Rising costs force 2,260 companies to exit as 138,000 enter market
According to the Business Registration Service (BRS), 2,260 firms applied to cease operations in the year ending June 2025, a 24.3 per cent increase from 1,817 closures recorded in the previous year.
Kenya’s business environment is showing mixed signals, with more companies closing their doors even as new registrations tick up slightly.
According to the Business Registration Service (BRS), 2,260 firms applied to cease operations in the year ending June 2025, a 24.3 per cent increase from 1,817 closures recorded in the previous year.
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Meanwhile, new businesses registered in the same period reached 138,000, a small rise of 1.3 percent from 136,209 in the year before, highlighting the uneven fortunes within the country’s corporate sector.
“Despite the dissolution of business entities, it is important to highlight that the rate of new company registrations far exceeds the dissolved entities,” BRS said in a statement.
The surge in closures has been linked to a tougher operating environment, driven by higher costs and tax obligations.
From March 2024, employers must deduct 1.5 per cent of workers’ gross monthly pay and contribute the same amount to the affordable housing levy.
In addition, companies are required to match employee contributions to the National Social Security Fund, with increased rates for top earners taking effect in February 2025.
These added financial burdens have particularly affected businesses with tight profit margins, forcing some to shut down amid weak demand for goods and services.
Many companies pointed to disputes with the Kenya Revenue Authority, rising operational expenses, and declining customer numbers as the primary reasons for closure.
Under Section 897 of the Companies Act, any business intending to close must file an application with BRS, stating the reasons for the decision.
Two years ago, the business climate appeared healthier, with company registrations growing 9.21 per cent to 145,284, while closures fell 7.2 per cent to 2,030.
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