KENYA Law and Practice Contributed by: Walid Khan, Ruth Wangui Rukwaro and Christina Wanjiku Wood, Africa Law Partners
have offered yields in the low-to-mid teens, drawing strong participation from pension funds, insurers and foreign institutional investors seeking higher returns than in developed markets. The government continues to rely on this market to finance infrastructure and energy programmes, using infrastructure bonds to mobilise domestic savings for large-scale public investment. These issuances help plug fiscal gaps while providing investors with secure, high-yield opportunities. Corporate issuers are also re-engaging with the bond market. Market participants report renewed inves- tor appetite for credible corporate paper, particularly from established companies in telecommunications, banking and energy. In parallel, Kenyan banks have employed hybrid structures – combining syndicated loans with bond offerings – to diversify their fund- ing bases. These transactions, often structured over five to ten years, allow corporations to balance debt portfolios while offering investors flexible repayment mechanisms. 1.4 Alternative Credit Providers Alternative credit providers have reshaped Kenya’s financial landscape by offering fast, technology-driv- en lending solutions that expand access to under- served populations. Fintech platforms handle very high volumes of small-ticket loan applications each month, running into hundreds of thousands, leverag- ing mobile technology and alternative credit-scoring models based on mobile usage, airtime top-ups and utility bill payments. These providers offer short- term loans, typically ranging from KES500 to around KES70,000, with repayment periods as short as 30 days. While interest rates are generally higher than traditional bank loans, competition and regulatory intervention are driving greater transparency and more sustainable pricing. Traditional banks have been compelled to respond to this disruption. Products have been developed that integrate mobile technology with mainstream banking, offering instant loans linked to mobile money wallets. These services provide more flexible repayment terms and lower interest rates for low-risk borrowers, inten- sifying competition in the sector.
Regulation has also evolved in response to the rapid expansion of alternative credit. The CBK (Digital Credit Providers) Regulations, 2022 require all digital lenders to be licensed by the CBK, ensuring transparency in loan pricing, consumer data protection and fair col- lection practices. By mid-2025, more than 50 digital credit providers had obtained licences. CBK has con- tinued to emphasise enhanced consumer protection, including clearer disclosure of effective interest rates and restrictions on aggressive debt-collection practic- es. While compliance has increased operating costs, the reforms have strengthened consumer confidence and curbed predatory behaviour in the sector. 1.5 Banking and Finance Techniques Kenya’s banking and finance techniques are evolving to meet the diverse needs of both investors and bor - rowers in a market shaped by rising interest rates and heightened credit risks. Traditional bank loans remain the backbone of corporate finance, but borrowers are increasingly adopting hybrid structures that combine loans, bonds and equity to optimise funding. Hold- ing company structures are gaining traction, allowing firms to pool assets across subsidiaries and use con- solidated balance sheets to secure financing on more favourable terms. 1.6 ESG/Sustainability-Linked Lending Sustainability-linked lending is steadily gaining momentum in Kenya, reflecting both global investor priorities and domestic policy shifts towards green finance. Commercial banks have begun embedding environmental, social and governance (ESG) criteria into loan products. The CBK has supported this development by issu- ing Guidelines on Climate-Related Risk Management (2021), which require banks to integrate climate risk into governance, strategy, risk management and dis- closure practices. Building on this, in 2024–25 Kenya introduced a Green Finance Taxonomy and began phasing in climate-related disclosure frameworks for banks, aligning local practice with the country’s com- mitments under the Paris Agreement and its pledge to achieve net-zero emissions by 2050. Kenya has also benefited from concessional credit lines and green finance initiatives supported by devel-
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