The Capital Markets Authority (CMA) and the Kenya Development Corporation (KDC) have signed a Memorandum of Understanding (MOU) to promote greater utilization of the capital markets through structured financial products by corporates including SMEs.
The MOU establishes a partnership through which joint efforts in education, awareness creation, and stakeholder engagements will be executed to improve knowledge levels and uptake of financial products and services. CMA and KDC will collaborate to promote the commercialization of SME ideas that will be developed to product prototypes through the CMA Regulatory Sandbox. Business advisory services will also be jointly offered to struggling but promising businesses including distressed potential issuers.
In Kenya, many SMEs remain unserved especially in the aspect of access to capital through appropriate financial products to support growth and expansion. This partnership is anticipated to enhance SME growth capacity while diversifying financing approaches by adding capital markets to the list of potential capital raising avenues.
The MoU is aligned to the Government’s Agenda of focusing on the bottom of the financial pyramid, that deliberately sheds light on SMEs, as they increasingly play a catalytic role in the country’s economic transformation journey into the future.
Speaking during the signing ceremony, the CMA Chief Executive Officer Mr. Wyckliffe Shamiah said, “Strategic alliances are crucial for accelerating market development as they provide complementary expertise and support to the involved parties and consequently enhance their internal capacities. Such partnerships are important for the CMA as it aims to ensure that the country’s capital markets attain international stature and provide access to other markets.”
At the same event, the KDC Director General Mr. Christopher Huka said that the collaboration between the two government institutions in research, product development, policy and regulatory work is expected to create a conducive environment for SMEs to thrive.
“Under this agreement KDC is committed to providing sustainable economic development through provision of long-term finance and other financial, investment and business advisory services to enterprises in diverse sectors of the economy, given that access to long term capital has become a challenging issue in many developing economies. Our goal is to address critical gaps and market failures that require long-term funding which cannot be met by commercial banks.” Mr. Huka said.
The two partner institutions are committed to champion industry development and facilitate access to suitable financial products and other technical resources through closer collaboration in the areas of product development, long-term financing, research, stakeholder engagement, and innovation.