Recently, President William Ruto launched the Central Securities Depository Dhow at the Central Bank of Kenya (CBK). This represents a significant milestone in the Kenyan financial market. This digital facility promises to bring about transformative changes especially for investors, both domestic and international. This facility will ease the process of doing business for investors in all walks of life. If you are an investor who is keen on the Kenyan market, then this is how this new development will change your way of doing business.
- Eliminating Barriers to Trade:
The president pointed out that one of the primary objectives of the DhowCSD is to eliminate barriers to trade. Traditionally, investing in government debt, such as Treasury bills and bonds, involved manual submissions and physical visits to CBK. With this digital platform, investors can now participate in auctions and make payments online, making it easier and more accessible for all.
- Enabling International Investments:
One of the most exciting aspects of the DhowCSD is its potential to attract Kenyans living abroad. For the Kenya’s living and working abroad, it will now be easier to broaden your investments since this is an opportunity to delve in the money markets. The platform is targeting over Ksh400 billion in investments from the Kenyan diaspora, allowing them to buy government debt without the need for physical presence. This opens new investment opportunities for Kenyans worldwide and strengthens the country’s economic ties with its diaspora community.
- Promoting Savings and Investments
This new development is also expected to foster a culture of savings and investments among Kenyans. By simplifying the investment process and making it more convenient and accesible, the DhowCSD encourages individuals to put their money into Treasury bills and bonds, contributing to personal financial growth and the country’s economic development.
- Enhancing the Domestic Capital Market:
The digital infrastructure provided by the DhowCSD is set to deepen Kenya’s domestic capital market. With increased investor participation, the country’s financial market is likely to experience growth and stability. This, in turn, can attract more foreign investors and boost Kenya’s economic prospects.
- Streamlined Payments:
The CBK will no longer accept cash or cheque deposits for payments of Treasury bills and bonds. Instead, all payments will be routed through commercial banks, ensuring a more secure and efficient payment process for investors. It is all about the trust and since payments will be done digitally, investors will have less worry about losing their investments.
- Facilitating Collateral Exchange:
The DhowCSD platform also facilitates the exchange of collateral between banks, making it easier for financial institutions to trade with one another. This feature can enhance liquidity in the market and promote more significant interbank transactions.
This is a significant step towards modernizing and democratizing the country’s financial market. It empowers both local and international investors by eliminating barriers to entry, simplifying the investment process, and promoting economic growth. As Kenya continues to position itself as a hub for financial innovation in East Africa, the DhowCSD is a symbol of progress and inclusivity in the world of finance. Investors, both near and far, have a lot to gain from this transformative development.