New Financial Instruments East Africa

East Africa is developing new financial instruments to trade on their exchanges. According to Bloomberg,  the Nairobi Stock Exchange is acquiring regulatory approval for REITS and other futures instruments as well as Exchange Traded funds (ETF).

This is a brave new world for East Africa and new regulatory advances will follow. Institutional investors will be very interested to see firm investor protections in place to support investment in these new areas. In addition, dispute resolution processes available for potential conflict would be hugely beneficial for exchanges to continue to develop.   

Obama's trip to Africa has raised the stakes for new financial innovation on the continent!

SITI East Africa

A securities training institute has been launched in East Africa. The Securities Industry Training Institute (Siti East Africa) is based at the Uganda Securities Exchange (USE) in Kampala, Uganda.

This initiative is financed by the IFC. The board members of Siti East Africa include representatives of all of the exchanges of East Africa-Rwanda, Uganda, Tanzania, and Kenya. It is a capacity building initiative. http://www.ifc.org/ifcext/esmid.nsf/Content/AboutESMID

The curriculum was agreed by all of the exchanges. http://www.use.or.ug/inner.php?cat=siti&subcat=&content= It contains 4 distinct courses: a Fundamentals course, Markets participants course, Officers and Directors course and Specialty seminar. The objectives of the entire program are to widen the base of knowledge that the capital markets rely upon to regulate itself and to function in a capable way with the public. The program targets directors of companies, brokers as well as policy makers and financial professionals.

The modules as described on the USE website cover such things as Client account management, payment and settlement, and Legal Aspects of the Securities markets. These fundamentals are essential for any market participant let alone financial market professionals. One of the objectives of SITI is also to conduct programs on Information Technology and Clearing and Settlement. This is absolutely necessary for the exchanges of East Africa.

I think this program is utterly awesome. But it is financed by the IFC so it is basically US subsidized. Right now I am struggling with whether that is entirely a bad thing….

The US financial markets have fairly stringent standards when it comes to broker education and examination. http://www.finra.org/Industry/Compliance/Registration/QualificationsExams/RegisteredReps/P011051 This is not replicated in the UK or elsewhere. Typically, the English are far ahead of us in education but here they fall behind I am afraid. I think this is absolutely the right thing at the right time. With worrying activities in Kenya as far as broker activity, requiring education and potentially examinations of financial industry professionals can only be a good thing.

Moreover, the potential for the involvement of information technology is enormous. A guy who works for SWIFT spoke at ASEA in Abuja. http://www.swift.com/ I met him at the water table between speakers at ASEA and accused him of being part of a global mafia controlling the transfer of international payments (swift code and all that). He said, ’rubbish!!’ and explained that they are completely transparent. (Ian Bessarabia, SWIFT). I did really believe him and I think he has something that Africa wants. SWIFT can provide clearing capabilities for exchanges. AND the fact that they are already so internationally connected means there may be some bullying but ultimately they provide credibility. ALSO, they can document easily all transactions so should disputes over trades occur resolution may be nothing more than production of the paper trail- rather than something more arduous requiring testimony or worse-lawyers. All of this sounds too good to be true, so it probably is. HOWEVER, I think that sometimes fear of bullying or too much corruption or fear alone prevents progress.

Take this Nigerian student on the Northwest flight to Detroit. People do things. Countries do things and organisations do things. If we begin to forget the differences between all of these things we might as well forget surviving global warming let alone the next 10 years.

People do things. Progress dies when we stop seeing with our hearts and our inner sense. Politics is number one right now in the US…not reason and progress.

Africa has many progressive initiatives. This education is run by the IFC but I don’t care about that. I no longer care where people come from. I only care about people as humans. What difference does it make anyway? Enough crazy politicians want to seem effective and make us sit for the last hour of a transatlantic flight. Well ok.

I choose life. I see people and they do things good and bad and I see that too and I am not confused.

I encourage everyone to develop this skill.