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Principal Secretary to the National Treasury,

Chairman and Board of the Capital Markets Authority;

Capital Markets leaders and stakeholders,

Distinguished Invited Guests

Ladies and Gentlemen:

It is my pleasure to join you this evening to preside over this important occasion of celebrating a shared achievement as stakeholders in capital markets. Taking into account that Kenya is neither the largest economy on the continent, nor the one with the most developed capital markets, it is particularly rewarding to have our capital markets regulator, and by extension our industry as a whole, recognized as being the most innovative on the continent.

Ladies and Gentlemen, allow me at this time to congratulate the Board and management of the Capital Markets Authority for this exemplary achievement. Having worked closely with the Authority, I am quite aware of the dedication and work that has gone into this achievement. I wish to encourage you to continue with that spirit of hard work and selflessness.  

I recognize that this achievement was as a result of the collaborative efforts between the Authority and the capital markets stakeholders. In this regard, I join the Authority in thanking all stakeholders for the support you have continued to provide the Authority as it walks along this challenging road of creating a conducive environment for capital markets growth. I am informed that you have just had very fruitful brainstorming session and I am confident that the outcomes of that sessionwill inform critical interventions that are required to maintain positive growth of our markets.

As you continue striving to upscale our capital markets, you can rest assured of the National Treasury’s support and facilitation. Allow me to once again recognize this sector for the development of a 10 year Master Plan which I gladly launched last year and note has stimulated a great deal of positive development.

The development of Capital Markets Master plan came at a time when the Government was launching the second Medium Term Plan for implementing the Vision 2030. Implementation of the Plan was further bolstered early this year when I gazetted the Capital Markets Master Plan National Steering Committee to oversee the implementation of the Master Plan. As the National Steering Committee, we shall be holding our inaugural meeting towards the end of this month to receive a substantive progress report and identify and address critical issues that are pertinent to the implementation of the Master Plan.

Ladies and Gentlemen, we all know that one of our key objectives is to make Nairobi an International Financial Centre (IFC). Recognition of Kenya’s capital markets regulator is a major boost to this aspiration. The National Treasury will ensure that the Nairobi IFC Authority leverages on this key achievement by the Capital Markets Authority. Our ultimate goal is to make Nairobi the financial hub of the region. Experience from other International Financial centers indicates that capital markets plays a very critical role in defining an international financial Centre. In this regard the National Treasury will continue working together with CMA to ensure improved ranking of our Exchanges as well as increase in available products in our markets. In this regard, I am very pleased to hear that Kenya has now moved to the next level of market maturity with the introduction of a licensed Derivatives Exchange to be run by the Nairobi Securities Exchange.

The National Treasury supported the demutualization of the Nairobi Securities Exchange and can see that reform in governance and operations is clearly bearing fruit. Allow me to congratulate the Nairobi Securities Exchange for the positive step they made in reducing the admission fee tenfold. I urge them to continue reducing these markets costs so that we can have as many players in our market as possible. In order to support greater vibrancy in market activity, during this year’s Budget speech, I removed foreign ownership limits for listed companies as a way attracting and encouraging foreign investment and promoting greater liquidity for domestic investors.

Ladies and Gentlemen, while appreciating the role of CMA in making Nairobi an International financial Centre, please remember the scale of the challenge in front of you as a sector. I urge you all to continuously remember the role capital markets play in the overall growth of an economy by way of resource mobilization. As we strive to maintain our annual growth level of 10% with high savings levels, the capital markets have the cardinal role of facilitating mobilization and allocation of long term savings and investments. The National Treasury will therefore continue supporting the sector through engagement with other arms of the government in ensuring the right legal and regulatory framework and environment exists within the capital markets space.

Ladies and Gentlemen, I would like to assure those present that in line with our Vision 2030 objectives, the Government will continue to critically assess the balance between external debt and the domestic debt markets to finance national development projects. Where possible we will seek to finance government programs using domestic debt which is often cheaper than foreign debt in the long term. This is however only viable in an environment where the domestic debt market is vibrant and liquid. It is for this reason that we as National Treasury support all initiatives aimed at developing both government and corporate bond issues since an increased supply of instruments translates to competition and overall efficiency in the market.

You may be aware that I officiated the launch of the M-Akiba product 2 weeks ago. This savings vehicle which targets the retail investor is expected to not only mobilize government funding from the retail investors but will also help in lowering the borrowing costs of government debt in the medium to long term while supporting financial inclusion and the effective allocation of national savings.

One of the National Treasury’s objectives in managing its debt as well as generally boosting inward savings is to support any measure that aims at attracting the attention of the Kenyans in the diaspora. You may be aware that the Ministry of Foreign Affairs spearheaded the development of National Diaspora Policy that was launched early in January this year. The National Treasury will work together the Ministry of Foreign and other stakeholders to ensure that we maximize on diaspora remittances.

Ladies and Gentlemen, as we focus on tapping the diaspora remittances, we should not lose sight of maximizing the potential funding that can be mobilized from the gulf region and our brothers and sisters who profess the Muslim faith. In this context I have previously hinted that the government will be exploring issuing a Sukuk and I look forward to a number of Islamic financial markets conferences and projects that will be commencing in this and the next quarter. We appreciate that most of the traditional capital markets products do not meet the Shariah standards. I therefore glad to note that Capital Markets Authority, in conjunction with all the financial sector regulators, is already working on various initiatives to develop institutionalize competitive Shariah compliant financial markets in Kenya. At the National Treasury, we shall work with various national leaders to establish a National Shariah Supervisory Council that can be used to set standards and good practices for shariah compliant products in the country.

As I conclude, I wish to observe that with all our efforts on product development and innovation without good corporate governance, we shall not attract investors into the capital markets. My office will therefore continue working with the Authority to ensure that there is a robust corporate governance regulatory framework in place that can bring our integrity to international standards.

Finally, allow me to once again congratulate the Board and Staff of the Capital Markets Authority for this Innovation Award and commend the industry as a whole for driving progressive growth.

I wish you all fruitful engagements during this cocktail.

Asanteni