Chairpersons of the Nairobi Securities Exchange, the Central Depository and Settlement Corporation, Kenya Association of Stockbrokers and Investment Banks, Fund Managers Association and REITs Association of Kenya;
Chief Executives of the Nairobi Securities Exchange, the Central Depository and Settlement Corporation and Kenya Association of Stockbrokers and Investment Banks;
Distinguished invited Chief Executives of various institutions and Listed Companies;
My fellow Board members;
Chief Executive of the Capital Markets Authority, Wyckliffe Shamiah and the Management and Staff of the Authority;
Ladies and Gentlemen:
I hope that you are all safe and well.
I am delighted to be part of today’s inaugural Annual Capital Markets Consultative Forum. Let me start by welcoming and thanking you all most sincerely for accepting our invitation and making the time to participate in this Webinar.
Please allow me to introduce my fellow Board Members present at this forum today.
- Ladies and Gentlemen; The Authority’s Board is fully aware of and supports the new approach of the CMA Management in undertaking direct and, in some cases, one on one engagements with the industry, especially on exploring ways of increasing uptake of capital markets products and services and general market deepening. Despite significant milestones achieved in introducing new products and services, backed by robust and facilitative policy and regulatory frameworks, the extent of uptake of capital market products and services has not been as expected and this obviously is a major concern to the entire industry, very much including the CMA Board. Over the last 5 years the Authority has received global recognition as an innovative regulator, but the Board is acutely conscious that all the product, service and regulatory innovation (and awards) count for absolutely nothing if uptake of the same and market deepening does not then follow.
- Now while the CMA Management has kept us closely updated on their interactions with industry stakeholders, the reported challenges that are being encountered, the concerns of market players and the measures being taken to address the same, we felt, as a Board, that we needed to dedicate session to ‘hear directly from the horse’s mouth’, to learn of the positive as well as negative experiences, to join and participate in the required candid discussions and so that then we are all well aligned as we play our different roles in together building this market. Consequently, this forum brings together the Authority’s Board and Management with all the industry stakeholders, to not only showcase our progress thus far, but also, perhaps more meaningfully, to provide a platform to discuss emerging issues and or challenges that require our concerted efforts to address and resolve.
I am confident that today’s session will ultimately provide further impetus to efforts currently underway to facilitate increased uptake of capital markets products and services in Kenya;
- Ladies and Gentlemen, the financial sector is one of the six priority sectors under the economic pillar of the Kenya Vision 2030, with this sector’s role being key to creating a vibrant and globally competitive financial sector that promotes high levels of savings and financing for Kenya’s investment needs.
To achieve this objective which is dove-tailed with the Capital Markets Master Plan objective of transforming Kenya into the choice market for domestic, regional, and international issuers and investors looking to invest in and realize their investments in Kenya, within East Africa and across the region; the need to have in place a responsive and robust operational, legal and legislative framework cannot be gainsaid;
- 4.As you are well aware, it is just over one year since the first positive case of Covid-19 was reported in Kenya. Since then, while our aspiration remains to make Kenya an investment destination of choice for investors and issuers there had to be a refocus of the Authority’s strategic direction, initially, to ensure the market’s continuity, stability and resilience, and then to ensure that the capital markets play a major role in catalysing Kenya’s National Economic Recovery Strategy. Like all countries around the world, Kenya was not spared by the adverse economic effects that have hit hard due the COVID-19 shock. The disruption in global trade and travel, and the containment measures put in place to limit the spread of the Virus, meant that economic activity contracted sharply.
That said, I take this opportunity to thank the Kenyan Government, for the timely and prudent monetary, fiscal and policy interventions undertaken to cushion households and institutions across the country from the potentially devastating effects of the required containment measures.
Whilst on matters relating to the response to COVID-19, I wish to recognise and thank the industry players and associations including the NSE, FMA and KASIB for the generous support for the sector’s fundraising efforts organised by the Authority towards the National Emergency Fund. Whilst our industry has been hard hit by this unprecedented situation, I feel we showed the necessary empathy for our fellow Kenyans whose circumstances have been much more difficult than ours.
- Ladies and Gentlemen, as you may be aware, the International Monetary Fund (IMF) just issued the World Economic Outlook report themed Managing Divergent Recoveries. The report has identified an array of challenges that various countries experienced in 2020 especially in the service and tourism industries. In the same breath, the report has also projected the global economy to grow at 6 percent in 2021. In the report Kenya is projected to grow at a remarkable 7.6% in 2021 on account of a strong agriculture sector with exceptional harvests in 2020. Despite this exciting prospect, we must acknowledge that we are certainly not yet out of the woods as evidenced by the impact of the prevailing containment measures necessitated by current third wave.
With that note of caution, I must say that we believe that a greater focus on the capital markets as an alternative and cheaper source of funding for both public and private sector, will no doubt accelerate Kenya’s recovery.
- Ladies and Gentlemen allow me you to extend the CMA Board’s sincere appreciation to you as key industry stakeholders, for your contribution to and support towards the development of the capital markets short-term recovery strategy themed Building A Resilient Capital Market. This strategy, developed in response to the Pandemic and presented at one of the online market deepening forums, outlines the Authority’s blueprint for the next two-and-a-half-year period commencing January 2021 and focuses on five priority areas, namely:
- Sustaining market vibrancy by enhancing liquidity through existing capital markets products and services;
- Supporting market based long-term funding for all sizes of businesses to jump-start economic recovery and growth;
- Supporting alternative approaches to increase retail and institutional investor participation in the capital markets;
- Strengthening business continuity by embracing digital technology and application of ICT in the capital markets value chain to enhance operational efficiency and service delivery;
- Enabling the capital markets stakeholders to weather the Covid-19 impact and build sustainable businesses;
- Ladies and Gentlemen, in tandem with the Country’s recovery strategy, this short-term capital markets recovery plan is anticipated to result in the following outcomes:
- Significant increase of utilization of capital markets and listings by Micro, Small and Medium Enterprises (MSMEs), existing and potential large cap business and Counties to fund their longer-term expansion and contribution to Kenya’s economic development;
- Increased primary and secondary equity and debt market liquidity through roll out of capital markets liquidity tools (market making, short selling, securities lending, and borrowing, over the counter (OTC) transactions;
- Improved capital markets soundness by reducing concentration risks through new large-cap equity listings such as through privatization;
- Capital markets players and especially market intermediaries (stockbrokers, investment banks, fund managers), listed companies and issuers of securities to the public remaining going, successful and profitable business concerns; and
- Increased mobilization of savings and investments through transformative use of mobile and other online technology for participation in the primary and secondary capital markets.
- 8.Ladies and Gentlemen, I believe today’s conversation will also delve into the Short-Term Recovery Plan and you are most welcome and strongly encouraged to propose any areas for improvement during the upcoming plenary session.
In addition, it is worth mentioning that the Authority, with the assistance of FSDA, is undertaking a midterm review of the Capital Markets Master Plan and towards this end an initial draft market assessment report has been developed following a desktop review and stakeholder engagements. I believe all of you will be accorded an opportunity to fully participate in this review.
As I conclude, Ladies and Gentlemen: I am confident that through such engagements, which we intend to hold more regularly, we will not only manage to ensure that the capital markets remain resilient but will also address the concerns around uptake and market deepening, thus contributing to the Kenya’s overall Economic growth. To further assure you of our commitment to this initiative, I can share that we have scheduled an internal meeting between the Board and Management this afternoon to specifically deliberate how best to take forward the issues identified and deliberated upon with you in this morning’s forum.
Finally, it would be remiss of me not to acknowledge that this is my last week as the Chairman of the Authority’s Board. It has been a great honour to serve in this position for two terms and to work with all the various stakeholders in the Capital Markets industry, our peer regulators, my colleagues on the Board and the highly committed team at the Authority. I am certainly not seeking to convert this very important forum into a farewell event but please allow me to thank each and every one of you for the support, cooperation and collaboration that we (and I) have received over the last six years. The capital markets in Kenya may not be in exactly the position we would wish it to be, but fora such as these, the collective knowledge and expertise that we represent, the infrastructure and networks that we have built, the interest, commitment and passion for our industry that we share (exhibited by our participation today) all go to ensure that we are fit for purpose and can achieve rapid deepening once the environmental and other external factors become more favourable.
With those few remarks, it is now my pleasure to declare the Forum officially open!