The Central Bank of Kenya (CBK) has announced it will lift a nearly ten-year moratorium on licensing new commercial banks, effective July 1, 2025. The move marks a significant policy shift and opens the door for new entrants into one of East Africa’s most dynamic banking markets.
The moratorium, initially imposed on November 17, 2015, was a response to governance, risk management, and operational challenges that had led to the collapse of several small banks. CBK cited the need to stabilize and strengthen the banking sector at the time, and the freeze allowed for deep reforms in supervision and transparency.
In a statement, CBK noted that the decision to lift the moratorium follows substantial progress in regulatory and supervisory frameworks. The banking regulator pointed to improved oversight, increased transparency, and a spate of consolidations through mergers and acquisitions that have bolstered the sector’s resilience. These developments have also attracted a mix of domestic and international investors, signaling growing confidence in Kenya’s banking industry.
Kenya currently hosts 46 licensed banks, of which 39 are commercial banks. According to CBK data, 24 of these are privately owned and locally based, while 15 are foreign-owned institutions.
The reopening of the licensing window comes in the wake of the enactment of the Business Laws (Amendment) Act, 2024, which raised the minimum core capital requirement for commercial banks to KSh10 billion. This new threshold is a key condition for any institution seeking entry into the sector.
“New entrants will be required to demonstrate that they can meet the enhanced minimum capital requirements,” said CBK.
The central bank maintains that stronger, better-capitalized banks are crucial to weathering growing financial risks in domestic, regional, and global markets. Additionally, such institutions will be better positioned to support Kenya’s economic development by financing large-scale infrastructure and industrial projects.
The lifting of the moratorium reflects Kenya’s broader ambition to strengthen its financial sector and attract strategic investors, enhancing the country’s position as a financial hub in the region.
