Paper short abstract:

This paper investigates the genesis, organisation and operations of the Nairobi Stock Exchange (NSE) for the period 1954-1970.

Paper long abstract:

This paper investigates the genesis, organisation and operations of the Nairobi Stock Exchange (NSE) for the period 1954-1970. Given the relatively low and racially skewed levels of private sector development and savings mobilisation in colonial Kenya, this paper explores the question of whether there was an economic justification for the establishment of a capital market during the uncertain period of political and economic transition. The second objective is to explain how the development of Kenya’s capital market, centred around the NSE, can provide valuable insights into the composition of private capital in Kenya during and after the Mau Mau rebellion for independence from British colonial rule. Officially established on 1 July 1954, the NSE was a private initiative led by six brokerage companies to facilitate broader access to long-term capital for settler-colonial enterprise and the state’s growing need for development finance. Using the operations and regulation of the NSE as an analytical lens into the history and politics of Kenya’s capital market, this paper provides novel evidence on the participation of private capital and the architecture of the financial sector during the country’s violent decolonisation process. The early growth in volume and value of transactions on the NSE shows the dominance of European and Asian institutional investors in the trade in government stocks and debentures in an expanding pool of Kenyan industrial companies. The analysis of the NSE immediately after Uhuru in 1963 consider the effects of the government’s Kenyanisation policies on the participation of African capital and individual investors.