CHAPTER ONE: INTRODUCTION
1.1 Background of the study
In Kenya, the 2030 Vision aspires for the country to be firmly interconnected through a network of roads, railways, ports, airports, and water ways, and telecommunications and provide water and modern sanitation facilities to her people (Denge, 2011). However, according to Iyabo (2010) , if the Government‘s vision of accelerating economic growth in the medium-term and making Kenya a middle-income country by 2030 is to be kept on target, additional investment in infrastructure is required.
According to Central Bank of Kenya (CBK) (2009), the recognition that local Infrastructure bond market regulation remains underdeveloped has more recently led to several efforts to promote their development, including the Infrastructure bond instrument with a Diaspora component. The bonds market in Kenya trades in both the treasury and corporate bonds. While treasury bonds were introduced as early as mid-1980s, corporate bonds came to the market in 1996 during the reform period. Despite the early initiation of treasury bonds in the market, the market remained almost stagnant, with the government using treasury bills to finance domestic debt. It was not until 2001 when the government took a deliberate effort to develop the market that activities of the treasury bonds market increased (Mbewa, Ngugi & Kithinji, 2007).
According to Kim (2000), utilizing bond markets for financing is important for several reasons: (i) it helps to diversify the sources of infrastructure financing; (ii) it alleviates the uncertainties caused by the global bank disintermediation; (iii) it contributes to transforming short-term bank deposit into long-term development resources; and (iv) it contributes to enhancing ...
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...debt in the total domestic debt stock stood at 70:30 then. A number of reforms were introduced, which included; the lowering the cash ratio for commercial banks to release liquidity thereby reducing short term interest rates, streamlined domestic Borrowing Cash Plan in favor of bonds, and liberalized the pension sector (Mbewa, Ngugi & Kithinji, 2007). Kenya issued its first infrastructure bond of 18.5 billion shillings in February 2009 and was used to build roads, develop a geothermal energy project, and boost water and irrigation systems (Mugwe, 2011). The infrastructure bond was issued at 12.5% coupon rate over 12 years; redeemed in three stages in 2015, 2017 and 2021. its second infrastructure bond, a 12-year security with a 12 percent coupon valued at 18.5 billion shillings ($249.16 million), on Nov. 12 and plans to use the proceeds in fiscal 2010 (Ombok, 2009).
Also, the usage of high yield bonds securities for financing became popular during the 1990s in foreign markets such as Latin America, Asia, and Europe showing the rise in international appeal for these kinds of securities. However, outside of the U.S the high yield market has taken a longer time to become popular and thus there is still room for the development of high yield bonds within financial markets in emerging countries. It is safe to determine that the market for high-yield bonds will always be in existence since it is a viable alternative for many fast growing firms to acquire financing and is a rewarding option for investors. The key to the still growing, strong market demand for high yield bonds is based on linking the [U.S.] economy’s constant desire for capital with investors’ desire for higher returns on their investment.
The situation became even more complex when the British colonial administration introduced a currency-based income tax system. For centuries, the Kenyan economy had largely rested on the exchange of livestock and other goods. With this in mind, it should come as little su...
...better relations with the host country, however they were just putting money back in their pockets. The stipulations for the loan to Kenya also included that all projects were to be awarded to Chinese contractors, despite the high reputation Kenyan engineers hold. This is creating a sense of frustration for the local populace and is likely hindering the local industry.
Uganda, formally known as the Republic of Uganda, is a poverty stricken country plagued with economic instabilities. Since the 1980’s, the economy has remained on a fairly steady climb, but many have doubts about the continuation of growth. Uganda will never achieve a stable economy if they do not establish changes to their infrastructure. To implement these modifications and maintain economic progression, Uganda will need 1) better government determination to end corruption, 2) commitment to improve the weak educational reforms, and 3) a decrease in their export vulnerabilities. Fortunately, the country is experiencing a much needed evolution in telecommunication which could be the single most contributing factor for an improved economy.
Flawed financial innovations: the implementation of innovations in investment instruments such as derivatives, securitization and auction-rate securities before markets. The indispensable fault in them is that it was difficult to determine their prices. “Originate to distribute securities” was substituted by securitization which facilitated the increase in ...
provided by the government. This meant that the new bank debt would be the most senior piece in and would
Infrastructure is important in the economic stability of any country and the comfort of its people. Mongolia is grappling with its economy because of poor development of logistical infrastructure. The reasons for this poor growth trace back to the history of the country, and its overreliance on the mining sector. The post-communist country depends too much on mining, which is clouded by corruption, thereby forestalling development of the transport system. The government and organizations in the country are also reliant on international support. Moreover, the recent privatization of institutions is not enough to address the development challenges in the country.
This paper will serve as a discussion on the topic of investment banking. In this paper the author includes various articles and thoughts that help to understand the background and principle of investment banking. This discourse will attempt to address this issue through explaining what investment banking is, introducing major investment bankers, and how investment banking affects our globally economy. Investment Banking Defined Investopedia (2008) stated this definition about investment banking, “A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations.
On attaining independence in 1963, the inaugural Kenya government identified poverty illiteracy, disease and unemployment as the most debilitating of challenges facing the country. Almost five decades later, despite numerous policy efforts, these challenges continue to enslave many Kenyans. The situation is even more debilitating when one is a youth. According to the Kenya Integrated Household Budget Survey , approximately 67 per cent of the unemployed in the country are youth.
In the year 1942, fellows of the Kikuyu, Meru, Kamba, and Embu tribes took an oath of unity and secrecy to fight for independence from British decree. The Mau Mau movement initiated with that oath and Kenya ventured on its relentless journey to National sovereignty. The Mau Mau movement was a militant African nationalist unit that resisted against the British authority and its colonial rule. The Mau Mau members were chiefly made up of Kenya’s largest tribe, Kikuyu. The Kikuyu conducted intense assaults against their colonial leaders. Between the years 1952 and 1956, the British overpowered the Mau Mau over a violent operation of military action. Nevertheless, the Mau Mau Rebellion also convinced the British that social, agrarian and political improvements were essential for Kenya’s future.
Saudi Arabia’s capital market is considered to be young compared to other financial markets in the region. Saudi financial markets have been developing slowly because most enterprises in the country are either government owned or family-owned, most of which was funded through state budget, and as a result reduced the need for financing. In the recent past, Saudi Arabia has focused on a careful measurement for structural developments and regulatory changes. However, different phases of historical development of the capital market which can be classified into three phases; pre-industrialization phase, post industrialization phase and growth phase that sparked changes and shaped the kingdom 's capital market on
The health services are a devolved function in the current transition to county system. Kenya had an annual economic growth rate of about 2.2% in the 90’s with a further increase in GDP of 4.5% in the last decade (World Bank, 2010) which was disrupted by the political crisis in 2007. According to World Bank (2010) statistics, about 46.6% of Kenyans live below the national poverty level. It is one of the countries with highest levels of economic inequity in the society (World Bank, 2010). According to WHO (2013), Kenya is ranked position 147 0ut of 177 with a Human Development Index of 0.521.
The main source of income for Kenya comes from agriculture. Coffee and tea are the most valuable crops. Together they account for approximately 50 per cent of all forigien exchange earnings. Because of the rapidly growing population, Kenya now imports large quantities of food, praticularly wheat. Unemployment is high. Expecally in the urban areas.
Physical isolation is a strong contributor to poverty reduction and economic growth. Populations out of reliable access to basic social and economic services like road infrastructure are poorer than those with reliable access (World Bank, 2006). In addition to the more direct factors of the production process such as human capital, physical capital and intermediate inputs, road infrastructure plays a great role for economic growth and poverty reduction. Road creates favourable condition for resource mobilization and efficient and sufficient allocation of factors of production through better linking of centres of demand and production. There are different perspectives and
Functions performed by financial intermediaries can be categorized into three functions; (1) maturity transformation, (2) risk transformation, and (3) convenience denomination. With maturity transformations, intermediaries convert short-term liabilities to long term assets. This conversion is common with banks and other institutions that provide liquidity for entrepreneurs, giving a short term debt a match with a long term loan. Rather than constantly evaluating short term loan options and rolling over the debt balance, a longer term commitment is able to be made that locks in a lower rate to benefit all parties. Additionally, intermediaries can provide risk transformation, which offer the ability to convert risky investments into relatively risk-free by lending to multiple borrowers to spread the risk. By pooling the funds of multiple investors, the intermediary – such as a mutual fund – inherently provides diversification and tolerance against a single investment producing undesirable results. Finally, convenience denomination is provided by an intermediary. With a large quantity of deposits being held at a financial intermediary, they are able to match small deposits with large loans, and larger deposit...