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i. Provide an important alternative source of long term finance for long term productive
investments. This helps in reducing stress on the banking system by matching long term investments with long term capital.
ii. Provides equity capital and infrastructure development capital that a strong socio
economic benefits- roads water and sewer systems, housing , energy ,
telecommunications , public transport etc – ideal for financing through capital markets via a long dated bonds and asset backed securities.
iii. Provides avenues for investment opportunities that encourage a thrift culture critical
in increasing domestic savings and investment ratios that are essential for rapid
industrialization. The savings and investment are too low, below 10% of GDP in
Kenya.
iv. Encourage broader ownership of productive assets by small savers to enable them
benefit from Kenya Economic growth and wealth distribution. Equitable distribution of wealth is a key indicator of poverty reduction.
v. Promote public private sector partnerships to encourage participation of private
sector in productive investments. Pursuit of economic efficiency shifting driving force
of economic development from development from public to private sector to enhance economic productivity.
vi. Assists the government to close resource gap , and complement its effort in financing
essential socio economic development , through raising long term project based
capital.
vii. Improves the efficiency of capital allocation through competitive pricing mechanism
for better utilization of scarce resources for increased economic growth.
viii. Provides a gateway to Kenya for global and foreign portfolio investors, which is
critical in supplementing the low domestic savings ratio.
ix. Attraction of international capital flows to supplement a country?s saving to finance
investment needs.
x. Transition of liquidity to the economy for investments in productive sectors.
xi. Corporate governance, a market for corporate control and market based bench marks
for corporate performance.
xii. Capital markets provide diversification within market dominated by banking systems.
xiii. A source for long term finance – capital markets are seen as alternative to bank
finance as means of addressing the shortage of long term finance.
xiv. Saving mobilization- Provide more opportunities for investors.
Kavungya answered the question on March 30, 2022 at 09:30
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