Nairobi Securities Exchange. Photo | Courtesy.
The Nairobi Securities Exchange (NSE) has recorded an unprecedented surge in bond market activity, with turnover rising 140 percent to a historic Sh1.5 trillion in 2024, up from Sh643 billion in 2023.
This significant increase has resulted in a six-fold rise in net profit for the exchange, reaching Sh116.3 million, while bond levy revenue more than doubled to Sh170 million, compared to Sh64.4 million in the previous year.
Infrastructure Bonds Fuel Trading Boom
According to a report by Business Daily Africa, the record performance was primarily driven by strong investor interest in an 8.5 percent amortized infrastructure bond issued in February 2024, which offered an 18.46 percent return—one of the highest yields in recent years. The high interest rates set by the Central Bank of Kenya (CBK) to curb inflation and stabilize the exchange rate made this bond particularly attractive to investors.
As interest rates began falling in July 2024, a rush to secure the premium bond in the secondary market ensued. By early 2025, its price had surged to Shh119.32 per Sh100 unit, reflecting the heightened demand as investors sought to lock in high yields before declining rates made such opportunities scarce in new government securities.
NSE’s Financial Turnaround and Dividend Increase
This surge in trading activity has significantly boosted NSE’s financial health. According to The Standard, the exchange’s total income rose by 25 percent to Sh828.4 million, while operating expenses grew at a more modest 12.9 percent, contributing to the six-fold jump in profits.
As a result, the NSE Board has doubled its dividend payout to Sh0.32 per share, up from Sh0.16 in 2023. Shareholders on record as of May 21, 2025, will receive the dividend by July 31, 2025.
Future Growth Strategy
Looking ahead, NSE plans to attract more domestic and diaspora retail investors, upgrade its trading infrastructure, and expand its product and service offerings. According to The Star, the exchange attributes its success to recent market reforms that have improved efficiency and enhanced the bond market’s appeal to both global and local investors.
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The exceptional performance of the bond market underscores a shifting investment landscape in Kenya, where fixed-income securities are becoming increasingly attractive amid economic uncertainties. With the government’s continued issuance of infrastructure bonds and improved investor confidence, analysts predict that bond trading volumes will remain robust in the coming years.
