Investment Updates:

• Weekly Rates: Cytonn Money Market Fund closed the week at a yield of 11.5% p.a. To invest, dial *809# or download the Cytonn App from Google Play store here or from the Appstore here;

• We continue to offer Wealth Management Training every Tuesday, from 7:00 pm to 8:00 pm. The training aims to grow financial literacy among the general public. To register for any of our Wealth Management Trainings, click here;

• If interested in our Private Wealth Management Training for your employees or investment group, please get in touch with us through wmt@cytonn.com;

• Cytonn Insurance Agency acts as an intermediary for those looking to secure their assets and loved ones’ future through insurance namely; Motor, Medical, Life, Property, WIBA, Credit and Fire and Burglary insurance covers. For assistance, get in touch with us through insuranceagency@cytonn.com;

• Cytonn Asset Managers Limited (CAML) continues to offer pension products to meet the needs of both individual clients who want to save for their retirement during their working years and Institutional clients that want to contribute on behalf of their employees to help them build their retirement pot. To more about our pension schemes, kindly get in touch with us through pensions@cytonn.com;

Hospitality Updates:

• We currently have promotions for Staycations. Visit cysuites.com/offers for details or email us at sales@cysuites.com;

Money Markets, T-Bills Primary Auction:

This week, T-bills were oversubscribed for the eighth consecutive week, with the overall subscription rate coming in at 146.9%, lower than the subscription rate of 182.3% recorded the previous week. Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 14.5 bn against the offered Kshs 4.0 bn, translating to a subscription rate of 361.3%, higher than the subscription rate of 124.5%, recorded the previous week. The subscription rate for the 182-day paper increased to 103.0% from 78.9% recorded the previous week, while that of the 364-day paper decreased significantly to 105.1% from 308.7% recorded the previous week. The government accepted a total of Kshs 29.1 bn worth of bids out of Kshs 35.3 bn bids received, translating to an acceptance rate of 82.5%. The yields on the government papers registered a mixed performance with the yields on the 91-day papers increasing by 0.4 bps to remain relatively unchanged at 7.6% in comparison to last week. However, the yields on the 364-day paper decreased by 13.6 bps to 8.3% from 8.5% recorded the previous week, while the yields on the 182-day paper decreased by 0.6 bps to remain relatively unchanged from the 7.8% in comparison to the previous week.

The chart below shows the yield growth rate for the 91-day paper from January 2024 to date:

The charts below show the performance of the 91-day, 182-day and 364-day papers from March 2025 to March 2026

The chart below compares the overall average T-bill subscription rates obtained in 2023, 2024, 2025 and 2026 Year-to-date (YTD:

Money Market Performance:

In the money markets, 3-month bank placements ended the week at 9.0% (based on rates offered by various banks). The yields on the 364-day paper decreased by 13.6 bps to 8.3% from 8.5% recorded the previous week, while the yields on the 91-day paper increased by 0.4 bps to remain relatively unchanged at 7.6% in comparison to last week. The yield on the Cytonn Money Market Fund increased by 13.0 bps to 11.5% from 11.4% recorded the previous week, while the average yields on the Top 5 Money Market Funds increased by 2.6 bps to remain relatively unchanged at 11.2% recorded the previous week.

The table below shows the Money Market Fund Yields for Kenyan Fund Managers as published on 20^th March 2026:

Source: Business Daily

Liquidity:

During the week, liquidity in the money markets tightened with the average interbank rate increasing by 0.8 bps to remain relatively unchanged at 8.7% in comparison to last week, partly attributable to tax remittances that offset government payments. The average interbank volumes traded decreased by 2.1% to Kshs 12.0 bn from Kshs 12.2 bn recorded the previous week. The chart below shows the interbank rates in the market over the years

Kenya Eurobonds:

During the week, the yields on the Eurobonds were on an upward trajectory with the yield on the 7-year Eurobond issued in 2024, increasing the most by 50.0 bps to 8.0% from 7.5% recorded the previous week. The table below shows the summary performance of the Kenyan Eurobonds as of 12^th March 2026;

Source: Central Bank of Kenya (CBK) and National Treasury

Kenya Shilling:

During the week, the Kenya Shilling depreciated by 17.0 bps against the US Dollar, to Kshs 129.5 from the Kshs 129.3 recorded the previous week. On a year-to-date basis, the shilling has depreciated by 36.4 bps against the dollar, as compared to the 22.9 bps appreciation recorded in 2025.

We expect the shilling to be supported by:

1. Diaspora remittances standing at a cumulative USD 5,051.2 mn in the twelve months to February 2026, 1.9% higher than the USD 4,956.5 mn recorded over the same period in 2025. These have continued to cushion the shilling against further depreciation. In the February 2026 diaspora remittances figures, North America remained the largest source of remittances to Kenya accounting for 54.2% in the period, and,

2. Tourism inflows, which strengthened significantly. Tourism receipts reached Kshs 560.0 bn in 2025, up from Kshs 452.2 bn in 2024, representing a 23.9% increase, supported by improved international arrivals through the country’s major airports, and,

3. Improved forex reserves currently at USD 14.3 bn (equivalent to 6.1-months of import cover), which is above the statutory requirement of maintaining at least 4.0-months of import cover and above the EAC region’s convergence criteria of 4.5-months of import cover.

The shilling is however expected to remain under pressure in 2026 as a result of:

1. An ever-present current account deficit which came at 2.2% of GDP in the twelve months to October 2025, and,

2. The need for government debt servicing, continues to put pressure on forex reserves given that 52.0% of Kenya’s external debt is US Dollar-denominated as of September 2025.

Kenya’s forex reserves decreased by 1.2% during the week to USD 14.3 bn from the USD 14.5 bn recorded the previous week, equivalent to 6.1 months of import cover, and above the statutory requirement of maintaining at least 4.0-months of import cover.

The chart below summarizes the evolution of Kenya's months of import cover over the years:

Rates in the Fixed Income market have been on a downward trend due to high liquidity in the money market which allowed the government to front load most of its borrowing. The government is 123.1% ahead of its prorated net domestic borrowing target of Kshs 634.8 bn, having a net borrowing position of Kshs 1,031.0 bn (inclusive of T-bills). However, we expect stabilization of the yield curve in the short and medium term, with the government looking to increase its external borrowing to maintain the fiscal surplus, hence alleviating pressure in the domestic market. As such, we expect the yield curve to stabilize in the short to medium-term and hence investors are expected to shift towards the long-term papers to lock in the high returns

Market Performance:

The equities market was on a downward trajectory, with NSE 10, NASI, NSE 20, and NSE 25 declining by 1.0%, 0.9%, 0.8% and 0.6% respectively, taking the YTD performance to gains of 16.6%, 14.2%, 12.8% and 11.8% for NSE 20, NSE 25, NSE 10 and NASI respectively. The equities market performance was mainly driven by losses recorded by large cap stocks such as KCB, BAT and EABL of 4.1%, 2.1% and 1.7% respectively. However, the performance was supported by gains recorded by large cap stocks such as NCBA and ABSA of 3.7% and 2.4% respectively.

Also, during the week, the banking sector index declined by 0.4% to 241.3 from 242.2 recorded the previous week. This is attributable to losses recorded by stocks such as KCB, Standard Chartered and DTBK of 4.1%, 1.5% and 1.0% respectively. However, the performance was supported by gains recorded by stocks such as NCBA and ABSA of 3.7% and 2.4% respectively.

During the week, equities turnover decreased by 67.2% to USD 15.9 mn from USD 48.3 mn recorded the previous week, taking the YTD total turnover to USD 396.2 mn. Foreign investors remained net sellers for the seventh consecutive week with a net selling position of USD 2.7 mn, from a net selling position of USD 20.1 mn recorded the previous week, taking the YTD foreign net selling position to USD 62.1 mn, compared to a net selling position of USD 92.9 mn recorded in 2025.

The market is currently trading at a price to earnings ratio (P/E) of 8.1x, 28.7% below the historical average of 11.3x. The dividend yield stands at 5.3%, 0.6% points above the historical average of 4.7%. Key to note, NASI’s PEG ratio currently stands at 1.0x, suggesting that the market is fairly valued relative to its expected earnings growth. A PEG ratio greater than 1.0x indicates the market may be overvalued while a PEG ratio less than 1.0x indicates that the market is undervalued.

The charts below indicate the historical P/E and dividend yields of the market.

Universe of Coverage:

Weekly Highlights

1. Earnings Releases

1. Equity Bank FY’2025 Performance

During the week, Equity Group Ltd released their FY’2025 financial results. Below is a summary of the performance:

Key Take-Outs:

1. Increased earnings - Core earnings per share grew by 54.5% to Kshs 19.1, from Kshs 12.3 in FY’2024, driven by the 12.4% increase in total operating income to Kshs 217.7 bn, from Kshs 193.8 bn in FY’2024, coupled with the 5.6% decrease in total operating expenses to Kshs 125.6 bn from Kshs 133.0 bn in FY’2024,

2. Improved asset quality – The bank’s Asset Quality improved, with Gross NPL ratio decreasing to 11.5% in FY’2025, from 13.6% in FY’2024, attributable to a 9.8% decrease in Gross non-performing loans to Kshs 110.1 bn, from Kshs 122.0 bn in FY’2024, compared to the 6.6% increase in gross loans to Kshs 956.0 bn, from Kshs 896.9 bn recorded in FY’2024,

3. Expanded Balanced sheet - The balance sheet registered an expansion as total assets increased by 9.2% to Kshs 1,971.0 bn in FY’2025, from Kshs 1,804.6 bn in FY’2024, mainly driven by the 11.4% increase in government securities to Kshs 335.3 bn, from Kshs 300.9 bn in FY’2024, coupled with a 7.7% increase in net loans to customers to Kshs 882.5 bn, from Kshs 819.2 bn in FY’2024,

4. Increased lending- Customer net loans and advances increased by 7.7% to Kshs 882.5 bn, from Kshs 819.2 bn in FY’2024.

5. Declaration of dividends - The Board of Directors recommended a dividend of Kshs 5.75, translating to a dividend yield of 7.4% and a dividend payout ratio of 30.2% for the FY’2025

For a more detailed analysis, please see the Equity Group FY’2025 Earnings Note

2. Standard Chartered Bank Ltd FY’2025 Performance

During the week, Standard Chartered Bank Ltd released their FY’2025 financial results. Below is a summary of the performance:

Key Take-Outs:

1. Declined earnings growth - Core earnings per share decreased by 38.0% to Kshs 32.9 in FY’2025, from Kshs 53.1 in FY’2024, mainly driven by the 16.5% decrease in total operating income to Kshs 42.3 bn in FY’2025, from Kshs 50.7 bn in FY’2024, coupled with the 13.3% increase in total operating expenses to Kshs 25.5 bn in FY’2025, from Kshs 22.5 bn in FY’2024,

2. Improved asset quality – The bank’s Asset Quality improved, with Gross NPL ratio decreasing to 5.5% in FY’2025, from 7.4% in FY’2024, attributable to the 26.5% decrease in gross non-performing loans to Kshs 8.8 bn, from Kshs 12.0 bn in FY’2024, coupled with 22.6% decrease in Interest Suspense to Kshs 3.5 bn in FY’2025 from Kshs 4.5 bn recorded in FY’2024, and,

3. Declaration of dividends- The Board of Directors declared a final dividend of Kshs 23.0 per share in addition to an interim dividend of Kshs 8.0 per share, bringing the total dividend for FY’2025 to Kshs 31.0 per share translating to a dividend yield of 9.4% a and a dividend-payout ratio of 94.2%

For a more detailed analysis, please see the Standard Chartered Bank Ltd FY’2025 Earnings Note

3. Co-operative Group FY’2025 Performance

During the week, Co-operative Group released their FY’2025 financial results. Below is a summary of the performance:

Key Take-Outs:

1. Increased earnings - Core earnings per share grew by 16.9% to Kshs 5.1, from Kshs 4.3 in FY’2024, driven by the 13.9% increase in total operating income to Kshs 91.9 bn, from Kshs 80.6 bn in FY’2024. However, the performance was weighed down by a 11.4% increase in total operating expenses to Kshs 52.0 bn from Kshs 46.7 bn in FY’2024,

2. Improved asset quality – The bank’s Asset Quality improved, with Gross NPL ratio decreasing to 15.7% in FY’2025, from 17.0% in FY’2024, attributable to a 3.4% increase in Gross non-performing loans to Kshs 73.5 bn, from Kshs 71.1 bn in FY’2024, relative to the 12.0% increase in gross loans to Kshs 469.5 bn, from Kshs 419.2 bn recorded in FY’2024,

3. Expanded Balanced sheet - The balance sheet recorded an expansion as total assets increased by 11.3% to Kshs 827.4 bn, from Kshs 743.2 bn in FY’2024, mainly driven by a 12.6% increase in net loans and advances and governments securities holdings to Kshs 421.0 bn and Kshs 244.9 bn, from Kshs 373.7 bn and 217.6 bn in FY’2024.

For a more detailed analysis, please see the Co-operative Group FY’2025 Earnings Note

Asset Quality:

The table below shows the asset quality of listed banks that have released their FY’2025 results using several metrics:

Key take-outs from the table include;

1. Asset quality for the listed banks that have released results improved during FY’2025, with market-weighted average NPL ratio decreasing by 1.1% points to 12.2% from 13.4% in FY’2024 largely due to KCB Group numbers, and,

2. Market-weighted average NPL Coverage for the six listed banks increased by 5.2% points to 71.8% in FY’2025 from 66.7% recorded in FY’2024. The increase was attributable to KCB Group NPL coverage ratio increasing by 9.0% points to 74.0% from 65.1% in FY’2024. However the performance was weighed down by Absa Bank Kenya NPL coverage ratio decreasing by 1.4% points to 64.6% from 66.0% in FY’2024.

Summary Performance

The table below shows the performance of listed banks that have released their FY’2025 results using several metrics:

Key take-outs from the table include:

1. The listed banks that have released their FY’2025 results recorded a 16.6% growth in core Earnings per Share (EPS) in FY2025, compared to the weighted average growth of 26.2% in FY’2024, an indication of deteriorated performance attributable to the Standard Chartered numbers.

2. Interest income recorded a weighted average decrease of 3.6% in FY’2025, compared to 20.5% in FY’2024. Similarly, interest expenses recorded a market-weighted average decline of 23.0% in FY’2025 compared to the weighted average growth of 42.6% in FY’2024.

3. The Banks’ net interest income recorded a weighted average growth of 7.0% in FY’2025, a decrease from the 12.0% recorded over a similar period in 2024, while the non-funded income declined by 0.1% in FY’2025 compared to the 13.9% growth recorded in FY’ 2024, and,

4. The Banks recorded a weighted average deposit growth of 8.1%, compared to the decrease in market-weighted average deposit of 4.4% in FY’2024.

We maintain a “cautiously optimistic” short-term outlook supported primarily earnings-led attractive valuations, lower yields on short-term government papers and expected global and local economic recovery, and, “neutral” in the long term as persistent foreign investor outflows continue to constrain market liquidity and limit broad-based market re-rating. With the market currently trading at par to its future growth (PEG Ratio at 1.0x), where performance will be driven by company-specific fundamentals rather than general market direction, we believe that investors should reposition towards value stocks exhibiting strong earnings growth, attractive dividend yields, solid balance sheets, sustainable competitive advantages and trading at compelling discounts to their intrinsic value. While foreign investor sell-offs are expected to continue exerting pressure in the near term, we believe this will create selective entry opportunities for long-term investors.

1. Industry Report

1. January Leading Economic Indicators (LEI)

During the week, the Kenya National Bureau of Statistics (KNBS) released the Leading Economic Indicators (LEI) January 2026 Report, which highlighted the performance of major economic indicators. The key highlights related to the Real Estate sector include:

1. In January 2026, cement consumption reached 922,369 metric tonnes, representing a 17.6% y/y increase from the same month in 2025. Month-on-month, consumption decreased by 1.7%, to 922,369 from 938,302 in December 2025 reflecting a decline in momentum in the construction sector. The y/y performance was anchored by (i) continuous increase in production of cement to 938,012 as at January 2026 (ii) continued private sector construction activity in urban hubs such as Nairobi, Mombasa, and Kisumu, (iii) government-led infrastructure investments under the Bottom-Up Economic Transformation Agenda (BETA), including roads, affordable housing, water, and sanitation projects, and (iv) public works initiatives in rural and semi-urban areas, which both support livelihoods and expand critical infrastructure.

The chart below shows cement consumption in metric tonnes in Kenya between Q1’2023 and January 2026

Source: Kenya National Bureau of Statistics (KNBS)

2. Residential Sector

Launch of Affordable Housing Project in Kimilili, Bungoma County

During the week, William Ruto presided over the launch of an affordable housing project in Kimilili, Bungoma County, as part of his broader Western Kenya development tour, reinforcing the government’s ongoing efforts to scale up the Affordable Housing Programme across the country. The initiative reflects a continued shift towards expanding housing delivery into emerging urban centres, with the Kimilili project forming part of a growing pipeline of developments aimed at increasing access to decent and affordable housing while supporting local economic activity.

The affordable housing initiative has continued to, to record notable progress, with recent handovers of completed units signaling movement from construction to occupancy. Uptake levels have remained relatively strong, with 98.0% absorption rate across completed units, supported by flexible financing frameworks and sustained end-user demand.

Going forward we expect continued rollout of affordable housing projects in secondary, supporting expansion of formal housing supply. We anticipate increased private sector participation alongside government efforts driven by sustained demand and policy support. We expect gradual land value appreciation and rising investor interest in emerging residential nodes as infrastructure and housing developments scale up.

3. Real Estate Investments Trusts

1. REITs Weekly Performance

On the Unquoted Securities Platform Acorn D-REIT and I-REIT traded at Kshs 27.4 and Kshs 23.2per unit, respectively, as per the last updated data on 13^th March 2025. The performance represented a 33.4% and 14.5% gain for the D-REIT and I-REIT, respectively, from the Kshs 20.0 inception price. The volumes traded for the D-REIT and I-REIT came in at 13.4 mn and 42.2 mn shares, respectively. Additionally, ILAM Fahari I-REIT traded at Kshs 11.0 per share as of 19^th March, representing a 45.0% loss from the Kshs 20.0 inception price. The volume traded to date came in at 1.2 mn shares for the I-REIT, REITs offer various benefits, such as tax exemptions, diversified portfolios, and stable long-term profits. However, the ongoing decline in the performance of Kenyan REITs and the restructuring of their business portfolios are hindering significant previous investments. Additional general challenges include:

1. Insufficient understanding of the investment instrument among investors leading to a slower uptake of REIT products,

2. Lengthy approval processes for REIT creation,

3. High minimum capital requirements of Kshs 100.0 mn for REIT trustees compared to Kshs 10.0 mn for pension funds Trustees, essentially limiting the licensed REIT Trustee to banks only

4. The rigidity of choice between either a D-REIT or and I-REIT forces managers to form two REITs, rather than having one Hybrid REIT that can allocate between development and income earning properties

5. Limiting the type of legal entity that can form a REIT to only a trust company, as opposed to allowing other entities such as partnerships, and companies,

6. We need to give time before REITS are required to list – they would be allowed to stay private for a few years before the requirement to list given that not all companies maybe comfortable with listing on day one, and,

7. Minimum subscription amounts or offer parcels set at Kshs 0.1 mn for D-REITs and Kshs 5.0 mn for restricted I-REITs. The significant capital requirements still make REITs relatively inaccessible to smaller retail investors compared to other investment vehicles like unit trusts or government bonds, all of which continue to limit the performance of Kenyan REITs.

We expect the performance of Kenya’s Real Estate sector to remain resilient, supported by several factors: i) Kimilili Affordable Housing Project launch signalling expansion of Government Housing Programme in Bungoma County. However, challenges such as the weak investor appetite in listed REITs like ILAM Fahari I-REIT and high capital requirements will continue to constrain the sector’s optimal performance.

According to the Retirement Benefits Authority Industry Brief for December 2025, the Assets Under Management (AUM) increased by 24.6% to Kshs 2.8 tn from Kshs 2.3 tn. The performance was attributable to higher contributions from the NSSF Act, 2013’s raised limits and strong investment performance supported by a stable macroeconomic environment. Notably, according to the ACTSERV Q4’2025 Retirement Benefits Schemes Investments Performance Survey, segregated retirement benefits schemes recorded a 2.6% return in Q4’2025, from the 13.2% return recorded in Q4’2024. The performance was largely driven by weaker equity performance, with the average return coming in at 8.0% compared to 15.7% return recorded in Q4’2024. The return reflects the performance of the market as the Nairobi All Share Index (NASI) had gained by 4.7% and 48.9% in Q4’2025 and FY’2025 respectively.

In our previous report, we highlighted that, as of 30^th June 2025, pensions and gratuities exchequer issues came in at Kshs 207.2 bn, equivalent to 92.9% of the revised estimates III of Kshs 223.1 bn. Additionally, the National Treasury highlighted that the claims processing fell behind with only 85.0% of the claims being processed as of 30^th June 2025. Notably, in FY 2024/25, all pensions and gratuities processed for payment, together with Government of Kenya remittances to the Public Service Superannuation Scheme (PSSS), were fully funded. As of 30^th June 2025, the Public Service Superannuation Scheme (PSSS) reported Assets Under Management (AUM) of Kshs 242.8 billion, with 85.5% invested in government securities, 6.9% in equities, and 3.0% in offshore investments. According to the Office of the Controller of Budget, total payments towards Pensions and Gratuities (including PSSS) in the first three months of FY’2025/26 stood at Kshs 36.6 bn, representing 15.6% of the gross estimates of Kshs 234.9 bn compared to Kshs 32.1 bn recorded in a similar period of FY’2024/25 representing 14.4% of the gross estimates of Kshs 223.1 bn. Payments towards the PSSS stood at Kshs 9.7 bn representing 28.1% of the gross estimates of Kshs 34.4 bn. Ordinary and commuted pensions processed for payment totaled Kshs 29.0 bn, of which exchequer releases amounted to Kshs 26.9 bn, leaving an unfunded gap of Kshs 2.2 bn still outstanding.

We have been tracking the performance of Kenya’s Pension schemes with the most recent topicals being,

Retirement Benefits Schemes Q3'2025 Performance Report, done in December 2025. This week, we shall focus on understanding Retirement Benefits Schemes and looking into the historical and current state of retirement benefits schemes in Kenya and what can be done going forward. We shall also analyze other asset classes that the schemes can tap into to achieve higher returns. Additionally, we shall look into factors and challenges influencing the growth of the RBSs in Kenya as well as the actionable steps that can be taken to improve the pension industry. We shall do this by looking into the following:

1. Introduction to Retirement Benefits Schemes in Kenya,

2. Historical and Current State of Retirement Benefits Schemes in Kenya,

3. Factors Influencing the Growth of Retirement Benefits Scheme in Kenya,

4. Challenges that Have Hindered the Growth of Retirement Benefit Schemes, and,

5. Recommendations on Enhancing the Performance of Retirement Benefits Schemes in Kenya;

Section I: Introduction to Retirement Benefits Schemes in Kenya

A retirement benefits scheme is a savings avenue that allows contributing individuals to make regular contributions during their productive years into the scheme and thereafter get income from the scheme upon retirement. These schemes offer a range of benefits, including income replacement to maintain one’s lifestyle post-employment, compounded and tax-free interest that accelerates savings growth, and substantial tax incentives, such as monthly reliefs of up to Kshs 30,000 on contributions and exemptions on pension withdrawals after 20 years, under the Tax Amendment Act, 2024. Beyond financial independence, which reduces reliance on family support, the schemes also support home ownership through structured access to pension savings, allowing members to either assign up to 60% of their benefits for mortgage guarantees or utilize up to 40% (capped at Kshs 7.0 mn) for direct residential house purchases. These features make retirement benefits schemes a vital pillar of personal financial planning and national economic resilience.

Section II: Historical and the Current State of Retirement Benefits Schemes in Kenya

i. Growth of Retirement Benefits Schemes

According to the latest Retirement Benefits Authority (RBA) Industry Report for December 2025, assets under management increased by 24.6% to Kshs 2.8 tn from the Kshs 2.3 tn recorded in December 2024. The growth of the assets was majorly attributed to the increase in contributions to the mandatory National Social Security Fund (NSSF) scheme, through the rollout of the third phase of the NSSF Act, 2013 which took effect in February 2025 significantly boosting retirement savings. Under Phase 3, the lower earnings limit increased from Kshs 7,000.0 to Kshs 8,000.0, while the upper earnings limit doubled from Kshs 36,000.0 to Kshs 72,000.0. As such, the NSSF investment assets increased by 43.1% to Kshs 623.8 bn in December 2025, from Kshs 435.9 bn in December 2024. Additionally, the improved macroeconomic conditions during the period as evidenced by favorable interest rate environment, mild inflationary pressures and stability of the exchange rate led to the growth in investment income for the schemes. In February 2026, the fourth phase of the NSSF contribution limit adjustment was successfully implemented, raising the lower earnings limit to Kshs 9,000 from Kshs 8,000 and the upper earnings limit to Kshs 108,000 from Kshs 72,000. Additionally, Tier I contributions rose from Kshs 480 to Kshs 540 for both employer and employee, while maximum Tier II contributions increased from Kshs 3,840 to Kshs 5,940 for both. This upward revision has already begun to strengthen the retirement benefits sector by boosting individual savings and accelerating the growth of overall Assets Under Management (AUM). The enhanced contributions are expected to continue to deepen long-term investment capacity and improve income security for future retirees, reinforcing the sector’s role in national economic development.

The graph below shows the growth of Assets under Management of the retirement benefits schemes over the last 10 years:

Source: RBA Industry Report

The consistent YoY increase demonstrates the significant role that the enhanced NSSF contributions made to the industry’s performance, following the implementation of the NSSF Act of 2013, which took effect in February 2023. The primary goal of the Act was to broaden the NSSF’s benefit coverage, range, and scope as well as improve the adequacy of benefits paid out of the scheme by the Fund amongst others.

The chart below shows the y/y changes in the assets under management for the schemes over the years.

Source: RBA Industry Report

In Kenya, pension funds hold a substantial share of financial assets, consistently growing due to mandatory and voluntary contributions under the National Social Security Fund (NSSF) Act of 2013 regulations. In comparison, bank deposits remain the largest financial pool, reflecting their role as the primary savings vehicle driven by their liquidity, security, and accessibility, though they offer lower returns. Capital markets products, including unit trusts and REITs, are relatively smaller highlighting the nascent stage of capital markets in Kenya, but expanding as investors seek diversification and higher yields. Key to note, the Collective Investments Scheme’s industry’s overall Assets under Management (AUM) grew by 11.3% quarter‑on‑quarter to Kshs 756.2 bn in FY’2025 from Kshs 679.6 bn in Q3’2025, while on a year‑on‑year basis AUM rose by 94.3% from Kshs 389.2 bn in FY’2024. SACCOs play a crucial role in cooperative-based savings and credit access, especially for middle-income earners.

The graph below shows the Assets under Management of Pensions against other Capital Markets products and bank deposits:

*Data as of June 2025

Sources: CMA, RBA, SASRA and RAK

As of the latest available data by RBA, Kenya’s pension-to-GDP ratio increased by 1.5% points to 16.1% in December 2025 from 14.6% in 2024, driven by a 24.6% increase in pension Assets Under Management (AUM) to Kshs 2.8 bn, significantly outpacing the country’s GDP growth rate, which recorded a growth of 4.9% in Q3’2025. This disparity implies that the pension sector is expanding at a much faster rate than the broader economy, reflecting stronger savings mobilization, improved investment returns, and possibly increased compliance or contribution levels following regulatory reforms. However, the 16.1% is significantly lower than that of developed countries such as the United States at 169.5%, Australia at 132.6%, and the United Kingdom at 124.2%, reflecting the maturity and depth of their pension systems. In Sub-Saharan Africa region, Kenya outperforms countries like Malawi at 11.7%, Uganda at 9.0% and Nigeria at 8.0%, but still lags behind Namibia at 100.4% and South Africa at 83.8%. This positioning indicates that while Kenya’s pension sector is growing steadily, particularly with recent reforms, there remains considerable room for expansion and deeper integration into the national economy. The graph below shows select countries’ pension assets to GDP ratio as per the latest published data by World Bank as of 2020:

Sources: World Bank, RBA *data as of December 2025

The graph below shows Kenya’s pension to GDP ratio over the years:

Source: RBA Industry Reports

1. Assets Held by Fund Managers

According to the Retirement Benefits Authority, as of the end of December 2025, 23 fund managers submitted their returns to RBA. The AUM for the fund managers increased by 12.7% to Kshs 2,217.8 bn in December 2025 from Kshs 1,967.5 bn recorded in June 2025. The table below outlines the performance of the Fund Managers comparing June 2025 and December 2025:

Source: RBA Industry Report

Key take-outs from the above table include:

• Assets Under Management: The AUM recorded a 12.7% growth to Kshs 2,217.8 bn in December 2025, higher than the AUM of Kshs 1,967.5 bn in June 2025,

• Growth: In terms of AUM growth, VCG Asset Managers recorded the highest growth of 651.6% with its AUM increasing to Kshs 4.5 mn, from Kshs 0.6 mn in June 2025, attributable to the base effect. On the other hand, Britam Asset Managers recorded the largest decline with its AUM declining by 21.6% to Kshs 7.7 bn in December 2025, from Kshs 9.8 mn in June 2025,

• Market Share: GenAfrica Asset Managers remained the largest overall Unit Trust with a market share of 31.7%, 7.4% points increase from 39.2% recorded in June 2025.

2. Assets Held by NSSF

The total assets held by NSSF increased by 37.4% on a year-on-year basis to Kshs 623.8 bn in December 2025 from Kshs 453.9 bn in December 2024, and by 11.8% from Kshs 558.1 in June 2025. This is attributable to increased contributions due to the implementation of the NSSF Act of 2013, with the total NSSF remitted contributions increasing by 38.5% to Kshs 81.9 bn in FY’2023/24 from Kshs 59.1 bn in FY’2024/25, while unremitted contributions decreased by 35.4% to Kshs 2.0 bn from Kshs 3.1 bn in June 2024 highlighting improved employer compliance. Notably, contributions to the NSSF increased by 2.7% to Kshs 43.4 bn in December 2025 from Kshs 44.7 bn in June 2025. Additionally, internally managed funds amounted to Kshs 34.5 bn while externally managed funds were Kshs 589.3 bn. The graph below shows the total Assets under Management of NSSF over the last 5 years:

Source: RBA Industry Report

3. Total Pension Contributions

Total pension contributions in 2025 came in at 285.4 bn, a 21.5% increase from the 234.9 bn in 2024. Since the implementation of the NSSF Act, 2013 in February 2023, the total pension contributions have increased gradually from Kshs 133.0 bn in 2022 to Kshs 188.8 bn in 2023 and Kshs 285.4 in 2025. Notably, the total NSSF remitted contributions increased by 38.5% to Kshs 81.9 bn in FY’2023/24 from Kshs 59.1 bn in FY’2024/25, while unremitted contributions decreased by 35.4% to Kshs 2.0 bn from Kshs 3.1 bn in June 2024 highlighting improved employer compliance.

Contributions to Post-Retirement Medical Funds (PRMFs) increased by 32.2% to Kshs 157.1 bn in December 2025 from Kshs 118.8 bn in 2024. This growth is primarily attributed to an increasing number of retirement benefit schemes being established and commencing contributions to PRMFs to enhance member welfare post-retirement.

ii. Retirement Benefits Schemes Allocations and Various Investment Opportunities

Retirement Benefits Schemes aim to protect members’ savings while achieving competitive long-term returns by investing across various asset classes. Schemes have invested in traditional asset classes such as equities and fixed income securities, which offer a balance between risk and return. However, to enhance portfolio performance and diversify risk, they have increasingly explored alternative asset classes such as real estate, private equity, offshore funds and other non-traditional asset classes. Investing in alternative assets provides opportunities for higher returns, hedge against inflation and exposure to long-term growth sectors. The choice and proportion of these investments are determined by each scheme’s Investment Policy Statement (IPS), which sets out guidelines for risk tolerance, liquidity needs and return objectives. As such, the performance of Retirement Benefits Schemes in Kenya depends on a number of factors such as;

1. Asset allocation,

2. Selection of the best-performing security within a particular asset class,

3. Size of the scheme,

4. Risk appetite of members and investors, and,

5. Investment horizon.

The Retirement Benefits (Forms and Fees) Regulations, 2000 provide investment guidelines for pension schemes in Kenya, setting asset class exposure limits to safeguard returns and protect members’ funds. Trustees are required to draft and update Investment Policy Statements (IPS) every three years, tailored to scheme demographics and economic outlook, to guide diversification, risk management, and performance monitoring. Current regulations permit up to 90% in government bonds, 70% in quoted equities, 30% in property, 15% offshore, and 10% in private equity, though allocations remain skewed toward traditional assets, with IPS encouraging broader inclusion of alternatives and offshore investments. The table below represents how the retirement benefits schemes have invested their funds in the past:

Source: Retirement Benefits Authority

Retirement benefits schemes have for a long time skewed their investments towards traditional assets, mostly, government securities and the equities market, averaging 59.0% between 2016 and 2025 for the two asset classes, leaving only 41.0% for the other asset classes. However, as pension schemes seek higher returns, diversification, and inflation hedging, there has been a growing shift towards alternative investments that include immovable property, private equity and Real Estate Investments Trusts (REITs). It is vital to note, that in 2025 there was an increase recorded in investments in private equity by 84.8% to Kshs 29.9 bn from Kshs 16.2 bn recorded in 2024 while investments in Real Estate Investments Trusts increased by 22.8% to Kshs 14.4 bn in 2025 from Kshs 11.7 bn in 2024. However, allocation to immovable property decreased by 3.3% to Kshs 241.0 bn in 2025 from Kshs 249.2 bn in 2024.

Key Take-outs from the table above are;

• Schemes in Kenya allocated an average of 59.0% of their members’ funds towards government securities and Quoted Equities between the period of 2016 and end of 2025. The 44.4% average allocation to government securities is the highest among the asset classes attributable to safety assurances of members’ funds because of low-risk associated with government securities. Notably, allocation towards government decreased by 0.3% points to 52.1% from 52.5% recorded in 2024 attributable to the cumulative 225.0 bps reduction in the Central Bank Rate (CBR) to 9.00% by December 2025 from 11.25% in December 2024, which exerted downward pressure on yields for new debt issues and made them less attractive to investors,

• The allocation towards quoted equities increased by 2.1% points to 11.1% in 2025, from 9.0% in 2024 on the back of improved performance in the Kenyan equities market as evidenced by 48.9% gain by the NASI index in 2025, driven by price rallies in major blue‑chip stocks, notably Safaricom, East African Breweries (EABL), and leading tier‑one banks such as Equity Group, KCB, and Co‑operative Bank. Favourable macroeconomic conditions, such as stable inflation and a stable shilling, boosted market sentiment, have encouraged schemes to allocate more funds to equities during the period, and,

• Retirement Benefits Schemes investments in immovable property decreased by 2.5% points to 8.6% in 2025, from 11.1% in 2024 due to liquidity constraints of the real estate sector compared to other asset classes, making schemes favor more liquid investments such as equities and government securities.

The chart below shows the allocation by pension schemes on the three major asset classes over the years:

Source: RBA Industry report

The table below shows the AUM in the different asset classes in 2024 and 2025 and the change:

Source: RBA Industry report

Key Take-outs from the table above are;

• Government securities remained the highest allocated asset class, recording a 23.9% increase in AUM to Kshs 1,465.6 bn in 2025 from Kshs 1,183.3 bn in 2024. Additionally, quoted equities grew by 54.6% to Kshs 312.8 bn in 2025 from Kshs 202.3 bn in 2024,

• Commercial paper and non-listed bonds by private companies grew significantly by 276.9% to Kshs 12.1 bn in 2025 from Kshs 3.2 bn in 2024 due to the growth of the Linzi Sukuk Bond value to Kshs 16.9 bn. Notably, investment in other assets increased by 135.0% to Kshs 0.5 bn from Kshs 0.2 bn, attributable to increased demand for specialized investment vehicles with Mansa-X Shariah Compliant Fund and SIB Najah Mansa-X Special Fund growing to Kshs 417.1 mn and Kshs 50.4 mn,

• Listed corporate bonds increased significantly by 349.0% to Kshs 28.3 bn in 2025 from Kshs 6.3 bn in 2024 attributable to new issuances such as the LINZI 003 Infrastructure Asset‑Backed Security, which accounted for Kshs 18.1 bn in scheme investments at a fixed 15.0% return to fund the Talanta Sports Stadium. Further contributions came from East African Breweries Ltd’s 11.8% medium‑term note with Kshs 196.6 mn invested, and Safaricom’s medium‑term notes with Kshs 209.6 mn and Kshs 68.4 mn invested, expanding exposure to manufacturing and telecommunications.

• Fixed deposits grew by 5.2% to Kshs 56.5 bn in 2025 from Kshs 53.7 bn in 2024. Additionally, cash increased by 43.6% to Kshs 33.2 bn in 2025 from Kshs 23.1 bn in 2024.

Performance of the Retirement Benefit Schemes

According to the ACTSERV Q4’2025 Pension Schemes Investments Performance Survey, the five-year average return for segregated schemes over the period 2021 to 2025 was 4.4% with the performance fluctuating over the years to a high of 13.2% in Q4’2025. Notably, segregated retirement benefits scheme returns recorded a 2.6% return in Q4’2025, down from the 13.2% gain recorded in Q4’2024. The y/y decline in overall returns was largely driven by the 11.7% points decrease in returns from Fixed Income to 1.6% from a gain of 13.3% in Q4’2024 coupled with the 7.7% points decrease in Equities returns to 8.0% from a gain of 15.7% in Q4’2024. The chart below shows the quarterly performance of segregated pension schemes since 2021:

Source: ACTSERV quarterly surveys

The key take-outs from the graph include:

1. Schemes recorded a decrease of 10.6% points to 2.6% in Q4’2025 from the 13.2% gain recorded in Q4’2024. The performance was largely driven by a 1.6% gain in fixed income investments in comparison to the 13.3% gain recorded in Q4’2024, coupled with the 8.0% gain in equities investments in Q4’2025 compared to a gain of 15.7% in Q4’2024. Offshore assets registered increased returns, recording a 1.3% in Q4’2025, from the 0.8% gain recorded in Q4’2024, 0.5% points increase, and,

2. Returns from segregated retirement funds have exhibited significant fluctuations over the last five years, ranging from a high of 13.2% recorded in Q4’2024 to a low of 0.7% in Q4’2021, highlighting the sensitivity of fund performance to market and economic conditions.

The survey covered the performance of asset classes in three broad categories: Fixed Income, Equity, Offshore, and Overall Return. Below is a table showing the fourth quarter performances over the period 2021-2025: