The Central Bank of Kenya was established in 1966 through an Act of Parliament – the Central Bank of Kenya Act of 1966. The establishment of the Bank was a direct result of the desire among the three East African states to have independent monetary and financial policies.
The Central Bank of Kenya Act of 1966 set out objectives and functions and gave the Central Bank limited autonomy. Since the amendment of the Central Bank of Kenya Act in April 1997, the Central Bank operations have been restructured to conform with ongoing economic reforms. There is now greater monetary autonomy.
Section 4 of the Central Bank of Kenya Act states the core mandate of the Bank as follows:
The principal object of the Bank shall be to formulate and implement monetary policy directed to achieving and maintaining stability in the general level of prices;
The Bank shall foster the liquidity, solvency and proper functioning of a stable market- based financial system; and
Subject to (1) and (2), the Bank shall support the economic policy of the Government, including its objectives for growth and employment.
The Capital Market is part of the Financial Market that provides funds for long term development. This is a market that brings together lenders(Investors) of capital and Borrowers(companies that sell securities to the public) of capital.
In November 1988, the Government set up Capital Markets Development Advisory Council and charged it with the role of working out the necessary modalities including the drafting of a bill to establish the Capital Markets Authority (the Authority).In November1989, the bill was passed in parliament and subsequently received Presidential assent (The Capital Markets Authority was set up in 1989 through an Act Parliament (Cap 485A,Laws of Kenya). The Authority was eventually constituted in January 1990 and inaugurated on 7th March 1990. The Authority is a body corporate with perpetual succession and a common seal.
The Capital Markets Authority is established by an Act of Parliament to promote, regulate and facilitate the development of an orderly, fair and efficient Capital Markets in Kenya.
The principle objectives of the Authority are:
The development of all aspects of the capital markets with particular emphasis on the removal of impediments to, and the creation of incentives for longer term investments in, productive activities;
To facilitate the existence of a nationwide system of stock market and brokerage services so as to enable wider participation of the general public in stock market;
To create, maintain and regulate a market in which securities can be issued and traded in an orderly, fair, and efficient manner, through the implementation of a system in which the market participants regulate themselves to the maximum practicable extent;
To protect investor interests;
To operate a compensation fund to protect investors from financial loss arising from the failure of a licensed broker or dealer to meet his contractual obligations and
To develop a framework to facilitate the use of electronic commerce for the development of capital markets in Kenya.
The Insurance Regulatory Authority is a statutory government agency established under the Insurance Act (Amendment) 2006, CAP 407 of the Laws of Kenya to regulate, supervise and develop the insurance industry. It is governed by a Board of Directors which is vested with the fiduciary responsibility overseeing operations of the Authority and ensuring that they are consistent with provisions of the Insurance Act.
The Authority is a precursor to the then Office of the Commissioner of Insurance that came into existence with the enactment of the Insurance Act, CAP 487 in 1986. Prior to this, insurance regulation was based on the UK legislation under the Companies Act 1960.
Ensure compliance by insurance/reinsurance companies and intermediaries with legal requirements and sound business practices;
Promote voluntary compliance;
Set clear objectives and standards of intervention for insurance/reinsurance companies and intermediaries or type of intervention;
Protect consumers and promote high degree of security for policyholders;
Promote efficient, fair, safe and stable markets;
Maintain the confidence of consumers in the market;
Ensure insurance/reinsurance companies and intermediaries remain operationally viable and solvent; and
Establish a transparent basis for timely, appropriate and consistent supervisory intervention, including enforcement.