NAIROBI Nov 5 Kenya is processing applications
for licences to operate derivatives exchanges from both local
and foreign firms, the capital markets regulator said on
Tuesday, as Nairobi inches towards its goal of becoming an
international financial centre.
Paul Muthaura, acting chief executive of the Capital Markets
Authority (CMA), told Reuters after a media briefing that such
exchanges were vital to that plan, but he did not say when
operators would be chosen nor when exchanges would open.
The exchanges will offer futures and other derivatives on
minerals and commodities as well as currencies and interest
rates, as Kenya tries to boost its financial services market
share in east Africa, a region of more than 120 million people.
Agriculture makes up nearly a quarter of the country's $35
billion-a-year economy, employing two thirds of the population
of 40 million people.
The government is also planning to tap Kenya's mining
sector, partly by carrying out of an aerial survey of mineral
resources and establishing a minerals exchange.
CMA is working with the country's 47 regional governments,
established after elections in March, to allow them to raise
funds in the capital markets, Muthaura said.
Robust growth in Kenya's capital markets has been driven in
recent years by domestic economic expansion at home, and has
pulled in yield-hungry offshore investors.
Shares on the Nairobi Securities Exchange (NSE) jumped 30
percent in the year to September, with foreign inflows hitting a
record 9.8 billion shillings ($114.55 million) in August, and
average monthly bond turnover rose to 39 billion shillings in
2013 from 9 billion in 2009.
The investment climate was helped by this year's elections
passing peaceful, unlike the 2007 poll when 1,200 people were
killed in post electoral violence.
And analysts say that the country is unlikely to see
long-term investors pull money out because of the September
attack on a Nairobi shopping mall in which more than 60 people
were shot by al Qaeda-linked militants.
Still, the country has a long way to go to improve its
ability to attract equity listings and debt securities.
The World Bank ranks Kenya 129 out 189 countries for ease of
doing business, way below the island state of Mauritius, which
is already an established offshore financial centre.
Muthaura said they were addressing those shortfalls through
various initiatives such as legal reform.
An amended capital markets law that will make it easier to
prosecute market manipulators was going through the final stages
of the country's parliament, he said.