Top 5 places to invest in Kenya today
Nothing speaks to the business mind like profits. The lifecycle of aggregate profits are usually unpredictable, but with a solid ground to start on, the dots become easier to join. So where is the ground solid in the Kenyan economy? And more so, where are investors, both top dollar and small investors, daring to tread, and why?
Left, right and centre, structures in Kenya are rising and lands are always changing hands. The real estate business is booming in Kenya like never before. The real estate business usually comprises of buying or selling residential houses. Buying land is yet to be explored in its entirety. A good investment could be buying land in prime areas and selling it when prices hike, or building on ypur land and selling the house. In parts of the country, there are some places where land is sold as low as ksh70, 000 and the prices appreciate with time, but this can take years. One should consider location of the land, as a strategic place has more benefits and of course is more expensive. Besides selling land and houses, another way to make your mark in the real estate business is through importing housing finishes. The real estate business is rampant in Kenya, profits flow in one way or another. Becoming a real estate agent is also an undertaking that one can combine with their existing business, and get a cut of about ksh1, 000-10, 000 or higher for a house sale. The ever-growing demand of houses and land are due to population increase and is always met by the supply in the real estate market. With all said and done, nothing beats a thorough market research and a good strategy in planning before investing in real estate.
The agricultural sector recovery makes it an ideal investment. In the Kenyan economy, agriculture remains an important economic activity, contributing directly to 24% of the country’s Gross Domestic Product (GDP) and is the largest employer in the country, culminating 60% of the total employment, according to the Kenya Agricultural Research Institute (KARI). In this farming economy, investing in agribusiness can never go wrong. Investment in this sector can be done in a variety of ways such as crop production, horticulture, livestock, dairy, or fishery. A lot of opportunities are also offered in production of agricultural products such as seeds, fertilizers and pesticides, as well offering agricultural services from irrigation to storage facilities. Investing in dairy farming would cost about ksh100, 000 to buy top graders which can produce up to 30 litres a day. A litre of milk usually goes for 60Kshs. An alternative would be crop production, which can be done in your shamba or by growing crops in a green houses which offer a safe and conducive environment for plant growth. Higher yields are also expected when using a greenhouse and less acreage is needed. An average 3 by 30 metres greenhouse costs about ksh200, 000 including the set up for drip irrigation. Hydroponics is also an option to consider as it is 100% cost-effective and sustainable. Sack gardening/bag gardening are also an investment to explore. It involves growing crops in earth filled sacks which can be layered. Little water and soil is needed for sack gardens which come in handy especially in places where food shortages is rampant. A bag goes for Ksh1, 100 and one may need around 100 bags to start.
The umbrella term covers the realm of communications and technologies, and true to its word, the ICT sector has been soaring, making it a lucrative investment. Kenya forged forward to becoming a hub for ICT, with the springing of new technologies and innovations. As a member of the International Telecommunication Union (ITU), Kenya keeps up with the global infrastructure. In the information and communications technology, generating ideas, devices and providing services in line with the industry is a key investment to making a sure profit. With a 69.9% of internet penetration, and four mobile phone companies, opportunities in the Kenyan ICT sector are limitless. Investing in start-ups is also a wise move. Technology companies such as iHub and Nailab have start-ups which one can invest in.
The Nairobi Stock Exchange (NSE) is the leading securities exchange in East Arica, where securities (bonds, notes and shares) are bought and sold, and lists huge public corporations. For one to acquire dividends from the shares, one must first find a brokerage firm- there are quite a number of licensed brokers in the country. The broker will then make transactions on your behalf and assist you in opening a central depository and settlement corporation (CDSC), an online system that electronically facilitates transactions of shares across NSE. Central to making a profit in the stock market is to buy a stock at a low price and sell it a much higher price. The minimum number of shares you can buy is 100 units of the stock. However, not all companies floated in the stock market promise profit, as securities are bought and sold at prices governed by forces of demand and supply. Also, investing at the right place, and importantly, at the right time will determine your profit margin. Usually, stock exchanges plunge during certain times, such as election period or times of high inflation. Before investing in any stock look at the company fundamentals of the stock you are buying especially as a long term investor. For a trader, stock price volatility is what matters most as you tend to gain from the price fluctuations.
Bonds are debt security, similar to an I.O.U. When you purchase a bond, you are offering money to the Central Bank of Kenya to raise funds to support the budget and state projects. You are then assured of a specified interest rate during the time of the bond and to repay the face value until it is mature. Treasury bills’ maturities are offered in 91, 184 and 364 days. Compared to shares, investing in bonds is less risky because of the guarantee you will receive, and have a long term fixed interest. An investor needs a minimum of ksh50, 000 to invest in bonds. If you are looking for a long term safe investment, predictable returns and high interest, the bonds are a perfect match.
This is for the least risk averse people. If you want to be guaranteed of your returns, this is a better place to invest than the stock market though the returns may be lower i.e. ranges between 7-11% per annum. Nowadays there are a number of places you can invest in unit trusts from a minimum of 1,000ksh. A unit trust is a pathway to an investment, in that you pool your money along with other investors with a similar objective. Once you have invested your money on an Equity fund, the total amount inputted by all the investors can then be retained in the stock market with various companies which the Fund Manager finds are doing well. If the stock market is doing well, the investor can expect a return depending on the amount they have invested. Unit trusts offer you a variety of companies where you can invest your money, with relatively low price, an investment that wouldn’t be possible through investing directly in the stock. Also, the fact that your money is in control of the Fund Manager, who controls where your money goes is a relief as they tend to make expert decisions where to invest your money.