IFRS 11 in Kenya – Joint Arrangements Guide (2025 Update)

Q: What is IFRS 11 and why does it matter?

IFRS 11 shows how to report joint arrangements—projects where control is shared. For SMEs, NGOs, or corporates in Kenya, it ensures your accounts clearly reflect ownership, liabilities, and shared profits or costs, helping build trust with investors, donors, and regulators.

Q: How do I know if it’s a joint operation or joint venture?

Ask yourself: Legal structure: Is there a separate company/entity? Contractual rights: Do you control assets and liabilities directly? Practical control: Do you manage the assets and obligations on the ground? Direct control and shared assets = joint operation. Separate entity with shared net assets = joint venture.

Q: What’s the difference between a joint venture and a partnership in Kenya?

A joint venture is usually for a specific project, often with a separate entity. You report your share of profits or losses. A partnership is an ongoing business relationship under Kenyan law, sharing responsibilities and profits continuously.

Q: How is IFRS 11 different from IFRS 10?

IFRS 10 deals with control and consolidating subsidiaries. IFRS 11 focuses on shared control and joint arrangements. You use IFRS 11 when two or more parties jointly control a project.

IFRS Guide>>

September 9, 2025

Table of Contents

Introduction – Why IFRS 11 Matters for You
What is IFRS 11 in Simple Terms?
A Brief History of IFRS 11 in Kenya
What are Joint Arrangements under IFRS 11?
What is a Joint Operation?
What is a Joint Venture?
Joint Operations vs Joint Ventures – Comparison Table
How Can You Identify Your Joint Arrangement?
Example: Joint Venture vs Joint Operation in Kenya
What Must You Do Under IFRS 11?
How Should You Report in Separate Financial Statements?
Who Must Apply IFRS 11 in Kenya?
Case Study – Solar Energy Project in Kenya
Real-World Examples of IFRS 11 in Kenya
Why IFRS 11 Matters for Corporates, NGOs, Investors, and Regulators
FAQs on IFRS 11 in Kenya
Conclusion – Your Next Step with Mugo & Company
Disclaimer

Introduction – Why IFRS 11 Matters for You

If your organisation in Kenya is teaming up with another company – maybe to launch a project, develop infrastructure, or run a joint initiative – you’re entering what IFRS 11 calls a joint arrangement.

Now, you might be thinking: “Do I really need to understand this?” The short answer is Yes.

IFRS 11 in Kenya sets the reporting requirements for joint arrangements, helping SMEs, NGOs, and corporates show clearly who owns what, who owes what, and how income and costs are shared.

Whether you’re running an SME, managing donor funds in an NGO, or leading a large corporate project, getting this right can make a huge difference in credibility, compliance, and investor or donor confidence.

This guide by Mugo & Company will walk you through IFRS 11 in plain language, with real-life Kenyan examples, so you can apply it correctly without getting lost in accounting jargon.

Joint arrangements can get complex – let’s make them simple.

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What is IFRS 11 in Simple Terms?

Think of IFRS 11 as the rulebook for shared projects. Whenever you and another organisation share control of a project or entity, this standard tells you:

How to classify the arrangement: joint operation or joint venture.
How to record your share of assets, liabilities, income, and expenses.

In other words, IFRS 11 makes sure your books reflect your fair share – even if the project is complex or involves multiple partners.

A Brief History of IFRS 11 in Kenya

Before 2011, joint ventures in Kenya were reported under IAS 31, but that standard left room for confusion.

IFRS 11 was introduced in 2011 to provide clearer guidance and became effective worldwide, including Kenya, in 2013.

Kenya formally adopted it through ICPAK, aligning local reporting with international standards.

What are joint arrangements under IFRS 11?

A Joint Arrangement in Kenya happens when two or more parties share control and decision-making over a project.

Under IFRS 11, these can be classified as joint operations or joint ventures in Kenya.

This can either happen through:

a) A joint operation

In a joint operation, you report your share of assets, liabilities, income, and expenses directly.

For example:

Imagine two Kenyan construction firms working together to build a highway. Each contributes machinery and manpower, and each company records its own share of costs and revenue. That’s a joint operation in practice.

b) A joint venture

A joint venture works a bit differently. You and your partner create a separate entity and share the net assets.

For instance,

A Kenyan bank partnering with an international insurer to form a new insurance company in East Africa is a joint venture. You record your investment in the venture, not the individual assets or liabilities.

How do joint operations and joint ventures compare?

Feature	Joint Operation	Joint Venture
Definition	You and your partner share control and directly account for your share of assets, liabilities, income, and expenses.	You and your partner create a separate entity and share the net assets. You account for your investment using the equity method.
Legal Structure	No separate legal entity is required; the parties operate the project together.	A separate legal entity is formed to run the project.
Accounting Treatment	Record your proportionate share of assets, liabilities, revenue, and expenses directly in your financial statements.	Record your investment using the equity method under IAS 28; your share of profits or losses is recognised in your income statement.
Control	You have direct rights and obligations to assets and liabilities.	You have rights to the net assets of the separate entity, not direct control of individual assets or liabilities.
Revenue & Expenses	You have rights to the net assets of the separate entity, not direct control of individual assets or liabilities.	You recognise your share of profits or losses from the joint venture; revenue is not directly recorded from the underlying assets.
Disclosure Requirements	Must disclose your share of assets, liabilities, revenue, and expenses, along with risks and obligations.	Must disclose the nature of the joint venture, your investment, and your share of profits or losses.
Complexity	Usually simpler since there’s no separate entity; accounting is proportional.	Slightly more complex due to separate legal entity and equity method accounting.
Risk & Benefits	You share directly in the risks and benefits of the project.	You share in the net results of the separate entity, not individual assets or liabilities.

How can you identify your joint arrangement?

Figuring out whether your project is a joint operation or a joint venture under IFRS 11 doesn’t have to be complicated.

Just ask yourself a few simple questions:

Is the project run through a separate company or entity?

Do you directly control the assets and take on the liabilities?

Does your contract clearly give you these rights and responsibilities?

And in practice, are you the one managing those assets and obligations?

NOTE:

If your answers point to direct control of assets and liabilities, you’re dealing with a joint operation.

If instead, you’ve set up a separate entity and only share in the net assets, then it’s a joint venture.

Example: Joint Venture vs Joint Operation in IFRS 11 in Kenya

Joint Operation Example: Picture two construction companies in Kenya teaming up to build a highway. Each brings in their own equipment, shares the costs, and records their share of the revenue directly.

Joint Venture Example: Now think of a Kenyan bank partnering with an international insurer to set up a brand-new insurance company. Instead of recording individual assets, each partner records their investment in the new entity.

These real-world examples of joint operations and joint ventures in Kenya show how IFRS 11 applies in practice.

Not sure whether your project is a Joint Operation or Joint Venture?

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What must you do under IFRS 11?

If you’re applying IFRS 11 in Kenya, here’s what matters:

Classify your arrangement: First, figure out whether your project is a joint operation or a joint venture.
For joint operations, make sure you record your share of assets, liabilities, income, and expenses directly in your accounts.
For joint ventures, use the equity method to account for your investment.
And don’t forget to disclose clearly the purpose of the arrangement, along with any risks and obligations.

In short: classify it, record it properly, and be transparent—this keeps your reporting clean and trustworthy.

How should you report joint arrangements in separate financial statements?

When you prepare separate financial statements in Kenya, how you report your joint arrangement depends on your level of involvement:

Joint Operations: You record your share of assets, liabilities, income, and expenses directly in your accounts. Think of it as showing exactly what you control and are responsible for.
Joint Ventures: You don’t report individual assets or liabilities. Instead, you record your investment in the venture under IAS 27 and recognise your share of profits or losses.
Significant Influence but No Joint Control: If you have influence but not joint control, apply IAS 28. This usually applies when you can affect decisions but aren’t fully responsible for the arrangement.
No Influence or Control: If you have neither, IFRS 9 is what guides how to report your financial interest.

Want to dive deeper? Check out our simple guide on IFRS 9 in Kenya to understand how it works in practice.

Who Must Apply IFRS 11 in Kenya

If your organisation is involved in joint arrangements in Kenya, here’s when IFRS 11 applies:

You must follow IFRS 11 if you are:

A listed company on the Nairobi Securities Exchange (NSE)

A bank, insurer, or any regulated financial entity

A large corporate that participates in joint projects

You may be exempt if:

You’re a small or medium enterprise (SME) using the IFRS for SMEs framework

Your business doesn’t have any joint arrangements

In short, if your organisation shares control over a project or entity, IFRS 11 is relevant – otherwise, you might qualify for exemptions.

Does IFRS 11 apply to your organisation? Don’t guess – get clarity now

Schedule a quick consultation with our IFRS experts.

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Case Study – Solar Energy Project in Kenya

Let’s say your renewable energy firm in Kenya teams up with a European investor. The way you set up the partnership changes how you report it under IFRS 11:

Joint Operation: If both of you directly share the solar panels, loans, and revenue, each partner records their share of the costs, debts, and income in their own books. If you set up a separate company (SPV) to run the project, it becomes a Joint Venture, and you’ll account for your investment using the equity method.
Joint Venture: If you create a new company (SPV) to run the project, you don’t record the panels or loans directly. Instead, you show your investment in that new company and recognise your share of its profits or losses.

In short: working together directly = Joint Operation; creating a new company = Joint Venture.

Applying IFRS 11 doesn’t have to be confusing.

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What are real-world examples of IFRS 11 in Kenya?

Example	Type of Arrangement	Why it matters under IFRS 11
Kenya Airways & KLM	Joint Venture	Demonstrates how airlines share net assets and operations through a separate entity.
Safaricom & Vodacom (M-PESA)	Joint Venture	Shows collaboration to expand mobile money across regions with shared ownership.
KenGen & International Partners	Joint Operation	Highlights shared use of power generation assets and direct reporting of costs/revenue.

Why is IFRS 11 important for corporates, NGOs, investors, and regulators?

Understanding and applying IFRS 11 correctly brings real benefits, no matter your role:

Entity	Importance of IFRS 11 in Kenya
For Corporates	It ensures your joint projects are reported transparently, giving a clear picture of assets, liabilities, and shared outcomes.
For NGOs	Donors can see that funds are managed responsibly, helping build trust and credibility.
For Investors	Clear reporting on joint ventures makes it easier to assess performance and risk, boosting confidence.
For Regulators	Accurate financial statements reduce the risk of misreporting and ensure compliance with Kenyan accounting standards.

FAQs on IFRS 11 in Kenya

Q1. What is IFRS 11 and why does it matter?

IFRS 11 shows how to report joint arrangements—projects where control is shared. For SMEs, NGOs, or corporates in Kenya, it ensures your accounts clearly reflect ownership, liabilities, and shared profits or costs, helping build trust with investors, donors, and regulators.

Q2. Who must follow IFRS 11 in Kenya?

Any organisation involved in joint arrangements should pay attention. This includes listed companies, large corporates, banks, and insurers using full IFRS.

SMEs under IFRS for SMEs have some flexibility, but if you share or control a project, IFRS 11 applies.

Q3. How do I know if it’s a joint operation or joint venture?

Ask yourself:

Legal structure: Is there a separate company/entity?

Contractual rights: Do you control assets and liabilities directly?

Practical control: Do you manage the assets and obligations on the ground?

Direct control and shared assets = joint operation.
Separate entity with shared net assets = joint venture.

Q4.What’s the difference between a joint venture and a partnership in Kenya?

A joint venture is usually for a specific project, often with a separate entity. You report your share of profits or losses.

A partnership is an ongoing business relationship under Kenyan law, sharing responsibilities and profits continuously.

Q5: How does IFRS 11 differ from IAS 28?

Think of IFRS 11 as the sorting hat—it tells you what type of joint arrangement you have.

IAS 28 is the rulebook for joint ventures, showing how to account for your investment using the equity method.

Q6. How is IFRS 11 different from IFRS 10?

IFRS 10 deals with control and consolidating subsidiaries.

IFRS 11 focuses on shared control and joint arrangements. You use IFRS 11 when two or more parties jointly control a project.

You can also read our practical guide on IFRS 10 in Kenya for a deeper explanation.

What’s your next step with Mugo & Company?

Getting IFRS 11 in Kenya right is critical. Misclassifying arrangements can lead to incorrect financial statements, audit challenges, or donor/investor concerns.

At Mugo & Company, we help SMEs, NGOs, and Corporates in Kenya apply IFRS 11 correctly, whether you’re starting a new joint project or reviewing your existing reporting.

IFRS 11 can feel tricky – but you don’t have to navigate it alone.

Connect with Mugo & Company and get clear, practical guidance for your joint projects in Kenya.

Book your First Consultation For Free

Disclaimer

This guide is for general information only. It does not replace professional advice. For tailored support, consult a qualified accountant or advisory firm such as Mugo & Company.