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Government urged to tap into Capital Markets

27 August 2014, 09:20

Nairobi -  The Nairobi Securities Exchange (NSE) on Tuesday urged the Kenyan government to tap the capital markets in order to finance infrastructure projects.

NSE Chairman Edward Njoroge told an investor's forum in Nairobi the capital markets are a sustainable source for long term finance.

"Tax revenues are not adequate to finance the growing infrastructure needs," Njoroge said during the listing of Diamond Trust Bank's (DTB) new shares at the NSE. The bank raised 41 million U.S. dollars through a right issue.

He said public sector reforms have made the government, an attractive client for the financial sector.

"The increased attempt by listed companies to raise fresh funds through the security exchange indicates that the primary segment of the capital market has picked up," Njoroge said.

The chairman said the NSE is currently undergoing reforms in order to expand Kenya's financial sector. "Our long term objective is to position Kenya as the financial services hub of the East African region," he said.

The NSE has demutualized and will be listed on the securities exchange in September in order to increase transparency and corporate governance.

In Africa, the only other exchange that has demutualized is South Africa's Johannesburg Stock Exchange.

DTB Chairman Abdul Samji said that there is great demand from domestic and international investors for opportunities in Kenya's capital markets.

"Investors are willing to pay a premium for shares in company that they trust," Samji said.

Capital Markets Authority Director Edwin Njamura said that since 2010 only seven listed firms have raised money through a rights issue.

"Good governance lays the basis for the ease to access to affordable financing as well as stable macro economic conditions," he said.

- Xinhua

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