Investors average share purchase in M-Pesa Ziidi Trader rises to Sh4, 818
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Individual investors have spent an average of Sh4,818 to buy shares through the new M-Pesa platform known as Ziidi trader, reflecting the influence of the mobile money service in bringing small traders to the Nairobi Securities Exchange (NSE).
New data show that the average ticket size on the M-Pesa backed application has nearly doubled since launch in March from Sh2, 872.
The sale and purchase of stocks directly via M-Pesa marks the first-time investors are transacting in shares without going through stockbrokers.
Nearly one million individual investors have opted into the Ziidi Trader since launching five months ago, but the number of active traders has remained at below 150,000.
Backers of the application have attributed the lower number of active traders to gaps in investor education where most individuals are yet to buy into the Nairobi bourse having formed no choice on the counters to purchase from, rather than the lack of market access.
They are banking on instruments like exchange traded funds (ETFs) to result in more conversions to trading by presenting investors with a basket of diversified stocks, negating the need for retail investors to pick individual stocks.
The Nairobi Securities Exchange (NSE) currently has two ETF listings-Absa New Gold and the Satrix World Feeder, while an additional listing of the Wall Street Africa (WSA) Banking Index ETF is set for the fourth quarter of this year.
“We’ve learnt that, even if you give somebody a Lamborghini but there are no roads to drive on, the person won’t drive,” said Eric Ruenji, founder and Chairman of Theo Capital Holdings.
“People want to invest but don’t know what to invest in. It’s no longer about having market access. We want to get people who have opted in to become traders without having to think about it too much, even if it’s buying just one unit.”
The Ziidi Trader has consistently handled the bulk of shares orders at the NSE since launching and has averaged 54 percent in the period.
The turnover or value of shares traded via the mobile-only platform has however remained muted at around two percent.
Individual investors on the M-Pesa shares trading platform have also been net buyers of shares at the NSE, putting in orders of 566, 000 compared to 265,000 for sales.
This indicates that retail investors are buying and holding shares, supporting long-term capital formation.
The Ziidi Trader is a mobile-based shares trading platform, jointly offered by Safaricom, the NSE and Kestrel Capital.
It enables customers to buy and sell NSE-listed shares and corporate bonds directly from their mobile-phones, monitor portfolios and access market insights digitally.
Safaricom has credited the platform with expanding access to capital markets, with the trading app having played a key role in the recently concluded Kenya Pipeline Company (KPC) initial public offer.
Seventy-three thousand individuals participated in the IPO where 36,000 of them placed orders through the M-Pesa platform.
“The launch of Ziidi Trader marked an important milestone, broadening access to capital markets and demonstrating early traction as a new driver of financial deepening and inclusion,” the company said in May.
At the time, the telecoms operator revealed 84,000 small investors as active traders on the platform and 511,000 sign-ups/opt-ins.
M-Pesa users can leverage the platform to directly buy shares on the NSE without opening a traditional brokerage account.
The system relies on existing M-Pesa know-your-customer credentials and PIN authentication, eliminating the need for new account creation.
Shares purchased through Ziidi are held in a single omnibus account managed by Kestrel Capital, which executes trades on behalf of users.
The NSE is betting on the platform to grow retail participation to as many as nine million investors by the end of December 2029.
Reporting originally appeared via Business Daily. Read the full source for additional context.