Chairperson’s Statement

Dear Shareholders, it is with great pleasure that I present to you, on behalf of the Board of Directors and the Management of the Central Depository & Settlement Corporation Limited, the Group’s Annual Report and Financial Statements for the year ended 31st December 2022.

Global and Local Operating Environment

We started the year on a promising note as the global pandemic waned, however, global economic growth prospects for 2022 were dimmed on account of the Ukraine-Russia conflict, the reemergence of Covid-19 in China, and the persistent food and energy inflation. Global economic growth in 2023 rests on a careful calibration of monetary and fiscal policy to tame run-away inflation, de-escalation of the Russia-Ukraine war, and resolution of global supply chain challenges. This coupled with the reopening of China’s economy offers a glimmer of hope for global economic recovery.

Turning to the local environment, growth in Kenya’s real Growth Domestic Product slowed to 5.5% in 2022 compared to 7.5% in 2021, according to the National Treasury. World Bank Kenya Economic Update, December 2022, notes that the Kenyan economy remains resilient notwithstanding the global and domestic shocks, with GDP projected to grow by 5.2% on average in the financial year 2023/2024.

The domestic capital markets remained undervalued and at lowered risk amidst exogenous shocks in 2022. Annual trading volumes decreased to 3.08 Bn shares in 2022; down from 4.05 Bn shares posted in the year 2021. Foreign investors who account for a significant contribution to equities turnover shied away from the Kenyan capital markets as they sought higher yields in safer jurisdictions.

Financial Performance

As a result, CDSC’s financial performance worsened in 2022 and the Group posted a net loss of Kes.108 million. The net loss position was a result of a 29% percent decline in total revenues in the period, precipitated by the 32% decline in the volume of shares traded on the Exchange. Furthermore, CDSC ceded 50% of bond (fixed income) levy revenues to the NSE in line with the agreement to cede the entire levy by end of the year 2023.

This was exacerbated by a 12% increase in administrative and operating expenses attributed to higher costs to maintain technology infrastructure and the staff voluntary exit costs. It is instructive to note that CDSC trimmed its staff complement by 30% during the year in an effort to reduce its overheads.

CDSC’s balance sheet, however, remains resilient to overcome any short and medium-term headwinds. Total assets currently stand at Kes.491.6 million. The Board and Management will continue to manage the current asset base prudently, as we navigate the challenging business environment.

In the face of these new business realities, the Board, working closely with Management, is implementing a wide array of cost rationalization and revenue-generating initiatives that are guided by the 2021-2025 Strategy.

Strategic Direction

During the second year of implementation of the strategy, the Group made significant strides in meeting the set goals. The Key 2022 milestones were:

  1. The CDS system maintained 100% uptime for all business processes.
  2. The organization implemented an enhanced and more efficient organizational structure.
  3. Active Investors stood at 2.85% at the end of the year, which is significant growth compared to 1.13% at the start of the current strategic cycle.
  4. The organization completed an independent assessment of its compliance with global and local best practice in data privacy for implementation in 2023.
  5. Our adoption of digital transformation continued to gain momentum with the discontinuation of physical CDS statements, the roll out of the CDSC Chatbot as well as the adoption of the CDSC APIs by various CDAs.

Management is focused on the following areas of the strategy in this financial year.

  1. Revenue diversification through the introduction of new fees currently under consideration by the CMA.
  2. Revenue diversification through the offering of CDSC services to new segments such as the commodities ecosystem through partnerships with the organizations such as the Warehouse Receipt System Council.
  3. The process to implement a new CDS System to support CDSC’s future needs has commenced.
  4. Aggressive investor activation and education and growth of new products to enhance Local Investor participation, market liquidity and revenues. AND
  5. Partnerships with Fintech Companies to enhance the reach of CDSC services digitally.

As we head into the future, we are confident that our strategy and proposition to customers will drive our growth and contribute to the shared value created for our shareholders and customers.

Board and Governance

The Board continues to adopt the best corporate governance practices to ensure that the short – and long – term objectives of the company are achieved. The Board Charter was reviewed in the first quarter of 2023. The review has enhanced CDSC’s governance, leadership, social and compliance responsibilities.

The Board has also prioritized the implementation of an ESG framework in order to operationalize the environmental, social and governance objectives and ensure sustainability of the company.

The Board is committed to enhance the Board’s gender and diversity balance and to ensure it has the right mix of skills, knowledge, and experience so as to perform its role effectively and ensure delivery on long term and sustainable stakeholder and shareholder value.


We remain cognizant of near-term risks in 2023 such as inflation concerns and pressure on the local currency. We are also mindful of global occurrences like the ongoing conflict between Russia and Ukraine as well as actions by the US Federal Reserve due to their potential impact on the investment decisions taken by our international clients.

The outlook for the Capital Markets is positive as the Government has made it clear that it will support measures to ensure a robust and inclusive market, including a pledge to privatize six to ten state owned corporations in 2023. CDSC has been actively engaged in various forums bringing together stakeholders to complement and catalyze other ongoing reforms toward revitalizing the Kenyan capital markets. The domestic equity markets remain fundamentally sound with attractive opportunities in undervalued securities, that investors should seize amidst the tough operating macroeconomic environment.

We are confident in our investment decisions anchored on our clearly defined strategic priorities that are expected to drive the next phase of growth of this organization.

Our success will be defined by the disciplined and consistent execution of the planned initiatives and our deliberate focus on the full automation of our services. We will continue to invest in areas of our competitive strength, support and protect the well-being of our staff, customers, and champion sustainable causes in the communities we operate.


I wish to express my sincere gratitude to the Board of Directors whose availability, insights and consistent engagements have provided the sound stewardship necessary to deliver immense value to all our stakeholders. I wish to acknowledge the dedication of the Management and staff in ensuring continuity of service to our clients and diligently delivering on the set objectives in an exceptionally challenging year.

Finally, on behalf of the organization, I would like to extend a special appreciation to our key stakeholders; the Capital Markets Authority (CMA) and the Kenya Association of Stockbrokers and Investment Banks (KASIB) for the continuous and fruitful engagements. I also wish to recognize the Nairobi Securities Exchange (NSE) for the long-standing partnership we continue to enjoy as we provide critical market infrastructure solutions and products that meet our customers’ needs. I am confident that we will sustain this collaboration and I look forward to even greater interactions for our mutual growth.