Participants in Kenya’s capital markets are mounting a coordinated push to reform how share transactions are taxed, arguing that the current stamp duty structure penalises retail investors and constrains the growth of the Nairobi Securities Exchange.
Under the Finance Bill 2026, industry stakeholders have raised concerns about the flat-fee stamp duty applied to equity transactions, which they say creates a disproportionate cost burden for investors trading smaller volumes. Unlike a percentage-based levy that scales with transaction size, a flat fee consumes a significantly higher proportion of the value of modest trades, effectively pricing out smaller participants and discouraging the retail investment culture that deeper capital markets require.
The Nairobi Securities Exchange has for years grappled with thin trading volumes relative to its regional peers. Market capitalisation has fluctuated sharply with macroeconomic conditions, and daily turnover remains low compared with exchanges in South Africa, Nigeria, and Egypt. Industry advocates argue that reducing frictional costs on share transactions would encourage more frequent participation from individual investors, broaden the shareholder base of listed companies, and improve overall market liquidity.
Kenya’s Capital Markets Authority has been pursuing a broader agenda to deepen market participation, including efforts to expand the investor base among younger Kenyans and salaried workers through digital trading platforms. Stakeholders argue that stamp duty reform would complement those initiatives by ensuring that cost structures do not undermine accessibility.
The Finance Bill 2026 is currently subject to public participation, giving capital markets players a formal channel to table their proposals before the National Assembly. Whether Treasury accommodates those calls will depend partly on the revenue trade-off involved — and whether policymakers accept the argument that lower barriers to entry would ultimately generate greater market activity and a broader tax base over time.
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