PETER MWANGI DURING THE BELL RINGING CEREMONY TO MARK THE LISTING AND COMMENCEMENT OF TRADING OF THE SHELTER AFRIQUE MEDIUM TERM NOTE AT THE NAIROBI STOCK EXCHANGE (NSE) TRADING FLOOR, TUESDAY SEPTEMBER 20th 2011 The Honourable Minister, Ministry of Housing, Hon. Soita Shitanda; The Permanent Secretary, Ministry of Housing, Mr. Tirop Kosgey; The Director Debt Management, Ministry of Finance, Mr. John Murugu; The Chairman of Shelter Afrique, The Honourable Minister, Ministry for Lands and Housing, Uganda, Hon. Daudi Migereko; The Board of Directors of Shelter Afrique present; The Managing Director, Shelter Afrique, Mr. Alassane Ba; The Chief Executive, Central Depository and Settlement Corporation (CDSC), Ms. Rose Mambo; The Chief Executive Officer, Capital Markets Authority (CMA), Mrs. Stella Kilonzo; The Director Investment Banking, Coverage: East Africa, CFC Stanbic Bank, Mr. John Ngumi; The Managing Director, CFC Stanbic Financial Services Limited, Mr. Nkoregamba Mwebesa; Members of the Press Invited Guests Ladies and Gentlemen

0 million.71 Billion).000 Shelter Afrique Medium Term Notes. 3.0 million. each subsequent debt issue by Shelter Afrique has increased in size. . On 10 February 2006. also points to the acknowledgement of their quality and the rising investor appetite in our market for debt securities. For this confidence. it gives me great pleasure to welcome you to the Nairobi Stock Exchange (NSE) as we mark the listing of another Shelter Afrique Debt Security and the first non. In 2000. The ability of issuers such as Shelter Afrique to continue to come to market and raise greater amounts of capital. the definition of infrastructure eligible for this exemption under the Kenya Income Tax Act. 2. Honourable Minister. This month. the Government of Kenya had raised Kshs. Honourable Minister.000 Medium Term Note (MTN) Issue. MTN.000.7. deep and liquid – well suited to their needs. 3. Shelter Afrique came to the market to access funds by issuing a Kshs. I am happy to note that the NSE has had a long standing relationship with Shelter Afrique.500.the first tranche of a Kshs.governmental issue this year. thank Shelter Afrique.000. 3-year medium term floating rate note. 20 Billion with a tenor of twelve (12) years . clearly demonstrating our deepening relationship with Shelter Afrique and the confidence they have in our market as one that is well regulated.0 million. 3-Year floating rate note . 9. On September 25th 2009.36 Billion).12 Billion of outstanding Government of Kenya treasury bonds are infrastructure bonds. with a maturity of at least three years. Kshs. In 2006 the Government exempted withholding and income tax from income accruing to all listed bonds used to raise funds for infrastructure and social services. is restricted to social amenities available to members of the public such as energy and road infrastructure. the trend is clear.year. floating/fixed rate. Energy (Kshs.86. Shelter Afrique listed a Kshs.18. we sincerely. the Government seeks to raise upto Kshs.On behalf of the Board of Directors and Management of the Nairobi Stock Exchange. 350.for partial funding of specific infrastructure projects in the following sectors: Roads (Kshs. let me start by warmly welcoming you all to this occasion that marks the Listing of the first Tranche of Kshs. 1 Billion MTN.78 Billion) and Water (Kshs. it is notable that the Government continues to encourage issuance of debt for infrastructure investment and social services. Honourable Minister. However. 500. As of the end of August 2011.000. Shelter Afrique listed a Kshs. under their Kshs. 95.0 Billion through the issuance of treasury bonds. 200.

Mr. in our vision of becoming “a leading securities exchange in Africa with a global reach”. 2011. Second is the Mid Cap Market Segment: Honourable Minister. lapsed on August 30 2011. Honourable Minister. the NSE stands ready to convert to the Nairobi Securities Exchange Ltd. It is my humble appeal to the Government through you. poverty eradication. do not qualify for the tax exemption. The thirty (30) day exposure period for the Capital Markets (Demutualization of the Nairobi Stock Exchange Limited) Regulations. such projects by Shelter Afrique would help to plug the current deficit for middle and lower middle income housing. Undoubtedly Sir. As soon as the Regulations are gazetted.The establishment of the Mid Cap market segment is not only expected to unlock access to capital for SMEs but also raise the level of savings and investments within the capital markets through additional listings. Minister for an expansion of the definition of infrastructure that qualifies for these tax exemptions. First is Demutualization: In order to boost our own transparency and corporate governance. To this end. we are committed to demutualize the NSE at the earliest opportunity. Introduction of the Mid Cap Market is in line with the Government focus on the SME sector as one of the key drivers of Vision 2030. and employment creation.Honourable Minister. we are in the process of setting up a Mid Cap market segment within the NSE. However. When a Securities Exchange is demutualized. Any anticipated government revenues losses. destined to play an effective role as an engine for economic growth. allow me now to take a few minutes to highlight some of the transformative initiatives that we are undertaking at NSE. such a move will aid in increasing the participation of the private sector in developing infrastructure for all users. This market segment will encourage the listing of Small and Medium Sized Enterprises (SMEs) . I am happy to report that the Capital Markets . could be recovered from user charges. it commits to transparency and good corporate governance. the funds raised through the Shelter Afrique MTN will be used to develop private housing infrastructure for Kenya’s growing middle class and so under the current definition. It is this improved governance that is critical in attracting investors and increasing opportunities to raise debt or equity through the capital markets.

Debt securities including preference shares are under three (3) categories. Overall. Trading in debt securities like the Shelter Afrique bond was already on a T+3 settlement cycle. The investment we made of about Kshs. is the introduction of a Treasury bond index: We are working with a global index provider to introduce a branded equity index and a branded treasury bond index. Fourth is Reducing the Settlement Cycle: On July 4 2011. The equity index will run concurrently with the NSE 20 Share and NSE All Share indices. Equities are now under ten (10) industry sectors. This market milestone is in line with international best practice. We can also use their brand to reach new foreign investors. Investors who purchase shares are able to get their shares. three (3) days from their purchase. The Treasury bond index will act as a gauge by which our investors can measure the performance of their bond portfolios. We are convinced that the reclassification will provide a more accurate reflection of the diversity of the companies listed at the NSE and by extension reflect the increasing diversification of our economy. Fifth is Company Reclassification: On August 1 2011. manage and distribute branded indices and index related products. The branded indices give the NSE the opportunity to use the global index provider’s expertise to design. Finally. we reclassified the business segments under which our listed companies are placed. The system has the capability to facilitate internet trading. . three (3) days from the sale of their shares. This reclassification brings us closer to international best practise and will enable domestic and international investors compare company and sector performance more easily. We expect that the efficiency gains from this shorter settlement cycle will improve liquidity in the market for listed equity securities thus making our market more attractive to domestic and foreign investors.100 million on the Broker Back Office will improve the integrity of our trading systems and facilitate greater access to our stock market. the equity settlement cycle moved from the previous T+4 settlement cycle to the T+3 settlement cycle. I am happy to report that investors are now able to get their money. the indices should improve capital flows into the domestic market and enhance liquidity and market capitalization.Authority has exposed the rules and regulations for public comment and the legal framework is expected to be in place by December 2011. Third is Broker Back Office: We have commenced operations on the Broker Back Office.

Finally. PETER MWANGI CEO. Capital Markets Authority to make her speech. I wish now to take this opportunity to congratulate Shelter Afrique on a successful bond listing. it is my honour to welcome. the Chief Executive Officer. please join me in welcoming Mrs. Ladies and Gentlemen. and wish them the best in their business. Stella Kilonzo. NAIROBI STOCK EXCHANGE ~END~ . With these remarks.

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