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East Africa
T
he three markets of Kenya,
Uganda and Tanzania together
accounted for 6% of total ABFM
responses with Kenya, the largest and
most developed market in the region,
responsible for half of that.
Foreign investors account for the ma-
jority of turnover at the Nairobi Securi-
ties Exchange (NSE) with a preference,
like most cross-border investors, for
large-cap stocks. The current climate
has, however, prompted a move to gov-
ernment bonds.
Kenya has been making efforts to de-
velop its bond markets more broadly. In
October 2019, it closed its first ever green
bond to raise funds for environmentally
friendly, affordable student housing in
Nairobi.
Like markets the world over, East Afri-
can stock exchanges have started feeling
the impact of Coronavirus. By the end of
February, the 20 Share Index had closed
at a 16-year low. In mid-March, the chief
executive of CDSC, the Kenyan CSD,
affirmed that “sound business continuity
plans are in place to ensure seamless
settlement of all securities traded at
the exchange.” He noted that “in the
endeavour to support the Government to
contain the spread of COVID-19, CDSC
issued a circular to all its stakeholders
providing alternative channels to be
used for delivery of physical documents
to minimize physical contact”, adding
that CDSC continues to offer all services
to stakeholders and closely monitor the
events of the Coronavirus as they unfold,
adjusting its business decisions as may
be necessary.
Compared to expectations across the
ABFM universe as a whole, East African
markets shine in client service, cash
management and FX and regulation and
compliance. Account management, in-
novation and liquidity management can
be found at the other end of the scale,
though still within Satisfactory range
(4.00-4.99).
Standard Chartered Bank
Across the region, Standard Chartered
recorded some 80% of individual re-
72
Global Custodian
Spring 2020
COUNTRY SCORES East Africa Kenya Tanzania Uganda
Account Management 4.33 4.23 5.09 4.00
Asset Safety 5.82 5.58 5.44 6.71
Asset Servicing 5.66 5.75 5.18 6.11
Cash Management and FX 6.65 6.14 7.00 7.00
Client Service 5.77 5.35 6.63 5.91
Innovation 4.00 3.47 6.25 3.47
Liquidity Management 4.00 n/a n/a 4.00
Pricing 4.53 4.67 5.50 3.79
Regulation and Compliance 6.03 5.92 5.70 6.63
Relationship Management 4.17 3.69 6.56 3.81
Risk Management 5.65 5.33 6.00 6.00
Technology 4.89 4.33 7.00 4.55
sponses.
As the sole provider rated in Uganda
and Tanzania and the dominant one in
Kenya, it has set the benchmark for both
regional and national ratings. Its results
for the region as a whole are impressive,
though with a wider than usual spread
in category scores, ranging from 4.00 for
innovation and liquidity management
to well over 6.00 for cash management
and FX and regulation and compliance.
(These two are most likely a combination
of good service and moderate expecta-
tions of what is achievable in relatively
low volume frontier markets.)
In Kenya on its own, where the bank
faces a degree of competition, its cate-
gory scores equal or exceed the market
average in all areas with the exception
of relationship management, where both
the market average and the bank’s own
score leave plenty of room for improve-
ment. The bank scores somewhat better
in this category in the other markets in
the region.
PROVIDER SCORES
(REGIONAL) East Africa Standard Chartered Bank Versus regional average
Account Management 4.33 4.35 0.02
Asset Safety 5.82 5.89 0.07
Asset Servicing 5.66 5.71 0.05
Cash Management and FX 6.65 6.65 0.00
Client Service 5.77 5.86 0.09
Innovation 4.00 4.00 0.00
Liquidity Management 4.00 4.00 0.00
Pricing 4.53 4.55 0.01
Regulation and Compliance 6.03 6.10 0.07
Relationship Management 4.17 4.13 -0.04
Risk Management 5.65 5.75 0.10
Technology 4.89 5.00 0.11