The steady shift from equities to fixed debt instruments as the main form of raising capital by both public and private entities has exposed the lack of depth in the capital markets when it comes to competently handling bond transactions.

The shortage of bond dealers and analysts highlighted in another section of this issue should come as no surprise.

With the exception of a couple of years after independence, the Treasury neglected bonds as a form of raising domestic debt until the short dated nature of treasury bills made interest on the papers too expensive, draining government resources and opening a window for longer dated more sustainable borrowing options.

Harnessing skills

In a nascent market like Kenya, this meant little interest collectively and individually in harnessing skills key to the operations of the bond.

It spoke volumes some 15 years ago when pioneers in the corporate bond market had no choice on who to structure the instruments, making one banker the most sought after item in the deal making scene as the firm that succeeded in retaining him gobbled up all the business in the market.

After trading in the instruments started at the Nairobi Stock Exchange, the only stockbroker who had the expertise to handle the transactions swallowed up virtually all the business until a disgruntled employee moved on to set up a rival shop.

That bond trading is a close knit business was brought home by allegations of collusion between bank employees and security firms to skim the fat off trading margins.

The blame, however, lies with the Capital Markets Authority, which has until recently tended to bask in the operational nature of its mandate -- licensing and whipping bad boys back into line -- while forgetting the strategic task of building human capital capacity in the sector.

The other accusing finger points at the Nairobi Stock Exchange which despite not being a regulator, is the human face of the capital markets through the trading floor.

By virtue of its members being the executors of both equities and debt transactions, it is the NSE that should be at the forefront of identifying skill gaps in the sector and proposing appropriate training.

But the regulators cannot usurp the role of visionary investment banks and stockbrokerage houses that should be training their staff to gain an edge over their rivals, rather than engaging in the unsustainable poaching of staff from each other.