NSE targets pension fund managers with new unit

Nairobi; Kenya: Nairobi Securities Exchange (NSE) plans to set up an in-house department dedicated to handling pension fund managers as it seeks to increase liquidity for long-term financing.

The move is part of a reorganisation that the 60-year-old bourse is undergoing following a successful demutualisation process that saw the NSE become the second exchange in East Africa to self-list.

According to NSE Chairman Edward Njoroge, pension funds in the country present an untapped resource for long-term financing and the bourse is looking at how to unlock some of this capital. “We are getting someone at the exchange on a full-time basis to help engage pension fund managers to put more funds into the securities exchange,” he said.

“We will reveal a new structure in the coming weeks which fits into the new demutualised look of the exchange and also with the new strategy to push more investors into the exchange.” Kenya is currently in the middle of more than half a dozen massive energy, transport, and infrastructure projects whose combined cost is close to Sh4 trillion. But with traditional sources of funds from external appropriations and bi-lateral grants dwindling, the country has been forced to turn to the private sector and the capital markets.

Data from the latest report on performance of the retirement benefits industry stated that pension schemes in the country held assets with a total worth of Sh696.7 billion at the end of 2013. Government securities accounted for the largest portion of investment by pension fund managers at 33.75 per cent of the total assets under management to stand at Sh235 billion.

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Investment in property has also been another favourite for pension scheme managers owing to the lucrative returns therein, with investments in quotable assets standing at Sh177 billion to constitute 25.47 per cent of all assets under management.

Mr Njoroge states that the NSE is actively engaging fund managers and pension schemes to develop the same appetite for the capital markets as they have for the real estate market.

“We need to get the investment officers of these funds to help them appreciate that this is an area where they can make money for their pensioners,” he states.

“Commercial banks cannot do long-time funding as effectively as pension funds can and luckily for us the feedback has been positive and we are putting more resources into this area,” he said.

The NSE will be hosting the 18th African Securities Exchanges Associations conference next month where more than 23 key participating African Securities will converge in Diani Mombasa.

The bourse expects a large attendance from investors, fund managers, and governments.

“There has been talk about Africa rising, which is true, but we want to explore how African exchanges can enable economies manage this growth,” states Mr Njoroge.