In this comprehensive guide, we will answer the 20 frequently asked questions (FAQs) about running a successful business in Kenya.
Entrepreneurship skills in Kenya and across Africa remain alarmingly low. A significant portion of the population lacks fundamental knowledge on how to start an manage a business successfully. Consequently, entrepreneurship culture is low and there are high chances of business failure. This post will empower you as an aspiring entrepreneur to navigate the early stages of business with confidence, competence and ease.
Are you Curious what a business is? different types and sizes of business in Kenya? Or are you interested in learning how to start your own business and secure financing? Here are are your FAQs answered
What is a business?
A business is an organisation or entity that provides goods or services in exchange for money. It is involved in the production, sale, or provision of goods and services to others willing to pay for it . Businesses can be started to make the owners some money ( for-profit businesses), or to fulfil a charitable mission or further a social cause (not-for-profit business) However no matter the intent, Businesses exist to meet the needs and wants of their customers or beneficiaries.
What are the different types of businesses in Kenya?
Common types of businesses in Kenya include retail stores, restaurants, farms, factories, consulting firms, technology startups, construction companies, and service providers (e.g., banks, salons, hospitals, academies, restaurants etc.).
How are businesses classified in Kenya?
Businesses in Kenya can be classified based on various criteria, including economic sector, legal structure, ownership and sizes as illustrated below
- Industry or economy sector; i.e agriculture, manufacturing, services
- Legal structure; i.e. sole proprietorship, partnerships, companies, and branches of foreign companies. Others recognised by law and awarded certificates include cooperatives and societies such as CBOS, associations, political parties, churches etc.
- Ownership; i.e.private, public (parastatals)
- Business size; i.e.Micro, small, medium, large
How are businesses classified by size in Kenya?
In Kenya, businesses are typically classified based on their annual turnover, number of employees, or asset value. There are specific thresholds set by government agencies and financial institutions. According to Micro and Small Enterprises Policy of 2020, The following are key business sizes in Kenya.
| Business Size | No. of Employees | Annual Turnover (Ksh) | Asset Value (Ksh) |
| Micro-enterprises | 1-10 | <500,000 | < 5 million |
| Small enterprises | 10-50 | 500,001 to 5,000,000 | 5-20 million |
| Medium-sized enterprises | 51-250 | 5,000,001-100,000,000 | Upto 125 million |
| Large enterprises | over 250 | Over 100,000,000, | Over 125 million |
How do you name a business in Kenya?
In Kenya, the law regulates business names and branding through the Business Names Act and the Trademarks Act.
- The Business Names Act governs the registration and use of business names for sole proprietorship and partnership businesses with the Registrar of Business Names. This will ensure transparency and credibility of your business as well as help prevent fraudulent activities.
- The Trademarks Act governs the registration and protection of trademarks, which include logos, symbols, words, or phrases used to identify and distinguish goods or services of one business from those of others. Registering a trademark provides legal protection against unauthorised use by competitors and allows businesses to build brand recognition and goodwill.
While choosing a name or brand for your business in Kenya, consider factors such as relevance to your industry, uniqueness, availability of domain names and social media handles, and cultural considerations. Remember to conduct a name search with the Business name registration Services (BRS) on Ecitizen to ensure the name is not already in use.
What legal requirements do I need to fulfil to start a business in Kenya?
To start a business in Kenya, you need to register your company with the Registrar of Companies, obtain necessary licenses and permits from relevant authorities (e.g., business permits, health licences), and comply with tax regulations (e.g., obtaining a tax identification number, VAT registration).
Furthermore, foreign nationals intending to establish a business in Kenya must secure the requisite work permits from the Ministry of Labour. Depending on the industry, specific licenses and permits are also necessary, with regulatory bodies such as the EPRA for gas or petrol stations. Other requirements include Compliance with employment laws, intellectual property protection, environmental regulations,, and corporate governance standards sis equally imperative to ensure legal and ethical business operations.
What are the benefits of registering a business in Kenya?
Registering your business in Kenya has many pros than cons. The pros of registering a business in Kenya include; legal recognition, limited liability protection, access to government support programs and incentives, eligibility for financing opportunities, and credibility with customers, suppliers, and partners.
How do I protect my business idea or intellectual property in Kenya?
Intellectual property rights in Kenya can be protected through patents, trademarks, copyrights, and industrial designs. You can register your intellectual property with the Kenya Industrial Property Institute (KIPI) or the Kenya Copyright Board (KECOBO) to secure legal protection
Registering a patent in Kenya can be a lengthy process, taking 3–5 years. You’ll need to pay a filing fee of approximately Ksh3,000 when applying, and another fee of about Ksh3,000 after 18 months for publication. If your patent is accepted, you’ll pay Ksh5,000 for examination and Ksh3,000 for grant fees. It’s important to remember that a patent is valid for 20 years from the date of application..
What free resources are available to help entrepreneurs start and grow their businesses in Kenya?
Entrepreneurs in Kenya can access various resources and support services, including business incubators, accelerators, entrepreneurship training programs, mentorship networks, government grants and loans, and networking events organised by industry associations and chambers of commerce.
What are the key considerations for business success in Kenya?
Key considerations for business success in Kenya include market research, customer understanding, effective marketing and branding, financial management, innovation and adaptability, compliance with legal and regulatory requirements, and building strong relationships with stakeholders.
What are the challenges of doing business in Kenya?
Challenges of doing business in Kenya may include bureaucratic red tape, corruption, infrastructure limitations, access to finance, and market competition. However, with proper planning and strategic management, these challenges can be overcome.
How can I access affordable financing for my business in Kenya?
Finance options for businesses in Kenya include bank loans, venture capital, angel investors, grants, and government-backed funding programs. It’s essential to explore various sources and choose the most suitable option based on your business needs.
What taxes do businesses in Kenya need to pay?
Businesses in Kenya are subject to various taxes, including corporate income tax, value-added tax (VAT), withholding tax, and excise duty. The tax rates and requirements vary depending on the nature of the business and its income.
What are the most profitable business ideas in Kenya?
The Key sectors driving the Kenyan economy include agriculture, manufacturing, tourism, information technology (IT), financial services, and renewable energy. You can consider the top or unique business ideas in each.
Read Next: The Most Profitable Business Ideas In Kenya In 2024
What are the labour laws and regulations in Kenya?
Labor laws in Kenya govern various aspects of employment, including wages, working hours, leave entitlements, and employee rights. Employers must comply with labor laws to ensure fair treatment of employees and avoid legal liabilities.
The Employment Act governs the rights and obligations of employers and employees in Kenya. It covers various aspects of employment, including contracts, wages, working hours, leave entitlements, and termination of employment.
