Individual investors have spent an average of Sh2,621 to buy shares through the new M-Pesa platform, reflecting the influence of the mobile money service in bringing small traders to the Nairobi Securities Exchange (NSE).
The investors on average bought 277 shares from the M-Pesa stock platform known as Ziidi Trader from February 5 to March 10, official trading data shows.
The sale and purchase of stocks directly via M-Pesa marks the first time investors are transacting in shares without going through stockbrokers.
Since launch, Safaricom data shows that the M-Pesa platform has handled 268,936 share purchase orders, representing 62.04 percent of the 433,498 total orders on the NSE between February 5 and March 10.
The Ziidi Trader now consistently accounts for over 62 percent of daily share orders on the Nairobi bourse.
“These confirm that ordinary citizens are now actively participating in Kenya’s capital markets,” said Eric Ruenji, Founder and Chairman of Theo Capital Holdings.
“The numbers confirm that ordinary citizens are now actively participating in Kenya’s capital markets.”
Individual investors on the M-Pesa shares trading platform have also been net buyers of shares at the NSE, putting in orders of 214,048 compared to 54,888 for sales.
This indicates that retail investors are buying and holding shares, supporting long-term capital formation.
The platform played a supportive role in enabling retail participation in the recently concluded Kenya Pipeline Company initial public offering.
Of the 73,000 individual investors who bought into the offer, 36,000 retailers placed their share orders through the M-Pesa platform.
Both President William Ruto and Treasury Cabinet Secretary John Mbadi highlighted the impact of the platform, including its ability to mobilise citizens to participate directly in the ownership of national assets.
More than 200,000 individual investors have opted into the Ziidi trader, accelerating the entry of retailers to the NSE.
“Over 200,000 investors have opted in, and if you compare that to where the NSE was before, it took nine years to get to 200,000 investors,” Esther Waititu, Chief Financial Services Officer at Safaricom, said in an interview with a local TV station.
“This shows that if you make a process simple and accessible and then incorporate it into what a consumer does every day, it can actually be transformational.”
The Ziidi Trader’s most significant impact on the NSE has been in driving up the number of share orders as opposed to traded values, as its share of turnover remains around the 2.5 percent mark.
An analysis of share orders between February 5 and February 18 showed that the transactions grew nearly four times due to the rise in micro-transactions.
The share orders hit 26,169 as of February 18, a number 3.8 times more than the 6,761 deals recorded before the start of M-Pesa shares trading on February 4.
Before the launch of the Ziidi Trader, the number of equity deals at the NSE averaged below 7,000 orders per day.
More than half of share orders came from the platform on its first day after public launch.
The Ziidi Trader is embedded on the M-Pesa smartphone application and relies on Safaricom’s existing know-your-customer credentials.
M-Pesa PINs are used as passcodes to opt into the platform, authorise trading and take other actions in the ecosystem. Shares purchased are held in a single omnibus account managed at present by Kestrel Capital, which acts as the stockbroker executing the trades.
The new system allows for efficient, anonymous and often faster trading, which the NSE believes will rev up the participation by retail investors.
The NSE is betting on the platform bringing up to nine million individual investors to market by the end of December 2029.
The idea of direct share trading had been controversial in the past as stockbrokers feared the innovation would run them out of the market.
Ziidi Trader, however, accounted for about 3 percent of the value of the shares traded, indicating that its success is hinged on the volumes.
