Britam Asset Managers, a subsidiary of Britam Holdings on Tuesday welcomed the government’s move to establish structures for a sovereign wealth fund.
According to the firm that currently manages assets worth Ksh. 158 billion, a Sovereign Wealth Fund would greatly benefit the country by stabilizing the governments’ revenue collection streams.
Similarly, the firm through its Chief Executive Officer, Kenneth Kaniu insisted that now is the opportune time for the country’s regime to have mechanisms in place for the setting up of the Sovereign Wealth Fund because Kenya is expected to begin realizing revenues from crude oil production by 2022.
“The government’s plan to have all mechanisms in place beforehand through the Draft Sovereign Wealth Fund Bill (2019) and Natural Resources Benefit Sharing Bill (2018) is an encouraging development. The move to establish the necessary legal and structural mechanisms before expected revenues from crude oil and minerals begin to come in should result in more effective and efficient use of resources,” Mr. Kaniu said in an official statement.
Mr. Kaniu consequently revealed that the wealth fund would not only stabilize government revenue collection streams but also improve the country’s infrastructure deficit as well as its net savings.
On his part, James Mose, Britam Asset Managers’ Chief Investment Officer also highlighted a potential secondary benefit of sovereign wealth funds; the stability of the Kenyan shilling.
“As the assets held in the Sovereign Wealth Fund will be denominated in foreign currency, the Fund will also be expected to result in stability of the Kenya Shilling which has depreciated at an annual average rate of approximately 3 percent to 4 percent,” Mr. Mose said in the statement.
Mr. Mose however cautioned local policy makers to guard against potential over reliance on revenues from natural resources in future budgets as this would result in short term shocks in the event of depressed commodity markets.