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September 2010 |
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What Is The Role Of Capital Markets In An Economy? |
- Provides an important alternative source of long-term finance for long-term productive investments. This helps in diffusing stresses on the banking system by matching long-term investments with long-term capital.
- Provides equity capital and infrastructure
development capital that has strong socio-economic benefits - roads,
water and sewer systems, housing, energy, telecommunications, public
transport, etc. - ideal for financing through capital markets via long
dated bonds and asset backed securities.
- Provides
avenues for investment opportunities that encourage a thrift culture
critical in increasing domestic savings and investment ratios that are
essential for rapid industrialization. The Savings and investment
ratios are too low, below 10% of GDP.
- Encourages
broader ownership of productive assets by small savers to enable them
benefit from Kenya’s economic growth and wealth distribution.
Equitable distribution of wealth is a key indicator of poverty
reduction.
- Promotes public-private sector partnerships
to encourage participation of private sector in productive investments.
Pursuit of economic efficiency shifting driving force of economic
development from public to private sector to enhance economic
productivity has become inevitable as resources continue to diminish.
- Assists
the Government to close resource gap, and complement its effort in
financing essential socio-economic development, through raising
long-term project based capital.
- Improves the
efficiency of capital allocation through competitive pricing mechanism
for better utilization of scarce resources for increased economic
growth.
- Provides a gateway to Kenya for global and foreign portfolio
investors, which is critical in supplementing the low domestic saving
ratio.
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Highlights |
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