The government is exploring changes to insurance laws to compel providers to compensate small businesses affected by the recent anti-government protests, as authorities race to prevent long-term economic fallout from the destruction.

This comes after businesses in at least 27 counties suffered massive losses during the violent June 25 demonstrations, where looting, vandalism and arson left shops destroyed and livelihoods shattered.

Small traders, especially in Nairobi’s central business district, were hardest hit, with several reporting that their entire stock was wiped out or their premises burnt down.

Although most of these businesses are uninsured, the State Department for Micro, Small and Medium Enterprises (MSMEs) says it is initiating discussions with underwriters to explore how affected enterprises can be cushioned ,even if it means changing the legal framework to enforce such protection.

“I promise us to have an engagement with them so that we find a way, even if it means reviewing the insurance framework in this country,” said Susan Mang’eni, the Principal Secretary for MSMEs Development.

“Yes, we know most of the MSMEs are currently not insured, but this is one intervention that we are going to implore unto them to consider insuring,” she added.

Data from the Insurance Regulatory Authority shows that 63 percent of MSMEs in Kenya did not have any form of insurance as of December 2024, leaving them exposed to shocks such as political unrest and natural disasters.

Mang’eni did not disclose whether the government would act as a guarantor for the insurance firms, but indicated that any upcoming arrangement will push businesses to register for insurance coverage.

A rapid response team has already been deployed to assess the scale of damage and identify the businesses in need of urgent support.

“And there is already some level of appreciation there in the market. And I think this conversation that we’re going to have, government with the insurance company, will figure out a way of making this happen. Because it’s important that it does happen,” the PS added.

Officials say the goal is to avoid a repeat of 2024, when numerous businesses destroyed during protests against the Finance Bill never reopened , worsening joblessness and deepening poverty in urban and rural areas alike.

In Nairobi, protesters left a trail of destruction along major streets including Moi Avenue, Mfangano Street, Khoja, and around the Bus Station area.

 Shops were broken into, boutiques ransacked, wines and spirits stores emptied, and several buildings set ablaze. Electronics and fashion retailers were particularly targeted.

As the government works on recovery measures, the banking sector is also stepping in. Kenya Bankers Association (KBA) CEO Raimond Molenje said lenders have set aside Sh150 billion for on-lending to MSMEs this year,  double the Sh75 billion offered in 2024.

“As banks, our primary aim is to ensure credit flows to Kenyans and their businesses. This year alone, we’ve already disbursed Sh81 billion to MSMEs between January and May, and we remain committed to maintaining a minimum of Sh150 billion annually for the next three years,” Molenje said.

The sector is grappling with rising default rates, which hit a 20-year high of 17.6 percent in May.

 But Molenje expressed optimism that the renewed credit push and collaborative reforms would lift private sector growth to at least 10 percent annually by the end of 2025.

“Banks have the cash—led by Equity Bank here today—but the ecosystem must be better structured. Through MSME Connect, we’re confident that we can empower small businesses and drive economic progress,” he said.