CMA mulls Sh7tr market cap by 2028

Friday, April 5th, 2024 01:00 | By

The Capital Markets Authority (CMA) in Kenya has unveiled an ambitious five-year strategic plan to propel market capitalization to Sh6.6 trillion and revenue to Sh1.7 billion by 2028.

This follows prolonged poor market performance as companies seeking capital found alternative routes, amid a dearth of regular high-quality IPOs, leaving a new generation of investors in the lurch

At some point, Nairobi was ranked the worst-performing African bourse in dollar returns, as foreign investors, who once formed the backbone of the bourse, left in droves.

Attracting investors

According to Wycliffe Shamiah, the CEO of CMA, the new strategy is crafted to change all these and invigorate economic growth, attract investments, and align with local and global priorities.

The strategy is to make the capital markets a pivotal source of investments and long-term financing, vital for Kenya’s developmental and socioeconomic well-being.

“The authority will therefore deploy significant resources toward growing the customer base, democratising the market, enhancing liquidity, optimising the customer experience, stakeholder engagement, strengthening investor protection mechanisms, improving resource mobilisation, and enhancing strategic influence,” Shamiah said.

Ugas Mohamed, the CMA chairman, underscored the plan’s focus on promoting resilience, competitiveness, and inclusivity through innovation, bolstering investor confidence.It envisions a dynamic capital market, propelled by enhanced customer experience, financial inclusion, policy reforms, improved infrastructure, innovation support, and investor protection.

Mohamed says key areas of focus, include promoting Real Estate Investment Trusts (REITs), facilitating market access for micro, small and medium enterprises (MSMEs), privatisation, market-based Private Public Partnership (PPP) financing, and implementing commodity market reforms

One of the key challenges will be to entice and convince investors of the NSE’s viability and profitability.

Similarly, with the government’s privatisation plan of 18 loss-making parastatals to improve their performance and profitability, will feature prominently in this attempt to resuscitate the markets.

The chairman said the plan harmonizes with Kenya’s Bottom-up Economic Transformation Agenda, Vision 2030 Fourth Medium Term Plan, the CMA Master Plan, and international priorities like the United Nations’ Sustainable Development Goals and the Africa Union Agenda 2063.

THE BUDGETThe blueprint outlines a total cost of Sh6.8 billion, with costs increasing annually and peaking at Sh1.6 billion in the third year. It allocates Sh823.9 million for customer base expansion, Sh162.4 million for financial sustainability, and Sh959.8 million for performance enhancement and risk management. Funds are earmarked for human resources, environmental, social, and governance initiatives, with administrative costs projected to reach Sh4.7 billion.

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