Investment options in Kenya have traditionally centred around land and rental properties.
However, as the investment market continues to evolve, Kenyans are actively seeking alternative methods to broaden their investment portfolios. A rising trend in this pursuit is the growing popularity of Money Market Funds (MMFs), a type of low-risk asset provided by Collective Investment Schemes (CISs). These funds allocate investments across a variety of assets, such as government securities and bank deposits
In the third quarter of 2023, the Capital Markets Authority’s Quarterly Statistical Bulletin reported that CISs held a total of Sh175.79 billion in assets under management in June. This figure represented a 1.7% rise from the Sh164.2 billion recorded in March. The primary components of these assets, accounting for more than 80%, were government securities and fixed deposits, which form the core of MMFs.
According to data provided in the bulletin, there has been a consistent upward trend in the amount of money Kenyans have put into MMFs since 2017. In that year, the total value of assets managed was Sh55.5 billion, with money markets dominating with a 78.8% share. As of the 2020 quarter, this number had increased to Sh76.1 billion.
Alongside conventional investment choices, there has been a significant surge in the digital assets sector. The UN Conference on Trade and Development (UNCTAD) recognized Kenya as the fifth leading nation in terms of crypto adoption in June 2022. Surprisingly, more than four million individuals, accounting for approximately 8.5% of the population, possess cryptocurrencies. Nevertheless, as per Chainanalysis data from 2023, Kenya’s global ranking dropped to 21st place, with Nigeria securing the second position. From July 2022 to June 2023, Kenya’s transaction volume surpassed $15 billion, while Nigeria achieved an astonishing $60 billion.
The government’s interest in taxing digital asset transactions was evident when the Finance Bill was introduced earlier this year. This demonstrated the government’s recognition of the sector’s significance. Government securities, bank deposits, CISs (especially the MMFs), and savings and credit (sacco) deposits are among the most popular investments. However, MMFs have gained popularity due to their attractive benefits, including stable returns, liquidity, and competitive risk-adjusted returns.
