Kenya to rely on capital markets to fund public expenditure

Kenya will increase its reliance on domestic capital markets in order to raise funds required to fund public expenditure, a senior government official said on Thursday.

Cabinet Secretary in the National Treasury Henry Rotich told journalists in Nairobi that the government is now issuing 30-year bonds in order to raise long-term finance.

"The government will take advantage of the vibrant capital markets to raise much needed funds for expenditure in various infrastructure projects through the government bond program," Rotich said during the unveiling of the new Central Depository and Settlement Corporation brand.

Government data show that the government raised 1.8 billion U.S. dollars in 2015 from the capital bond market, up from 430 million dollars in 2006.

"This is a testimony to the maturity of our capital markets which has been made possible by the significant investments in technology by service providers," Rotich said.

The CS noted that the growth of the capital markets is an indication of the significant role that capital markets play in our economy.

Rotich said the capital markets offer a source of funds that is protected from the negative effects of foreign currency fluctuations. In the past few years, Kenya has invested a lot funds in automating the capital markets.

"This has contributed to the increase in the stock market capitalization from 2.6 billion dollars in 2003 to 27 billion dollars in 2015," the treasury official said.

Kenya will also support efforts to develop an efficient depository and settlements services at the capital markets so as to accelerate the growth even further.

Rotich said that plans are at an advanced stage to launch the M-Akiba which is a digital mobile platform that will enable the public to invest as little as 30 dollars in government securities. Endit