9,441 companies in Kenya close shop in five years

Some 9,441 registered companies in Kenya closed shop in the past five years with many of them crashing out on hard economic times.

Some of the companies, however, were just short-term business vehicles set up for specific purposes such as bidding for tenders before closing shop.

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Data from the Business Registration Service (BRS) shows 2,030 firms were struck off by the Companies Registrar in the financial year 2022/23 to add to 2,189 firms that wound up in the previous year.

Deregistration rose during the Covid-19 pandemic that caused chaos in key sectors, especially trade, transport, tourism, food and accommodation.

The registrar dropped 435 firms in 2017/18 and rose to 992 in 2018/19. This number increased significantly to 1,255 in 2019/20 and 2,540 a year later.

“Most of the companies voluntarily applied to be struck off after having closed their operations,” BRS Director-General Kenneth Gathuma told Business Daily.

According to the Companies Act, asking to be deregistered can only be done if a company has not changed its name or engaged in any other activity three months before the application.

The process of company dissolution can be instigated by the registrar in case the office believes the company is no longer operating.

The growing number of companies that are bowing out could signal the growing difficulties in the local business environment, especially aggressive taxation, increased cost of inputs such as energy and dwindling business.

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But this also comes at a time new business registrations are growing at a record number as more individuals set up their own ventures at a time unemployment remains high.

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