Stock Markets Have a Future if they Leverage Disruptive Technology

The two-day Building African Financial Markets (BAFM) seminar, hosted by the NSE came to an end on April 20 with a rallying call from speakers that capital markets, amidst technological disruption, must embrace it or deal with fading relevance.

The seminar, which was the 7th edition since its inception shifted its venue from countries like South Africa, Morocco, and Nigeria where previous editions had been held to Kenya

Paul Muthaura, the Chief Executive of Capital Markets Authority (CMA) noted that the gambling is a manifestation that is bringing in millions to which the tech enthusiasts and investors behind it are constantly on the lookout for innovative products they can use to put their money.

“NSE has those new and innovative products which can aid in tilting those millions into the capital markets and away from the gambling arena,” he said.

He also added that institutions or industry sectors that shun innovation away are susceptible to redundancy, relegated to stunted growth, and poor competitiveness in the end.

The capital markets department urged the Treasury to extend tax incentives that will entice and lure the winners in the betting and gaming industry to invest part of their cash proceeds at the stock exchange markets. Mr Muthaura’s call to the regulators in Africa was that they have to reconsider their models of supervision in order to align regulatory requirements with market preferences in the fast-changing environment.

As opposed to seeing disruptive technology as a hindrance to the progress of the capital markets, the speakers of the BAFM seminar urged the stock exchanges to consider leveraging blockchain technology that is being widely adopted. They cited Veritaseum as an example, and how it has been successful in building blockchain-based, peer-to-peer capital markets as software on a global scale.

“African markets will have to build capacity and embrace new knowledge if they are to maintain a growth trajectory. Technology is really a disrupting business and we have to find a way of utilizing it to our advantage and we appreciate the need to build capacity among fraternity players in the capital markets” said NSE Chief Executive, Geoffrey Odundo.

The NSE has endured a listing drought for over two years and it is for this reason that the chairman, Samuel Kimani argued that regulators and other capital market troupes have to be proactive and alert to technological disruption if they are to retain relevance and remain in the market.

On his part, the President of the African Securities Exchange Association (ASEA) and Chief Executive of the Nigerian Stock Exchange Abimbola Ogunbanjo, said that emerging technology means one thing for the capital markets; they must do more in promoting financial literacy or risk product failure.

In presence included the Deputy President, William Ruto, who in his opening remarks noted that the Capital Markets such as the NSE are major players regarding the Big Four agenda.

“As a government, our intention is to create affordable capital for the private sector in line with the state’s intention to reduce the cost of capital in the country to single-digit levels,” he said.