OPENING REMARKS BY MR PAUL MUTHAURA, AG. CHIEF EXECUTIVE, CAPITAL MARKETS AUTHORITY, DURING FORUM FOR THE BUSINESS COMMUNITY ON MARCH 27TH, 2015 AT THE IZAAK WALTON INN HOTEL
County Executive, Industrialization, Investment and Trade;
Chairman, Kenya National Chamber of Commerce and Industry Embu Chapter;
Participating capital markets exhibitors;
Ladies and Gentlemen;
All protocols observed:
I am indeed very humbled to grace this important occasion. Allow me to take this early opportunity to thank you all for creating time out of your busy schedules to attend this important function. This is a clear demonstration of the importance you attach to further developing this county of Embu.
Ladies and Gentlemen; Investor education forums such as the one we are having today will not only increase the understanding of financial and capital markets but will also boost investor confidence in our country. Increased investor confidence leads to more players entering the markets, which in turn, creates a robust capital markets industry and the economy at large in Embu County and beyond.
Ladies and Gentlemen; The Authority uses a multi-faced approach to its investor education program targeting various constituents such as youth groups, structured forums and potential issuers. Further, we are also in discussions with the County Governments to create a securitized instrument derived from their current receivables within the capital markets that enables them to raise long term funds through the public. The forum today is specific to the business community of Embu County and how one can benefit within the capital markets.
Ladies and Gentlemen; while small businesses may not generate as much income as compared to large corporations, they are a critical component of any major contributor to the strength of our nation. Small businesses present new employment opportunities and serve as the building block of Kenya’s' largest corporations. Small businesses contribute to local economies by bringing growth and innovation to the community in which the business is established. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable by larger corporations. Small businesses tend to attract talent who invent new products or implement new solutions for existing ideas. Larger businesses also often benefit from small businesses within the same local community, as many large corporations depend on small businesses for the completion of various business functions through outsourcing.
Ladies and Gentlemen, in Kenya, The Small and Medium Sized Enterprises sectors is one of the key drivers of Vision 2030, destined to play an effective role as an engine for economic growth, poverty eradication and unemployment. According to latest data published by the Institute of Economic Affairs, SMEs are the main source of economic growth in developed and developing countries such as Kenya and are responsible for about 77% of employment and contributes about 35-50% of GDP.
Cognizance to the critical role played by SMES the Authority in conjunction with the Nairobi Securities Exchange (NSE) and the Central Depository and Settlement Corporation (CDSC) jointly embarked on the establishment of a venture capital and Small and Medium Sized Enterprises (SME) market at the Nairobi Securities Exchange (NSE), which was launched on January 22, 2013 called the Growth Enterprise Market Segment (GEMS). The GEMS market currently has four listed companies and is expected to increase further. You will receive more information regarding this segment in the presentations that have been prepared for you.
Ladies and Gentlemen; the information in today’s forum has been packaged to allow you to receive information on being an investor as well as being an issuer in the capital markets. I am confident that the team will be able to demystify some of the critical aspects of capital markets. Although the Authority has several flagship initiatives that are currently ongoing, I would like to highlight three areas of importance:
a) Given that Saccos have a significant presence in Embu County, you will be glad to note that the Authority is in discussions with stakeholders on the implementation Over the Counter (OTC) platform where SACCOs shareholders in particular can trade their shares in more efficient manner. This platform is contrasted with exchange trading, in that it occurs over the counter or across the table as opposed to an exchange which is an auction. In an OTC environment training can be among friend or people who know each other while through an exchange the seller doesn’t not necessarily know the buyer. The price of the trade under OTC is also not necessarily published for the public.
b) Secondly, the Authority commenced the process of compensation of former clients of Discount Securities Ltd (“DSL”) under statutory management through the CMA Investor Compensation Fund (ICF) on February 8, 2012. To enable customers’ access the funds more conveniently the Authority had procured the services of The Co-operative Bank of Kenya Limited for purposes of processing and disbursement of the funds. Investors were therefore accessing these services in any branch of the Cooperative Bank countrywide. We have begun a final call campaign to any former clients of the collapsed stockbroker who has a genuine claim to immediately file the claim with the Statutory Manager through the Co-operative Bank of Kenya. The process will end on June 30, 2015 after which no further claims will be accepted and the claims will deemed forfeited. I encourage all of us to notify anyone who may have been affected by this failures to visit a Cooperative Bank.
c) Thirdly, the Authority also has an exciting opportunity for professionals to conduct investor education speaking engagements targeting the Counties, among other target groups. The main objective of this initiative is to increase awareness and participation in the capital markets by effectively engaging the various constituents mentioned above. This is in line with one of the Authority’s mandate to promote Investor Education and Public Awareness throughout the Country. Please visit our website at www.cma.or.ke to receive more information how you can help increase financial literacy in the County of Embu.
The latter strategy is in line with the Capital Markets Master Plan, which is a comprehensive plan charting the strategic positioning and future direction of the Kenyan capital markets over the next 10 years.
Ladies and Gentlemen, In addition to the forum today, I hope you will find time to attend the Capital Markets Open Day at Moi Stadium to receive one-on-one first-hand information regarding investments within the capital markets as well as opportunities to raise capital to fund long term infrastructure projects. The Open Day is running at this very moment and will end at 5pm tomorrow.
Ladies and Gentlemen, in closing, I would like to thank the Kenya National Chamber of Commerce Embu Chapter as well as the County Government for partnering with us in putting this forum together. I wish you all fruitful discussions.