Category: Business Daily

Should you take out an education insurance policy for your child, or would you be better off investing that same money and drawing on it when fees are due?

There isn’t a one-size-fits-all answer, but there are useful ways to think about the trade-offs.

Most education insurance policies in the Kenyan market combine two things: a savings element that grows over the years, and a set of additional protection features that allows parents to build a fund for future school fees while ensuring that the child’s education can continue if the insured parent dies or suffers a covered disability.

That protection side is what differentiates the education policy plans from the purely savings plans.

A common protection aspect in an education policy is the waiver of premium on death. This means that if the parent paying premiums passes away, the insurer steps in and keeps paying the premium. So, when the plan matures, the insurer pays out in full when your child needs the school fees money.

A related version extends this to total and permanent disability (TPD). If the parent becomes permanently unable to work, premiums are waived the same way, since disability can wipe out income. Some education policy plans add a critical illness benefit too, triggering an early pay-out or premium waiver on diagnosis of conditions like cancer or stroke.

All these riders protect the education goal against three separate ways a family’s income can be interrupted. That’s a meaningfully different promise from a plain investment account, which has no mechanism to notice a parent has died, become disabled, or fallen critically ill. The pure investment account simply stops growing unless someone else steps in.

Now consider the investing route on its own. Put the same monthly amount into a unit trust, a money market fund, or a mix of equities and bonds, and you’re likely to have more flexibility.

You can adjust contributions as your income changes, and you’re not locked into surrender penalties if you stop paying early. The trade-off is that none of this protects the goal itself if the person funding it can no longer do so.

So, how might a parent think this through? First, who else depends on your income, and what happens to this savings goal if that income disappears tomorrow? If you already have a solid life, disability and critical illness cover elsewhere, structured to fund your child’s education specifically, the riders in an education policy may add less value, and a pure investment vehicle might do the job with more flexibility. If you don’t have that cover, the built-in protection could be filling a real gap.

Second, how disciplined are you as a saver? An education policy’s fixed premium and long-term contract work in some parents’ favour, removing the temptation to dip into the pot. Others find that rigidity frustrating, especially with an uneven income, and prefer an investment they can top up or pause as life demands.

Third, what does the fee structure look like? Education policies bundle charges for the riders and administration, making it harder to see what you’re paying for each piece. A standalone investment usually has clearer fees, but you’d need to separately price life, disability, and critical illness cover to match the protection.

There’s also a middle path some families choose: a term life policy sized specifically to cover the remaining school fees liability, paired with a separate investment account for the actual savings. This can sometimes work out cheaper than a bundled education policy, though it requires a bit more hands-on management, since you’re running two or three products instead of one.

Ultimately, this comes down to your own risk appetite, existing cover, discipline as a saver and how much you value the simplicity of a single product versus managing the pieces yourself. It is a genuinely personal decision.

If you’re weighing this up for your own household, it’s worth sitting with a certified financial or insurance advisor who can look at your full picture and help you map out which combination actually serves your child’s education best.

Every few months in Nairobi’s upscale neighbourhoods of Kilimani, Kileleshwa and Lavington, an old bungalow disappears behind corrugated iron sheets as construction cranes move in to build yet another apartment block.

Today, balconies overlook neighbouring balconies, while some windows stare directly into living rooms across only a few metres of separation. Yet many of these developments are still marketed as offering “exclusive living”.

Traditionally, exclusivity had little to do with price. It meant low-density neighbourhoods, larger homes, mature gardens, fewer neighbours and enough space to provide privacy and quiet.

Today, developers increasingly define exclusivity through rooftop swimming pools, gyms, co-working spaces, concierge services and smart-home technology. While these amenities undoubtedly add value, they do not necessarily recreate the neighbourhood qualities that once defined Nairobi’s premier suburbs.

Real estate expert Johnson Denge says the meaning of exclusivity has gradually shifted.

“Exclusivity has become more of a marketing term,” he says. “It could refer to amenities exclusively provided for residents, the level of security or simply a way for developers to differentiate themselves in a competitive market.”

Developers argue that the apartment boom reflects the economics of Nairobi’s land market rather than competition for prestige.

“It is not necessarily competition on location. It is more about developers wanting to maximise returns because land is very expensive. For you to achieve the returns you are looking for, you have to intensify development,” Mr Denge says.

Land in neighbourhoods such as Kilimani and Kileleshwa now commands hundreds of millions of shillings, making low-density developments increasingly difficult to justify.

“You realise that land in places like Kileleshwa, Kilimani and similar areas can cost up to around Sh400 million. For developers to undertake projects that deliver meaningful returns, they are forced to maximise the number of units they can build,” he says.

A parcel that previously accommodated a single home now host dozens of apartments, allowing developers to spread land acquisition and construction costs across many buyers.

The result has been an unprecedented wave of densification across neighbourhoods once synonymous with spacious living.

The same economic forces driving higher-density developments are now contributing to falling apartment prices.

“They densify by putting up more apartments so that they can balance affordability for buyers while generating enough sales to recover their investment. The lower prices are mainly driven by high supply and weakening effective demand,” Mr Denge says.

Kenya National Bureau of Statistics (KNBS) data supports that trend. Apartment prices in Nairobi’s high-end estates fell 4.8 per cent in the year to March, while prices in middle-income estates declined 3.2 per cent as new developments continued to enter the market.

Many residential developers are now relying on discounts, flexible payment plans and other incentives to attract buyers for completed units.

The changing market has also altered the profile of apartment buyers. Although owner-occupiers remain active, Mr Denge says demand is increasingly being driven by investors with varying objectives, including landlords, speculators betting on capital appreciation and diaspora buyers seeking to invest back home.

Another major driver has been the rapid growth of short-term accommodation.

Short stay business has transformed apartments into income-generating assets, encouraging investors to purchase units specifically for holidaymakers and business travellers. However, as more investors entered the segment, returns have come under pressure.

“Many people who purchase these apartments convert them into Airbnb units, and that market is also beginning to experience price reductions because supply has increased,” Mr Denge says.

While many residents blame zoning changes for the rapid densification of Nairobi’s traditionally exclusive suburbs, Mr Denge argues that the regulations themselves are not the problem.

“The zoning regulations are very clear. They provide for plot ratios, plot coverage, setbacks and buffers. The challenge is enforcement,” he says.

He adds that exclusivity cannot exist in isolation.

“When you find that residents are living only a few metres apart, the lifestyle promised by the developer is sometimes not achieved, not necessarily because the developer failed, but because the development does not exist in a vacuum.”

Planning, he says, needs to extend beyond individual developments.

“There should be proper planning where developers are required to leave adequate space between apartment blocks and sufficient open spaces. Our planning rules tend to focus on setbacks from the main road, with very little consideration given to spacing between neighbouring developments.”

Despite the changing character of these neighbourhoods, Nairobi’s traditional uptown markets continue to attract investors.

Knight Frank’s Wealth and Investment Trends 2026 report notes that affluent Kenyans continue to view residential property as an important store of wealth.

Mr Denge expects future residential growth to shift beyond Nairobi’s traditional apartment hotspots.

“As infrastructure improves, we will see more development moving into satellite towns because land is relatively affordable, there is more room for expansion and infrastructure continues to improve within a 10 to 30-kilometre radius of Nairobi,” he says.

Areas such as Ruaka, Ruiru, Syokimau, Athi River and Kitengela are already attracting developers seeking lower land costs while remaining well connected to the city.

Mr Denge believes the current slowdown reflects a market correction rather than a long-term decline.

“Real estate markets have a way of regulating themselves because developers respond to demand,” he says.

He points to Nairobi’s office market, where years of oversupply eventually prompted developers to slow new projects in response to changing market conditions.

Esther Masese Waititu has resigned as Safaricom Plc’s Chief Financial Services Officer, nearly three years after she took the job.

The Business Daily has established that Ms Waititu will leave Safaricom on July 31, 2026, ending a tenure that began in 2023.

This marks the latest of C-suite exits from the telecommunications firm, with Chief Strategy Officer Michael Mutiga exiting to join Stanbic Bank Kenya and South Sudan as Chief Executive Officer effective August 1st, 2026.

“Among Esther’s defining achievements is her modernisation of M-Pesa’s technological infrastructure. She spearheaded the migration to Fintech 2.0, a cloud native architecture that future-proofed the platform’s reliability and sealed the Daraja developer ecosystem,” Ndegwa said in his email.

Before joining Safaricom Plc, Waititu had been in Africa’s banking sector for 13 years, where she served as KCB Group’s Director in charge of Corporate Banking in the period between September 2021 and February 2023 and in various roles at Africa’s largest bank by asset base, Standard Bank.

Safaricom Plc has, in the interim, tapped its Director, Public Sector Digital Transformation, Boniface Mungania, to serve as Chief Financial Services Officer.

A court has refused to enforce a 438 percent annual interest charge imposed on a digital loan, signalling closer judicial scrutiny of punitive mobile loan terms even if borrowers voluntarily accept them before receiving credit.

The Small Claims Court in Nairobi ruled that Zenka Digital Limited could not enforce contractual loan terms requiring 36 percent monthly interest, equivalent to 438 percent annually, and a further 1.5 percent daily default charge, translating to approximately 45 per cent monthly. It said the rates were punitive and unconscionable.

The dispute arose from a Sh76,000 loan that Zenka advanced to borrower Benson Njeru in September 2024 and was repayable within one month. The total payable was Sh103,360. Njeru defaulted, prompting Zenka to sue, demanding a Sh152,000 payment.

The Magistrate’s Court ruled that Zenka could only recover the Sh76,000 it lent the borrower and declined to enforce contractual interest and default charges that had raised its claim to Sh152,000.

“The interest rate charged is unconscionable,” the magistrate said in the judgment dated July 10, 2026. It noted the agreed 36 percent monthly interest translated to about 438 percent annually.

“The rationale underlying the in duplum rule is to guard against the excessive accumulation of interest and charges and to prevent a lender from recovering amounts that are grossly disproportionate to the principal debt,” the court said.

She added that the lender also imposed “a daily default rate of 1.5 per cent, translating to approximately 45 per cent monthly.”

Digital lenders are a major source of quick unsecured credit for thousands of Kenyans who increasingly rely on mobile phones to borrow small and medium-sized amounts, making disputes over loan pricing and recovery an important consumer finance issue.

The court found that the lender had proved it disbursed the money through the respondent’s M-Pesa account after reviewing the loan application and payment records.

However, the court held that the agreed interest terms produced an excessive financial burden that the court could not enforce.

The court said combining the monthly interest with the daily default charge would cause the debt to grow rapidly beyond the original amount borrowed.

“Such rates are capable of producing a debt that bears no reasonable relationship to the amount borrowed and would result in an oppressive burden upon the borrower,” the court said.

The magistrate added that enforcing those provisions “would offend the principles of fairness, equity and good conscience that guide the court in the enforcement of contractual obligations.”

While recognising that contracting parties are generally bound by agreements they freely sign, the court said it retained discretion to refuse terms producing unjust or unconscionable outcomes.

The court instead entered judgment for the principal sum of Sh76,000, awarded interest at 18 percent annually for two months from September 23, 2024, granted court-rate interest from the filing of the suit until payment in full, and awarded Zenka Sh10,000 in costs.

Mr Njeru had argued that the amount claimed was exaggerated because the interest exceeded what the law allowed. He also said he had made repayments that were omitted from the claim.

The court rejected that argument because no evidence was produced to support the alleged repayments.

“I do note that though the respondent claimed it had made some payments, the same was not supported by evidence,” the magistrate said.

Electric bus maker BasiGo is rolling out four public electric vehicle (EV) charging stations in counties surrounding Nairobi, targeting inter-city public transport operators and private car owners.

The expansion is in partnership with the oil marketing company Rubis Energy Kenya, under which BasiGo will lease space at Rubis service stations to install and operate the charging facilities.

The first charging station under the partnership has been opened in Sabaki, Machakos County, while three more sites in Meru, Nanyuki and Nyeri are to open later this month.

BasiGo told the Business Daily the stations will be open to the public and will serve electric buses, vans, trucks, passenger vehicles and other compatible EVs

The company operates more than 10 charging stations in Nairobi, primarily serving its electric bus fleet.

It said the new facilities are designed as smaller inter-city charging depots for public service vehicles (PSVs) and motorists travelling outside the capital who need to top up their batteries.

The charging hubs will be equipped with CCS2 and GB/T DC 100kW (kilowatt) fast kits, capable of charging a typical passenger vehicle in under an hour.

Charging will be offered at a rate of Sh48 per kilowatt-hour, meaning a full charge for a mid-sized EV with a 75kWh battery would cost about Sh3,600.

“Every charging station we deploy along key transport corridors strengthens the business case for electric mobility and makes intercity electric transport more practical, reliable and commercially viable,” said BasiGo Kenya Managing Director Moses Nderitu.

Kenya has seen a sharp rise in electric mobility as consumers and businesses seek alternatives to fossil fuels, although adoption remains heavily concentrated in two-wheelers.

Data from the National Transport and Safety Authority (NTSA) shows the country had 35,661 registered electric vehicles as of January, including 33,374 motorcycles, 1,065 three-wheelers, 591 station wagons, 98 buses, 54 minibuses and matatus, 67 saloons, 13 vans, four lorries and two prime movers.

Rising fuel prices have been one of the main drivers of EV uptake, particularly among public transport operators.

This is because Kenya Power offers a discounted e-mobility tariff, charging Sh8 per kilowatt-hour during off-peak hours and Sh16 during peak periods to encourage EV charging.

Motorists have been grappling with high pump prices over the past year, with petrol and diesel in Nairobi recently rising to Sh214.03 and Sh222.86 per litre, respectively.

Limited public charging infrastructure beyond Nairobi is one of the biggest obstacles to wider EV adoption.

The Electric Mobility Alliance of Kenya estimated that the country had only about 300 public charging points as of June last year, the majority of which were battery-swapping stations for motorcycles.

About 90 percent of the charging infrastructure was concentrated in Nairobi, making long-distance EV travel difficult.

Industry analysts estimate that establishing a public charging station costs between Sh4 million and Sh5 million, rising to nearly Sh7 million where developers are required to install dedicated electricity transformers to meet higher power demands.

BasiGo, which assembles electric buses and vans in Nairobi, has been expanding its charging network beyond the capital.

Last year, it opened charging stations in Nyahururu and Kiambu, targeting the growing deployment of electric vans on regional routes.

The firm’s latest expansion is part of a strategy among EV companies to partner with OMCs to leverage existing fuel station networks while enabling the oil retailers to diversify beyond fossil fuels.

Besides Rubis, BasiGo also operates charging stations hosted at Vivo Energy service stations.

Meanwhile, TotalEnergies Kenya has partnered with electric motorcycle firms Ampersand, Roam and Arc Ride to offer battery-swapping through its retail network.

Kenya’s growing businesses are not short of ambition. Many have strong products, expanding customer bases and clear growth plans, yet struggle to access financing that matches their stage of development. The challenge is not simply a shortage of capital but a shortage of financing options.

The scale of the problem is significant. While earlier International Finance Corporation estimates placed Kenya’s MSME financing gap at Sh2.2 trillion, the Revised MSME Policy 2026 now puts it at Sh3.3 trillion.

Closing this gap will require more than additional lending; it demands a broader and more sophisticated financing ecosystem.

Businesses have different capital needs depending on their size, sector and growth trajectory. A resilient financial system should therefore offer multiple financing pathways rather than relying on a single model.

One option gaining prominence is private debt. Under this model, investors provide capital directly to businesses through structured lending arrangements. Rather than competing with banks, private debt complements traditional finance by expanding funding choices while giving investors access to income-generating assets.

Its emergence also signals the continued evolution of Kenya’s capital markets. As investors seek greater portfolio diversification, regulated private debt vehicles can channel capital into productive businesses while supporting enterprise growth.

The benefits are mutual. Businesses gain flexible financing to expand, innovate and strengthen resilience, while investors access alternative investment opportunities that support economic development.

If financing options fail to keep pace with business needs, promising enterprises may delay expansion, innovation could stall and economic opportunities may be lost. Bridging Kenya’s financing gap will therefore require not only more capital but also more diverse, well-regulated financing solutions.

Ultimately, Kenya’s entrepreneurial potential will depend on the strength and diversity of its financial markets. The goal should not be to champion one financing model over another, but to build an ecosystem that gives businesses of every size access to the capital they need to grow and create jobs.

The High Court has ordered Disney Insurance Brokers to pay Monarch Insurance Sh49.3 million in unremitted insurance premiums collected from clients between 2014 and 2020.

Justice Freda Mugambi ruled that the broker failed to prove several insurance policies had been validly cancelled after customers defaulted on premium payments or that Monarch had been notified of the cancellations.

The dispute centred on the authenticity of cancellation notices, with both parties presenting forensic document examiners to analyse receipt stamps appearing on the disputed documents.

Monarch’s expert, Anthony Ngige of Stealth Africa, testified that the stamp impressions differed from the insurer’s genuine office stamps used during the period. Disney’s expert, Martin Esakina Papa, reached the opposite conclusion.

Justice Mugambi preferred Monarch’s evidence, saying Mr Ngige’s findings were supported by “identifiable physical characteristics capable of objective verification.” She held that the questioned stamp impressions corroborated other evidence that weakened the broker’s defence.

The case arose from a commercial relationship spanning almost a decade in which Disney sourced insurance business for Monarch, collected premiums from policyholders and remitted the money after deducting its commission.

Monarch sued Disney in 2021, claiming the broker had failed to remit Sh58.3 million collected on its behalf despite repeated demands and written acknowledgements of debt. A partial judgment of Sh9 million had already been entered, leaving Sh49.3 million for determination.

The court also relied on correspondence between the firms showing Disney repeatedly sought more time to settle the debt, requested Monarch not to bank issued cheques and proposed repayment plans.

“The correspondence can only be consistent with the existence of an acknowledged indebtedness,” Justice Mugambi ruled.

The judge dismissed Disney’s argument that the claim was time-barred, holding that written acknowledgements and settlement proposals revived the cause of action. Monarch was also awarded interest and costs.

The High Court has frozen Sh180 million held in two fixed deposit accounts of a health and motor vehicle insurance company following a successful application by the Ethics and Anti-Corruption Commission (EACC).

The court froze the accounts of Irina Health and Motor Vehicle Insurance Company Limited held at Equity Bank’s Lodwar branch after finding the EACC had established a strong case linking the money to a suspected Sh282 million procurement fraud involving the Turkana County Government.

The freezing will remain in force pending determination of EACC’s recovery suit. EACC claims the companies and other defendants orchestrated a fraudulent procurement scheme through which they obtained a sum of Sh282.4 million, disguised as payments for procurement contracts.

The court barred the company together with Akimata Limited and Abenyo Amatwel Etiir from withdrawing, transferring, disposing of or otherwise dealing with the funds pending determination of the recovery suit.

The court said that EACC had demonstrated an arguable case warranting preservation because investigators traced Sh180 million into the accounts and the defendants had not produced documentary material explaining the specific transactions.

EACC alleges Irina Health received Sh85.1 million despite neither participating in the tender nor having the capacity to provide insurance services to the county government.

Akimata allegedly received Sh197.3 million through forged tender documents without supplying contracted goods. EACC said the payments were disguised as procurement contracts and that it later traced the disputed proceeds into fixed deposit accounts.

In court filings, EACC said Irina received the money despite neither participating in any tender nor providing, or having the capacity to provide, insurance services, while Akimata obtained payments by “submitting forged tender documents and failing to supply any goods.”

The defendants denied wrongdoing and argued the funds were lawfully acquired through tendering, contract execution, service delivery and payment. They said continuing preservation unfairly crippled operations, prevented payment of employees, taxes and statutory obligations, and no criminal culpability had been established.

They further argued preservation orders should not continue after investigations ended because EACC had already filed the recovery suit.

The court rejected that argument, saying filing the substantive case did not eliminate the risk that assets might be dissipated before judgment.

“If the funds are withdrawn, transferred or dissipated before trial, any eventual decree for recovery may be rendered ineffective,” the judge said.

EACC obtained earlier preservation orders in March 2025 after tracing the funds during investigations.

It later filed the civil recovery suit seeking restitution of Sh282.4 million and asked the court to freeze the accounts pending the suit’s determination.

In allowing the application, the judge said the commission had satisfied the legal test because it established a strong case, showed a risk of dissipation and demonstrated that the balance of convenience favoured preserving the disputed funds.

Kenya’s next financial challenge is not access, it is understanding.

Kenya is often held up as a global success story in financial inclusion. With the rise of mobile money services such as M-Pesa, the country has shown how technology can bring millions of people into the formal financial system, many for the first time. By 2024, 84.8 percent of Kenyan adults had access to formal financial services, up from 26.7 per cent in 2006.

But access, impressive as it is, should not be confused with understanding. For a generation of young Kenyans, financial tools are arriving earlier and faster than the knowledge required to use them well. Teenagers are growing up in a world of mobile wallets, digital banking, instant transactions and increasingly sophisticated financial products.

They are financially connected long before many of them are financially prepared. The wider data suggests the gap is real: only 44.1 percent of adults use more than one formal financial product, just 36 percent regularly save with formal institutions, and insurance usage, including NHIF, stands at 22 percent. That gap matters.

Being able to send or receive money on a phone is not the same as understanding how to budget, how to distinguish saving from investing, how to assess risk, or how to make decisions that support long-term financial stability.

Familiarity with digital finance can create an illusion of competence. In practice, access without understanding may expose young people to a different set of risks poor spending habits, vulnerability to scams, confusion about debt, and unrealistic ideas about wealth creation.

This is where schools ought to enter the conversation more seriously.

Financial literacy is often treated as an optional life skill, secondary to the formal curriculum. In Kenya, that view is becoming harder to defend. If young people are expected to navigate an increasingly digitised financial system, then the ability to make sound financial decisions deserves to be seen as part of education for adulthood, not as an extracurricular add-on.

That case looks stronger still when one considers that 23.1 percent of 18-25-year-olds were totally excluded from financial services in 2024, with exclusion especially pronounced among rural youth.

That is the thinking behind initiatives such as Jubilee Asset Management Limited’s AngazaCash Financial Literacy Programme. The programme, which targets high school students, aims to introduce basic concepts such as budgeting, saving, investing and financial planning before students leave school.

The impulse behind such programmes is difficult to dispute. Kenya’s young people clearly need more practical preparation for the financial realities they will face.

Kenya has already shown the world what broad financial access can look like. The harder task now is to ensure that access is matched by judgement, discipline and understanding. For young people especially, the issue is no longer whether they can participate in the financial system. It is whether they can do so in ways that improve their resilience rather than deepen their vulnerability.

That is why financial literacy should go hand-in-hand with financial inclusion, not because every student needs to become an investor or entrepreneur, but because in a country where financial tools are becoming ubiquitous, the ability to make informed decisions is no longer a specialist skill. It is a civic and economic necessity.

Too often, the language around financial literacy is well-meaning but vague. Students are encouraged to “save”, “plan ahead” and “invest in their future” all sensible ideas, but not yet a sufficient response to the actual financial environment they inhabit.

In Kenya, financial education for teenagers should be rooted less in abstraction and more in the specifics of daily life: mobile money habits, digital fraud, informal saving culture, family obligations, peer pressure, side-hustle economics, betting, short-term borrowing and the social performance of consumption.

This is not a theoretical concern: The Kenya National Financial Inclusion Strategy by the Cenrtal Bank of Kenya, explicitly identifies over-indebtedness, gambling and weak consumer protection as threats to financial health, especially for youth and low-income households. explicitly identifies over-indebtedness, gambling and weak consumer protection as threats to financial health, especially for youth and low-income households.

In other words, the challenge is not simply to teach students about money. It is to teach them how money behaves in the world they already know.

That distinction matters because Kenya’s financial system has evolved quickly. The country has become a model of innovation in access, but capability has not necessarily kept pace. The next phase of the inclusion story is therefore less about opening the door and more about equipping people to walk through it wisely.

High school may be the most important point at which to begin. It is the stage when attitudes toward money, risk and aspiration start to form. It is also the point just before many young people gain greater autonomy without necessarily gaining better judgement. By then, financial behaviour is already being shaped by what they see at home, among peers and online. Leaving financial literacy until adulthood may simply be too late.

Still, programmes led by financial institutions should invite scrutiny as well as praise.

There is always a need to distinguish genuine education from softer forms of brand positioning.

If companies are entering classrooms to talk about financial wellbeing, they should also be prepared to support balanced teaching including the dangers of debt, the limits of investing, the risks of speculation and the importance of consumer protection. Otherwise, financial education risks becoming too polished, and not sufficiently independent.

For decades, the blueprint for passing down wealth in Kenya was largely predictable. Parents bought land, built rental apartments, accumulated shares in blue-chip companies or tucked away money in insurance policies and fixed-income investments, confident that these assets would provide financial security for future generations.

However, that is changing as affluent Kenyans increasingly move part of their wealth into professionally managed investment portfolios with exposure to international markets and alternative assets.

The latest Frank Knight Wealth Report shows that rich investors continued reducing their allocation to real estate in 2026 as they sought investments that offered stronger long-term growth prospects, greater liquidity and broader diversification.

“Investors are increasingly prioritising assets that generate stable income streams, preserve capital and offer easier market exit opportunities,” the report notes.

Among the biggest beneficiaries of this shift are Special Funds – higher-risk collective investment schemes regulated by the Capital Markets Authority (CMA). These funds held Sh203.5 billion in assets as of March 2026, according to the regulator.

Unlike traditional collective investment schemes, Special Funds have greater flexibility to invest across a wider range of assets, including international equities, commodities, foreign currencies and derivatives.

Wealth managers say that increasingly, affluent parents are opening these investment portfolios not only for themselves but also as long-term wealth-building vehicles for their children.

“They are highly sophisticated investors,” Lawrence Lagat, a Wealth Manager specialised in Islamic banking, told BD Life.

“Their aim is not simply to preserve wealth but to multiply it over time before transferring it to the next generation.”

For children below 18, the investments are held in their parents’ accounts until they reach adulthood, after which ownership can be transferred.

Whereas previous generations typically relied on education insurance policies, life insurance or property to secure their children’s financial future, contemporary investors are embracing professionally managed portfolios that provide exposure to global investment opportunities without requiring them to actively monitor international markets.

“The research is delegated to people like us,” said Lagat.

“Most high-net-worth clients understand the value of global markets, but do not have the time to manage these investments themselves.”

The appeal lies in the potential for higher long-term returns, although advisers stress that these investments carry significantly greater risk than conventional products such as treasury bills, fixed deposits and money market funds.

“There is a real element of investment risk and clients need to understand that,” Lagat says.

One of the attractions for wealthy families is compounding, where investment gains are automatically reinvested, allowing returns to generate further returns over time.

Using the Rule of 72, investors estimate how quickly an investment could double by dividing 72 by the expected annual rate of return.

Depending on market performance, some Special Funds have the potential to double investors’ capital within four to five years.

Financial adviser Angelina Oganga of Standard Investment Bank says wealthy investors are increasingly attracted by strategies that seek returns regardless of market direction.

“Our Mansa X Fund targets clients looking to build generational wealth,” she says.

“Through long-short investment plans, we seek opportunities whether markets are rising or falling.”

Liquidity is also driving demand. Unlike property, which can take months to sell, or some savings products that restrict withdrawals, investors in Special Funds can typically access part of their money within two days, while full redemptions usually take around three days.

To manage risk, fund managers diversify investments across multiple asset classes, sectors and geographical markets. Portfolios typically combine relatively stable fixed-income securities with global equities, commodities and foreign currencies, while managers rebalance holdings as market conditions change.

“We manage the portfolios. Depending on market sentiment, we continuously rebalance investments to maximise opportunities while managing risk,” Lagat says.

Despite their reputation for aggressive investing, Special Funds are subject to strict regulatory safeguards.

Client assets are held separately from the fund manager’s money through independent custodians licensed by the Capital Markets Authority (CMA).

“Every licensed fund must also appoint an independent trustee responsible for overseeing how client funds are administered and ensuring major transactions comply with regulatory requirements. If an investor has concerns, they can write directly to the custodian to verify the true position of the fund,” Lagat said.

The CMA also conducts quarterly inspections of licensed Special Funds to monitor compliance, while external auditors review their financial statements annually before they are submitted to the regulator.

Even with these safeguards, wealth managers insist that Special Funds are not suitable for everyone.

“Global markets can be volatile. Commodity prices fluctuate, currencies move sharply and even some of the world’s largest corporations can suffer dramatic losses. We recall the collapse of Lehman Brothers during the 2008 global financial crisis as a reminder that no investment is immune from shocks. We disclose these risks during the onboarding of clients. They must understand that while we invest their money in strong companies and diversify widely, no investment is risk-free,” he says.

However, that balance between risk and reward is what is increasingly becoming acceptable to wealthy Kenyans.

“Rather than asking how to preserve wealth, many are now asking how to multiply it before handing it over to their children, ” Lagat observed.

Ms Oganga concurs. She, however, points out that the risk-mitigating factors put in place are what give the wealthy Kenyans a hedge to want to invest in such high-risk ventures.

“With Special Funds, we are exposed to riskier markets, but with good risk mitigation strategies, the frameworks lower the risks by bringing them down,” she says.

Those strategies could be diversification of investment, where you can have a client invest in as many as 200 assets. At any given time, we are investing our clients’ Special Funds in about 200 financial instruments, in different sectors in different geographies. What that kind of diversification does is reduce the concentration risk of investing in one financial instrument.”

She cites the Covid-19 pandemic as a case study.

“Many industries came to a standstill during the pandemic, but other industries emerged from that, including pharmaceuticals, telecommunication, technology and precious metals,” she said.

“Those industries were doing well at that time, and with diversification, we were still able to deliver a return of 18 percent to our Special Fund investors. These are some of the scenarios that make Special Funds attractive to the wealthy individuals.’’

There is also active management of these portfolios, such as taking up new investment opportunities as soon as they emerge and terminating those that are struggling.

According to Ms Oganga, such mitigating factors have seen the bank consistently offer a return of 18.15 percent to its investors since launching its Special Fund in 2019.

“That 18.15 percent has been net of fees. Our lowest returns recorded during that period have been 15.45 percent,” she said.

“Last year, we recorded our highest return at 20.74 percent. Such numbers are validating, considering the market volatility in 2025.”