We can only build on NSE bourse feats

The introduction of trading in the Nairobi Securities Exchange (NSE) is a step in further cementing Kenya’s position as the financial hub of Africa. Key in this implementation is focusing on trading volumes and making efforts for it to increase.

For the trading volume in the NSE to consistently increase and probably rival that of the developed nations, several actions need to be taken. They include legislation and enforcement of stricter penalties for economic crimes related to financial market fraud, a more proactive approach by the NSE to attract companies in getting listed and media optimism of Kenyan companies.

Economic crimes such as insider trading and false reporting of financial statements affect several stock markets across the globe. Making and speedy enforcement of stricter laws is likely to increase trader confidence in the NSE and give it an edge over other stock markets.

Increase in listed companies

Traders are not interested in holding a stock for years. They want to make money on the price differences of a stock within a short duration — days, hours or even minutes. Five stocks have accounted for about 90 per cent of the total volume of trade in the NSE. It is, therefore, evident that the opportunities for traders at the bourse are limited. 

For traders to see more opportunities to make money, an increase in the listed companies is the way to go. The NSE should, therefore, be more proactive in wooing companies to list.

Mass media companies have a role to play in this. More optimistic but factual coverage of key companies operating in the country and oncoming listings in the NSE would do the economy a world of good.

They say write your failures in the sand and engrave your successes in stone. Kenya has a lot to be proud of and, with appropriate coordinated action, there promises to be further successes to engrave.

Mr Njeru, a financial expert, is the director of Africa Afya Healthcare. [email protected]