NAIROBI, July 11 (Xinhua) -- Kenya plans to prioritize use of domestic savings to fund development projects, a government official said on Thursday.
Nelson Gaichuhie, chief administrative officer at the National Treasury and Planning, told journalists in Nairobi that use of local resources is a cheaper source of finance as compared to local and foreign loans.
"The government will enhance fiscal incentives to encourage the expansion of the national savings rate," Gaichuhie said during the launch of NEXT Derivatives trading at the Nairobi Security Exchange.
He said that a high investment rate will be dependent on the ability of the country to mobilize domestic savings.
According to government data, the country's saving rate stands at approximately 12 percent against a target of 30 percent.
Gaichuhie added that the government is exploring a number of reforms that will accelerate the savings rate in the country.
In 2017, the east African nation launched a mobile based government bond to raise local funds to finance infrastructure projects.
Gaichuhie observed that the capital markets offers a viable alternative to raise both short and long term funds.
"The capital markets also provide an avenue to promote domestic savings by offering high returns on investments," he added.
The Kenyan official revealed that the NSE has one of the most advanced infrastructure and vibrant markets in Africa.
"If well utilized the capital markets can be a key driver economic growth and development," he said.
Gaichuhie said that Kenya's capital market faces a number of challenges that affect other emerging market such as limited listing and a narrow investor base.