Capital Markets Authority
The vision of promoting the development of the Kenyan capital market to be an investment destination of choice through facilitative regulation and innovation is supported by Kenya’s 10-year Capital Market Master Plan, which was adopted and launched by the Government in November 2014. The Capital Market Master Plan was developed through proactive and extensive engagements with relevant stakeholders to drive and co-ordinate necessary institutional reforms to improve competitiveness of the capital markets in Kenya.
In line with the ambition to be the heart of capital markets investment in Africa, the Plan aims to ensure that the capitals are effectively positioned to play their role in supporting economic growth and transformation as envisioned under Vision 2030. This is intended to be achieved inter alia through growing the domestic market, accelerating regionalisation and facilitating interconnection to global financial flows. The Plan envisions a transition for Kenya into the choice market for domestic, regional and international issuers and investors, within East Africa and across middle Africa.
The Nairobi Securities Exchange (NSE) closed 2013 as the top performing African market on the global MSCI Index and the fourth best performing stock market in the world, with a 43.58 per cent return placing Kenya on the radar of international investors with an appetite for emerging market growth. This sterling performance continued in 2014 where the bourse was ranked fourth best performing exchange in Africa by Bloomberg, CBS and Thomson-Reuters. In 2014, the NSE became the second exchange in Africa to be demutualised and self-listed, thereby further broadening its ownership structure and deepening its fundraising capacity to drive innovation. With a view to deepening and diversifying investment opportunities, the Kenyan market is in the final phases of introducing more sophisticated products like derivatives, Exchange Traded Funds, Islamic capital market products such as Sukuks, Real Estate Investment Trusts (REITS), and Asset-Backed Securities.
The exceptional international investor confidence in the Kenyan economy evidenced by the appetite for Kenya’s sovereign bond offerings has not only redefined Kenya as a frontline frontier market on the global capital markets map, but also set the tone for a string of domestic corporate and public debt issuances.
A new Code of Corporate Governance Practises for Issuers of Securities to the Public, spearheaded by the Capital Markets Authority, has received strong support from both domestic and international stakeholders who anticipate its enactment in 2015. The introduction of the new Code, as complemented by a new Stewardship Code for Institutional Investors, will complete the overhaul of the governance framework for listed companies, in line with global trends to facilitate increased transparency and accountability. This mirrors the significant governance and market conduct reform introduced for the licensed community between 2009 and 2011.
Regionally, the Authority continues to support initiatives within the East African Community (EAC) to harmonise capital markets regulatory and legislative frameworks and infrastructure and has in collaboration with its sister regulators, developed Council Directives allowing for the adoption of regional convergence standards to support the harmonisation of frameworks on capital markets products, services and intermediation with the backing of the EAC Council of Ministers.