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Build on Kenya capital markets momentum to broaden offerings

Africa News News African October 19, 2026 · Comments off

For the past decade, conversations about Kenya’s capital markets revolved around what they could become. This year, the conversation has shifted.

In August, the Nairobi Securities Exchange crossed Sh4 trillion in market capitalisation for the first time, and by the end of the first half of 2026, the NSE All Share Index (NASI) had returned 26.8 percent, making it the fourth best-performing stock market in the world, ahead of the Nasdaq, the FTSE 100 and the Shanghai Composite. Numbers like that get attention.

The more interesting story is who is behind them.

For years, trading on the NSE was dominated by foreign investors, but that has been changing.

Through 2026, local investors have repeatedly absorbed heavy foreign selling and still pushed every major index higher, a shift the Capital Markets Authority has partly credited to reforms such as single-unit trading, introduced in August 2025, which let Kenyans buy a single share instead of a full board lot.

It sounds like a small technical change; in practice, it removed a real barrier to entry, and it matters, because a market cannot deepen while participation stays narrow.

But a rising market should not be confused with a mature one. The rally has been narrowing in a different sense: Safaricom and the banking sector between them still account for roughly three-quarters of listed market value, a strength when those names are performing and a vulnerability the moment they are not.

The investment conversation in Kenya has also stayed fairly narrow: equities, government paper, property, and traditional collective investment schemes.

Those remain the backbone of most portfolios, and rightly so. However, as more Kenyans put money to work in the market, the need for diversification, and for exposure to strategies and sectors beyond the familiar names, will only grow, and product innovation must catch up.

Exchange Traded Funds (ETF) are one obvious example of what that catch-up could look like. Their value is not that they are simply another product on a shelf. Properly built, an ETF offers a low-cost, relatively simple way to access a variety of securities, an index or a theme, without requiring the time or expertise to build that exposure security by security.

For an investor who does not have hours to spend picking stocks or investment strategies, that is often the difference between participating in the market and staying out of it altogether.

However, the opportunity in Kenya is broader just ETFs. Depositary receipts, which provide access to offshore equities and structured products such as exchange-traded notes can be used to broaden access by wrapping thematic strategies built around sectors or global trends.

Real estate investment trusts have existed in the Kenyan capital market for over a decade but have never really taken off, a reminder that launching a new product is not the same as building a market for it; innovation should start with what investors need: yield enhancement, diversification, liquidity, and access beyond Kenya’s borders, rather than with the desire for a new issuance.

Access is only half the equation. According to Central Depository and Settlement Corporation data, the number of dormant share accounts, those with no recorded transactions for two years or more, grew 28 percent to 1.54 million between 2022 and 2024.

Younger Kenyans are investing too, often through digital brokers, but frequently into US and Asian equities rather than NSE-listed names.

An exchange built in 1954 largely as a venue for companies to raise capital, and for early investors to exit, is still working out how to become an on-ramp for a mass retail market rather than a destination for the already engaged.

Technology is doing some of that work already. Fintech and digital distribution have cut much of the friction that once stood between an ordinary saver and the market, and expectations have shifted: investors want to discover and transact in financial products with the same ease they get from any other app on their phone.

Nevertheless, making investing easier cannot come at the expense of making it less responsible. As complexity in investment products grows, investor education, disclosure, payoff transparency and product governance need to keep pace.

The current momentum gives Kenya’s capital markets a rare opening: to build the products, infrastructure and distribution that outlast a single good year, rather than waiting for the next downturn to expose the gaps.

A strong market is encouraging. A market that gives investors more choice, easier access and good reason to trust it is something else entirely: transformational.

Gregory Waweru is the Chief Executive Officer, SBG Securities Kenya

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