•Investors are increasingly looking for more information around the level of ESG.
•Kenya recorded the highest growth in access to foreign exchange.
The Nairobi Securities Exchange (NSE) has urged listed companies to adopt sustainability reporting mechanisms to enhance their profitability and investment attractiveness to local and foreign investors.
Speaking during the sixth edition of the Absa Africa Financial Markets Index (AFMI) 2022, NSE chief executive Geoffrey Odundo said investors are increasingly looking for more information.
This is mainly around the level of Environmental, Social and Governance (ESG) compliance and asset allocation in listed companies, due to the impact on climate change.
“We have provided listed companies with an ESG compliance manual to guide them as they adopt regular sustainability reporting. Embracing these measures enhances their overall investment profile,” Odundo said.
According to the Absa report, Kenya has been ranked highest in the market transparency, tax and regulatory environment pillar.
This follows the introduction of climate risk regulatory frameworks and ESG asset classes such as green bonds in the capital markets.
This comes on the back of regulations introduced in 2021 by the Central Bank of Kenya (CBK), requiring financial institutions to adopt climate risk guidelines to foster sustainable finance practices in the banking sector.
In a statement, Absa Bank Kenya interim CEO, Yusuf Omari, said there was a notable growth in the performance of the Absa collective investment schemes such as the Absa Gold Exchange Traded Funds (ETF).
It is currently trading at an all time Sh 2, 000 per unit, as well as the Absa Unit Trust money market funds.
“We have also recorded the fastest growth in the collective investment scheme sector in the quarter ending June, hitting Sh 1.05 billion in assets under management from Sh287 million in March,” Omari said.
Capital Markets Authority (CMA) director in charge of regulatory policy and strategy, Luke Ombara, also noted significant revenue growth in pooled funds such as pension schemes.
According to Omari, the pooled funds have risen to Sh150 billion from Sh48 billion as at June this year, while hinting at future plans by the CMA to structure a diaspora bond to boost foreign exchange liquidity.
The index shows Kenya recorded the highest growth in access to foreign exchange with an increase of 29 basis points, ranking fifth out of the 26 African countries that were assessed in this year’s AFMI report.
Overall, Kenya moved up two places to rank eighth, having scored 61 points up from 55 points in a similar period last year.