Capital Markets Overview

Banking Sector

Kenya now also boasts of the most sophisticated financial system in the region. Its large banking sector includes some 45 commercial banks, which account for about two thirds of all assets, loans and deposits. Multinational banking institutions like Standard Chartered, Barclays Bank and Citybank have been doing business in Kenya over many years and are well established. In the successful banking sector are commercial Kenyan banks with a history of great success and network in the country. The leading banks in terms of assets are generally regarded to be Barclays Bank of Kenya, Standard Chartered Bank of Kenya, Kenya Commercial Bank, Citibank and Co-operative Bank of Kenya. Smaller banks include the CFC (formally Credit Finance Corporation), investments & Mortgages Bank, National Bank of Kenya and the National industrial Credit Bank.

The Nairobi Stock Exchange

The Nairobi Stock Exchange (NSE), the fourth biggest market in Africa, has been an attraction to thousands of Kenyans, as many of its listed companies attract huge speculative investments. This indicates that Kenya's rising middle class have savings to tap into, as prosperity increases. As for foreign investors, their numbers are also growing. And many long established foreign firms continue to invest in their Kenyan businesses, some because they fear competition from new investors. This again is positive as competition is the motor for progress, as well as a sure indicator of a healthy market.

Regional stock exchange group planned

To develop regional corporate business, three East African securities exchanges, namely the NSE, the Uganda Security Exchange (USE) and the Dar-es-Salaam Stock Exchange (DSE) have established a working relationship in the spirit of integrating and developing capital markets in the East African Community (EAC). The exchanges operate under the umbrella of the East African Securities Exchange Association (EASEA). Negotiations are ongoing, with no date set for completion. In early2007, the NSE introduced a Wide Area Network (WAN) computer system to facilitate electronic trading for members, allowing them to open branches across the country to serve eager private investors.

Capital market opportunities

The capital markets are creating opportunities for a range of financial companies including the IDCD (Industrial and Commercial Development of Corporation), which has acted as an investor in various businesses and is the largest quoted investment company in East Africa. It has some features of private equity fund and those of a mutual fund. The company is currently benefiting from NSE's resurgence, but also owns various profitable unlisted companies that could be listed on the NSE in the coming years.

Actis, a leading equity private investor in emerging markets, provides an international perspective and is an active player in Kenyan corporate life with an office in Nairobi. It was one of the first institutional investors to back the incredibly successful sub-Saharan mobile telecommunications company Celtel run by Mo Ibrahim, and was instrumental in the deal that saw Celtel acquiring KenCell, one of Kenya’s two main mobile operators.

Elections at the end of 2007 will indicate how fast the political system is maturing. Kenya's business community is gradually developing away from political influences to believing that if the economy is to maintain healthy growth and sentiment is to remain positive, greater efficiency in the political process will be needed with investment targeted to longer term sustainable development. These are exciting times for Kenya's corporate sector.

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