US investors increase their exposure to Kenya as Nairobi strengthens its position in Africa's financial markets

American investors increased their portfolio holdings in Kenya by 45 percent in 2025 to Sh258 billion ($1.9 billion), marking the highest level in four years as demand for Kenyan government securities and listed companies recovered after a prolonged decline.

Data from the US Department of the Treasury shows that holdings of Kenyan equities and long-term debt securities by US investors rose by Sh80 billion ($615 million), from Sh178 billion ($1.3 billion) in 2024. The increase marked a second consecutive year of growth following four years of declining exposure, pointing to renewed interest in Kenya’s financial markets among American investors.

The recovery came against a difficult international investment environment, as geopolitical tensions and uncertainty surrounding US President Donald Trump’s trade policies prompted investors to reassess their exposure to emerging and frontier markets. Relatively high interest rates in developed economies, particularly the United States, also intensified competition for international portfolio capital.

Daniel Mainda, chief executive of the Nairobi International Financial Centre, attributed Kenya’s appeal to improvements in its financial products and efforts to strengthen the investment environment. He said that the country had taken deliberate steps to maintain economic stability while identifying alternative methods of attracting direct investment.

Government debt accounts for most US investment

American investors’ exposure to Kenya remains heavily concentrated in long-term debt securities, which accounted for approximately 90 percent of their total portfolio holdings in 2025.

US holdings of Kenyan long-term debt securities increased by 42 percent to Sh231 billion ($1.785 billion), compared with Sh164 billion ($1.261 billion) a year earlier. The increase reflects the continued importance of government securities in attracting international portfolio investors, with Treasury bonds and infrastructure bonds offering exposure to Kenya’s domestic debt market.

The growth coincided with a decline in domestic interest rates as the Central Bank of Kenya eased monetary policy. Treasury Bill rates averaged 8.7 percent in June 2025, down from 16.5 percent in June 2024, according to the CBK, creating an opportunity for investors to secure prevailing returns on longer-dated securities.

Government securities remained an important component of Kenya’s investment proposition as the Treasury continued issuing bonds to finance public expenditure and infrastructure development. For international investors, these instruments provide access to shilling-denominated returns, while their attractiveness is influenced by interest rates, currency movements and developments in the domestic economy.

Despite the growth in debt holdings, American investors’ exposure to Kenyan equities recorded the faster rate of expansion. Equity holdings almost doubled to Sh27 billion in 2025, up from approximately Sh14 billion in 2024, reflecting increased exposure to companies listed on the Nairobi Securities Exchange.

NSE recovery strengthens Kenya’s appeal to foreign investors

The increase in American equity holdings coincided with a recovery in the Nairobi Securities Exchange, where improving share prices and trading activity supported renewed investor participation.

The NSE All Share Index gained 24.3 percent in the first half of 2025, while market capitalisation increased by 24.6 percent over the same period, according to the CBK. Foreign investor activity also improved, with net purchases on the exchange reaching a record Sh1.2 billion in August 2025 as uncertainty surrounding President Trump’s tariffs eased.

The recovery continued into 2026. The NSE recorded Sh395 billion in equity turnover during the first nine months of the year, compared with Sh145 billion across the entire 2025 calendar year, according to TechTrendsKE reporting. The exchange also added 333,043 investors between January and September 2026, taking its reported investor base to 2.36 million.

Kenya’s broader capital-market position also improved. The country rose from seventh to fifth place in the 2026 Absa Africa Financial Markets Index, scoring 65 out of 100, according to the index findings reported by TechTrendsKE. Improvements in stock and bond trading, dollar-denominated securities and market transparency contributed to Kenya’s stronger position.

These developments provide a wider context for the increase in American holdings, as the Nairobi Securities Exchange works to deepen its markets and expand access to domestic and international investors.

Nairobi strengthens its position as a financial centre

Kenya is also pursuing investment through the Nairobi International Financial Centre, which is intended to attract financial institutions, investment funds and multinational businesses seeking to establish operations in the country.

The NIFC reported that 15 newly certified companies had investment commitments worth Sh25.8 billion ($200 million), adding to efforts to position Nairobi as a regional financial and investment hub. The commitments were associated with the centre’s certification framework and investment incentives introduced through the Finance Act 2025.

In October 2026, NIFCA chief executive Daniel Mainga outlined plans for a $250 million technology and artificial intelligence investment fund targeting startups and companies in Kenya and across Africa. The proposed fund forms part of the centre’s wider ambition to attract capital into technology businesses and expand Nairobi’s role in regional investment activity.

The developments complement the growth in portfolio holdings by showing how Kenya is pursuing different sources of international capital. While government securities and listed equities provide foreign investors with access to financial markets, the NIFC’s initiatives target companies and investment structures operating across the wider economy.

The Capital Markets Authority has also reported growth across Kenya’s investment industry, including money market funds, fixed-income funds, special funds and digital investment platforms. The expansion of these products is widening the range of investment opportunities available to individuals and institutions participating in the country’s financial markets.

Foreign capital supports Kenya’s financial markets as borrowing pressures persist

The growth in foreign investment comes as Kenya continues to manage its fiscal financing requirements and efforts to maintain stability in the foreign-exchange market.

CBK Governor Kamau Thugge attributed the shilling’s stability to improvements in the balance of payments, financial inflows and the accumulation of foreign-exchange reserves. He reported a current account deficit of $4.68 billion alongside a financial and capital account surplus of $7.458 billion.

Foreign portfolio investment contributes to the financial account by bringing external capital into Kenyan securities markets. When international investors purchase government bonds or listed shares, they can also support foreign-exchange supply as they convert funds into shillings to acquire those assets.

However, the government’s continued reliance on domestic borrowing presents a competing policy consideration. Thugge has urged the National Treasury to rein in domestic borrowing, arguing that heavy government demand for local financing could undermine efforts to reduce lending rates and improve access to credit for businesses.

For Kenya, attracting international portfolio investors provides another source of demand for government securities and listed companies, while expanding the pool of capital available to its financial markets. The 2025 increase in American holdings represents a recovery from the preceding years of decline, although total exposure remains below the pre-pandemic peak of Sh390 billion ($3 billion).

The recovery therefore comes as Kenya works to strengthen its capital markets, broaden international participation and establish Nairobi as a destination for investment across Africa.

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