A Comprehensive Guide To Doing Business In Kenya: Focus On The Technology Sector – Part 1

OVERVIEW

The Republic of Kenya, one of the world's largest countries in terms of land mass situate in East Africa is found to have a very resilient economy despite the level and number of challenges that it has faced over the years, including corruption, leading to misuse of funds and a high debt load; poverty and inequality; climate change issues; and in more recent times, severe liquidity crunch and inflationary pressures, subdued business sentiment following the mid-2024 protests, and reduced public spending amid ongoing fiscal consolidation efforts. Despite all these, Kenya's GDP still ranks within the top 10 African countries with the highest GDP in 2025. The Government is also taking active efforts in stabilizing the economy and improving the regulatory and infrastructural framework in place to allow for a more favorable investment environment. The opening of the banking sector promises more inflow of funds and the amendment to the business laws reflects an understanding on the need for relevant changes. The market size equally offers a lot of opportunities for investment and growth. In 2010, Kenya was dubbed the Silicone Savannah due to the amount of startups that were emerging in the market across different sectors. By 2015, it was recognized as an IT hub and by 2024 had over 150 tech startups. Despite the shutdown of a number of start-ups due to several issues, Kenya is not perturbed and the new Silicon Savannah Innovation Park, R135 Million Euros initiative aimed at promoting research and innovation in Kenya and across Africa in alignment with Kenya's vision 20130 for the bottom up transformation of the nation into a newly industrializing middle-income country has emerged like a beam of light. This guide seeks to help investors navigate through the Kenyan business environment and overcome the challenges in the space. It would provide insight on the regulatory framework, opportunities, risks as well as cultural nuances that need to be considered when delving into the tech space in Kenya.

A. SECTOR SPECIFIC REGULATORY LANDSCAPE

The technology sector cuts across different industries including manufacturing, financial, agriculture, retail and e-commerce, transportation, food and beverage, amongst others. In light of this, the regulatory framework is largely determined by the industry in which the tech company operates in addition to other general regulations applicable for businesses. Under this section, in addition to the general regulatory framework, we will be identifying a few of the major industries in which technology now plays a crucial role and the regulatory requirements under each sector.

General Regulatory Landscape: Structure and Key Institutions

Sector specific regulatory landscape for different technology industries

1. Fintech

Kenya's fintech sector has revolutionized financial inclusion through mobile platforms. The launch of M-Pesa set a global precedent in mobile money adoption. Building on this momentum, fintechs such as M-KOPA and Cellulant have attracted international investors, with M-KOPA raising over $250 million in funding.

The Central Bank of Kenya (CBK) oversees the licensing of digital lenders and payment platforms through instruments like the Digital Credit Providers Regulations (2022) and the National Payment Systems Act. Additionally, fintechs involved in capital markets are regulated by the Capital Markets Authority (CMA). Savings and Credit Co-operative societies need to be registered with Sacco Societies Regulatory Authority (SASRA).

2. Agritech

Agritech startups in Kenya are using technology to address food supply inefficiencies, farm productivity, and market access. Companies like Apollo Agriculture, which helps farmers with financing, training, quality farming input and Insurance.

This sector benefits from growing smartphone usage and mobile-based platforms that support supply chain optimization, market price transparency, and access to agricultural financing. The integration of digital technologies in agriculture aligns with Kenya's broader food security and rural development agenda.

Kenya's Agritech regulatory framework is anchored in the Constitution and the Agricultural Sector Development Strategy. It is overseen by the Ministry of Agriculture, the Agriculture, Fisheries and Food Authority (AFFA), and county governments. These bodies operate under laws like the Agriculture Act (Cap. 318), which promotes research, technology use, and quality control in agriculture.

The Kenya Integrated Agriculture Management Information System (KIAMIS) supports secure data sharing and planning, aligned with the Data Protection Act (2019). The framework also follows East African standards, such as food crop packaging limits and hygiene rules.

Guided by policies like the National Agroecology Strategy and the Climate Smart Agriculture Implementation Framework, the focus is on promoting technology, sustainability, food security, and transparency across the sector.

3. E-Commerce: Emerging Digital Marketplaces

Kenya's e-commerce sector is growing steadily, supported by increasing internet penetration and the rise of digital payment solutions. Although still behind more mature markets, platforms are gaining traction as urban consumers adopt online shopping for convenience and variety.

Challenges such as logistics and trust barriers are being addressed through investment in infrastructure, digital identity solutions, and policy support. As disposable incomes rise and digital familiarity grows, the sector is expected to expand significantly, creating openings for both B2C and B2B platforms.

Kenya's e-commerce is primarily governed by the Kenya Information and Communications Act (KICA) 2009, amended in 2013. It legally recognizes electronic contracts and signatures, enabling secure digital transactions. The Communications Authority of Kenya (CAK) regulates the sector, ensuring consumer protection and stability in the digital market.

Supporting laws include the Data Protection Act for personal data privacy, and the Computer Misuse and Cybercrimes Act, which addresses cybersecurity threats. The National Computer and Cyber Crimes Coordination Committee (NC4) oversees broader cyber policy, including blockchain and mobile money risks.

Other key laws are the Competition Act, promoting fair online business practices, and tax regulations like the Digital Service Tax. The framework also supports secure payments, intellectual property rights, and digital inclusion.

Ongoing efforts aim to adapt to emerging tech, bridge the digital skills gap, and strengthen FinTech regulation—ensuring Kenya's digital economy remains secure, fair, and inclusive.

4. Artificial Intelligence and Software as a service(SaaS): Digital Transformation Tools

Artificial Intelligence and SaaS represent the next frontier in Kenya's tech ecosystem. AI applications are emerging in healthcare diagnostics, agricultural monitoring, and financial modeling. Meanwhile, SaaS platforms are streamlining operations for startups and SMEs in accounting, HR, and customer relationship management.

These solutions are particularly attractive due to their scalability and affordability, which meet the needs of cost-sensitive businesses in emerging markets. The growth of cloud infrastructure and supportive policies by the Communications Authority of Kenya (CAK) bolster adoption.

Kenya is gradually developing its regulatory framework for AI and SaaS, aiming to align with global trends while encouraging responsible innovation. Although there is no standalone AI law yet, existing legislation like the Data Protection Act (2019) is being adapted to address AI-related concerns, particularly around data protection and privacy.

In 2024, the Kenya Bureau of Standards introduced the DKS 3007 Code of Practice to provide guidance on AI applications and risk management. The National AI Strategy (2025–2030) is now being rolled out, emphasizing digital infrastructure, data, and research to support AI growth through public-private collaboration. A National AI Policy is also expected by late 2025, drawing inspiration from frameworks such as the EU's AI Act and the African Union's AI Strategy.

Other developments include KICTANet's ongoing work on an AI Statement of Principles focused on ethics, human rights, and privacy, and the proposed Kenya Robotics and Artificial Intelligence Association Bill (Still undergoing review), which seeks to establish a professional regulatory body for AI and robotics.

The evolving regulatory landscape highlights key concerns around transparency, accountability, ethical use, and the need for robust digital infrastructure. Kenya's biggest challenges will be enforcing these policies effectively, balancing innovation with regulation, and keeping up with the rapid pace of AI advancement.

Risks and Enforcement Penalties

Kenya's regulators impose significant penalties for non-compliance:

• CBK can fine up to KES 5 million and revoke licenses.
• CMA may impose fines up to KES 10 million or 5 years' imprisonment.
• ODPC can fine violators up to 1% of turnover or KES 5 million.
• Financing reporting centre (FRC) can initiate criminal charges for money laundering or reporting lapses.

B. INCORPORATING A COMPANY IN KENYA

1. Step by step incorporation process

A foreign company cannot do business in Kenya without being registered in Kenya, it is important to consider the following steps:

1. Determine the Type of Presence in Kenya
   A foreign entrant could either register as a local entity,a subsidiary of a foreign entity or a branch of a foreign entity. The major difference between both for tax purposes is that the residence of a local entity is Kenya and as such will be liable to pay tax on their worldwide income. On the other hand, the residence of a branch is the country of the head office and as such would only be entitled to pay tax on the income attributable to the branch in Kenya.
2. Reserve a Company Name
   The foreign entrant is to provide 3 alternative names for registration. The authority will approve a name that does not conflict with existing names and may request for a change of the name if it does conflict.
3. Register the Foreign Company on the eCitizen portal and pay the prescribed fee
   An application shall be made to the Registrar of Companies for the registration of a company in Kenya and the applicant shall provide certain information and documents required for registration as below:
   
   1. Physical address of the Company in Kenya
   2. Email address and phone number of the Company
   3. Purpose/Objects of the business
   4. Share capital of the company
   5. Names, nationality and contact details of the persons that will stand and directors, shareholders and company secretary.
   6. If one of the shareholders is a company, the Certificate of incorporation of that company as well as its charter, statutes, or memorandum and articles of association
   7. List of beneficial owners of a corporate shareholder
   8. A copy of the passport photograph and means of Identification of each director, shareholder and company secretary.
   9. Forms will be generated for signing by relevant parties.
   10. Once the registration has been approved, a certificate of incorporation and a document detailing the particulars of directors and shareholders will be...
4. Appoint a Local Representative
   This is mandatory where none of the directors foreign are permanently resident in Kenya or where it is a branch that is being registered. A local representative will be required to ensure compliance by the Company and may be personally liable for non-compliance. In this case, a memorandum of appointment of the local representative and the means of identification of the representative will be required. The local representative would also be deemed to be the tax rep of the company.
5. Tax Registration:
   Where the directors are not resident in Kenya, they would need to obtain their KRA PIN but this cannot be successfully done without a work permit. In addition, the Company also needs to apply to the Kenyan Revenue Authority for the issuance of a KRA PIN.
   Once a company is duly registered, it will be issued with Company registration documents: a certificate of incorporation and a document detailing the particulars of directors and shareholders. These forms are presented for the application for the KRA PIN.
6. Business permit
7. Work Permit
8. Sector-Specific Compliance Requirements:
   The Company will need to comply with other sector specific registration as previously highlighted.

II. KEY GOVERNMENT BODIES AND AGENCIES INVOLVED IN THE INCORPORATION PROCESS

The incorporation of a foreign tech company in Kenya is governed by a number of legal and regulatory frameworks enforced by multiple government agencies. These agencies are as follows:

1. Business Registration Service (BRS)

The Business Registration Service (BRS) is the statutory body mandated to register and incorporate companies in Kenya under the Companies Act 2015. A foreign fintech company wishing to establish a branch or subsidiary in Kenya must register with the BRS and obtain a Certificate of Compliance as stipulated under Sections 974 to 980 of the Companies Act. This process is administered via the government's digital platform, eCitizen.

The BRS ensures that foreign companies meet legal requirements for registration, including disclosure of directors, local representatives, and registered office addresses in Kenya. Without this foundational step, no fintech entity—foreign or domestic—may lawfully operate in the country.

2. Kenya Revenue Authority (KRA)

The Kenya Revenue Authority (KRA) administers tax laws and ensures compliance with Kenya's fiscal framework. Any foreign fintech company must register for a Personal Identification Number (PIN) and comply with the Income Tax Act, Value Added Tax Act, and Tax Procedures Act.

In particular, the Finance Act of 2020 introduced the Digital Service Tax (DST), applicable to non-resident companies offering digital services to users in Kenya. This includes foreign fintechs offering online lending, insurance, or investment services through web or mobile platforms. Under Section 12E of the Income Tax Act, the DST is levied at 1.5% of the gross transaction value.

3. Directorate of Immigration Services

The Directorate of Immigration Services is a government agency under the Ministry of Interior responsible for managing immigration and residency matters for foreigners and citizens in Kenya. They are in charge of issuing work Permits, which can be either Class G for foreign investors/business owners or Class D for foreign employees with technical skills. Also, Issuance of Alien Cards, which is mandatory for foreigners staying over 90 days in Kenya serves as a foreign resident ID.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.