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President William Ruto has signalled plans by the government to step up privatisation of State Corporations to spur listings on Nairobi Securities Exchange (NSE).

He said the government plans to revamp the capital markets and use the sector to raise revenue to fund State projects, attract foreign investments and also reduce borrowing from external markets.

“The government plans to change the business environment and end a listings dry spell for more than a decade, by listing up to 10 enterprises on the Nairobi Securities Exchange in the next twelve months,” he said in Nairobi yesterday.

The Head of State was speaking during the launch of Nairobi Securities Exchange Market Place, an initiative that seeks to revive market activity and boost growth in the domestic capital market.

 “We will embark on privatisation of public corporations as a way to generate wealth. We intend to get between 5-10 mature public sector companies listing at NSE in 12 months,” said Ruto.

He said the privatisation law can be repealed if it is not amended in the next three months in a bid to help parastatals raise funds easily on the NSE.

“We have a bad privatisation law and instead of the law helping us in privatisation, it has stalled the process. I have given an order that if we can’t amend it in our first 100 days in office, we will repeal it,” Ruto added.

“I believe and there is demonstrated evidence that the stock market under the NSE has significant potential to grow this economy through providing development capital through among other things listing of public companies,” Ruto said.

Currently, NSE has 63 listed companies with a total market capitalisation of Sh1.9 trillion. Kenya has not floated any major Initial Public Offer (IPO) since 2006 when KenGen listed, with the last IPO being in 2015 when property investment fund ILAM Fahari I-Reit listed on the bourse.

IPOs are where companies lists on a stock market while simultaneously raising new capital, and are important for deepening capital markets, and maintaining their vibrancy. A lively stock market also helps to further economic goals such as spreading wealth and attracting foreign exchange.

Global market

However, ongoing volatility in the global market and local market might further complicate efforts to end the listing dry spell that has persisted for almost six years now. The States move at the bourse comes when market capitalisation has remained below the Sh2 trillion mark in the past one week, a performance that was witnessed in August 2020, when Kenya was battling Covid-19 restrictions, which delivered layoffs, job cuts and business closures. Kenya has not been able to attract a major Initial Public Offer (IPO) since 2006 when KenGen listed, with the last IPO being in 2015 when property investment fund ILAM Fahari I-Reit listed on the bourse.

IPOs are where companies lists on a stock market while simultaneously raising new capital, and are important for deepening capital markets, and maintaining their vibrancy. A lively stock market also helps to further economic goals such as spreading wealth and attracting foreign exchange.

Experts hope that the government’s move will see address both supply and demand side of the market to accelerate growth in this crucial sector.

The president also asked private companies not shy away from raising funds at the bourse due to tax fears of information that may arise from firms going public.

“The government is willing to work with you so that we can remove those impediments. We are ready to forgive some sins, let me put it that way, so that we can all move together,” he said.

Kiprono Kittony, NSE Chairman  said the Market Place will provide a platform for Kenya to communicate investment opportunities to the world, positioning the country as a hub for trade and investments.