The National Treasury will soon require all Public Interest Entities (PIEs)/companies operating in Kenya to disclose financial information and list at least 20% of their equity on the Nairobi Securities Exchange (NSE).
President William Ruto announced the move during the listing of the Linzi 003 Infrastructure Asset-Backed Security on Wednesday, July 23.
The reform is aimed at enhancing transparency, accountability, and public participation in the management and ownership of public assets.
The move will target all government-owned entities and enterprises deemed to operate in the public interest.
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Ruto Directs Treasury on Implementation
According to President Ruto, the new rule will take effect within a year of the entities making their initial financial and operational disclosures in line with capital market standards.
“We are raising the bar to require public entities to begin disclosing standardised financial and operational data in line with capital markets standards. Within one year of initial disclosure, they will be required to list at least 20% of their equity on the NSE.”
“This reform will promote transparency, improve governance, expand local ownership, and give Kenyans the opportunity to directly participate in our country’s economic success,” Ruto said.
Further, he added that the Cabinet Secretary for the National Treasury has been tasked with immediately setting up an industry council to guide the process.
Treasury CS John Mbadi will work with the Attorney-General to develop the necessary legal instruments for adoption.
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How Companies Will Be Affected
Moreover, the new listing requirement will also push public companies to begin disclosing standardised financial data.
This is meant to level the playing field in Kenya’s capital markets and increase investor trust in state-owned enterprises, some of which have been criticized for inefficiency, mismanagement, and lack of accountability.
The Treasury’s directive is expected to affect firms that have operated without public scrutiny for years.
President Ruto also confirmed that the Kenya Pipeline Company would be the first to list under the new strategy.
The Cabinet is expected to approve its Initial Public Offering (IPO) by the end of this month, after which it will be tabled before the National Assembly.
“The Cabinet Secretary for the National Treasury will immediately establish an industry council to guide this process and advise the Attorney-General on the appropriate legal instruments for adoption.
“While other nations in the region have moved boldly and strategically to divest and reinvigorate their economies, Kenya has not undertaken a single privatization in over a decade. That is about to change,” Ruto noted.
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