Wednesday, August 8, 2012

Diplomat to start Somalia's first stock market

 

NSE to give expertise to Somalia stock exchange

Posted by on August 8, 2012

NSE Chief Executive Officer Peter Mwangi/ FILE
NAIROBI, Kenya, Aug 8 – The Nairobi Securities Exchange (NSE) has entered into a Memorandum of Understanding (MoU) with the Somalia Stock Exchange Investment Corporation (SSE) for technical support in setting up a stock market in the lawless neighbouring country.
NSE Chief Executive Officer Peter Mwangi noted that the Memorandum of Understanding was the first step in the journey that would see the development and implementation of a self sustaining stock exchange in Somalia.
“The NSE shall have primary responsibility for the technical development of the Somalia Stock Exchange including identifying the most suitable partners and expertise for the operations of the Somalia Stock Exchange,” he said.
Deputy Permanent Representative of Somalia to the United Nations Idd Mohamed, who was the principal signing on behalf of the SSE stated, “The SSE shall be responsible for the implementation of the Somalia Stock Exchange and its subsequent operation. We are very pleased that NSE has accepted to be our technical partners.”
“We are aware that NSE is a founding member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA),” he noted.
He pointed out that the NSE has been involved in the development of other markets in the region.
“Through EASEA, the regulations and standards of the EAC stock exchanges have progressively been harmonized. The members of EASEA also share the same technology provider,” he added.
Both the NSE and the SSE will explore the location of the Exchange, development of human capital, the trading mechanism and the development of Shariah products and services.
Mwangi noted that the NSE is pleased to assist the people of Somalia to develop their capital markets and particularly to assist in the integration of Kenyan markets in Eastern Africa.

2:10pm EDT
* May initially be based in the Kenyan capital
* Sees banks and telecoms listing their shares
* Regional firms eyeing entry into Somalia
NAIROBI, Aug 8 (Reuters) - A Somali diplomat wants to start the Horn of Africa's first ever stock exchange in neighbouring Kenya and he expects telecom, banking and money transfer firms that have defied decades of conflict to list their shares on the bourse.
"Somalis are very enterprising people ... and they want to join other east Africans that have working stock exchanges," said Idd Mohamed, Ambassador extraordinary and deputy permanent representative to the United Nations.
"Initially the exchange will be based in Nairobi, but if the situation improves we could move it to Mogadishu."
Firms that have continued to thrive in Somalia include Hormuud Telecom, a private company which is well known even beyond Somali borders.
Mohamed, who founded the Somalia Stock Exchange Investment Corporation (SSE) with others, said he expected the bourse to attract both Somali-owned companies and international firms wishing to invest in the largely Muslim country and help rebuild it.
He was speaking at the signing of an agreement with the Nairobi Securities Exchange (NSE) for provision of expertise and support in the formation and development of the SSE.
"We are happy to assist them as we have assisted other countries like Rwanda. We hope we will be able to help them come up with sharia compliant sukuk bonds and halal equities," said Peter Mwangi, the chief executive of the NSE.
Islamic sharia law forbids investments that pay interest or those made in certain companies such as brewers or gambling firms.
Together with Somali government soldiers, African Union troops who are battling the Islamist al Shabaab militants have made significant progress over the past year, bringing in a measure of normality to the capital and other parts of Somalia.
Those gains by the government and African forces, which followed many hard battles, have prompted nations like Turkey to re-open their embassies in Mogadishu.
Regional firms, including banks in east Africa's largest economy Kenya, hope to follow in their footsteps when peace is fully attained.
If those companies do eventually move in, they will join a bunch of oil explorers, who are already active in the semi-autonomous region of Puntland.
Somalia has no formal banking sector and its people rely heavily on money transfers, estimated to be over $2 billion annually, from diaspora communities in Europe, North America and the United Arab Emirates. (Reporting by Kevin Mwanza; Writing by Duncan Miriri; Editing by Jon Loades-Carter)

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