Kenya Capital Markets to Issue Guidelines for Crowd-funding

Cytonn CEO Edwin Dande has also threatened to sue Mr Shamiah for allegedly “misleading the public and the government in regards to Cytonn and Private Offerings” if he shall not have complied within 7 days.

CMA chief executive Wyckliffe Shamiah

To encourage start-ups and innovators to raise capital from the market, the Capital Markets Authority is planning to issue guidelines for crowd-funding.

According to the regulator, as a result of the Covid-19 pandemic, they are learning important lessons during on how to sustain the capital markets and fully leverage opportunities despite the circumstances.

“To support start-ups and innovators in general, CMA Kenya is fast-tracking the development of crowdfunding guidelines,” Mr. Luke Ombara Director, Regulatory Policy and Strategy, CMA said in the 15th edition of the Capital Markets Authority (CMA) Soundness Report Q2, 2020 period.

Crowd-funding involves young entrepreneurs and small groups of people raising funds for their ventures through various online platforms involving individuals as well as organisations.

“Even as the policy and regulatory framework is being reviewed, the Authority is proposing that a Guarantee Fund similar to the SME Credit Guarantee Scheme established by the National Treasury and Planning should be set up to support market-based funding (equity / debt),” says Ombara.


CMA chief executive Wycliff Shamiah said the regulator was seeking regulations that would make it easier for Small and Medium Enterprises (SME) and other firms to raise money at the local securities market.

“The Authority will fast track the ongoing overhaul of its public offers, listings and disclosures (POLD), collective investment schemes (CIS) and corporate governance frameworks, to drive capital raising and listings by all types of companies, counties and other potential issues,” said Shamiah. 

“It’s true the corporate bonds section hasn’t been very active save for the green bond issued last year. Firms consider what is most convenient for them at the time. Banks are very liquid now so they go there despite the fact that the capital markets are cheaper,” he added.

CMA established the Growth Enterprise Market Segment in 2013 to encourage enterprises to list at the bourse. Listed companies on GEMS are Atlas, Home Afrika, Nairobi Business Ventures, Flame Tree, and Kurwitu. 

Under the current regulations, investors eyeing the main investment market segment must offer a minimum of 25 percent of their shares to the public while those seeking to list on the Growth Enterprise Market Segment (GEMS) must have 15 percent of their shares available for trading.

Acorn Holdings Cross-lists Kshs 5.0 billion Green Bond on London Securities Exchange
Acorn Holdings Cross-lists Kshs 5.0 billion Green Bond on London Securities Exchange

For instance, some of the laws that will be under review include the Public Offers Listing and Disclosures) Regulations 2002.

“The first phase, which involved a diagnostic analysis, is complete. We are now at the policy formulation stage, the document to be validated by stakeholders by the end of September,” said Ombara.

According to the regulator, the second phase will include legislative drafting with new listing regulations to be ready by June 2021. 

This is expected to attract initial public offers (IPOs) that have not been witnessed at the Nairobi Securities Exchange(NSE) for the past five years.

Self-listing of the bourse in 2014 was the last Initial Public Offering (IPO) at the NSE and has not witnessed much activity since the KSh4.3 billion Acorn green bond floated in January.