exchange magazine 1

8/10/2019 Exchange Magazine 1

1/18Exchange 2008 I 2nd Quarter I 1

Quarter 2Issue 2008


2/18I Exchange 2008 I 2nd Quarter2



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ELEGANCE

Style is rarely ever spoken of



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.



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



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



Regional Analysis



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.



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



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.





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.



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.



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.



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.

exchange magazine 1

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