Remarks by Mr Paul Muthaura for Launch of Open Day and Exhibition
Cabinet Secretary to the National Treasury and our Chief Guest, Mr Henry Rotich, represented by Mr. Mutua Kilaka, Financial Secretary to the National Treasury
Board members of the Authority;
Board Members and Chief Executive of Nairobi Stock Exchange;
Board Members and Chief Executive of Central Depository and Settlement Corporation;
Chief Executives of Capital Markets intermediaries;
Participating capital markets exhibitors;
Representatives from the Media;
Ladies and Gentlemen;
All protocols observed:
It gives me great pleasure to extend to you all, on behalf of Capital Markets Authority, a very warm welcome to the Capital Markets Open Day and exhibition. As host of this momentous event, I am delighted to be part of this exciting environment that enables a wide spectrum of market players and investors to easily and freely interact with a view to demystifying the opportunities in the capital markets industry.
Special thanks go to all our key stakeholders represented here today and for the next two days of this exhibition. I look forward to enhancing and strengthening this close relationship as we strive to improve our services to Kenyans.
I am also grateful and honored that the National Treasury through the Cabinet Secretary has ensured their voice and perspectives will be well represented here today. This is no doubt reflects the Government and the Treasury’s commitment to the growth and deepening of the capital markets.
Ladies and Gentlemen: Investor education ranks very highly among the Authority’s key initiatives towards market development, which together with regulatory oversight constitutes our key mandate. To this end, the Authority remains committed to enhancing financial literacy and public awareness particularly through collaborative efforts.
Today’s official opening of the Capital Markets Open Day is a culmination some of these strategic partnerships, involving over 30 different players in the industry. This exhibition is intended to not only enhance market integrity, but also to ensure that we increase the uptake and development of products in recognition of the critical role that the capital market plays in accelerating economic development.
Ladies and gentlemen, There is considerable evidence showing that one of the key strengths of capital markets is their ability to bringing together those looking to invest capital and those seeking investments to support wealth creation. Competitive and robust capital markets allow businesses and entrepreneurs to tap into the financial resources needed to increase output, invest in new technologies, fund research and development, and build new industries for the betterment of the economy and the economic agents therein.
This open day is in this regard intended to draw the attention of all stakeholders, --government, financial sector intermediaries, existing and potential issuers of capital markets securities as well as investors to these opportunities as well as underlining the importance of capital markets to financing infrastructure development and the re-tooling and modernization of our economy’s industrial sector to world competitive standards.
Ladies and Gentlemen: effective regulation is critical for the smooth and efficient operation of the capital markets. It is through the clear detailing of the rules and parameters of the game that participants are able to fully leverage the opportunities available. We must therefor ensure that there is confidence in the securities industry. As a regulator, we continuously grapple with the delicate balance between granting the market room and flexibility to develop without exposing the participants and the market to unreasonable risks and instability. Through this balance we seek to measure the cost of compliance with regulatory requirements as against the development of an effective regulatory environment that can spur sustainable industry growth through ensuring confidence and certainty.
With the support from the National Treasury, the Authority continues to pursue the creation of a facilitative environment to leverage financing opportunities through the capital markets. In this regard, and in response to the through the review and creation of legal and regulatory framework to facilitate the development of new products and services, and indeed the changing market dynamics the Authority is in the process of facilitating gazettement of regulations necessary to accelerate the development of the REITS segment to facilitate real estate investment and the integration of regional bond markets to support capital raising across the EAC through regulatory coordination.
Similarly a comprehensive review of the capital markets regulatory framework has been accomplished to strenghten risk management and corproate governance among our licensed players resulting in the introduction of the Capital Markets (Conduct of Business) (Market Intermediaries) Regulations 2011 and the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations 2011 which have introduced greater oversight of internal risk management and controls as well as ensuring improved transparency and responsibility by the Board for ensuring compliance and risk management.
There have been further supplemented by rules to strengthen risk based supervision such as the Financial Resource Requirements and Internal Controls rules and Anti Money Laundering which expected to be in full effect in 2013. In addition to regulatory reforms, the Authority has pursued a complete overhaul of the legal and regulatory framework in line with international standards and best practice principles through the development of two new bills in the form the Capital Markets Authority Bill and the Securities and Investment Bill all geared to enhance the regulatory framework of the Authority as well as to support the diversification of available products.
Ladies and Gentlemen the Authority is working proactively to ensure the following broadened range of products and services in the capital markets industry including
- Islamic Capital Markets products
- Exchange Traded Funds (ETFs)
- an Operational framework for regional and international cross listings and mechanisms
- an appropriate framework for Diaspora investments
- an Operational framework to guide County Governments to utilize the capital markets
- a framework to facilitate short selling of securities, margin trading and securities lending and borrowing.
- And the introduction of futures and derivatives market
The Authority is particularly keen to see the take-off of the market for Islamic Investment products given the strong correlation between these products and infrastructure financing for which the nation is in heavy demand for. Our priority objective is to accelerate the building of critical mass for the development of a significant Islamic Capital Markets industry thereby widening the range of available Shariah-compliant products and services. In this regard, the Authority continues to have stakeholder engagements designed to increase awareness on the potential issuance of Sukuk products as a means of alternative financing for infrastructure development. In addition, the second Shariah compliant Collective Investment Scheme (Unit Trust) was approved in March 2013. The Authority also continues to build intellectual capacity within its ranks through specialized training in this niche sector.
Public awareness of new products and services are key to increased understanding which in turn deepens our markets. To enhance investor education and public awareness the Authority will continue to adopt and implement more effective investor education initiatives that will translate into increased investments, increased capital raising and overall increase in the level of growth capital markets services and financial services at large. This will be expected to substantially contribute to accelerated growth in GDP level to the desired 10% per annum levels required in realizing the aspirations of the Vision 2030. We are persuaded that if the capital markets are to be the single biggest determinant of the growth of the Kenyan economy, a well thought-out approach to and implementation of investor education and public awareness will be critical.
Ladies and gentlemen, as we continue the journey towards our target of becoming a middle income economy by 2030, it is very evident that our continued prosperity as a nation is closely linked with our ability to understand and increase our financial literacy. This is where each and everyone here today plays a role in ensuring that we continue to understand and participate in our capital markets.
As witnessed here today, solid partnerships are an effective tool that support’s an organization’s business, and objectives. It involves situation analysis, team work, conceptualizing appropriate strategies and action plans, and determining the measurement of results. It also entails the coordination of multiple methods to achieve specific results. The Authority will continue to identify more partners that will assist through collaboration in activities at a national and county level.
In conclusion I urge all of us to take advantage of the opportunity provided by the next three days for open and frank discussions, sharing and education.
It is now my pleasure to welcome the Chair of the Authority's Board Technical and Policy Committee Mr. Humphrey Muga to deliver welcoming remarks on behalf of our Chairman and to welcome our chief guest.