- Out of the more than 15,000 respondents interviewed, more than 70 per cent proposed a raft of measures to restore confidence in the capital markets.
- The measures include the introduction of more products, permitting borrowing and lending of securities to retail investors, promoting investor education, training and workshops that foster and promote ethics within financial services, and better enforcement by the industry regulators.
Retail investors in Kenya have given the capital markets a wide berth as a result of high transaction fees, low market awareness and a myriad of regulatory red tape, a survey report indicates.
The survey conducted by the Institute of Certified Investment and Financial Analysts (ICIFA) titled “An Assessment of Challenges that Retail Investors Face in Kenya’s Financial Market”, also blames inadequate capital to invest among the key deterrents for Kenyans to invest in financial markets.
Out of the more than 15,000 respondents interviewed, more than 70 per cent proposed a raft of measures to restore confidence in the capital markets.
The measures include the introduction of more products, permitting borrowing and lending of securities to retail investors, promoting investor education, training and workshops that foster and promote ethics within financial services, and better enforcement by the industry regulators.
Others include advertising and marketing, increased transparency of all market players, availing the Nairobi Securities Exchange (NSE) market data for free, elimination of investment bureaucracy, enhancement of investor experience addressing grievances in a timely manner, lowering of brokerage fees, lowering the minimum trading amount and negotiation with the government to lower the taxes on trading.
According to the F.A Diana Muriuki, CEO of ICIFA, the survey was conducted to provide insights into the paradigm shift that has been witnessed in the last General Elections where the Bottom-up economic model was favoured to replace the Trickle-Down economic model.
“The Bottom-Up model advocates for the enactment of policies that are favourable to SMEs, reduction of the tax burden and creating cheap credit access to SMEs to facilitate entrepreneurship and innovation,” Diana said during the launch of the report in Nairobi.
Further, Diana noted:
“The bottom-up model advocates for an increase in entrepreneurship and innovation, therefore, improving the Gross Domestic Product of the country that will directly affect variables such as individual incomes, inflation and investment appetite."
She said that with continued and active consumer education on products, services and procedures of the financial markets, retail investors can be better positioned to make sound investments in anticipation of the realization of the bottom-up-economic model.
Currently, ICIFA champions investor education through the ICIFA Investment show hosted on the ICIFA YouTube Channel.
The report recognizes retail investors as key players in the market but notes that awareness of service or product providers and trading companies is low.
Speaking when he officiated the launch of the report, State Department for Investment Promotion PS Hassan Abubakar said his department would fully support innovation and reforms in the investments industry.
“I will be working closely with ICIFA and all the other market players to ensure our capital markets open to retail investors within a conducive environment and offering tangible returns,” the PS said.
The report classifies the Kenyan retail investor as an individual with or without professional knowledge of the financial sectors, with an average monthly income ranging between Sh 50,000 and Sh200,000, who has been investing for 1 to 6 years and/or 10 years or more, who is both a long-term and short-term investor, and whose primary reason for investing is a combination of income and capital growth.