The Nairobi Securities Exchange (NSE) has become an integral part of Kenya’s economic growth story over the last 65 years. As East Africa’s largest stock exchange, the NSE now lists over 63 major companies and plays a vital role in enabling businesses to raise capital and grow. But it has been a long journey since its humble beginnings back in the 1950s.

The Origins

The genesis of today’s Nairobi Securities Exchange began in the early 1950s when the country was still a British colony. Around this time, white settlers and members of the Asian community were informally buying and selling shares in various public companies. This took place mostly between businessmen over a cup of coffee or chai!

By 1954, an organized stock exchange was becoming a necessity and a group of settlers formally came together to establish the Nairobi Stock Exchange in July of that year. There were no computers and trading took place on a physical trading floor. Securities could also be transferred between individuals privately without going through an official broker.

A Major Milestone – Africans Allowed to Trade

In the initial years, Africans were restricted from buying and selling securities. It was only after the country gained independence in 1963 that the new government allowed Africans to participate and own shares. This helped broaden ownership of corporations beyond foreigners and minority groups. It ushered in an era that allowed ordinary Kenyans to build wealth through the securities market.

Gradual Growth and Maturation

Over the next 20 years, the Nairobi Stock Exchange remained a relatively small exchange. There were only about 10 listed companies in the 1960s but this had grown to 20 companies by 1980. Trading volumes were minimal as there were still relatively few players who actively invested in the stock market.

However, several important developments helped boost trading activity and participation from the 1980s onwards:

• Brokerage firms opened branches countrywide to attract investors, not just Nairobi-based individuals.
• The privatization of many state corporations in the 80s-90s resulted in more locally owned public companies that people could invest in.
• Banks increased lending to private investors who wanted to borrow money to buy shares.
• Foreign and institutional investors began actively trading at the NSE.

The 90s Tech Boom

A major turning point came in the 1990s when live trading through the automated trading system (ATS) was introduced in 1991. This electronic system connected live from the NSE trading floor to brokerage branches and banks across the country. It meant investors could watch real-time share price movements and place orders remotely. This boosted participation enormously.

The launch of internet trading services starting in 2000 also propelled rising trade volumes as local and foreign investors could now easily trade online through their broker’s website.

NSE Today – East Africa’s Largest Exchange

The Nairobi Securities Exchanges has now grown exponentially from its early days to become East Africa’s largest Exchange. As at March 2022, the NSE had 65 listed companies with a total market valuation of around KES 2.5 trillion (USD 21 billion). Leading stocks include blue chip companies like Safaricom, Equity Bank, EABL and cooperative Bank.

In recent years, there has been an increased focus by the NSE to attract small and medium enterprises to list which continue to drive economic growth and job creation. There have also been educational initiatives and partnerships to increase financial literacy and expose more Kenyan investors into owning a piece of the public companies fueling the country’s growth through buying and trading shares.

The Nairobi Securities Exchange has certainly come a long way from its humble beginnings initiated by a handful of settlers meeting informally to trade shares to becoming a robust African securities market providing vital access to capital for Kenyan companies while offering investors a chance to grow their wealth. The next 65 years promises to be just as exciting!

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