Kenya's 53 assessed issuers scored 78.88% on the Capital Markets Authority's corporate governance scorecard for FY 2024/2025, the highest in eight years of assessments and only the second time the 75% Leadership Rating threshold has been crossed.
- •From a baseline of 55% in FY 2017/2018, when 17 companies were rated Needs Improvement, the market has advanced 23.88 percentage points, with only 2 companies remaining in that band.
- •The 5.32 percentage point gain from 73.56% in FY 2023/2024 requires some context: the Capital Markets (Public Offers, Listings and Disclosures) Regulations 2023 made CG Code compliance a legal obligation for the first time, forcing companies to reclassify board members under new mandatory definitions.
- •The next phase will be harder with the CMA is finalizing a binding ESG Code aligned with IFRS S1 and S2 standards, mandatory from January 2027, giving issuers 18 months to build quantitative sustainability disclosure infrastructure from a qualitative base. I
The scramble after CMA's 2023 rules pushed scores below the previous Leadership Rating of 75.71% in FY 2022/2023. The FY 2024/2025 result confirms the adjustment is complete, with Leadership-rated issuers rising from 27 to 38, Needs Improvement companies falling from 4 to 2, and Fair-rated issuers halving from 8 to 4.
The largest single-principle gain in eight years was Board Operations and Control, up 9.44 percentage points from 67.93% to 77.37%. Its cause was a systematic governance failure: companies had been designating individuals as Independent Non-Executive Directors despite those individuals being employees or executive directors of related entities, directly violating POLD Regulations 2023 definitions. Forced reclassification corrected board composition ratios, restructured Nomination and Audit Committees and triggered Compliance Officer appointments under Regulation 33. The score moved because boards changed, not because disclosures improved.
All seven CG Code principles reached Leadership Rating simultaneously for the first time in the report's history. Accountability, Risk Management and Internal Control led at 84.47%, with 42 of 53 issuers at Leadership. Stakeholder Relations was lowest at 75.85%, with six issuers still in the Needs Improvement band on that principle alone. Banking led all sectors at 90.30%, topping every principle including 94.40% on Accountability and Risk Management.
Energy and Petroleum recorded the steepest sectoral gain, up 10.59 percentage points to 89.97%, with Commitment to Good Corporate Governance reaching 95.23%, the highest single-principle sectoral score in the report's eight-year history.
The accountability findings sit at the other end of the table. Agricultural remained the only Fair-rated sector at 62.80%, with a Stakeholder Relations score of 56.67%, one percentage point above the Needs Improvement floor. For a sector whose supply chains run directly to smallholder farmers and out-growers, a near-failing grade on stakeholder engagement is a material supply chain risk, not a reporting gap. Commercial Services and Telecommunications was the sole sector to decline, falling 1.03 percentage points across Commitment to Good Corporate Governance, Rights of Shareholders, Stakeholder Relations and Transparency and Disclosure. The sector consolidates Safaricom, the NSE's largest stock by market capitalisation.
CMA's Machine Learning ESG Analyst, MALENA, deployed from March 2025 and operational across 45 companies in its first year, replaces annual point-in-time scoring with continuous real-time monitoring. The 12-month window companies previously had to manage their governance presentation is gone. Kenya's governance improvement has been structurally driven by regulatory enforcement and legal obligation. Whether it is permanent will show when the compliance gains are exhausted and the harder work of ESG integration and real-time disclosure begins.
