Cost holding back Kenyan investment AfDB Report. High electricity prices and expensive business registration fees are discouraging investors from putting their money into Kenya. A new report by the African Development Bank (AfDB) reveals.
According to the Kenya Country Focus Report 2025, the cost of registering a business in Kenya remains high at 15% of GNI per capita, while electricity rates average USD 0.15/kWh. These, along with weak infrastructure and financial inaccessibility. With these they are making it harder for MSMEs, which form 75% of the private sector, to thrive.
The report further flags limited access to credit due to high interest rates, tough collateral requirements, and low financial literacy especially in rural areas. Government initiatives like the Uwezo and Hustler Funds, though helpful, fall short of meeting demand for start-up capital.
AfDB recommends simplifying business rules, reducing service fees. Digitizing community banking, and increasing awareness of financing options. It also calls for reforms in Kenya’s tax regime, noting that frequent changes like taxes on digital assets are creating uncertainty for investors.
Corruption, capital flight, and a slow judicial process also rank among the biggest turnoffs for investors, the report says. Citing concerns over state capture and poor dispute resolution.
Despite these challenges, Kenya’s economy grew 4.9% in Q1 2025, driven by agriculture and manufacturing. The report notes that with stable weather, lower global oil prices, and better macroeconomic policies, the outlook remains cautiously optimistic.
To unlock growth, the AfDB urges Kenya to expand the tax base, formalize the informal sector, and boost investment in agriculture, mining, fintech, and renewable energy.
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