Private Credit Funds in Kenya: CMA’s Regulatory Approach to Alternative Lenders

“Private credit fund” is not a defined term in Kenyan law, and that gap trips up more foreign fund managers than any single licensing requirement does. Depending on how a private credit vehicle is actually structured, it can fall under the Capital Markets Authority’s fund-licensing regime, under the Central Bank of Kenya’s digital lending regime, or arguably under neither. Getting that fork right at the structuring stage determines which regulator you deal with, what it costs, and how long it takes, and it is the question we see foreign fund managers ask us first, before anything about terms or security.

The fork: pooled fund capital versus balance-sheet lending

Kenya regulates two genuinely different things under the loose banner of “private credit,” and conflating them is the most common mistake we see. A vehicle that pools capital from multiple third-party investors and then deploys it as loans is a fund, and falls under the Capital Markets Act (Cap. 485A) together with the Capital Markets (Alternative Investment Funds) Regulations, 2023 (Legal Notice 170 of 2023, gazetted 15 December 2023). These Regulations created a distinct Alternative Investment Fund licensing category covering debt and debt-linked funds alongside equity, hedge, property and infrastructure funds, so a debt-focused private credit fund is licensed as a debt AIF, not under some separate private-credit-specific rulebook that does not exist.

A business that instead lends from its own balance sheet, typically a digital lending app extending consumer or SME credit without raising a pooled investor fund, falls under the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 (Legal Notice 46 of 2022) instead. That is an entirely different regulator, a different application process, and a different compliance posture; CBK had approved roughly 153 digital credit providers under this regime as of September 2025. We cover that regime in detail in our guide to Digital Credit Provider licensing in Kenya. A genuinely balance-sheet, non-digital private lender that is not a bank, microfinance institution or SACCO and does not operate through a digital channel sits in a genuine grey area we could not resolve to a clean answer from primary sources; if that is your structure, this is a point to get bespoke advice on before assuming either regime, or neither, applies.

What licensing a Kenyan AIF debt fund actually involves

Under the 2023 Regulations, an Alternative Investment Fund must pool capital from between two and one hundred investors, with a minimum investment of KES 1 million per investor maintained throughout, and public solicitation of investors is prohibited, consistent with the sophisticated-investor character the framework is built around. The fund manager must be approved by the CMA on a fit-and-proper basis, and the fund must appoint a CMA-licensed custodian to hold its assets separately from the manager. The application fee is KES 10,000, with an annual fee of KES 250,000. Funds that existed before the Regulations came into force had until 15 December 2024 to bring themselves within the licensing regime. We were not able to confirm from the Regulations’ own text whether any foreign-investor-specific provisions exist beyond the general two-to-one-hundred-investor and minimum-ticket rules described above; secondary summaries do not mention any, but that absence should be confirmed against the primary text rather than assumed.

The structuring question we see fund managers actually ask

Given that fork, the real decision a foreign fund manager faces is not “how do I get licensed” but “should I license a Kenyan AIF debt fund at all, or lend into Kenya from an offshore vehicle instead.” Licensing a Kenyan AIF gives you a locally regulated structure, a Kenyan fund manager and custodian relationship, and a vehicle that can more easily take security over Kenyan assets and enforce it through Kenyan courts without cross-border recognition questions. Lending from offshore avoids the KES 250,000 annual fee and the CMA fit-and-proper process entirely, but raises its own questions: whether the offshore lender’s activity itself constitutes a regulated activity in Kenya depending on how the loan is originated and serviced, how Kenyan withholding tax applies to interest paid offshore, and how enforceable security over Kenyan collateral is if a dispute ends up in a Kenyan court against a lender with no local presence. Neither answer is universally right; it depends on deal size, expected deployment volume, and whether you expect to make one loan or run a recurring lending programme into Kenya.

A live example of where this is heading

The clearest real-world signal that debt-adjacent AIFs are an active category, not a theoretical one, is the CMA’s approval of the Green Investment Fund LLP, managed by Britam Asset Managers, on 12 August 2026, which uses mezzanine and quasi-equity financing to fund green-focused MSMEs. It is a licensed example of the debt AIF structure in practice rather than a pure equity or hedge vehicle, and it signals that CMA is actively approving this category rather than leaving it dormant on the books. We could not locate a published CMA master plan or policy statement specifically targeting private credit as a growth priority asset class, so we are not asserting a formal government push exists beyond the Regulations themselves and this approval pattern.