Visa and the Nairobi Securities Exchange (NSE) have joined forces to launch an ambitious strategy aimed at revolutionising retail investing in Kenya, signalling a significant push to deepen financial inclusion and unlock wealth creation for everyday Kenyans. The collaboration, anchored by a detailed report titled “Reimagining Retail Investors in Kenya: A Technology-Centered Blueprint,” sets out a roadmap designed to overcome longstanding barriers such as onboarding challenges, high costs of trading, and limited financial literacy.
Chad Pollock, Visa’s Vice President and General Manager for East Africa, described the report as a “turning point” for financial inclusion, emphasising that leveraging digital innovation alongside NSE’s market expertise can open new avenues for retail investors to participate meaningfully in Kenya’s capital markets. The blueprint leverages behavioural science insights and mobile-first technology, recognising the emotional and social factors that influence investment decisions, including fear of missing out and peer pressure.
Practical innovations highlighted include USSD-enabled micro-investing, fractional share trading, and tools geared toward the Kenyan diaspora, such as the “Remit-to-Invest” platform. Additionally, the strategy promotes gamified financial education and the use of trusted local agents as investment advisors, intended to build trust and confidence within communities.
This strategy aligns with the NSE’s wider five-year plan launched earlier in 2024 to attract nine million active retail investors by 2029. Currently, despite 1.5 million accounts being registered on the NSE, a staggering 97.5% remain inactive. Frank Mwiti, CEO of the NSE, reinforced the importance of this partnership, stating that the insights from the report would guide the design of more inclusive markets and policies to extend investment opportunities throughout Kenya.
However, the NSE’s ambitious target of attracting nine million retail investors and listing 40 new companies over the next five years faces significant challenges. Despite the optimism, market scepticism remains due to a lengthy drought of new listings—the last initial public offering (IPO) occurred in 2015. Several prominent companies have delisted or had trading suspended in the past decade, deepening worries about the market’s vitality.
To combat this, regulatory reforms have been introduced to lower barriers to listing, especially for small and medium-sized enterprises (SMEs). The Treasury reduced the profitability requirement from three out of the past five years to just one year, and waived it entirely for SMEs with a credible growth plan. The government has also identified 11 state-owned enterprises for potential privatisation to inject fresh activity into the bourse.
Market data reveal a robust turnaround in investor confidence of late, with portfolio growth of KSh 419.5 billion in the preceding ten months to October 2024 and a boom in bond market turnover which more than doubled, surpassing KSh 1 trillion. This bond market growth has been supported by reforms introducing hybrid fixed-income instruments, aiming to diversify investment options and stimulate capital market growth.
On the retail front, the partnership between Visa and NSE complements broader transformations in Kenya’s financial landscape, including a surge in digital payments and alternative credit models. For example, retail supermarket chain Naivas recently introduced a buy-now-pay-later scheme backed by Visa, reflecting a growing acceptance of digital credit solutions even among middle-class consumers, signalling enhanced financial inclusion beyond just investment.
Despite these promising developments, the first quarter of 2025 has shown the difficulties inherent in such an ambitious agenda. The NSE has yet to reach initial interim goals of onboarding 450,000 new investors and listing at least two companies. Data from the Central Depository and Settlement Corporation indicates that active trading remains confined to a tiny fraction of accounts.
Nevertheless, the scalability of the Visa-NSE digital investment blueprint offers potential lessons for other African markets striving to deepen retail investment and financial inclusion. By tailoring financial products to diverse investor profiles—including youth traders and diaspora communities—and harnessing mobile technologies familiar to millions, the strategy aims not only to rejuvenate the NSE but to transform the investment landscape across the continent.
In sum, while the journey to revive Kenya’s capital markets faces steep challenges, the strategic alliance between Visa and the NSE, supported by regulatory reforms and growing digital payment innovations, marks a bold step towards creating a more inclusive, accessible, and dynamic investment environment for retail investors nationwide.
Source: Noah Wire Services
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