OPINION | Africa’s Capital Market Opportunity: Is Tokenization the Secret Key to Unlock Africa’s Economic Potential? – By CEO, Nairobi Securities Exchange (NSE)

Illiquidity plagues many African markets: Small firms struggle to raise capital, bond markets are thin, and secondary trading is limited. Tokenization can break these logjams.

CryptoGuru··13 min read
By Frank Mwiti, Chief Executive Officer, Nairobi Securities Exchange (NSE)

 

Africa’s economies are large and growing, yet its capital markets remain underdeveloped. Sub-Saharan Africa’s GDP (gross domestic product) was roughly $3 trillion in 2023, but its total stock-market capitalization has only been a fraction of that, and most savings have sat on the sidelines.

In particular, the large flows of diaspora remittances – about $54 billion in 2023, as per the World Bank – indicate deep pools of savings that could be mobilized.

 

Likewise, digital finance has exploded:

Africa now has 1.1 billion registered mobile-money accounts (more than half the world’s total) and saw $1.1 trillion in mobile-money transactions in 2024. This demonstrates that the digital infrastructure and reach are in place. If even a portion of these assets could be channeled into investment-grade instruments, it would dramatically expand the market’s depth.

Tokenization – converting real-world assets (RWAs) into tradable digital tokens – offers exactly this opportunity. By linking Africa’s savers (onshore and abroad) with investible assets via blockchain, countries can unlock latent liquidity in housing, SMEs (small and medium-sized enterprises), infrastructure and financial securities, thus unleashing a new wave of capital for growth.

Unleashing liquidity

Illiquidity plagues many African markets: Small firms struggle to raise capital, bond markets are thin, and secondary trading is limited. Tokenization can break these logjams.

For example, South Africa recently recorded the continent’s first tokenized corporate bond. In April 2024, the private-school network Die MOS Inisiatief raised R100 million through a 10-year floating-rate bond issued on Mesh.trade’s blockchain platform through a 10-year floating-rate bond issued on Mesh.trade’s blockchain platform.

By raising debt digitally, MOS dramatically reduced issuance costs and processing time. Crucially, 65.5 percent of that R100 million came from retail investors (including 24 percent non-institutional), showing how tokenized issuances can tap ordinary savers.


Similarly, financial authorities see huge potential in standard instruments.

In August 2024, the Nairobi Securities Exchange (NSE) partnered with DeFi Technologies, Valour and SovFi to explore digital-asset exchange-traded products (ETPs) in Kenya. This pilot could deepen Kenya’s capital market by creating blockchain-based issuances of equities, debt and funds, with near-instant settlement.


Diaspora finance is another case in point.

Remittances to Sub-Saharan Africa were up 1.9 percent in 2023, exceeding foreign direct investment (FDI). Traditional diaspora bonds have been used to mobilize this capital, but tokenized assets could do even better. A properly regulated crypto-bond or stablecoin deposit platform could channel diaspora savings directly into local projects. (Indeed, the World Bank has noted that “diaspora bonds can be structured to directly tap diaspora savings”.)


With blockchain, funds from abroad can settle in seconds rather than weeks, reducing foreign-exchange (forex) bottlenecks.

In short, African markets can unlock trillions in standby capital by converting diaspora flows and local savings into digital securities, significantly improving liquidity and lowering borrowing costs.

Fractional ownership

Tokenization dramatically increases choice by allowing fractional ownership of high-value assets.

Real estate is a classic example:

Few Africans own homes or large properties due to high prices.

In Nigeria, Lagos State (population approximately 21 million) is responding to soaring housing demand (residential sector valued at ₦173 trillion or approximately US$11 billion) by launching a property-tokenization initiative. Under this plan, properties are divided into thousands of digital tokens so that small investors can buy shares with minimal capital.


In practice, an expensive building can be broken into tokenized “shares”, each priced at, say, a few hundred dollars.

This “fractionalization” lowers the entry point to real-estate investment. Nigeria’s tech ministry stated that it envisioned this would “raise financial inclusion, reduce risk and offer diversification” for ordinary investors.

A digital ledger ensures that each token is uniquely traced to the property, which also helps stamp out fraud in the often corrupt real-estate sector.

 

Fractional ownership also applies to other asset classes.

 

The Die MOS tokenized bond illustrated how corporate debt can become far more accessible:

The minimum subscription was only R5,000 (approximately $275), explicitly so “the man in the street” could participate.

Over time, even large infrastructure projects or art collections could be tokenized.

For instance, Kenyan fintech (financial technology) start-ups are prototyping agricultural and renewable-energy asset tokens, allowing smallholders and investors to share in farm or windmill yields with very low outlays.

South African innovators have similarly demonstrated that splitting a bond or equity into digital slices can generate demand from segments previously shut out.

Each case shows how tokenization can turn one large, illiquid asset into many liquid pieces, creating secondary markets and enabling investors of all sizes to trade quickly.

Expanding access

By lowering minimums and removing geographic barriers, tokenization broadens the investor base. Africa’s young, tech-savvy population stands to gain.

In Kenya, where mobile subscriptions exceed the population (approximately 122 SIMs [subscriber identity modules] per 100 people) and smartphone penetration is rising, the Nairobi Securities Exchange (NSE) envisions the Kenya Digital Exchange (KDX) as a fully regulated platform to trade tokenized RWAs, the Kenya Digital Exchange (KDX) is a fully regulated platform to trade tokenized RWAs.


NSE’s Chief Executive Officer noted that the KDX will “unlock new investment opportunities, deepen market access, and position Kenya as a trailblazer in tokenization.”

 

Similarly, Nigeria’s Lagos property plan explicitly targets retail inclusion:

By selling tokens, ordinary Nigerians can invest their savings in city real estate without needing a bank loan or a large downpayment.

The impact is real. The South African school bond not only tapped the corporate sector but also drew ordinary savers: 24 percent of its token subscriptions were from non-institutional investors. Likewise, digital platforms in Nigeria and Kenya have seen huge uptakes:

One report called Nigeria and Kenya the top two crypto markets in Africa, driven by peer-to-peer trading and remittances.


This aligns with the mobile-money revolution:

With 1.1 billion mobile-money accounts on the continent, even rural and/or unbanked Africans have phones and digital wallets. Tokenized assets can integrate seamlessly:

An African farmer with a mobile wallet could one day buy a token slice of a wind farm in another province.

Overall, tokenization can democratize finance. Investments previously reserved for pension funds or high-net-worth individuals (HNWIs) – such as large bonds, stock blocks or prime land – become available in bite-sized pieces. This not only brings in more capital, but it also spreads risks.

For small and medium enterprises (SMEs), it means easier access to capital markets: A start-up or family-owned business could issue a tokenized equity offering and crowd in many small investors. Already in 2024, fintech pilots in Africa’s tech hubs are evaluating ways for SMEs to tap into token financing. The prospects are particularly bright for traditionally excluded groups (youth, women, diaspora) who can invest from anywhere, anytime.

Building regulatory and technology roadmaps

Realizing these benefits requires clear rules and robust infrastructures.

Across Africa, regulators are taking varied but decisive steps. In Kenya, the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK) collaborated on a national fintech strategy in 2023 that includes blockchain pilots.

More recently, in January 2025, the Government of the Republic of Kenya (GoK) put out a public notice calling for comments on the Draft National Policy on Virtual Assets and Virtual Asset Service Providers as well as the Virtual Assets Service Providers Bill, 2024.

The Draft National Policy on Virtual Assets and Virtual Asset Service Providers seeks to guide the development of a fair, competitive and stable market for virtual assets (VAs) and virtual asset service providers (VASPs) in Kenya.

The Draft Virtual Assets Service Providers Bill, 2024, similarly, seeks to provide for the promotion, development and regulation of virtual assets in Kenya.


In light of this, the Nairobi Securities Exchange (NSE) announced a partnership with Hedera Hashgraph and DeFi Technologies to explore the issuance of securities tokens in Kenya.


The Kenya Bankers Association (KBA) is also exploring tokenized collateral frameworks.

In practice, Kenya leverages its mobile-money infrastructure and interoperable IDs (identity verifications) to bootstrap digital-asset platforms.

In West Africa, Nigeria’s new Investments and Securities Act (ISA) 2024, signed into law in March 2025, formally recognizes digital assets and crypto-tokens as securities under the Nigerian Securities and Exchange Commission’s (SEC’s) mandate.


The ISA extends SEC oversight to virtual-asset service providers and cryptocurrency exchanges while imposing penalties for fraud. This gives innovators a legal framework and protects investors. The Central Bank of Nigeria (CBN) has similarly convened task forces to study blockchain in money markets.


Meanwhile, South Africa released its 2024 Digital Payments Roadmap, explicitly citing stablecoins and tokenization as key priorities for modernizing finance.


The South African Reserve Bank (SARB) is piloting wholesale and retail CBDCs (central bank digital currencies), and its fintech unit is working with local exchanges to integrate DLT (distributed ledger technology) for KYC (know your customer) and settlements.

Egypt, Morocco and Tunisia lead North Africa, and each has a distinct stance.

Egypt’s Financial Regulatory Authority (FRA) encourages fintech, but crypto-based businesses remain prohibited by law. Cairo banks warn citizens that cryptocurrencies are not legal tender and users may face penalties.

Similarly, Morocco’s central bank banned domestic crypto-trading in 2017, though it licenses fintech start-ups and is piloting a digital currency for banks.

Tunisia has a more progressive approach; its central bank recently launched a blockchain-based system for real-estate registry, and pilot projects (with French support) are exploring trade finance on a blockchain, even as a draft law for crypto activity is under review.


In short, while regulations vary, the trend is clear:

African policymakers recognize the need to govern digital assets. By drawing lines around crypto speculation and enabling legitimate tokenization, countries are building roadmaps for broader innovation.

Technologically, Africa is catching up fast. Most countries are modernizing payment systems and introducing some blockchain-education initiatives (for example, Kenya’s and Nigeria’s regulatory sandboxes and Ghana’s blockchain lab at the Ministry of Finance).


The heavy lift now is on upgrading infrastructure:

  • Secure networks
  • Reliable ID/KYC (identity/know your customer) schemes and
  • Interoperability standards.

Initiatives such as the Pan-African Payment and Settlement System (PAPSS) hint at regional synergies. Combined with private-sector efforts (for example, banking consortia trialing tokenized bonds), this momentum suggests that an African tokenized market is coming into focus.

Conclusion: Call to Action

Tokenization holds the potential to reshape African finance – making markets deeper, investors broader and transactions cheaper. Concrete pilots (from Kenya’s planned digital-asset exchange to Nigeria’s real-estate tokens and South Africa’s Mesh bond) demonstrate its power.

But scaling requires action on all fronts:

1.) Regulators must finalize clear frameworks and build digital-asset sandboxes

2.) Exchanges and fintechs must collaborate on standards and custody;

3.) Investors (including diaspora and pension funds) should explore token-based products.

Crucially, African governments and stakeholders should view tokenization not as a buzzword but as a strategic tool. When properly harnessed, digital assets can democratize investment, attract fresh capital and ultimately help finance the region’s infrastructure, education and enterprise.

The time is ripe for African leaders to pilot, invest and partner aggressively – unlocking the continent’s latent wealth with the transformative power of tokenization.

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ABOUT THE AUTHOR

 

Frank Mwiti is the Chief Executive Officer of the Nairobi Securities Exchange (NSE), with 24-plus years of global experience in investment banking, capital markets and management consulting.

 

He has held senior roles at UBS, Deutsche Bank, PwC (PricewaterhouseCoopers) and EY (Ernst & Young).

 

He chairs several global and regional boards and holds credentials from MIT (Massachusetts Institute of Technology), an LLB (Bachelor of Laws), and is a Certified Public Accountant (CPA)

 

This post was originally published here.

 

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