About this transcript: This is a full AI-generated transcript of Business, Investment & Growth Townhall - Kenya's Economic Future in Focus from Capital FM Kenya, published August 2, 2026. The transcript contains 20,810 words with timestamps and was generated using Whisper AI.
"DJ UV. - Good morning, good morning, welcome. If you're just joining us, it's a pleasure to have you. Please do come. Thank you. Thank you. That's Republic every Friday on 98.4 Capital FM with DJ UV, 9 to 11 PM. Thank you. All righty, we are ready to begin in five, four, three, two, and one. Did..."
[00:00:00] Speaker 1: DJ UV.
[00:00:30] Speaker 2: - Good morning, good morning, welcome.
[00:00:36] Malika: If you're just joining us, it's a pleasure to have you. Please do come.
[00:01:00] Speaker ?: Thank you.
[00:01:30] Speaker 4: Thank you.
[00:01:59] Speaker 5: That's Republic every Friday on 98.4 Capital FM with DJ UV, 9 to 11 PM.
[00:02:29] Speaker ?: Thank you.
[00:02:59] Malika: All righty, we are ready to begin in five, four, three, two, and one. Did that give you a bit of anxiety? It's a clock ticking down, things are getting serious. But you know what? It is a serious conversation we're here to have, but it doesn't mean it should cause you any anxiety. In fact, today's conversation, if anything, should reduce the anxiety you have around your Biashara, around business, around the economy, around investment as well. I know that one does get quite a few people anxious. So good morning to you.
[00:03:46] Speaker ?: So good morning to you.
[00:03:46] Malika: So good morning to you. I'm Malika with Capital FM. I host The Breakfast Show. And today I'm hosting you all live here. And it's such an honor. I'd like to request you all to be upstanding. All right. You probably expected me to start singing a particular tune right now, but that's not what's happening. I want you to look to your partner next to you, whichever side you have somebody, and tell them, I know business.
[00:04:15] Speaker 6: I know business.
[00:04:18] Malika: Say it with conviction. One more time.
[00:04:20] Speaker ?: I know business.
[00:04:22] Malika: All right. Now that we've stretched, we've gotten to know our neighbors a little bit. Do have a seat. We're going to kick things off right now. And today's town hall is all about business, investment, and growth. Those are three things that are crucial, not just for each individual in this country, but as a collective, as Kenya as a whole, of course. Our panelists today are incredible. The insights they have and what they're bringing to the table is definitely applicable to each of us in its own way. So I want you to take your notes. I always have a book. Don't talk. It's not just a journalistic tendency, but it's good to have a book, a pen, a paper, to note down one piece of advice, one thing you hear today that you can take with you, that you can research more, that you can dig into, all right? So have your tools at the ready as well. A phone works too. It's okay. But I know you want to scroll TikTok a little bit as you're here. No, no, no. We want to be right here in the present together. And all this is possible courtesy of our partners, INM Capital, as well as Strathmore Center for Value Investing. So thank you so, so much to our partners for enabling us to hold such pivotal discussions and to bring us all together here today. All right. Now I'd like to invite a very special person, Dr. Edwin Obonio, director for Strathmore Center for Value Investing, to come on up here, give us his opening remarks to kick things off. Let's give him a round as we welcome him here. Welcome Dr. Edwin.
[00:05:58] Dr. Edwin Obonio: Yes, so you can hear me now. Yeah? So, good morning guests, distinguished gentlemen and ladies. That sounds so formal. Today we are kind of having an open forum, so no forum on talk. On behalf of Strathmore Center for Value Investing and our partners, INM Capital and Capital FM, we convened this meeting today forum to have an open discussion about investing and growth within our economy. So I'm happy that all of you have been able to attend. I'm grateful that you've woken up early morning to propose yourself to come and hear this conversation. And I'm hoping we'll even have some questions after. Just to guide some of your thoughts that you already have before you came. I'm hoping that you'll learn one or two things. As Malika said, I hope you'll jot down, yeah, one or two things from today's session. So, Strathmore Center for Value Investing is a center within Strathmore University. The Strathmore Institute of Mathematical Science. And our main aim really is to educate the public on investing and be a bureau of finance, which is also known as psychology of investing, so that people can be able to make good investment decisions wherever they are in life, whatever walk of life they are in. So we are happy to convene this in order to continue the conversation together with our partners. And of course, there will be more forums like this to ensure that everyone is not left behind. Both our students here internally within the university, undergraduate, postgraduate, and also the public as a whole. And that's why we are also partnering with the Media House, because we can also take the conversations also nationwide. Thank you so much for coming here today. And I hope that you learned something and you enjoy the session. Thank you.
[00:08:18] Malika: Thank you so much, Dr. Obonio. Let's give him a round. All right. As Dr. Obonio makes his way down, I'd like to invite the Managing Director for Capital FM, Simon Bargure, to also address us and give us his thoughts as we carry this conversation forward. Let's give him a round as well. Good morning.
[00:08:48] Speaker 8: Good morning.
[00:08:49] Speaker ?: Good morning.
[00:08:50] Speaker 8: Okay. I'm more into reading than speaking off the cuff, so you will excuse me. First, I'd like to apologize. I think we started a bit late, more than we anticipated. We'll seek to improve in future. Personally, I think time is such an important thing to me, and so to the industry that I work in. So, pardon us, we'll seek to improve on that. So, I'll go straight to it. Good morning, distinguished guests, our partners, panelists, members of the business community, policymakers, investors, students, and everyone joining us here at Statham University in person and across our various digital platforms across the country and across the world. On behalf of the Capital Group Limited, I would like to – it's my pleasure to welcome you for our July business investment and town hall today. This year particularly is significant for Capital FM, as we celebrate 30 years of shaping Nairobi's music, music talent, lifestyle, and urban culture, while keeping the nation informed as well. More importantly, it marks the beginning of our third flow. The next chapter in our evolution, built on three decades of trusted storytelling and influence. We are becoming an even stronger digitally-driven media platform committed to shaping conversation, connecting communities, and creating lasting impact. That commitment is reflected in our 2026 editorial agenda. Each month, we have convened national conversations around issues that matter most to Kenya's future. Today, we turn our attention to one of the country's greatest priorities: business, investment, and growth. Our theme, Kenya Open for Business, investment, trade, and opportunities, both a certain of confidence and a call to action. At Capital Group, we believe economic growth is not measured simply by GDP or investment announcements. It is measured by thriving businesses, quality of jobs, stronger exports, innovation, and improved livelihoods. Our objective today is therefore to move the conversation from investment announcements to economic impact, from deals to jobs, from policy to opportunities, from growth statistics to shared prosperity. There has never been a better time for this conversation. The World Bank projected Kenya's economy to grow at about 5.2% in 2026, placing us among Africa's fastest growing economies. SME and micro SMEs account for about 80% of the employment, while more than 80 million young Kenyans enter the job market every year. These figures remind us that investment is not simply an economic priority, it is a national imperative. Kenya's comparative age is built on strong fundamentals, a strategic gateway into East and Central Africa, access to regional markets through the EAC, COMESA, and AFTAD, or Africa Free Continental Trade Area. Modern transport infrastructure, a young educated workforce, and one of Africa's most advanced digital economies. Our financial sectors continue to be a global success story. From pioneering mobile money to today's thriving fintech ecosystem, Kenya has transformed financial inclusion and business financing. Institutions such as INM Capital Limited, our partner today, together with Kenya's banking and telecommunications sector, continue to enable entrepreneurship and expanding access to capital for businesses of every size. Our capital markets are demonstrating renewed confidence. The Nairobi Securities Exchange has posted a strong recovery in 2026, driven by improved corporate earnings, stronger banking performance, and a growing investor participation. Healthy capital markets are more than indicators of confidence. The finance enterprise, infrastructure, and innovation. Kenya is equally emerging as Africa's green investment destination. Nearly 93% of our electricity comes from renewable sources, principally geothermal, hydro, wind, and solar. Few countries can offer investors clean energy, reliable energy at this scale, making sustainability one of Kenya's strongest comparative advantage. During my recent visit to Shenzhen China, one lesson stood out. Shenzhen's transformation was not built on incentives alone. It combines special economic zones with infrastructure, policy certainties, skills development, technology transfer, and export-led industrialization to create a globally competitive ecosystem. Kenya is building that foundation through Dongokundu SCZ, Naivasha SCZ, Konza, Technopolis, Tatu, City SCZ, and Atriva Export Processing Zone. And emerging county industrial parks as well. These are more than infrastructural projects. They are platforms for manufacturing, innovation, exports, and sustainable creation. As I reflect on my recent article as well, from SCZ's to global competitiveness, Shenzhen's playbook for Kenya, an opportunity lies not in creating more economic zones, but in building ecosystems where policy infrastructure, talent, innovation, and investment work together to produce globally competitive businesses. The media has an equally important responsibility. Yes, we do. We are more than observers of economic progress. We are catalysts for it. By showcasing entrepreneurs, promoting exports, highlighting innovation, and connecting investors with opportunities, we strengthen confidence in Kenya as an investment destination and help unlock the country's full potential. Today's tunnel, therefore, asks one defining question. Can investment, trade, and enterprise create jobs and growth Kenya needs? I believe the answer is yes. But only government, the private sector, investors, financial institutions, academia, and the media work together with shared ambition to build a more competitive and prosperous Kenya. We are privileged to be joined by an exceptional panel of leaders, economists, and investment experts whose insights will enrich today's discussions. Thank you for joining us. Kenya is open for business. The opportunities are here. The time is now. Karibu Nsana, and let the conversations begin. Santeni. Thank you so much.
[00:15:27] Malika: That is our MD at Capital FM, Simon Bargure. And just because I want to get a few brownie points, let's give him one more round of applause. You'll be doing me a favor. Thank you so much. Now, as Mr. Bargure said, today the big question is, how do we unlock investment? How do we grow businesses? And very importantly, how do we create more jobs in Kenya? We know that this is a big, big question that many are asking. The youth in this country have high levels of education. But when they're done studying, and we are in a university, when many of the students here are done, how many job opportunities are waiting for them? Right? So these are crucial questions we are asking today. Right about now, I would really like to invite our first panel on to the stage. Mr. Silas Motuku, CEO, I&M Capital. Kindly do make your way from the right. Dr. Mercy Kano, finance lecturer at Strathmore University at the Strathmore Center for Value Investing. And Ken Gishinga, Chief Economist at Mentoria Economics. Let's give them a round as well. Thank you. All right, as we get right into the conversation, I do want to ensure that we are aware of the incredible partners who are enabling this conversation to happen. And of course, today's business investment and growth town hall is proudly supported by I&M Capital. I just want to take a moment to tell you a little bit about I&M Capital. Now, it is a wholly owned subsidiary of I&M Group PLC and a licensed fund manager by the Capital Markets Authority of Kenya since 2021. And the Capital Markets Authority of Uganda since 2025. I&M Capital is dedicated to helping individuals, to helping institutions as well as businesses achieve their financial goals through professional wealth management and tailored investment solutions. Backed by market expertise, research, as well as disciplined risk management, because that one is crucial. So, to start your investment journey, you do visit your nearest I&M Bank branch today, right after we do this. And you can also email wealth.advisors@imbank.co.ke or call 0719-088-175. Speak with an I&M Capital Wealth Advisor. I'll keep reminding you of that number because I know that's one you definitely want to note down. And of course, we're here thanks to Strathmore. Now, today's town hall proudly hosted in partnership with the Strathmore Center for Value Investing, a research training consultancy centre under Strathmore Institute of Mathematical Sciences. Now, this right here equips investors. It equips professionals with practical insights in investing and behavioural finance, while helping SMEs grow, become investor ready, prepare for the journey to going public. And of course, to learn more, you can email scvi@strathmore.edu, call 07934-66504. Now, you see why I told you to have your pen and paper ready? I've got lots of numbers, lots of emails for you to have jotted down, while I move myself, so that we are all very visible. Of course, everybody can stream via Capital FM Kenya, Facebook, YouTube, X as well. So, welcome panel, thank you so much for joining us today. Good morning.
[00:18:48] Speaker 6: Good morning.
[00:18:49] Malika: Good morning. Yes. How are you all doing today? Ken, how's it going?
[00:18:52] Speaker 6: Good morning, Malika. Thanks for having me and really, really looking forward to an honest conversation.
[00:18:59] Malika: Mm-hmm. Transparency. Yes. Dr. Mercy, welcome. Thank you. Thank you so much. And Mr. Motuku, pleasure to have you.
[00:19:08] Speaker 9: Thank you very much.
[00:19:09] Malika: Okay, panel, as we get into it. Now, I did do a little bit of digging as I like to do when it comes to the numbers and it comes to Sub-Saharan Africa. The growth is positive as per the Kenya National Bureau of Statistics. There is an increase in the GDP as well that we've seen in terms of 2025 compared to 2024. Of course, 26 is going to be, you know, broken down soon enough. But as we dive into this conversation, I'd like to begin with you, Ken. Now, you know, the economy, it's shown resilience. There's been inflationary pressures, high interest rates, global uncertainty. All these big words, Ken, what is your outlook for the next 12 to 24 months? For somebody in the audience today, actually, we have design consultants, we have architects, we have importers as well. So for somebody doing business in this country, you know, all these macro factors, what do you see in terms of 12 to 24 months, the outlook looking like?
[00:20:12] Speaker 6: Thanks, Malika. I think before you have an outlook on the economy, you have to reflect on where we are coming from. And indeed, we are coming from, if you look at the last five years, we've had major global shocks. We had the COVID pandemic in 2020, the Russia-Ukraine crisis, and now we have the U.S.-Iran war that's affecting fuel and even fuel prices have gone up. So we've seen a bit of inflation seeping into even our everyday products because of the fuel prices. That's it. The latest GDP numbers were a bit positive, about 4.9%. But I always tell people GDP is sometimes can be, you have to be very careful with how you interpret GDP. Actually, the most important macroeconomic indicators are inflation and unemployment. Inflation has been slightly up, but in unemployment, we don't have a strong grasp. We don't capture unemployment statistics the way we cover it in the U.S. So that's the one area that I think from a data collection, we need to look at. But moving forward, there are things investors get attracted to about Kenya. What are the things that make Kenya attractive? Number one, the location is very strategic. You are literally five hours from any part of Africa, from Cape Town to Cairo to West Africa to Dubai. Within five hours. So geographically, we are very strategic in terms of our labor force. We have a very young, very hungry labor force, very dynamic. The median age in Kenya is about 19 years. If you compare that with Europe, the median age in Europe is 44. And the median age in the U.S. is 37. So we are a very young country, and that's where all the big brands want to come and do business in Kenya. We also have the digital networks, M-Pesa, artificial intelligence is being deployed. Those are the things that make Kenya very attractive and also very diversified. Whether you want to be in agriculture or tourism or energy, there's a lot of opportunity. Not all African countries have that. If you go to Mali, for example, 85% of Mali's export is just gold. So we have a very diversified economy. But the challenges are also quite real. Our public debt is quite high, 69% debt to GDP. Our taxation system is a bit burdensome. And it's creating a lot of issues with the business community, as we saw with the last few finance bills. So the challenges are as significant as the positives. But as we go into the election year next year, you know, my plea to Kenyans is to read the economic blueprints of all the candidates. Understand how do they plan to tackle public debt? How do they plan to unlock key sectors? Because that's one area as Kenyans we've been ignoring. We sort of vote with waves. Yes. But that area of looking at the blueprints, who can manage debt the best? I'm really challenging Kenyans to take time to really look at all the economic blueprints.
[00:23:43] Malika: That's interesting. Who can manage debt best? When you go to the ballots to think about that question. A couple of things you said, Ken, stood out to me. The fact that we are so strategically placed and the infrastructure we have is robust. You know, we do say that Nairobi is looked at as the New York of Africa. I don't know, maybe that's how some of us pick up some semi-American accents just on these streets. It's feeling hot under the collar. But speaking of the sectors to focus on. Now, the KNBS also say this positive growth of the GDP, we can also peg it to certain sectors like agriculture. Dr. Messi, if I can rope you in on this one. What do you think about the focus between such a sector and the unemployment crisis we have in this country? Do you think that there needs to be more programs or measures to get young people into such sectors so that there is greater growth in other areas we might see saturation?
[00:24:40] Speaker 10: Yes, thank you very much for that question. Yes, I do believe that one of the impediments to growth has been a lack of, can I say, financial literacy. So, we have, as you mentioned, many graduates graduating and waiting to be employed. I would say one of the ways that we could improve GDP would be to educate these people, not just to come out of school and wait for employment, but to create those jobs for themselves. So, you mentioned agriculture. So, you mentioned agriculture. Agriculture, in my opinion, is one of the ways that, one of the sectors that promises to provide a lot of, you know, income for the young people. So, there is not just the raw agriculture, but also value addition. Yeah. So, agri-processing, agribusiness is a key sector. So, I don't know about the Gen Z's or the young people. Maybe they don't view agriculture as some area that they can go into because it's not, not chic. So, but it is one of those areas that, you know, people will always need food. There's no day that, even with the AI and all that, there's no day we can replace the food production. So, it's an important segment, and I think one of the ways that the government can do is to improve the policy around agriculture, encouraging the youth in several ways to get into agriculture. So, yes. Thank you.
[00:26:14] Malika: Absolutely. And Mr. Mutuku, coming to you now, you know, when it comes to investment, what are investors asking today that they were not asking three years ago?
[00:26:24] Speaker 9: Thank you very much. I think investors need to look at business quite differently today. And one of the key areas they need to be looking at is corporate governance. How are companies managed? Who are the people leading these companies? You know, what are their credentials? And that really informs a decision on which kind of businesses, you know, to invest in. And again, looking at the current, you know, climate, you also need to look at ESG as one of the factors, right? Environmental social governance is very important. What are these companies investing in, right? How are they, you know, achieving their profits? And you also need to look at companies that, you know, can weather the storms. Risk management has become a key area that companies need to look at. How are risks being managed? How can these companies get over the weather that other companies have seen? You know, like the COVID, the wars, all these currency depreciations and, you know, etc. So investors need to be a bit more vigilant in the way they look at businesses. Look to the long term as opposed to the short term. Because I think if you're investing into businesses, then you must have very patient capital. Thank you.
[00:28:00] Malika: Thank you so much. And if you're just joining us, welcome. We're so happy to have you. Do come up to the front. Don't be shy. We'd like to include you in the conversation for sure. Now, Sila, still on that. You know, there are a lot of people who have brilliant ideas here for their entrepreneurial journey to kick off. Some of them are looking for investment. Some have their pitch decks that have been gathering dust because they haven't really managed to convince those investors to really take a gamble on them, so to speak. So what attracts both local and international investors when deciding where to put their money?
[00:28:36] Speaker 9: Yeah, I think related to just what I've said, international investors will look at companies that have a good track record. So how has your company been performing over the years? What are your strategies for the next four to five years? Because these investors are looking for long-term relationships. What has been your past performance and what do you predict as future performances? So those are some of the things that, you know, international investors will be looking at. Again, I think they will also look at, as I said, your governance structures. They will look at the staff that you have. How experienced are they? You know, what kind of capabilities do you have within? And the values as well. Those are quite critical things that investors will be looking at.
[00:29:30] Malika: Thank you. When we look at the country as a whole, of course, investment from external sources has fueled quite a bit of development, but it's also created the debt issue. So, Ken, what reforms would have the greatest impact also on investor confidence? As we've seen massive projects take off, some stalling, you know, things, the debt accumulating, even, and then, of course, the dollar rate fluctuation impacts how much debt we're repaying. A grand, grand amount of our national budget goes into debt reservicing.
[00:30:02] Speaker 6: You're absolutely spot on, Malika. The debt challenge has been significant. If you look at the tail end of the Kibaki administration, and you look at how much money was going towards the consolidated fund. This is a fund that collects debt payments and pension. It was about 13% of revenue collected. That number right now is close to half. So, almost 50% of revenue collected is going towards servicing debt. So, it is a big issue because it crowds out the private sector. Money that should be going to businesses end up now going towards buying government bonds, infrastructure bonds, and it really crowds out. About 20 years ago, we were at a place where interest rates on treasury bills were at about 3%, 4%. So, banks could not make any money from buying treasury bills, and they really had to lend money to the real economy. Banks would visit you in your office and ask you, "Malika, do you need a loan to expand your business?" But that, in a way, ended. Because if you can get an infrastructure bond for 16%, risk-free, why would you want to lend to a risky entity? For a long time, so that's in economics, you call out the crowding out effect. The private sector has been crowded out. Thankfully, that number is switching back up. We are seeing credit to private sector now on the way up. We are at, I think, 9%. Still below where we need to be. We need to be in double digits. But still, we have to solve that debt problem. Now, to your question, how do you solve the debt problem? Debt arises from two things: your revenue and your expenditure. Our expenditure has been growing at a faster rate than the economy. So, I think we need to start tempering the expenditure growth. In terms of revenue and the taxes, we need to rethink our tax. We need to move towards a progressive tax system. Right now, you look at VAT, for example, it's becoming a major impediment to businesses. Other is, in fact, sometimes when you go out there to downtown and you want to buy electric goods, electronic goods, some people will ask you, do you want a receipt or don't you want a receipt? In a sense, do you want with tax or without tax? So, we need to start moderating some of these taxes, which have become inhibitive, so that we are able to reduce that deficit. Once you reduce the deficit, the borrowing goes down and definitely more money goes to the private sector.
[00:32:49] Malika: Yeah, I think the policies in place perhaps need a bit of tweaking, like you say, because there are people who are frustrated to the extent that they are saying, "Do you even want a receipt?" Do you? Okay. So, Dr. Mercy, you know, when it comes to this sort of tedious situation, we have quite a few entrepreneurs in the audience as well. When it is about financing and Ken touched on the loan and the loan process when it comes to financial institutions, we've seen a lot of lenders who are doing lending via mobile apps and then the loan sharks become an issue and it's a whole cycle. So, when we are looking at generally gaining finance and capital as an SME, what kind of policy do you think we need to introduce or rethink so as to mitigate these new emerging loan options for Kenyans? Because, actually, there was a conversation I was listening to last weekend and a financial advisor talking about the fact that, you know, when money is on the table, we say, "Let's just take it. The loan is available. Let's take it." Before thinking, why do we need it? Simply for the fact that it's there, take it now. So, Dr. Mercy, what are your thoughts?
[00:34:05] Speaker 10: Alright. Thank you very much. So, what do I think about loans? So, first of all, I need to say there is two types of debt for businesses. And even personally, there's good debt and bad debt. So, debt is not bad. I wouldn't say it's objectively bad. It is what are you doing with that debt. If it is to create opportunities to earn more or to improve your cash flow, it's definitely go for it. So, the problem would come if you are taking the loan for consumption, for example, which I think is what you're hinting at. All these mobile apps that are giving people. So, maybe it's because people are struggling to live from day to day, so they resort to just accessing loans. And it's become exceedingly easy to do that because of mobile platforms that enable that. So, the question would be, before you go for that loan, you should ask yourself, is that loan going to generate for you some income? Is it going to increase your wealth? So, if it is not, then that is a bad debt. So, in terms of policy, I would just add on to what Ken has said. I think the issue has been the frequent changes to policy, for example, tax loans. So, I think what investors would be worried about is those frequent unpredictable changes. So, I know that for people to invest, they need predictability. Predictability is important. And at the moment, I can't tell whether the existing loans today will be what will be there in the next five years. I'm going to wait. So, patient regulation or law encourages long-term investing. Just think of it like if you are a farmer and you want to plant a crop, would you plant that crop if you're not sure whether the farm will still belong to you in the next five years? Yeah? So, you wouldn't do that. So, what you need to do is to encourage a bit of consistency in the regulation. You'd rather have one good law that stays consistent for the next five years rather than keeping changing or putting short-termist kind of laws that keep changing. That really is discouraging to invest in. Thank you.
[00:36:39] Malika: I'd like to remind our panelists, as you answer, do look directly into the camera there. As my very able co-host, Chico Lawi, has been trying to direct you. Currently, he's lost his voice, but I love the spirit he's showing. So, thank you for that. And going into our next question, Silas. You know, many Kenyans still associate investing with real estate, right? Let me buy a piece of land, see what to do with it later. Why should they consider diversified investment portfolios? Yeah.
[00:37:08] Speaker 9: Thank you. And I think I like using a classic example, and especially to, you know, our Gen Z listeners. You wake up in the morning, and the first thing you touch is your phone. It's an Apple phone, right? You check your messages, Instagram, and so forth, and you get out. Some of you have cars. Some will probably take an Uber. You get into your Mercedes-Benz. You drive to work. And I think on your way, you need to fuel. So, you take your phone again. Go into your Safaricom app to send some M-Pesa to the station attendant. You find you have no money. You get into your banking app. And I'm assuming this is INM Bank. So, you go into OTG. You pull out your money. And you pay the station. And assume this is total. So, you move on. You get to the office. You sit down. And later on, I know most of you like soft drinks. You ask for a Coca-Cola. And during the day, you decide, well, I need to go for a client meeting. You get into an Uber. Now, if you've been listening to me, all the companies I've mentioned are investable companies. These are companies that you deal with every single day. You're putting your money there. So, why not invest in those companies? So, investment is very key when it comes to not just people who are working. Even our SMEs, you need to make investments. Today, we speak about compounding and the power of compounding. If you put 100,000 shillings today, you're young enough for a 10% return over 30 years. Without touching that money, the compounding effect, including your initial 100 seed capital, would end up to about 1.7 million shillings. Those who have done economics can do compounding. If you took the same 100,000 shillings and every single month you added on 10,000 shillings at the same rate of 10%, you would end up with 24 million shillings after 30 years. So, just not let down. That is the power of investing and the power of compounding. I think the message is driven.
[00:39:39] Malika: Yes, absolutely. Making me think about my portfolio, its existence or not, perhaps. And Ken, you know, when we think about compounding, as Silas has mentioned, there's something that some people tend to forget is that the principle is also something you have to think about, right? So, when young people today in Kenya say, "I want to start investing," what's the minimum they would need?
[00:40:06] Speaker 6: Well, I mean, it really depends on the asset class that they're looking at. And there are many asset classes, not least what the government offers, and those requirements have come down significantly. So, it really depends. You know, when I think of the NYOTA fund, for example, that the president launched, it was about 22,000 shillings. And the idea was, I think it was about 25,000 shillings and maybe 2,000 is kept into some fund, then you're given 22,000. So, with that 22,000, that becomes your principle. So, you have to ask yourself, where can I put this money to get a bit of return? And what are the sectors? So, I think a smart way is looking at what are the growth sectors. And I like what Masi said about things like agriculture. You know, everybody has to eat food. And it's actually the fastest growing sector of the economy, food and accommodation. If you want to go into the capital markets, you can also, with the help of your advisor, be able to pick a few stocks. Whether it's banking stocks. And there are people to advise you on that. So, there really, there is no minimum. It really depends on what your aspiration is, your risk appetite. Some people have a higher risk appetite than others. And also the knowledge you have. There's something called information asymmetry, where sometimes what you're investing in, you don't have enough information. So, also getting information about the various intricacies of that particular sector. So, information is a very critical part of investing. And far too often, people have very big information asymmetries and they don't do their research and they don't get the return. So, research is actually a very key component of understanding where you want to be.
[00:42:07] Malika: Yeah, absolutely. And of course, the right advisors are key as well. Remember, at INM Bank, you get the right advisors. You know that. And Dr. Masi, I know you deal with a lot of students on a day-to-day basis. When it comes to picking a sector and it comes to starting a business, what are some of the greatest, you know, stumbling steps you see them taking? Like, is it that this business is trending? The chicken farm? Let me go for it. You know, what's a better way to assess the right steps to take when you're thinking of starting a business? As a young people else is doing it, yeah?
[00:42:40] Speaker 10: So, there's some gaps or the needs in the market that you can address. And then, perhaps, you can now proceed with that and then figure out what is the capital needed. You need advisors, you can go for them. But the key thing, as Ken was just saying, is that you need to do quite a bit of research. Kindly research. Do your homework. Don't get into something just because everybody else is doing it. Yeah. Thank you.
[00:43:10] Malika: And Silas, coming back to you, you know, how can investment managers better support SMEs and growing businesses as we're talking about the entrepreneurs here?
[00:43:20] Speaker 9: Yeah, thank you. I think the first thing is look at flexible financing for entrepreneurs. When you're funding entrepreneurs, you have to know that you need to put in capital that, you know, estimated about five to ten years for them to pick up and turn around a profitable business. The next thing is about managing finances. I think what's the biggest mistake here that, you know, most SMEs would make is mixing their own finances with the business finance. So, you make a sale today and you say, "Okay, I'll buy my Ungar and I'll return the money tomorrow." So, that really complicates issues for the SME. I think, again, you need to ensure that the businesses they do can actually expand into the region. Kenya is a very attractive region and expansion into other regions within East Africa from Kenya is quite easy for these SMEs. So, we also need to look at, you know, providing equity capital for those that are looking to fund SMEs in different sectors and also diversifying these businesses to make sure that you're not just looking at one business model. You actually can be able to move into other business models as you, you know, as you grow into these sectors. Thank you.
[00:44:49] Malika: Interesting. So, keeping the end game in mind as soon as you enter the arena as well. Thank you, panel. I think, as we wind up, I have one single question for each of you. It's the same question and that is, if you could recommend one policy or investment priority that would actually speed up Kenya's economic growth over the next five years, what would it be? Ken, can I put you on the spot to start us off?
[00:45:14] Speaker 6: Absolutely. I think our VAT rate is very high. I would say reducing VAT from 16% to 8% can actually be a game changer because it means more people will be left with money in their pockets and businesses will be able to do more sales. So, I think that's the most important policy intervention right now.
[00:45:38] Speaker 10: Thank you. Dr. Mercy? For me, I would recommend financial literacy and capital market participation at the household level. We've seen the NSE on an upward trend and actually the foreign capital has been selling, there have been net sellers, but what has happened is that that has been taken up by domestic capital. So, we have seen that the NSE has continued to rise. So, I think one of the ways we can really encourage growth is to encourage people to invest locally. One of the ways you can do that, as was said by Silas, is to buy the shares of locally listed firms. That way, domestic capital supports domestic businesses and then we become less susceptible to capital flight and that way we have a stable financial system. Thank you.
[00:46:35] Speaker 9: I think mine revolves around cheap electricity. That has been a concern in this country. And I think if we make electricity cheap, we will see more companies coming in to invest in Kenya. We will make it easier and cheaper for manufacturing, agro improvement in terms of providing value add for all our products. And I think that's one of the key areas that I think the government should look at. Thank you.
[00:47:07] Malika: Thank you. So, VAT, capital markets and electricity are the major three ways that our panel has highlighted in order to what we can take a look at policy around to accelerate the growth in Kenya. Now, we would like to take a couple of questions. We have some time to do so. Anybody who has a question for this panel, you can raise your hand.
[00:47:29] Speaker ?: Any questions?
[00:47:30] Malika: Any questions? Or you've jotted them down to ask them all at one go at the end of it all. Okay. All right. Thank you so much. I'd like to thank our panel as I'd like to welcome you to take your seats as well. Let's give them a round of applause, please.
[00:47:45] Speaker ?: All right.
[00:47:45] Malika: That was, of course, Silas Motuku, CEO, INM Capital. Dr. Mercy Kano, finance lecturer at Strathmore University, Strathmore Center for Value Investing, as well as Ken Gishinga, Chief Economist of Mentoria Economics. I'd like to remind you once more that we are absolutely lucky to be able to be having this conversation today thanks to our brilliant partners. That is INM Capital. It is a wholly owned subsidiary of INM Group PLC, licensed fund manager by the Capital Markets Authority of Kenya since 2021 and the Capital Markets Authority of Uganda since 2025. INM Capital is dedicated to helping us in this room, individuals, institutions, businesses to achieve their financial goals through professional wealth management, as Mr. Motuku has highlighted quite a few different things that you can find there as well. Tailored investment solutions backed by market expertise, research, as Ken said, always dig deeper, ask for more information and, of course, risk management as well. And to start your investment journey, visit your nearest INM Bank branch. You can also email wealth.advises@imbank.co.ke, call 0719-088-175. Okay, right about now we'll take a short break and then we shall be back with our second panel right here. Thank you so much. Give yourselves a round as well. Thank you. Thank you.
[00:49:16] Speaker ?: Thank you.
[00:49:45] Speaker 5: It's gotta be DJ UV, throwing it down on the Dance Republic.
[00:50:15] Speaker 11: Which country are they Muslim? Rebooting your workday or night with Dance Republic on 98.4 Capital FM.
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[00:53:34] Speaker 9: We're going to be able to do this.
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[00:54:47] Malika: If you can take your seats, ladies and gents. We're about to begin the second half of our town hall today, of course, focusing on business investment and growth. I'd like to remind you, of course, we're at Strathmore University, and today's town hall would not be possible without our partnership with Strathmore. Of course, the Strathmore Center for Value Investing, specifically this one right here, SCVI. It's a research, training, and consultancy center under the Strathmore Institute of Mathematical Sciences. We heard from the director, Dr. Bonio, who's sitting right here in front of me. And SCVI does equip investors and professionals with practical insights in investing and behavioral finance while helping SMEs grow, become investor-ready, and prepare for the journey to going public. Remember, to learn more, you can talk to Dr. Bonio. He's right here in the purple socks, which are very cool. Or you can... And you know, when you came to studio, you told me something important. A question entrepreneurs should always ask themselves. Are you ready to delegate? That's a big one. Okay. So such gems can be found right here. This center really helps you go further. You can email them to learn more as well. Go to scvi@strathmore.edu or call 0793466504. Now, for the second half of this conversation, I do not want to monopolize the stage. I would really like to invite my co-host. This is June Gashui, Tata June. She does the evening show. She does the drive show on Capital FM 984, your best mix of music. And so I'd like to invite June right here to take over this second section of our town hall today. Let's give her a round of applause. Thank you so much.
[00:56:30] Speaker 12: It's not everywhere where you're called Tata June and you come up smiling. Good morning, friends. How are you? I'm checking to just see what the temperature is. Do you believe that we are open for business? Do you feel like business investment and growth are achievable? I'm talking to the younger people. My nieces and nephews in the room. How are you guys feeling about investing? Like a 1000 bulb that is entering your investor today. Do you feel like it's something that you can begin to start doing? Yeah. Yeah. I think we don't invest for today. We invest for tomorrow. We invest for our families, our futures. And I think this is a very important conversation. And so we will continue to explore some of these themes. And of course, you've heard from our first panel. We've had an honest conversation, I think is the word Ken started with at the beginning. He said, I'm looking forward to an honest conversation and may the honesty continue. All right. So I want to bring up our second panel. And our second panel consists of Samir Raja, who is the Assistant General Manager, Head of Investment Advisory at I&M Capital Limited. Samir Raja, if you would join us on stage, please let's give him a round of applause as he comes. Next is Charles Miano, Portfolio Manager and Chief Investment Officer at NABO Capital. Please come up. And also Onesmas Kaumbulu, Associate Director, Tax and Regulatory Services at KPMG East Africa. Please come up Onesmas. Onesmas, when people hear tax, especially this close to the 30th of June, I'm not sure if we are friends or if we are enemies, but we're happy we're friends. Yeah. We're very happy to have you here with us. And thank you gentlemen for being present and open to having this conversation. We want to start with financial growth, a theme that is not unfamiliar to most of you and most of us in this room. And I think what I like about it is the future facing aspect of growth. Most of us have been losing a lot of money. So we're looking forward to hearing from this panel how we can consistently achieve financial growth. Samir, let me begin with you. Capital is essential for business growth. This is what we hear. This is what we have read. But what financing gaps, in your opinion, still exist for Kenyan businesses, small, medium enterprises, and even the larger corporations? What have you identified as some of the financing gaps that still exist?
[00:59:26] Speaker 13: Thanks. Thanks a lot. Good morning, everyone. Good morning. From my part, what I see as a big financial gap here in Kenya, there seems to be a great amount of capital gap. When we talk of big corporates, it's very easy for them to get financing. They can walk to a bank. They have access to collateral, very heavy collateral. They can give away their, or rather pledge their land, their machinery. So that part of the sector, relatively easy for them to get access to financing. The lower end, or when we go to the mass market, us as individuals, there's an increasing number of, can I say, mobile apps that give you access to lending very quickly. They even advertise and tell you, open this app today, within 24 hours, you have access to X amount. But nobody looks at the bigger picture in terms of interest rate. It comes with heavy implications when it comes to the rate of interest that you're paying. But talking of the gap now, I feel the bigger part of the gap falls within the SME sector. And it was mentioned earlier by the MD at Capital FM, our biggest driver in this economy is the SME sector. And we feel that there's a big gap for them to access financing because either they don't have enough collateral or the cash flow does not support the business. So this is a big, it's a big hold back. And I can push this back to the capital markets. I think we need, we need to sort of expand the reach beyond the traditional lending and look more towards the capital markets aspect of things. So that there's more accessibility to the SME sector that is affordable.
[01:01:20] Speaker 12: That's a great point. And it's a perfect segue to the conversation I want to engage Charles on. You've referenced the capital markets authority, Samir. And I want to ask, not sorry, the authority, but just capital markets generally. How can capital markets play a bigger role? I hear Samir saying, understanding the different businesses and being innovative in the kind of capital, capital that they can access that may not be the same for the larger corporations. But what is it that the capital markets can do in terms of playing a bigger role for financing economic growth?
[01:01:55] Speaker 14: Yeah, thanks a lot, John. And good morning, everyone. Good morning. So in regard to capital markets and what they can do, if you look at the SME that has been talked about this session, there's a huge gap, about 3.3 trillion gap in terms of funding, the requirements that they need. Banks can only supply about 700 billion of that. But if you look at the capital markets, our pension sector is about 2.8 trillion. Our CIS, where you have your money market, your fixed income, where the everyday people invest, is about 852 billion shillings. And the question is, where is our money going to? A large part of that, over 50% is going to the government. So there's a huge gap where I call the missing middle. So as Samir has mentioned, you have the large corporates that are able to access funding easily because of how a banking sector or a banking system is structured. It hasn't been updated to a point where it can fit the SME and why is that? Typically, if you want to go take a loan from a bank, you need two things. Most importantly, you need a collateral. So what's collateral? Typically, it's your vehicle, your land, specifically real estate. And for others, it's salary based. So you need to be employed somewhere and you have a check-off system. So what if you don't match any of that? And that's where the gap is. And what we've noted over the last few years is that the market has opened up. We have seen the market open to fund certain type of ventures. And I think that's where the capital markets should now focus on. For example, if you look at securitization, which is basically you take an asset, which can be, let's say, let me use the example of Talanta Stadium, which many of us are familiar with. Talanta Stadium was a very interesting and I think very innovative way in which it was raised. They raised about 44 billion. And how that worked was, take Talanta Stadium. The promise to the investors is that there will be certain cash flows that will come based on the levies and based on income that will be charged from Talanta Stadium in itself. And it was structured as an asset-backed security. So 44 billion of that went into that particular venture. And I've said about, and if you look at that 44 billion, if that was pushed into the SME, it would be significantly huge. So I do think based on what the capital markets can do, that if you have more securitizations, where we have more innovation beyond just investing in government securities, investing in, investing just in the listed stocks, and we have unique products that offer appealing returns. Then we should have now a promising prospect into growing the SME space. All right.
[01:05:15] Speaker 12: Thank you so much, Charles. I don't know if you guys are feeling the same way I'm feeling. These amounts were, I had to write them down. 700 billion, friends. You know, this is just money we talk about every day, yeah? 2.8 trillion in the pension sector and 852 billion. I just put exclamation mark. That is not small money. And yet we, we, I hear my border border last week told me, "Watu wa nasema hawa na pesa, bat niwewe una pesa. Pesa iko i Kenya." So I guess we're trying to identify how it can be accessed and absorbed by some of these organizations. But in order for investment to happen in a transparent and accountable way, we always hear this word, the regulator, regulatory frameworks. And I want to come to you, Onesmus, with this question. How important do you feel regulatory certainty is when an investor is assessing a particular market and whether to invest or not?
[01:06:14] Speaker 15: Great, thanks. And again, let me first of all start by greeting you all. Good morning. Good morning. So, it's an important question because at the back of our minds, especially here in Kenya, and I must also say that I come as a friend to you guys. So, before I'm smoked out of the room, I'm not from the regulator. But importantly, any time we're all seeking to set up businesses, we always have an important point at the back of our minds. And that is, what is my return on investment? But importantly, whatever the amount, if you assume it's a hundred bob, for instance, am I going to have the entire a hundred bob, or will it come to me as two shillings? Meaning, the entire, or the rest of the 98 shillings will have been taken away by taxes. So, it's very important to have that at the back of your minds. And let's again remember, I know my colleague here, Ken, earlier on when he was speaking, mentioned about the growing debt and the high taxation rate, which he said in his words that he feels, and I know that is a sentiment that many of the Kenyans in this room and the side here share, that it's burdensome. But the question is, as a government, for example, balancing between investment and revenue, in this case tax revenues, is a very delicate and complicated matter. Because again, remember, as a government, we need funds to build infrastructure, to fund education, for health, for security, and for a lot more. And unlike many of the other countries that you see out there in the world, as a country, Kenya specifically, we do not have gold mines, for example. We do not have oil that we can, you know, get in the tune of giving us the entire 4.8 trillion, which is the budget that they see as for treasury. So, when you think about it really, where does that leave us? And that speaks to the question of taxation. What we are seeing is very critical that you analyze what taxes are you going to pay. One thing I must also admit is that as citizens, as people, not just Kenyans, by the way, we do not like paying taxes. And that's why one of the ways that Kenya has really tried to reach a wider majority is through broadening the tax base and the broadening the issue of E-teams. And you've seen the public outcry that it has caused. And so, as we sit here, what I would ask you is, are you proudly paying your taxes? Maybe yes or maybe no. But if it's a no, it's because, again, as a country or as a government, we've not really been very transparent in showing citizens where do we take the money that we collect from you. By the way, do you know that what I feel, and I know I share, majority of you share in this sentiment with me, is that even if we were taxed 50%, but we went to the hospital and we didn't have to pay a dime for the treatment. That we didn't need to boast about owning cars, because immediately I leave this show here, I'll just hop onto a train and get to wherever I'm going. Even if you're driving, roads have no potholes, it would be very easy. And those are the same questions that every taxpayer would always want to have at the back of their minds. Is, and again, the actor also mentioned this, is the tax system predictable? Because you don't want to come and invest today, and you've seen it, by the way. You've invested in Kenya today because the law of the day provided that you're tax exempt for the next 10 years, right? So you look for funds, set up a plant in Kenya, employ many Kenyans, but then tomorrow your fate is not guaranteed because the very minute governments change, or whatever happens, tax laws change. And the exemption is taken away, and now you have to pay taxes. You had borrowed money. Now you must pay Mr. Mutuku here the money that you had borrowed for you to get the seed capital. So you can imagine that unpredictability can really throw you off. So one of the key aspects that an investor would always want to be assured of is, is there certainty in the tax systems? Do I have the guarantee that if I'm investing in Kenya today, this tax rate is likely to remain in force for the next 5 to 10 years, so that I have some form of security, and I can plan around my finances and cash flows. Thank you.
[01:10:37] Speaker 12: Wonderful, wonderful. And thanks for breaking it down, you know, to examples. I love that idea of if I have to pay a large amount of tax, but the services that I can access, that I would normally have to pull money out of my pocket to pay for, are just readily available, then our perspective and our feelings would be very, very different. I want to now sort of move to taxation and the business environment. And as we do that, just to let you guys know, we have a poll if you are on social media. Is anybody here on X? My X? Formally Twitter? All 17 of you, wonderful. There's a poll running on the Capital FM Kenya page. And the question we're asking is, what is the biggest barrier to business and investment growth in Kenya? We've given you four options. Access to capital, which we are discussing here. Policy uncertainty. High costs of doing businesses, the licenses, the rent you have to pay. Kanjo, Kanjo, Kanjo, Kanjo. And then also stocks and products. Or limited market opportunities. Those are the four options. Please take a moment and share your thoughts on that poll, which is currently running on our Capital FM Kenya X platform. Let's move to taxation and the business environment, gentlemen. Onesmas, I'll stay with you since you're the one who started bringing tax into our space. All right. Businesses often cite taxation as one of their biggest challenges, as do individuals. But from your point of view, how do you think Kenya can strike a balance between raising revenue that it needs to offer these services? And I know you've touched a little bit on this. But also, I'd like you to focus more on the part of encouraging investment, if you would.
[01:12:24] Speaker 15: Great.
[01:12:25] Speaker ?: Yeah.
[01:12:25] Speaker 15: So one of the ways that the government can really encourage investment is, I have quite a couple of things to put forth. One of the ways is by ensuring that these consistent incentives and tax incentives, of course, especially in the high growth sectors. For instance, if today we want to get a lot of investors coming in to set up in Kenya, we obviously know that manufacturing would drive our economy or sort of accelerate it. Then we need to make sure that our regulations or tax laws have that in mind. And some of the incentives that we can talk of are, for example, having a special economic zone set up. We all know the benefits that come with a special economic zone, the tax exemptions, the reduced corporate income tax rates, and the tax holidays. And so, if you think of all the SEZs and EPZ zones that we have in Kenya today, and what they are doing, and you project that, then obviously, you can see that having tax incentives embedded in our tax laws today would by far and large encourage investment. And do you know again that, in fact, manufacturing companies and setting up companies in Kenya, if those incentives are encouraged, that's one of our biggest drivers or generators of foreign direct investment. We would never have to worry about the dollar, because if a foreign investor, for example, comes in and partners with a Kenyan, then we're able to get direct investment into that. Another way is simplifying the tax system. Setting up a company in Kenya is one thing, but then the tax system. And I would also be a tax system. And I would also be lying if I sat here and said things aren't looking up. When you think of where we started, for those of us in the room that are pretty older, you'll recall that back in the day, we would have to hop onto motorbikes to rush to Kiare with almost a box of paperwork. And that was just maybe about a single return that you needed to put in. But today, we need to give credit to the Kiare for its adoption of automating the tax processes in Kenya. You can actually file your tax return without needing all those paperwork from the comfort of your house or from a holiday somewhere in the world, because they've enabled it to be like so. For those of us who attempted to file their returns in 2025 without even engaging a tax consultant, you are even able to do it via just a simple WhatsApp message, because if they text you and you tell them to proceed, they've done everything for you. They've auto-populated your tax returns. You can see what incomes you earned, what expenses you incurred. And so I think that itself is a step towards the right direction. Of course, the room for improvement is always there. And we can still better our systems to make sure that we've got very clear and swift ways of putting in our tax returns. But importantly also, if we can reduce the number of taxes that we levy. Sometimes I wonder whether we need all the statutory deductions that we pay or can those be collapsed into just one single one. So I think that's it in summary. I can talk of incentives and also just a simpler filing system, especially one that is automated.
[01:15:52] Speaker 12: Yeah, I think that's an important point. And even as the answers for the poll are coming in there, the cost of doing business is one of the main leading answers. And I think it's partly what you're talking about, the number of taxes. There was a time when doing business required you to just have a single business permit because there were so many and then they collapsed them into one. And now we have more taxes being introduced every single financial year. So it looks like we're going back to those days. Onesmas, thank you for sharing some of those thoughts with us. Samir, if I could come to you in the same sort of line of thought. If you could think through what tax reforms you feel would make Kenya more competitive to the Kenyans in this country, to those in the region, on the continent and beyond.
[01:16:43] Speaker 13: Thank you. So I think as it was mentioned earlier, the bigger part of the problem is the inconsistencies in tax. And I think that's what is causing all the businesses to shy away. And that's probably becoming a part of where the costs are increasing as well. So I mean it becomes very difficult for us as human beings when we are trying to do, let me stick to investment since that's what I know. When you're doing an investment, we need to be very clear on what the taxation is, either now or later. But in Kenya's case, of course, I can confidently say the tax is fairly clear from an investment perspective whereby, of course, everybody was talking about the infrastructure bonds, which grew a lot of demand in the last 10 years or so. And the reason for its growing demand, of course, was the fact that it was sold as tax-free, which is the case, right? Because when you do the investment, you're not subject to any withholding tax, which is a big plus. Similarly, if you do any other investment in Kenya, be it from one day all the way up to 10 years, the withholding tax applicable is very clear. And when you do it for more than 10 years, again, it's very clear at 10%. Yeah, so according to me and from where we sit, I think that the laws from the investment side are fairly clear and well laid out. In terms of attraction, I think what they're doing now, they're inclined towards more green bonds. Yeah, when we talk of green bonds, of course, these are more on the sustainable side, more on the impact side that are assisting our environment as a whole and for climate change as well. So with those having more tax benefits, I believe that's the right direction to go to.
[01:18:48] Speaker 12: Wonderful. Thank you. Charles, I'll come to you now about still looking at it from an investor point of view. When we look at the tax policy, Samir has told us that he feels most of the documentation is clear. Maybe it's not as accessible or understood by the younger generation of our future investors. But when we look at investors who have to assess tax policy when making some of these investment decisions, what is the process they go through?
[01:19:21] Speaker 14: Yeah. Yeah, thanks for that question. I think something that has been clear and unanimous is the fact that we need a lot of policy certainty, especially when it comes to tax. And let me give you an example of how an investor will view this. Assume you're a foreign investor, you want to set up an avocado factory in Rifty Valley. So you've done your assessments in New York or London, and you need a 16% hurdle rate, meaning that in order to make sense of this project, you need to achieve a return of 16% RR or rate of return over the next five years. However, when you look at Kenya, from 2023 to 2026, we've had finance bills, some being passed, some being withdrawn, so a lot of uncertainty. And that uncertainty gets priced into what we call, gets added to a discount rate, which increases your premium. So that 16% hurdle turns into a 19%. So as you assess that abroad and you're looking to invest in Kenya, you say, okay, based on the future uncertainty of these policies that I see happening year on year in Kenya, I need about 20% return or 20% hurdle. And you can only achieve 16% hurdle. And you can only achieve 16% based on this avocado factory you're setting up. So what does that mean? It means you won't set up, meaning there's no factory, there's no jobs, there's no employment, and there's no impact on, you know, GDP from this, and there's no foreign direct investment. And that's the impact of what tax can have. So when we look at it from an investor's perspective, you always take into account the type of return that you make. And it's important as investors to view opportunities in different lenses. One, when you're investing, you look at the rate of return, important. That rate of return, understand whether it's gross or not. When it's gross, it's a pure high-level return. And then now you have your net return. So your net return has fees. So it's typically management fees what, let's say, asset managers like ourselves charge for doing, for running that fund or for finding those opportunities for you. But another element that is very crucially important is the tax. So the tax that is charged is what we, for many securities, is withholding tax. And Samir has mentioned infrastructure bonds and why they're so attractive. They're tax-free, meaning that an equivalent of, say, an infrastructure bond earning 12.5% is equal to an FXD or a normal bond earning 14%, for example, roughly so. So you could actually pick a 14% bond or you could actually pick a 12.5% bond that is earning a coupon of that amount and it's the same value. So what's crucial now in terms of assessing as investors is the fact that what type of tax are you, what's coming to your pocket? Because at the end of the day, it's, you might be given a 15, your take home can be even as low as you think you're getting 15, tax aggressively could go as low as below 10%. And with that uncertainty, you might be typically for, let's say government bonds above 10 years, it's 10%, below 10 years, it's 15%. And you're saying, okay, let me invest in this five-year bond, I'll be taxed 50, could go to 25, who knows. And so it's very important that we have a policy that is certain, predictable. I think one of the urges, if I was to talk to, you know, the legislatures was be, have a three-to-five-year policy that is clear. Set that structure, even when, let's say it's a government which has a five-year plan, either a new regime or an existing regime. Set that five-year and say, this is the type of policies that we want and we're setting it in 2026 up to 2030. And that's what's going to apply and you'll see significant foreign direct investments and you will see a lot of local investments.
[01:24:01] Speaker 12: Yeah, I think that's a great point. Most corporations have strategic business plans for five years, yeah? And so why should the policy not match that? I think the legislators are listening to Capital FM, so I'm sure they have heard you. And also thank you for using avocados. I think I saw a lot of smiles. I don't know if it's hunger or with the love we have for avocados, but I did some research as you were talking. You mentioned New York or London. Do you know, do you guys know what the price of one avocado is in New York right now? Anybody want to guess? Almost. The lowest, do you know? Maybe $4, it's actually $3.50. So you're very, very close to that. Which is the 300, almost 400 shillings, friends. One avocado and look at how they fall. God has blessed Kenya. So perhaps this investor needs to look at being able to transport and improve their return on that down for us. I want us to jump to the capital markets and investment, which I know has been spoken about. So you can just share some thoughts. It doesn't need to be too lengthy. But I want us to look at the role that the capital markets need to play when we look at the infrastructure, financing of that infrastructure, innovation and private enterprise. I think what we would call an enabling environment and financing that. Charles, if I could stay with you on that particular one. If you want to use avocados, you still may. But what role do you think Kenya's capital markets should play in financing this infrastructure and innovation for private enterprise?
[01:25:43] Speaker 14: Yeah, thanks again for that question. I think there's a lot that capital markets can do. We're in a nascent stage right now. If I look at, we might say there's a lot of growth in the capital markets, which is great. But we're still way, way, way behind. For example, we're now about three and a half million customers or investors within the CIS. That was less than a thousand, that was less than three thousand about 2018, right? 2018 we had maybe around three thousand, two thousand five hundred. We're now 3 million, income funds, et cetera. However, if you look at the CIS, which is the full name is collective investment schemes. About, it's 4.7% of GDP, right? But South Africa, our neighbors in the south, it's 61 and a half percent. Significant difference. And so, if you look at that gap, there's so much we can do in terms of financing the private sector, in what we can do in terms of infrastructure, and impacting the real economy. One of the things that has happened, and I think it was mentioned perhaps in the previous panel, was the fact that interest rates with government has been very high, right? We've seen interest rates as high as 18% in 2024. Right now hovering around 13 to 14%. They're about on the long end bonds. And what that has led to is complacency. I call it complacency because it's easy to lend government at 14%. Because government is risk-free. It's easy. It's available every month. You can buy it every day. Very easy. But it's difficult. And I think one of the things I like about Silicon Valley entrepreneurs, if you listen to a lot of podcasts, they always say, like one of the revolving themes is always tackle hard things. Tackle hard things. And for us as investors, it's very easy for us to just give the government and lend the government as we do. 60% of our CIS, our money market, fixed income, etc., our government. But the hard thing is, what can we do in terms of funding private credit? That missing middle that I mentioned, that requires 3.3 trillion funding, that does branding on YouTube, social media. You don't have an asset, but you have cash flows. Probably you're making about 5 million shillings in revenue every month, maybe even 10 million shillings in revenue every month, that we can be able to invest and allocate that capital to you. So I'd say in regard to the capital markets and what they can do is flexibility in terms of what can be allocated to, but also the space where, let's say you have 5 to 10% that you can allocate to private credit. You tackle that hard thing and say, what can we do to fund the businesses that will have an impact? And why SME is so important is the fact that SME is 40% of our GDP. Only agriculture is higher and employees almost, it's the second highest employer outside of agriculture. So I think if we are able to now look at doing more non-conventional investing, then that will help significantly.
[01:29:29] Speaker 12: Tackle hard things. I like that. I like that. Samir, I think most Kenyans that we meet confuse saving and investment. It's never really separated, right? And I think the investment part struggles because we struggle to save. And we already think we don't have enough money for our daily lives. And so telling us to put away a certain amount to then make the decision to invest, starts to put us in a difficult situation. So I want you to speak positively on how more Kenyans can participate in their wealth creation through investment products. How do we get them from the panic we're in, do I have enough even for tomorrow, to planning and making the investment choice?
[01:30:15] Speaker 13: Yeah, thanks for that. Yes, there is a difference between saving and investing. Saving is just keeping money aside, perhaps for a rainy day. But investing, of course, the objective is very different. Your objective here is to ensure the money is plowed in and you need the money to work for you. You need it to grow for you. There's a different objective. We used this example earlier and I can use it again. If we take an example of a car. If I have a car parked outside, it's saving. If I need to go somewhere, I just pick the keys, of course, provided this fuel, and we drive away. But when we talk of investing, we look at it more like giving the car away, perhaps as a taxi. It's earning you some revenue. When you need it, you'll tap into it. But in the meantime, at least it's earning you something over and above that. But to answer the question, I think to start the journey, and I like the question you asked earlier, where the younger crowd is looking to invest, even with as low as a thousand shillings, what are you doing with it? I think the earlier you start, the better. We always say you must start investing as early as yesterday. Investment is a journey. There's no get rich quick scheme. There are many schemes that advertise it that way. But I think it's a journey, and it starts with you. It starts with making the first step. I think the more important part is when you're doing an investment, what is your objective? When you're putting money aside, what are you putting money aside for? Is it for a rainy day? Are you saving for a holiday? Is it growth? Is it for educational purposes? So once you identify that goal, I think it's always important to know what your duration you want to achieve this by as well. It's easy to say, I want to own a home, and I want to own a home in two years. I'm not sure how realistic that is, but it could be. Container homes now, it's possible. It is possible, absolutely. Yeah, so I think once the goal is identified, it's important to then assess what sort of risk you have as an individual. It could be based on your age. It could be based on your dependence. It could be based on your cash flows. And I think it was mentioned earlier whether we have good debt and bad debt. I think all that plays a part. But once you know your appetite for risk, of course I like to say in Kenya we have a very good financial literacy level. It is improving, I must say. I don't know whether people in this room knew, but the most amount of time spent on social media by any country, in fact Kenya is first. We spend over three and a half hours a day. That's insane, right? Which is also good, because I mean if we use social media in the right way, put the financial literacy details in there, all of us of course peruse through the investment options and use it the right way. I think we have a good opportunity here. I think we mentioned earlier about our mean age in the country, which works to our favour. It's a relatively young workforce. So yeah, I mean on my side it would just be a plea if anybody has not considered or looked at investments. It's high time you start. We spoke about compounding. You start at a young age, you make your 100,000 shillings a month with 10,000, if I heard correctly, with 10,000 monthly instalments becomes about 30 million in a few years. That's remarkable. So yeah, I mean to cut it short, I think my plea would be everybody to start early and as early as possible.
[01:34:08] Speaker 12: Yeah, thank you, thank you. I wanted to move quickly to Kenya's competitive advantage just in the interest of time so we can also engage with the audience on some questions. So Onesmas, I want you to make Kenya attractive for us. Yeah, let Kenya tune us. And if we were to be tuned by our beloved country, what policy changes could significantly improve our ease of doing business in Kenya? If you could highlight a few points and also just appreciating some of the online engagement we're getting. Allow me just to read one of these reactions before you answer. This is Phinehas, I think, gifted Piwin. He says, while Kenya's economy is growing, so I guess that's already a positive. Partnering with the U.S. for security keeps us safer than relying on exploitative countries like Russia that recruit our people for wars. They're not even fighting for Phinehas. Thank you. Thank you for your comments. I think it's a valid point, but please let Kenya tune us before we look at U.S. and Russia.
[01:35:15] Speaker 15: Thank you, thank you. So it reminds me, earlier on, before we came here, I was having a coffee with Andrew and a gentleman here called Vincent. And we were just discussing about why should I invest in Kenya and not abroad. And obviously, as Kenyans, the first thing, like I've said, we've got this mindset or mentality that we're really heavily taxed. But think about it, like I said earlier, we, yes, have our shortcomings, but by far and large, we actually have a relatively stable economy. But over and above that, we've got a very simplified taxation system, all credit to the KRF for its investment. Massive investment, actually, if you've been doing your checks on how much KRF is investing to just digitize and automate tax filing systems. And it's a very good policy, because like I said, gone are the days when people would want to work with loads and loads of paperwork. You just want the comfort knowing that with a scanned document, you can be able to mine the data from that PDF document and fill it up in the KRF platform. And ITAX is superb, because tell me which other system is able to handle the over six or so million taxpayers. And you don't ask Kenyans the last minute. So on the 30th of June, I'm sure so many of us were on ITAX trying to file our tax returns. And unlike last year, by the way, because last year it somehow caved in and collapsed, and we won ourselves a few days extension. But this year, you obviously saw that KRF didn't grant an extension. And a lot of the tax filings that we were doing on the 30th of June, as late as midnight, just one minute or two were going through. So I think for me, that's a big investment in that, one, we have the tax automation processes up and running. And above that, we also have a very stable internet, because if the internet wasn't as good, we wouldn't be doing such kind of moves last minute. And one last thing before I give it back to you is, we also, I mean, of course, we are at 55 million now. And out of that population, about 70% of our population is below 35, which positions us as a very good country for anybody outside there who is seeking to invest in Kenya. Sameer said we spend about three hours in a day on internet. That also means, if you're doing anything tech-related, you can actually do a lot of marketing of your products. I mean, nowadays, how many companies are pushing the advertisement to social media? So it's just when I'm on Facebook, when I'm on Instagram, I'm also getting to consume a lot of advertisements, learning, getting awareness about the existence of products, companies. And so, in this 35, yes, we're going to give you the market. And over and above that, you're also going to get us where you need us to be. And that positions us as a very good, yes, to invest in.
[01:38:08] Speaker 12: Okay, yeah, three and a half hours. I wonder, just out of curiosity, how many of us in the room who are online, three and a half hours a day are actually making money in that window of time? Anybody making money? Content creation, anybody? You're spending. You're giving them your money. Chance, let me come to you. Which sector, and I was hoping digital and content creation would be part of the sectors you speak about, offer the strongest investment opportunities over the next decade? If we look at from now to 2036, if that was our 10-year strategy, what sectors do you think offer the strongest investment opportunities in return?
[01:38:51] Speaker 14: Yeah, thanks again for that question. I think there are a number of sectors that offer significant opportunity for canyons. I think one that is very key that was mentioned was that I personally think so. We love to be at Lufay's for that. Is that? I think Lufay's for that. Is that? I think there is... And if you look at even, and Samir mentioned about, we need to get to a point where we can get to 10 gigawatts and above and be able to compete effectively in the market. And the cheapness as well is very important. Our power is very expensive. I think companies pay about 18 to 15 US, I mean 18 to 34 US cents per kilowatt hour. So if you look at that, if you compare that to our neighbors, it's huge. Ethiopia pay about 5 cents, Rwanda and South Africa, I believe 4 cents or thereabouts. So our power is very expensive. And power, if you think about it, penetrates to every sector of the economy. And that's why the blackout yesterday that happened, I was in CBD and the whole CBD went out. And you can imagine if they, if power is expensive and it's made that cheap, how it trickles down to agriculture, how it trickles down to tourism and how it trickles down to, you know, every digital and all these sectors. So I think it's a crucial key and I also part of investment is increasing on the sub, the supply chain of what we can on agriculture side. So we're very good producers. Africa is a very good producer. However, they're not good at the entire supply chain where you convert, you take an item. Let me give an example of cocoa. Cocoa is grown in Ghana and the very coast. And I remember watching this BBC documentary and they were going to a farmer and they brought him Cadbury's chocolate. And they told him, taste this. And he was like, whoa, this is so sweet. What is this? He was like, this is what you're getting from the ground right now. You see, so we are so closed off from the supply chain. But I think if we invest now in the entire supply chain where our tea or coffee, look at the tea and coffee brands, the biggest coffee brands, biggest tea brands. They all export. We export the raw tea and it's processed and comes back to us at a higher premium. But if there's investment in those sectors, then we'll definitely see a huge prop up in our GDP. So I do think, in my opinion, if we invest significantly in energy, invest significantly in the supply chain within agriculture, then we will see a huge bump in our growth.
[01:41:48] Speaker 12: Wonderful. Samir, let me come to you. We are still on the, with the mission, we have the mission of tuning the people in the room. So if you were to highlight two things that you think make Kenya, makes Kenya attractive compared to other investment destinations in Africa specifically, what two things would you highlight?
[01:42:09] Speaker 13: Yeah, I mean, from Kenya's point of view, we have probably the most lucrative financial sector when comparing to Africa. Our economic growth has been fairly, fairly good. I can say very good if we're comparing with the African continent. But I can just give an example of not too long ago. We have, we have an electioneering period next year, right? That's not shied people away. In fact, if I can give some statistics this year, that's a great return. But more importantly, historically, we've had a drop in interest rates over the last couple of years or so. And that has also fueled our stock market. But I think we are within the sub-Saharan region as well. So from an investment point of view, we have solutions that the rest of the Africa haven't yet developed. So we have a good advantage in that front. Okay, wonderful.
[01:43:03] Speaker 12: Friends, I want to position a thought for you to reflect on even as we move to our closing round, where I'll give you each about a minute, a minute and a half to complete a sentence that I will say if.
[01:43:18] Speaker 13: So from my point of view, I mean, a middle sector, the S space, as Kenyans, any normal economy, by the way, when form of corporate debt, not all of it, but a lot of it is because the collateral is fully utilized or they don't want to pledge their valuable assets. So I think that's a space we need to work on very heavily to give access to capital to these SMEs and not only from a debt space, even from an equity space. If you compare our market to perhaps the US market, you would see plenty of companies which are listed from the small cap to the medium cap to the large cap. But here we have only a handful which are listed. And more importantly, if we ask people in this room, how many companies that know which are listed, they might know many, but the ones that trade are probably about 10, 10 or 15. So I think that's the space we need to grow at, just giving more accessibility to both equity and debt.
[01:44:15] Speaker 12: Okay, wonderful. Charles, Kenya's economy will thrive if?
[01:44:21] Speaker 14: Yeah, so I think Kenya's economy will thrive if the government and the people of Kenya work together. And by that, I mean, if the government works with the people, one, through policy uncertainty. So we need to be sure the policies that are being implemented for a long time horizon. Second, if the government supports by paying pending bills, pending bills are significant, over 400 billion shillings. That's money owed to SMEs. That's a company that did a tender for government and hasn't been paid for three years. How will that company survive? How will that company survive? They have bills, they have rent, they have salaries to pay, they have taxes to pay. How will they thrive? So if there is that support from government. And then lastly, if government is able to create an enabling environment for them, then we will see an economy that is able to prop up. For the citizens, I think something that has been mentioned is the fact that Kenya has a medium age of about 19 to 20. Significant advantage there. And one of the things that we take for granted is we have one of the best English-speaking people. So that's very important in that business processing, like let me use one small example. Teleperformance, the biggest business process outsourcing company, has half a million people. They started with as little as 200 people in Kenya in 2020. They're looking to scale that to 5,000. And the reason being is we have people who are very digitally savvy, very good English, right? And someone can speak as if they're some guy from US on the network, the Safaricome equivalent, can call and think they're speaking to an American. It's just someone here in Nairobi, in Ruiru, you know? So I think that, and lastly, is the digital embracing. Samir has brought it up. Digital embrace is huge. AI embraced by Kenyans is huge. Social media embrace is huge. And even if you look at ZD, it had over 2 million, it has over 2 million subscribers. The CDSC, which invests in stocks, has 1 million people and it took 20 years. ZD took just one year to get to 2 million. CDSC took 20 years to, I mean, to get just to 1 million. So if we use our digital serviness to invest, be more proactive, improve our literacy, then I think the sky's the limit to what Kenya can do in the African and in the global continent.
[01:47:13] Speaker 15: We are, and what happens a lot of times. Just to pose a question here randomly, think about it. What happened or what became well? And would ensure that we're spoken about if we had a strategy. Because that strategy would safeguard us from, oh, today Kiema is the president. I wish one day I'd become, and then I want to go south. Then tomorrow, he becomes the president and all of a sudden, after maybe we're only two steps to south, he decides, you know what, south is not the way. Let's start going back. So we started doing a journey of 98,000 steps of work and time. So you can imagine how much we lose. So all these issues of AI, integration, who would be our right partners, what strategy. This is where we want to go. These are our priority sectors. This is how much funding we need. And that should be handed down from one president to another to minimize disruptions and ensure that at least we track our progress against what we've set ourselves to do. And we would like to get in for sure. Then we would thrive as an economy and as a country.
[01:48:15] Speaker 12: Wonderful. Thank you so much. Friends, we are at the end of the formal part of this panel. So I want to begin by thanking our panelists, but also to highlight that our discussion today has shown that economic growth is not only driven by policy, even though our current policies seem to be uncertain, but it's also built through confidence, which we all need to have in the investment options we have, the innovation that is being implemented, and the collaboration as well. Creating an environment where business can thrive, investors can commit capital with certainty, and entrepreneurs can also grow, and this will be essential for Kenya's long-term prosperity. I want to thank all our panelists, Charles Miano. I want to thank all of you in our room today who've participated in this conversation and online for joining us today. I want to ask that we continue to work together to build a stronger, more competitive, and more prosperous Kenya. We do have a vote of thanks that will be moved formally. And so I want to invite our commercial manager from Capital FM, Jared Ouma, to come up and move that vote of thanks. And even as he comes up, just to let you all know that as we close this month's topic, August's theme for us at Capital FM is on innovation, AI, and the digital economy. So if that is a topic that is of interest to you, and you are the three-and-a-half-hour or more people online, I want to encourage you to spend some of that time listening to Capital FM and engaging in that discussion. Jared Ouma, welcome.
[01:50:03] Speaker ?: Thank you, June.
[01:50:13] Speaker 12: Jared, you are not a true Kenyan. You have not banned the microphone. Oh, sorry. Thank you very much. Yes.
[01:50:19] Speaker 16: Now we are home. Thank you, June, and everyone for coming to this event. We are really honored. So as a norm, as June has said, I have a small vote of thanks to Just Read. So to our distinguished guests, valued sponsors, partners, and esteemed attendees on behalf of Capital, I stand before you with a deep sense of gratitude as we draw this business and investment and growth tunnel to a close. Our heartfelt thanks goes to our sponsors, who is I&M and Strathmore University. We thank you for ensuring that we have been able to achieve this. As we continue, next month we have another event coming up and we would like to invite all of you and all the attendees who have been able to come here today also. We invite you and thank you for, you know, availing time to just honor our invite to be here today. I see the presence of people from different organizations. Just to mention, I see Amina from NOVA Pioneer and everyone else who have not mentioned their name. We thank you for honoring us and feel welcomed and thank you very much. Thank you, June. Back to you.
[01:51:38] Speaker 12: Thank you, Jared. Thank you, Jared. And now the fun part, friends. I promised you a chance to engage with our panelists before we release them. So I'm going to ask that we put up our hands. Okay, we already have two from this side. Please tell us your name, where you're from, and who you're directing your question to. Do you mind standing up? Hello, everyone.
[01:51:56] Speaker ?: My name is Wayne Waidaka. I am from Strathmore University students.
[01:51:58] Speaker 17: And I am directing my question to Charles, particularly on how you foresee -- particularly on how you foresee the different investment vehicles that are coming into the country affecting the investment space. More specifically, on the Kenyan sovereign wealth fund that has just been commissioned. How do you think this would change the investment landscape in the country?
[01:52:44] Speaker 12: Charles, you heard the question? Let me take a couple more and you have a wonderful voice. I don't know -- I don't think I heard anything else you said after. So Charles, I hope you are listening. What's your question? Hi.
[01:52:58] Speaker ?: Hi. My name is Kavira. I am into Custles.
[01:53:01] Speaker 18: Make sure you see me for a cut today or in the future. And Cornesmus -- Cornesmus said -- Cornesmus said that Kenyan supplemental -- you see that they are being overtaxed. We don't have any problem with being taxed. I think it's a matter of -- it's about value for our money and unfair contribution to the national basket. In, for example, the case of -- we've talked up so many times about what happens in EC League. When it comes to -- sorry about that -- when it comes to value for our money, for example, what the government is doing to us is a case -- for example, imagine if I sent my mother some 10,000 back in the village for our chicken project. And when I go to check it out, I just find two chicks. Yeah? That is what the government is doing to us. And that's why we are complaining. Thank you.
[01:54:08] Speaker 12: I think that was more of a comment, but I'm happy for you to -- we need more than two chicks, is what we are saying. I'll take one more from here and then the second round from this side. Yes. You want to give her that one? Okay. Take that microphone.
[01:54:24] Speaker 19: Good morning, everyone. My voice has been going out, so please bear with me. But my name is Ivana Harris. I am from Atlanta, Georgia in the United States. My question is, you mentioned Microsoft, and from my understanding, Microsoft chose the more rural areas of Kenya for their Microsoft data center due to minerals, Kenya's water source, and Kenya's green energy. Aside from the one gigawatts of energy they were promised without the Kenya population's input, what would you say are the pros and cons of Microsoft choosing Kenya out of everywhere else in the world?
[01:55:00] Speaker 12: Okay. Do you want anyone in particular to answer that or just the panel? Anyone could speak to that. Can we take those three? And then we'll come to this side and if we have time we'll come back here.
[01:55:14] Speaker 14: Yeah. Thanks a lot for the question, Wayne. So in regard to the prospective investment opportunities that are coming through in the market, I think the National Infrastructure Fund is an interesting prospect in regard to the contribution that it can have when it comes to the funding by government for infrastructure. So just to take you back or to give you a landscape of how government funds, typically government funds through the budget. And the budget consists of two main things that the government has been done for the large part. It's been through taxes, so taxes are raised, income tax, VAT, excise duty, etc. The second way has been through debt. So this debt is borrowed through either externally or domestically. Domestically through treasury bills, treasury bonds. Externally through euro bonds, World Bank, IMF, bilateral agreements, etc. But what we've seen and credit to the current government on this is the fact that they've become more, I wouldn't say creative, but creative is also a term I can use. In that, can you fund without denting or increasing your debt to GDP? Because the debt is the issue that we have, it's a solvency issue. If you're not able to pay debt, then it collapses and impacts everyone from pensioners to the everyday savers. And so what they've been able to do is certain initiatives. One that we've seen that are contributing to this national infrastructure fund is the sale or privatizing of their parastatos or government-owned businesses. So we saw that through the IPO, the Kenya pipeline or IPO, the largest IPO we've had in over 18 years. Yes, it had only 70,000 individual investors. Yes, it was, it had, Uganda took a huge part, but it was a win. I think it was a win because it brought back the vibrancy that we needed in the market. And they were able to bring that, raise a hundred billion off debt or off balance sheet, right? And the second one is like, for example, the disposal or sale of their holdings about 15%, if I'm not wrong, in the Safaricom shares. They raised about 204 billion. Then this again, part of that will be put into the infrastructure project. And then part of that is still off balance sheet. So as you can see, and then at least 10 or 11 opportunities that the government is looking to bring to the NSE and through privatization of some way or means. So I do think that this will have an impact. And if they're able to model that to some of the other infrastructure funds that are globally in other, you know, jurisdictions, then I think it can be a win, especially if I located appropriately and segmented where and audited. Because the issue that we have on SMS mentioned is the auditing. No one minds paying taxes, no one minds paying taxes, but you can, but as long as you know where these funds are going through and where it went exactly, then it's fine. The question, I think there was a second question. On Microsoft? On Microsoft. So I think part of the advantages, I think it was touched on the first panel, is the geography in which Kenya is located, or even Nairobi. I can't touch on it in the fact that we, where we are, we have advantages compared to the other jurisdictions. One, we are not landlocked, meaning that we can be able to access from different pathways. Second is the fact that our population is fairly young, and thirdly, we are very resource-enabled. Not resourcing particularly in the precious metals, oil type, but in terms of rich soils, in terms of people, and I think part of now how I'd assume Microsoft is looking at this, and I need to dig deeper into that research more, is looking at prospectively, which country can I set up that is very favourable to investments within the African space. Last year, we received over $1 billion in venture capital, the largest, and that's bigger than South Africa, bigger than Nigeria, bigger than Egypt. And all that went to different opportunities, especially within energy and FinTech. And so, if you're looking at that type of external investment coming in, then I would suppose so that Kenya fits into that mould, and we're likely to see more other partnership being forged, and we're already seeing that being sort of the trend that we are seeing, especially the current regime pushing on beyond just government-to-government deals, by looking at government-to-enterprise, government-to-private businesses.
[02:00:53] Speaker 12: Okay. Thank you, Charles. Onesmus?
[02:00:55] Speaker 15: Yeah, real quick, and Kawira, I share in your sentiments that, what again Charles has said, remember we've said, we, just again, coming back to example, so, had you rather stop sending your mum the 1,000, or would you rather hold her accountable and say, "Mum, I'm sending 1,000, my expectation is that I get five chicks." So, this is it. We're seeing the government needs to do to us a lot more, because if they're taxing us the much that they're doing, then we need to see them doing as much. And we said earlier, we need to see roads, we need to see, you know, free medication, we need to see subsidised electricity, quite a lot being done. So, it's more fast, and I know we've got the avenues, we're Kenyans, we've got, we know really how to do this. So, let's maximise on the avenues that there are, to hold the government to account on asking them, "Where is this money going?" Instead of it going to paying recurrent expenditure on salaries for the government officials and stuff like that, we need to see more of it being channelled to the right places, so that again, we can also see the yield of our hard work.
[02:01:52] Speaker 12: Thank you, Onesmus. You're very politically correct in your statements, I like them. We know what to do. Kenyans on Twitter is what we're talking about. All right, let me come to this side, I'll start with you and then the lady in the yellow, and we'll come to you.
[02:02:07] Speaker 20: Good morning. Morning. My name is Denzel Damba. I'm a student here in Strathmore University, and my question is, we're talking about business investment and growth, and looking at most of the countries that have developed and managed to go and have good GDPs, basically a good investment environment. Let's take Japan and Singapore. They established some form of ethics, so do you think in Kenya, with even how you're saying we are progressing and we are moving, do you think looking at our current culture and ethical landscape, and even how the next election year and the propaganda that is on the media is, do you think the thing is, will we go there really, if we continue the trajectory we are on?
[02:03:03] Speaker 12: Thank you, Denzel. Who's that question to? All my panelists are smiling, but who would you like to answer that question? Any of them. All right. Samir, I'm delegating you. Go ahead.
[02:03:14] Speaker 21: Okay. All right. Thank you. Good morning. Morning. My name is Masi Mbenda. I am the managing director for Millions and Food Advice Kenya. Now, in the first panel, Ken established that GDP alone is not enough to assess the economic state of the nation. We also need to look at inflation, and we also need to look at employment. And Dr. Masi said agriculture is among, you know, the surging contributors of the economy. And at Millions, we've also identified that gap, and we actually actively working towards bridging it. We've created a B2B solution that allows food-related SMEs and startups to pay a small fee to utilize our infrastructure and our extrusion and innovation center at Tatu City. And so they are able to test the market and scale. Now, when Charles spoke about you need to bridge the need for, bridge the supply chain in agriculture. And when, you know, Samir was talking about you need to balance equity and debt in SMEs, I was smiling because I knew we've really made the right investment. Now, my question to Samir is from an investor's point of view, what enabling environment is there or exists for SMEs and startups as well as entrepreneurial VC enablers like ourselves. Thank you.
[02:04:42] Speaker 12: All right, thank you very much. She already has the mic. Hi, my name is Christelle.
[02:04:48] Speaker 22: Yes, Christelle. I'm a graduate assistant at SIMS. And my question is that Kenya is currently falling back on the space of green bonds, at least corporate green bonds that are certified, given that we only have one by Acon Holdings. So I'm just wondering what you think the reason for that is, and what opportunities are available for SMEs to get into the green finance space?
[02:05:22] Speaker 12: Okay, Samir, it sounds like this is your round of answering questions. So go ahead and start.
[02:05:28] Speaker 13: Okay, thank you. To start with Denzil's question, I may not give you the exact answer whether we'll get there or not, but at least I can confidently say that we should focus more on the positive side, especially from the investment space. If we just rewind a little a few years back, maybe even if we go 10, 12 years back, when we were talking of investment opportunities within Kenya, we had very limited availability, very limited access to investments. The majority of the people you speak to will tell you we've invested in a fixed deposit. And the discussion around the table will be which bank is giving you the best rate. Yeah, that's where we were. So fast forward today, we went through a phase where we had these infrastructure bonds we're talking about. We have good uptake on government securities. More recently, our central bank launched the Dow CSD, making it very convenient for somebody to apply for government debt, be it treasury bill or treasury bonds. So, and now today, with the AI space growing, with Kenyans adapting more towards the technology space, we're seeing a lot of accessibility to global markets as well, which is fantastic. Locally, historically, we've always had access to the likes of Safaricom, to the banks, to the East African breweries. They've always been there for us. Yeah, it's just a matter of making one or two phone calls to a stock broker and you have access to it. But now it's gone even further. We're using all this social media, we're using Netflix, and now you can get access to bigger part of the companies. Yeah, I'm sure many of us in the room have used for ChatGPT as AI. Yeah, rather than just using it, we now have access to invest within that company. So, I wouldn't answer to the extent of Singapore and Japan, but we are definitely making strides. So, focusing on the positives, I think we are headed in the right direction from the investment space. Second question was on funding, the equity and debt side of things. Frankly, I feel we've slacked a little on this space. The availability is there, but I want to go back to the previous conversation we were having earlier, which was on legislation, on structures, on how to issue these bonds, and that also answers the last question for green bonds. You know, when you're trying to be, when you're trying to get a first mover advantage, be the first one, you mentioned the ACON bond. When you're the first, of course, you are creating the framework. You're creating the legislation for the rest of the people to follow. Yeah, that's been a bit of a bottleneck from at least where we see. And for anybody issuing these bonds, it's taking longer than usual. However, I can tell you confidently that there are quite a few we've heard of in the pipeline that could be coming up. So, that's a good space. And I think that on the sustainability side, on the green bond side, on the climate change side, I think a lot of development is overdue. And we do expect to see the space picking up. On the funding equities, we've had a big gap, but I think you mentioned earlier on the VC side, on the PE side, there was a big uptake last year. So, Kenya is viewed in a positive manner. And I think with a lot of growth on the renewable energy side, we have a very, we have a positive advantage here. We have a lot of capabilities. So, I think, to answer it short, we feel that a lot of investment will be coming, or is expected within the country, within the renewable energy space as well, for the VC and private equity space.
[02:09:25] Speaker 12: All right, wonderful. I'm going to invite Dr. Mercy Kano, just to weigh in on the agricultural side of things, if you would.
[02:09:34] Speaker 10: So, this is about how to go about investing? Okay. So, in the agri space, I said that there's a lot of opportunity in agri processing. This is value addition. As Charles had noted about the cocoa farmers, then they couldn't tell that the chocolate they're eating is actually coming from the cocoa that they're farming. So, I'm thinking, instead of just focusing on, let's say, somebody mentioned that if you send your mother money to grow some chicken and maybe produce eggs, maybe we could look further. What more can we do so that when we introduce these products in the market, we've added a bit of value to them. And shelves in abroad. But I've always asked myself, why is it that we cannot, you know, process and export the same coffee that we produce? Surely we have an advantage since we are growing the product and our coffee and tea is among the best in the world. If you knew how to process it, or the government enabled manufacturing, supported exports, looking to the tax policy around that, that would encourage, you know, foreign direct investment perhaps into those sectors, and then we can move from just producing to actually processing and exporting. Thank you.
[02:10:58] Speaker 6: Yes, Ken Gishinga, final words. I think also on that topic of agriculture, which I'm very passionate about, I would say one of the most common questions investors ask when they come to visit me is why Kenya imports so much food. We import our wheat from Ukraine, almost 95% of our wheat is imported, our sugar from Brazil, our onions from Tanzania, yet we have so much fertile land in this country. Between here and Namanga, you have all the fertile land. It speaks to an economic policy that has not empowered agriculture. Agriculture gets less than 1% of bank loans go to agriculture, and even from the fiscal policy side, Kenya is a signatory to the Malabo declaration that says countries should commit 10% commit 10% of their budgets to agriculture, yet we don't see that. So, for me, I think the decline of agriculture is probably the most profound theme of our economy today, yet it's a sector that can create a lot of jobs. So, if we want to create a lot of jobs, because jobs, employment really is the most important economic indicator. We really have to look at such sectors and empower entities such as the AFC, the Agricultural Finance Corporation, used to be very big in the 90s and helped so many farmers get into agriculture, into mechanization, into development. The AFC was one of the biggest entities. But today, if you go there, it's not the same. It's a shell of what it used to be. So, I think if we want to really be honest about creating jobs, financing agriculture has really had to be at the heart of our strategy.
[02:13:02] Speaker 12: I see a lot of people nodding, so I think we all agree. COVID made all of us farmers, isn't that true? Did we all not set up our kitchen gardens? Yeah? We are completely out of time. I'm being threatened by the people at the back and I need you all to protect me. But I want to ask that you stay behind and please engage with our panelists. We will not let them leave until you all are satisfied. So, I want to invite Chico Lawi. We're very equal opportunity employers at Capital FM. So, Chico is going to be the handsome guy who gives our panelists the gifts. So, all our panelists, all six of you, if you come back up on stage so that we can appreciate you. Chico, I'll help you. You just, you know, the ladies usually come and stand. Your job is just to look good. Today, you'll be quiet. Please come up and stand in the middle. Chico will come and gift you. Chico Lawi is our presenter on Capital in the Morning. I hope you guys are tuning and downloading the app as we speak. So, let them all stand in some form or shape and then you may start with Ken Gishinga. And then your job audience is to clap if Chico is doing a good job. Yes, wonderful. Thank you very much, Ken. And then, of course, we appreciate Dr. Kano. And next up we appreciate Onesmas. Wonderful. That one is for Charles Miano. Samir Raja, thank you so much. Could I invite our MD, Mr. Simon Barguere, please come up. And we want to appreciate Dr. Edwin Opondo as well. Come up, Dr. Edwin Opondo, yes. Just come, come up, come up. Just this way is good so we can capture you walking.
[02:15:40] Speaker ?: And please appreciate our MD Chico Lawi, Simon Barguere.
[02:15:49] Speaker 12: If all of you could come to the front and just stand so we can take that photo. Please smile. Please smile. The red box is supposed to inspire a heat, number one, and just a happiness. Okay, wonderful, wonderful. You may all, oh, okay. All right, I'll invite all of you to sit and then two of you I will invite back for a particular presentation. Our partners here at Stratham Capital FM and INM Capital. So I'm going to invite Dr. Obonio to come up and gift. Do the same thing you did, sir, if you would just walk. You are at home so you are in no hurry. And so once again, let me invite up from INM Capital and from Capital FM, the two heads who are here, sparing this discussion. We'd like to appreciate both of you if you would join us on stage one more time. Red is capital's color. So if you check the color of the thing in the bag, you will know who you should go to gift first, please. Thank you very much, Strathmore University. We see you also bleed red and blue, so we appreciate the colors. And I would like to invite you to gift Silas Mutuku, Chief Executive Officer of INM Capital. Thank you very much. Friends, we've come to the end. I'd like you to all remember our hashtags for today. Capital FM Town Hall. And of course, our topic was business investment and growth. Did you all take your selfies at the beginning, Malika? Did they do their selfies? Okay, let's do that now. So look alive. Ladies, lip gloss. Yes, gentlemen, powder. I'd like you to just take out whatever phone God has blessed you with. It's okay. As long as it can take a photo, please take a selfie with the person next to you. Malika, please come. We're also going to take hours if our media team can come and take the photo from this side. You had to. All right. I'm sure you have a phone. It doesn't matter the quality at this point. We just want a photo and we want you to engage with our hashtag. All right. Capital FM Town Hall. And the second hashtag today is business investment and growth.