The trading of company shares in Kenya began in the 1920s and was based on a “gentleman’s agreement” with no physical trading floor.
It was not until 1954 that the Nairobi Stock Exchange (now Nairobi Securities Exchange) was formally registered.
During the brutal colonial era, Africans and Asians were largely locked out of the stock market and weren’t allowed to own more than a few shares. READ MORE
As Uhuru (independence) beckoned and anti-colonial sentiment hit a fever pitch, the Kenyan stock market suffered its first free fall.
In two years, what was then known as the East African Trade Index had almost half of its market value wiped out.
This was between 1960 and 1962 during the Lancaster Constitutional talks that culminated in a framework to independence in 1963.
Globally, investors have always hated uncertainty and it was no different in Kenya.
Jittery investors were fleeing on the back of predictions that the economy would soon collapse.
However, the young vibrant Kenyans tasked with the formation of government-inspired confidence and after the Kenya African National Union (Kanu) took over the reins of power, market prices started rising.
By September 1963, the index was up by 94.3 points and in the first week of independence, it stood at 95 points before passing the 100 mark by August 1965.
The East African Standard (now The Standard ) would describe the spectacular recovery of the stock market from the pre-independence slump as “one of the major phenomena of the young nation’s life in the past few years.”The East African Standard further termed the steady rise of the market “a devastating reply to pessimists who a few years ago forecast that Kenyan commerce would collapse.”Former President Mwai Kibaki, who was then Minister for Commerce and Industry, led a rallying call on Kenyans, especially the emerging middle class to invest in the bourse.Even as the newspaper buttressed the need for more locals to buy shares, it noted that the Kenyan middle class had more pressing priorities such as owning homes.“Only comparatively few Kenyans, even now, are in a position to become investors. Many of the growing middle class have more urgent priorities such as building their own houses,” reported the newspaper on August 21, 1967.Curiously, the upcoming middle class thought that the idea of buying shares was “capitalism” and should be avoided at all costs.“But the idea that buying shares is ‘capitalism’ and therefore to be shunned should not deter those […]