By Etaarifa Contributor
Cabinet Secretary for the National Treasury, Henry Rotich has unveiled a 2015/2016 National Budget that will be broadly welcomed by investors, according to the Nairobi Securities Exchange (NSE).
The exemption of shares from Capital Gains Tax (CGT) is projected to improve liquidity on the Exchange. Improved liquidity means an increase in the overall number of shares being traded, which is a key attribute that investors look for when investing in a stock market.
The CGT exemption is also important for the positioning of the new Nairobi International Financial Centre (NIFC) as an attractive and competitive investment destination. In place of CGT, the Government has introduced a 0.3% withholding tax on the value of the share transaction.
Mr. Geoffrey Odundo, CEO, NSE says, “We’ll be looking in greater detail on how withholding tax will be applied. At a high level, Treasury has given a boost to investors and Kenya’s attractiveness as an investment destination. As a country we have high ambitions for the role our Capital Markets will play in Vision 2030 in terms of creating long-term financial security and personal savings.”
The Cabinet Secretary also committed the Government to the launch of the M-Akiba bond. This is Kenya’s first mobile-based Treasury bond with a minimum investment level of Ksh. 3,000. NSE has worked with the Capital Markets Authority, Central Bank of Kenya, the Kenya Association of Stockbrokers and Investment Banks, the Central Depository and Settlement Corporation, the Nairobi International Financial Centre Authority, the ICT Authority and the National Treasury on the development of the M-Akiba bond and the roll out of the Treasury Mobile Direct (TMD) platform.
Mr. Odundo says, “Throughout the process, we have kept our eyes on the ultimate target: promoting financial inclusion in Kenya. The M-Akiba bond will enable an entirely new group of investors to access Government debt securities via their phones, which will undoubtedly drive up the national savings rate.”
The exemption of stamp duty on assets being transferred into REITS and Asset-Backed Securities is also predicted to prompt several of these new investment vehicles to list on NSE in 2015/2016.
REITS and Asset-Backed Securities present an affordable investment asset class for the public. They also provide a channel for developers and County Governments to mobilise resources to undertake capital-intensive development projects in infrastructure, housing, healthcare and energy.
Mr Odundo concludes, “We think that the taxation on asset transfers into REITS was slowing up the development of this market. Now REITS will be welcomed by investors – of all types – looking to get exposure to Kenya’s property market. By taking this step, the Government has clearly identified that this will unlock capital for the development of affordable housing and other critical amenities across the country.”