Privatization of Nairobi Stock Exchange

Kenya is considering speeding up plans to privatize the Nairobi Stock Exchange (, the biggest market in East Africa. The aim is initially that stockbrokers would acquire the large majority of the shares.

The NSE is already relatively advanced, with an Automated Trading System that also handles bonds. It is linked to the central depositories of the Central Depository and Settlement Corporation (CDSC) and the Central Bank of Kenya (CBK), which could lead to automated trading of treasury bills and other debt instruments.

Kenya’s Finance Permanent Secretary Joseph Kinyua was reported in local media recently as saying privatization could come earlier than expected as the Government moves to improve the country’s capital markets. First step would be to turn the stock exchange into a company via demutualization, separating its ownership from management to foster transparency.

Previously investor confidence had been hit by collapse of a number of some stockbroker firms, but regulators and others have since been taking some action.

2 Responses to “Privatization of Nairobi Stock Exchange”

  1. rob stangroom

    Does the NSE make a profit? Will the demutualisation result in a big market technical partner coming in? How exactly will the market benefit? Not enough info I am afraid. I doubt it will proceed smoothly given the nature of the Kenyan market, but I hope it does. In the absence of a critical mass of investors wanting to pay for subscription products how is the NSE going to “grow the value of existing business lines”. Rent seeking from trading information? The relationship between the NSE and CMA will be by way of MOU. The formula for share allocation is to be agreed by the members and Government will still be a shareholder + there’s likely to be a capital raise. Recipe for long delays. I say nothing will happen in 2010.

  2. Tom Minney

    A critical question is whether the market will be dominated by stockbrokers or have a structure that gives retail and insitutional investors, issuers and other stakeholders a strong voice. Anything that gives investors and issuers a better deal is the most important, and this includes looking for more liquidity. That said, Nairobi SE seems one of the more dynamic exchanges in Africa.