KPC exchange listing plan right move but not enough
By Editorial, February 7, 2025The Nairobi Securities Exchange (NSE) has been yearning for fresh energy, and the possible listing of Kenya Pipeline Company (KPC) might just be the spark needed to reignite interest. While Treasury Cabinet Secretary John Mbadi’s hint at taking KPC public is a step in the right direction, the reality is that one listing won’t be enough to break the long-standing dry spell. To truly make the NSE an attractive hub for companies, bold reforms and strategic incentives must come into play.
One of the biggest roadblocks to listings is the regulatory maze that companies must navigate. The Capital Markets Authority (CMA) needs to simplify listing requirements, cutting down bureaucratic hurdles and making the process more efficient.
Businesses, especially family-owned enterprises and SMEs, often shy away from the NSE because of complex compliance demands and excessive disclosure requirements. A friendlier, phased approach could encourage more firms to consider going public without feeling overwhelmed.
Tax incentives could also be a game-changer. The government should introduce tax breaks or reduced corporate tax rates for newly listed firms, making the prospect of going public financially rewarding. Additionally, targeted incentives for priority sectors such as fintech, agribusiness, and renewable energy could lure companies in. If listing at the NSE means not just raising capital but also unlocking fiscal benefits, more firms will take the plunge.
Beyond incentives, investor confidence must be rebuilt. Market volatility, economic instability, and corporate governance concerns have kept both local and foreign investors hesitant. The government and the CMA must work on fostering transparency and ensuring listed firms adhere to best governance practices. A well-regulated, investor-friendly environment will not only attract companies to list but also encourage sustained participation in the stock market.
Public awareness is another crucial factor. Many business owners still view the stock market as a space reserved for large corporations. A nationwide campaign showcasing success stories of companies that have benefited from listing could shift this mindset. By demystifying the process and highlighting the growth potential, more businesses might consider NSE as a viable expansion strategy.
Lastly, strategic privatisation of profitable State-owned enterprises can provide the NSE with a much-needed boost. If entities like KPC, Kenya Ports Authority and KenGen offer shares to the public, this could set a precedent that encourages other firms to follow suit.