CMA Chairman Kungu Gatabaki says this will help county governments get more funding for investments in their counties and stop reliance on the national government.
“Instead of fighting with the national government for allocation of funds, we would like the county governments to start thinking in terms of county bonds,” Gatabaki said.
He said that county governments should create County Development and Investment Agencies to help accrue the opportunities at the capital market for long term funding of their development needs.
Gatabaki says that the authority is in talks with Governors to see them seek national government clearance for borrowing.
“I am aware that of the constitutional requirements for the county government to see national government clearance and I believe that our Constitution is flexible enough for us to start interrogating that restriction to allow county governments to issue bonds,” he said.
He says that counties will have to demonstrate sustainable budgets with clear revenue generation strategies as well as viable development projects.
He says that the authority is also seeking the government to privatise key government parastatals.
“One of quickest avenues of creating additional investment opportunities in the capital markets and diversifying ownership of national assets is privatization,” he said
Gatabaki encouraged the government to privatise the National Oil Corporation in order to enable Kenyans participate in the oil sector through ownership.
He says that the privatisation would be a good vehicle to enable ownership in assets such as oil in Turkana or coal in Kitui County.
“Privatisation should also be extended to other agencies such as Kenya Pipeline to open up additional investment opportunities for Kenyans,” he said.
He said that the Capital Markets Act is in the process of being amended in order to enable the authority deepen its regulatory oversight role in a potentially robust securities hub.
One of the amendments includes the introduction of a hybrid bond market in Kenya.
Gatabaki said an operational framework for implementing the hybrid bonds market has been designed with the Nairobi Securities Exchange (NSE) and this is expected to provide the reporting infrastructure that will facilitate the operationalisation of an Over the Counter Market.
“As a result, authorised securities dealers will now be licensed to trade just like members of the NSE,” he said.
He revealed that the regulations for the regional bond issuance were also gazetted.