Kenya’s 91-day Treasury bill yield dropped below 8 percent on September 1, 2025, marking the first time since June 2022 that short-term government debt has attracted such robust demand.

At the same time, the Nairobi Securities Exchange (NSE) All Share Index closed at 176.82 points, even as net foreign outflows hit KSh 1.18 billion.

Speaking to CNBC Africa, Raphael Agung, Group Director: Global Markets and Chief Economist at NCBA Investment Bank, attributed the decline in Treasury bill rates to a series of monetary policy easing measures, the latest being a 25-basis-point cut designed to reduce borrowing costs for the private sector.

According to Agung, the policy shift is already bearing fruit, with auction performance consistently exceeding expectations. Subscription levels have surpassed 150 percent, underscoring ample liquidity in the banking sector as institutions seek secure investment options.

This renewed confidence is also reflected in the equities market. While the NSE registered notable foreign outflows, Agung downplayed the concerns, stressing that Kenya’s sovereign credit rating upgrade and broader macroeconomic stability have buoyed both domestic and foreign investor sentiment.

Looking ahead, Agung forecasts that the positive momentum is likely to persist, supported by improved liquidity and a healthier sovereign balance sheet. He noted that Kenya’s fiscal outlook has brightened considerably compared to the challenges of 2024, with international rating agencies recognizing progress through recent upgrades.

“Central to this turnaround has been Kenya’s adept handling of debt obligations and the Central Bank’s effective strategies in managing outflows,” Agung said. He added that the 91-day Treasury bill rate could decline further, potentially stabilizing around 7.5 to 7.8 percent as markets adjust.

On the equities side, he highlighted the correlation between monetary policy and NSE activity. Despite traditional theories suggesting a disconnect, Kenya’s emphasis on the overnight rate as a benchmark has been instrumental in guiding investment behavior. Key indices such as the NSE 20 and NSE 25 have posted double-digit gains year-to-date, supported by portfolio rebalancing as asset managers diversify away from lower-yielding fixed-income assets.

Foreign investor participation has also picked up, Agung noted, buoyed by Kenya’s stronger debt sustainability and foreign reserves that now stand at a record $11 billion. With global capital flows influenced by U.S. interest rates, Kenya’s improved risk profile positions it as an attractive destination for yield-seeking investors.

Agung concluded on an optimistic note: “Kenya’s strengthened sovereign position and evolving market narrative are creating fertile ground for sustained economic growth. Both local and international investors are increasingly confident in the country’s prospects.”