Custody Services Poised for Takeoff as Kenya’s Investment Assets Soar Past Ksh. 2.3 Trillion
By Timothy Ndemwa
As East Africa’s financial sector accelerates toward global standards, the role of custody and securities services is gaining unprecedented attention as a core driver of investor confidence and economic expansion.
Long perceived as back-office operations, custodial services are now emerging as vital components of financial infrastructure, especially in light of Kenya’s rapidly expanding investment landscape. With the country’s pension sector expected to surpass Ksh. 200 trillion (approximately $1.8 trillion) by 2040, stakeholders are urging custodians to continuously innovate to meet growing institutional and individual investor demands.
This trend is not isolated. Globally, the custody industry is booming, with assets under custody projected to hit $60 trillion by 2025. Locally, the Retirement Benefits Authority (RBA) reports that Kenya’s pension assets under management surged by 64 percent from Ksh. 1.398 trillion in Q1 2020 to over Ksh. 2.3 trillion by December 2024. The capital markets have performed even better, with assets in collective investment schemes growing over 500 percent in the same period — from Ksh. 76.3 billion to Ksh. 496.2 billion.
These developments underscore the critical need for custodians to offer agile, tech-enabled solutions aligned to the modern investor’s evolving expectations especially in alternative investments such as green bonds, tokenized assets, and virtual currencies.
“Innovation is no longer optional,” said a representative from Absa Bank Kenya, during the recent launch of the Absa Custody Business. “Custodians must go beyond safekeeping and offer data-driven insights, seamless cross-border investment support, and ESG-aligned options to stand out.”
Key to this transformation is technology. Custodians are now integrating blockchain, artificial intelligence, and real-time platforms to boost operational transparency, minimize risk, and ensure efficient service delivery. These shifts are attracting tech-savvy investors and addressing growing demand in the digital asset space especially as cryptocurrencies gain traction in the region.
The sector’s rapid growth is being met with proactive collaboration across the ecosystem. Forums such as the Absa Custody Business launch are now bringing together regulators, pension administrators, fund managers, and investors to shape the industry’s regulatory and technological future.
Compliance with evolving regulatory frameworks remains non-negotiable, experts say. Custodians who maintain close dialogue with regulators are better placed to navigate legal changes while safeguarding client assets and building trust in a fast-changing environment.
With Kenya’s investment landscape expanding at an estimated rate of Ksh. 50 billion monthly, industry leaders like Absa are positioning themselves as key enablers of cross-border investments through strategic global partnerships, including Euroclear integration for foreign currency Eurobonds and gold ETFs.
As East Africa embraces this financial evolution, custodians who prioritize innovation, sustainability, investor education, and strategic partnerships are poised to drive the next phase of inclusive economic growth.
