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Transcript of Exchange Magazine 1
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8/10/2019 Exchange Magazine 1
1/18Exchange 2008 I 2nd Quarter I 1
Quarter 2Issue 2008
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VOLVO
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vsop & xo
Distributed by Distell Kenya Ltd [email protected] (Nairobi) or [email protected] (Mombasa)
ELEGANCE
Style is rarely ever spoken of
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Tea, a major contributor to Kenyas
GDP under the agricultural sector
Taking you away from the office will bring a leap into your creativity. Immersing you into ourexperience will inspire you. Meet the world as you unwind.
Let all your worlds connectThe world blends here.
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Letter
fromthe
Chairman
In recent years, there has been much made of the rise in the
economic and political clout of China and India. The global
commodities boom kick-started by surging demand from
China and India has benefited Africas resource-rich states.
At the November 2006, Beijing Summit of the China-Africa Cooperation
Forum, leaders of China and 48 African countries agreed to establish
and develop a new type of strategic partnership, featuring political
equality, mutual trust, mutually beneficial economic cooperation and
cultural exchanges. Chinese President Hu Jintao, announced at the
summit 8 steps to consolidate the new type of strategic partnership
between China and Africa, including further opening Chinas markets
to exports f rom Africas least developed countries by increasing the
number of products receiving zero-tariff treatment from 190 to 440.
The measures also included building three to five trade and economic
cooperation zones in Africa in the next three years, providing $ 3.0 billion
dollars in preferential loans and $ 2.0 billion dollars in preferential buyerscredits to African countries and training 15,000 African professionals.
To implement the summits commitment, President Hu chose to visit 8
African countries as his first overseas tour at the beginning of 2007.
The 2008 India-Africa Summit was held from April 4-8, 2008 in New
Delhi. It was the first ever such meeting between the heads of state and
government of India and 14 countries of Africa chosen by the African
Union. The summit adopted two documents, the Delhi Declaration and
the Africa-India Framework for Cooperation, with an aim to enhance the
true partnership to achieve the Millennium Development Goals. The Delhi
Declaration is a political document that covers issues of bilateral, regional
and international interest to India and Africa, including their commonpositions on UN reforms, climate change, the World Trade Organization
(WTO), and anti-terrorism, to name afew. The Framework for Cooperation
covers agreed areas of cooperation in many sectors including education,
science and technology, agricultural productivity, food security, industrial
growth, infrastructure and the development of the health sector.
In his inaugural address, Indian Prime Minister Manohan Singh announced
India will double financial credit to Africa to $ US 5.4 billion dollars in the next
five years, and provide preferential market access for exports from all 50 least
developed countries, including 34 of Africa. Prime Minister Singh described
Africa as the land of awakening, adding that the two billion people of India
and Africa could set an example of fruitful partnership. The India-Africa
trade volume has increased by 285 percent to $ US 25 billion dollars in thelast four years. According to the latest survey conducted by the Federation
of Indian Chambers of Commerce and Industry, this has raised Africas share
in Indias global trade from 5.8 percent in 2002-03 to 8 percent in 2006-07.
The articles in this edition intend to inspire debate on how African
policy makers, and businesses can position themselves to take up
the arising opportunities and to successfully mitigate accompanying
challenges - soaring food, energy costs, environmental degradation
and reserving/conserving resources for Africas own people.
Thank you for your attention.
CHAIRMAN OF THE EDITORIAL COMMITTEE OF THE EXCHANGE
Chairmans Noteword from the chair
Simon Rutega
Chief Executive Officer
Uganda Securities Exchange
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This optimistic economic outlook is
premised on the governments commitment
to redirect public investment to the critical
growth sectors, the finance minister
said. Although the country has seen
economic progress over the past decade,
it has unfortunately been largely buoyed
by external support, leaving the nations
growth prospects bound in a numberof ways by its external supporters.
On inflation, Uganda has had a strong track
record of maintaining price stability with
inflation at an average of about 4.8 per cent
for the past 12 years. The governments
objective has been to keep inflation
below five per cent and this has been the
cornerstone in achieving and maintaining
macroeconomic stability. Dishearteningly
though, annual headline inflation (all items)
and core inflation (excludes electricity, utilities,
food and fuel) inflation in February 2008
were at 7.8 and 7.9 per cent respectively.Still, last Decembers political crisis in
neighbouring Kenya the countrys
gateway to the sea, significantly affected
the movement of goods and services,
especially petroleum products.
Consequently, this exerted pressure on most
goods and services. By the end of April 2008,
there was also an increase in regional demand
for food items particularly from Southern
Sudan and this coupled with low supplies and
the increase in the retail price of soda to cater
for the increased cost of production, whichled to a rise in monthly headline inflation.
This trend has persisted. As of May 2008
Ugandas inflation soared to double
digits of 11.8 per cent a rate that was
last encountered over a decade ago.
Regional Analysis
the
integrat ion
agenda
Market Movement
Story by Dennis KawumaKampala
Even in the face of rising food and fuel
prices across the globe, with most
forecasts looking grim, Ugandas
economy can still be ably described as
one that is filled with hope and promise.
Needless to say, the bear realities still do
exist for Ugandans to contend with.
Conversely though, all these exist as progress
even though modest, being made withplausible consistency. Presenting the 2008/09
budget speech to Parliament, Ugandas
Finance Minister Dr Ezra Suruma said the
countrys economy grew at 8.9 per cent.
This is considerably higher than the growth
rate of 6.5 per cent which we projected
in last years budget, Dr Suruma said.
The countrys 2008/09 total budget is at
UgSh 6.1 trillion and this represents a 28 per
cent rise from the previous year. Uganda
is one of those countries that have a good
prospect to cash in on the global food deficit.
In gearing up for the opportunity, thecountrys National Agricultural Advisory
Services (NAADS) has seen a 62 per cent
increase of its budget by government. The
additional funding is meant to help buy
inputs for small farmers who cannot afford to
purchase the necessary agricultural inputs.
In the next fiscal year, Ugandas real GDP
is expected to grow by 8.1 per cent. The
countrys 2008/09 budget also reveals
that its internal revenues will be able
to finance 70 per cent of its budget for
the next financial year. That indeed is aconsiderable landmark in the countrys bid
to become economically self-sustaining.
According to analysts, this development
is bound to have positive wide-ranging
economic implications for the country.
Some of these factors are expected to
continue through the rest of 2008 and
at least up to the first half of 2009. Thisimplies that headline inflation is projected
to remain above the governments five
per cent target during the said period
although it has committed to getting it
back under control. On the stock market
front, the countrys bourse is yet to become
a major player in economic growth.
In terms of contribution to GDP, there
is nothing significant yet because the
stock market is still fairly new around
here, says Uganda Securities Exchange
(USE) CEO Mr Simon Rutega.He adds: What the USE is currently doing is
to concentrate on medium and long-term
financing. At the close of trading on the USE
on June 10 2008, its market capitalization
was about $4.4billion on average. The
USE began formal trading in 1998 and it
just celebrated its 10thbirthday early this
year. Currently the products listed on the
exchange include nine equities and bonds.
Three of the equities are cross listings, which
include Kenya Airways, East African Breweries
Limited and Jubilee Holdings Limited.
The USE helped to give East Africa its firstever cross border listing with the listing of
East African Breweries Ltd (a Nairobi Stock
Exchange listed company) onto the USE in
March 2001. The growth and public interest
into the stocks market was particularly
boosted last year when Stanbic Bank Uganda
listed on the USE following a successful IPO,
which was oversubscribed by 200 per cent.
The USE witnessed its first Rights Issue early
this year in February, courtesy of Uganda
Clays Limited. It was highly successful and
it registered a 10 per cent over subscription.Another Rights Issue is due before this year
is out and more companies are awaiting
the countrys Capital Markets Authority
(CMA) approval as they look to get listed
onto the USE in the not so distant future.
Ugandas rise and rise against the tide
How the EAC markets and their economies
are doing, the quarterly trends on each market
and their likely impact on other markets.Uganda
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Regional Analysis
How the EAC markets and their economies
are doing, the quarterly trends on each market
and their likely impact on other markets.Tanzania
Market Movement
the
integrat ion
agenda
to unfolding global events.
In the second quarter, overall inflation
only rose marginally from 9 per cent
at the end of March to 9.1 per cent.
However food prices rose by 11 per cent
in the last 12 months to May 2008, while
transportation went up by six per cent.
Like all other poor countries, food accounts
for over 50 per cent of Tanzanias Consumer
Price Index as inflation basket.
Fuel and Power rose by 12 per cent on
account of increasing global fuel prices.Projections are that in the medium term,
inflation levels could continue rising on
the backdrop of higher energy costs but
a good harvest in the third quarter could
ease inflationary pressure. In line with
government efforts to improve credit
access and support. The macroeconomic
environment, interest rates on government
securities were contained. The average 182-
day treasury bill rate closed the quarter at 7.9
per cent while the two year Treasury bond
declined from 14.9 per cent to 12.8 per cent.The Tanzania shilling strengthened by 4.6
per cent against the US dollar during the
second quarter, despite huge disparities
in international trade.
The second quarters rally was boosted by
gains on key stocks as Tanzania Breweries
Limited and Tanzania Portland Cement
Company market caps rose by Tshs41
Billion and Tshs7 Billion respectively.
Notable is the fact that the Dar market
remains inaccessible to foreign investors,
due to the governments foreign exchange
currency restriction. However, this has not
detered companies with a regional focus
on crosslisting. KCB will be joining Kenya
Airways, Kenya Breweries and JubileeInsurance which are cross listed in the three
exchanges and bringing to 11 as the total
number of listed companies at DSE. Four
out of this are cross-listed firms from NSE.
Once successfully completed, the move
will boost DSE market capitalization,
which increased by 7.1 per cent to
$2,841 million in the second quarter.
Overall, Tanzanias economy grew by 7.1 per
cent in 2007 and is projected to sustain the
growth momentum to eight per cent in 2008.
Inflation basketOn the inflation front, Tanzania
looked to have done well in relation
The current account worsened as exports
declined by 14.6 per cent and imports rose by
17.5 per cent in the 12 months to March 2008.
BoTs May monthly economic review
attributes the strengthening in second
quarter due to strong budgetary
support receipts towards the end of the
fiscal year and which could continue
into remaining months of 2008.
The integration agenda,at Tanzanias door.
Notable is the fact that the Dar market remains inaccessible to foreigninvestors, due to the governments foreign exchange currency restriction.
KCB will be joiningKenya Airways, KenyaBreweries and JubileeInsurance which arecross listed in thethree exchanges andbringing to 11 as thetotal number of listedcompanies at DSE.
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The research also shows that between
2005 and 2006, imports from the EAC
total Frw64 million (KSh7.6 million).
Kenya was the main source of the imports,
supplying about Frw31 million (KSh3.8
million) worth of goods. Uganda was thesecond important supplier with Frw28
million (KSh3.4 million). Kenya and Uganda
accounted for a combined share of 93
per cent of all imports from the EAC.
Tanzania supplied imports worth about Frw6
million (KSh740,000) or 6.9 per cent of total
imports, the remainder being from Burundi.
the
integrat ion
agenda
Regional Analysis
How the EAC markets and their economies
are doing, the quarterly trends on each market
and their likely impact on other markets.Rwanda
Market Movement
Like Uganda, Rwanda suffered
heavily during the post poll violence
in Kenya early in the year.
Notably is the fact that, Rwandas
cost of living is expected to rise
9.5 per cent in 2008, before easingslightly to eight per cent, in 2009.
However, on the economic front,
GDP is expected to hit six per cent
in 2008 and 6.5 per cent in 2009,
owing mainly to improvements in
services, construction and mining.
The country expects to be admitted
to the Commonwealth club in 2009,
joining the other three East African
countries, Kenya, Tanzania and Uganda.
Rwandan Government estimates that the GDP
could actually be higher than experts project,estimating a seven per cent growth in 2008.
Seven percent real GDP growth (for 2008),
and in 2009 we are expecting 7.5 and
eight per cent in 2010, Finance Minister
James Musoni told Reuters in June on the
sidelines of the World Economic Forum
for Africa meeting in South Africa.
However, agriculture will remain the main
obstacle to a faster economic growth rate.
The reason advanced for the weakness
(agriculture accounts for around one-
third of GDP), is due to poor weather.
To add on to that, will be the persistent
high international oil prices.
It is worthy to note that Rwandas vulnerability
to increasing oil prices was also compounded
by the recent post election crisis in Kenya
that forced the government to negotiate for
a transfer of its imports route to Tanzania.
Oil products had to be brought in from
the Tanzanian port of Dar es Salaam,
which increased transport costs.On the budgetary front, the Rwandan
government anticipates higher public
spending this year due to increased donor aid.
The increased donor aid, is expected
to contribute to faster GDP growth for
2008 than its current forecast range of
6.5 per cent to over seven per cent.
In the Letter of Intent to the International
Monetary Fund (IMC), the government
argues that it can increase real GDP growth
by using aid to increase spending by two
per cent of GDP, with the aim of improvingsocial services, public infrastructure and
supply-side capacity in order to respond to
anticipated increased domestic spending.
Trade in the regionOn regional trade Kenya remains
Rwandas main trading partner but
Uganda seems to be to be catching up.
In 2007, trade between Uganda
and Rwanda tripled, according to
Ugandas Export Board (UEB).However, a study commissioned by Rwanda
Revenue Authority (RRA) and the Ministry
of Infrastructure shows that, Kenya is still
Rwandas leading business partner.
Looking AheadClub status and stable growth in Rwanda
Seven percent real
GDP growth (for2008), and in 2009we are expecting 7.5and eight per cent in2010, Finance MinisterJames Musoni toldReuters in June on thesidelines of the WorldEconomic Forumfor Africa meetingin South Africa.
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How the EAC markets and their economies
are doing, the quarterly trends on each market
and their likely impact on other markets.
Kenya
the
integrat ion
agenda
manager at AIG Investment said.
The figure is one percentage point
above its earlier projection of 3.5 per
cent growth rate based on first quarter s
events and prevailing sentiments.IMF projected a four per cent growth rate
in what it termed as a respectable result
given the events of the first quarter.
Government projects a growth rate of
between four per cent in the worst-case
scenario and an optimistic six per cent.
The recovery is mainly pegged on
agriculture and tourism sectors,
infrastructure development,
manufacturing and implementation of
business process outsourcing (BPO).
The latter is expected to provide a minimum
of 10,000 jobs annually, as businessoutsourcing takes shape in the country.
The bourseAt the stock market, the second quarter
reversed January-March meltdown to
gain 5.6 per cent in US dollar terms, riding
on positive investor sentiment due to
the return of political calm. In the first
quarter, the market shed 11.1 per cent.
Market turnover hit the Sh33.9 billion mark
compared to Sh16.3 billion for a similarperiod last year on account of robust sale of
Safaricom shares after it debuted at NSE.
The Safaricom share, offered at Sh5 per
share closed the quarter at Sh7.40, a 48
per cent upside on the offer price.
The twin issue of post poll violence and
raising global fuel prices has had a negative
impact on the Kenyan economy.
Government figures put the economic
growth rate at negative 1.3 per cent infirst quarter with an accelerated cost of
living recorded in the second quarter.
Inflation hit a 15-year high in May 2008
after recording 31.5 per cent. Food
and fuel prices directly contributed
to a bigger chunk of the rise.
Presently, experts say that the inflation
outlook is still negative although it is
expected to ease on account of an
improved political climate to average
about 25 per cent by year-end.
A fact well informed by Junes figure
which shows the cost of living to haveeased down to 29.3 per cent.
The second quarter also saw the
launch of Kenyas Vision 2030 which
will seek to fast track economic
growth to +10 per cent by 2012.
Indicators of economic performance for
second quarter are noted to have shown
signs of return to high economic growth
experienced over the past five years.
Such a rebound was earlier in July
confirmed by economic estimates by
the International Monetary Fund (IMF)and AIG Investment, both revising their
earlier low growth projections upwards.
We are quite confident that a growth
rate of 4.5 per cent is achievable, Mr
Edward Gitahi, a senior investment
Regional Analysis Market Movement
When the tough times roll, the NairobiStock Exchange hits its best of times
Revenue collectionDespite the difficulties experienced in
the first quarter of 2008, Kenya Revenue
Authority (KRA)continued to register astellar performance collecting nine billion
shillings above its target of Sh389 billion.
The effect of this, is the hope that the taxman
will be able to meet a high target set this
year of collecting Sh468 billion, a 20.2 per
cent increase of last years Sh389 billion.
Hopefully, this will ease concern of a high
interest regime after the government laid out
a historical budgetary spend of Sh760 billion
supported by budget deficit of Sh127 billion.
The Kenya Shilling weakened by 3.7 per
cent during the second quarter to settle at
Sh65.20 reversing first quarter gains thatresulted from the signing of the peace accord
and in the run up to the Safaricom IPO.
The earlier gains reversed concerns of
a widening current account deficit and
portfolio outflows after the Safaricom
allocations, AIG Investment says.
Market sentiment for a weaker shilling is
swirling within the range of Sh66 - 68 to
the USD baring any external shocks.
Going forward, experts say, key risk to
economic growth will remain the inability of
the coalition government to hold togetherand reach consensus on important national
issues like constitutional and land reforms.
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Policy SmeX
The role of the Nairobi Stock Exchange(NSE) in the Kenyan economy is bestdiscerned by examining the mandate of
the Exchange to all its key stakeholders.
Companies use the NSE to raise funds
for expansion and growth (without the
interest burden of funds borrowed from
lending institutions), optimizing their
capital structure and lowering their cost
of capital. The secondary market improves
the liquidity of their securities. The capitalmarkets also increase public awareness
about the company and its products. For
the government of Kenya, the Exchange
provides a venue for the implementation
of government policy, privatization and
capital raising. The Exchange surveillance
systems assist financial services regulators
in first line market regulation.
Exchange trading platforms provide a
centralized, accessible, and transparent
avenue for price discovery; this coupled
with the opportunity for risk diversification
offered by the choice of securities from
different issuers, facilitates the wealth creationand management process for the investor.
For market intermediaries, robust capital
markets infrastructure enables them extend
the reach and scale of their businesses.
The NSE has three active segments through
which issuers who meet their eligibility
requirements can raise capital. The Main
Investment Market Segment (MIMS) and the
Fixed Income Market Segment (FISMS) both
require a minimum, authorized issued and
fully paid up share capital and net assets
of Ksh. 50.0 million and Ksh. 100.0 million
respectively, immediately before the Initial
Public Offer (IPO). The prospective issuer
should have recorded after tax profits inat least three of the last five accounting
periods prior to seeking a listing. For the
Alternative Investment Market Segment
(AIMS) for small capitalization companies,
the share capital and net asset requirements
Chris Mwebesa explains NSE CEO
A Nairobi Stock Exchange Market Segment for Small and MediumEnterprises makes Strategic and Commercial Sense.
The NSE has realized that its existing market segments donot effectively serve the needs of the Small and Medium SizedEnterprises (SMES) - a signicant sector of Kenyas economy.
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are Ksh. 20.0 million and Ksh. 20.0 million
respectively. The prospective issuer must
have been engaged in the same business for
a minimum of two years, one of which should
reflect a profit with good growth potential.
The NSE has realized that its existing market
segments do not effectively serve the needs
of the Small and Medium Sized Enterprises
(SMES) - a significant sector of Kenyas
economy. Indeed, sources of capital for
new ventures and entrepreneurial talent
which are the backbone of the SME sector
are very limited in our region. Even after
having in place a proper business plan,
books of accounts, two major challenges
SMEs seeking to raise capital face are not
having a long enough operating history toprovide comfort to prospective investors
and the constraints on managements
capacity to expend resources and time
to adhere to the continuing listing
obligations of a securities exchange, whilst
also focusing on growing the business.
The NSE has identified the need to serve
a significant sector of the economy that
dominated by SMEs. Besides providing
a public good, it makes commercial
sense. These types of markets have been
very successful in other jurisdictions.
Compared to a listing on the Main Board,
the issuer seeking to list on the SMEx Market
Segment, would have less discretion in the
utilization of the proceeds of the capital
raised and is usually expected to demonstrate
they will be used solely for building and
expanding the business. However, unlike
on the Main Board, and in cognizance of
the earlier stage of their development, the
requirement for a lengthy trading record
and profitability is removed. An abridged
prospectus would only be required when
a company is raising capital. A pragmatic
approach to regulating younger, smaller
companies and assuring investor confidencecould be done through a new market
participant called a financial advisor.
The financial advisor would have devolved
authority to decide whether a company
is suitable for admission and to provide
ongoing advice to the company once it is
listed. The advisor guarantees that based on
all available information and to the best of
their knowledge and belief, the application
or public document constitutes a full and
true disclosure of all material facts aboutthe issuers offer. The advisor must confirm
that they are satisfied that the forecast/
estimate of projection has been made after
due and careful enquiry of the directors of
the applicant. The advisor will also make
up for the SME managements lack of
experience in running public companies,
providing oversight. Without an advisor the
listed company is effectively unregulated.
Therefore, the company must have an advisor,
at all times and in case a listed company loses
its advisor, it must get a new advisor withinthe time specified in the rules otherwise
its shares are suspended and ultimately
could be delisted. In order to assure investor
confidence, there would be a minimum
period after listing for which the same advisor
continues to act for the issuer before they
can be replaced. The advisor must disclose
any possible areas of conflict they might
experience in the course of carrying out their
duties and put in place rules and procedures
to minimize such instances. Corporate
governance facilitates investor confidence.
The NSE proposes a compulsory mentorship
programme for all executive and non-
executive directors of SMEx companies
covering corporate governance that is
facilitated by the Exchange and the Capital
Markets Authority with the advisor alsoplaying a fundamental role. The NSE proposes
to partner with the Institute of Directors
(IoD), Centre for Corporate Governance and
ICPAK to provide the Directors Induction
Programme (DIP). Once the company is
listed, there needs to be a healthy interest
in the companys shares and sufficient stock
to satisfy that demand. The companys
investment bank/stockbroker will publish
research where necessary and act as a
market maker. Broker and analyst support is
important for further fundraising after an IPO.It provides necessary support to share trading
in the secondary market (liquidity) and
ensures the profile of the public company
consistently remains in the public domain.
Prior to listing, venture capitalists and
government start up schemes are essential
to SMEs. When listing, higher standards
should apply to SMEs, and the listing sponsor
should have an essential role. A strong retail
market is important to back up listed SMEs.
Investor confidence should be built mainlyon corporate governance and surveillance.
It is also crucial to encourage research on
SMEs; a third of the listed companies are
covered by a research scheme in Singapore.
In the case of the NSE, the AIM could be
restructured as a SMEx Market Segment to
also provide support to those sectors of the
economy that the government of Kenya
considers crucial in achieving Vision 2030.
PolicySmeX
1. The Alternative Exchange (A ltX) of the JSE Limited in the South African Development Community (SADC)
2. The Irish Enterprise Exchange of the Irish Stock Exchange in the European Union (EU)
3. The TSX Venture Exchange of the Toronto Stock Exchange Group in the North American Free Trade Area (NAFTA)
4. The Mesdaq Market of the Bursa Malaysia in the Association of South East Asian Nations (ASEAN)
The NSE has identied the need to serve a signicant sector of the economy that dominated by SMEs, besides providinga public good, it makes commercial sense. These t ypes of markets have been very successful in other jurisdictions.
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SY (Smart Youth)Following Up with the kids
For Nairobi Stock Exchangeand for its most promisingyouth bait, the NSE Smart YouthInvestment challenge, the weeksince the premier of this onlinesimulation of the boursestrading activities on June 3rdhas seen extraordinary times.
The success of the virtual game has
also lifted its promotor, Catherine
Gitonga, knowingly or unknowingly
into the stock market stratosphere.
Already, the NSE board and its chief
executive, Chris Mwebesa, want the
game, which started off with university
students, extended to cover other
academic institutions to tap an even
wider audience of potential investors.
They are even considering strategies on
how capital markets education can be
inculcated in secondary school curriculum.
It is this innovation, courage, promise
and financial instinct shown byMs Gitonga that has unleashed
speculation about her future role.
Since the three-month long online
investment challenge started in
June, it has attracted 3,340 full-time
undergraduate students in the countrys
private and public universities.
Technically, it started on the third day
of June since the first two days were
public holidays and the NSE trading floor
opened on the third, says Ms Gitonga.
But so far, we have 835 registered teamsand each team has 4 university students
hence a total of 3,340 participants.
There are at least 17 institutions of
higher learning in her program.
They include Africa Nazarene University,
Catholic University of Eastern Africa,
Daystar University, Egerton University
and Jomo Kenyatta University of
Agriculture & Technology.
Others are Kabarak University, Kenya
Methodist University, Kenyatta
University and Kiriri Womens University
of Science & Technology.
There is a great demand from the
youth in the need to know about
investing, observes Ms Gitonga.
The inquiry emails we get every day, which
average about 100 per day, are from young
Kenyans drawn from various ages and
stations in life, who want to know of the
opportunities in the Kenyan market. They
want to know where they can invest, what
is involved in these investments and how
much return they can get, she notes.
With such encouraging interest from a young
market that has largely been left out in the
countrys mainstream economic activities,
Smart Youth then refers them to licensed
investment advisors, stock brokers and
investment banks for further mentoring.
It is this interest that has caught
the NSE executives eye.
A month after the commencement of
the competition, the leading team as
at the last trading day of that month
was awarded in the June mini draw.
Wizzybiz Investors and Figga Niggaz teams,
both of the University of Nairobi, won
the first phase of the NSE, Bank of Africa
and Centum Ltd sponsored challenge.Team members bagged Sh5,000 each that
was a total of Sh20,000 for a prize that was
proudly sponsored by Centum Investment.
The cash was deposited into their
respective accounts in Bank of Africa.
The next mini draw will be announced
at the end of July and the grand
price at the end of August.
All teams started with a virtual capital of
Sh500,000. The teams also got a price feed
from NSE via an authorized data vendor.
Now, the Exchange seeks to have
trading in securities incorporated into
the schools learning curriculum.
During the awardingceremony, NSE chiefexecutive, Chris Mwebesa,said the move was partof a strategy aimed at notonly roping in investorswhile they are young,but also developing apool of well-informedinvestors for the market.
NSE first vice chairman, Bob Karina, has
also been on record saying that the
challenge had shown the great demand
among the youth for information on
investment opportunities in the country.
Their interest should be harnessed and
channeled through practical experiences.
They can then learn the fundamentals to
enable them become real investors, said
Mr Karina, who also doubles up as the Faida
Investment Bank managing director.
Ms Gitonga admits that in every university
they ventured into, the reception was
warm and encouraging. Response from
the respective deans of Student affairs
and from the students themselves
was equally commendable.
Our approach to marketing the
competition was that we gave investment
talks in each university and in some of
these talks we were accompanied by
our sponsors. Among them are the NSE,
Bank of Africa, Sterling Investment Bank
and Centum Investment, she says.
But all this has not come without challenges.
Despite the hunger for investment
knowledge from the youth, Ms Gitonga feels
that investment firms, stockbrokers included,
are not doing enough for that market.
I would like to encourage the companies
providing investment services in the
market to pursue the youth aggressively in
encouraging them to invest their money
as this little money now is what becomes
billions in the next 10 years, she pleads.
According to her, and despite the perception
that the youth are a broke lot, she thinks they
still have a useful chunk of disposable income.
By communicating with the youth through
this competition, I have realized that the
young people have lots of money. They knowhow to make money through innovative
ways. What they sometimes lack is proper
means to re-invest their money, she admits.
She feels they also lack an information stream
as to what is available for investment.
Smart Youth may be providing an avenue
for such and she believes they shall have
a lot of young people in universities
investing in the NSE. In the meantime,
where does that leave the rest?
In the next competition we shall be covering
a wider group of youth both in universitiesand in other academic institutions so that
we can be of learning assistance to more
young people who are very interested
in investing in shares, she reveals.
Young Investor The NSE investment challenge
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Another challenge in the competition
that Smart Youth will have to deal with is
matching the need for information with the
number of mentors available to offer help.
Although the game handlers have ensured
they have provided mentors who are persons
drawn from organizations licensed by theCapital Markets Authority, the questions to
the mentors keep coming and they vary.
Sometimes the questions to the
mentors are so many that they have had
to share this voluntary work with their
professional work, she confesses.
She hopes that increasing the number
of mentors will reduce the workload
on the existing mentors and will the
burden of handling the inquisitors while
enhancing the quality of advice received.
In the meantime, all she can say is that she
is very grateful to the mentors for their
support in educating the participants.
Her new prominence in the stock
market notwithstanding, Ms Gitonga
becomes a pivotal link for her efforts to
link the bourse to the future market.
Perhaps, she might also get a call from
curriculum developers at Jogoo house just in
case the Education ministry wants her insightsand are looking to consider NSEs proposal.
I would like to encourage the companies providing investmentservices in the market to pursue the youth aggressively in
encouraging them to invest their money as this little moneynow is what becomes billions in the next 10 years,she pleads.