Kenyan Startups Faced Harshest Climate in 2024 and 2025, Experts Say
Kenyan startups faced unprecedented challenges in 2024, and the tough economic conditions are still prevailing through 2025, making it one of the most difficult periods for newly established businesses.
This is according to business leaders and financial experts who spoke at a Nairobi event on Friday during MGK Consulting’s 25th anniversary celebration.
Eric Kimani, a business commentator and Executive Director of Palmhouse Dairies Limited, said the business climate has never been this unfavourable for emerging enterprises.
“The years 2024 and 2025 so far have been particularly challenging for emerging enterprises in the country, more difficult than it was in any other year before,” Kimani said.
He attributed the current hardship to harsh tax policies, shrinking consumer demand and a general decline in business confidence.
“We are living in very, very challenging times at the moment. Businesses are shrinking, companies are folding and laying off employees.”
Kimani highlighted that startups now surrender up to 35 per cent of their earnings to taxes, up from 30 per cent before 2023, tightening already slim margins.
His counterpart, Michael Kimani, Senior Partner and Chairman of audit and accounting firm MGK Consulting, echoed similar concerns.
He said over the past 18 months, the financial health of young and growing businesses has deteriorated, leading to slowed growth, increased closures, and less investor interest.
Insights by the Kenya Association of Manufacturers (KAM) SME Hub in April revealed that only two per cent of Kenyan startups successfully transition from small to medium and eventually large-scale enterprises, compared to a five per cent global average.
A separate report by the Communications Authority of Kenya indicated that nearly 80 per cent of startups in the country shut down within their first year of operation.
Only three to five per cent survive beyond that first year.
With consumer spending falling and business confidence shaken, Kenya’s startup ecosystem continues to struggle, even as experts urge policy reform to salvage the innovation pipeline and support youth-led enterprises.
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Kenyan Startups Faced Harshest Climate in 2024 and 2025, Experts Say