Capital Markets Authority has expressed concern about the poor saving culture that Kenyans have developed over the last decade.
Chairman James Ndegwa said the poor saving culture has led to fewer companies being listed in the Nairobi Stock Exchange.
A study conducted by the regulator in June indicates Kenya’s gross savings rate has dropped by almost half in 10 years. In 2007, the savings rate was 11.7 per cent but this has dropped to 6.2 per cent at the end of 2017.
CEO Paul Muthaura and his NSE counterpart Geoffrey Odundo on Friday said there is need to demystify the concept of using capital markets to raise capital.
“It is relatively cheaper to raise capital through capital markets than through loans,” they said.
“Through capital markets, businesses have better opportunities to grow and this in turn will help improve the saving culture among Kenyans,” Odundo said. They spoke during the potential issuers forum in Mombasa.
Small and Medium Enterprises should also be listed to be more visible and improve their credibility in the business sector. Ndegwa said although there are more than 60 companies on the NSE, which has a total market capitalisation of Sh2.8 trillion, not many listings have been done recently partly due to unfavourable political environment.
“75 per cent of the total capitalisation at the NSE is accounted for by just six firms,” the CMA chair said.
Kenya National Chamber of Commerce and Industry Mombasa county chair Rukia Rashid said family-owned businesses fear being listed in the NSE due to uncertainties.
CMA will put in place initiatives to enhance the experience of those interested in growing their companies through the capital markets.
“To stimulate the market, we are reviewing eligibility requirements for firms that wish to list on the bourse with a view to removing unnecessary barriers and attract new listings,” Ndegwa said.
NSE business development and commercial director Bahati Morara said they are also working towards making listing attractive.
“We have to make simple, possible and inclusive. Brand visibility is important as a business,” said Morara.