APRM �� SECOND COUNTRY REVIEW REPORT OF THE REPUBLIC OF KENYA sector has created the challenge of designing an appropriate governance structure, which will ensure that the benefits of the mineral wealth accrue to all the stakeholders. 2.21 The Panel recommends that in order to fully reap the benefits of the mineral and oil wealth, and to avoid the pitfalls of other African mineral-rich countries, Kenya needs to reform its legal and regulatory framework for natural resources to enable prudent management of oil and gas resources. The current regulatory and fiscal regime is in need of reform, as it relates to petroleum and dates from 1986. Specifically, full minerals-specific and oil and gas-specific regulatory frameworks are required. 2.3 Corporate Governance 2.22 The development of corporate governance in Kenya has led to the establishment of the Centre for Corporate Governance of the Institute of Directors, Kenya Association of Manufacturers, Kenya Private Sector Alliance, and the Kenya National Chamber of Commerce. These developments have influenced the internalization of corporate governance principles and objectives following the Commonwealth model by most companies which are listed in the Nairobi Stock Exchange and that are subject to the Capital Markets Act. Most family-owned businesses, private companies, Micro, Small and Medium Enterprises, as well as the informal sector, largely operate based on the principles of corporate governance contained in the Companies Act. Kenya is making progress on the objectives for corporate governance in the approved APRM Codes and Standards. The approved codes and standards have the potential to: • Promote market efficiency • Control wasteful spending • Consolidate democracy • Encourage private financial flows 2.23 The Government of Kenya has established various guidelines as regulatory mechanisms to strengthen the financial sector and improve corporate governance. These include, Capital Markets Guidelines on Corporate Governance Practices by Public Listed Companies in Kenya, Capital Markets (Registered Venture Capital Companies) Regulations 2007, Capital Markets(Conduct of Business) (Market Intermediaries) Regulations 2011, Capital Markets (Corporate Governance) (Market Intermediaries) Regulations, 2011, Capital Markets (Demutualization of the Nairobi Securities Exchange Limited) Regulations 2012, a Capital Markets Futures Exchanges Licensing Requirements Regulations 2013, Capital Markets Real Estate Investment Trusts Collective Investment Schemes Regulations 2013 and the Capital Markets Guidelines on the Approval and Registration of Credit Rating Agencies. 2.24 As a result, Kenya has moved up 21 places in the 2016 World Bank’s ease of doing business, as the country made its maiden entry into the top hundred category. It is a huge achievement for Kenya, which has been keen to improve the business environment. | 38 |