The recent slump in trading at the Nairobi Securities Exchange is proving an effective motivation for many Kenyans to seek out alternative investment opportunities. While the NSE is expected by many to experience an upturn in fortunes in the upcoming months, pre-empting the timing of that upturn is risky business. Instead, many are choosing to avoid the traditional avenues of investment in favour of getting on board in markets that promise more scope for growth. More reliable industries like agriculture are proving an appealing investment, while forex trading and renewable energy are relatively new investment opportunities with substantial room for upward mobility.
Agriculture
While the NSE will inevitably fluctuate, industries like agriculture remain more constant due to their necessity. That is not to say there is no room for growth, however. The sector has grown by almost 5% annually in recent years, while 70% of the country’s exports are linked to agriculture. With an increase in demand for mechanisation and innovative farming methods, investment opportunities are aplenty. No investment is without risk, but agriculture is so essential and so ingrained in Kenyan life that its presence is not likely to come into question. This adds an extra degree of security to investments.
There is also scope for diversifying investments within the agriculture sector. With horticulture, coffee production and livestock barely scratching the surface of Kenya’s agricultural power, investors have a multitude of options. As Kenya’s largest economic sector, agriculture is among the safer options for investors. It has played a central role in Kenya’s economic development over the past few years and, with the burgeoning development of irrigation and increase in foreign investment, these trends look set to continue. Domestic investors are striving to find a way into Kenya’s biggest financial sector.
Source: KALRO via Facebook.
Forex trading
Forex trading may be in its infancy in Kenya, but growth looks set to happen quickly and extensively. EGM Securities became the first forex broker regulated by CMA in Kenya earlier this year. The Capital Market Authorities is indeed in the process of looking into extensive legislation to allow for such investment options. Kevin Nganga, CEO of EGM Securities, estimates that there are 80,000 Kenyans actively trading in the forex markets via international brokers. EGM Securities’ ambition is to attract that custom to domestic soil. In the past, Kenyans desiring to trade in the forex market had no choice but to look abroad. Now, there is the option to take advantage of local regulation and minimal transaction by employing the services of EGM Securities.
EGM Securities have grand ambitions to popularise forex trading in Kenya, making it accessible and comprehensible to every household. Part of that process involves the provision of a demo platform. In markets where trillions of dollars are in play, it is vital that traders have a deep understanding of the system. There is an extensive list of forex brokers who permit the creation of demo accounts, highlighting the importance of learning about market conditions and becoming familiar with the platform and its particularities before making financial commitments. These are virtual accounts that use virtual capital to allow new and experienced traders alike to experiment with strategies, but without the risk. EGM Securities is one of the brokers that encourages new traders to use the demo platform before diving into the real markets. This ability to learn about the nuance of markets in a safe environment will prove instrumental in encouraging more Kenyans to consider forex trading as a viable investment.
Renewable energy
Kenya is one of the leading developers of renewable energy in the world, with its commitment to sustainable living acclaimed across the globe. The Lake Turkana Wind Power Station is a testament to this dedication, with the largest private investment venture in Kenyan history aiming to supply one million homes with green energy. Overseas investors, including ones based in the United Kingdom, have declared their interest in becoming involved in Kenya’s renewable energy business. This demonstrates the world renown that Kenya has achieved in this field, making renewable energy an attractive venture for domestic investors too.
With pressure rising globally in the fight against climate change, the development of renewable energy sources will continue to expand. Kenya is a role model for sustainable energy in Africa, with government and businesses alike keen to maintain that status. Geothermal energy already enjoys a strong presence in the country, but the ambition is for geothermal to become the main source of energy in Kenya over the next few decades. While nothing is inevitable in the world of investment, such a long-term commitment to a project is music to the ears of those looking for dependable growth.
The NSE is a real asset to the country, but its difficulties in recent times are driving potential investors to consider alternative avenues of investment Entrepreneurial spirit is strong in Kenya, with some voices calling for the NSE to do more in terms of supporting the growth of businesses. While the NSE flounders and foreign investors withdraw, the time is right for Kenyans to explore alternative investment opportunities. Whether relying on strong industries like agriculture or anticipating the growth of new markets, investors in Kenya have a range of strategies at their disposal.
