Dealing inSecurities in East Africa: Contextualizing the Origin and Development of Securities Markets in Kenya. 1900-2000
Dr. Jacob K. Gakeri

Abstract
This study chronicles the historical underpinnings of Kenya’s securities markets by highlighting the sociopolitical, economic and legal context in which the markets emerged and developed up to 2000.It hypothesizes that because trading in securities developed as a peripheral activity undertaken by professionals in diverse fields, this hugely contributed to its sluggish growth alongside its domination and monopolization by a minority who made no noticeable effort to encourage the Government to formulate a comprehensive policyto nurture its growth andsustainability. Neither the colonial Government nor the Government of independent Kenya considered securities markets asignificantpart of financial services. Consequently, self-regulation became the mantra until 1989 when the Capital Markets Authority Act, the harbinger to the Capital Markets Act, was promulgated. The Act established the Capital Markets Authority with regulatory and developmental responsibilities overthe embryonic securities markets.Disconcertingly, the Authority did not fundamentally change the regulatory paradigm of the markets. Stockbrokers retained manifest influence on decision making particularly on the growth trajectory of the markets. Although by 2000 the markets had imprinted an indelible mark in the financial services sector, their esoteric character coupled with the exceedingly low levels of financial literacy contributed to the low uptake of their products. The situation was exacerbated by the absence of a dynamic policy and legal framework.Throughout the period under review, performance of the securities markets remained lackluster.The study concludes that since the development of securities markets isan arduous process, it is imperative for the Government and stakeholders to assemble the necessary infrastructure.

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