The Capital Markets Authority (CMA) has onboarded a consultant with the support of FSD Africa to review the Capital Market Master Plan (CMMP, 2014-2023), which provides the long-term strategic direction for the Kenyan capital markets. The blueprint was developed in close collaboration with capital markets industry stakeholders with the aim of mobilizing savings and stimulating investments to the levels necessary to realize the Kenya Vision 2030 aspirations.
The CMA Chief Executive, Mr. Wyckliffe Shamiah, explained that although a 54 percent completion rate of the CMMP deliverables has been achieved over the last six years, significant challenges have been experienced including the massive disruptions precipitated by the unforeseen global Covid-19 pandemic.
Achievements of CMA
Mr. Shamiah noted that some of the key achievements include; an enabling policy, legal and fiscal environment to facilitate introduction of new products and services such as Real Estate Investment Trusts (REITs), Asset Backed Securities (ABS), Derivatives markets, Online Forex Trading, Commodities Markets, Green Bonds; measures to maintain financial market stability by strengthening corporate governance; and other investor protection instruments through gazettement of the Corporate Governance Code and Stewardship Code among others.
Other key achievements include; setting up a Financial Law Review Panel; admission of Nairobi to the Global Financial Centre Index ranking of financial centres published by the Z/Yen Group; a new Central Depository System with the capability of inter-depository linkages; and Kenya being dropped from the Financial Action Task Force grey list based on substantial progress on legislative and institutional structures to combat Anti Money Laundering and Counter Terrorism Financing.
Challanges faced by CMA
Mr. Shamiah highlighted some of the key challenges which have slowed down progress including historical issues like the collapse of Discount Securities and Nyaga Stockbrokers which impacted investor confidence negatively. The collapse of Chase Bank and Imperial Bank with unresolved issues around their corporate bonds hurt issuer and investor confidence in the corporate bond market in Kenya. Low uptake of various capital markets products such as Exchange Traded Funds (ETFs), REITS, ABS and limited listings on Nairobi Securities Exchange has also hampered vibrancy of the securities market in Kenya.
Mr. Shamiah said; “the Covid-19 pandemic brought about significant disruptions to the economy leading to the development of a Short-Term Post Covid-19 Recovery Strategy for capital markets to support Kenya’s economic recovery. The review of the CMMP is expected to inform review of the CMA Strategic Plan (2018-2023) to align both documents with the prevailing market conditions and expectations of the stakeholders’’.
Dr Evans Osano, Director, Capital Markets at FSD Africa said, “review of the Capital Market Master Plan is timely as it provides an excellent opportunity to re-align capital market development in Kenya to a post-Covid world where economic resilience is paramount. Development of long-term funding avenues is critical to fund sustainable and green projects, tighten alignment with the Nairobi International Financial Centre and provide much-needed capital for growth’’.