Kenya's push to maximise Sh95 billion circular economy

Kenya is mulling the introduction of digital product passports to track and trace recyclable materials as the country looks to unlock the Sh95 billion ($730 million) circular economy potential.

These digital passports would also be able to tell if the product in the market is made from recycled materials, which is key in the sector, considering the application of the Extended Producer Responsibility (EPR) that has placed this burden on businesses.

More so, this system will beef up the country’s database, which the Kenya Investment Authority (InvestKenya) notes would be critical for small and medium-sized enterprises (SMEs) operating in this space.

“The databases will act as a broker between investors and fragmented startups and small and medium enterprises (SMEs),” says the authority in a presentation made during the just concluded Kenya International Investment Conference (KIICO).

The other digital solution presented involves deploying monitoring, reporting and verification systems for carbon and material circularity metrics.

In the presentation, the authority has listed the actions needed to unlock further investment opportunities in the sector. InvestKenya has put more emphasis on how to empower SMEs, as it calls for platforms to support SME aggregation and growth.

A call has been made to build digital marketplaces for secondary materials, connecting SMEs to buyers. “Create shared-service platforms (compliance, accounting, quality testing) for small recyclers,” the agency says.

“Establish SME aggregation platform to bundle supply and negotiate better offtake contracts.”

The government also seeks to have credit guarantees to de-risk lending to SMEs in the recycling business. On this financial plan, the need to create green bonds earmarked for circular infrastructure and special economic zones (SEZs) for the same purposes has been highlighted.

InvestKenya says Kenya has a strong circular economic potential, citing that the country generates 22,000 tonnes of waste daily, of which 96 per cent is not recycled. It notes that there are over 120 circularity companies across the entire value chain.

It also adds that the country has supportive legislation such as the Waste Management Act, 2022, the East African Single-Use Plastics Bill (2023), the green growth agenda and the recent Extended Producer Responsibility (EPR) that mandates manufacturers and businesses at large to take responsibility for the waste facilitated through their sales.

This is besides the country’s position as an economic hub in the region, which contributes to the startups in the Sh127.9 billion ($984 million) raised by startups in 2025.

“Yet circular economy investments in Kenya remain limited. Despite strong fundamentals and significant potential, circular investment in Kenya remains below its potential, requiring targeted coordination to mobilise capital and scale implementation,” says the agency in the document titled, Waste Management and Circular Economy: Investment Pathways and Opportunities in Kenya.

The prospectus was commissioned by InvestKenya and developed in collaboration with global system change advisory firm Systemiq, law firm ALN Kenya, and TakaTaka Ni Mali, a tech-enabled social enterprise in the waste management and circular economy sector.

It reframes waste not only as an environmental challenge but as a strategic economic opportunity for Kenya, which already has a growing ecosystem of more than 120 circular economy businesses operating across the value chain.

It also sets out where and how private capital can accelerate Kenya’s circular economy and waste transition over the next three to seven years by identifying four types of investors.

They include public sector and regulators, enterprises, development partners, among them development finance institutions and ecosystem enablers such as non-governmental organisations and informal waste collectors.

The authority opines that by recovering materials that would otherwise be lost, Kenya can create new industries, strengthen manufacturing value chains, and reduce reliance on imported raw materials.

It focuses on opportunities that could accelerate Kenya’s circular economy transition over the next three to seven years, highlighting where private capital can benefit from and support scalable solutions.

“This prospectus is an investment-focused, pipeline-building document anchored in existing and emerging policy frameworks, intended to clarify where private capital can play a role and mobilise capital and other actors,” the document reads.

Deputy President Prof Kithure Kindiki, while speaking during the closing of the conference, said climate commitments are reshaping industries.

He noted that investors are looking for destinations that combine sustainability, competitiveness, and long-term growth. In this emerging global order, we see this as Africa moment.

“Africa today stands at the intersection of climate action and economic transformation. Although Africa holds nearly 40 per cent of the world’s renewable energy potential, the continent received only about two per cent of global renewable energy investment over the past decade,” he said.

He added that correcting this imbalance is a climate imperative and also an investment opportunity of this generation. African leaders have already charted the path through the Nairobi Declaration on Climate Change that took place in 2023 during the Africa Climate Summit.

InvestKenya Chief Executive John Mwendwa referenced the Sh377 billion ($2.9 billion) unveiled at the conference, saying the country has a robust pipeline of green deals that the government is actively facilitating towards closure.

“To further accelerate this momentum, we are fast-tracking a Project Reparation Facility to develop investment-ready, bankable projects, while expanding de-risking instruments, including guarantees, blended finance, and risk-sharing mechanisms,” he said.