Uphill task awaiting new EA bourse bosses

Saturday February 10 2024
Nairobi Securities Exchange.

Nairobi Securities Exchange trading floor. PHOTO | NMG


Kenya and Tanzania bourses are set for changes in top management after the expiry of the contracts of Geoffrey Odundo and Moremi Marwa, respectively, with their replacements facing an uphill task of reforming and restoring investor confidence in stockmarkets struggling to attract new investors.

The Nairobi Securities Exchange (NSE) is expected to announce Mr Odundo’s replacement in two weeks after completion of the recruitment process by consultancy firm Cedar Africa Group.

“Three names should be forwarded to the board from the ongoing process ... from the consultants to the human resources committees and thence to the board for an announcement,” said a source privy to the process.

Mr Odundo’s term expires March 1, after serving a one-year extension granted by the NSE board to ensure a smooth transition. He has been at the helm of the NSE since March 3, 2015.

Read: Cross-listed firms hard-hit by drop in trade volumes

Going by the data from the Capital Markets Authority (CMA), Mr Odundo’s successor faces the monumental task of bolstering the performance of an exchange that has not attracted new listings in close to a decade and the NSE 20-Share Index has declined by 70 percent to a low of 1,501.16 in 2023 from a high of 5,112.65 in 2014.


Equity turnover has declined by 59 percent to Ksh88.23 billion ($551.43 million) from Ksh215.73 billion ($1.34 billion) while the value of listed shares (market capitalisation) has fallen 37.82 percent to Ksh1.43 trillion ($8.93 billion) from Ksh2.3 billion ($14.37 billion) in the period under review (2014-2023).

The exchange is bearing the brunt of rising inflation, growing interest rates, a depreciating shilling, high cost of living and dollar shortage which are negatively impacting local and foreign investments.

According to disclosures by the central bank, stock trading on the NSE has significantly declined as a result of the big firms’ dominance, lack of new listings and falling investor demand.

Dar es Salaam Stock Exchange (DSE) started the process of recruiting a new CEO in August 2022 after the contract of Mr Marwa ended in May 2022.

Mr Marwa who was appointed to the position on May 20, 2013, and exited May 20, 2022 after nine years at the helm.

He was replaced by Mary Mniwasa, on an acting capacity.

The DSE is seeking to increase the number of listings on the bourse and provide a responsive securities exchange that promotes economic development through offering a range of attractive and cost-effective products and services, its 2022 annual report shows.

Read: Capital flight shakes East Africa stock markets

In Kigali, the Rwanda Stock Exchange (RSE) has 10 listed firms of which five are cross listed from the Nairobi Securities Exchange and Johannesburg Stock Exchange (JSE). The bourse is also grappling with a initial public offering (IPO) drought.

In June 2022, the NSE 20-Share index — the benchmark index — fell below 1,700 for the first time in 20 years, indicating muted activity and free fall of prices on the bourse.

NSE demutualised and self-listed in 2014 by allowing the public to own shares in the company which was previously wholly owned by trading intermediaries. But many of the stockbrokers and investment banks — which after listing each held a stake of 2.7 percent in the bourse — have since sold their shares either fully or in part.

Mr Odundo was hired as a CEO of the exchange in March 2015 from Kingdom Securities, the stock trading arm of the Co-operative Bank of Kenya. His term ended in March 2023, but the NSE board asked for a one-year extension after the Capital Markets Authority (CMA) turned down a petition seeking to grant NSE powers to determine the term limits for their Chief Executives and board chairs.

NSE, which is operating both as a licensee of the CMA and a listed entity, was seeking designation as a fully listed firm so as to be regulated as a public firm, allowing it the freedom to prescribe the term limits for its CEO and Chairman.

The NSE chief is expected to serve for a maximum of eight years and the chairperson for two years under CMA regulations.

Read: Foreign investors pull out $1m from NSE in extended flight

DSE, which was incorporated in 1996 and started operations on April 15, 1998, issued shares to the public and thereafter self-listed its shares on July 12, 2016.

Mr Bwiso who has been at the helm of the USE for nine years joined the exchange as Chief Executive in February 2015, tasked with the responsibility of demutualizing the exchange and increasing the number of listings on the bourse.

RSE has established an investment clinic programme to train, nurture and prepare Small and Medium-sized enterprises (SMEs) for listing on the main board at the Rwanda Stock Exchange (RSE).