KENYA Law and Practice Contributed by: Walid Khan, Ruth Wangui Rukwaro and Christina Wanjiku Wood, Africa Law Partners
Banks The following requirements apply in relation to banks. • To operate, banks must obtain a licence from the CBK under Section 4 of the Banking Act. • Key requirements include: (a) minimum core capital of KES1 billion (the Busi- ness Laws Amendment Act, 2024 provides pro- gressive increase of the minimum core capital to KES10 Billion by December 2029); (b) demonstration of sound corporate governance and fit-and-proper criteria for directors and senior management; (c) robust risk management systems to address credit, liquidity and market risks; and (d) annual external audits and continuous CBK supervision, including prudential returns. Microfinance Institutions and SACCOs The following requirements and procedures apply. • Deposit-taking microfinance businesses and non- deposit taking microfinance businesses must be licensed under the Microfinance Act, 2006. Licens- ing is done by the CBK. • Deposit-taking microfinance institutions (DTMs) must maintain a minimum capital of KES60 mil- lion for nationwide operations or KES20 million for community-level DTMs. • SACCOs offering front-office savings and credit (FOSAs) are regulated by the Sacco Societies Reg- ulatory Authority (SASRA), which requires minimum institutional capital of KES10 million, fit-and-proper management and annual reporting. These institutions play a critical role in financial inclu- sion, particularly in rural areas, where the primary credit access comes from SACCOs and microfinance lenders. Foreign Lenders Pursuant to the amendments introduced by the Busi- ness Laws Amendment Act, 2024, foreign lenders are required to register in Kenya and obtain licences from the CBK in order to lend to Kenyan entities.
opment finance institutions such as the African Devel- opment Bank and the International Finance Corpora- tion. These facilities channel funding into renewable energy (solar, wind, geothermal), climate-smart agri- culture and sustainable manufacturing, reinforcing the growth of sustainability-linked lending in the domestic market. Other initiatives include the following. • CMA Code of Corporate Governance Require- ments for Issuers of Securities to the Public, 2015 prescribes that listed companies integrate ESG considerations in governance and report on sus- tainability performance. • Kenya Bankers Association’s Sustainable Finance Guiding Principles and the Landscape of Sustain- able Finance in Kenya’s Banking Industry Report aim to enhance sustainability. • The NSE Listing Rules, the ESG Disclosures Guid- ance Manual, 2021 and the Policy Guidance Note on Green Bonds, 2019 require ESG integration by listed companies. • The ICPAK’s Roadmap for Adoption of IFRS Sustainability Disclosure Standards in Kenya requires adoption of IFRS 1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS 2 (Climate-related Disclo- sures), making ESG reporting mandatory for public companies, including financial institutions. 2. Authorisation 2.1 Providing Financing to a Company The regulatory framework for providing financing in Kenya is anchored in the Banking Act (Cap. 488), the Microfinance Act (2006), and oversight by the CBK. Banks, microfinance institutions and other non-bank financial entities are required to obtain appropriate licences before offering financing and observe anti- money laundering requirements to operate legally. Pursuant to the amendments introduced by the Busi- ness Laws Amendment Act, 2024, foreign companies are now required to register locally and obtain licences locally to lend to companies in Kenya.
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