From: barnhart@ddsw1.MCS.COM (Mr. Aaron Barnhart)
Subject: IPS:KENYA: STOCK EXCHANGE AIMS HIGH, BUT CRITICS SAY HELD BACK
Date: Sat, 21 Nov 1992 16:43:54 GMT
Organization: Evanston, Illinois, U.S.A.

Copyright Inter Press Service 1992, all rights reserved.  Permission to re-
print within 7 days of original date only with permission from 'newsdesk'.

Area: Latin America
Title: KENYA: STOCK EXCHANGE AIMS HIGH, BUT CRITICS SAY HELD BACK


an inter press service feature

by horace awori

nairobi, nov 14 (ips) -- a year after the nairobi stock exchange
(nse) adopted the open-cry trading system, it is set to look
further afield.

''we hope that in the near future, we will have links with
international centres like the johannesburg and singapore stock
exchanges'', says jimmah mbaru, new chair of the exchange.

the exchange is full of plans, according to mbaru, including
trading in short term government securities and an expansion of
the trading floor along with the building of a new office.

''the nse will also continue to play a role in the privatisation
programme of viable and profitable parastatals'', he told ips.

mbaru hopes that the stock exchange will be a successful
''lobby for the private sector and to encourage government to
get out of the commercial sector because it is better handled by
the private sector''.

the nse has already recorded success in the lobby for the
abolition of capital gains tax that was hampering trading on the
exchange.

last year, the exchange -- a means for companies and the
government to raise investments -- traded a total of 16.7
million shares worth 8.5 million dollars with the index going up
from 915.34 in 1990 to 958.29 by december 1991. market
capitalisation in 1991 was 600 million dollars.

this year it began trading in convertible foreign exchange
bearer certificates in addition to stabilising their premium
prices.

''all this has happened after the change over from the
outmoded call-over to the open cry system where trading is done
on the boards'', says mbaru .

but he does not share the disparaging remarks of ngeny
karuiki, his predecessor, over the capital markets authority
(cma) set up in 1990.

karuiki had described the authority as ''more of an obstacle
than a facilitator, especially in the privatisation of
parastatals''.

the former stock exchange chair had argued that the cma
''should be a more facilitating than regulatory'' authority,
having nothing to do with the pricing of shares. (more/ips)


kenya: stock (2)

karuiki cited the united states among countries where
regulatory bodies only intervened in cases of fraud.

he said privatisation plans, currently undertaken by the
kenya government were ''cosmetic and tailored to please the
world bank and the international monetary fund''.

''there has not been a genuine sale of government shares on
the nse'', karuiki charged.

his criticism of the ''meddling nature of the cma'' has got
backing in dickson gachuche, managing director of kenya finance
corporation which went public last year.

the cma should ''not assume that every firm going public
wants to cheat the public'', argues gachuche.

darin gunesekera, the authority's adviser replied to the
criticisms saying: ''it is not fair to say the authority has
done nothing because it has played a major role in getting most
of the fiscal changes needed''.

the cma, he added, played a big part in making the ''exchange
more visible and transparent in its operations'', especially
with the adoption of the open-cry trading system.

gunesekera argued that the cma was set up to stimulate the
development of long term debt and equity markets.

part of its mandate was also the creation of an active money
market covering inter-bank markets and secondary markets for
government securities.

regarding accusations that no real sale of parastatals has
taken place, the cma points to the recent sale of 18 million
shares of the housing finance company of kenya which represented
40 percent of the parastatal's equity.

another parastatal slated for public sale of 40 percent
of its shares is uchumi supermarkets.

justin mwarania, a commerce lecturer at the university of
nairobi agrees with karuiki, describing the cma as ''a
gear-and-break system that has become a curse to the stock
market''.

mwarania urges however that privatisation ''should be gradual
because kenyans do not have resources to be active participants
in the process at the moment''. (end/ips/ha/ro/ar/92)