Growing investor confidence in East African Capital Markets drives surge in Banks and Telecom stocks

Growing confidence in East Africa's capital markets is driving investment into banking and telecommunications firms, sectors widely viewed as key engines of the region's economic transformation. (PHOTO Prompted by AI)

By Charles Mkoka

DAR ES SALAAM, Tanzania — Growing investor confidence in East Africa’s capital markets is increasingly directing investment towards the region’s leading banks and telecommunications companies, with Kenya’s Safaricom emerging as the largest holding in a major regional exchange-traded fund (ETF).

Latest portfolio allocation data from the iTrust East African Community Large Cap ETF shows Safaricom accounts for 18.8 percent of total assets, underscoring sustained investor confidence in the company’s profitability, market leadership and ability to generate strong shareholder returns.

The telecommunications giant is followed by KCB Group, which represents 14.99 percent of the fund, while Tanzania’s NMB Bank ranks third with a 10.69 percent weighting. 

Other significant holdings include CRDB Bank, MTN Uganda, Bank of Kigali, Jubilee Holdings and Vodacom Tanzania, reflecting a broad preference for companies viewed as central to East Africa’s long-term economic growth.

The fund’s composition offers a snapshot of where investors see the region’s strongest opportunities, with banking and telecommunications emerging as the dominant sectors. Together, they account for more than 70 percent of the ETF’s total exposure, highlighting confidence in industries benefiting from digitalisation, financial inclusion, mobile money adoption and rising consumer demand.

Safaricom’s position at the top of the portfolio comes after the company reported a record annual profit exceeding KES 100 billion and announced the largest dividend payout in its history. 

The firm remains East Africa’s most valuable listed company and continues to benefit from the expansion of digital financial services and the growing contribution of its Ethiopian operations.

The prominence of financial institutions within the fund reflects a broader shift taking place across the region’s capital markets. 

Combined holdings in major banks, including NMB Bank, CRDB Bank and KCB Group, account for nearly half of total investments, signalling investor expectations that expanding access to banking services, increased lending activity and stronger economic growth will continue to support earnings across the sector.

Tanzania’s growing presence in the portfolio also highlights the rising influence of its financial institutions. 

NMB Bank and CRDB Bank have emerged among East Africa’s most valuable listed companies, reflecting strong profitability, expanding customer bases and increasing investor interest in Tanzania’s banking sector.

By country allocation, Kenya remains the largest destination for investment capital, accounting for 49.29 percent of the ETF’s assets. Tanzania follows with 35.58 percent, while Uganda represents 10.17 percent and Rwanda 4.96 percent.

Analysts say the allocations point to increasing confidence in East Africa’s economic prospects and the continued maturation of its capital markets. 

As regional integration deepens and cross-border investment opportunities expand, investors are increasingly turning to established market leaders that offer both growth potential and stable returns.

The emergence of regional investment vehicles such as the iTrust EAC Large Cap ETF is also providing investors with easier access to East Africa’s largest companies through a single platform, further strengthening the integration of the region’s financial markets.

Despite uncertainty in global markets, the latest investment trends suggest that East Africa’s banking and telecommunications sectors remain among the most compelling destinations for capital, supported by strong fundamentals, expanding digital economies and a growing middle class.