NAIROBI , (Xinhua)– Kenya is set to introduce a futures market trading platform for commodities that will benefit the predominant agriculture sector with better pricing of agro-produce which face knock-down prices during oversupply periods.

“We expect to introduce a Futures Exchange this year,” said Stella Kilonzo, the Chief Executive Officer of the Capital Markets Authority(CMA)

Kenya economy is agriculture based, with the sector representing single largest segment of economy estimated to be 27 percent, according to government statistics.

But the pricing of agriculture commodities like cereals, tubers and livestock products has been one of the biggest problems facing farmers and traders because the marketing system does not have a system of limiting its supply to the market.

As a consequence, there is always oversupply during harvest season that knocks down the prices.

“We expect to introduce a Futures Exchange this year,” said Stella Kilonzo, the Chief Executive Officer of the Capital Markets Authority(CMA) when he addressed Kenyatta University Students in Nairobi late on Tuesday.

Kilonzo said the establishment of a Futures Exchange will benefit all sectors of the economy by addressing the current volatility of prices of commodities that would be traded in the Futures Exchange.

“This will also elevate the Kenyan economy to a global economy by facilitating futures trading of multi-asset classes including currency, mineral, and energy derivatives,” she said.

CMA said it will also introduce Real Estate Investment Trusts(REITS) to facilitate trading of property products and enable establish a formal means investors can pool funds to develop properties.

She said the plan is for a dual regulatory framework that provides for traditional and development REITS. The traditional REITS, which pool funds for investment in stable income generating rental properties, will be open to investment by the general public.

The development REITS that pool funding for construction of housing and other priority sector construction projects will be permitted to invest in higher risk development and construction activities.

“We also expect the Growth Enterprise Market Segment (GEMS), which will be a listing platform for Small and Medium Enterprises to be in place this year,” said Kilonzo.

“We anticipate this will spur new listings at the Nairobi Securities Exchange and help investors diversify their portfolios. “

The planned innovations by the CMA are part of the ongoing capital markets reforms meant to make Kenya ’s financial sector more vibrant in line with the Vision 2030 objectives of providing housing in Kenya , where we face huge supply constraints, and catalyze additional economic activities through the SME sector, which has been identified as the engine for job creation.

She said as part of improving the financial sector, CMA has teamed up with the other financial sector regulators to run public education campaigns across the country.

“This has created an opportunity for us to interact with as many Kenyans as possible in our efforts to enhance awareness about investment opportunities in the capital markets, the products available, and our role as a regulator in the capital markets.”

Kenya Parliament is also this year expected to pass the proposed Capital Markets Act and the Securities & Investments Act to bring Kenya ’s capital markets legal and regulatory framework in line with global best practices.



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