Answer to Question #96859 in Finance for ABU

Question

Discuss the role of Nairobi Securities Exchange in the Kenyan economy (10 marks)

Answer 1

The Nairobi Securities Exchange (NSO) was founded in 1954. The NSO is a Kenya-based leading African exchange. For the first time, it is the market for local and international investors looking to be exposed to economic growth in Kenya and Africa. The NSO canceled and self-listed the NSE in 2014. Its board and management team comprises some of Africa's leading capital market professionals. The NSO plays an important role in the development of Kenya's economy by encouraging savings and investment, as well as helping local and foreign companies to obtain cost-effective capital.. The NSO operates under the jurisdiction of the Capital Markets Authority of Kenya. It is a full member of the World Exchange Federation, the African Securities Exchange Association (ASEA) and a founding member of the East African Securities Exchange Association (EASEA).

Role of NSO

The exchange helps companies gain capital from selling shares to the investment public Companies. This has a direct impact on the economy as many people are employed as companies expand, decrease the unemployment problem. The Nairobi Securities Exchange provides for an avenue of resource mobilization directly from the public, this lowers the cost of raising capital and thus more profits from less capital this has the effect of boosting the economy.

NSO provides a timely and accurate, reliable and reasonable view of the market. Protect their investments by ensuring that issuers are not fraudulent or harm the investor. Investors need transparency of the stock exchange which would enable them to make integral based monitoring of their activities.

It helps the public to invest their savings in high yielding economic sectors which will benefit the individual and the national economy. It will be Mobilizing savings for investment. The Nairobi Stock Exchange provides the government with a platform for policy implementation and capital rising.

NSO provides a general trend in the economy. ex. Price index, stock exchange, shares rise and fall.