About Us

The Capital Markets Authority is a body corporate established under the Capital Markets Act, 1989. The Act was amended in 2000 and renamed as Capital Markets Act. The principal activities of the Authority is to promote and facilitate the development of an ordinary, fair, and efficient capital market in Kenya.

2017 Overview



National Treasury Cabinet Secretary, Henry Rotich (second left) cuts a ribbon to mark the official opening of the Capital Markets Open Day held from 4 – 6 May 2017. Looking on are CMA Chairman James Ndegwa (extreme right), CMA Board Director Paul Ngugi (second from right), Central Bank of Kenya Deputy Governor Sheila M’Mbijjiwe (centre) and CMA Board Director Christine Okoth (extreme left)

CMA Director Market Operations, Mr. Wycliffe Shamiah(left) receives a trophy on behalf of the Board and Management of the CMA from the Secretary General, Dubai Economic Council, His Excellency Hani R. Al Hamli (right) during the International Finance Magazine Award ceremony held in Dubai on 26 January, 2017. CMA was recognized as “The Most Innovative Capital Markets Regulator Africa 2016”.

Warren Vardin, Financial Services Commission Mauritius (left), Luke Ombara, CMA Director Regulatory, Policy and Strategy (centre) and Konrad Afande, CMA Assistant Manager Investor Education and Public Awareness review a book demystifying online foreign exchange trading. The Authority held a stakeholder engagement workshop to review draft Online Foreign Trading Regulations in February 2017. The Regulations have since been gazetted

From left: Capital Markets Authority Chief Executive Paul Muthaura, Financial Services Volunteer Corps President and CEO Andrew Spindler and Bloomberg LP Senior Director and Counsel Michelle Bond, address press during a technical assistance mission to CMA in March 2017. The representatives from FSVC, Bloomberg LP and US Securities and Exchange Commission convened with capital market industry stakeholders to help address regulatory and market-based impediments to liquidity, and advise on the development of new products and services to improve market access

Capital Markets Authority Director Regulatory, Policy and Strategy Luke Ombara (left) and Chief Executive Paul Muthaura review the Capital Markets Soundness Report. In January, 2017, the Authority launched its premier report which communicates to the public on matters relating to key capital market stability issues. It also highlights steps that stakeholders are taking to resolve the issues.

CMA Director for Regulatory, Policy, and Strategy, Mr Luke Ombara (left) and Mr. Alex Mswaka, The Association of Chartered Certified Accountants (ACCA) Head of Marketing for Sub Sahara Africa, Markets shake hands during the signing of a Memorandum of Understanding (MoU). The Authority and ACCA signed a further MOU on 20 June, 2017 to undertake joint financial literacy initiatives for an additional period of two years.

Board Members


SEATED (Left to Right)
1. Dr. Thomas Kibua
2. Ms. Christine Okoth
3. Mr. James Ndegwa – Chairman
4. Mr. Paul Muthaura – Chief Executive
5. Mr. Paul Ngugi
6. Mr. Harry Kimtai

STANDING (Left to Right)
1. Dr. Geoffery Mwau, Alt. PS National Treasury
2. Dr. Kamau Thugge – PS National Treasury
3. Mr. John Birech, Alt. Governor CBK.
4. Mr. Moibi Mose.
5. Mr. Nevis Ombasa, Alt. Attorney General
6. Prof. Githu Muigai – Attorney General.
7. Linda Muriuki.
8. Dr. Patrick Njoroge – Governor CBK

Key Management

Paul M. Muthaura

Paul M. Muthaura

Chief Executive

Wyckliffe Shamiah

Wyckliffe Shamiah

Director, Market Operations

Edwin Njamura

Edwin Njamura

Director, Corporate Services

Luke Ombara

Luke Ombara

Director, Regulatory Policy and Strategy

Hellen Ombati

Hellen Ombati

Manager Legal Affairs & Corporation Secretary

Esther Maiyo

Esther Maiyo

Manager, Internal Audit

Johnstone Oltetia *

Johnstone Oltetia *

Manager, Market Supervision

Kamunyu Njoroge

Kamunyu Njoroge

Manager, Investor Education & Public Awareness

James Kivuva

James Kivuva

Manager, Strategic Projects

Abubakar Hassan

Abubakar Hassan

Manager, Investigation and Enforcement

Andrew Muthabuku

Andrew Muthabuku

Manager, Human Capital & Administration

Richard Chirchir

Richard Chirchir

Manager, Information Communications & Technology

John Njoroge

John Njoroge

Manager, Finance

Matthew Mukisu

Matthew Mukisu

Manager, Derivatives

Mary Njuguna

Mary Njuguna

Manager, Corporate Approvals

Daniel Warutere *

Daniel Warutere *

Manager, Market Supervision

* Daniel Warutere was appointed to this position on 25 May, 2017 following the secondment of Johnstone Oltetia to The National Treasury on 2 May, 2017

Chairman’s Statement

“During the period under review, Kenya’s capital markets greatly benefitted from policy and regulatory support from the Government which, among other initiatives, is working steadily towards issuing its first Sukuk and other conventional sovereign debt issuances, buoyed by its consistent sovereign rating.”

An Overview of Global Growth

According to the World Economic Outlook April, 2017, global economic activity is expected to pick up in the long term with a much awaited cyclical recovery in investment, manufacturing and trade. World growth is expected to rise from 3.1 percent in 2016 to 3.5 percent in 2017 and 3.6 percent in 2018.

Stronger activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply by OPEC nations, have helped commodity prices recover from their troughs in early 2016. However, in the medium term, strategic efforts towards correcting structural problems such as low productivity growth, high income inequality and a shift from inward looking policies to promote global economic integration are required for the realization of a positive global outlook.

Additionally, forward- looking economic policies will play an important role in staving off emerging downside risks while coordinated and renewed multilateral efforts will be critical in tackling common challenges in an integrated global economy.

The contribution of emerging markets and developing economies towards the overall growth of the global economy cannot be understated as witnessed in the recent years; they now account for more than 75 percent of global growth in output and consumption, almost double the share of just two decades ago. The external environment remains a significant enabler in the realization of these transformations as terms of trade, external demand and in particular external financial conditions remain increasingly influential determinants of medium term growth in these economies as they become more integrated into the global economy.

Politically, the year witnessed two key global events: First the global reaction to the results of the 23 June, 2016 referendum leading to the announcement of Brexit and causing the UK Government to invoke Article 50 of the Treaty on European Union, which puts the UK on a course to leave the EU by March 2019. And then the November 2016 US elections which saw Donald Trump elected as President of the United States of America raising uncertainty over the future of long established foreign treaty and trade arrangements, and indeed the USA’s overall relationship with the rest of the world. The possible direction of foreign policies targeted towards developing nations and the implications of the rise of protectionism, are a key concern for Kenya, as for many African nations.

A key driver of the sustained growth observed during the year was a deliberate shift in national policy by the super economies towards infrastructure investments. Further to US President Donald Trump’s pledge to close the US$1 trillion infrastructure funding gap, the United Kingdom continued to champion infrastructure investments to mitigate the uncertainties caused by Brexit, while the Eurozone’s €315 billion three-year Juncker Plan appears to be well in force. China’s President Xi Jinping’s New Silk Road plan to connect China with Central Asia, the Middle East and Europe through road, rail and port construction is also well underway as a further testimony to growing priority of infrastructure as a key tool of fiscal stimulus.

Regional Outlook

Africa’s real GDP growth slowed down to 2.2 percent in 2016, mainly due to the continued decline in commodity prices and weak global economic growth. East Africa was the fastest growing region at 5.3 percent real GDP growth, followed by North Africa at 3 percent. Growth in other regions was less pronounced, ranging from a low of 0.4 percent in West Africa, dragged down by the recession in Nigeria, to 1.1 percent in Southern Africa, with South Africa, the region’s largest economy, posting only 0.3 percent growth.

With dynamic private sectors, entrepreneurial spirit and vast resources, Africa has the potential to grow faster and more inclusively. The continent’s average growth is expected to rebound to 3.4 percent in 2017, assuming that the recent recovery in commodity prices is sustained, the world economy is strengthened and domestic macroeconomic reforms are entrenched. In 2018, growth is expected to consolidate, expanding by 4.3 percent.

The continent is showing signs of recovery with growth projected to reach 2.6 percent in 2017. However, the recovery remains inconsistent, with growth expected to rise only slightly above population growth, a pace that hampers efforts to boost employment and reduce poverty.

Nigeria, South Africa, and Angola, the continent’s largest economies, are seeing a rebound from the sharp slowdown in 2016, but the recovery has been slow due to insufficient adjustment to low commodity prices and policy uncertainty. Furthermore, several oil exporters in the Central African Economic and Monetary Community (CEMAC) are facing economic difficulties.

The latest data reveals that seven countries (Côte d’Ivoire, Ethiopia, Kenya, Mali, Rwanda, Senegal and Tanzania) continue to exhibit economic resilience, supported by domestic demand, posting annual growth rates above 5.4 percent in 2015-2017. These countries house nearly 27 percent of the region’s population and account for 13 percent of its total GDP.

The global economic outlook is improving and should support the recovery in the region. Africa’s Pulse, a World Bank publication notes that the continent’s aggregate growth is expected to rise to 3.2 percent in 2018 and 3.5 percent in 2019, reflecting a recovery in the largest economies. It will remain subdued for oil exporters, while metal exporters are projected to see a moderate uptick. GDP growth in countries whose economies depend less on extractive commodities should remain robust, underpinned by infrastructure investments, resilient services sectors and the recovery of agricultural production. This is especially the case for Ethiopia, Senegal, and Tanzania and to some extent Kenya.

The composition of total financial flows to Africa reflects the dynamism of its domestic markets. In 2017, inflows are projected at almost US$180 billion. Remittances will reach US$66.2 billion, up from US$64.6 billion in 2016. Foreign direct investment inflows are expected to reach over US$57 billion in 2017, supported mainly by greenfield investments from emerging economies, with China leading the pack. Tax revenue remains the most important source of domestic financing in African countries but has slowed with the decline in commodity prices.

African countries will need to explore other options of mobilizing domestic resources to minimize vulnerability of revenues to volatility in commodity prices.

Kenya’s Capital Markets Policy Issues Capping of interest rates

A key policy change in the financial services industry in the 2016/2017 Financial Year was the passing into law of the Banking (Amendment) Act, 2016 which came into force on 14 September, 2016. The law set the maximum interest rate chargeable for a credit facility in Kenya at no more than 4 percent above the Central Bank Rate. In addition, the Act set the minimum interest rate granted on a deposit held in an interest earning account in Kenya to at least 70 percent of the base rate. The implementation of this Act led to the growth in the average savings rates and a decrease in the average lending rates offered by commercial banks in the same period.

However, real questions and doubts remain as to whether the interest rate cap will achieve its intent of reducing the cost of accessing credit by Kenyans, with the Kenya Bankers Association (KBA) and the Nairobi Securities Exchange separately providing data that suggested a decline in lending to the private sector and a decline in the performance of listed commercial banks. In response to this, a Presidential Statement and subsequently a policy pronouncement by the Cabinet Secretary for the National Treasury at the close of this Fiscal Year indicate that the Government will work closely with the Central Bank of Kenya and the Kenya Bankers Association to conduct a more comprehensive assessment of its impact in order to inform its possible review.

Consolidation of non-bank financial sector regulators

In April 2017, the Kenya Cabinet approved the draft Financial Services Authority (FSA) Bill 2016 whose aim is to merge the functions of four regulatory bodies; that is the Retirement Benefits Authority, Insurance Regulatory Authority, Capital Markets Authority and the Sacco Societies Regulatory Authority.

Through the FSA, Kenya seeks to increase efficiency and ease of doing business within the financial services industry by providing consolidated supervision of financial services to eliminate regulatory gaps and increase protection of consumers of financial services through the introduction of a robust market conduct framework encompassing many previously unregulated financial services including non -deposit taking credit providers.

However, the Bill is yet to be forwarded to the National Assembly for consideration and the Authority will continue to proactively engage on the road map for the same in the coming financial year.

Market Development Reforms and Innovations

During the period under review, Kenya’s Capital Markets greatly benefitted from policy and regulatory support by the Government which, among other initiatives, is working steadily towards issuing its first Sukuk and other conventional sovereign debt issuances, buoyed by its consistent sovereign rating, the most recent being Standard & Poor’s affirmation of the country’s short and long term foreign and local currency sovereign credit ratings at “B+/B” with a stable outlook on strong external position and monetary policy flexibility. This was complemented by the tax neutrality and incentive measures pronounced during the 2017/2018 budget delivered in March 2017 by the Cabinet Secretary for the National Treasury, designed to support the introduction of Islamic Finance products, Asset-Backed Securities (ABS) and Real Estate Investment Trusts (REITs). It is noteworthy that Kenya’s current estimated infrastructure funding gap is US$2-3 billion per year over the next 10 years, re-emphasizing the need to fully leverage market based financing.

The pilot tranche of the M-Akiba issued in April 2017, was overwhelmingly successful with more than 100,000 registered potential investors missing out due to the small issue size and presenting a strong foundation for the further Kshs 4.85 billion tranche planned for the coming financial year. The success of this product is expected to demonstrate the true potential of this Financial Technology (FinTech) solution from the Government in mobilizing savings towards the 30 percent level projected in the Kenya Vision 2030.

Related to M-Akiba, the Authority further introduced a new concept of a “Regulatory Sandbox” which is a ‘safe space’ in which businesses are allowed to test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences. The aim of establishing a Sandbox is to allow firms to ‘experiment’ with new technology and offer innovative financial products and services subject to appropriate controls for investor protection. This is an exciting area that will be pursued further in the new financial year.

The Authority has, over the last couple of years, attained Global and Regional awards for its excellence in innovation, particularly in service delivery improvements. This year the Authority was once again recognized as “The most innovative capital markets regulator in Africa”. These achievements come against the backdrop of deliberate reforms currently taking place in Kenya in the public sector in order to realize more effective service provision. The Mwongozo Code, issued by His Excellency the President of the Republic of Kenya in January 2015, has been a critical document in entrenching the principles and values of public service and best practices in corporate governance.

As Chairman of the Capital Markets Authority Board I am proud to note that we have complied with these principles and values fully and I believe, in so doing, we have been able to steer the capital markets to be increasingly more competitive with other emerging markets globally. I further wish to state that my Board has consistently inculcated sound corporate governance practices, which are grounded on our national values as well as global international practices, in the capital markets industry as a whole, to ensure its sustainability.

The Authority signed the 2016/17 Performance Contract (PC) on 23 February, 2017 following negotiations with the National Treasury in December 2016, and subsequent vetting by the Performance Management and Coordination Office in January 2017. Cumulatively, the gross majority of the Authority’s 2016/2017 PC targets were met or exceeded as at end of June 2017. Key areas where commitments were exceeded include: fees and levies collections; investor education and public awareness, stakeholder engagement, youth internship and apprenticeship, starting a business, protecting investors, research and regulatory and policy proposals. The Authority however remains committed to continuous performance improvement towards ensuring that the targets are met across all functions as prescribed by the performance contracts.

International Cooperation Agreements

Internationally, the Authority has entered into Memoranda of Understanding with two global regulators; the Australian Securities Investment Commission and the Abu Dhabi Global Market to provide a framework for co-operation and referrals between the different approaches used in the respective jurisdictions on financial markets innovations in line with the growth of fintech globally. Through the cooperation agreements, the Authority hopes to exchange lessons learned on best practices as it works towards establishing its own regulatory sandbox to support the growth of fintech companies in the country.

Appreciation and Outlook

The support extended by the Government to the Authority is critical to the success we achieve in performing our duties and responsibilities. I wish to thank the National Treasury, our capital markets industry colleagues and all the other financial services regulators who have played a significant role in supporting the Authority as it executes its mandate.

The commitment and diligence of the CMA Board Members in preparing for and attending Board and Committee meetings as well as other events of the Authority has been tremendous. The excellent work of the Authority’s management and staff under the able leadership of Mr. Paul Muthaura has been exemplary and the support the team as a whole provides to the Board’s execution of its statutory mandate is immense.

The drive with which the Authority’s staff and our industry partners have worked towards achieving the 10-Year Capital Market Master Plan is equally impressive and very significant ground has already been covered. With this rapid progress I am confident that, while there are inevitable short term challenges to be addressed, the future looks promising as Kenya prepares to position itself as the “Heart of African Capital Markets” by the year 2023.

We therefore look forward to the exciting years ahead in the capital markets as new products and innovations are introduced to meet demands from the dynamic set of local, regional and international investors with eyes set on Kenya as an investment destination of choice.




Mr. James Ndegwa

Chief Executive’s Statement

Market Performance

Kenya’s capital markets continued to exhibit resilience in the face of both internal and external challenges in 2016/17 Financial Year. Market capitalization for listed companies at the Nairobi Securities Exchange (NSE) grew by 11.35 percent during the period under review, rising to Kshs2.22 trillion as at 30 June, 2017.

This was largely driven by the resilience of the NSE 20-Share Index, which experienced a significant decline of 19.90 percent between July 2016 and February, 2017, during which time it fell below the 3000 point mark; only to resurge by 29 percent to 3607.18 points at the close of the financial year. The earlier decline in the index in the first half of the year was mainly influenced by depressed performance of listed companies as reflected in the high instances of profit warnings and the uncertainty arising from the impact of the capping of the interest rates domestically, coupled with key global events such as Britain’s decision to exit the European Union and the election of Donald Trump as the President of the United States of America.

The second half recovery was driven mainly by renewed interest in the market following introduction of new products notably the listing of Kenya’s first Exchange Traded Funds (ETFs), the M-Akiba bond and positive capital markets policy pronouncements by the Cabinet Secretary for the National Treasury in his delivery of the 2017/2018 Budget Statement.

Total secondary market bond turnover in 2016/17 Financial Year amounted to Kshs 403.29 billion, a 6.96 percent increase from Kshs 377.04 billion recorded in 2015/16 Financial Year. This improved performance was driven by efforts of the Kenyan Government to bring down primary market rates by dropping high bids during its securities’ auctions resulting in institutional investors such as commercial banks redeploying the funds in the secondary market. The general drop in the equities market (equity turnover recording Kshs 152.29 in 2016/17 Financial Year, a 13.19 percent decrease from total turnover recorded in 2015/16 Financial Year), further boosted performance of the secondary bond market due to their inverse correlation, leading to a shift by investors to bond investments. Statistics indicate that the Kenyan markets remain an attractive destination for investors, particularly foreign investors, who account for more than seventy percent of the total market turnover. This was further catalysed by the policy decision to remove caps on foreign ownership of companies listed on the Nairobi Securities Exchange as the country works towards making Nairobi an international financial services centre.

The market also witnessed significant growth in the private equity industry as observed by the number of deals entered into during the year. Overall, we remain optimistic and confident in Kenya’s potential to withstand shocks, both local and external, and believe that we will be witnessing more favourable performance in the coming year, largely driven by innovations and favourable policy and regulatory environment.

Capital Markets Master Plan (CMMP)

The Capital Market Master Plan identified 113 recommendations to be implemented over its 10 year (2014 – 2023) term. Key milestones achieved in the year under review included;

  1. On-boarding of a consultant to conduct a gap analysis on national and county financing through support of the Financial Sector Support Project (FSSP) expected to make policy recommendations aimed at enhancing the uptake of capital market products and services that can be leveraged towards bridging these gaps and supporting devolution.
  2. Stewardship Code for Institutional Investors was gazetted on 23 June, 2017;
  3. Tax neutrality measures on Real Estate Investment Trusts (REITS) and Asset-Backed Securities (ABS) with respect to VAT were adopted by the National Treasury vide the Finance Act 2017;
  4. Amendments to the Capital Markets Act, the Cooperatives Societies Act and Sacco Societies Act to facilitate Shariah compliant finance products as well as tax statutes to provide for equivalent tax treatment of these alternative financial products with the conventional financial products.
  5. The Public Finance Management Act (PFMA) was amended to provide for issuance of sovereign Sukuks (Islamic bond);
  6. CMA staff and industry participants continued to receive level I Chartered Institute for Securities & Investment (CISI) certification and the first batch received level II certification;
  7. Regulations to facilitate Securities Lending and Borrowing (SLB) and Short Selling were approved by the Board and submitted to National Treasury for gazettement;
  8. Issuance of the following policy guidance notes to facilitate roll out of new products:
    – Policy Guidance Note on Asset-Backed Securities; and
    – Policy Guidance Note on issuance of Global Depositary Notes/ Receipts
  9. Onboarding of a consultant to undertake an impact assessment of investor education by the Authority and develop a white paper to inform national consumer financial education policy and strategy;
  10. Following the issuance of Policy Guidance Note on Exchange Traded Funds (ETFs), the Authority approved the first issue and listing of an ETF in February, 2017 by New Gold ETF Issuer;
  11. Onboarding of a consultant to support capacity building, strengthen regulatory oversight and inform product implementation for derivatives markets;
  12. The Authority through support of Frontclear conducted an analysis of gaps in legislation hindering certainty in insolvency netting and settlement finality in REPO and Derivative transactions with the recommendations set to be implemented in 2017/18 Financial Year, following stakeholder engagement with a view to Kenya securing clean ICMA & ISDA opinions; and
  13. The above achievements add onto another 10 percent achieved during 2014/15. Cumulatively, overall progress made in implementing CMMP recommendations account for about 30 percent yet this is just the second year since the launch of the CMMP.

Review of the Policy Framework

To ensure policy proposals made to the National Treasury are inclusive and represent market and industry requirements, the Authority adopted an industry roundtable engagement approach that provides a platform for key stakeholders to share their views, vision and proposals on industry direction. This was implemented in the 2016/2017 Financial Year as the Authority sought to amalgamate policy proposals from industry players for consideration by the National Treasury.

2016/2017 Financial Year was characterized by key policy wins for the capital markets and the overall financial services sector industry as convergence on efforts aimed at growing the industry and increasing product offerings was attained. These were witnessed through the Budget Statement, 2017 which entrenched key gains for the industry and are summarized as overleaf:

Moreover, the Finance Act 2016 amended the Capital Markets Act, making the Authority the primary regulator of spot commodity markets in Kenya, a critical step, in collaboration with the Ministry of Trade and other key stakeholders, in establishing a commodity exchange in the country.

Sufficient measures are being put in place to ensure that the policy pronouncements that have an impact in the Kenyan capital markets are highlighted through targeted investor education forums and joint public education and awareness efforts amongst the financial sector regulators to raise awareness of the evolving and more conducive environment for the use of the capital markets to fuel economic development.

Newly Established Partnerships

During the financial year, the Authority was able to secure a number of MOUs with institutions of similar interest.

  • The Authority signed a Co-operation Agreement with Financial Services Regulatory Authority of the Abu Dhabi Global Market (ADGM) on Regulation of Financial Technology.
    Signed on 18 June, 2017, it provides a framework for co-operation and referrals between the Innovation Functions of the two Authorities. The agreement was based on the mutual desire by the Authorities to promote innovation in financial services in their respective markets. The Agreement provides for a Referral mechanism where the Authorities through their Innovation functions will refer to each other Innovator Businesses that would like to operate in the other’s jurisdiction. It also caters for the Authorities to participate in joint innovation projects on the application of key technologies such as digital and mobile payments, block chain and distributed ledgers, big data, flexible platforms (API) and other areas of new technology and to share information about innovations in financial services in their respective markets.
  • Memorandum of Understanding with the Association of Chartered Certified Accounts (ACCA) to undertake joint financial literacy initiatives.
    In June, 2017, the Authority signed a Memorandum of Understanding with the ACCA to undertake joint financial literacy initiatives for an additional period of two years. The partnership aims to enhance financial literacy in Kenya through programs targeting various stakeholders and builds on the previous joint initiatives under an earlier MOU. The joint financial literacy initiatives are aimed, in amongst other targets, at promoting excellence in financial reporting by the media, having recognized the pivotal role that the media plays in deepening financial literacy in Kenya.
  • Memorandum of Understanding with the Australian Securities Investment Commission on establishment of a Regulatory Sandbox.
    In October 2016, the Authority and the Australian Securities and Investment Commission (ASIC) signed a co-operation agreement which aims to promote innovation in financial services. It also sets up as framework for cooperation between the Authority and ASIC in the expanding space of innovation in financial services. This is in line with IOSCO recommendations as articulated in its Fintech report dated February, 2017 where greater multilateral and bilateral collaboration and greater national regulatory coordination is encouraged to address the potential risk for regulatory arbitrage arising from the cross-cutting nature of Financial Technology (FinTech).

  • Launch of Business Incubation and Accelerator Listing Experience.
    The Capital Markets Authority (CMA) partnered with industry players to engage with companies with the potential to list, in March 2017, through a new initiative dubbed “the business incubator and accelerator experience.” This is a continuous program intended to provide interested companies with a realistic and practical feel of the listing process. Interested firms are given an opportunity to participate in a stage by stage, one on one, structured engagements with the CMA, NSE, Nominated Advisors (NOMADS), Transaction advisors, Lawyers, Auditors, Stockbrokers and Investment Banks, among other service providers, to allow for confidential B2B discussions on their readiness for listing.The Authority will continue promoting this initiative in the forthcoming financial year as it works towards achieving the Capital Markets Master Plan (CMMP) goal of having at least three to four companies listed on the GEMS market segment annually.
  • Launch of an anonymous Whistleblowing Portal.
    As part of its mandate of ensuring fair, orderly and efficient markets, the Authority launched an anonymous reporting portal in July 2016 to enable whistle blowers to report malpractices in the capital markets. The portal which is accessible through the Authority’s website, gives whistle blowers an opportunity to share anonymous but verifiable evidence with the potential to complement and support CMA’s investigation and enforcement efforts. The public is encouraged to use this facility objectively and play an active role in ensuring transparency in capital markets operations.
  • CMA Resource Center Portal.
    During the financial year, the Authority launched its Resource Center Portal. The portal was developed based on modern information communication technologies to facilitate online access to the rich information that the Authority possesses. The Portal which was implemented in September 2016 is geared towards making more information content available online and to remove geographical barriers in accessing basic capital market information. The portal can be accessed through the link; http://www.cmarcp.or.ke/.

Review of legal and regulatory framework

In its drive to widen the scope of available capital markets products in the Kenyan market in line with the 10-year Capital Market Master Plan, the Authority developed a number of regulations and frameworks to support the operationalization of new capital markets products. These included:

  1. Policy Guidance Note on Global Depositary Receipts/Notes, issued in June, 2017;
  2. Policy Guidance Note on Asset Backed Securities, issued in April, 2017.
  3. Stewardship Code for institutional investors, gazetted into operation in June, 2017.
  4. The following regulations are still under development and are hoped to be finalized in the next financial year.
  5. Securities Lending and Borrowing and Short Selling Regulations.
  6. Regulations on Online Forex Trading, in line with the policy pronouncement by the Cabinet Secretary, National Treasury in the 2016 budget statement.

Technical Assistance Provided by CMA Kenya

Noting the significant reforms undertaken in recent years in the areas of market supervision and regulation, market development and investor education, the Authority has stood prepared to share lessons learned with fellow regulatory authorities across the African continent. In this regard, the Authority was able to support a number of technical assistance programmes as follows:

  1. Between 20-24 March, 2017, the Authority hosted staff from Swaziland’s Financial Services Regulatory Authority (FSRA) where the participants were taken through an overview of the Kenyan capital markets, regulation procedures, legislation and guidelines, Kenya’s Capital Markets Master Plan and implementation status amongst others.
  2. In March, 2017, the Authority hosted staff from Botswana’s Non-Bank Financial Institutions Regulatory Authority where capacity building initiatives were offered in line with the Authority’s rules and regulations governing investments, licensing policies and procedures of fund administrators, risk based supervision, inspection policies and procedures, enforcement amongst others.

Market Development

Financial Year 2016 / 2017 marked a significant year on the market development front as the Authority made key advancements in introducing and providing a facilitative regulatory environment for the introduction of new capital markets products.

i. Exchange Traded Funds

In line with its strategic objective of broadening the array of products in the capital market, the Authority approved the secondary listing of the first Exchange Traded Fund (ETF) in Kenya in February, 2017. Consequently, 400,000 gold bullion debentures issued by New Gold Issuer (RF) Limited were listed on the Main Investment Market Segment of the Nairobi Securities Exchange, commencing trading on the NSE on 27 March, 2017.

The ETF is expected to open the doors to local investors wishing to indirectly participate in the gold market, where they have previously had to either trade in the commodity in its physical form (bullion) or do so through offshore markets. It is also expected to provide diversification benefits from a portfolio perspective.

ii. M-Akiba Bond Issuance

Financial Year 2016/2017 saw the debut of the first mobile phone based retail bond issued by the Government of Kenya through the National Treasury. The bond was issued in two phases; a pilot phase offered in March, 2017 that was 100 percent subscribed, raising Kshs150 Million, with a minimum investment amount of Kshs3,000 and a maximum amount of Kshs140,000 through Mobile Network Operators and Kshs999,999 through Pesalink.The second tranche of the issue was offered on 30 June, 2017 following the successful pilot phase and is aimed to raise Kshs1 billion with a green shoe option of Kshs3.85 billion.

iii. Islamic Finance

Following the commissioning of Islamic Finance Advisory and Assurance Services (IFAAS), in association with Simmons & Simmons to lead the Project Management Office (PMO) on Islamic Finance in the country in October 2015, the Joint Financial Sector Regulators have made notable steps towards creating an enabling environment for the growth of Islamic finance in the country.

During the financial year, the PMO team made policy proposals to the National Treasury most of which were adopted in the 2017 Budget Statement; ranging from proposed amendments to statutory provisions such as the Public Finance Management Act and amendment of the Capital Markets Act to incorporate the definition of Sukuks (Islamic bonds).

Additionally, the Islamic corporate governance structure upon which Kenya’s Islamic finance industry will operate has been established with the formation and official launch of the Islamic Finance Steering Committee (IFSC) and Islamic Finance Consultative Committee (IFCC) with the former drawing members from financial services regulatory bodies and the latter being members drawn from the industry, including Islamic scholars. The members have since been gazzeted in the Kenya Gazette.

Policy/Research Conducted

As one of the initiatives to deepen Kenya’s capital markets, CMA initiated various studies and contributed to financial sector publications;

i. Consultative paper on policy framework for the implementation of a regulatory sandbox to support financial technology (Fintech) innovation in the Capital Markets in Kenya

The Authority developed a strategy paper outlining a proposed policy framework for the implementation of a regulatory sandbox to support financial technology (Fintech) innovation in the capital markets in Kenya that was the basis of extensive public consultation.

The consultative paper was subjected to public exposure for a 30 day period and a forum with industry players held in June, 2017 aimed at receiving feedback on the Authority’s approach in establishing a regulatory sandbox.

ii. A research paper on access to funding by National and County Governments

In 2010, through the promulgation of a new Constitution, Kenya adopted a devolved system of government with 47 county governments as the devolved units. To seek solutions towards infrastructural financing for both state and county development projects, the Authority with support from the World Bank through the Financial Services Sector Project on-boarded a consultant in May, 2017 who will be conducting a study aimed at proposing potential capital markets products that can be used by the institutions to raise funds. Leveraging the capital markets is expected to shift reliance on transfers from the national government in financing infrastructural and overall development projects at the county level.

iii. The Authority also provided inputs towards publications in financial services industry such as the Foreign Investment Survey 2016 and the Kenya Financial Sector Stability Report 2016, a joint annual publication prepared by the Joint Financial Sector Regulators Forum.

Financial Highlights Results

Future Outlook

Throughout the 2016/2017 Financial Year, the Authority is proud to have made significant steps in line with the Capital Markets 10 Year Master Plan and the Authority’s Strategic Plan 2013-17 which will be entering its final year of implementation in 2017/18 Financial Year.

This has equally been supported by the Authority’s internal policy on high quality performance dubbed “Uwezo Kipeo,” that has created a spirit of excellence amongst staff as they execute their duties. Acknowledging its human capital as one of its most invaluable resources, the Authority will continue to forge ahead in confidence as it executes its dual mandate of market development and regulation.

In conclusion therefore, I wish to thank the Board for their guidance and unfailing support throughout the year. I would also like to extend my sincere appreciation to the various stakeholders both in Government and private sectors who have made the development and implementation of the Capital Markets Master Plan a reality.

My special appreciation goes to the Management and staff of the Authority for their tireless commitment and willingness to drive the Authority’s ambitious and multi-faceted agenda on market development and effective regulation. The teams’ excellent work in fulfilment of the responsibility entrusted to us has resulted in our recognition two years in a row as “The Most Innovative Capital Markets Regulator in Africa” and moves us ever closer to facilitating the Kenyan capital markets to become the true Heart of the African Capital Markets.




Mr. Paul Muthaura
Chief Executive

Statement of Financial Performance

Statement of Financial Position

Statement of Changes in Net Asset

Statement of Cash Flows

Statement of Comparison of Budget and Actual Amounts

Year on Year Financial Performance Comparison