By Benadeta Mwaura - Reporter
Kenya June 30 2026 - A series of devastating market fires in Kenya has once again exposed a harsh reality facing thousands of Micro, Small and Medium Enterprises (MSMEs). Many businesses operate without proper registration or insurance, leaving owners with little chance of recovering when disaster strikes.
The latest warning comes from the insurance industry, which is urging entrepreneurs to formalize their businesses through licensing and take up affordable insurance cover to safeguard years of investment.
While many small business owners view business registration as merely a legal requirement, financial experts argue that it is one of the most important investments an entrepreneur can make because it opens the door to financing, insurance, government opportunities and long-term business growth.
Registering and licensing a business gives it legal recognition and demonstrates that it operates within Kenya's regulatory framework.
A licensed business can:
- Open business bank accounts.
- Apply for loans and asset financing.
- Bid for government tenders.
- Enter into formal contracts.
- Access government support programmes.
- Purchase commercial insurance policies more easily.
- Build trust with customers, suppliers and investors.
Many insurers also require proof that a business is legally operating before issuing certain commercial insurance products or processing compensation claims.
Kenya has witnessed numerous market fires over the years, including incidents at Gikomba, Toi Market, Kariakor, Kisumu, Mombasa and several county markets where traders have lost millions of shillings worth of stock overnight.
Following the recent Gikomba market fire, insurers said many affected traders had no insurance, meaning they were forced to start from scratch despite years of investment.
Insurance experts say a relatively small annual premium can protect business assets such as:
- Stock and merchandise.
- Buildings and kiosks.
- Machinery and equipment.
- Furniture and fittings.
- Business interruption losses.
- Theft and burglary.
- Fire damage.
- Public liability claims.
One insurance executive urged entrepreneurs not to wait until disaster strikes before seeking protection.
"The same way you came up with a strategic plan, your vision and you drew it up and you are executing it on a daily basis, protect your capital, protect yourself, that's my message to you."
When a licensed and insured business suffers a fire or other insured loss, the owner can submit a claim and, subject to the policy terms, receive compensation to replace stock, repair premises or restart operations.
By contrast, unregistered and uninsured businesses often rely on fundraising, loans or personal savings after disasters, delaying recovery and, in some cases, forcing permanent closure.
This distinction is particularly important for MSMEs, which account for the overwhelming majority of businesses in Kenya and contribute significantly to employment and economic activity.
Business registration also improves access to credit.
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Banks, microfinance institutions and digital lenders generally require proof that a business exists before approving business loans.
Registered businesses are also better positioned to establish financial records, build credit histories and qualify for working capital or expansion financing.
In addition, formal businesses can participate in supplier contracts with large companies that often require valid licences, tax compliance certificates and business registration documents.
Kenya's government continues to roll out initiatives targeting MSMEs, including affordable credit, procurement opportunities, digital marketplaces and business development programmes.
Most of these initiatives require businesses to be formally registered and tax compliant.
As the government increasingly digitises public services, informal enterprises risk being excluded from opportunities available through platforms such as eCitizen, the Kenya Revenue Authority (KRA), and the Public Procurement Information Portal.
Despite growing awareness, insurance penetration among small businesses remains relatively low.
Industry studies show that many SMEs either lack insurance altogether or are underinsured, leaving them exposed to financial shocks that can wipe out years of investment.
Experts attribute the low uptake to limited awareness, perceived costs and the misconception that insurance is only necessary for large corporations.
However, insurers argue that many business insurance products are now tailored for small enterprises, with flexible premiums designed to suit traders, retailers, manufacturers and service providers.
For Kenya's MSMEs, licensing and insurance are increasingly becoming essential tools for business resilience rather than optional administrative requirements.
As climate-related disasters, market fires, theft and other business risks become more frequent, experts say entrepreneurs who formalize their businesses and protect their assets will be better placed to survive unexpected shocks, access financing and grow sustainably.
For many small businesses, the cost of registration and annual insurance is often only a fraction of what it would take to rebuild after losing an entire enterprise to fire or another unforeseen event.