The Nairobi Securities Exchange (NSE) has gone through one of the longest downturn cycles in its modern history. From political shocks, global economic pressure, and a weakening shilling, to local tax uncertainty, the period between 2017 and 2024 became an extended era of investor fear and suppressed valuations.
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Only in 2025 has the market shown true signs of recovery—this time not driven by hype, but by stabilizing fundamentals and improved investor confidence. Here is the full story.
I. 2017 – Election Heat and Uncertainty
2017 was a critical year for the NSE. Kenya held two presidential elections, creating a prolonged season of political tension. Investors—especially foreign institutions—avoid uncertainty, and the repeat election caused:
- Decline in foreign inflows
- Delayed investment decisions
- Market-wide caution and reduced liquidity
As a result, several counters began showing weakness, marking the beginning of a downward trend.
II. 2018–2019 – The Interest Rate Cap Squeeze
The interest rate cap introduced in 2016 was still in effect, and its impact became clearer in 2018 and 2019. Banks, which are major drivers of Kenya’s economy and the NSE, significantly reduced lending to SMEs and high-risk borrowers. This created:
- Slower business growth
- Reduced profits for many listed companies
- Lower investor appetite
During this period, the NSE remained subdued, with limited new listings and declining turnover.
III. 2020 – The COVID-19 Shock
Just as Kenya began adjusting from the rate cap environment, the pandemic hit. COVID-19 brought:
- Panic selling worldwide
- Dividend cuts and suspensions
- Sharp decline in corporate earnings
- Complete withdrawal of many foreign investors
A few resilient stocks held steady, but the overall market experienced one of its sharpest declines in years.
IV. 2021 – Partial Rebound but Global Money Shift
When global markets reopened, many exchanges—especially in the US and Europe—experienced massive rebounds fueled by stimulus packages. However, Kenya did not benefit as strongly.
Two major reasons:
- A strong US dollar attracted foreign capital back to developed markets.
- Investors preferred large global tech companies over emerging markets.
Although the NSE showed partial recovery, it remained weaker than most global markets.
V. 2022 – Global Inflation and Russia–Ukraine Impact
As inflation skyrocketed globally, central banks increased interest rates. This made developed markets more attractive again and pushed foreign investors further away from Kenya.
The Russia–Ukraine conflict added pressure:
- Commodity prices rose
- Import costs increased
- Company margins tightened
Foreign exits continued, pushing the NSE lower.
VI. 2023 – Weak Shilling and Rising Debt Concerns
By 2023, the shilling was falling faster than at any time in recent history. Foreign investors holding Kenyan assets suffered massive currency losses—even if the share price remained stable.
For example, a 20% currency loss wipes out any gains.
This triggered:
- Heavy foreign sell-offs
- Record-low valuations on banks and blue-chip companies
- Investor fear across the market
2023 marked the deepest point of the downturn before the political and economic struggles of 2024 emerged.
VII. 2024 – The Final Downturn (Finance Bill 2024)
Many people assumed 2024 would be a recovery year, but instead it became the final blow.
The Finance Bill 2024 introduced new taxes and signaled rising operating costs for companies. Investors expected:
- Lower profits
- Reduced dividends
- Decreased consumer spending
- Tougher business conditions
As a result:
- Confidence collapsed
- Buyers disappeared
- Selling pressure increased
- Prices reached true bottom levels
2024 was not a recovery year. It was the year the market fully bottomed out.
VIII. 2025 – The Real Bull Run Begins
2025 is the REAL recovery year—far more meaningful than the false starts of previous years.
Why?
- Repeal of the Finance Bill restored business confidence.
- The shilling stabilized, reducing currency-loss risk for foreign investors.
- Dividend-paying stocks became extremely attractive after years of low pricing.
- Local investors re-entered strongly, especially retail and high-net-worth Kenyans.
- Corporate performance improved, reflecting post-reform optimism.
- Valuations returned to fair levels, not inflated levels.
This bull run is different—it is not about hype or speculation. It is about restoring the market to where prices realistically should have been before the 2024 collapse.
Summary
From 2017 to 2024, the NSE went through:
- Political uncertainty
- Lending restrictions
- COVID-19
- Global inflation
- Currency weakness
- Foreign exits
- Tax pressure
All these factors created an 8-year path of suppressed valuations.
2025 changes the story.
This is the first year where underlying economic stability, investor confidence, corporate strength, and policy clarity align to drive a genuine bull run—one that restores the market back to its rightful pre-2024 levels.
The recovery is real, slow, steady, and grounded in fundamentals.
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