The trouble with the bourse

Why Kenyans opt to gamble


By David Onjili

In 2013, the Nairobi Securities Exchange (NSE) launched The Growth Enterprise Market Segment (GEMS), to provide more long-term finance options to Small and Medium Enterprise (SMEs). This was in recognition to a survey by FSD Kenya and the World Bank which noted that only 23.4% of SMEs had access to credit from banks, a situation made worse with the introduction of the interest capping rates in September 2016.

Through GEMS, SMEs that had been in operation for more than one year without necessarily being profitable could still be listed in the bourse.

By September 2013, GEMS had listed 4 firms, with hopes of listing 19 more by 2017 and 39 by 2023 as per the Capital Markets Master Plan that is in line with vision 2030. Yet, so far only 5 companies are listed: K-Shoe, HomeAfrica, Kurwito Ventures, Flame Tree Group and Atlas Development.

In a Newsplex survey conducted last year by the Nation, 15 of the 64 companies that traded at the NSE reported losses in the 2016 financial year. 26 of these, or 39%, recorded falling profits after tax while 23 firms recorded increased profits.

The majority of these listed companies are trusted, well known and preferred brands amongst Kenyan customers, so where is the problem?

The NSE itself is not a guarantee to wealth creation especially with tales of insider trading and corruption

Experts suspect either a lack of trust from customers in the brands, or reduced spending power amongst the consumers, and therefore a direct reflection of economic activity in the country. But they also do not rule out increased competition from cheap imports to some of the products offered, as has been noted in the sugar and cement segments.

While the NSE is an avenue for investors to earn, it works better as a long term instrument. But because many Kenyans think short-term, it explains why many opt for real estate and gambling, which promise quick riches. The influx of several real estate projects and betting companies is testament to this.

A GeoPoll conducted last year showed that 54% of youth in Sub-Saharan Africa bet, where Kenya leads with 74% of its youth engaging in betting; Uganda has 57% and Ghana’s 42% was the lowest.

On average, a Kenyan gambler spends Sh5,000 a month, and this is on the lower side; the same survey showed 79% of Kenyans who gamble place bets on football, and 90% of these use their mobile phones.

But while focus is primarily on the winners – the jackpot for SportPesa, without including bonuses, was Sh221 million in 2017, and Sh230 million in 2018 – less highlighted are the amounts gamblers lose, which estimates put in the billions monthly. Not one to miss out on the pie, government began levying higher taxes, which has, arguably, jolted gambling houses into implementing more stringent rules, resulting in fewer winners.

These are all negative consequences of gambling, but because of guarded management practices and a general lack of information on how to invest in the bourse, many Kenyans opt to gamble, not invest.

The NSE itself, as currently run, is not a guarantee to wealth creation for investors especially with most of the listed companies recording losses and being quoted often on insider trading and graft.

Newly listed products, like the NewGold ETF, are not doing well or are simply expensive when compared to the amounts one needs to gamble, which can be as low as Sh20.(



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