Kenya’s Nairobi Securities Exchange (NSE) is developing East Africa’s first artificial intelligence (AI)-focused exchange-traded fund (ETF), with plans to make the product available to investors before the end of the year.
The NSE Chief Executive Officer, Frank Mwiti, said the proposed ETF would provide investors with exposure to a basket of companies with significant involvement in artificial intelligence.
“We want essentially to be able to bring a product to our market where the underlying basket is a reflection of companies that have a direct exposure to AI,” Mwiti told Reuters.
He said companies such as Microsoft, Anthropic and OpenAI could serve as references for the fund’s underlying assets.
Although Kenyan investors can currently access AI-related investment products in foreign markets, the NSE wants to provide a locally traded option that would make it easier for investors to participate in the growing sector.
Mwiti said demand for AI-focused investments is particularly strong among younger investors who are increasingly looking beyond traditional industries.
“Instead of cement manufacturing… they want to do AI,” he said.
The planned ETF comes amid a global surge in AI-related stocks, which has pushed several markets to record highs. However, the rally has also raised concerns among investors over the possibility of an AI-driven market bubble.
Mwiti said the NSE would closely monitor global trends and could delay the launch if necessary to ensure investors are not exposed to an overheated market.
“There is… a vibe in the market that there might be a bubble around AI, so maybe there is also an aspect of waiting and seeing,” he said.
Exchange-traded funds are investment products that hold underlying assets such as listed shares and allow investors to gain exposure to specific sectors or asset classes while trading them like regular stocks.
The NSE CEO said the AI fund would most likely be denominated in Kenyan shillings to reduce foreign exchange risks for local investors.
“Kenyans are actually investing in foreign markets because of lack of product diversity here,” Mwiti said.
The exchange is currently discussing the proposal with Kenya’s market regulator.
Beyond AI investments, the NSE is also considering launching a cryptocurrency ETF linked to assets such as Bitcoin, Ethereum and Solana, which could be introduced next year following the passage of legislation regulating virtual assets in Kenya.
While AI-focused ETFs are already available in major developed markets such as the United States, many African capital markets have yet to introduce similar products.
Mwiti said interest in AI investments in Kenya is being driven not only by global technology companies but also by a growing number of young, investment-savvy citizens.
He noted that Safaricom’s introduction of stock trading through its M-Pesa mobile payment platform in February helped attract about one million new investors, many of whom were entering the market for the first time.
Kenya’s equity market has gained slightly above 30 per cent so far this year, supported by strong corporate earnings, stable inflation and currency conditions.
The NSE chief executive said these factors have helped push the market capitalisation of listed equities to a record 4 trillion Kenyan shillings ($30.95bn), adding that he expects the figure to reach 5 trillion shillings by the end of the year.
