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The Capital Markets Authority (CMA) and the Kenya Development Corporation (KDC) have signed a Memorandum of Understanding (MOU) to promote greater utilisation of the capital markets through structured financial products by corporates, including SMEs.
On September 28, 2022, the two parties said that the MOU would establish a partnership through which joint efforts in education, awareness creation, and stakeholder engagements will be executed to improve knowledge levels and uptake of financial products and services.
CMA and KDC will collaborate to promote the commercialisation of SME ideas that will be developed to product prototypes through the CMA Regulatory Sandbox. Business advisory services will also be jointly offered to struggling but promising businesses, including distressed potential issuers.
In Kenya, many SMEs remain unserved, especially regarding access to capital through appropriate financial products to support growth and expansion. This partnership is anticipated to enhance SME growth capacity while diversifying financing approaches by adding capital markets to the list of potential capital-raising avenues.
The MoU is aligned with the Government’s Agenda of focusing on the bottom of the financial pyramid, which deliberately sheds light on SMEs, as they increasingly play a catalytic role in the country’s economic transformation journey into the future.
CMA Chief Executive Officer Wyckliffe Shamiah said that strategic alliances are crucial for accelerating market development as they provide complementary expertise and support to the involved parties and consequently enhance their internal capacities.
“Such partnerships are important for the CMA as it aims to ensure that the country’s capital markets attain international stature and provide access to other markets.”
KDC Director General Christopher Huka noted that the collaboration between the two government institutions in research, product development, policy and regulatory work is expected to create a conducive environment for SMEs to thrive.
“Under this agreement, KDC is committed to providing sustainable economic development through the provision of long-term finance and other financial, investment and business advisory services to enterprises in diverse sectors of the economy, given that access to long-term capital has become a challenging issue in many developing economies. Our goal is to address critical gaps and market failures that require long-term funding, which commercial banks cannot meet.” Huka said.
The two partner institutions are committed to championing industry development and facilitating access to suitable financial products and other technical resources through closer collaboration in the areas of product development, long-term financing, research, stakeholder engagement, and innovation.
In a related story, KDC and the Kenya National Chamber of Commerce and Industry (KNCCI) recently entered into a strategic partnership to accelerate the provision of credit to SMEs.
The June 2022 partnership was coined to open up an avenue for KNCCI members to have access to relevant and tailored products and services to grow their businesses; whilst for KDC the MoU gives the Corporation access to potential customers for uptake of its products.
The partnership would see the over 3,000 KNCCI members enjoy diverse financial and advisory solutions to help them recover from the economic downturn occasioned by the Covid-19 pandemic and to spur business growth.
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At the time, Huka said the partnership would enable SMEs and large enterprises greater access to much-needed financing, helping them to improve their enterprises while contributing to the country’s recovery from the adverse impact of the pandemic and the challenges brought about by the Russia-Ukraine war.
“We are excited about this partnership with the Kenya National Chambers of Commerce & Industry. It enables us to open a path to reach more entrepreneurs with needed financial solutions for business growth. Our financial offering combining credit, joint ventures, strategic partnerships and business advisory services is an excellent match for the requirements of the market as the country emerges from the pandemic,” Huka said.
Beyond credit, members of the KNCCI will also enjoy non-financial solutions, including advisory and networking opportunities.
Read the original article on The Exchange.
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