Reignite interest in stock market

A few days ago, I received a notification requiring me to go update my Central Depository and Settlement Corporation (CDSC )account. This is the account that every shareholder has that stores information on the shares she or he has in companies listed on the Nairobi Securities Exchange #ticker:NSE .

The notification was a reminder that several years ago I opened an account and bought shares. Later I heard discussions with several commentators on the state of the stock exchange and the government's role in it.

It emerged that over the last nine years there has been no initial public offering (IPO) on the exchange. This is an indicator of the focus that the current government has put on the bourse, especially when compared with the Narc government which had numerous IPOs.

Before Narc, owning of shares was a preserve of the rich. Ordinary citizens defined property in the form of land and other physical goods. Shares and intangible assets were not in their vocabulary.

The economic recovery strategies that the Narc government under President Mwai Kibaki put in place saw many Kenyans get interested in and join trade in the stock market. While this interest has waned in recent years, as evidenced by the fact that the CDSC has to write to people asking them to update and keep their account active, the importance of the bourse cannot be gainsaid.

With the deepening of the economy and greater focus on technology, the place of the capital markets is ever more in focus.

With the elections just a few short months away and with the consensus that the economy requires innovative thinking to be revived, it is interesting that this far the political parties contesting this year’s elections have had almost nothing to say about the stock exchange.

The Covid-19 pandemic demonstrated the place of technology in facilitating activities in society. It also accelerated our transition to the digital cashless economy. Before it, Kenyans were used to carrying cash in their wallets and pockets. However, the pandemic led to cashless transactions irrespective of the volume of trade.

Sustaining this requires that we relook our economy and deepen options for digital growth. The stock market is an important area to focus on.

The new government that gets elected in August must find ways of reactivating the interests of Kenyans in the stock market. This requires several approaches.

Firstly, a campaign to promote the bourse as an investment option, demonstrating its benefits and the procedures for engaging with it.

This is particularly important for the youth who have embraced technology in their operations. Providing stock market literacy to them will help debunk the myth that the market is complicated and for the rich.

Secondly, the government needs to identify companies that can be listed, through IPOs, in the market and encourage such companies to list. IPOs generate excitement and result to many new entrants in the stock market.

Third is a greater focus on corporate governance and its regulation. By doing so, the health of most companies will improve and with it greater returns to shareholders and thus renewed and improved interest in the stock market.

The stock market also requires to be internationalised through aggressive marketing and improvement of the investment climate in the country to attract more foreign investors. This will make it more competitive as compared to other stock markets across the world.

The next election is important for another reason. The quality of that election and the environment in which it is conducted will either support the efforts to revive the economy and with it the growth of the market or will scare investors and dampen the efforts to ensure that the bourse is as vibrant as it was a decade ago.

By focusing on the stock market Kenyans will see beyond land as the primary form of property and accelerate the country’s journey towards enhanced economic growth.