Investment in the future dipped in 2021 compared to 2019, the previous year of the survey. The number of Kenyans investing in equities and bonds fell from 3.2% in2019 to 2.3% in 2021. The trend follows the steady decline in investment usage since 2012 as Kenyans rank investment low among their priority areas due to limited resources, constrained supply of shares and little savings and incomes.
The investment rate across products varies widely. Many Kenyans have a bias towards shares and stock compared to other investment classes. Shares take up 71% of all investment, while other capital market products take up 19.4%. Mutual funds, Unit Trusts, REITs and derivatives form 6.3% of total investments, whereas T-bills and bonds account for the smallest share at 3.2%.
One of the biggest reasons why Kenyans are not investing in securities is not having enough money to invest. According to the 2021 FinAccess Household Survey, 35% of Kenyans do not invest their money because they “do not have the kind of money to invest”. The most popular reason after money was “I have never heard of securities market” (29%), followed by [we] “Don’t understand how to invest in securities” (15%).
TThe report notes the need to create more awareness on investment products, especially investment classes like mutual funds, unit trusts, bonds and bills. Awareness programs could target general information about the different asset classes, their risks and return, and most importantly, how to access the asset classes. Further, players in the market should also avail information on the various investment products available for different budgets. Such will help debunk the myth around what “kind of money to invest” by informing Kenyans that it is possible to invest in some asset classes with minimal finances and benefit from interest rates and compound interest. For example, Cashlet allows Kenyans to invest in unit trusts with as little as Ksh 500, earning annual interest of up to 9%.
While information could help increase the number of people who know the available investment options and tell Kenyans how to approach the different asset classes, fund managers should create or partner with platforms that make it easier for individuals to invest. Such partnerships include creating channels that let potential investors access information, and investment products directly through their mobile phone devices, allowing them to easily and conveniently participate in money and capital markets.
SEE ALSO: INTRODUCING UNIT TRUSTS THROUGH CASHLET