Archive for the 'Kenya' Category

4 priorities from new head of African stock exchanges

Nairobi Securities Exchange (credit: Diana Ngila, Nation Media Group)

Nairobi Securities Exchange (credit: Diana Ngila, Nation Media Group)

The new President of the African Securities Exchanges Association (ASEA) put forward 4 strategic objectives for the member bourses. Oscar Onyema, CEO of the Nigerian Stock Exchange, was elected President after outstanding leadership by Sunil Benimadhu, Chief Executive of the Stock Exchange of Mauritius.
According to a news report in Nigeria’s This Day, Onyema said the vision is to support the effective mobilization of capital for economic development. The new executive committee to lead African securities exchanges will focus on
• Strengthen ASEA’s governance, financial and reporting framework
• Promote the sustainable development of African capital markets
• Facilitate an increase in market access at the regional level, and promote cross-listing among African exchanges
• Align the goals of African capital markets with those of the African Development Bank (AfDB).
Onyema said: “I am honoured to be elected president of ASEA which is the largest platform for Africa’s stock, futures and options exchanges. I would like to thank the outgoing Executive Committee led by Mr. Benimadhu for their stewardship of the Association over the last two years, and I look forward to working with ASEA members, our global counterparts and regulators to contribute to the association’s rich legacy, as well as to promoting our markets in a broad range of areas”.
He was elected this week at the Executive Committee meeting of ASEA after its 18th annual general meeting held in Diani, Kenya.

Exchanges and regional integration
According to this press release from Nairobi Securities Exchange, William Ruto Deputy President of Kenya opened the ASEA flagship conference: “Well-established capital markets can help African countries lessen vulnerability of their economies to external shocks, by locally marshalling funds through instruments such as bonds and reducing currency and duration mismatches.
“The exchanges have continued to foster regional integration by allowing cross-border capital raising initiatives such as public offers, bond issues and cross-listing of stocks”. He encouraged Kenyans to keep saving and to do this using the capital markets.
Benimadhu, the out-going ASEA president, welcomed the new president and committee members: “We look forward to ASEA’s continuing progress as it seeks to enhance the global competitiveness of member exchanges”.

Open up, urges investor
Allan Thomson, managing director of Dreadnought Capital, based in Johannesburg, South Africa, was reported in Kenya’s Daily Nation that opening up the markets to foreign investors would bring in much needed capital and training for the local markets: “I have respect for regulators in Africa and what they are trying to do. But it is worrying. African capital markets suffer from too much protectionism and stringent rules. The fact is that protected and inaccessible markets remain small.”
He added that membership at most capital markets was expensive, which kept away potential investors: “I once approached a securities exchange in Africa and was told to pay $1 million to become a member yet they were only five. I suggest a zero membership fee because investors bring in skills and capital,” he added.

Diani, Kenya (credit www.planetwindsurfholidays.com)

Diani, Kenya (credit www.planetwindsurfholidays.com)

Nairobi SE appoints Andrew Wachira as acting CEO

The Board of Directors of the Nairobi Securities Exchange appointed Andrew Wachira as the Acting CEO of the exchange, effective from 1 Oct 2014. Peter Mwangi left on 30 Sept, as reported on this blog. The process to recruit a permanent Chief Executive is ongoing.
According to the NSE announcement, lawyer Mr. Wachira has over 10 years’ experience at the Nairobi exchange. He has been the Head of Compliance and Legal Department, NSE since 2009. He has a Bachelor of Law Degree from the University of Nairobi and is an Advocate of the High Court of Kenya. He is a member of the Law Society of Kenya.
Board Chairman Mr. Eddy Njoroge said: “Andrew has been instrumental in the implementation of a number of key initiatives at the exchange. His experience, leadership skills and wealth of knowledge will ensure a smooth transition for the exchange. As we formalise the substantive recruitment of a Chief Executive, we are confident that he will execute this interim position commendably.”

History pic - Nairobi SE in 2009 (credit www.businessdailyafrica.com)

History pic – Nairobi SE in 2009 (credit www.businessdailyafrica.com)

Nairobi SE trades bonds on new automated trading system

nairobise40926_logoSTT40926_Logo

 

 

 

 

 

 

The Nairobi Securities Exchange (www.nse.co.ke) is trading corporate bonds and Government of Kenya treasury bonds on an automated trading system. It marks another step forward for South Africa’s financial software development company Securities Trading & Technology Pty (STT), which also supplies the STT bond trading system used by the Johannesburg Stock Exchange (JSE), Africa’s most liquid bond market.
The new system allows on-line trading of debt securities and is integrated with the settlement system at the Central Bank of Kenya (CBK) for treasury bonds. It offers true delivery-versus-payment (DVP) to mitigate risk. In August 2014 the NSE increased the number of settlements in treasury bonds to 3 per day, with settlements at 11:00, 13:00 and 15:00 each day so that a bond trader can buy a Kenyan treasury bond and sell it the same day.
The new STT automated trading system (ATS) also is efficient, scalable and flexible, and supports trading in bonds that have been issued in different currencies.
Peter Mwangi, CEO of the Nairobi bourse, said in a press release: “This is a significant step towards the exchange’s goal of ensuring that the secondary market becomes more transparent and the price-discovery mechanism is beyond reproach.
“The multicurrency trading functionality of the new system means that foreign-denominated bonds can now be listed and traded on the NSE. With this development, we look forward to the listing of the Government of Kenya Sovereign Bond at the exchange.” He was referring to Kenya’s debut $2bn Eurobond that was successfully floated on the Irish Stock Exchange in June after attracting bids for 4 times the initial target.
Nairobi’s stock market was reported to be working with the Central Depository and Settlement Corporation (CDSC) and the CBK for settlements of corporate bonds.
It also follows the South African practice and allows reporting of bond prices by yield (i.e. the current interest rate to investors). According to an earlier report in Standard Media, Mr Mwangi said: “the bond trading system.. will allow reporting of bond prices by yield… Decision-making will be faster and this should spur further liquidity in the bond market.”
The STT system supports market-making, a 2-way-quote trading model, ability to integrate with regulators’ surveillance systems and ability to report transactions that are concluded over-the-counter (OTC) for purposes of settlement.
In enhancing the bond trading system, the Nairobi Securities Exchange acknowledges the vital role that a vibrant secondary market for active African bond trading continues to play in raising long-term capital for the Government and corporate entities. County governments can also use the same system to raise capital through issuing and listing county bonds.
Ms. Michelle Janke, Managing Director of Securities Trading & Technology said: “I am delighted to have partnered with the NSE, all teams have put in an enormous effort to take the market live”. The market went live on 26 September.
The Dar es Salaam Stock Exchange went live using the STT system on 27 June, as reported on this blog, after switching from Millennium IT system.

JSE launches futures trading for 3 African currencies

South Africa’s Johannesburg Stock Exchange (www.jse.co.za) has launched currency future instruments which will help investors and businesspeople looking to hedge against African currency movements. The 3 new currency futures are the first to track exchange rate between the rand (ZAR) and Nigeria’s Naira (NGN), Kenya Shilling (KES) and Zambia Kwacha (ZMW).
The move will allow investors, importers and exporters to protect themselves against the currency movement in the foreign country. The JSE has partnered with Barclays Africa and specialist brokers, Tradition Futures, to bring this new offering to market.
A press release from the JSE quotes Andrew Gillespie of Tradition Futures: “It is a groundbreaking development to have a transparent, independent, well-regulated platform to mitigate or assume FX (foreign exchange) risk in these African countries, against any other currency of their choice – that does not prejudice anyone, irrespective of size, domicile or nationality.

Representatives of JSE, Reserve Bank, Kenya and Zambia open trading in African currencies (credit: JSE)

Representatives of JSE, Reserve Bank, Kenya and Zambia open trading in African currencies (credit: JSE)


“The ability to transact anonymously, through specialist brokers such as Tradition Futures, and to have access to full and fair, timeous price discovery is an international benchmark requirement for a developed market. This allows for a level and fair playing field, where the best price is available to all, without bias or favour, which is a significant facet and feature of this market in African FX on the JSE.”

Guide to African currencies (see www.charterresource.org/african-currencies)

Guide to African currencies (see www.charterresource.org/african-currencies)


The JSE already offers futures against the ZAR in: USD (contracts of $1,000), Euro, Sterling, Australian dollar, Japan Yen, Canada dollar, New Zealand dollar, Chinese Renminbi, Swiss Franc, Botswana Pula and a couple of custom instruments. See the helpful brochure available here.

How they work
A currency futures contract is an obligation to buy or sell an underlying currency at a fixed exchange rate at a specified date in the future. For example, a futures contract can give an investor the right to buy USD at ZAR10 per USD1 at the end of December. One party to the agreement is obligated to buy (longs) the currency at a specified exchange rate and the other agrees to sell (shorts) it at the expiry date. A futures contract is therefore an agreement between two investors with different views on the way or extent a currency will move.
The underlying instrument of a currency future contract is the rate of exchange between one unit of foreign currency and the South African rand. The value of the futures contract moves up and down with this exchange rate – the level of the exchange rate determines the value of the futures contract. Currency futures contracts therefore allow participants to take a view on the movement of the exchange rate as well as to hedge against currency risk. Currency futures are used as a trading, speculating and hedging tool by all interested participants.
The new JSE futures contracts will provide the market participants with the ability to get exposure on the JSE to the exchange rate between the USD and the Zambian, Kenyan and Nigerian currencies through trading synthetic cross-currencies. For example, investors can get exposure to the exchange rate between the USD and the KES by trading both against the ZAR. To promote cross-currency trading the JSE will charge trading fees on only one of the foreign trade logs and not both.

Boosting African trade
The currency futures were launched on 3 October. The press release quotes Warren Geers, General Manager: Capital Markets at the JSE: “The JSE is very excited about this new groundbreaking initiative as we have been working on this strategy for 2 years. With Africa being a global investment destination it makes sense for the JSE as a major exchange player in Africa to be involved in providing appropriate products to mitigate currency risk and exposure when dealing in Africa.”
Trade statistics from the South African Revenue Service (SARS) show trade between South Africa and Nigeria totalled R34.4 billion, between South Africa and Zambia was nearly R18bn, and between South Africa and Kenya amounted to R4.6bn for for January-July 2014.

For more information, look at the currency futures details on the JSE website.

Nairobi Securities Exchange CEO Peter Mwangi moves to Old Mutual Kenya

The well-respected CEO of the Nairobi Securities Exchange (www.nse.co.ke), Peter Mwangi, is to take up a new job as Group CEO at financial services company Old Mutual Kenya with effect from 1 October. Mr Mwangi has served at the NSE since 24 November 2008 and his contract was renewed in 2011 but according to regulations a CEO of an exchange can only serve 2 terms.

Mr Mwangi and his top team have made huge progress in boosting the activity and standing of the NSE. Kenya’s Standard reports that major strategic projects implemented while he was CEO include:

  • Trading treasury bonds on the automated trading system,
  • Reducing the trading and settlement cycle to four days
  • Demutualizing the exchange and selling its shares to the public.

Local press reports that in a statement sent to newsrooms Mr Mwangi says he expects the bourse to build on the foundations it set to be one of the most efficient and well capitalized exchanges on the continent.

Old Mutual continues in expansionary form in Africa, and an analyst reports: “Old Mutual has been accelerating its growth agenda within the African continent, expanding its footprint both organically and inorganically and Mr. Mwangi’ s appointment comes at an exciting time for the Group as whole as he will be in charge of spearheading Old Mutual agenda in this region. In 2013, the Group announced that it plans to invest $500M in East and West Africa, and we have already seen this as the Group has established operations in Nigeria and Ghana. In Kenya, the Group acquired Faulu Kenya which is in the process of been integrated in Old Mutual’s operating model.”

Tavaziva Madzinga, Old Mutual Africa Chief Operations Officer, was quoted on CapitalFM: “With the Group’s focus on growing in East Africa, and Kenya in particular, Mwangi will guide the delivery of Old Mutual’s commitment to provide affordable insurance and banking solutions to millions of Kenyans.”

Peter Muthoka, Chairman of the Board of Directors of Old Mutual was reported as saying: “The importance of our customer cannot be emphasised enough. We are dedicated to our vision of becoming our customers’ most trusted financial partner and we look forward to working closely with Mr Mwangi in serving Kenyans to empower them financially to achieve their goals.”

According to his profile on Businessweek: Before joining the NSE Mr Mwangi had been CEO and Managing Director of Centum Investment Company, (formerly, ICDC Investment Company until it changed its name in 2008) from December 2004 to October 15, 2008. He had joined been company secretary from 2000 to 2004 and has also been Investment Manager. His working career began as a Technical Officer in the Kenya Air Force, where he was involved in the maintenance of avionic communication systems and the development of the Air Force’s information and communication technology (ICT) strategy.

His degree is BSc in Electronic Engineering from University of Nairobi. He is also a Member of Certified Public Accountant of Kenya (ICPAK) and the Institute of Certified Public Secretaries of Kenya (ICPSK) and is a Chartered Financial Analyst.

He serves as a Director of UAP Insurance Sudan Ltd., Kisii Bottlers Limited, Mount Kenya Bottlers Limited, Rift Valley Bottlers Limited, Eveready Batteries Limited, KWAL Holdings Limited and Central Depository & Settlement Corporation Limited. He serves as a Director of Nairobi Stock Exchange Ltd., and Wildlife Works Inc. He is also a member of the Institute of Directors (IOD).

Peter Mwangi

Peter Mwangi

Nairobi Securities Exchange IPO closes 12 Aug

Significant dates
24 July – IPO opens
12 Aug – IPO closes
4 Sept – Share allotment announcement
9 Sept – Self-listing ceremony
nairobisecuritiesexchange_NSE21

The Initial Public Offering (IPO) of the Nairobi Securities Exchange Limited (www.nse.co.ke) is open until 12 August. The NSE is seeking to raise KES 627 million ($7.14m) by selling up to 66,000,000 new shares (some 31% of the equity) at a price of KES 9.50 per share. The offer is open to domestic and international investors.
The IPO will culminate on 9 September with the self listing of the NSE on the Main Investment Market Segment (MIMS), making it Africa’s second security exchange after the Johannesburg Stock Exchange (www.jse.co.za) to demutualize and list itself.
Mr. Henry Rotich, Cabinet Secretary for the National Treasury, said during the IPO launch ceremony on 23 July (see press releases here): “One of the key objectives of the Capital Markets Master Plan is to build on recent market reforms to address regulatory and institutional constraints in order to strengthen market infrastructure, intermediation, oversight and governance standards. The demutualization and self-listing of the NSE form part of the government’s policies to enhance governance standards and facilitate access to our markets by a wider community of investors. “
Mr. Edward Njoroge, NSE Chairman, said: “The success of our country and the region will be mirrored both in our market and our company, the NSE. We urge all Kenyans, and other investors both far and wide, to embrace this offer with the confidence that Kenya’s growth and future success will, in many ways, be accelerated through the development of our capital markets.”
The minimum number of shares available for purchase is 500 at a cost of KES 4,750.00 (approximately $54). Thereafter purchases are in multiples of 100 shares.
The NSE is celebrating its 60th anniversary and the demutualization and share offer have taken 5 years until the Capital Markets Authority approved all in June.

Is the NSE IPO a bargain? Analysis by Ryan Hoover

Ryan Hoover of the excellent Investing in Africa blog (www.investinginafrica.net) has published his analysis of the NSE IPO here, it is well worth reading. He looks at the NSE income and expenses in the prospectus, and shows that transaction levies (fixed at 0.24% of total trade value, i.e. 0.12% on each side) are the main source of income, earning the NSE KES 405m in 2013. He breaks down the baseline earnings to come with an after-tax figure of KES 0.80 per share, giving the offer a price/ earnings (P/E) ratio of 11.8x.
Since Kenyan bonds currently yield around 11% he looks at future earnings, noting that trading volumes are up 37% in the first half of 2014. Using a forecast growth in earnings per share of 20% he believes the shares could be worth KES 19.90 in 2019 at a P/E ratio of 10x (the JSE is on P/E of 16x) and adding in dividends at KES 0.25 per year (the current level adjusted for the IPO) he sees the potential annual return at 17.4%.
Check out his excellent blog, also for the discussion following the article, which points out that the offer is likely to be over-subscribed.

Kenya pledges lower domestic rates after $8.8bn bids for its $2bn Eurobonds

Nairobi National Park (credit: Kenya Tourism Board, www.magicalkenya.com)

Nairobi National Park (credit: Kenya Tourism Board, www.magicalkenya.com)

Global investors offered a record $8.8 billion in bids for Kenya’s 5- and 10-year Eurobonds this month. The country issued $0.5bn in the 5-year bond at 5.875% and $1.5bn in the 10-year at 6.875%. The resounding success is likely to encourage more African governments to speed up plans to come to international markets for credit while cheap global rates continue and appetite is high for frontier markets debt.

This is Africa’s biggest Eurobond issue to date. According to the BBC, investors from the US took about 67% of the issue and UK investors about 25%. Bond rates on Kenya’s 10-year debt in issue came down since the new issue was first announced on 16 June to 6.41% which is 381 basis points over the similarly dated US treasuries, according to Bloomberg.

President Uhuru Kenyatta was reported on Reuters telling a news conference: “By accessing these external funds, we will reduce government borrowing from the domestic markets, thereby helping drive down interest rates which should boost investment, spur economic growth, provide more employment opportunities to our people.” He described the sale as “a vote of confidence”. At a state of the economy address on 25 June he said the funds would be used prudently to fund infrastructure including transport and energy and to fund agriculture.

Cabinet secretary for the National Treasury (equivalent to Finance Minister) Henry Rotich said: “Investors were impressed with the management of our economy and perceived it to be very strong.” He said it would diversify government’s financing for development programmes. He also said the Government would come back to the markets in the next fiscal year (starting 1 July) but may consider a sukuk bond (see here for UK’s £200 million sukuk bond success) or a diaspora bond. The sovereign is also set to be a benchmark for Kenyan firms issuing corporate bonds on international markets, similar to the success of Nigeria’s sovereign issue.

Rotich said that from 8 July the Central Bank of Kenya would start setting a new reference rate for banks, the Kenya Banks Reference Rate. Banks would have to use this, although they would still be able to add risk premiums according to the creditworthiness of borrowers. This is also expected to lower interest costs and the rate would be set according to the average of the CBK’s main lending rate and the average yield on benchmark 91-day Treasury Bills every 6 months.

The Government announced its 2014/15 budget this month and forecast a budget deficit of 7.4% of gross domestic product (GDP) and local borrowing of KES190.8bn ($2.18bn) or 4.1% of GDP, according to Reuters. Macro-economist Rotich was a colleague when Kenyatta was Finance Minister and the two are working together to speed up Kenya’s economic growth to over 10%. According to a story in the Financial Times blog Beyond Brics, Rotich says Kenya will grow at 5.8% this year and 6.4% next year, however the World Bank has just cut its forecast from an earlier 5.3% forecast for this year and forecasts 4.7% for both years.

The blog cites the World Bank report: “The new projections reflect the effects of the drought, the deteriorating security situation, the low level of budget execution, and tighter global credit as the US Federal Reserve winds down its expansive monetary policy.”

The World Bank says drought has cost Kenya $12bn over the last 10 years and that foreign direct investment (FDI) is only 1% of GDP. The blog reports: “The World Bank is also increasingly preoccupied by the impact of inequality on growth and stability.” The World Bank is optimistic and is backing Kenya with a $4bn programme, double the Eurobond.

Kenya plans $43bn of infrastructure by 2017, but there are questions as to whether they get value for money in a $3.7bn deal with Chinese for new rail and rolling stock. Kenya is likely to become a middle-income country by September after re-basing because of statistical revisions.

Nairobi Securities Exchange plans to offer 38% of shares in June IPO

nairobisecuritiesexchange_NSE21

The Nairobi Securities Exchange (www.nse.co.ke) is pushing ahead fast with its demutualization plans and will sell up to a 38% stake in an initial public offering (IPO) in June. According to a report on Reuters, NSE chief executive Peter Mwangi said the NSE will offer up to 81 million shares, subject to regulatory approval.
The offer price will be set by the IPO advisors closer to the offer date. The bourse will use the funds for new products and enhance transparency.
Reuters quoted Mwangi saying: “We want to list through an IPO on the main market. We need to open this listing before 30 June. That conversion from a private to a public company will position us to be a very effective player.”
“We are playing in a sweet spot where the frontier funds think Africa is rising. East Africa is a hot spot on the African map and we are the gateway into that east African region.”

Soaring profits, new products
The NSE’s pretax profit more than doubled to KES 379m shillings last year from 2012. It has been lifted by a surge in trading turnover after the 4 Mar 2013 presidential election went peacefully. The dynamic Nairobi exchange is a mutual company owned by its stockbrokers, and demutualization is the process converting into a private for-profit company, as reported on this blog. The ordinary shares have a nominal (par) value of KES 4 shillings ($0.05) each.
Kenya’s Capital Markets Authority is reviewing the exchange’s advanced plans to offer currency and interest-rates futures and options. The NSE futures market will offer standardized contracts for currency futures that will be traded. Mwangi said: “We are seeing more and more international investors who might want to invest in Kenya and they might want to hedge the currency risk.” Local banks offer foreign-exchange forward contracts, which are negotiated directly with buyers, but they cannot be traded.
Mwangi added that part of the funds raised in the IPO will be used to bankroll new products such as derivatives, exchange-traded funds (ETFs) and Sharia-compliant indexes. The NSE has already led the way with a number of FTSE-branded index products and is working with the CMA and CDSC to introduce a real estate investment trust (REIT) market in Kenya and trading platform and a futures and commodities exchange.

Diversifying income
The 60-year-old Nairobi stock exchange has been diversifying through new sources of revenue including sales of publications, provision of services through the Broker Back Office (BBO) and data-vending. It bought a prime commercial property in Nairobi’s Westlands area to tap into rental income, according to a report in Standard Digital.
The region is enjoying many benefits from increasing regional integration under the East African Community (EAC). The Nairobi bourse is a key player in the East African Securities Exchange Association (EASEA), which aims to standardize regulations and operations within the region to make cross-border investing easier. Members are the Dar es Salaam Stock Exchange (DSE), the Rwanda Stock Exchange (RSE), the Uganda Securities Exchange (USE), and the Central Depository and Settlement Corporation (CDSC). It also has a memorandum of understanding with the Somalia Stock Exchange Investment Corporation (SSE) under which it will have primary responsibility for the technical development of the Somalia Stock Exchange including identifying the most suitable partners and expertise.
Regional integration has also boosted expansion among listed firms and investor confidence after the discovery large quantities of gas and oil across several east African countries. There are many cross listing between the exchanges.
Mwangi said they wanted to attract more listings on the NSE’s Growth Enterprise Market (GEMS) which is aimed at small firms wishing to list their shares. There is only one listing, property developer Home Afrika so far. The NSE hopes to attract more listings through easier listing terms such as allowing business owners to offer a minimum of 15% if the shares in the market. Mwangi told family business owners who may be reluctant to lose control: “With 85% you have effective control of your company but you enjoy all the advantages of being listed. We are in a sense offering the best of both worlds.”
The NSE is a key member of the African Securities Exchanges Association and an affiliate member of the World Federation of Exchanges (WFE) and intends to become a full member.

Nairobi Securities Exchange scores megaprofits and heads for own IPO and listing


The Nairobi Securities Exchange (www.nse.co.ke) celebrated its 60th annual general meeting by taking key decisions to advance its demutualization into the final stages. It also made record profits for the financial year to 31 Dec 2013 and paid its first dividend to shareholders.
NSE Chairman Eddy Njoroge was one of the directors re-elected at the 60th annual general meeting of the exchange, held last week. He thanked the NSE shareholders for passing key resolutions and said the demutualization process is nearly finished with the next step the NSE doing an initial public offer (IPO) and then listing its shares for trading on itself. According to a press release, he noted that the Board had appointed Transaction Advisors who are currently working towards the Self-Listing of the Exchange through an IPO on the Main Investment Market Segment (MIMS) of the NSE, before the end of June 2014: “The Capital Markets Authority has received our final application, and we expect formal approval to be granted by the regulator shortly. This will open the door to the long-anticipated self-listing.
“The NSE’s impending demutualization will provide further impetus for the exchange to support the attainment of Vision 2030, further positioning our capital markets as the hub for East and Central Africa. The NSE IPO will enable a wide cross-section of Kenyans to both own a piece of the exchange and to share in the future financial success of this company with a very rich national heritage”.
The NSE had total income of KES 622.7 million ($7.2m), up 62% from the previous year’s KES 384.3m. Net profit soared 210% to KES 263m, up from KES84.8m and the highest in the bourse’s 60-year history. The total value of trading in equities was up 79% to KES 155.8 billion ($1.8bn) from KES86.8 billion and market capitalization was up 50% to KES 1.9 trillion ($22.6bn). The AGM resolved to pay a first dividend of KES 2 per share.
According to another press release, Chief Executive Peter Mwangi said: “Our strong financial performance in 2013 was a result of the very strong market performance and the efforts of management to diversify revenue streams from the traditional sources of transaction levy and annual listing”.

Demutualization – the resolutions
Demutualization is the process through which an exchange stops being a mutual company, often a company limited by guarantee, with the stockbrokers and other stakeholders as members. Instead it turns into a for-profit limited company with shareholders. This can help with management and with capital raising to invest in new technology. The first demutualization was Stockholm Stock Exchange in 1993 and since then most top world exchanges have followed. Some observers ask if for-profit exchanges really work in issuers’ and investors’ interest.
Special resolutions passed at the Nairobi SE AGM were:
1. Subject to approval by the CMA, the share capital is increased from KES 25m (25m x ordinary shares of KES 1 each) to KES 850m by creating 825m new shares which rank pari passu
2. After this, the new 850m shares should be consolidated into 212.5m ordinary shares of KES 4 each.
3. Subject to approval by Registrar of Companies and CMA, the company shall be turned from a private into a public company and new articles of association be adopted, signed and registered.
4. Subject to approval where applicable, part of the credit on the company’s revenue reserve be capitalized value KES 490m to pay in full and at par for 122.5m ordinary shares of KES 4 each. These would be issued as fully paid among the registered shareholders of the company
5. Up to 2.5m ordinary shares of KES 4 each would be offered for subscription to employees of the company.
6. Subject to approval by relevant authorities, up to 212.5m ordinary shares be approved for listing on MIMS. Up to 81.375m ordinary shares should be offered for subscription by the public, and the company will issue a prospectus.

The Africa Report food for thought on the “great game” in East Africa

“East Africa is the most promising regional bloc. [It] has registered between 5 and 6% growth annually for the past decade. We estimate that regional gross domestic product will expand 18-fold by the middle of the century, from $185bn in 2010 to $3.5trn by 2050. This era is comparable to the period immediately after independence.” This is an intriguing article just published by The Africa Report, quoting Gabriel Negatu, regional director of the African Development Bank.
The article, by Parselelo Kantai in Nairobi and Juba, additional reporting by Patrick Smith in Addis Ababa, talks of the four leaders that dominate the East African “chessboard”. Here are a few sample quotes: “At international gatherings such as the African Union summit in Addis Ababa, the four gravitate towards each other: Ethiopia’s Hailemariam Desalegn, Kenya’s Uhuru Kenyatta, Rwanda’s Paul Kagame and Uganda’s Yoweri Museveni.
“Differing in age and political experience, they argue about many details but there is a critical point of consensus. If East Africa is to grasp the economic opportunities now available, there must be a determined effort to integrate its markets and economies, even if that means making concessions and compromises in the short term.
“All four run interventionist foreign policies – Ethiopia, Kenya and Uganda sent troops into Somalia, while Rwandan and Ugandan troops have been both invited to and expelled from the Democratic Republic of Congo.
“They all favour a statist hand on the economic tiller, but they are all building up business classes on whose political loyalty they can rely. All have supported Kenyatta in his attempts to avoid prosecution at the International Criminal Court.
“Economic growth and breaking away from dependence on Western markets are common imperatives. None of them enthuse about democracy, particularly in its Western, liberal variants.”
The article also gives insights on Uganda’s $8bn oil infrastructure deal of 5 February that will help reshape the region and its economies and 2 giant railway projects due for completion by 2020. It highlights the need for jobs and services to keep up with growth, and China’s giant role in reshaping the region.
It highlights regional diplomatic tensions too. The writers also point to joint pressure on Tanzania, sometimes seen as the laggard in the regionalization project, and give insightful perspective on the lessons from the South Sudan crisis, as well as letting key South Sudanese voices be heard. They write:
“For governments tempted to ignore the new underclass, South Sudan serves as a cautionary tale. An abiding weakness of governments in East Africa is their ethnocentrism: their tendency to favour crassly their ethnic support bases in the allocation of public sector jobs, appointments, commercial opportunities and government tenders.
“South Sudan’s crisis may have been exacerbated by its weak institutions, but the best illustration of this was the government’s failure to rein in cronyism, corruption and ethnic rivalries in the state sector.
“In South Sudan, these weaknesses caused a war. In other countries in the region, they produce bad elections and policy-making, and hold back burgeoning economies.”
The article speaks of the determination not to be proxies for foreign powers in any conflict and says the South Sudan crisis could give an opportunity to rebuild a state more suited to local realities.
For more, we recommend that you read the article in full here.