NAIROBI, Kenya – In a pioneering move inspired by Zimbabwe’s recent innovations, Kenya is embracing tokenisation technology to democratise access to investment opportunities, particularly in traditionally exclusive sectors like gold, real estate, and land.
This shift is set to empower everyday Kenyans, enabling them to own fractional shares in valuable assets that were once beyond their reach.
On October 5, 2023, the Reserve Bank of Zimbabwe (RBZ) Governor, John Mangudya, announced the launch of a gold-backed digital token that would be used for domestic transactions, marking a major milestone in the country’s financial sector. The move not only aimed to reduce the country’s reliance on the US dollar but also allowed ordinary citizens to own a piece of gold, a commodity that was historically accessible only to the wealthy elite.
Now, Kenyan firms are taking a page from Zimbabwe’s book. Kenya’s financial market, known for its vibrant activities and high-ranking Nairobi Securities Exchange (NSE), is beginning to leverage Web3 technology to open up similar opportunities. Web3, also known as decentralised ledger technology (DLT), is the innovation behind digital assets like cryptocurrencies and non-fungible tokens (NFTs). Through a process called tokenisation, real-world assets are digitised and broken into smaller, tradable units, allowing people to buy and own just a fraction of these assets.
The Nairobi Securities Exchange is at the forefront of this tokenisation drive. By joining the Hedera Council, the NSE has positioned itself to launch tokenised securities that will allow fractional investments in Kenyan stocks by the end of 2024. The Hedera network, known for its energy-efficient mechanism compared to blockchain systems like Bitcoin, is expected to play a crucial role in the NSE’s strategy to innovate and enhance access to financial markets.
“Tokenisation has the potential to transform industries across Africa and the NSE is committed to driving this innovation through the Hedera network,” said Frank Mwiti, CEO of the NSE.
In addition to the NSE, private firms like Ubuntu Tribe are pushing the boundaries of tokenisation in Kenya. The company is working with regulators to secure a licence to tokenise gold, allowing smaller investors to own fractions of the precious metal. Mathew Munyao, Web3 culture manager at Ubuntu Tribe, explained that tokenising gold would not only provide investment opportunities but also offer a hedge against inflation. With Kenya’s local currency facing volatility, holding value in gold assets could help individuals protect their wealth over time.
“The main idea behind tokenising gold is to give everyone equal access to opportunities. Right now, not everyone in Kenya can invest in rare earth minerals,” said Munyao. “It’s not just investing. It’s also saving and hedging against inflation.”
Tokenisation in Kenya is not limited to gold. A number of firms are entering the market with plans to digitise other real-world assets, including real estate, farmland, and even diamonds. Alphbloq, a company focused on tokenising real estate, is currently navigating Kenya’s Capital Markets Authority’s regulatory sandbox. Other firms like Kenya Security Tokenisation and My Shamba are focused on tokenising farms and land, offering Kenyans new ways to invest in properties that were once reserved for the wealthy.
These developments are part of a broader trend in Africa, where tokenisation is proving to be a game-changer for the underprivileged. By simplifying and making investments more affordable, tokenisation could unlock wealth creation opportunities for individuals who would otherwise have been excluded from traditional asset ownership.
“Because investing in these assets was previously reserved for the wealthy, many didn’t know about them. But with tokenisation, investing will be simplified and cheaper, making it accessible to many,” Munyao told The EastAfrican.
As Kenya’s tokenisation efforts gain momentum, they are set to follow in Zimbabwe’s footsteps, ensuring that more people, including the country’s poor, can invest in valuable traditional assets.
Source: The Eastern Africa