The Capital Markets Authority (CMA), Nairobi Securities Exchange (NSE) and Kenya Pension Funds Investment Consortium (KEPFIC) have signed a Memorandum of Understanding (MOU) to support infrastructure projects financing and development through the capital markets, which is expected to lead to growth and deepening of the country’s capital markets.
“Through the partnership, NSE, CMA and KEPFIC will seek avenues to deploy pension funds’ investments into infrastructure projects using available capital markets products such as Green bonds, Asset Backed Securities (ABS) and Real Estate Investment Trusts (REITs).” Said CMA boss Wyckliffe Shamiah.
The partnership is expected to cement the capital markets contribution to the Sustainable Development Goal Nine.
This, according to Shamiah, would be achieved by leveraging capital markets to building resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation, while providing pension funds with a significant return on their investments
Recently the Retirement Benefits Authority (RBA), introduced infrastructure as a distinct investment category under the pension fund investment regulations.
This allows pension funds to directly invest up to 10 percent of their portfolio in the asset class, potentially unlocking approximately Ksh.140 billion for infrastructure investments.
Infrastructure investments are capital-intensive, meaning pooling of long-term capital is necessary.
The MoU between the entities will also help in financing big-ticket infrastructural projects and provide an avenue for enhancing the liquidity of KEPFIC investments through the capital markets.
“This collaboration between NSE, CMA, and KEPFIC outlines the direction NSE is taking in enhancing pension fund activity through forming strategic partnerships as well as reaffirming our commitment to increase liquidity in our market.” Said NSE CEO Geoffrey Odunndo.
His sentiments were echoed by Sundeep Raichura, the KEPFIC Chairperson who said the partnership will “enhance the transparency and liquidity of our members’ investments as well as pave the way for collaborative stakeholder engagements and capacity building initiatives pertaining to alternative assets in the capital markets.”
