1. The Role and Functions of the Alternative Exchange ( AltX) and its Contribution to the Development of Small and Medium -Size Enterprises (SMEs) in South Africa By
XOLISA MTIKI
09 FEBRUARY 2017

2. CONTRIBUTION OF SMEs SECTOR TO THE SOUTH AFRICAN ECONOMY
Formal SME Sector Contribution in the Emerging Economies
45% of overall employment (World Bank, 2015)
33 % of National Income (GDP) (World Bank, 2015)
Formal SME Sector Contribution in the South African Economy
2.3 million SMEs (formal & Informal) ( StatsSA, 2015)
57% of National Income (GDP) (StatsSA, 2015)
61% employment contribution (Bureau of Economic Research , 2015)

3. PROVINCIAL CONTRIBUTION by SMEs
Table 3.5: SMEs by Province
SMEs
(2015)
Province 
Total
Formal
Informal
Other
86 528
Western Cape
10 030
Eastern Cape
50 670
4 957
Northern Cape
20 611
8 534
9 058
3 019
Free State
96 846
26 224
60 816
9 806
KwaZulu-Natal
74 976
15 293
North West
27 430
79 153
6 273
Gauteng
13 989
Mpumalanga
35 208
9 063
Limpopo
28 054
14 098
Source: Statistics South Africa and Bureau of Economic Research (2015)

4. SMEs CHALLENGES IN SOUTH AFRICA
Source: The South Africa Institute of Chartered Accountants (SAICA)(2015)

5. WHAT IS THE JOHANNESBURG STOCK EXCHANGE (JSE) ?
A market where shares bought and sold
Place where primary capital raised by listed companies
A company owned by its shareholders

6. JSE REGULATORY FRAMEWORK
Financial Service Board: Non Banking Financial Services Sector
Capital Markets
Insurance Houses
Retirement Funds
Collective Investment Schemes
Friendly Societies

7. FUNCTIONS OF THE EXCHANGE
To raise capital.
To assist businesses to establish or expand their businesses.
Provision of an orderly market.
To facilitate the secondary trade of listed securities between buyers and sellers, in terms of Rules and Regulations of the JSE, with due protection for all parties concerned .

8. LISTING CATEGORIES
Main Board
Development Boards:
Development Capital Market (DCM) – 1984
Venture Capital Market (VCM) – 1989
Alternative Exchange (ALTX) 2003
Currently only 2 boards exists:
1. JSE Main Board
2. Alternative Exchange (AltX)

9. DCM, VCM, AltX and MAIN BOARD REQUIREMENTS
Listing requirements
 Main Board
DCM
VCM
AltX
Share capital
R25 million
R1 million R
R2 million
Profit history
3 years
2 years
None
Pre-tax profit
R8 million
N/A
Number of shareholders
500 75
100
Sponsor/DA
Sponsor
JSE Sponsor
Designated advisor
Special requirements
Appoint financial directors
Education requirements
All directors to attend Directors Induction Programme
Source :Johannesburg Stock Exchange (2003)

10. THE ALTERNATIVE EXCHANGE (AltX)
Establishes in 0ctober 2003 as Exchange for SMEs
Partnership between Department of Trade and Industry (DTI) and JSE
Role and Functions of AltX
Act as an incubator for the Development of SMEs in South Africa
Allows the SMEs to raise capital
Provides an opportunity for investors to invest in small high growth companies
Prepare the SMEs readiness for migration to JSE main board

11. THE ALTERNATIVE EXCHANGE (AltX) continue…..
AltX improvements compared to DCM and VCM
Designated advisor (Bridge Capital)
Appoint financial directors
All directors to attend Directors Induction Programme
FTSE/AltX 15 Index
Liquidity

12. THE ALTERNATIVE EXCHANGE (AltX) continue…
Source: JSE (2015)
In, 2015 AltX raised R33,9 billion (AltX 2015)
25% have migrated to JSE main board since establishment (Cheyne, 2015).
29 companies have delisted since its inception (Cheyne, 2015)

13. Has the AltX achieved its intended purpose successfully ?
Based on its performance it has allowed SMEs listed on the AltX board to:
raise their profiles;
raise capital;
secure better quality deals and employ more people ;
Greater contribution to South African Economy
However, government , private sectors and other stake holders need to do better in assisting SMEs in South Africa.

14. THANK YOU

15. Q &A