Kenya’s pension market is the third largest in Africa but remains an untapped source of capital for the nation’s long-term development projects, according to insights from the Africa Finance Corporation (AFC).  

By late 2023, Kenya’s pension assets had reached an impressive over Ksh2.2 trillion, equivalent to more than $17 billion.

This substantial asset base places Kenya firmly among the continent’s leading pension markets. It trails only South Africa, which boasts approximately $300 billion in pension assets, and Nigeria, with around $43 billion.  

Following Kenya, Namibia holds about $16 billion, while both Egypt and Morocco each manage pension assets valued at roughly $8 billion. 

“Kenya has made notable strides in integrating informal sector workers into pension systems. With roughly 83 per cent of its workforce operating informally, the government has introduced a suite of targeted micro-pension schemes,” AFC says in its State of Africa’s Infrastructure Report 2025. 

“The Haba Haba scheme, launched in 2019 by the National Social Security Fund (NSSF), allows self-employed individuals to save flexibly via mobile money platforms such as M-Pesa and WhatsApp.” 

Traditionally, Kenyan pension funds have allocated their investments primarily to conventional financial instruments.  

These include government securities, listed equities on the stock exchange, and various real estate ventures, aiming for steady returns for their beneficiaries.  

While these allocations offer stability, they represent a conservative approach to capital deployment. A significant opportunity exists to reorient a larger portion of this capital towards critical infrastructure and industrial projects.

Such a strategic shift could provide much-needed long-term financing for key sectors, accelerating national economic growth.

This re-focus would align domestic savings directly with Kenya’s development agenda, fostering greater economic self-reliance. 

Sovereign credit risk 

“Africa’s allocation structure significantly weakens the developmental impact of long-term savings and amplifies systemic exposure to sovereign credit risk.  Current allocation practices limit participation in real economy sectors—such as infrastructure, manufacturing, and digital services—that are essential for structural transformation and inclusive growth,” AFC lamented. 

Commercial banks hold the highest amount of capital in Africa at $2500 billion, followed by Insurance companies at $455 billion, then forex reserves held by central banks at $435 billion.  

Insurance companies hold $320 billion, and public development banks carry $250 billion on their balance sheets, while external reserves stand at $150 billion. 

Africa does not need to be borrowing large sums of capital from abroad, but can leverage these funds to reduce its exposure to external factors. 

Kenya has distinguished itself as a leader in Africa by successfully integrating workers from the informal sector into its pension system.  

This innovative approach addresses a large segment of the population previously excluded from formal retirement savings. The National Social Security Fund’s (NSSF) “Haba Haba scheme” exemplifies this success. 

The Haba Haba initiative leverages widely used mobile money platforms, notably M-Pesa and WhatsApp, to facilitate convenient pension contributions for informal workers. 

This technological integration has significantly broadened the reach of pension services, bringing millions into the formal savings net. The ease of access provided by mobile money has been transformative. 

It has effectively dismantled barriers to entry for many self-employed individuals and small business owners, encouraging consistent savings.

This inclusion directly contributes to the substantial growth of Kenya’s overall pension asset base.  

It also ensures a more secure future for a larger portion of the workforce.