Kenya has continued to experience rapid economic growth and it has been recognized as one of the fastest growing market in Africa. Various economic sectors such as Real Estate, Manufacturing, Banking, Energy and ICT have expanded in the recent years thus creating more room for investment.
Are you looking for a platform where you can invest your money and earn passive income? Then investing in stock market is the way to go. In Kenya, buying and selling stocks of various companies is done through NSE which is the leading Securities Exchange in East Africa.
What is NSE?
It refers to an organized market where stocks and shares of listed companies are issued, bought and sold through stockbrokers. It was established to achieve the following objectives;
• To mobilize savings in investment sectors that will guarantee productivity as an alternative to banks deposit savings
• To regulate the money market and ensure the economy inflation rate is manageable
• To encourage growth of financial related services providers such as pension and insurance firm which encourage saving
• To facilitate equity financing
• To encourage of public flotation of private companies which improve growth
In order for you to buy/sell shares of any company, it must be listed at NSE. Currently, companies are listed based on the following sectors;
• Investment
• Investment services
• Manufacturing and allied
• Telecommunication and technology
• Real estate investment trust
• Agriculture
• Banking
• Automobiles and accessories
• Commercial and services
• Construction and allied
• Energy and petroleum
• Insurance
The Nairobi Securities Exchange Market is licensed and regulated by CMA (Capital Market Authority) which is the government agency which regulates the capital markets in Kenya. The body is also charged with the responsibility of approving public offers and listings of securities that are traded at NSE.
How do I join NSE?
The initial process starts by finding a reliable authorized securities broker or firm who will trade shares on your behalf. It should be noted that NSE does not allow direct purchase and selling of shares among the shareholders. That is the reason why brokers come in to provide a link between the buyer and the seller of securities.
After you have identified your preferred stock broker, you will be required to open a Central Depository and Settlement Corporation (CDSC) account. This is an online platform that facilitates electronic securities transactions at NSE. Your authorized stockbroker will facilitate you in the process of creating the CDSC Account.
You will be required to provide personal details including your ID, colored passport and KRA certificate. For companies, certificate of registration is also required. Foreign investors are required to have a valid passport and further arrangements on how to invest including extra documents (if need be) will be facilitated by your stock broker.
After a successful opening of the CDS Account, you will be provided with the account number and a secret question that you will have to identify yourself with whenever you make a trade at NSE. You are also privileged to open multiple CDS accounts with different agents/brokers where you can buy shares of different companies and trade them separately.
Bottom line:
Investing in stock exchange can guarantee you value of your money especially if invested for a long term. Ensure that you have done due diligence before settling on shares of a particular company by conducting market research analysis. Always go for companies that are safe to invest and which have high growth potential.
