In Kenya, the private sector has a negative attitude toward listing on the securities market, limiting the attractiveness of the capital market for investors, resulting in few listed companies.
The Treasury Cabinet secretary has given firms a two-year tax amnesty upon listing to encourage them to go public.
The capital market is a highly specialised and organised financial market and an essential agent of economic growth because of its ability to facilitate and mobilise savings and investment.
The capital market offers a variety of financial instruments that enable economic agents to pool, price, and exchange risk.
In Kenya, the private sector has a negative attitude toward listing on the securities market, limiting the attractiveness of the capital market for investors, resulting in few listed companies.
The Treasury Cabinet secretary has given firms a two-year tax amnesty upon listing to encourage them to go public.
The capital market is a highly specialised and organised financial market and an essential agent of economic growth because of its ability to facilitate and mobilise savings and investment.
The capital market is the prime tool that drives any economy on its path to growth and development.
This is because it is responsible for long term growth and capital formation by issuing funds for investment, ensuring an efficient and effective allocation of scarce resources for optimal benefits to the economy, reducing over-reliance of the corporate sector on short-term financing for long-term projects and encouraging inflow of foreign capital.
The capital market occupies an important place in the economic development of society.
The valences of the capital could be even more interesting in the case of emerging markets, which are well known for reorienting financial resources to efficient activities. They not only contribute to the economic reforms but also the privatisation process.
The growing importance of the capital markets in the world has reinforced the belief that finance is a crucial ingredient for economic growth and stock market development.
The capital market plays an important role in the growth of industries and businesses.
Economic growth hinges on an efficient financial sector that pools domestic savings and mobilises foreign capital for productive investments. Underdeveloped or poorly functioning capital markets are illiquid and expensive, deterring foreign investors.
The capital market enables the contractual savings industry to mobilise long-term savings from small individual households and channel them into long-term investments.
It fulfils the transfer function of current purchasing power, in monetary form, from surplus sectors to deficit sectors, in exchange for reimbursing a greater purchasing power in the future.
Real assets
In this way, the capital market enables corporations to raise capital to fund their investment in real assets.
The overarching goal of the Big Four agenda and Vision 2030 is to transform Kenya into a middle-income economy by improving its competitiveness while ensuring unity and inclusive growth. Capital Market Authority is charged with the development of the capital and financial markets.
The capital market provides equity capital for infrastructure development like roads, water, sewer systems, housing, energy, telecoms, and public transport, which have strong socio-economic benefits.
Securities markets are important because they play a significant role in the economy by channelling investment where it is needed and putting it to the best use.
The securities market provides an important alternative source of long-term finance for productive investments. This diffuses stresses on the banking system by matching long-term investments with long-term capital.
Securities markets provide an avenue for raising funds and trading in securities, including futures, options, and other derivatives, which provide opportunities for investors to generate returns.
The implication will be an increase in productivity in the economy, creating more jobs, increasing aggregate consumption, and hence growth and development. It enables them to benefit from economic growth and wealth distribution while providing avenues for investment opportunities.
The capital markets facilitate the efficient allocation of scarce financial resources by offering a large variety of financial instruments with different risk and return characteristics.
This competitive pricing of securities and the large range of financial instruments allows investors to better allocate their funds according to their respective risk and return appetites, thereby supporting economic growth.
