It’s no secret that the past few years have been tough on Kenyan businesses. If you’re an entrepreneur, you probably know exactly what I’m talking about. From the ripple effects of COVID-19 to rising costs, higher taxes, and a weakening shilling, many businesses have found themselves in survival mode. And now, with Kenya’s sovereign credit rating recently downgraded to B-, staying afloat has never felt harder.
Entrepreneurs are resilient and resourceful, but they’re tired. Tired of constantly fighting uphill battles. Tired of shouldering risk without enough support. The big question on many people’s minds is: Where do we go from here?
Survival has come at a cost
If you walk around Nairobi today or visit towns across the country, you’ll notice the scars. Shops closed. Offices downsized. Small businesses operating on a shoestring budget, their owners doing everything they can just to keep the lights on.
And it’s not just businesses that are hurting. Households are under pressure, too. A recent report found that nearly 60% of Kenyans are now dipping into their savings just to service debt. That’s not sustainable.
Many entrepreneurs I talk to are asking the same question: We’ve made it this far, but at what cost? And will things ever get easier?
What we learned from the pandemic
When COVID-19 hit, the world came to a standstill. Here in Kenya, industries like hospitality and tourism were decimated almost overnight. Retailers, manufacturers, and service providers all took massive hits.
But in the middle of that chaos, we saw something remarkable. Restaurants quickly pivoted to delivery services. Manufacturers started producing masks and sanitisers. Retailers who had never considered e-commerce were suddenly selling online. It was an incredible display of ingenuity and adaptability—something Kenyan entrepreneurs have always been known for.
That same spirit is what’s kept many businesses going, even as new challenges emerged.
The squeeze is getting tighter
Since the pandemic, things haven’t exactly bounced back. Global supply chain issues, inflation, and rising fuel prices have hit businesses hard. And for a country like Kenya, which imports so much, the weakening shilling has made everything more expensive.
This has meant higher costs across the board—for raw materials, transportation, and everyday goods. Consumer spending power has shrunk, and businesses have had to adjust by offering cheaper products, cutting costs, and running promotions. But all of that eats into already thin profit margins.
The funding gap
Not long ago, Kenya was buzzing with investment. In 2020 and 2021, even during the pandemic, we saw record venture capital inflows. Startups were raising millions. It felt like Nairobi was the Silicon Savannah people had always dreamed of.
Fast-forward to today, and the story looks very different. Funding has dried up. Banks are playing it safe with government securities instead of lending to SMEs. Interest rates are high, and venture capitalists are focusing on safer bets—companies that are already profitable.
For many small businesses, this has been devastating. They can’t grow because they can’t access affordable capital. And without growth, they risk stagnation or worse.
Taxes and red tape
The recently passed Finance Act has made life even harder for entrepreneurs. New levies, higher taxes, and increased compliance costs are squeezing businesses from every angle. VAT, PAYE, corporate tax—it’s all adding up. And for small businesses, the weight is often too much to bear.
On top of that, the regulatory environment can be painfully slow. Getting licenses, permits, or approvals is time-consuming and expensive. If we want to encourage entrepreneurship, we need to make it easier, not harder, for people to do business.
So, what’s the way forward?
Despite all these challenges, I remain hopeful. And that hope comes from the entrepreneurs I meet every day—the ones who refuse to give up.
Here’s what I believe can help:
Resilience isn’t enough
Kenyan businesses have shown incredible resilience. But resilience alone won’t sustain us. We need policies that back entrepreneurs, funding that enables growth, and a culture that celebrates local businesses.
As a country, we’ve come through some tough times before—and we will again. But it will take all of us: entrepreneurs, consumers, policymakers, and investors, working together to create a business environment where Kenyan companies can dream big and grow strong.
Because when our businesses succeed, Kenya succeeds.
Peter Fry is the Executive Director at Kua Ventures.
