Capital Markets Drive Measured Confidence in Kenya’s 2026 Economic Outlook
Nairobi Security Exchange (NSE) CEO Frank Mwiti. Photo / Courtesy
Kenya is heading into 2026 with renewed, though measured, confidence as stronger capital market performance, moderating inflation and improving macroeconomic coordination help steady the economy amid ongoing fiscal and global headwinds.
This outlook was highlighted during the 2026 Economic Outlook Breakfast, convened by the Kenya Private Sector Alliance (KEPSA) in collaboration with the Nairobi Securities Exchange (NSE) and KPMG, where industry leaders assessed the country’s economic direction.
NSE Chief Executive Officer Frank Mwiti told participants that 2025 proved to be a defining year for the capital markets, elevating the Nairobi Securities Exchange to the position of Africa’s second-best performing equity market.
According to Mwiti, the strong performance reflected a broader return of investor confidence underpinned by declining interest rates, a more stable shilling and closer alignment between fiscal and monetary policy.
“These conditions created a more predictable environment for both businesses and investors,” he said, noting that confidence was gradually returning after a period of economic strain.
Market data showed a sharp recovery across segments. Total market capitalisation rose to about KShs 3.0 trillion, representing nearly a 48 per cent increase from 2024 levels, while equity turnover climbed to KShs 145 billion, signalling improved liquidity and participation.
The fixed income market also recorded unprecedented activity, with bond turnover hitting KShs 2.7 trillion, driven largely by sustained demand for government securities and growing interest in corporate bonds as firms explored alternative financing options.
Equity benchmarks reflected the bullish sentiment, with the NSE 20 Share Index posting a gain of over 56 per cent, while the NSE All Share Index advanced by more than 51 per cent over the year.
From a broader economic perspective, KPMG Partner and Head of Private Enterprise in Africa, Sandeep Main, said Kenya is entering 2026 with improving momentum, although structural challenges remain.
He cited easing inflation, currency stability and recovery in sectors such as agriculture, construction and information technology as key growth drivers, while warning that high public debt levels, increased tax compliance pressures and costly credit continue to strain businesses.
KPMG projects Kenya’s economic growth to range between 4.9 and 5.2 per cent in 2026, with Sandeep emphasising that consistent policy implementation and focused reforms will be essential to sustaining private sector investment and employment.
KEPSA Vice Chair Brenda Mbathi reaffirmed the role of the private sector as a cornerstone of economic growth, particularly as global trade patterns evolve and technology reshapes markets.
She said KEPSA remains committed to working with policymakers to strengthen the business climate, attract investment and expand regional and continental trade opportunities.
