The Nairobi Securities Exchange has seen low levels of activity in recent years, a stark contrast to the early 2000s, which saw a series of mega initial public offerings (IPOs) attract large swathes of investors.
Today, there are more than 1.5 million Central Depository System (CDS) accounts, with 1.25 million account holders being Kenyan.
However, a recent article by the Business Daily, shows that only 38,594 accounts are actively trading—a meagre 2.5 percent. So how did we get from the excitement and activity of the early 2000s with KenGen and Safaricom IPOs to the lull being witnessed now?
One reason is the lack of information about how to take advantage of the stock market as a platform to grow your wealth. We’ve seen a boom in other investment avenues in recent years, as Kenyans look for ways to diversify their income streams to fund long-term and short-term projects.
You have heard steady conversations around money-market funds (MMFs), T-Bills, buying land, and exchange-traded funds (ETFs), but there is very little discussion about investing in and trading stocks.
Another reason is the technology barrier. Kenya is a tech-savvy nation with a largely young population that drives tech adoption. That tech knowledge can now drive the next generation of investors to take up the opportunities available at the NSE.
Previously, one would have to compile a large, difficult-to-find number of documents and establish a relationship with a broker to buy and sell shares on the NSE. Now, Kenyans can trade directly from their mobile phones.
A platform such as NSEasy, is democratising stock trading and placing our stock market back in the control of Kenyans, goes the additional step of removing barriers to access by leveraging USSD technology. All you need to do is dial *665*44# and input your ID and email address. One does not even need to buy data, download apps, or create new passwords.
Making a good return on the NSE is all about buying the stock when it is low, and selling when it is high. One can also earn dividends from the companies they purchase.
NSEasy makes this easy by sending customers reminders when their portfolio’s value increases by 10 percent, 20 percent, 30 percent, and so on, alerting the trader that they can sell now and make a return on their investment.
Every trader should research to make sure they are buying stocks in the companies they think will appreciate.
Regardless of the increase or decrease in price, every shareholder has their shares safeguarded. Each individual should only invest in stocks they have done thorough research on and that they fully understand. It is very easy to simply look at the stock belonging to the biggest names, but there may be others that are performing well yet they fly under the radar.
Stocks belonging to Safaricom, Equity Group, and East African Breweries have benefited their investors greatly, but there are some less flashy stocks with strong performances, like Carbacid Investments, Standard Chartered Bank, and Crown Paints Kenya.
These stocks are among those with the highest rates of return per share through dividends. That makes them very attractive to investors with long-term investment goals.
Democratising the stock market is within reach, and it’s time we grab this opportunity with both hands. With the right mix of technology, education, and collective effort, the future of stock trading in Kenya looks bright.
Let’s work together to ensure that every Kenyan, no matter where they are or what resources they have, can participate in the wealth-building opportunities that the Nairobi Securities Exchange has to offer.
