British businesspeople say the regulatory uncertainty and complex tax administration in the country are a major setback to investing locally
British investors now say that corruption is among the key structural barriers that have made it increasingly difficult for them to do business in
Kenya.
They are also concerned about the country’s high energy costs, which they stated undermine competitiveness, as well as frequent power outages that disrupt production.
The Britons added that the regulatory uncertainty and complex tax administration in Kenya are a major setback to investing locally, which creates risk where clarity is needed.
“British companies tell us that doing business in Kenya has become harder. Some investors have scaled back or exited, not for lack of opportunity but because of structural barriers,” British Deputy High Commissioner to Kenya Dr Ed Barnett says.
“Corruption and Kenya’s grey listing by the Financial Action Task Force raise compliance costs and reduce investor confidence. These challenges affect businesses, limiting gains in job creation.”
These revelations come at a time when the country hosted the inaugural UK-Kenya business forum this week, and as the trade between the two partners reached £2.1 billion (Ksh350b).
However, high-level Kenyan government officials attending the forum that was held on Thursday (January 22, 2026) did not delve directly into investment bottlenecks that their British investors had raised.
When he took to the podium, Investment Promotion Principal Secretary Hassan Abubakar defended the heavily criticised sale of public assets that has raised eyebrows among government critics.
The PS only reiterated on the existing cooperation between the two Kenya and Britain which is the fourth country with high foreign direct investments in Kenya.
“We have already renewed our strategic partnership with the UK for the next five years. Two, we have a bilateral investment treaty with the UK to make sure our investments are protected. Three, we have a double taxation agreement with the UK to make sure that your income is not double-taxed,” Abubakar said.
He added that Kenya has adjusted the partnership to factoring geopolitical tensions, the sustainability imperatives, and the technological innovations.
“Our renewed strategic partnership is anchored on the drivers of the future, which means the technology and the digital trade, green growth and clean energy, infrastructure and financial services,” the PS stated,
Abubakar, who was long on marketing the newly privatised Kenya Pipeline Company, which was listed on the Nairobi Stock Exchange this week after the government put its 11.8 billion shares on sale, told investors at the forum that the government is moving away from public to private investments to raise money to fund government projects.
“We, as government, are selling 65 per cent of our jewel, almost 11.8 billion shares at Ksh9 per share, and we’re selling it through the Stock Exchange. We have a bottom-up economic transformation agenda and for us to fund that agenda we need finances and investment,” Abubakar said.
The PS narrated how the government had explored various options before resorting to the sale, but could not find any viable pick that could fund President William Ruto’s development blueprint.
“We have three options. One is to beg, and become a money-begging destination. We say no. The second one was to borrow, to become a lending destination. We say no,” he said.
“The third way was to raise our own taxes to fund. The Genz said no. So, what were we to do? We have to shift to private investment to fund this programme of action to achieve our objectives.”
Abubakar added: “The president was very clear that the proceeds of the privatisation will not be used for recurrent purposes or for budget support. But it will be used as seed capital for a national infrastructure fund that will commend our infrastructure to turn to Singapore.”
Last year, Kiharu MP Ndindi Nyoro, who has become a fierce government critic, especially in the sale of public assets warned that the price of KPC shares would dip significantly after the initial public offer and the government could be at a loss.
“The current trend in NSE has been bearish this year, the companies listed are grossly undervalued. The sale of KPC will bring a lot of excitement. Kenyans will buy during the IPO, but after the announcement of the financial investment in February for the whole year, the share price will collapse,” Ndindi said on the floor of the House.
“The current investors in the NSE are not buying assets; they are buying revenue.”
Currently, there are about 150 British companies operating in the country and employing over 250,000 Kenyans.
Data from the British Department of Business and Trade shows that the UK exported to Kenya amounted to £792 million (Ksh137b) in 2025, an 8 per cent increase, equivalent to £59 million (Ksh10b) compared to 2024.
In the same year, Kenyan exports to the UK market hit £1.3 billion (Ksh224b), a 14.4 per cent increase, equivalent to £164 million (Ksh28.3b) compared to 2024.
During the forum, Kenya and the UK entered three new partnerships to boost skills, innovation, and clean growth that culminated in UK’S Scottish College, Forth Valley College and Kenya’s National Industrial Training Authority (NITA) signing an Memorundum of Understanding.
Currently, Kenya is also benefitting from Manufacturing Africa, a programme the British Council says, de-risks manufacturing investments having supported 21 deals to financial close, raising over Ksh103.5 billion in Foreign Direct Investment, and creating over 35,000 jobs.
Additionally, the Council says the Sustainable Urban Economic Development Programme (SUED) has invested Ksh1.3 billion in seed capital to support agribusinesses to invest in Kenyan towns, creating over 14,000 jobs and attracting a further Ksh7.9 billion (GBP 46 million) in private investment. By Samuel Kariuki, People Daily