Every day across Kenya, tonnes of food rot before reaching consumers. Fruits spoil in overheated trucks crawling along highways toward urban markets. Milk goes bad in regions without cooling facilities. Vegetables wither in storage while fish and cereals are lost through weak transport systems, poor handling and unstable market access.

 

In homes, restaurants and urban centres, even more food is discarded after purchase. The scale of the crisis is staggering.

According to reports from ‘O-Farms Project,’ food waste at the consumer level alone is estimated at approximately 99ks per person every year in Kenya.

But beyond the visible piles of wasted food lies a deeper and more complex crisis; one tied to climate change, unemployment, weak agricultural systems and lost economic opportunity.“When SMEs are unable to participate effectively in circular economy markets, food loss continues at scale,” Frederick Ochieng, acting CEO of Biovision Africa Trust said.“This contributes to greenhouse gas emissions and leads to inefficient use of water and land resources.”As food decomposes in dumpsites and landfills, it releases methane and other greenhouse gases that contribute significantly to global warming.

Farmers lose income from produce that never reaches the market, while water, land, fertiliser, fuel, electricity and labour invested in producing that food are also wasted. At the same time, millions of Kenyans continue to struggle with food insecurity and rising living costs.

Yet amid the crisis, a growing number of small businesses are attempting to build opportunity out of waste.

Across the country, entrepreneurs are converting organic waste into compost and animal feed. Others are said to be processing rejected fruits into juices, dried snacks and natural fertilisers. Some are building recycling systems around agricultural by-products that would otherwise end up in dumpsites.

“What we are seeing in Kenya is that SMEs are already innovating,” Ebenezer Amadi, senior programme manager at Bopinc said, “turning waste into value and building markets, often through informal channels.”Despite increasing recognition of the role these enterprises could play in Kenya’s green transition, many are struggling to survive.

According to O-Farms Project, Kenya has made notable progress in developing policies around circular economy practices, however, small and medium enterprises (SMEs) continue to face major operational and financial barriers that limit their growth.

The report is based on surveys conducted among 45 Kenyan SMEs and consultations with 26 stakeholders working across the circular economy and agribusiness sectors.

Its findings reveal a widening gap between Kenya’s policy ambitions and the realities businesses face on the ground.

In recent years, Kenya has positioned itself as one of Africa’s emerging leaders in circular economy policy.

Legislative frameworks such as the Sustainable Waste Management Act of 2022, the Extended Producer Responsibility Regulations of 2024 and the Green Economy Strategy and Implementation Plan have all signalled the government’s commitment to sustainable growth and waste reduction.

On paper, the policy environment appears increasingly supportive. But for many SMEs operating in food systems and waste recovery, those frameworks remain difficult to understand, expensive to comply with and largely inaccessible outside major urban centres.“Despite this evolving policy landscape, only 18 percent of SMEs report familiarity with prevailing circular economy laws, evidencing an enormous policy-implementation gap,” Beryl Oyier, Country Director at Bopinc said.

The disconnect is evident across almost every stage of business operations. One of the most significant barriers identified by the report is market access. According to the findings, 93 percent of SMEs struggle to secure stable and reliable markets for their products.

For many enterprises, that means operating in constant uncertainty. Without dependable buyers, businesses cannot confidently invest in equipment, hire workers or scale production. Many continue to rely heavily on informal systems to survive.

The report found that around 80 percent of SMEs depend primarily on word-of-mouth referrals to attract customers, while 64 percent sell directly from their production sites instead of formal retail or distribution channels.

For some businesses, informal marketing remains the only affordable option available. But relying on informal systems also limits visibility, weakens growth potential and leaves enterprises vulnerable to economic shocks.

Certification requirements present another major obstacle. Nearly 78 percent of SMEs surveyed described certification processes as expensive, complicated and heavily centralised in Nairobi, effectively excluding businesses operating in rural counties.

For small entrepreneurs processing food products or recycled materials far from the capital, compliance often involves costly travel, multiple approvals and lengthy bureaucratic procedures that consume both time and money.

In many cases, the cost of certification exceeds what small businesses operating on thin profit margins can reasonably afford.

Access to financing is another persistent challenge. According to the report, 60 percent of SMEs identified access to finance as one of their biggest barriers to growth, while 63 percent reported limited access to appropriate technologies needed for production and waste processing.

For businesses working in circular economy sectors, obtaining loans can be especially difficult. Many financial institutions still view waste-related enterprises as risky or unconventional investments. Others require collateral or repayment conditions that small entrepreneurs cannot meet.

As a result, many businesses remain trapped in small-scale operations despite growing demand for sustainable food systems and environmentally friendly products.

The report further notes that inconsistent regulations between counties create additional challenges for businesses attempting to expand operations across different parts of the country.“These challenges are further influenced by variations in regulatory frameworks across national and county levels,” Jackson Kinyanjui, senior inclusive business advisor at Bopinc said.

Mr Kinyanjui further explains that enterprises operating in different counties may encounter differing requirements related to waste management and compliance. This increases administrative complexity and raises operational costs.

Entrepreneurs already struggling with limited financing and market instability, inconsistent regulations become another deterrent to growth.

“As a result, Kenya’s green growth agenda, however well-designed at the national level, loses its most powerful delivery mechanism,” Ochieng said, “the entrepreneurs and small enterprises already operating at the heart of the food system.”Amadi explained that the challenge facing many SMEs is not a lack of innovation, but the difficulty of navigating complex systems.“The challenge is not a lack of effort,” Amadi explained “but navigating systems that are complex and not always well understood.”He pointed to certification and compliance systems as some of the biggest barriers facing entrepreneurs.“Certification processes, for example, remain difficult to access,” Amadi emphasized, “and awareness of existing standards and regulatory frameworks is still low among many enterprises.”Unlike large corporations, many of these enterprises operate directly within local communities where food waste occurs.

They work with farmers, market traders, transporters and consumers at the grassroots level. Their solutions are often low-cost, adaptable and locally driven.

However, despite their potential, many continue operating in survival mode, balancing rising costs, weak infrastructure and uncertain markets while attempting to build businesses around sustainability.

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