Friday, October 19, 2007

Is the Nairobi Stock Exchange a fish market? Amos Kimunya doesn't think so...


This was the unfortunate retort made by finance minister Hon. Amos Kimunya in an attempt to respond to the ODM presidential candidate's comment that the NSE is a playground for selected individuals to make money from.

Looking at those remarks by Hon. Raila Odinga, one might say that they are a long shot and uncalled for; others might rubbish them as mere propaganda. Upon closer scrutiny, however, one begins to wonder what would inspire him to harbour such strong sentiments against the NSE.

Being an investor at the NSE, I strongly connect with the sentiments echoed by Hon. Raila, and looking at the daily goings-on at the stock exchange, I feel like I have been perenially getting the shorter end of the stick. And I do mean this literally.

First and foremost, considering the issue of privatization of state companies through the initial public offers (IPOs), my assumption would be that it is done to empower the local mwananchi. Sadly, however, reflecting on the past IPOs (KENGEN, KENYA-RE and the second offer of the Mumias shares) begs the one million dollar question: what percentage of the total shares floated were actually allocated to the regular mwananchi, as opposed to the copious amounts slurped up by the corporate world? Many Kenyans would agree with me that the paltry 200 shares that were allocated per individual “investor” (despite applying for the minimum number of shares allocated per individual prior to the start of the IPO, which, ironically, is much higher than the amount finally allocated) is a scornful and contemptuous joke.

Unless the unit price per share rises by a staggering Ksh. 1 million, whereupon we would all be laughing to the bank (but alas, that is not about to happen any time soon), I am left wondering what the hell I would do with a bloody 200 shares. Some of the monolithic companies, including the TransCentury Group (which we all know is affiliated to the first family) with huge vested interest in the NSE got the full amount of shares they applied for, oftentimes numbering in the millions (just to be modest, since the actual figures are bound to be outrageous).

And then, why is it the norm that the first day of trading after an IPO, when the share prices usually skyrocket by as much as 300 or even 400%, is usually reserved for a selected few? These chosen few, ladies and gentlemen, are the group masquerading as corporate investors and their only goal is to manipulate the NSE and unsuspecting Kenyans. Surely, Hon. Raila Odinga’s observation can't be balderdash, as his detractors would like us to think, especially when you look at the NSE in this perspective.

Secondly, I have never seen a football match in which the referee is also an active player. This, unfortunately, is commonplace at the NSE. A cursory glance at the board of the NSE reveals that it is composed of the very same individuals who own the investment banks that buy and trade shares at the NSE. Is not that conflict of interest? In that regard, then, Kimunya's assessment that the NSE is not a fish market is spot-on because in a fish market, you certainly will not find the fisherman moonlighting as the fishmonger.

Lastly, I am inclined to believe Kimunya when he claims that the international community does not have confidence in the opposition. This is simply because the government that Kenyans elected in 2002 all defected to a man, leaving PANU/Narc-Kenya/GNU as the ruling party and official opposition at once.

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