NewsEast & Horn AfricaKenya to launch Nairobi financial centre later this year-finmin

Mon,10Dec2018

Posted on Wednesday, 18 July 2018 14:21

Kenya to launch Nairobi financial centre later this year-finmin

By Reuters

Pedestrians walk past the closed doors of a money-transfer service in Nairobi, Kenya Wednesday, April 8, 2015. Photo: Khalil Senosi/AP/SIPAKenya will launch its international financial centre in the capital Nairobi later this year to attract large foreign financial firms and boost capital flows, its finance minister said on Wednesday.

The government of East Africa's biggest economy has been working with Qatar since 2014 to build a financial centre in Nairobi that mirrors Doha's international financial centre.

"The Nairobi international financial centre will be critical to attracting international capital into the Kenyan market," Henry Rotich told a capital markets meeting.

Compete with established financial centres

The Kenyan financial centre is expected to compete with other established financial centres in the region like Mauritius.

Despite Kenya's relatively developed capital markets, 75% of all business financing in the economy was from the banking sector, while the balance came from the capital markets, Rotich said, adding that the situation was not ideal.

"We should be funding our businesses through equity and bonds under the capital markets as opposed to the loans through the banking sector," the minister said.

"I urge the capital markets to aggressively work on this aspect and tilt the share of capital assets in funding business requirements."

Kenya required an investment level of 30% of gross domestic product (GDP) and a savings rate of over 25% of GDP to sustain growth of 10% a year, the minister said.

The Treasury expects growth to bounce back to 5.8% this year after drought, election uncertainties and a slowdown in private lending cut it to 4.9% last year.

 



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