This explains how the common ways of saving in Kenya work, what they cost and who protects your money. It is general information, not advice about what you should buy: that depends on your own situation, and a licensed adviser can help.

Before investing anything

  • An emergency fund first. A few months of spending somewhere you can reach within days.
  • Check the regulator. Every legitimate product below has one. Promises of high, guaranteed returns from an unregulated scheme are the classic Kenyan pyramid scam.

Money market funds

Money market funds (MMFs) pool savers’ money into short-term, low-risk instruments such as Treasury bills and bank deposits. They are popular because you can start small, add money by M-Pesa, and usually withdraw within a few days.

  • Interest accrues daily and the rate moves with the market.
  • They are regulated by the Capital Markets Authority (CMA). Check the fund manager is licensed.
  • Interest has 15% withholding tax taken off, and that is final.

Bank savings and fixed deposits

Savings accounts pay little. Fixed deposits pay more for locking money away for a set term, from a month to a year or more. Deposits are protected up to a limit by the Kenya Deposit Insurance Corporation. Interest has the same 15% withholding tax.

Treasury bills and bonds

The government borrows by selling Treasury bills (91, 182 and 364 days) and bonds (two years and longer). You can buy directly from the Central Bank of Kenya through its DhowCSD platform and app, or through a bank or broker.

  • The minimum for a Treasury bill is higher than for an MMF.
  • Interest on bills and most bonds has withholding tax deducted.
  • Infrastructure bonds are tax-free, which is why they are popular.
  • Bonds can be sold before maturity on the Nairobi Securities Exchange, but the price may be above or below what you paid.

SACCOs

SACCOs (savings and credit co-operatives) are member-owned. You save regularly, and can usually borrow a multiple of your savings. Many are tied to an employer or profession. Deposit-taking SACCOs are regulated by the SACCO Societies Regulatory Authority (SASRA); check that yours is licensed before joining.

Shares

Shares in listed companies are bought on the Nairobi Securities Exchange (NSE) through a licensed stockbroker, into a Central Depository (CDS) account. Share prices go down as well as up, and dividends have withholding tax.

Chamas

Many Kenyans save through a chama - a group that pools money each month. They work on trust, so agree written rules, keep records, and bank the money in the group’s account rather than with one person.

Pensions

Beyond NSSF, employer pension schemes and personal pension plans get tax relief on contributions up to a limit. Pension schemes are regulated by the Retirement Benefits Authority (RBA).

Tools