NSE chair eyes State for Sh230b to excite market
Wednesday, September 23rd, 2020
Nairobi Securities Exchange (NSE) is looking into ways to turn around dwindling fortunes.
Speaking to Business Hub’s Lewis Njoka, chairman Kiprono Kitonny unveils what needs to be done to attain this ambitious turnaround strategy. Excerpts:
Q: Congratulations on your appointment to chair the bourse. The Nairobi Securities Exchange is currently facing a listing dry spell. What is your game plan to end it?
A: Thank you very much. The NSE has a strategic plan and I come in at the beginning of a new five-year strategic planning cycle.
I want to focus on five core areas that will define the success or otherwise of my leadership at NSE. One is listings.
We have engaged government at the highest levels. We want to get commitment at the highest level that government could release some of its enterprises to the public through listing.
It is our belief that we are able to raise up to Sh230 billion shillings for the government if they were to draw down further shareholding.
Q: Many will argue that the settlement cycle at the bourse is still long. Can we have same day trading?
A: There is definitely room for improvement in terms of the settlement cycle. Shorter settlement cycle offers an incentive to investors.
We are working hard to shorten the settlement cycles. Our market cycle of T+3 is perceived as being slightly long, although it still remains the global standard in many of the frontier and emerging markets globally.
We are working towards achieving a cycle of T+2 which will be setting a standard for this region.
It will mean more liquidity, faster transaction time and a greater incentive for those participating in the markets.
Q: Do you think there is need for more stringent measures to curb unethical practices?
A: In the last few years we have seen a lot of corporate failures in Kenya. For me, corporate governance will be the cornerstone upon which we shall build the future exchange.
Some of the building blocks that are already in place is that we have a self regulatory division within the exchange that ensures we that have a close monitor on the businesses that are on
the exchange. We also carry out a lot of market surveillance. We’ve undertaken stress tests to monitor the financial health of listed companies through our SRO division.
Q: What is your take on deepening retail market participation at the bourse?
A: That’s one of the key areas of focus for me. I would like that to define my leadership. At the
moment, as you know, the participation of foreign capital vis a vis local capital is 70:30 in
favour of foreign capital. So, we would like to really sensitize the public, particularly through collective investment schemes, of the value of investing in marketable securities in equities and the bond market.
I believe we could try and level that ratio to 50:50. I am very Pan-Africanist, my definition of local is Africa.
Q: Talking of cross-listing, last year it was at the top of your plans at NSE. How do you
plan to take it from where it is to the next level?
A: Cross-listing is a function of the partnerships and the quality of partnerships we create.
The Acorn Green bond was cross-listed in Nairobi and London and has been successful. For us it
has been a successful experiment and within the government itself there are plans by some of
the state owned corporations to list green bonds and I believe there is a lot to be said for it.
If we look at the green space in its totality we are very well positioned even to access wind climate funding. It’s something we are really going to push hard.
Q: As the new Chair, what are your fears, what are your concerns for the financial sector, for the country, and the region?
A: My first concern is that, as we have many times when markets try to integrate, is that
bureaucracies don’t move at the pace of the goodwill at the level of the heads of state. We’ve
seen it at the EAC integration, Comesa and we are seeing similar challenges at the AfCFTA.
My second concern is that as a country, we have allowed politics to take the front and centre
of almost everything. My other concern, which is the concern of many, is our public debt. But again, we are a very resilient country and these are things that can be remedied.
Q: What is the future like at the bourse under your chairmanship?
A: It’s very bright. In the three years that I will be at the helm of NSE, I would like to create an environment of increased opportunities for investors, positioning Kenya as a key investment
hub in this region. I would like to change the positioning of NSE from a frontier market to an emerging market which would then unlock endless possibilities.