Category: Business Daily

We used to book a banda every Saturday afternoon. It was always sunny. I don’t know if the weather actually cooperated every weekend or if nostalgia has edited out the clouds.

There was always an air of bonhomie about this haunt in South C. Different groups held court in different bandas. The Asian community would be out in force, doing their usual koroga, music spilling from open car doors. The amiable manager dropped in frequently, asking if all was kosher. The waiters knew our order. Chicken poussin. Wet fry. Naan. Spinach. Ugali.

It started as an investment club. Once a month, we discussed matters. On the other Saturdays, we simply gathered to have a tipple and shoot the breeze. Sometimes we would invite other friends and gather around a bottle of whisky. Sometimes we paid corkage. Sometimes we didn’t.

Then, five years ago, one of us died.

A road accident at 2am. Paralysed from the neck down and then gone less than 48 hours later.

It felt surreal. We thought we’d all grow old together. We were too young – or too foolish – to be touched by death. But death has chutzpah. His death scuttled us. It put the kibosh on our Saturdays. The meetings waned and stopped altogether.

Recently, a few of us went back.

Remarkably little had changed. The manager was still there. The crowd looked familiar. The food tasted exactly as we remembered it. Saturday afternoon was, of course, mostly sunny even if the weather wasn’t. We gathered around a bottle of whisky. OK, it was two bottles. We laughed and traded war stories. And yet it wasn’t the same. Not because the place had changed, but because we had.

Death had touched us and touched the interaction. Still, there was comfort in being back. A reminder that life keeps moving, even after it has been interrupted. That change is the only certainty we are ever guaranteed. And that perhaps the task is not to outrun loss, but to keep choosing life after it arrives. Still, Motor Sport remains hallowed ground. A place to pour libation.

The National Assembly’s Departmental Committee on Finance and National Planning has differed with the National Treasury over a proposal to empower the Kenya Revenue Authority (KRA) to deem a prescribed threshold of undistributed income as distributed dividends to shareholders and, therefore, subject the same to Withholding Tax.

Whereas the National Treasury proposed to amend Section 24 of the Income Tax Act and adopt a minimum of 60 percent as the threshold for deemed dividend distribution, the committee is now proposing that the same be placed at a maximum of 40 percent.

The two proposals differ not just on the proposed thresholds but more significantly on the fact that whereas the National Treasury is proposing adoption of a floor as the threshold, the House Committee is proposing adoption of a ceiling as the threshold.

According to the Income Tax Act, the rate of Withholding Tax on deemed dividends is five percent for residents and 15 percent for non-residents.

‘Clause 16 is proposing to amend Section 24(1) of the Income Tax Act by introducing a minimum deemed dividend distribution threshold of 60.0 percent of undistributed income. The proposal seeks to discourage the indefinite retention of profits solely for purposes of deferring the taxation of dividends. Stakeholders raised significant concerns regarding the proposed 60 percent threshold arguing it risks creating cash flow constraints,’ Finance and Planning Committee Chairman, Kuria Kimani, told Parliament.

‘To balance revenue objectives and business sustainability, the Finance and Planning Committee observes that a 60 percent deemed dividend threshold could place undue pressure on companies and constrain investment decisions. The committee is, therefore, proposing to moderate the threshold to a maximum of 40 percent to achieve the balance between revenue mobilization and business continuity,’ Kimani told the House.

The difference between the National Treasury and the House Committee means that in an instance where a company has Sh1 billion worth of undistributed income, the National Treasury proposal would deem at least Sh600 million as distributed dividends to shareholders while the House Committee would deem a maximum of Sh400 million.

Despite the House committee differing with the National Treasury and tabling a counter proposal of a maximum of 40 percent, analysts still contend that going this route would still leave businesses exposed from a cash flow and capital position.

‘Most global jurisdictions including the United States, United Kingdom, South Africa, India and Nigeria, do not impose mandatory dividend distribution percentages. Instead, they rely on principles-based anti-avoidance rules to address unreasonable profit accumulation,” Deloitte East Africa says.

The Institute of Certified Public Accountants (ICPAK) says the proposal interferes with legitimate commercial and business decisions.

The accountants’ body added that dividend declaration is ordinarily a commercial decision made by the company’s board and shareholders after considering operational requirements, expansion plans, debt obligations, liquidity needs and future investment strategies.

Other stakeholders argue that there should be no uniform distribution level and that KRA should pursue its investigations on specific cases.

“We recommend that the proposal be withdrawn so that the provision continues to apply on a case-by-case basis in order to accommodate the working capital needs of businesses across diverse industries. The proposals treat all businesses as though they have the same capital needs,” law firm Anjarwalla and Khanna said.

The proposal by the committee is now due for consideration by the Committee of the Whole House where legislators go through a bill and its proposals on a clause-by-clause basis.

In recent years, climate investment discussions in Kenya have largely focused on generating carbon credits for sale in global markets. However, the new Climate Change (Non-Market Approaches) Regulations, 2026 signal a broader shift, moving beyond carbon trading and introducing new considerations for developers, investors and sustainability-focused organisations.

Gazetted in February 2026, the Regulations operationalise Article 6.8 of the Paris Agreement, establishing a framework for non-market approaches (NMAs) – climate initiatives that support mitigation, adaptation and sustainable development without creating or trading carbon credits.

The framework includes a national platform for submitting, assessing and tracking projects, bringing these activities firmly within Kenya’s climate governance structure.

For organisations involved in renewable energy, climate-smart agriculture, ecosystem restoration, clean cooking and sustainable waste management, the Regulations represent more than a policy update.

They introduce compliance obligations for projects that have traditionally operated outside the carbon market ecosystem. As a result, organisations may need to reassess existing and planned projects to ensure they meet the new requirements.

A key change is the introduction of a formal approval process. Project proponents must obtain authorisation from the Climate Change Directorate and demonstrate alignment with Kenya’s climate priorities and sustainable development goals.

Projects seeking recognition under the wider Article 6.8 framework may also be assessed on scalability, multi-stakeholder collaboration and their ability to attract international support.

This means regulatory compliance can no longer be treated as a late-stage consideration. Governance structures, stakeholder engagement and compliance planning will need to be integrated into project design from the outset. Early legal and governance input can help identify risks, prevent approval delays and ensure long-term compliance.

The regulations also place greater emphasis on community participation.

Projects involving public land must demonstrate meaningful public engagement, while those on community land require free, prior and informed consent.

Existing provisions under Kenya’s Community Land Act further require investment agreements involving community land to be approved by at least two-thirds of adult community members through a properly convened assembly.

Compliance obligations continue throughout a project’s lifespan. Proponents must submit annual progress reports, creating ongoing requirements for monitoring, governance and accountability.

While the framework introduces additional responsibilities, it also offers greater regulatory certainty.

Benjamin Franklin, former US president, once observed, ‘In this world, nothing is certain except death and taxes.’ Two and a half centuries later, tax has become more than a legal obligation. It is now a defining test of how companies are governed.

Tax transparency, compliance, and dispute management increasingly shape corporate reputation, investor confidence, and long-term sustainability.

This matters well beyond the boardroom. Pension savings are invested in listed companies whose share values can collapse under tax scandals. Government revenue lost to poor corporate tax practices is revenue not spent on roads, hospitals, or schools. Tax governance, in other words, is everyone’s concern.

For decades, tax sat quietly in the finance department. That era is over. Tax decisions now shape reputation, share price, and regulatory relationships. When a company is accused of aggressive tax planning, it is no longer just a compliance matter, it is a front-page story.

The G20/OECD Principles of Corporate Governance (2023) and Kenya’s Capital Markets Authority Code (2015) both emphasise accountability, transparency, and disclosure as non-negotiable.

Increasingly, these frameworks recognise that tax strategy is inseparable from the broader governance mandate. Boards that fail to exercise oversight of tax affairs expose their organisations to risks that no audit committee can retrospectively contain.

Tax transparency means openly disclosing where a company operates, how much tax it pays, and why. Tax compliance means filing accurately and paying on time. Together, they signal ethical leadership.

The World Bank’s 2020 Corporate Governance Brief notes that well-governed companies carry lower risks and enjoy cheaper access to finance. The IFC’s Toolkit for Disclosure and Transparency goes further, urging companies to fold tax transparency into their ESG reporting.

In a market where investors increasingly screen for tax conduct, opacity is costly. Companies that voluntarily disclose their tax strategies are rewarded with greater investor confidence and fewer adversarial encounters with revenue authorities.

For directors, tax is no longer a matter they can safely delegate and forget. It has become one of the clearest tests of board effectiveness and one of the sharpest sources of personal and institutional risk.

Under Kenya’s Tax Procedures Act and Companies Act, directors can be held personally responsible for tax offences committed by the companies they lead. A board that fails to ask the right questions is a board exposed.

At the same time, global investors, lenders, and rating agencies increasingly factor tax conduct into their decisions. Boards without a credible tax narrative risk a higher cost of capital or exclusion from investor pools altogether.

Strategy and tax are also inseparable. Decisions on mergers, expansion, transfer pricing, and digital business models all carry tax consequences that can make or break value creation. A board that does not understand the tax implications of its strategy is not fully in control of the strategy itself.

Weak governance exposes companies to the risk of tax disputes, which often stem from disagreements with revenue authorities over how tax laws apply to complex business models.

A dispute does not necessarily indicate non-compliance. It may reflect a company’s justified challenge to a misapplication of the law or a misunderstanding of its business operations.

Yet even justified disputes expose governance gaps where the company lacks proper documentation, internal protocols, or board-level awareness of the matters in contention.

Companies with strong governance frameworks such as proper record-keeping, proactive regulator engagement, and internal capacity are better positioned to navigate these processes, reduce disruption, and increase the likelihood of favourable outcomes.

Regardless of the outcome, the resolution of a tax dispute helps establish precedent and guides future compliance. In the long run, this contributes to stronger governance and better organisation of tax affairs. Boards should treat tax with the same strategic seriousness they apply to capital allocation or risk management.

Tax must become a standing agenda item at board and audit committee meetings, not a matter raised only when a dispute has already escalated. Directors who receive regular briefings on tax risk exposure, pending disputes, and shifts in the regulatory landscape are far better equipped to exercise meaningful oversight.

Equally important is the recognition that tax cannot operate in isolation. Tax decisions sit at the intersection of finance, legal, compliance, and business strategy. When tax is embedded in the organization’s decision-making architecture rather than siloed within a single department, the quality of governance improves markedly.

Finally, boards should treat tax transparency as a trust-building tool rather than a burden. They are building trust with the stakeholders whose confidence underpins long-term value.

Voluntary disclosure of tax strategies signals to investors, regulators, and the public alike that the company is governed with integrity, and that signal carries real economic weight in a market increasingly shaped by ESG considerations.

Tax is no longer a back-office function. It is a boardroom responsibility that signals a company’s character to the market. Companies that elevate tax governance are better placed to attract capital, withstand scrutiny, and grow sustainably.

Franklin was right that taxes are certain. What is no longer certain is whether companies that fail to take them seriously will survive the scrutiny that now comes with them.

Spanish food producers are stepping up efforts to expand their presence in Kenya, betting on rising demand for imported foods and beverages among a growing middle class, expatriates and hotels.

Last week, 12 Spanish producers showcased a range of beverages and speciality foods in a Taste of Spain event held in Nairobi’s Pax Manor hotel. Among them was David Bermudez of Aceitunas Cazorla, a Spanish olive producer exploring opportunities in Kenya.

‘We want to bring olives into the Kenyan market, but not the normal ones that Kenyans know about,’ he told BDLife. ‘We would like to introduce flavoured olives.’

The company produces olives marinated with ingredients such as garlic, pepper, olive oil, lemon, and orange, alongside varieties stuffed with blue cheese, truffle, jalapeño, anchovy, and other flavours.

‘For the stuffed varieties, we use machines to remove the pit and then fill the olives with a jelly paste of the different flavours,’ he said, adding, ‘I visited several markets and found that the choice was largely limited to pitted or sliced olives. This is not a product that exists widely in Kenya, and we believe that allows us to carve out a niche in the market.’

The target market

In Spain, olives are commonly served as appetisers or tapas alongside meals and drinks. Mr Bermudez believes flavoured olives could similarly find a place in Kenya’s hospitality sector and among consumers seeking new food experiences.

‘Olives stuffed with anchovies, for instance, can be paired with cold beer, fruity white wines, fish dishes or salads,’ he said at the event organised by the Economic and Commercial Office of the Spanish Embassy in Nairobi.

‘The olives stuffed with jalapeños pair well with grilled meat, tequila, margaritas, or Mexican food.’

Aside from a single private-label customer in South Africa, Aceitunas Cazorla has no established presence on the continent.

‘We currently have one customer in South Africa, but the products are marketed under a private label rather than our own brand,’ he says. ‘Our objective is to find importers and distributors who can help us build a presence in Kenya and, eventually, across other African markets.’

Another exhibitor was Beveland, a Spanish producer of liquors and spirits, a returning player in the Kenyan market.

‘We produce all kinds of spirits, ranging from entry-level to premium products,’ said Federico Vullien, the company’s representative.

‘We previously sold our Scotch whisky, tequila, and brandy in Kenya, but our importer ran into difficulties during the pandemic. We have since returned with a partner who imports about 40,000 bottles of our gin annually, but we are looking for additional partners for our whiskies and ready-to-drink canned cocktails.’

Strong potential

The family-owned company exports to about 80 countries and works with distributors across Africa. While Mr Vullien said the company’s products generally resonate with the African palate, he was pleasantly surprised by the reception of its canned cocktails during the event.

‘I knew the trend of low-alcohol, ready-to-drink cocktails was growing all around the world, but I didn’t expect so many people in Kenya to enjoy these flavours,’ he said.

‘Among others, we have mojito and pina colada varieties, and I can already see a strong potential for them here in Kenya. The pina colada, in particular, which tastes like pineapple and coconut, has generated a lot of interest today.’ Like many of the producers at the showcase, Beveland is seeking importers and distributors to expand its presence in the Kenyan market.

Less conventional varieties

Bodegas Cornelio Dinastía, a family-owned winery from Spain’s Rioja region, was also seeking a foothold in the Kenyan market.

While Rioja is best known for its traditional winemaking styles, the company is positioning itself differently, relying on organic production methods and less conventional grape varieties.

‘Instead of following the traditional or classic styles, we try to use different grape varieties that are not as commonly used in the region,’ said the winery’s representative, Oscar Rivas.

‘For red wines, Tempranillo is the most widely used grape, and while we use it too, we also work with Grenache and Graciano, which are native to our area. For white wines, Viura is the most popular grape in Rioja, but we focus on white Grenache and Sauvignon Blanc.’

Bodegas Cornelio Dinastía currently produces about 150,000 bottles annually, focusing on quality rather than volume. It is still in the early stages of establishing a presence in Kenya and is currently seeking an importer to bring its wines into the market.

The company sees Africa as a key growth frontier for the wine industry.

‘Traditional wine markets are already very mature,’ he says. ‘I think Kenya and the wider African market represent the future. There is a lot of potential and an opportunity to introduce more people to wine culture.’

Among the labels the company showcased in Nairobi was La Guarida del Lobo (The Wolf’s Lair), a red wine that the winery believes could resonate well with Kenyan consumers.

Made from 90 percent Tempranillo and 10 percent Graciano grapes, the wine undergoes a slow fermentation at low temperatures and is not aged in oak barrels, a decision intended to preserve its fruit-forward character.

‘New red wine drinkers are looking for wines with more fruit and less oak,’ he explained. ‘I think this wine could perform very well in Kenya.’

The wine pairs well with a variety of foods, including meats, rice dishes, and cheese, making it versatile enough for both casual and formal dining occasions.

Peabut and pistachio cream

Borges is yet another Spanish producer seeking a larger share of the Kenyan market, even though some of its products may already be familiar to local consumers.

The company produces a range of vinegars, creams, nuts, and cooking oils, including olive and sunflower oils, and is particularly keen to introduce its honey-and-salt peanuts, single-serve soy sauce sachets, and creams to Kenya’s hotels, restaurants, and catering sector.

‘We already have olive oil in the market, but I believe the peanut cream and the pistachio cream will do well too, more so for bakeries,’ said Manuel Caro, the company’s representative.

‘The peanut cream is different from the usual peanut butter because it also has honey and salt in it, enhancing its flavour, and the pistachio cream will do well because there are not too many pistachio products in Kenya.’

Hostels developer, Acorn Holdings Limited has launched a scheme to fund students’ rent payments and start-up capital for businesses.

The scheme, known as Zinduka Graduate Enterprise Programme, is a partnership with Absa Bank Kenya Plc and Co-operative Bank Group and will enable students to gain access to affordable accommodation via unsecured housing loans and start-up capital.

The programme is expected to support between 5,000 and 10,000 new enterprises annually, with eligible graduates accessing business loans ranging from Sh200,000 to Sh500,000.

Kenya has approximately 500,000 students enrolled in universities, but fewer than 40,000 university-provided beds, leaving 460,000 students in informal, unregulated makeshift accommodation that is unsafe, poorly serviced, and more expensive than they appear.

In addition, only an estimated 15 percent of graduates secure formal employment, leaving the majority to create their own livelihoods, often without business skills, a financial track record, or access to startup capital.

‘The formal job market is only able to absorb about one in 10 graduates. This means the vast majority must create their own opportunities through entrepreneurship rather than rely on formal employment,’ Edward Kirathe, chief executive, Acorn Holdings Ltd, said.

‘Zinduka bridges a critical gap by connecting a student’s journey from securing their first home away from home to accessing the capital needed to launch their first business. It is a pioneering model that no housing company in Kenya, and arguably across the continent, has implemented before.’

In the first stage, the student and parents are listed on the unsecured loan as co-borrowers, enabling the students to generate a credit record that banks can use to assess their creditworthiness.

Tough to see around the next corner with straight line thinking.

Look out the window. Do you see any straight lines in nature? Is thinking in a linear way, our built-in default mode of business intelligence? Or, should one also understand systems? Why is it that our most obvious choice is often wrong? Does black and white exist on the management palette — or are business decisions often shades of gray, not to mention the shocking red and warning sign yellow? Do we prefer simple straight lines, often assuming that doubling an effort yields double the result?

Straight line thinking is required hammer in your management toolbox. But it should be one tool among many. Straight line thinking goes from point A to B, simply a step-by-step process where ideas follow a sequential, cause and effect path.

We assume that the future is a direct extension of the past and that a single action consistently produces a predictable outcome. Being data-driven and rational requires established rules, consistency, and formulas.

Risk of straight line thinking is that in a binary way, complex scenarios are often reduced to straightforward ‘yes or no’ or ‘true or false’ answers.

Linear thinking works for straightforward, predictable tasks like following an audit checklist, a routine project management, or a recipe. Advantage is in clarity and focus: cutting through the mental clutter to do a task quickly, without getting distracted by fuzzy tangential ideas.

Catch is that one risks a blindness to complexity. Business world rarely operates in straight lines. Assuming continuous growth or steady trends can cause you to miss sudden disruptions, feedback loops, or delays.

Linear thinking is our mind’s default [factory setting] mode cognitive bias — where the risk is that we mistakenly expect straight-line, proportional relationships between inputs and outputs. In practice, complex business and economic systems operate in a non-linear way.

Things like your firm’s growth, economic development, fuel efficiency, or customer retention often follow curves. Most things move in cycles where ancient ‘yin and yang’ phases prevail.

No, perfectly straight lines don’t exist in nature. But there are examples that come pretty close. For instance, a spider’s silk with tension creates incredibly straight strands. Structure of the molecular lattice of minerals like quartz can create sharp, linear boundaries.

Light travels in straight paths in a vacuum, though gravity curves it. Gravity causes plumb lines to hang vertically, following a straight path – but it helps to see the big picture, the system.

Constantly reframe

At the heart of systems thinking is problem reframing. Many managers solve the wrong problem because they frame challenges from a single straight line perspective.

Systems thinkers continuously reframe problems to reveal hidden interdependencies. And it’s not just a one off event. Smart managers continuously polish problem statements as new system dynamics emerge – which is just about all the time.

If Red Oak Bank introduces AI assisted customer service then what will the competition do? If the bank begins to offer interest on their current accounts will others follow? Sometimes the competition can be pretty straight line predicable which can be used to gain an advantage.

Better to take systems perspective, crafting an offer, addressing the customer’s pressing problem, with an injection of — often counter intuitive — out of the box thinking.

Straight line thinking predominates in business plans. If we open a new branch in the Blue Ocean Mall our top line revenues will increase by 7 percent. Strategy is another universe, involving another level of thinking. What most organisations have is really is a plan called a strategy. A strategy is not a plan.

Kama Sutra of strategy

Lawrence Freedman’s book Strategy: A History is a fluid, and pragmatic overview of how humans have sought to shape their environments. Essence of his thinking dismantles the idea of rigid, long-term planning, arguing instead that true strategy is highly adaptive and governed by the starting point, not the end point. And never a straight line.

Freedman traces strategic thought from primate groups and ancient texts like Homer’s Iliad, through Sun Tzu, Machiavelli, and Clausewitz, up to modern corporate management and game theory.

Over 28 chapters, in almost 700 pages, Freedman covers the idea of strategy from a wealth of perspectives, almost from the beginning of time.

Freedman rails against overly complex, long-term blueprints. History shows what happens is that opponents always push back and chance events, unpredicted random events disrupt environments, so strategies must constantly recalibrate.

of the day strategy is about taking a systems perspective, shrewdly balancing available means against desired outcomes, to extract more power from a situation than the starting balance would suggest.

Henry Mintzberg has long challenged straight-line’ thinking, particularly through his critique of formal strategic planning saying, “strategy is not the consequence of planning, but the opposite: its starting point.”

Mintzberg argues that formal planning is analytical and linear, whereas strategic thinking is synthetic and creative. Rather than a straight line from formulation to implementation, Mintzberg believes business strategies evolve in real-time saying: ‘Strategies grow initially like weeds in a garden, they are not cultivated like tomatoes in a hothouse.’

Best profitable plan to corner the market might be to go straight to a real ‘wow’ imaginative strategy.

Members of Parliament have foiled fresh attempts to increase the powers of the Kenya Revenue Authority (KRA) Commissioner General, including granting the taxman sweeping powers on asset seizures.

The Finance and National Planning committee of the National Assembly has shot down amendments to the Tax Procedures Act, including one that sought to compel taxpayers to secure mandatory stay orders to protect their accounts from being frozen by the taxman.

The legislators also rejected proposals to include weekends and public holidays in computing timelines for filing tax objections and appeals.

At the same time, the committee has presented additional amendments to protect taxpayers from an all-powerful tax czar, including requiring the KRA to disclose its sources of third-party data deployed in tax assessments, and has also allowed taxpayers to reject or amend pre-populated tax claims.

The recommendations by the Kuria Kimani-led Finance committee extend a trend where MPs have stood in between the government’s push for the creation of an all-powerful KRA which would be unleashed on taxpayers.

The State had proposed deletion of Section 42 (14, e) of the Tax Procedures Act, which currently provides that KRA cannot attach accounts in instances where a taxpayer has filed an appeal disputing the taxman’s assessment.

Business sector players, however, pushed back, arguing that the proposal risks overreach by KRA, will still be injurious to business cashflows and will derail Kenya’s credentials as far as tax justice is concerned.

‘The committee noted that such a measure could result in significant cash flow constraints and operational disruptions for taxpayers, particularly where amounts recovered are later found not to be payable,’ the Finance Committee said.

‘The Committee further observed that the proposal raises concerns relating to the right to fair administrative action, access to justice, and delays in the refund of amounts collected where taxpayers are successful in their appeals.’

This was the fourth time in the recent past that the State is attempting to claw back on the Tax Procedures Act’s protection of taxpayers as far as agency notices are concerned.

On the proposal to include weekends and public holidays in computing timelines for filing tax objections and appeals, the Committee noted that this would shorten the period available to taxpayers to exercise their rights and increase the risk of procedural default.

A new amendment, Clause 29A, will be introduced to the Tax Procedures Act to require the KRA Commissioner General to disclose information sources and computations relied upon in issuing an assessment.

The Commissioner is also expected to bear the responsibility of demonstrating the accuracy and reliability of the information used.

This is after the Finance Bill moved to empower the KRA Commissioner to issue tax assessments based on information obtained from third-party sources, electronic tax systems, employer filings and audit records.

Previously, the Finance Bill 2025 had proposed measures to empower the taxman before Parliament’s freeze, including a proposal to include Saturdays, Sundays and public holidays in computation of statutory time for lodging objections and appeals.

The Treasury also unsuccessfully pitched to empower KRA to issue notices in recovery of taxes from third parties owing a taxpayer despite a taxpayer appealing against the assessment specified in a decision of the tribunal or court. The Law Society of Kenya (LSK) was among stakeholders who called for the rejection of the proposal this year, highlighting the circumvention of taxpayer rights.

‘The proposal would undermine taxpayers’ rights to justice, appeal and fair administrative action,’ LSK said.

The push to create an all-powerful KRA has emanated from pressure to improve domestic revenue mobilization, which has underperformed, by enhancing enforcement action.

KRA has a target of raising Sh2.985 trillion in ordinary revenue in the fiscal year starting July 1, even as it struggles to meet the current target of Sh2.784 trillion for the year to June 30.

Despite freezing part of proposals to embolden the KRA Commissioner, MPs have backed the strengthening of the taxman’s enforcement framework for the recovery of government revenue collected on behalf of other government entities.

KRA will be allowed to deploy the same processes to collect a fee, levy or charge and to recover the unpaid amount as a civil debt due to the government in the same manner as unpaid tax under a tax law. The proposal to re-introduce a one-year tax amnesty from July 1 to cover liabilities accrued up to December 31, 2025, has also been upheld even as MPs warn of the creation of a moral hazard.

‘The repeated use of tax amnesty programmes may create moral hazard by weakening the culture of voluntary compliance as some taxpayers may delay payment of taxes in anticipation of future waivers on penalties and interest,’ the Finance Committee said.

‘This may create an unfair environment where compliant taxpayers bear the burden while non-compliant taxpayers benefit from future relief measures.’

In Mbooni, Makueni County, the scenic hills conceal a difficult reality. Nearly four in 10 residents live in poverty, while about a third experience food poverty.

A few years ago, Mercy was among the 85,000 people in the county living in extreme poverty, according to the Kenya National Bureau of Statistics (KNBS) 2022 Poverty Report. Today, she is a budding entrepreneur, demonstrating how enterprise can help families escape poverty.

Mercy’s journey began after she lost her job at a textile factory in Nairobi due to a serious health condition. Returning to her home in Mbooni, she found her husband was the family’s sole breadwinner, earning barely enough to survive.

The family often skipped meals and struggled to pay school fees for their children. Determined to improve their situation, Mercy took on casual jobs. At one point, she earned just Sh88 (US$0.67) a day crushing stones and making gravel.

Her fortunes changed when she joined the Kenya Social Economic Inclusion Programme (KSIEP), implemented by the Ministry of Labour and Social Protection in partnership with Village Enterprise.

Through the programme, she received a grant, business training, mentoring, coaching and access to a Business Savings Group. Equipped with new skills and support, Mercy established a printing business that produces customised designs and official logos on uniforms and clothing for schools, businesses and NGOs.

Today, the enterprise is thriving. As the only printer in her locality, she has built a loyal customer base and created jobs for two people whom she is mentoring in the trade.

Mercy’s story illustrates the potential of graduation programmes to help extremely poor households build sustainable livelihoods and move out of poverty.

Over the years, the Government of Kenya, development partners and NGOs have implemented initiatives such as cash transfers, food aid and grants to address extreme poverty. While these interventions have improved livelihoods, 7.1 per cent of Kenyans still live in hardcore poverty and nearly four in 10 remain below the poverty line.

To address this challenge, Kenya has adopted a National Graduation Strategy that promotes a holistic approach to poverty reduction through sequenced support tailored to vulnerable households. The strategy aims to foster enterprise development, reduce dependence on aid and create pathways to self-reliance.

Drawing on global and local evidence, including BRAC’s Ultra-Poor Graduation model, the strategy provides a standard framework for implementing graduation programmes across the country.

Existing and new investors who participated in Family Bank’s private placement last year are set for capital gains of 24.1 percent or Sh1.93 billion when the lender lists on the Nairobi Securities Exchange (NSE) on Tuesday next week.

The investors, including Kenya Tea Development Agency (KTDA) and Kenya Orient Life Assurance -which is associated with Family Bank founder Titus Muya- applied for 552.05 million shares of the lender for Sh14.50 each.

Family Bank has meanwhile set a listing price of Sh18 per share, indicating a quick paper gain of 24.1 percent or an aggregate of Sh1.9 billion for the investors.

Among the investors who joined the lender’s shareholder register after the recent cash call is Kenya Orient Life Assurance with 35.3 million shares, on which it will see a paper gain of Sh123.6 million based on the listing price.

KTDA acquired an additional 103.4 million shares in the private placement, placing its gains on the extra stocks at Sh362 million.

An investor who bought 81.2 million shares through nominee and management services provider Investments and Mortgages will record a gain of Sh284.4 million.

Family Bank says various valuation methods priced its shares as high as Sh43.06 apiece, but it decided to list the stocks at a discount to align with the multiples at which other listed banks are trading.

‘The above price [Sh18 per share] strikes the optimal balance between value maximization for existing shareholders and the imperatives of a successful public market debut,’ Family Bank says in its information memorandum.

‘It is grounded in audited financial data, calibrated against live NSE peer multiples, consistent with OTC price discovery, and has been structured to ensure that Family Bank enters the market with a credible valuation discount that rewards subscribers and supports post-listing price stability.’

OTC refers to the less liquid and less transparent over-the-counter market where Family Bank’s shares have been trading for years.

The bank has not booked the entire amount it was targeting from last year’s private placement as some of the investors await vetting by the Central Bank of Kenya (CBK).

This means that the company’s total issued shares will rise further from the current 1.662 billion units, lifting its market capitalization on the NSE.

The company accepted applications for 552.05 million shares in the private placement but had only issued 357.45 million shares to the investors from whom it received Sh5.18 billion.

‘As at 31 December 2025, 357,459,553 shares had been allocated. The remaining 194,596,515 shares were pending allotment, subject to regulatory approval by the Central Bank of Kenya,’ Family Bank said.

Once cleared, the remaining group of investors will be allotted the pending shares at a total cost of Sh2.82 billion, bringing the total amount raised to Sh8 billion.

The lender’s issued shares will grow to 1.85 billion from the current 1.66 billion, which will give it a starting market capitalisation of Sh29.9 billion when it joins the main investment market of the NSE on Tuesday next week.

Family Bank’s shareholders have been exempted from the customary two-year lock-in period, giving them freedom to sell their shares and realise some of the gains.

‘The Capital Markets Authority has granted Family Bank an exemption from the requirement applicable to a listing by introduction under the Capital Markets (Public Offers, Listings and Disclosures) Regulations, 2023, which requires controlling shareholders to provide an undertaking restricting the sale of part or the whole of their shareholding for twenty-four (24) months following listing by introduction,’ the bank said.

‘Accordingly, no lock-in undertaking will apply to Family Bank shareholders in connection with the proposed listing by introduction.’

Mr Muya and his associates are expected to sell part of their holdings, mainly to comply with ownership limits applicable in the banking sector.

The related parties currently hold a combined 35.67 percent stake in the bank, exceeding the maximum ownership of 25 percent.

Compliance with the ownership limits is one of the key reasons for the bank’s listing by introduction –a process in which the firm will list its shares without raising new capital.

The CBK caps the ownership in a bank by a person and his associates at 25 percent to improve corporate governance and mitigate self-dealing.

The regulator has currently extended a concession to the Muya family to hold a combined stake of up to 31.93 percent. The family’s actual ownership is 35.67 percent, meaning it could seek to offload a 3.74 percent stake to comply with the concession, before later moving to full compliance.

Scaling down their ownership to 25 percent will mean selling up to 128.7 million shares, assuming the pending private placement shares are fully allotted.

Proceeds from the private placement will be used for expansion, including lending to small and medium-sized enterprises and investment in digitization.

Family Bank says it plans to maintain a dividend policy of distributing 30 percent of net profits but may vary the rate based on growth plans and other considerations at the discretion of the board.

The lender reported a net income of Sh5.3 billion in the year ended December 2025, rising 55.4 percent from the prior year’s Sh3.4 billion.