How Nairobi bourse got its groove back

NSE Market watch board during ringing of the bell ceremony at Nairobi Securities Exchange. [File, Standard]

For years, the Nairobi Securities Exchange (NSE) was the preserve of foreign funds and wealthy institutions. 

Ordinary Kenyans watched from the sidelines, locked out by the high minimum trades and a belief that stocks were not for “people like us.”

For the better part of two decades, the Nairobi bourse moved to a familiar rhythm: foreign funds bought, foreign funds sold, and everyone else watched.

When global investors sneezed, the NSE caught a cold. When they fled — as they did after the contested 2007, 2017 and 2022 General elections, during the Covid-19 pandemic, and after the 2024 Gen Z-led protests — the bourse bled billions of shillings.

This familiar script is now changing, official data shows. 

In the first three months of this year, a quiet revolution flipped the script. As foreign investors yanked Sh8.78 billion out of Kenyan stocks — nearly double the previous quarter’s outflows — ordinary Kenyans did something unprecedented. They bought in.

Not institutions. Not wealthy insiders. Just ordinary Kenyans with smartphones and a few thousand shillings.

This saw the number of Kenyan retail investors jump by 28,696 in the single quarter to about 1.3 million,  according to the latest Capital Markets Authority (CMA) Quarterly Statistical Bulletin published yesterday.

The shift marks a structural transformation for Kenya’s capital markets. With local individual investors now holding 12.4 per cent of all shares and local institutions controlling nearly 69 per cent, the bourse is becoming less vulnerable to the “hot money” outflows that have long triggered volatility. 

For ordinary Kenyans, regulators say, the stock market is no longer a remote casino for the wealthy but a potential engine of household wealth, deepened by mobile technology and regulatory reforms that have torn down old barriers. During the quarter, 66,727 new equity accounts were registered across all investor categories.

The bulk — 65,522 — were local individual investors opening accounts for the first time. However, the net increase in active local individual investors was 28,696, rising from 1,256,201 to 1,284,897.

The difference reflects account closures, dormant accounts, or existing investors who did not actively trade during the period.

Female investors increased by 41,045 to 716,157, while male investors rose to 1,462,430. Total equity investors reached 2,178,587, up from 2,027,517 three months earlier.

As of March 31, local individual investors held 12.37 per cent of all equities by value, while local corporate investors — companies, pension funds, and institutions — held 68.97 per cent. Combined, local investors controlled 81.34 per cent of the market.

Foreign corporate and foreign individual investors together held just 13.82 per cent, down sharply from previous years. Brokers, East African residents, and junior investors accounted for the remainder. 

Foreign participation

The retreat of foreign capital accelerated in the first quarter. Net foreign outflows — the value of shares sold by foreigners minus purchases — nearly doubled to Sh8.78 billion from Sh4.62 billion in the previous three months. Average foreign participation in trading slumped to 32.3 per cent from 37.0 per cent.

“Recent developments have led to increased participation by retail investors in the capital markets, driven by reforms in the equities market such as single-share trading,” said the CMA Chief Executive Officer, Wyckliffe Shamiah.

According to CMA, two developments lowered the barrier to entry. In February, Safaricom launched Ziidi Trader, a mobile investment platform built directly into M-Pesa, the mobile money service used by more than 30 million subscribers.

For the first time, a user could buy a single share with a few taps on a basic phone. “During the quarter under review, Safaricom PLC, in partnership with the NSE, launched Ziidi Trader, a mobile-based investment platform integrated into the M-Pesa app, enabling users to buy and sell listed shares and invest in corporate bonds directly from their mobile phones,” Shamiah said.

“The platform enhances access to capital markets by leveraging M-Pesa’s extensive reach, supports financial inclusion and investor participation, and operates under the oversight of the Capital Markets Authority to ensure transparency and investor protection,” he added.

“The initiative simplifies the investment process and is expected to deepen market activity while broadening retail investor participation.”

Then came the Kenya Pipeline Company (KPC) listing — the largest initial public offering in the country’s history. The Ruto government sold an 11.8 billion-share stake, representing 65 per cent of the company, at Sh9 each, aiming to raise Sh106.3 billion. The offer was oversubscribed by 105.7 per cent, with trading commencing on March 10.

A second listing, ALP Industrial Real Estate Investment Trust (REIT) — a pooled investment vehicle that owns income-generating industrial properties — became the NSE’s first dollar-denominated security. It raised $29.55 million (Sh3.84 billion), recording 115 per cent subscription.

The long-standing rule requiring a minimum of 100 shares per trade was scrapped in August 2025, replaced by single-share trading.

The CMA also licensed eight new intermediaries in the first quarter, including a digital stockbroker and an online investment platform.

“The authority continues to strengthen investor protection by reviewing regulations, tightening supervision, and implementing targeted investor education and awareness initiatives,” Shamiah said, “to ensure that retail investors remain protected and fully aware of the risks involved in investing.”

Meanwhile, the Nairobi All-Share Index (NASI), which tracks all listed stocks, rose 4.4 per cent to 194.82 points, and the NSE 20-Share Index climbed 9.3 per cent to 3,431.56 points.

Total market capitalisation — the combined value of all listed companies — expanded 9.7 per cent to Sh3.23 trillion. Equity turnover jumped 35 per cent to Sh58.4 billion. Derivatives trading — where investors buy and sell futures contracts based on underlying stocks — also saw a surge.

The volume of contracts traded rose 61 per cent to 78,348 contracts from 48,594 in the previous quarter, while turnover doubled to Sh318 million.

Total assets under management by collective investment schemes — pooled funds such as unit trusts — rose 11 per cent to Sh756.2 billion as of December 31, 2025, with 42.8 per cent invested in government securities.