Cabinet Secretary to the National Treasury, Mr. Henry Rotich;
Principal Secretary to the National Treasury, Dr. Kamau Thugge
Capital Markets Authority Board members;
Distinguished panelists and invited guests;
Ladies and Gentlemen:
It gives me great pleasure to extend to you all, on behalf of Capital Markets Authority, our deepest appreciation for joining us for this stakeholder engagement and cocktail event. I wish to take this opportunity to thank you for finding time out of your busy schedules to deliberate on key issues as well as joining us to celebrate together as an industry. Very much in line with the excellent support that we have been receiving from the National Treasury I am also honoured to recognize the presence of the Principal Secretary Dr. Kamau Thugge and the Cabinet Secretary of the National Treasury, Mr. Henry Rotich for gracing this occasion cognizant of your various commitments.
Ladies and Gentlemen; from the just concluded brainstorming engagement, it is quite evident that our industry is destined to take capital markets to the next level with our joint commitment to continuously working towards creating a vibrant and globally competitive financial sector that will promote a high level of savings to finance our nation’s investment needs. To further echo the sentiments of my esteemed Chair of the Authority’s Technical and Policy Committee, Ms. Rose Detho, today is really a celebration of the actual capital markets “soldiers” or “mashujaa” on the ground which is all of you, as the Authority merely plays the role of a facilitator.
Ladies and Gentlemen; The CMA’s recognition as being the most innovative capital markets regulator in Africa is a great milestone. The award series which is Pan African in scope, also recognizes the best performing stock exchanges, listed companies, investment banks, research teams, regulators, socially responsible companies, and sovereign wealth and pension fund investors. For the Authority to come out at the top is a testament to our industry’s collaborative efforts. I seem to recall that the Securities and Exchange Commission of Nigeria has won the award over the last four years so this award announces the arrival of Kenya on the continental stage. As a Board, we are all the more encouraged by this particular award given we set out the Authority’s Mission in our Strategic Plan 2013-17 as being to “promote the development of Kenya’s capital market to be an investment destination of choice through facilitative regulation and innovation.
That said, Ladies and Gentlemen, I applaud the Government, more specifically, the National Treasury, for supporting the developments of the various products and initiatives in the capital markets. In this regard, it is no surprise that Kenya is quickly progressing out of the “frontier” economy classification and closing the gap on “emerging market” economies. This has largely been attributed to the commitment by stakeholders and also the Government towards facilitating transformative policies and structural reforms.
This Innovation award was no doubt precipitated by a long line of previous support initiatives from the Government. Most recently, with the last Budget statement we saw further initiatives to stimulate the capital markets in Kenya. These included the creation of a new category in the Retirement Benefits Investment guidelines to allow schemes to invest up to 10 percent of their assets in private equity funds and venture capital funds and the removal of the 75% cap on foreign share ownership to stimulate Foreign Direct Investment (FDI) as examples.
In addition we applaud the Government for supporting measures introduced through the Finance Act 2015, which was assented to by the President on September 11, 2015, such as the removal of Capital Gains Tax (CGT), the introduction of reduced tax rates for companies introducing shares through listing by introduction on any securities exchange as well as the removal of stamp duty on the transfer of real estate into a Real Estate Investment Trust (REIT).
Ladies and Gentlemen; in this context, allow me to highlight some of the more recent developments in the capital markets that have been achieved with the support from you, the industry, as well as the Government:
The Authority recently granted approval to the first Income Real Estate Investment Trust Scheme (REIT) in Kenya to raise up to Kshs12.5 billion. The boom in Kenya’s real estate market will in no doubt facilitate the projected increased uptake of REITS.
The Technical and Policy Committee of the Board received extensive presentations from the NSE in respect of their Derivatives Exchange license on Friday the 16th and the Authority is now finally in a position to grant a license to the NSE to conduct derivatives business and to commence and aggressive public awareness campaign to deepen capacity and understanding of the new opportunities and risks associated with derivatives contracts and markets;
As a follow up to an MoU signed with the Charted Institute for Securities and Investment (CISI) to offer certification for capital markets practitioners in Kenya, I am pleased to report that the first component which is the international entry standard module has been completed and training sessions are set to begin within the next two months or less with the first certification exams expected in the first quarter of 2016.
The completion of the Corporate Governance framework review for Kenya which was complemented by the recent exposure of the Stewardship Code’s which empowers institutional investors to play a more proactive role in tracking and pressuring listed companies to improve their compliance with the standards in the Corporate Governance Code. In this context, we are proud to note that the corporate governance code for public listed companies finalized in August 2014 was a significant reference document for the design of the Mwongozo Code for State Corporations;
Last but not least, the increasing reach of our investor education initiatives which I have witnessed firsthand during the Capital Markets Open Day held in May as well as the County initiatives in Mombasa. I note with delight that today marks the beginning of the Capital Markets University Challenge for the County of Nairobi bringing together 19 universities in a competition which will serve to create greater awareness among the youth.
Ladies and gentlemen; as we celebrate how far we have come, I am pleased to note that innovation is being supported with the promotion of competition and the strengthening of market oversight. I am glad to note we have witnessed a tenfold reduction in NSE membership admission cost from Kshs 250 million to Kshs 25 million to reduce barriers to market access for new players seeking to be trading participants. The Authority also continues to strengthen measures to maintain financial market stability in Kenya through implementation of Risk Based Supervision (RBS) and the continuous assessment of liquid capital adequacy based on the nature and scale of the business conducted by regulated entities.
I will stop at these for today but encourage you to continue following all these important initiatives as they happen and to be part of their full realization
Ladies and Gentlemen; as I conclude, I wish to recognize the various industry working groups under the Capital Markets Master Plan as well as the Implementation Committee members, some of whom are represented here today for their committed efforts to secure the proper implementation of the Capital Markets 10 year Master Plan. As they prepare to report on that progress to the inaugural National Steering Committee later this month, it gives me great pleasure to welcome the Chair of that Steering Committee, the Cabinet Secretary to address us here today.
I wish you a blessed Mashujaa day tomorrow.
Karibu Bwana Rotich