Kenya’s capital markets have long been viewed as a critical pillar for mobilsing long-term funding, broadening ownership of productive enterprises, and supporting inclusive economic growth.
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Yet, despite this strategic importance, new listings at the Nairobi Securities Exchange (NSE) have been few and far between over the last decade.
As policymakers and market stakeholders reflect on how to reinvigorate the listings pipeline, one policy lever stands out as both practical and proven elsewhere: tax exemptions for newly listed companies.
If Kenya is keen on encouraging more companies to list, then the conversation must shift to what happens after listing, particularly how newly listed companies are supported through competitive tax incentives.
A good case study is Jamaica. With a population of just around 2.8 million people, Jamaica has built one of the most vibrant equity markets among small economies.
The Jamaica Stock Exchange (JSE) boasts over 100 listed companies, a remarkable feat when viewed against Kenya’s population of over 55 million and an NSE with 65 listed firms. The difference is not explained by economic size alone. A key driver has been Jamaica’s deliberate and generous tax policy aimed at encouraging companies to list.
Under Jamaica’s framework, companies listing on the Junior Market enjoy a corporate income tax holiday of up to 10 years, 100 percent exemption for the first five years and 50 percent exemption for the next five. This incentive materially improves post-listing cash flows, making the costs of listing worthwhile and attractive.
The result has been a steady pipeline of new issuers, including small and medium-sized enterprises that would otherwise have remained private. The tax incentive is simple, predictable, and substantial enough to change corporate behaviour.
Kenya has experimented with tax incentives for listed companies in the past, but the impact has been limited largely because the incentives were modest. Historically, newly listed firms have benefited from a reduction in corporate income tax, typically a 5 percentage point reduction (from 30 percent to 25 percent) for a limited period, often five years.
While helpful, this saving is relatively small when weighed against listing costs, ongoing disclosure obligations, market volatility, and the loss of control perceived by some promoters.
Unsurprisingly, these incentives did not meaningfully shift listing decisions, and the NSE did not experience a sustained increase in new entrants.
In other markets, Malaysia offers a clear example of deliberate post-listing support through tax policy. Companies listing on Bursa Malaysia, particularly on the ACE Market, have historically benefited from partial corporate income tax exemptions for several years after listing, directly improving post-IPO profitability and easing the transition to life as a public company.
In addition, IPO-related expenses such as advisory, underwriting, and professional fees are tax-deductible, significantly reducing the effective cost of going public. Importantly, Malaysia treats liquidity-enhancing corporate actions including share splits, bonus issues, and rights issues as tax-neutral at the point of issuance, meaning no immediate tax is triggered when companies restructure their share capital to broaden ownership or improve tradability.
With no capital gains tax on listed equities for investors, these measures collectively encourage strong investor participation, healthier secondary-market trading, and a sustained pipeline of new listings demonstrating how targeted tax incentives can support companies well beyond the IPO stage. Whilst IPO costs were tax deductible in Kenya, these incentives were also removed.
Kenya now has a timely opportunity to rethink its approach. The anticipated Kenya Pipeline Company (KPC) initial public offering, expected in the first quarter of 2026, could be a landmark transaction for the NSE.
As a strategic national asset, KPC’s listing has the potential to deepen the market, attract domestic and foreign investors, and set a benchmark for future State and private sector listings. However, for this listing to achieve its full impact, it must be supported by a well-designed tax incentive framework.
Beyond the initial IPO, corporate actions such as share splits may be considered in the future to increase the number of issued shares and improve liquidity and retail participation. While share splits are value-neutral in economic terms, they can trigger tax implications depending on how they are structured and interpreted under tax law.
If such actions attract taxes-whether stamp duty, capital gains-related considerations, or other transaction taxes-there is a strong case for extending tax incentives to cover these post-listing activities. Penalising companies for measures aimed at improving liquidity runs counter to the objective of building a vibrant secondary market.
Carefully designed tax exemptions would not erode the tax base in the long run; rather, they would expand it by bringing more companies into the formal, transparent market environment. In addition, dividends will remain subject to withholding tax.
Ultimately, the goal is not to offer incentives indefinitely, but to use them strategically to unlock listings that would otherwise not happen. The Jamaican experience demonstrates that when incentives are meaningful, companies respond. Kenya’s previous incentives, though well intentioned, were simply not significant enough to overcome structural and perception barriers to listing.
If Kenya wants more Kenyan companies to list and stay listed then tax policy must be bold, clear, and competitive. Supporting companies post listing through well-calibrated tax exemptions is not a giveaway; it is an investment in market depth, investor confidence, and long-term economic growth.
As the country looks ahead to major listings such as KPC and beyond, now is the time to align tax policy with capital market ambitions.
Let us support Kenyan companies not just to list, but to thrive after listing.