The Nairobi Securities Exchange (NSE) lists around 60 companies, including Safaricom, the big banks, and manufacturers such as EABL. Buying shares makes you a part-owner, with a share of any dividends. This is general information, not investment advice.

What you need

  • A stockbroker (or an investment bank) licensed by the Capital Markets Authority (CMA). The NSE publishes the list of trading participants.
  • A CDS account - the Central Depository account that holds your shares electronically. The broker opens it for you.
  • Your ID or passport, KRA PIN, a bank account and passport photos.

Many brokers now open accounts online and let you trade through an app.

Buying shares

  1. Open an account with a broker and fund it by bank transfer or M-Pesa.
  2. Place an order - the company, how many shares, and the price you are willing to pay.
  3. The broker executes the order on the exchange, and the shares appear in your CDS account.

Prices move every trading day. The NSE trades on weekdays, with results published daily.

Costs

Each purchase and sale carries fees - broker commission plus levies from the NSE, the CMA and the Central Depository. Together they come to roughly 2% of the value of each trade. That is why trading often eats into returns.

Dividends and tax

  • Dividends are paid into your bank account or M-Pesa. Resident individuals have 5% withholding tax deducted, and that is final.
  • Keep your contact and bank details up to date with the company’s registrar, or dividends can go unclaimed.

Other things on the NSE

  • Treasury bonds can be bought and sold here after issue. See Treasury bills and bonds.
  • Exchange-traded funds and REITs (real estate investment trusts).

The risks

  • Prices fall as well as rise, sometimes for years.
  • Some shares trade rarely, so they can be hard to sell.
  • Companies can cut dividends or fail.

Spread your money, invest money you will not need for years, and avoid tips promising quick gains.

Unclaimed shares

If a relative held shares and has died, or you have forgotten old shares, check with the CDSC and the Unclaimed Financial Assets Authority.

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