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07.04.2025

Kenya: Exchange Control Insights

Author
Emmanuel Laalia
Partner
Kenya
View Profile

Kenya is a dynamic and rapidly growing economy and the leading economy in the Eastern African region. It is characterised by a diverse and young population, vibrant market, skilled manpower, high mobile phone and internet penetration and a conducive business environment. With the growing tech ecosystem, a well established financial system and a dynamic cultural environment, Kenya is often referred to as the Silicon Savannah.

As the Eastern Africa’s regional economic powerhouse, Kenya is a gateway into the region. It has made significant strides in infrastructure, technology and governance, creating a favourable environment for businesses. It is a prime destination for international investors. Alongside South Africa, Nigeria and Egypt, it has been one of the ‘big four’ destinations for private capital for several years.

With ongoing infrastructure projects, a strong tourism sector, and increasing consumer demand, Kenya offers diverse opportunities across industries, including agriculture, technology, real estate, manufacturing, and renewable energy.

1. Legal framework

1.1. What laws and regulations govern exchange control regime in your jurisdiction?

As Kenya does not have exchange control restrictions, it does not have a legal regime for exchange control. However, the Central Bank of Kenya Act and the Capital Markets Act and the subsidiary laws made under this deal with some foreign exchange aspects such as licensing of foreign exchange businesses. In the recent past, we have observed the Central Bank, in exercise of its supervisory power over banks, requiring them to avoid speculative foreign exchange trading and limiting the spread between buying and selling rates when dealing with business customers.

1.2. Which bilateral and multilateral exchange control instruments have an effect in your jurisdiction? How is regulatory cooperation and consolidated supervision ensured?

This is not applicable.

1.3. What are the current priorities of regulators and how do they work with the banking industry?

The Central Bank exercises incidental powers when dealing with banks, in limited aspects of foreign exchange matters.

2. Exchange control regime

2.1. Can a subsidiary or affiliate repatriate money to a non-resident parent company?

Yes. The only procedures to be had regard to are anti money laundering procedures.

2.2. Is there limitation of transfer of foreign currency to procure goods or payment for services to non-resident person?

No.

2.3. Can a subsidiary easily make payments for intra-group transactions?

Yes.

2.4. Are there rules against intercompany netting off?

No.

2.5. Are permits required to transfer money to a third party or non-resident entity for procurement of goods or services?

No.

2.6. What requirements or documentation must be in place before banks authorize requests for international transfers?

Anti-money laundering and terrorism financing documentation such as documents supporting the reasons for payment.

2.7. Have there been recent directives issued by your Central Bank on Exchange Control?

No directives, but the Central Bank issued a Forex Code for commercial banks in 2023, with the objective to strengthen and promote the integrity and effective functioning of the wholesale (interbank) foreign exchange market.

3. Exchange control contraventions

Enforcement

3.1. Which entities are responsible for enforcing the relevant laws and regulations? What powers do they have?

This is not generally applicable. As regards licensing of foreign exchange businesses, the Central Bank and the Capital Markets Authority are responsible. Sanctions The Central Bank and the Capital Markets authority can give directives to their licencees and suspend or revoke licences.

3.2. What sanctions are applicable in the event of a violation of the exchange control regime?

Not applicable.

4. Trends and forecasts

4.1. How would you describe the current exchange control regime and trends in your jurisdiction? Are there any plans for further developments in the next 12 months, including proposals for legislative reforms?

There is no restriction in foreign currency holding and exchange. This is not expected to change in the next 12 months.

4.2. Does your jurisdiction regulate cryptocurrencies? Are there any legislative developments with regard to cryptocurrencies or financial technologies in general?

Presently, there are no laws regulating cryptocurrencies and fintech in general (there are laws with interface with fintechs such as money transfer laws) but there are proposals to enact such laws.

Author
Emmanuel Laalia
Partner
Kenya
View Profile
Article published in WTS Africa Quarterly Newsletter #2/2025
Recent tax developments in Africa
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