Kenya has had a complete legal framework for securitisation since 2007. Almost nobody has actually used it. If your business holds a large pool of predictable future cash flows, mortgage receivables, equipment leases, road or water levies, trade receivables, and you are wondering whether you could package them into tradeable securities rather than borrowing conventionally, the honest starting point is that the law says yes, the market has said no, and understanding why matters before you spend money structuring a deal.
The framework that already exists
The Capital Markets (Asset-Backed Securities) Regulations, 2007 set out the full mechanics: an originator sells or assigns eligible assets to an issuer, typically a special purpose vehicle kept legally separate from the originator so the assets are protected if the originator later becomes insolvent, and the issuer then offers securities to investors backed by the cash flows those assets generate. A trustee holds rights on behalf of security holders, a servicing agent, which can be the originator itself acting at arm’s length, collects and manages the underlying cash flows, and every securitisation transaction must carry a credit rating before it can be offered. The Capital Markets Authority’s 2017 Policy Guidance Note added further clarity on how it will interpret these provisions in practice, issued under its powers in sections 12A and 30Z of the Capital Markets Act to regulate new capital market products and the structure of special purpose vehicles.
Why the market has stayed thin despite the rules
Kenya’s securitisation and asset-backed bucket still shows as close to a zero share of the country’s capital markets in the CMA’s own regulatory data. A widely reported plan for KenGen to raise a large geothermal-backed bond has been discussed for years without materialising. This is not a sign the framework is broken, it reflects the practical reality that a securitisation deal is expensive and complex to structure, needs a large enough, sufficiently predictable pool of receivables to justify the cost, and needs a credit rating agency and institutional investor base willing to price a genuinely new instrument. Kenya’s fixed-income investors, largely pension funds and banks, have historically had little difficulty finding yield in government paper, which has reduced the commercial pressure to develop the asset-backed alternative.
What actually qualifies as a candidate
The Regulations are written broadly enough to cover mortgage loans, credit card and trade receivables, equipment loans and leases, infrastructure levies, and education or healthcare receivables. In practice, a realistic candidate is a business, or more often a regulated lender or infrastructure operator, with a large, granular, historically well-documented pool of receivables generating predictable cash flow, large enough that the fixed cost of structuring, rating, and trustee arrangements is worth carrying. A single company’s trade receivables book is rarely large enough on its own. Aggregators, mortgage refinance institutions, and infrastructure operators are the more natural fit, which is consistent with where interest in Kenya’s market has actually concentrated so far.
What it would actually take to get a deal done
Setting up the special purpose vehicle correctly, so the transferred assets are genuinely bankruptcy-remote from the originator, is the legal foundation everything else depends on, and it needs to be right before a credit rating agency will even engage. From there, the practical path runs through appointing a trustee and a servicing agent, preparing the disclosure documentation the Regulations require, including audited board resolutions and material contracts, and securing a credit rating before any offer to investors. None of this is exotic by international standards. It is simply a longer, more deliberate structuring process than a conventional bond or bank facility, which is exactly why it has mostly been discussed rather than done in Kenya so far. A business genuinely considering it is better served by confirming the receivables pool is large and clean enough to justify the structuring cost before committing to the process, rather than starting from the legal mechanics.
