Why the NSE Must Diversify Beyond A Few Firms

Kenya’s capital markets remain one of the most important pillars of its financial system, but the structure of the Nairobi Securities Exchange (NSE) today reveals an uncomfortable truth: the market is overwhelmingly dependent on one company, Safaricom.

At the top of the NSE leaderboard sits Safaricom, with a market capitalization of Sh1.2 trillion as of September 2025. This valuation not only cements its status as the most valuable company in Kenya but also dwarfs the second-largest company by a colossal margin.

The next in line, Equity Group Holdings, has a market capitalization of Sh209 billion. The difference between Safaricom and Equity is more than Sh991 billion. Put differently, Safaricom is worth nearly six times more than Equity and over 17% of Kenya’s GDP, which stood at around Sh7.1 trillion in 2023 (World Bank data).

Following Equity is KCB Bank at Sh175 billion, East African Breweries Limited (EABL) at Sh163 billion, Standard Chartered Kenya at Sh122 billion, and Co-operative Bank at Sh119 billion. Collectively, the entire Kenyan banking sector dominates the list, with six of the top ten firms being banks.

While these institutions are critical, their valuations still pale in comparison to Safaricom. For example, KCB, EABL, and Equity combined—Sh547 billion—are still less than half of Safaricom’s worth. That concentration represents both strength and fragility for the NSE.

The remaining top players, ABSA Kenya (Sh108 billion), NCBA Group (Sh109 billion), Stanbic Kenya (Sh71 billion), and I&M Holdings (Sh66 billion), round out the top ten. Together, the nine companies outside Safaricom are valued at around Sh1.142 trillion—still less than Safaricom’s single market cap.

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This level of imbalance creates a distorted picture of Kenya’s capital markets. When Safaricom’s share price falls or rises, the NSE indices swing sharply, masking the real performance of other listed companies. This makes the exchange fragile in terms of investor confidence.

Indeed, Safaricom accounts for nearly 50% of NSE’s total market capitalization. This kind of dominance is rare globally. For comparison, in South Africa’s Johannesburg Stock Exchange (JSE), Naspers and Prosus dominate but do not completely overshadow the rest. In Nigeria, Dangote Cement is dominant but balanced by banks, telcos, and oil firms.

The over-concentration on Safaricom reveals a deeper problem: the NSE is shallow and under-diversified. With just about 64 listed companies, the exchange does not adequately reflect Kenya’s economy. Key industries such as agriculture, real estate, logistics, healthcare, and technology are either missing or severely underrepresented.

This shallow listing base is partly why the NSE has struggled to attract consistent foreign inflows. According to CMA reports, foreign investor participation dropped to 47% in 2024 from 55% in 2022, reflecting waning confidence in the market’s breadth and resilience.

In addition, local investor activity remains subdued. Less than 0.01% of Kenya’s population actively invests in equities, a figure that compares poorly to South Africa (6%), the U.S. (over 50%), and even emerging peers like Vietnam (7%).

The implication is clear: the NSE is not a true mirror of Kenya’s diverse and growing economy. While SMEs and mid-sized firms drive over 70% of employment and nearly 40% of GDP, very few make it to the public market. This imbalance leaves investors with few choices and limits the NSE’s ability to mobilize long-term domestic capital.

Why do so few companies list? Multiple barriers stand in the way: stringent listing requirements, disclosure obligations, regulatory hurdles, high listing costs, and cultural resistance from family-owned businesses that fear losing control.

State-owned enterprises also remain absent. Parastatals like Kenya Pipeline Company, Kenya Ports Authority, KenGen (already listed but underperforming), and others could transform the market if partially privatized and floated. The government has promised privatization for years, but progress has stalled.

Meanwhile, new-economy companies—especially in fintech, agritech, and logistics—have not found incentives to list locally. Many pursue private equity or offshore listings instead. For instance, Cellulant and Twiga Foods have raised millions from foreign investors but have never considered NSE flotation.

This trend deprives Kenyan investors of opportunities to share in the success of local innovators. Instead, foreign investors and private funds reap the benefits while local savers remain locked into traditional banks, land, and chamas.

The NSE’s shallow pool also undermines the ability of pension funds and insurance firms to diversify. Kenya’s pension sector manages over Sh1.6 trillion in assets, but with limited stocks to invest in, much of this capital ends up in government bonds or offshore markets.

Adding more firms to the NSE would deepen liquidity, broaden investment options, and help channel domestic savings into productive enterprises. If just 20 mid-sized Kenyan companies across multiple sectors were listed, the exchange’s market cap could expand by over Sh500 billion within five years, according to CMA projections.

The policy solution is clear: Kenya must revamp its capital market strategy. This involves offering tax incentives for listings, reducing bureaucratic hurdles, strengthening investor protections, and conducting aggressive campaigns to educate family-owned businesses on the benefits of going public.

Privatization should also be prioritized. Listing stakes in profitable parastatals would inject dynamism into the market while raising much-needed revenue for the government. Countries like Nigeria and Egypt have successfully pursued such paths.

Equally important is innovation. The NSE should create alternative markets for SMEs, similar to the GEMs board in Hong Kong or AIM in London, where smaller companies can access capital with lighter regulations while still providing investor safeguards.

If these steps are taken, the NSE could reduce its dependency on Safaricom within the next decade. Safaricom will likely remain dominant, but its share of market cap could drop from 50% to below 30%, creating a healthier balance.

A more diversified exchange would also attract foreign capital. Investors looking at Kenya today see one giant and little else. A diversified NSE would present Kenya as a serious emerging market with depth and resilience.

This transformation requires political will, strong leadership from the Capital Markets Authority, and collaboration between the government, private sector, and financial intermediaries. Without it, the NSE risks stagnation, with Safaricom’s fortunes determining the fate of the entire market.

Kenya cannot afford such fragility. With youth unemployment high, SMEs struggling, and debt burdens rising, capital markets must play a bigger role in mobilizing domestic and international investment.

The Safaricom gap is not just a market imbalance; it is a national warning sign. A single stock cannot be the bedrock of an economy’s capital market. The time to act is now, before the imbalance becomes unmanageable.

The future of Kenya’s capital markets lies not in one giant company, but in building a broad base of champions across industries. The Nairobi Securities Exchange must evolve from Safaricom’s shadow into a platform that reflects the full power and potential of Kenya’s economy.

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