Pensions the Kenyan way

We have often noted how the Nigerian regulated pension industry, although growing at a decent rate in terms of assets under management, is running behind many emerging markets by virtue of being a relatively late starter (2004). Today therefore we offer some indicators and pointers for the comparable industry in Kenya, which managed a total portfolio of KES1.08trn (US$10.5bn) at end-2017. This represented 13.9% of GDP, roughly twice the share in Nigeria. The Kenyan economy is roughly one fifth the size of Nigeria’s.


  • The total of KES1.08trn included property investments of KES109bn managed by scheme trustees and holdings of KES66bn administered by the parastatal National Social Security Fund (NSSF). The balance was managed by the 22 fund managers registered by the RBA, which is funded by an industry levy at a maximum annual rate of 0.2%.
  • The NSSF, established in 1965, covers all workers in Kenya. However, employers can opt for a private pension scheme with an approved manager.
  • The portfolio breakdown shows a very different picture to Nigeria’s.  The large exposure to property is in good part historic, and subject to a ceiling of 30% of a manager’s portfolio. Kenyan commentators view the share of government securities as high: it would probably have been greater if interest rates had been consistently higher. (The 91-day T-bill currently yields 7.7%.)
Portfolio of Kenyan retirement benefits industry, December 2017 (% shares)

Sources: Retirement Benefits Authority (RBA), Kenya; FBNQuest Capital Research
  • We note that the RBA has approved more than 20 individual pension plans for the informal sector, and that employees can make contributions directly through M’pesa, the vehicle for mobile money transfers
  • Finally, there are moves afoot to create one unified financial services authority out of the RBA and three sister organizations.

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