Kenya Private Sector Alliance (KEPSA) has released a new report titled: Kenya’s Cost of Doing Business and How Businesses Are Navigating in 2026.

The report provides a timely and in-depth analysis of the evolving business environment in Kenya, highlighting the key cost drivers that affect enterprises and the adaptive strategies employed across sectors.

The release comes at a time when Kenya’s economy is showing signs of stabilisation, with growth projected at between 4.9-5.2 per cent in 2026, supported by easing inflation, a relatively stable currency, a rebound in the services sector, stronger private consumption and renewed export momentum.

These indicators signal a recovering economy and present a foundation upon which businesses can rebuild confidence. However, as KEPSA indicates in the report that the positive outlook coexists with deep-rooted structural constraints that raise the cost of doing business.

“At the micro-level, businesses are feeling the pinch. CEOs report that high operating costs are the greatest constraint to growth with electricity tariffs accounting for up to 35 per cent of manufacturing production costs. Logistics remain expensive due to infrastructure gaps and the 30 per cent corporate tax rate limits reinvestment, precisely when flexibility is most needed to navigate war-driven energy shocks,” KEPSA Chair Jaswinder (Jas) Bedi is quoted in the report.

Fuel price volatility further exposes businesses to the high costs, as Kenya remains vulnerable as a net importer, especially in the wake of the US-Israel-Iran war.

Yet, in response to these pressures, the report highlights how Kenyan businesses are demonstrating remarkable adaptability and ingenuity. Cross-industry consortia are forming to negotiate bulk energy and import procurement, mitigating global supply shocks.

Firms are expanding into African Continental Free Trade Area (AfCFTA) markets to diversify beyond tariffs and localise critical inputs to reduce reliance on conflict-affected regions, while investing in renewable energy solutions to reduce dependence on the national grid.

“As the voice of over two million businesses directly and indirectly, KEPSA remains committed to continue championing reforms that will ease these burdens and unlock growth. Key priorities have been introducing tiered energy pricing for SMEs, expanding green investment incentives and developing seamless digital trade systems,” KEPSA CEO Carole Kariuki in the publication says.

It also shares real-life stories of businesses accelerating the adoption of digital technologies, including artificial intelligence for smarter inventory management and cloud-based systems for leaner operations, achieving notable reductions in overhead costs.

“This edition of the Kenya Business Channel Magazine, a KEPSA production, carries the lived experiences of how businesses, large and small, are navigating the high cost of doing business. Because in many ways, the very pressures we navigate daily are becoming catalysts for reinvention and growth.

A quiet determination that continues to propel Kenya’s private sector forward in uncertain times,” says Josephine Wawira, KEPSA’s head of corporate communication and the publication’s executive editor.

As Kenya navigates a complex global and domestic economic environment, this publication serves as a critical resource for policymakers, investors and business leaders seeking to understand the realities on the ground and the pathways toward a more competitive and inclusive economy.

For instance, Priscilla Kerebi, a youth skills development advocate and co-founder of Edsource Africa, says: “The cost of doing business in Kenya will not be reduced by policy reforms alone. It will also depend on how intentional we are in integrating youth, including young women and other historically excluded groups, as innovators, technicians, entrepreneurs and problem-solvers. Inclusion is not a social add-on; it is an economic multiplier.

When youth are productively engaged, businesses benefit from lower recruitment costs, stronger local supply chains, and greater operational efficiency.”

• A Tell Media / KNA report / By Joseph Ng’ang’a