In its soundness report for the first quarter of 2018, the Capital Markets Authority (CMA) suggests repackaging Real Estate Investment Trusts and Asset-Backed Securities to fund large development projects in the housing, health, and agriculture sectors as a contribution towards the attainment of the government’s development agenda known as the “The Big Four”.
Government entities and the private sector are expected to contribute to the Big Four agenda with the aim of enabling the entire country to work towards common goals for economic growth.
“The [CMA] has aligned its priority focus areas to include opportunities and potential for Government and related entities to raise funds to finance these projects through the Capital Markets,” the report states.
The CMA plans to focus on initiating the use of Islamic Capital Markets Products and Services to finance development projects and to exploit Green Bonds and Financing to support investments in manufacturing, agriculture, and infrastructure development.
Additionally, the CMA proposes to exploit the Growth Enterprise Market Segment of the Nairobi Securities Exchange (NSE) via on-boarding SMEs in the manufacturing and production sectors and getting them listed.
With regards to food security, the capital markets could offer an opportunity for licensed fund managers to structure funds to entice long-term funds to invest in agriculture.
On health, the government could use the capital markets to acquire equipment, medical supplies, and develop health infrastructure.
The capital markets can also support the manufacturing sector by utilising capital markets instruments to raise money for go-downs, obtain seed capital for purchasing manufacturing inputs, and creating distribution networks.
To achieve these suggestions, the report recommends focusing on stakeholder engagements, eliminating barriers such as levies and fees to realise low-cost housing, introducing incentives to attract the private sector to use its products, and leveraging technology.
