Market for alternative investment as route public equity for small and medium entities in Tanzania

The objective of this study was to establish the possibility of having Market for Alternative Investment (MAJ) in Tanzania for the purpose of financing Small and Medium Enterprises (SMEs). The driving philosophy behind MAI is to offer young and developing companies’ access to new sources of finance .The study also examined the readiness of SMEs to go public and trade shares at stock exchange. The issues of how regulatory bodies of capital market are read y to establish MAl for SMEs have also been examined. The study fieldwork was done by administering questionnaires to capital market regulators and SMEs in Dares salaam region. Additionally, secondary data have been collected to supplement primary data. Non-parametric statistical and qualitative analysis has been adopted in testing hypotheses. This study found that there is much need of establishing MAI in Tanzania for the purpose of giving an opportunity to SMEs in Tanzania to raise equity capital from the public. This is due to the fact that most of SMEs surveyed were foW1d to have a shortage of equity capital. SMEs showed they are ready to participate in the capital market under MAI but only if it were to be established with rules and regulations that suite their characteristics. This study found that one of the future plans of CMSA is to have Alternative market. DSE indicated its readiness of absorbing MAI by accepting MAI to be part of its market when established. BRELA on its part requires those SMEs who want to trade their shares on the exchange to make amendments in their articles of association so as to become a public company. The study DSE indicated its readiness of absorbing MAI by accepting MAI to be part of its market when established. BRELA on its part requires those SMEs who want to trade their shares on the exchange to make amendments in their articles of association so as to become a public company. The study further revealed that for CMSA to establish MAI that will attract many participants there are many factors to be considered. Among them is to ensure that more incentives are provided to SMEs in terms taxes, reduce fees, disclosure requirement s, track profits record, competent management. It is believed that with MAI SMEs will get equity capital through public this will fastness their growth and create better public image. MAI also will improve capital market liquidity, which is very important for successfully capital market and would provide to public diversification options. Finally, the study recommends MAI should be established in Tanzania for the purpose of financing SMEs