This archive report was first published on 24 June 2020.
On June 24, 2020, Kenya's National Treasury proposed measures to increase transparency in private equity firms and venture capitalists, bringing them under the Capital Markets Authority's scrutiny.
The proposal, announced by Cabinet Secretary Ukur Yatani in the 2020/2021 Budget Statement, aims to amend the CMA Act to subject private equity firms and venture capitalists that mobilize resources from public funds, particularly pension schemes, to CMA regulation.
Private equity firms have raised concerns that the proposed regulation would amount to 'overregulation,' given that pension schemes are already regulated by the Retirements Benefits Authority (RBA). 'If the proposal is passed, PE firms will not have the incentive to raise funds locally from pension schemes,' said Eva Warigia, EAVCA executive director.
Kenya has allowed private equity firms to fundraise from pension schemes after amending the RBA Act, allowing schemes to invest up to 10% of their assets in the firms. In 2018, pension funds invested $48.9 million in private equity firms, representing a 12% growth from 2017.
According to a report by KPMG and EAVCA, between 2007 and 2018, approximately $33.1 billion was earmarked for Africa, with $3.3 billion coming to East Africa. In 2017 and 2018, private equity firms invested $1.4 billion across 84 deals in East Africa, with $1.2 billion invested in Kenya.
