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LETTERS: Capital markets must target small entrepreneurs

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Stockbrokers at the Nairobi Securities Exchange. FILE PHOTO | NMG 

Kenyans are entrepreneurial people. Hardworking and business minded. And every day you find people who are trying to profitably satisfy a society need. The challenge is that most of them operate informally in what is popularly referred to as hustling.

But once in a while, in the midst of all the hustling are some real gems that if nurtured well could be tomorrow’s industry leaders.

The Nairobi Securities Exchange (NSE) on the other hand, is where companies come to look for funding and investors can find companies to invest in for a future return. The Vision 2030 blue print (now less than 12 years away), dreams of the NSE as a vibrant market place with hundreds of companies.

Sadly, the current reality is far from rosy. We have been experiencing a new listing drought and non-less than the Deputy President William Ruto recently decried this sorry state of affairs.

Many listed companies have issued profit warnings, others rarely give dividends, and many have gobbled taxpayers and investors funds in bail outs while some have shed share values. This at times leaves the investors with no justification for going to the NSE in the first place.

These two states need to merge; the hustler entrepreneur– who’s is currently small and needs support, and the NSE which really needs to add more members into its fold to remain relevant in the future.

The third part of this triangle would be the investor willing to put money into initiatives that may not work but if they do, will benefit the economy as a whole.

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NSE together with the Capital Markets Authority (CMA) and other relevant institutions should try to meet the small entrepreneurs somewhere halfway. Every day in the news we hear and learn of people who are finding solutions to every day challenges but cannot scale up due to capital and maybe managerial constraints. Turning hyacinth into paper and other unique businesses.

NSE can set up a fund where people can put money with a disclaimer that the returns will be nil for a period of time say 3 years, and may or may not succeed. The fund should focus on businesses that are already running, with ideas that are fresh, employs people and can employ more if scaled up.

The businesses should also have unique selling points e.g. Employing only former prisoners to help them integrate, or women groups growing bamboo to meet the huge need for wood etc.

NSE could provide the capital required with little or no strings attached. Offer support to the business person but don’t interfere with the management to enable the vision of the founder to take root and flourish.

Just keep the entrepreneur on track, the drive and the hustler in him/her will keep moving. Also support him by convincing the Kenya Revenue Authority(KRA) to offer the business the tax breaks/ incentives offered to multinational companies.

NSE should be careful to ensure that it drops down to the budding entrepreneur’s level. Administrative changes should be little so as to free the entrepreneur to do what he does best: hustle and create value.

NSE could partner with other stakeholders. Team up with media houses to point out budding and potential businesses and their growth story. This will sensitize people and have the multiplier effect of new customers and markets.

Banks could be roped in to give loans with longer grace periods etc. Insurance companies could also come in handy.

Where necessary, help the business ideas to be patented to avoid unfair copycatting. After a few years of careful monitoring let the companies ease into NSE. Though it may not be its core mandate, there really is no boundary to adding value. And in the long run (read Vision 2030), it will surely pay off.

Kariuki Gathuitu, Nairobi.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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