The British army conducts joint exercises with Kenya in the northern Laikipia region, where it has a base in the town of Nanyuki. The fire broke out in the nearby Lolldaiga in March 2021.
"We arrived at a settlement and have dispatched payments,” lawyer Kelvin Kubai said in a short message to Reuters. He said compensation was paid to over 7,000 residents for what he described as "smoke nuisance" caused by the fire.
Residents of Lolldaiga area accused a British army training unit of causing the wildfire that destroyed much of a nature reserve, leaving behind ordnance that injured locals.
A British soldier later seemed to claim responsibility for starting the wildfire in a social media post, prompting the British High Commissioner at the time to say she was "appalled" and to pledge an investigation by the Royal Military Police.
The British government on Friday expressed regret over the incident.
"The Lolldaiga fire was extremely regrettable, and the UK recognises the length of time it has taken to resolve this matter and the frustration that this has caused within the affected communities," a spokesperson at the British High Commission in Nairobi said in a statement.
(Reporting by Humphrey Malalo; Writing by George Obulutsa; Editing by Ammu Kannampilly and Clelia Oziel)

epa04286600 A photograph taken on 05 December 2013 and made available on 28 June 2014 shows soldiers of British Army's 3rd Battalion, Parachute Regiment, gathering with Kenyan wildlife rangers for photographs in a forest near Nanyuki, 200km north of the capital Nairobi, Kenya. Media reported on 27 June that Kenyan government has delayed clearance for British troops from 2nd Battalion, Parachute Regiment, to enter the country, leaving some 700 troops from 3rd Battalion, Rifles, waiting to be replaced stranded in the country. Diplomatic relations between Kenya and UK has gone sour after the Foreign and Commonwealth Office issued travel advisories to its citizens, warning against visiting parts of Kenya. According to the British High Commissioner Christian Turner, Britain's military cooperation with Kenya provides 58 million pounds boost annually to the local economy, especially Nanyuki where the British military is based. EPA/DAI KUROKAWA