| East African Capital Markets Association proposed |
"We should even be thinking about integration in terms of the Common Markets of Eastern and Southern Africa (COMESA) which has a population of 400 million," he added. Mr Njenga also emphasized on productivity since stocks are only papers that need to be backed up by real wealth and observed that Kenya's 6.1% economic growth rate was only 0.6% above the world economic growth rate of 5.5%. He added that the dollar bubble will bust in a few years time since there are more dollars than real wealth in circulation. Mr Njenga said this while giving the opening remarks at the "Kenya as an Emerging Capital Market" seminar organized by the School of Accountancy at Hilton Hotel on Friday, 7th September 2007. His remarks were echoed by Dr James McFie who proposed the formation of an East African Capital Markets Association. Dr McFie however warned that for the association to function, it will need a mover. "Organisations only work if somebody makes them work," he said. In his presentation on integrating the East Africa capital markets, Mr Jimnah Mbaru, the chairman of Nairobi Stock Exchange (NSE), said plans were under way to establish a Wide Area Network which would enable investors to trade real time from different locations. Central Bank of Kenya Governor, Prof Njuguna Ndung'u in his keynote address said there is need to set the fundamentals for the industry to grow. He added that "only those who participate in the market feel its growth". Mr Jos Konzolo, the Managing Director of Reliable Securities Stock Brokers said ignorance on the workings of capital markets and high professional fees in the region made many people shy from investing in stock markets. He challenged those present to think of ways of increased participation in finance sector. In his presentation titled "Using the Capital Markets to Finance Kenya's Infrastructure" Mr Evans Osano of International Finance Corporation (IFC) said unmet infrastructure and housing needs hamper economic growth and poverty reduction. He said Africa's infrastructure financing needs are estimated at US$250 billion in the next 10 years. He observed that the bulk of infrastructure development undertaken by the public sector uses foreign currency loans and added the private sector can play an important role in this exercise. "The securities markets can be utilized to raise local currency funding for infrastructure and housing. However, developing a corporate bond market is a challenging assignment and requires a lot of commitment and coordination from stake-holders," he said. The good news is IFC has a program to develop the bond markets in Africa. Participants argued that the funds that the government of Kenya is raising from divesting in public owned enterprises should be invested in capital projects like funding physical infrastructure instead of being utilized as recurrent expenditure. Mr Habel Olaka, the Resident Manager of East Africa Development Bank in Kenya said some of the challenges to growing private equity and venture capital funds included exit challenges, tax inefficiencies, paucity of viable deals, lack of information about the asset class and shortage of experienced managers. He noted there were less than five cases where private equity had successfully exited from investments in Kenya and added there is need for creative exit strategies, and government support to markets, and innovation. He also said there is need to put in place mechanisms that will support domestic resource mobilisation into the private equity and provide the incentives to attract foreign investors. Among the 200 plus stakeholders who attended the function were two Tanzanians who are members of the East Africa Legislative Assembly (EALA) commonly known as the East African parliament. Seminar presentations can be found at this link: |
