New law raises hopes for cheaper borrowing

Mr Mwangi told Reuters that 100 firms with revenues of more than Sh1 billion ($12.4 million) in annual revenue would be targeted to issue both equity and debt by 2015.

“We expect that segment will be more active than the main segment. We would like to have it up and running sooner, but 12 months is realistic,” he said.

The bourse has 55 listed companies. Total market capitalisation stood at Sh1.17 trillion on Tuesday, up from Sh1.15 trillion on Friday.

Companies will be able to issue both debt and equity.

Mwangi said most foreign participation on the NSE was from European and South African investors.

Kenya’s benchmark 20-share index rallied after voters endorsed the new Constitution this month, peaking at 4,674.31 points.

It closed on Monday at 4,574.50. Increased FDI inflows should create new jobs in the economy, boosting consumer purchasing power and lifting aggregate demand in the economy that should in turn power the overall economy in a multiplier effect.

More FDI is seen as key in reversing the high unemployment levels, estimated at 21 per cent among the youth, excluding those in those in colleges.

From a high of $729 million in 2007, Kenya’s stock of FDI dipped to $96 the following year and rose marginally to $141 million in 2009.

The country’s neighbours in comparison have performed better, with Uganda’s FDI levels progressively rising from $733 million in 2007 to $799 million last year.

Tanzania on the other hand has held steady at an average of $657 million in the past three years.