Kenya attracts Sh117bn capital as investors shift from tech to real-economy sectors

AGRICULTURE, Education and Energy have emerged as the sectors that attracted the most capital for Kenya as investors changed tact and started channeling investments to early-stage startups.

New market data for the three months to September 2025, shows that East Africa represented 28 per cent of total African private capital activity, out of 177 transactions valued at $5 billion (Sh644.2 billion).

With Kenya accounting for 65 per cent of the regional capital inflows estimations show that the country recorded $910 million (Sh117.2 billion) in the third quarter of the year.

According to the Q3 2025 Stears Private Capital in Africa Activity Report, Kenya accounted for majority (65 per cent) of all East African transactions, far ahead of Uganda (33 per cent) and Tanzania (27 per cent).

“In the Consumer Discretionary segment, Education was the largest subsector, accounting for 32 per cent of deals. Investors increasingly targeted education assets serving Africa’s young and expanding population,” reads the report in part.

It notes that investments ranged from AI-driven learning startups to larger deals such as ADvTECH Group’s $9.5 million (Sh1.2billion) purchase of Regis Runda Academy, a private Kenyan school. Another deal was a $6.5 million (Sh837.5 million) loan from TLG Capital and the Development Bank of Kenya to Ark Group, which runs affordable schools.

According to Stears these transactions show investors’ growing appetite for assets serving Africa’s young, urbanising population, with Kenya seen as a launchpad for scalable education models across the region.

Although technology remains Africa’s leading sector for private capital investment, its share of deal activity in East Africa fell to 10 per cent.

Analysts interpret this as a sign of maturity in Kenya’s tech ecosystem, as capital begins to spread into sectors with tangible, long-term impact on livelihoods — such as energy, agriculture and logistics.

Still, the sector remains vital to Kenya’s growth narrative, particularly in fintech and digital infrastructure, where established firms are now seeking strategic partnerships and M&A opportunities rather than early-stage seed funding.

The country continued showing a strong appeal to private investors, supported by a mature startup ecosystem, robust financial infrastructure, and a growing pipeline of deals in sectors linked to food security, clean energy and digital services.

Across the continent, private capital activity rose sharply during the quarter, with 177 transactions recorded up from 147 in Q2 and total disclosed deal value increasing from $3 billion (Sh386.6 billion) to $5 billion (Sh644.2 billion).

However, the report notes a decisive shift in investor behaviour: smaller transactions between $2.5 million (Sh322.1 million) and $10 million (Sh1.3 billion) now make up 32 per cent of all deals, while large and mega deals have fallen to 21 per cent.

This reflects a renewed focus on early-stage and Series A venture rounds, particularly in markets like Kenya where capital efficiency and local innovation remain strong.

Kenya’s agribusiness sector continues to attract substantial investor interest, with cold storage and logistics emerging as one of the most dynamic investment themes in East Africa.

“Cold Solutions Kazi, part of the ARCH Cold Chain Solutions East Africa Fund, secured $18 million (Sh2.3 billion) in private credit from Cygnum Capital. Keep It Cool (Kenya), backed by Acumen and Catalyst Fund, raised $680,000 (Sh87.6 million) in convertible debt from the Global Innovation Fund to expand its refrigerated supply network,” the report notes.

The findings say that the deals paint the country’s growing importance as a regional hub for food logistics and post-harvest infrastructure, an area increasingly seen as critical to tackling food insecurity and supply-chain inefficiencies.

The report also highlights a rise in private credit as a preferred financing tool. Roughly 35 per cent of East African transactions were debt-financed, among the highest proportions on the continent.

Kenya’s energy, agriculture, and logistics sectors are leading this shift, as investors pursue structured financing options that balance returns with reduced risk exposure.

This reflects a global trend in which funds are diversifying away from traditional equity structures toward private debt and blended-finance models particularly appealing in markets where currency volatility and valuation uncertainty can complicate equity exits.

Renewable energy projects remained a central pillar of private capital activity in East Africa, accounting for nearly 40 per cent of all energy-related transactions on the continent.

While Seychelles and Mauritius recorded significant floating solar and utility-scale projects, Kenya remains a key destination for climate-focused capital, buoyed by strong policy signals around green growth and infrastructure development.

Impact investors such as Norfund, British International Investment and the African Development Bank continued to channel resources into clean energy, agri-logistics and circular-economy ventures, further embedding Kenya within the continent’s sustainability finance ecosystem.