Leading economists and experts around the world agree that the Covid-19 pandemic has disrupted economies and societies at a scale and pace not seen since World War II. Despite this challenging environment, Kenya’s resilience has shone through. The World Bank expects the Kenyan economy to rebound to 6.9 percent growth in 2021, the highest in Africa, and new polls indicate that the country is still considered one of Africa’s top investment destinations.
The 2020 World Travel Awards named Nairobi as the continent’s leading business travel destination, putting it ahead of Cairo, Cape Town, Durban, Johannesburg, Pretoria, Accra and Lagos. Likewise, CEOs and business leaders polled in the Africa CEO Survey 2020 picked Kenya as one of the top five most attractive countries for investment on the continent.
Kenya’s continued attractiveness to investors bodes well for our capital markets in a year when frontier and emerging markets are making a strong comeback due to the prospect of economic recovery, attractive equity valuations following massive sell-offs in 2020, and comparatively low yields in developed markets after central banks there reduced rates to near-zero and in some cases negative in order to inject liquidity into their markets in the wake of the pandemic.
To ensure that Kenya seizes a sizeable share of Africa-bound investment inflows this year, we need to take accelerated steps to make our capital markets more competitive and vibrant. This will require the dedicated support of the government. As the largest player in the bond market, and as a major shareholder in some of the largest listed firms, the government has an instrumental role to play in bolstering the attractiveness of our markets.
The government owns a 35 percent stake in Safaricom, a 60 percent stake in Kenya Re, and a 70 percent stake in KenGen, among others, official filings show. In view of this, the Nairobi Securities Exchange (NSE), alongside the Capital Markets Authority (CMA), has renewed calls for the government to sell down its stakes in some of these listed firms.
Scaling down government ownership in listed firms will release more shares for trading and provide fresh impetus to our bid to make our capital markets more vibrant. This will assist in changing Kenya’s ranking in the Morgan Stanley Capital Index (MSCI) from frontier to emerging market, thus unlocking billions in new global investments from funds that give greater weighting to emerging markets than frontier markets.
We are also pushing for the privatisation […]