The number of companies seeking to close shop — forced and voluntary closures — increased at a higher rate than firms registering to operate in the year ended June 2025, with 2,260 firms applying to the Business Registration Services (BRS) approvals to wind up.
This figure rose by 24.3 per cent from the 1,817 firms that sought to cease operations in the year ending June 2024, according to BRS data.
But, the number of firms seeking to do business in the country rebounded in the year to June 2025, with 138,000 companies being registered, a marginal rise of 1.3 percent from the 136,209 cleared to set up shop a year earlier. This signals mixed fortunes for companies in Kenya’s business landscape.
“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.
BRS did not, however, disclose the reasons behind the recovery in the number of companies seeking to set up in the country, amid concerns that Kenya’s business environment is worsening, mainly due to increased taxation and operational costs.
Employers are by law required to deduct 1.5 percent from the gross monthly pay of their workers, match it and remit it towards the affordable housing levy. This mandatory tax took effect in March 2024.
Firms are also required to match the contributions of their workers to the National Social Security Fund (NSSF). The rates of these contributions, especially for top-earning workers, have increased significantly since February this year.
The higher NSSF rates for workers, which employers must match, have increased the cost of doing business, hitting those grappling with depressed sales and margins the hardest.
Firms have struggled with falling demand for their goods for most of last year due to hard economic times that forced consumers to cut back on spending.
Most of the firms that have been forced to close have cited tax disputes with the Kenya Revenue Authority, dwindling customer numbers and increased operational costs.
The Companies Act Section 897 requires firms to apply to the BRS whenever they intend to close shop. The applications include the reasons as to why the company intends to shut down.
The year to June 2023 remains one of the best in the country’s measure of the business environment with company registrations growing 9.21 percent to 145,284, while closures dipped 7.2 percent to 2,030.
