Collective investment schemes (Unit Trusts) managers have been urged to diversify their investments and allocate some of their funds into asset classes that address the government priority agenda.
Trade, Investment and Industry Cabinet Secretary (CS), Moses Kuria, said that by investing into the government’s high impact projects such as the affordable housing, digital super highway and Universal Health Coverage (UHC), the fund managers will be able to increase their earnings, as well as contribute to the growth of the Kenyan economy through jobs creation.
Kuria made the remarks in a speech read on his behalf by Investments Promotions Principal Secretary (PS), Abubakar Hassan, Friday, during the launch of the GenAfrica Unit Trust Money Market Fund.
Kuria said that the launch of the fund comes at an opportune time when the government through the Kenya Kwanza transformative agenda, is advocating for adoption of a savings culture by the Kenyan populace.
“The President has emphasized on the need for Kenyans to embrace a culture of saving as part of efforts to improve the country’s economic situation,” said Kuria.
The CS said that recently the president launched the ‘sanduku’ investment initiative that is expected to finance large projects that include railway city development, affordable housing, special economic zones, Kenania Leather Park among others.
He explained that the Vision 2030 states that for Kenya to become an upper middle-income country, it must achieve an investment to Gross Domestic Product (GDP) ratio of 32 percent and out of that 70 percent is to be done by the private sector with the 30 percent invested by the public sector.
“So far we have seen more of public investment which is getting stretched and strained and it is high time now for the private sector to do what they are expected to do,” said Kuria, adding that currently private sector investment is stagnating at between 12 to 14 percent against a target of 25 percent and there is need to work on the gap.
He explained that Unit Trusts play a key role in mobilizing savings and private funds for investment.
“For Unit Trusts, in 2017 we were at Sh.55 billion and as of September 2022 we are at Sh.155 billion and this shows that we are growing at a range of Sh.20 billion every year which is a good growth,” said Kuria.
The CS said that Sh.155 billion is only one percent of the GDP and as a country we need to be more visionary and grow this number to at least 10 percent of the GDP with a target of attaining 50 percent of the GDP in the long run since this is what countries such as South Africa have achieved.
Kuria assured the sector that his Ministry will give them a facilitative and conducive environment and infrastructure to take the country to the next level.
“The President in his privatization agenda promised that there will be between five and six privatizations of state owned agencies and this is aimed at democratizing ownership of state owned entities and empowering hustler retail markets into owning assets,” said Kuria.
He said that the target of Unit Trusts is to mobilise retail savings from the common mwananchi and giving them a chance to invest in assets that are hitherto out of bound for Wanjiku.
Chair of the National Assembly Budgets and Appropriations Committee, Ndindi Nyoro, commended GenAfrica for managing over Sh.300 billion which means they have earned trust from locals who have invested into the company.
Nyoro said that the driver for growth in the Kenyan economy for the past 10 years has been to a large extent by the public sector that is government consumption and projects with the private sector being on the forefront in consumption of mostly imported goods.
“There is a gap there and therefore for us to grow as a country we need to increase local production and consumption in line with the theme ‘Buy Kenya Build Kenya,” said Nyoro.
Nyoro called on GenAfrica and other Unit Trust managers to invest their funds and expertise into companies and entities owned by the government since reviving these entities has the potential to improve their performance which will lead to a vibrant economy with many people making a livelihood from the same.
GenAfrica Board of Directors’ Chairman, Andrew Musangi, called on the legislators to come up with laws that will open up the investment space and allow Unit Trust managers to be able to invest in these government owned entities and other impact investments that will help grow the economy.