KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Deborah Sese, Cliffe Dekker Hofmeyr
• logistics – two deals; • hospitality – two deals; • manufacturing – one deal; • professional and other services – one deal; • automotive – one deal; and • fast-moving consumer goods (FMCG) – one deal. Impact of Rising Interest Rates and Other Macroeconomic Factors, Including Geopolitical Events, on Private Equity Deal Activity The macroeconomic and political developments in Kenya through the first half of 2025 continue to shape the landscape for private equity investment. Following the civil unrest triggered by the proposed Finance Bill 2024 and the subsequent withdrawal thereof in June 2024, the broader fiscal environment remained unset - tled. On 31 July 2024, the Court of Appeal declared the Finance Act, 2023 unconstitutional, citing a lack of sufficient public participation. This ruling has cre - ated further legal uncertainty regarding Kenya’s fiscal policy direction and has affected investor perceptions of regulatory stability. Despite a tough operating environment in 2024, early 2025 saw a more stable macroeconomic outlook. Interest rates, which had risen sharply in 2023–24, began to decline. The Central Bank of Kenya (CBK) eased the benchmark rate to 9.75% by mid-2025, and commercial lending rates followed, declining from highs of 17.2% to approximately 15.7%. T-bill yields also fell significantly, indicating improved monetary conditions and a potentially lower cost of debt for portfolio companies. The start-up ecosystem continues to face challeng - es. High-profile failures and restructuring of ventures such as Sendy, Copia, and Gro Intelligence have underscored the need for stronger business funda - mentals and more prudent capital deployment strate - gies. However, these developments may also foster a recalibration of investor expectations and a return to more sustainable investment models. Notwithstanding these difficulties, there are signs of resilience and renewed opportunity. The planned pri - vatisation of key state-owned enterprises, including the anticipated IPO of the Kenya Pipeline Company, signals a more active role for capital markets and
presents new avenues for private equity participa - tion. Additionally, Kenya’s ongoing efforts to deepen regional economic integration and its relatively stable position in the context of broader African geopolitical dynamics position it as a preferred investment desti - nation in East Africa. While caution persists due to ongoing regulatory and tax uncertainties, the medium-term prospects for private equity in Kenya remain positive, particularly for investors prepared to engage with local risks and structure investments thoughtfully in light of the evolv - ing tax and policy environment. 2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions Legal and Regulatory Developments Central Bank of Kenya On 11 December 2024, the Business Laws (Amend - ment) Act 20 of 2024 (Act) was enacted and took effect on 27 December 2024. It introduces several amendments to banking and finance laws, including under Chapter 491 of the Central Bank of Kenya Act (the “CBK Act”). Pursuant to these amendments, the CBK Act now pro - vides that a person cannot carry on any “non-deposit taking credit business” unless that person has been licensed by the CBK or is permitted to do so under any other written law. Non-deposit-taking credit business includes grant - ing loans or credit facilities to members of the public (secured or unsecured), asset financing, pay-as-you- go, buy now, pay later arrangements (excluding hire purchase), credit guarantees and peer-to-peer lend - ing. As it stands, the regulation of non-deposit-taking lending is so broad that even multilateral and bilat - eral lenders are required to be licensed. The effect of this expanded oversight is that the sector is less attractive to investors, especially private equity firms that advance credit, due to the requirement to obtain licensing to lend.
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