A brutal economic storm swept through Kenya in 2025, forcing a wave of corporate closures and market exits that have shaken the country's reputation as East Africa's premier investment hub. From storied auto dealers to financial institutions and manufacturers, the steady drumbeat of shutdowns has left thousands of Kenyans without jobs and raised urgent questions about the sustainability of the nation's economic policies.

The core of the crisis stems from a potent cocktail of challenges: a tough tax regime, soaring operational costs, currency volatility, and shrinking consumer demand. This toxic mix created an environment many businesses found simply unviable, culminating in a year of painful economic reckoning that directly impacts the livelihood of ordinary citizens.

The Great Exodus

The list of casualties in 2025 is long and diverse. The year began with hundreds of firms being officially dissolved. A gazette notice from the Registrar of Companies on January 3, 2025, announced the dissolution of 202 companies, a move that set the tone for the months to follow. By September, another 140 companies were slated for closure, spanning critical sectors like technology, healthcare, real estate, and energy.

Several household names were among those who pulled out or wound up operations:

• CMC Motors: After 40 years in the region, the automotive group ceased all operations in Kenya, Tanzania, and Uganda on January 17, citing unsustainable operational costs, economic pressures, and currency depreciation.
• Bank Al-Habib: The Pakistani bank officially exited Kenya on May 15 after a strategic review of its foreign operations, a decision confirmed by the Central Bank of Kenya.
• D.T. Dobie: One of the country's oldest auto firms, D.T. Dobie was placed under liquidation, marking the end of its 75-year run as a standalone corporate entity, though its operations were merged into CFAO Motors.
• Angaza Kenya Ltd: The social enterprise, focused on solar products for off-grid communities, entered voluntary liquidation in December after a resolution by its members.

These high-profile exits were compounded by the deregistration of hundreds of smaller enterprises, often for inactivity or failure to file annual returns, pointing to a widespread struggle across the board.

Policy, Pressure, and a Shrinking Wallet

Analysts and industry bodies point to a confluence of factors that made 2025 exceptionally difficult. The Kenya Association of Manufacturers (KAM) consistently warned of a challenging environment, with a majority of its members expressing a negative outlook on the economy. In a Q2 survey, 83.3% of manufacturers cited high taxation and low demand as the primary barriers to growth.

The Finance Act of 2025, while aimed at modernizing the tax system, introduced measures that businesses found punitive. A new five-year cap on carrying forward tax losses, for instance, disadvantaged companies with long investment cycles or those recovering from previous downturns. For small and medium-sized enterprises (SMEs), a hike in the turnover tax from 1% to 3% squeezed already thin margins. “We are living in very, very challenging times at the moment. Businesses are shrinking, companies are folding and laying off employees,” noted business commentator Eric Kimani, stating that some businesses were surrendering up to 35% of their earnings to taxes.

This pressure was magnified by expensive credit and rising energy costs, which eroded profitability and made survival a daily battle. The result was a vicious cycle: as companies laid off staff to cut costs, household purchasing power shrank, further depressing demand for goods and services.

The Human Cost

Beyond the corporate announcements and economic data lies a devastating human toll. The Federation of Kenya Employers (FKE) warned that tens of thousands of formal jobs had been lost. Each closure, from a large manufacturer to a small SME, represents lost livelihoods for families, disrupted supply chains for local producers, and diminished hope for young graduates entering a bleak job market. The shutdowns in the manufacturing sector, which has a high multiplier effect on job creation, are particularly alarming for the nation's long-term economic health.

As 2025 draws to a close, the business community is looking to the government for urgent policy interventions. Industry leaders are calling for a more predictable tax environment, relief on energy costs, and access to affordable credit to stop the bleeding. Without a fundamental shift, they warn, Kenya risks witnessing another year of corporate departures, further undermining its goal of achieving sustainable, inclusive growth for all its citizens.