Money markets tech startup, Hisa Technologies, is now enabling its users to affordably invest in stocks and securities, in not just Kenya but also across other global money markets like those in the US, with the help of blockchain technology.

Through its platform, Hisa uses fractionalization to make it possible for Kenyan investors to, for as little as $5, buy fractions of stocks and US securities from investment companies of their choice, while affording them an opportunity to also learn as they follow other investors’ discussions on wealth creation and investments.

The goal, according to Hisa co-founder and CEO, Eric Jackson is to make it possible for every one, even those without immense financial strength, to invest in stocks and securities and create wealth for themselves.

Hisa is using blockchain to achieve this fractionalization and tokenization of stocks and security investments, allowing more users to invest.

“We’re exploring leveraging blockchain to cut down the post trade period in stocks so when you buy these stocks, you’re able to immediately transact them, unlike previously when it mandatorily took three days for one to be able to trade them,” Jackson tells NODO News in an interview.

What is Fractionalization of Stocks?

Fractionalization essentially involves splitting a huge investment into small fractions, and is the fastest and easiest way to get a majority of Africans to invest, Jackson explains. “Only less than 1% of the adult population in Africa invests in the capital markets mainly due to barriers to entry, and also access to the products. Fractionalization helps you invest in what you need and can afford.”

With blockchain, investors can tokenize a fractionalized investment, enabling them to commit their funds based on how much they have, and get returns on the basis of the value they invested.

Such are the services that Hisa offers, and which Asuma says, make sense given that blockchain powers the investment services that they offer on the platform

“Basically, we are allowing everyday Kenyans to, for the very first time, invest in global companies that they interact with. And for as little as $5,” Jackson says. “This makes it easy for just about anyone to be able to invest in stocks and securities. The goal, for Kenyan stocks, is to make it fractional, so that we can break it down and make it as easy as possible for users to invest.”

Asuma says that this is among the first products that Hisa embarked on after its approval by the Capital Markets Authority (CMA). Investors can therefore, through Hisa, affordably trade in US stocks, as well as invest in US exchange-traded funds (ETFs), which help them to diversify their investments.

Cash Crisis is Pushing More Investors into Stocks

(Nairobi National Park and the city’s business district / Photo by Unsplash)

Hisa, at the moment, is adding money market funds, unit trusts and government bonds, to its platform to allow for greater diversity of its portfolio, a move that goes a long way in helping users, besides just understanding, to also invest in different other investment products.

Many Kenyans, Jackson says, are now investing in money market funds, because they don’t require much research. They also are a passive investment.

Government bonds are also a profitable investment for investors. For instance, he tells Nodo News, the last infrastructure bonds that the Kenyan government issued made earnings of 14%, which is quite an attractive gain, and which any Kenyan can invest in.

As Kenya continues to face a liquidity crunch, Jackson opines that the capital and stock markets are expected to see more activity, the more the reason Kenyans should invest in them.

The financial crisis in the country is forcing the government to borrow to offset its pending bills and debts, and banks are definitely the obvious first choice for government borrowing. But if the bonds become unattractive for the banks, then both local and global stocks will be the other option for the government, which creates an opportunity for those investing in stocks.

Hisa’s Growth and Infrastructure Bonds

(New York Stock Exchange, New York / Photo by Shigeru Sato)

The Hisa platform, Jackson says, currently has 20,000 users and there has been quite some growth in the number of its users in the past five months.

“We’ve grown from about 7,000 at the end of October to 20,000 now. Over the past few months, we’ve seen the most growth and I think we are going to see that growth continue because we now have Kenyan stocks on the platform and just need to augment the US stocks and ETFs,” he says.

He adds: “We expect to bring on board money market funds and bonds, and in turn see a lot more growth and interest because these are products that are already very popular with Kenyans.”

The biggest challenge for the government bonds has, however, been the costs. Investing in an infrastructure bond would ideally require a minimum of roughly $900, which is unaffordable for most prospective investors locally.

“And this is where we come in. As Hisa, we intend to leverage blockchain to fractionalize bond and unit trust investing making it easier for people to invest in the infrastructure bond from from as little as $5, as we’ve done with the stocks,” Jackson reveals. “With that we anticipate more uptake. Our target is to get to about 100,000 users of Hisa by the end of the year.”

More Work on Awareness is Needed

But awareness and education on trading and investing in stock markets, fractionalization, tokenization and blockchain is low, which poses a challenge in the uptake of Hisa’s products.

Jackson says Hisa affords its prospective users opportunities for education on these concepts through the platform as well as through mentors – veteran investors – who guide the newbies on how to navigate the intricacies of the financial markets, so they can understand the benefits.

Moving forward, this year, Hisa wants to have its B2B model running. It’s partnering with banks, fintechs, telcos, saccos, and other financial institutions to leverage its technology, allowing these institutions’ customers to use Hisa’s technology and its service offerings.

“For instance, last year, we partnered with Safaricom to allow its users to use their Bonga points to buy stocks,” he reveals. “We also want to power the stocks investing experience in banks by integrating the stocks investment capabilities through banking apps.”

While investing is a noble idea, many still disregard it. In the fintech experience in Africa, investing, he feels, doesn’t quite get the attention it deserves.

“I think investment really holds quite an important part because it allows people to build their wealth, so that they are able to be more conscious of their finances. The goal is to transform the youth, in particular, to be a more financially literate ,” Asuma says. “Financial literacy is very low in the continent, on average it is about 33%. We want to change that.”

-Edited by Shigeru Sato