Foreign Lending in Kenya
A 2024 Kenyan High Court ruling in Stichting Rabo Bank Foundation v Ava Chem Ltd has created significant uncertainty for foreign lenders and investors in Kenya. The court dismissed a foreign lender’s claim for lack of registration under Section 974 of the Companies Act, interpreting the act of taking security as “carrying on business” in Kenya, even when the transaction was executed abroad and the debt was admitted. This decision departs from global standards, conflates regulatory compliance with contractual enforcement, and could increase the risk premium for cross-border lending and reduce access to international capital for Kenyan businesses. The case is under appeal, and clarity on the distinction between regulatory requirements and contract enforcement is eagerly awaited by the market.123
