OPENING REMARKS BY MR PAUL MUTHAURA, AG. CHIEF EXECUTIVE, CAPITAL MARKETS AUTHORITY, DURING THE FORUM FOR THE BUSINESS AND PROFESSIONAL COMMUNITY ON JULY 2nd, 2015 AT THE SUNSHINE HOTEL KERICHO
Governor of Kericho County, Hon Prof Paul Chepkwony;
Deputy Governor Susan Kikwai;
Chairman, Kenya National Chamber of Commerce and
Officials from the County Government and the Kenya National Chamber of Commerce and Industry;
The Business and Professional Community of the country of Kericho;
Ladies and Gentlemen;
All protocols observed:
I am indeed very humbled to be in Kericho today for 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 the county of Kericho. A special thank you to the Deputy Governor for gracing the occasion as the Chief Guest.
Ladies and Gentlemen; Indeed Kericho, is a County that is very crucial in Kenya’s economic development. It goes without saying that Kericho is renowned for its large tea industry which is among the best in the world largely due to its good quality, flavour and fragrance. It is these large tea companies that form the bedrock of Kericho County and provide employment opportunities for the county’s people.
But, as you know, Kericho is soo much larger than just tea. A large part of the Mau forest, considered Kenya’s biggest water catchment area, lies in this county. The forest gives rise to some of the major rivers that flow out of it such as the Ewaso Ng’iro, Sondu, Mara and Njoro. With the right Conservation efforts, this county could be at the core of national efforts of making Kenya water secure.
Further, the location of the county, en route to the internationally recognized game park, the Maasai Mara, creates yet new and evolving opportunities in tourism.
I applaud the County Government of Kericho for its efforts in encouraging investment partnerships with the private sectors especially in infrastructure development. In line with this, I note that some of the Key areas identified by the current Strategic Plan include: Opening and grading of access roads, Construction and maintenance of bridges and Provision of water. These Strategic infrastructure projects can all be fund through the capital markets as an effective avenue for raising funds for long term projects.
Ladies and Gentlemen; it is in this spirit that the Authority convenes Investor education forums such as the one we are having today to not only increase the understanding of financial and capital markets at the County level but to also boost investor confidence in our country as a whole. 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 Kericho County and beyond.
Ladies and Gentlemen; In addition to several ongoing initiatives in our investor education program, the Authority is particularly very keen on engagements at the County level given that the Counties are the backbone of our economy that will enable us to achieve Vision 2030 and increase savings and investments through participation in our financial markets.
Ladies and Gentlemen; The role that SMEs play in economic growth cannot be denied, especially due to the fact they contribute to over 77% of employment and 35-50 % of GDP.
Both The Authority and the County Government of Kericho is appreciative of the role that SMEs play in the economy as demonstrated by initiatives such as today’s aimed at guiding and accelerating the growth of this sector. Due to Kenya’s per capita income structure, most businesses fall into the SME strata and as such any attempts by the Government to grow the economy must logically include development and sustenance of the SME sector.
According to Vision 2030 that aims to make Kenya a newly-industrializing middle middle-income country capable of providing a high quality of life for all its citizens by the year 2030, Kenya’s competitive advantage lies in agro-industrial exports. For improved performance of the manufacturing sector, one strategy includes strengthening SMEs to become the key industries of tomorrow. It is envisioned that this can be accomplished by improving their SME productivity and innovation.
Cognizance of 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 company 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 2015/2016 budget statement by the Cabinet Secretary to the National Treasury further recognized SMEs by putting in place more support for the sector with initiatives such as:
Buy-Kenya-Build-Kenya policy in public procurement,
- Introducing legislation to require 40 % local content in all public projects,
- Increasing allocation of Uwezo Fund,
- Developing a framework to facilitate leasing by SMEs as an alternate financing mechanism for capital expenditure and
- A framework to nurture and commercialize inventions, innovations and end –products at the national and County level.
On the County front, noting the Government has allocated a total of 287 Billion to the County Governments, there is still much to be done that will require considerable financial resources. It is in this regard that the Authority are also in discussions with the County Governments to create a securitized instrument based on current and future receivables that enables them to raise long term funds through the public through the capital markets. The forum today is specific to the business community of Kericho County and how one can benefit within the capital markets.
With regards to the promotion of Capital Markets, the removal of Capital Gains Tax of 5% and its replacement with a 0.3 % withholding tax on the transaction values of shares and the exemption from stamp duty of asset transfers and other transactions related to the transfer of assets into Real Estate Investment Trusts (REITs) and Asset Back Securities will stimulate the sector even further.
Ladies and Gentlemen; The Authority will continue discussions with the County Government to take advantage of these opportunities. The Authority will also continue to increase its capacity to support national and County development. In this regard, I am pleased to inform that CMA has developed partnerships and introduced programmes to ensure it will have the resources it needs to meet strategic objectives set out in the Capital Markets 10 year Master Plan which I sould encourage all of you to read on our website. It is noteworthy that this plan is not just an authority document but has been adopted by industry and the Government of Kenya as setting the strategy for the transformation of the capital markets in Kenya and the region. The CMMP aims to position Kenya as an international financial centre and a regional hub for capital markets investments in Africa.
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.
Ladies and Gentlemen, in closing, I would like to thank the Kenya National Chamber of Commerce Kericho Chapter as well as the County Government for partnering with us in putting this forum together. I wish you all fruitful discussions.
With those few remarks, it is my pleasure to invite the Deputy Governor of Kericho Hon Susan Kikwai on behalf of the Governor Hon. Paul Chepkwony to make the keynote Address. Having worked with her while she was with Kenya Investment Authority, I can see this county is in good hands.