NAIROBI, Kenya, Jun 13 – The Nairobi Stock Exchange Chief Executive Officer has welcomed this year’s budget terming it good for stimulating economic recovery.
Peter Mwangi said on Saturday that efforts to spur the economy outlined by Finance Minister Uhuru Kenyatta if well executed will in turn revitalise the bourse that has of late been hit by the global recession.
Mr Mwangi hailed the bold moves by the Minister but was quick to point out that more efforts were now needed on the implementation phase.
“On the whole I think it was a good budget. The measures are good but we also need to ensure that the implementation. The monitoring of this implementation is also strong enough so that we deliver the benefits to the people that the minister intended to give,” he said in his response.
Mr Kenyatta on Thursday delivered what he called a fiscal stimulus by choosing to avoid touching taxes and allocating more resources to the ground to spur development. The move has earned him enough praise.
Mr Mwangi particularly welcomed the proposal to raise capital base for stock brokers from Sh5 million to Sh50 million and that of investment banks from Sh50 million to Sh250 million. He said this move is a good buffer for both the businessmen and individual investors.
“The better capitalised you are the better able you will be to weather any financial storm that you might run into. The move is towards better risk management,” he said. “All these, I think will address the risk of the individual player and also the systematic risk.”
Mr Mwangi however faulted a move by Mr Kenyatta to restrict Public Pension Schemes from trading on equities. Mr Mwangi said the new requirement was likely to reduce returns for the pension schemes.
“On the long tem equities outperform bonds. Equities and property are real assets and provide a hedge against inflation which bonds will not do and because pension liabilities are for the long term you are actually eroding the pension pot,” he said.
The move by the Minister is seen as aiming to protect pensioners from losing money as has been the case with the collapse of stock brokers and corruption cartels that have siphoned monies from the schemes. Mr Mwangi however says the Minister should have addressed the operational loop holes at the pension schemes especially at the National Social Security Fund.