Unlocking Kenya’s capital markets potential

Instead of embedding these limits in law, the Cabinet Secretary, working with the Capital Markets Authority (CMA), would be empowered to set them through regulations.

The thinking behind this move is to make it easier for large investors to inject capital into the market.

By removing rigid caps, the government hopes to attract more money into the financial sector, leading to stronger institutions, deeper liquidity, and better access to financing for businesses. In theory, this could stimulate economic growth and job creation.

However, while the intention is sound, the execution matters. Removing clear rules without replacing them with robust safeguards could open the door to excessive control by a few dominant players.

It could reduce competition, erode investor confidence, and increase the risk of market manipulation. That’s why many experts are calling for a balanced approach, one that retains default ownership limits in law, such as the current 33.33 percent cap, but allows exceptions through a transparent, well-regulated process.

Any changes should be backed by public consultation, clear justification, and parliamentary oversight.

Beyond ownership thresholds, the reforms must confront deeper governance challenges. Investors should be required to disclose ultimate beneficial ownership, the real individuals behind shareholding structures.

Regulators must also have the authority to vet key appointments to ensure they meet high standards of integrity and competence. These safeguards are not theoretical.

The recent push by stockbrokers to remove the Nairobi Securities Exchange (NSE) chief executive officer, citing concerns over transparency and strategic direction, has exposed tensions within the market.

It reflects a broader discomfort with reform and the need for stronger alignment between leadership and stakeholders. Such episodes remind us that governance isn’t just about compliance, it’s about trust.

When markets are predictable, inclusive, and fair, more people are willing to invest. Pension funds, insurance companies, and foreign investors look for strong governance before committing their money. Without it, even the best reforms risk being undermined by fear, resistance, or misalignment.

Read: Kenya’s economic reforms: Markets don’t lie

If Kenya gets this right, it could unlock billions in long-term investment, support infrastructure projects, and help businesses scale. For example, a well-capitalised investment bank could finance affordable housing projects, while a strong fund manager could channel savings into renewable energy ventures.

These are not just boardroom ideas,they affect real lives. A boda boda rider saving for his child’s education, a teacher investing in a unit trust, or a small business owner seeking capital to expand, all stand to benefit from a fair and functioning market.

We are already seeing signs of what’s possible. The NSE has shown strong performance in 2025.

The NSE 20 Share Index recently crossed the 3,000-point mark, up nearly 69 percent compared to last year. Market capitalisation has reached Sh2.81 trillion, and trading volumes have surged.

This growth is being driven by macroeconomic stability, improved investor sentiment, and increased participation from pension funds and retail investors, helped by digital platforms and better financial literacy.

Under the Kenya Kwanza administration, efforts to stabilise public finances, invest in infrastructure, and promote public-private partnerships have laid a solid foundation.

The government’s focus on fiscal discipline and economic transformation is beginning to bear fruit. But to truly mobilise private capital, the capital markets must be ready. That means clear laws, strong institutions, and a regulatory framework that protects investors while encouraging growth.

Other countries offer useful lessons. Singapore combines strict governance with smart incentives to attract global investors. South Africa has built deep markets by supporting institutional investment and strong regulation.

Mauritius has become a hub for cross-border listings by offering clarity and consistency. Kenya has the potential to do the same, especially with Nairobi already serving as a financial gateway for East Africa.

The CMA reforms, if done right, could be a turning point. They offer a chance to modernise Kenya’s financial system, attract new investment, and deepen the market.

But they must be guided by transparency, accountability, and a commitment to integrity. That is the path to a capital market that not only grows, but grows with confidence, fairness, and resilience.

For ordinary Kenyans, this means more opportunities to invest, whether through Saccos, pension schemes, or mobile-based trading apps. It means more jobs created through thriving businesses, and a stronger economy that works for everyone.

When capital markets are inclusive and well-regulated, they become engines of prosperity, not just for the elite, but for all citizens.
Let us embrace reform not with fear, but with foresight. The future of Kenya’s economy depends on it.

The writer is the Managing Partner of Bon & Drew Associates, a governance auditor and Council Member of ICPAK