JSE/ Nairobi MOU to deepen ties for African investment
The Jamaica Stock Exchange (JSE), in paving the way for more cross-border listings locally, has signed its latest memorandum of understanding (MOU) with the Nairobi Securities Exchange (NSE) in Kenya in a move to forge stronger ties with Africa.
In a virtual signing ceremony on Monday, managing director of the JSE Marlene Street Forrest in welcoming the historic partnership said it unlocks an enormous opportunity for the cross listing of stocks and other investments by locals in the African country and vice versa. This, as it also opens avenues for closer collaboration guided by mutually agreed principles.
“We entered this partnership because the visions and strategies of the NSE are in sync with those of the JSE and as a result, we have identified this as a partnership that will do well. Having also noticed some similar products and services in both markets, our aim is to capitalise on these,” Street Forrest further said as she pointed to the training institute and the derivatives market among the top areas of focus.
“This signing forms part of our strategic plan and I know that it will [trickle down] to the growth and development of both markets,” she added.
Expressing similar sentiments Geoffrey Odundo, CEO of the NSE, in calling for scaled-up relationships in light of the cultural similarities, said this offsets the need to have more tangible deliverables.
“For us this is a great opportunity from which we have a lot to learn from each other. We want to make this MOU active by starting with some of the easier discussions around products and more importantly, about building on the liquidity of our markets through cross listing,” he said in his remarks at the virtual launch.
The JSE, now partnering with a growing list of countries across Africa, last year signed an MOU with Ghana and remains in dialogue with other states such as Sierra Leon as it works to strengthen African-Caribbean relations. Banking on the tenets of commonality, a shared past and common objectives, markets across both regions believe they can work together for the common good.
Ugas Mohamed, chair of the Capital Markets Authority in Kenya, in outlining the key areas being targeted for collaboration under the recent MOU, cited them as including capacity building through knowledge transfer, joint training programmes and possible cross listings.
With the NSE being particularly interested in the JSE’s successful Junior Market model, the entity is looking to learn and adopt best practices around the tax incentives given to these smaller companies listed on the exchange as it looks to fast-track similar growth for the MSME sector in Kenya.
The Kenyan exchange currently boasts an equity market capitalisation of about US$9 billion and a monthly equity turnover of US$100 million. Its market is made up of a diverse range of products across real estate investment funds, unit trusts and green bonds, among others.
The JSE, looking to build out its green bond portfolio in 2024, identified this among one of the areas in which it has great interest.
“As a regulator of the Kenyan capital market we are happy about the signing of this collaboration agreement that will add more depth, scale and diversity while facilitating improved uptake of capital market products and services. We look forward to the implementation of this MOU as we commit to support the NSE in ensuring that the benefits are to the benefit of both markets,” Mohamed said.
Lauding the occasion as a decisive moment and pivotal step in south-to-south collaborations, Kiprono Kittony, chair of the NSE, further said he looks forward to the strengthening of economic ties and the unlocking of new opportunities for both markets.
“As the world becomes increasingly connected it is imperative for stock exchanges to work together to enhance liquidity to facilitate cross-border investments and to provide investors with diversified opportunities. I am a strong believer that markets across the world have immense opportunities to learn from each other and to accelerate growth in their respective jurisdictions. I believe this MOU will therefore allow us to expose various opportunities in our markets as it engage participants on how to pursue them. The NSE looks forward to benefiting from the JSE’s extensive experience in various areas,” he added.