Developing five-year plan for Kenya's Capital Markets Authority
The Kenyan economy has been growing at approximately 5% annually over the past five years, with the International Monetary Fund (IMF) estimating growth to hover around 6% to 2024. The financial and insurance sector, in particular, has exhibited higher growth at an average of 6.6% over the same period, driven by continued proliferation of mobile money and efforts by financial-service providers to cut costs and increase efficiencies.
Despite the relatively high growth rates, Kenya remains below the Vision 2030 target of 10% annual growth, and further continues to face a number of developmental gaps requiring increased and directed efforts. One such area is ensuring an efficient financial intermediation mechanism that is able to facilitate the mobilisation and allocation of capital resources for long-term productive investments.
The Capital Markets Authority (CMA) of Kenya is charged with supervising, licensing and monitoring the activities of market intermediaries. This includes the stock exchange and the central depository and settlement system, and all persons licensed under the Capital Markets Act. The CMA was at the end of its five-year Strategic Plan (2013 to 2017) and facing an external environment that had changed significantly.
Examples of these developments included the technological revolution, the evolving needs of local and international investors and the protracted election period in 2017 that adversely affected the investment climate. Similarly, government priorities had evolved to include the Third Medium-Term Plan for Vision 2030 and the “Big Four Agenda”. Genesis Analytics and Bourse Consult were jointly contracted to develop the CMA’s strategic plan from July 2018 to June 2023 that would enable the regulator to have the desired impact in supporting economic development and empowerment.
We conducted a situational analysis to understand how the CMA was operating within the Kenyan market, and the CMA’s implementation of the previous strategic plan to identify learnings. This entailed evaluating how the broad macroeconomic factors might affect the functioning of CMA and evaluating the CMA’s progress against key performance indicators (KPIs) set in the previous strategic plan. To this end Genesis and Bourse conducted extensive industry stakeholder and CMA internal management consultations, and reviewed relevant internal CMA documentation, industry statistics and national policy documentation. Next the team reviewed other jurisdiction strategies, which had aimed to regulate markets in a progressive, innovative and flexible way, so as to identify key learnings for the Kenyan context.
These findings were used to formulate the 2018 to 2023 strategic plan. This involved developing six overall strategic objectives to address specific strategic issues, namely:
- Ensuring a robust policy and regulatory framework by enhancing the response and enforcement of the regulatory framework.
- Facilitating the development and uptake of capital market products and services by enhancing the awareness and delivery of capital markets education for investors and issuers.
- Ensuring sound market infrastructure and institutions by supporting the facilitation of trade, improving data access and the development of stable technologies.
- Leveraging technology to drive efficiency in the capital markets value chain.
- Ensuring optimal institutional efficiency and effectiveness of the CMA by enhancing staff competencies and optimising internal CMA systems.
- Enhancing strategic influence by building strategic alliances with domestic and international partners.
Underlying strategic initiatives in each strategic objective were further developed, with corresponding KPIs and timelines set for implementation. Key potential risks to the implementation of the strategy were additionally identified to aid the regulator’s efforts to mitigate their impact. This was all captured in a monitoring and evaluation plan that was handed over to the CMA management to aid the implementation of the strategic plan.
Lastly, the team evaluated the CMA’s organisation structure in relation to its ability to deliver on its new strategic plan and improve service delivery. Pertinent changes were recommended to enhance the operational efficiency of the regulator. T