East Africa’s growing financing needs are creating demand for capital market structures that can complement traditional bank lending. As businesses expand and infrastructure requirements increase, converting existing assets and predictable future cash flows into tradable securities can broaden the sources of capital available to businesses while providing institutional investors with access to long-term investment opportunities.
Kenya already has a growing pool of domestic capital that could support this transition. According to the Capital Markets Authority, Collective Investment Scheme assets under management increased by 12.6%, equivalent to Kshs 95.4 bn, to Kshs 851.7 bn as at March 31, 2026 from Kshs 756.3 bn as at December 31, 2025. The CMA has also established frameworks covering alternative investment products and asset-backed securities.
However, the growth in savings does not automatically translate into productive investment. A substantial share remains allocated to relatively low-risk instruments such as Treasury bills, government bonds and bank deposits. This creates an opportunity for investment banks to structure products that channel part of this capital towards corporate bonds, infrastructure securities and private equity.
Infrastructure and real estate provide clear applications. Toll roads generate user-fee revenues, housing projects generate rental income and energy projects generate cash flows from electricity sales. These predictable revenues can potentially be packaged into securities, enabling asset owners to access capital while allowing institutional investors to gain exposure to long-term cash-generating assets.
Asset-backed financing can also improve commercial bank balance-sheet efficiency. Eligible loan portfolios can be packaged into securities and transferred to capital-market investors, allowing banks to release capital for additional corporate lending without relying entirely on growth in deposits.
The opportunity extends beyond Kenya as businesses expand across Tanzania, Uganda and Rwanda. Deeper regional capital markets could support cross-border acquisitions, regional bond issuance and greater movement of capital across East Africa.
The emerging model is therefore complementary rather than substitutive. Commercial banks can continue originating loans and financing assets, while investment banks structure, package and distribute those assets to a broader pool of institutional investors. The development of these mechanisms could increase the capacity of East Africa’s financial system to convert existing economic assets into investable capital.
