- In Kenya, the growth has been significant with more and more people joining the sector.
- There are four licensed non-dealing foreign exchange brokers licensed in Kenya including SCFM Limited tradingand one Money Manager trading as Mansa-X.
Online forex trading is, a small segment of global currency market that makes up individual investors has been steadily growing over the last 25 years.
In Kenya, the growth has been significant with more and more people joining the sector.
The sector has been there for many years in Kenya, Kenyans were involved in online forex trading trading through foreign-based brokers before 2017.
In 2017, the Capital Markets Authority(CMA) was designated as the regulator of the Online Foreign Exchange industry as per the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017.
This made Kenya the second only African country to have a regulatory regime for Online Forex Trading
There are four licensed non-dealing foreign exchange brokers licensed in Kenya including SCFM Limited tradingand one Money Manager trading as Mansa-X under the same regulations.
According to Trade Forex Kenya, since the legalization of online forex trading, Kenya has witnessed a dramatic surge of 80 per cent in forex and CFD trading volume with the addition of over 40,000 new traders to the market.
Godfrey Wasike, is an individual trader, he has been in the online forex marketing industry since 2016 professionally on full time basis.
Wasike attributes his life success to the hardwork and persistence he put in online forex trading.
Throughout his life journey, Wasike faced a number of ups and downs, being raised by a single mother he knew that without putting his best foot forward he would be in for a life of suffering.
He tried everything in this country, from menial jobs such as working at Sanford restaurant as a cleaner, Kenafric industry as a house keeper,opening a movie shop where his partner conned him.
He even tried a career in music. All this happened while he was still in college .
While engaging in this activities he was still very interested in online forex trading but he didn't have the push to do it but would still learn about it back in 2013.
“I started trading professionally in 2014 where I just knew that I place money it goes up or down on binary.com I didn't understand the complexities until 2016 when circumstances forced me to fully engage in this career ,” said Wasike.
Failing in all other things in life is what saw him start engaging in online forex trading, he terms it as what he figured as his last straw in life.
Following the research he had done from 2013,going full time on forex trading saw him become an industry leader.
People who were even in the industry before him came to him for training on how to understand the markets.
Wasike now is one of the individuals sowing good seeds in the murky online forex trading waters
Despite the steady growth in the industry there have been a couple of cases of people being scammed of the online forex market.
In 2018, there was a forex brokerage firm VIP Portal which saw Kenyans lose more than Sh1.1 billion in what could turn out to be the biggest forex trading scam in Kenya’s history.
CMA has continued to work to notifiy the public when new entities are issued with licenses to operate to raise awareness on the licensed entities.
The Authority also maintains the list of licensed entities on the CMA website , to help in curbing the online investor fraud.
The markets watchdog has been proactively monitor the industry to weed out unlicensed entities.
So far, they have taken action against more than forty companies by requiring them to apply for a license or cease to operate until they do so, they have also taken court action against some of them with the support of the Capital Markets Fraud Investigation Unit.
According to Kenneth Waiganjo Acting CEO Scope Markets the biggest challenge in the industry is that the licensed companies such as Scope Markets have to compete with unlicensed international brokers who solicit business in Kenya without being licensed by the Capital Markets Authority.
Waiganjo also noted that the huge increase of illicit entities, both local and international, which are just conning of their hard earned money.
He called on Kenyans to work with licensed entities where they have an opportunity to trade and earn their money in legal ways.
To curb investor fraud, Scope markets has a Know Your Customer Framework which ensures that itonly onboard clients with clear income streams to evidence the funds they are investing on the Scope Markets platform.
As part of it's risk and compliance Strategy, they continuously monitor the trading patterns of our clients to ensure money obtained through fraudulent means or through money laundering does not find its way into our platform.
Scope markets data estimates that up to 400,000 Kenyans are actively involved in forex trading with only around 25 percent trading through the licensed non-dealing foreign exchange brokers.
The rest trade through unlicensed platforms where they are exposed to the risk of losing their investments.
Last August, the Central Bank of Kenya warned that global online networking companies, pyramid schemes and forex traders would take advantage of Covid-19 economic difficulties to exploit Kenyans.
There is not much data on how much Kenyans are losing to online fraudsters, but the global figure was estimated at 36 billion Euros (Sh4.6 trillion) in 2019, according to the Dutch-based E-commerce Foundation.
TRENDS IN ONLINE FOREX TRADING
The daily retail forex trading volume in Africa is the largest in South Africa, followed by Nigeria & then Kenya.
South Africa is the most prominent hub of forex trading in Africa with the highest number of regulated brokers.
Leaving aside institutional investments, Nigeria (290,000) is estimated to have more retail traders than South Africa (250,000).
Lastly, Kenya, which is a relatively new regulated market have an estimated 90,000 retail traders
South Africa has always been a popular market for traders and brokers in Africa due to the strong regulation provided by Financial Sector Conduct Authority (FSCA).
Nigeria currently doesn’t have any regulation for forex trading currently; most retail investors trade via FSCA & other foreign regulated brokers.
Kenya's CMA has started picking attention of African & Kenyan traders.
The COVID-19 pandemic fueled the growth as people started trading forex, commodities, indices and gold.
Due to the lockdowns in 2020 because of the pandemic, many people had to work from home, whereas many were left without employment.
Most Kenyans started seeking alternative ways to sustain or supplement their low income, and started trading online. This has been the trend globally.
The improved telecommunication infrastructure in Africa also enabled people to trade online with their Smartphones & other devices.