Kenya has a great opportunity to become a global commodity trading hub. On top of the country’s commitment to continuous infrastructure development, Kenya is also home to an increasingly youthful and tech-savvy demographic who are engaging with modern trading methods.
Commodities trading can significantly boost local economic growth, shaping a more positive and stable financial landscape for traders and other citizens. Thanks to digital technologies, more Kenyan traders can participate in global markets today to buy and sell critical commodities such as agricultural products and energy resources.
Traders seeking to expand their activities beyond foreign currencies, stocks, and shares can explore commodities to diversify.
The rise of online trading platforms
Today, many global brokerages offer reliable online trading platforms for increased accessibility and trading activity. People can participate in trading commodities as a way to diversify their investment portfolios. Traders can hedge their portfolio with popular precious metals such as gold and silver and top-traded energies like crude oil and natural gas.
Reliable online trading platforms also have built-in high-end security features such as Negative Balance Protection and PCI-DSS financial data protection, which helps secure trader funds. These platforms also offer built-in economic calendars that allow traders to keep up with major economic news that may impact their trading leverage and other price movements.
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This rise of commodities trading has helped elevate the Kenyan retail trading experience. Since the Nairobi Securities Exchange (NSE) was established in 1954, traders typically faced difficulties accessing shares, bonds, and other listed assets. With technological improvements and Internet connectivity, more retail investors can trade various assets to diversify their portfolios.
More startups and investment companies have since expanded operations in Kenya to facilitate retail investment by making the process more affordable and accessible. As Kenya’s agricultural sector plays a major role in the country’s economy, traders can now trade various agricultural commodities such as coffee and horticultural products. Crude oil and petroleum products are also increasingly important as the government continues to invest in developing its energy sector.
The impact of commodities trading in Kenya
As commodity trading becomes more popular in the country, other aspects of Kenya’s economy can benefit. This includes local fuel prices, as demand for crude oil in the global market can affect international oil prices and, subsequently, domestic fuel costs.
Commodity trading can also impact Kenya’s currency exchange rates as more traders import and export various commodities. Fluctuations in commodity prices can consequently affect Kenya’s currency’s strength, which impacts other resources in the country. By keeping track of commodity prices, traders benefit from being able to analyze price movements and patterns of their investments as well as predict other trends in local resources and products.
As commodity trading continues to grow in Kenya, we can also expect better relations with foreign countries. Recently, Kenya and China announced plans to bridge the trade gap and strengthen bilateral economic ties between both countries through commodity exports.
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China surpassed India as Kenya’s largest importer of commodities in 2014 and, since then, has played a significant role in supplying raw materials to local industries. These raw materials are then widely traded by small local enterprises, which helps boost Kenya’s economy. By investing in the growth of commodities trading, Kenya’s more than 7.4 million Micro, Small, and Medium-sized Enterprises (MSMEs) and over 14.9 million employed Kenyans can benefit in the long term.
In the meantime, Kenya’s government can also generate significant revenue by taxing and regulating commodities trading activities. This can fund other channels such as infrastructure improvement, education, and healthcare in the country.
Of course, as explained above, commodities can also influence international relations, and if trading is unregulated, it may lead to conflicts and financial losses. As such, the government needs to implement effective regulatory frameworks and policies to manage the impact and risks of commodities trading and maximize its benefits for the country.
