Democratizing Kenya's Financial Market: A Mobile Technology Blueprint

Financial deepening has long been hailed as an elixir for poverty reduction and economic growth in the developing world. Yet, owing to a range of individual-level constraints and market inefficiencies, the full potential of available financial instruments to safeguard wealth and insure against economic shocks for most individuals in these geographies has not materialized. My thesis will consider the problem of low financial market participation in Kenya, where a paltry 5% of residents transact in the country’s bourse. After reviewing literature that broadly establishes four factors (low levels of financial literacy, capital constraints, risk averseness, and the lengthy process of setting up a Central Depository System (CDS) account) as exhaustive culprits for low financial market participation in the country, this thesis will quantitatively analyze responses to online survey instruments administered to carefully curated pools of Nairobi Securities Exchange (NSE) participants and non-participants to determine the relative weighting of these factors within the target demographic for the proposed intervention. Insights from face-to-face interviews with 25 survey respondents were used to garner additional qualitative insights on barriers to NSE participation and the extent to which mobile technology and trading policy changes could make the NSE more accessible to Kenyans. The exercise revealed that, for the target demographic, mitigating the lengthy process of opening a CDS Account and offering exposure to low-risk, inexpensive instruments are promising channels to improve financial market participation – more so than improving general familiarity with listed securities at the NSE.