Fractional Share Ownership in Kenya

Recently, the Nairobi Securities Exchange (NSE) announced the introduction of fractional investing in Kenyan stocks. Fractional investing allows people to buy less than a whole share of a stock or security, hence opening up access to stocks that would otherwise be out of reach due to a high nominal price.

Kenya’s fractional investing is expected to be modelled on South Africa’s EasyEquities platform in which case, stockbrokers or fund managers will buy and hold shares and then accept small investments from clients, which represent a fraction of a single stock. The investors will not be known to the listed companies but will have exposure and claims against the market intermediaries in terms of their portion of price movements and dividends on the stock. Additionally, the investors would have no voting rights, though as they make further investments and ultimately end up with a whole share, the contract with the intermediaries will end and ownership of the whole share will be delivered to the customer.

To facilitate fractional investment of shares, the NSE is planning to upgrade its system to support trading in odd lots –blocks of shares below the minimum of 100 per trade. The NSE and the Capital Markets Authority also recently approved Hisa App, the first mobile app in the country that seeks to facilitate fractional investing. The app is expected to roll out its services before the end of March 2023.

Overall, Kenya continues to make great strides in enabling fractional ownership of shares by putting in place regulatory systems and market infrastructure. This will go a long way in increasing retail participation at NSE by allowing smaller investors to buy shares with less money than previously required.