Category: Business Daily

Many Kenyans spend years building wealth through homes, land, Sacco savings and investments, but far fewer think about what happens to the loans tied to those assets after they die.

However, unpaid mortgages, bank loans, digital credit and even hospital bills can determine whether beneficiaries inherit property or walk away empty-handed.

“Under Kenyan law, a person’s debts do not die with them; they must be identified and paid from the estate before inheritance is shared out,” says Njuguna Muri, senior partner at MMTK Law, whose response was prepared jointly with senior associate Mary Audi and associate Fridah Muriithi.

Many people also misunderstand what legally constitutes an estate. ‘Section 3 of the Law of Succession Act defines an estate as the deceased’s ‘free property’,’ Mr Muri says.

An estate comprises all the property a person legally owned at the time of death that can be distributed through succession after liabilities have been settled. This includes land and houses, money held in bank and mobile money accounts, cars, shares, SACCO deposits, livestock, business stock, jewellery and other personal belongings.

One of the biggest misconceptions, he says, is that spouses and children automatically inherit a deceased person’s debts. Executors or administrators of the estate are responsible for identifying assets, settling liabilities and distributing what remains, but they are not expected to repay debts from their own pockets unless they misuse estate assets or breach their legal duties.

That also means beneficiaries cannot access inherited property until creditors have been dealt with.

“Heirs are only entitled to the net estate after debts and liabilities have been paid,” Mr Muri says, noting that any attempt to distribute land, houses or money before settling creditors can be challenged in court and reversed.

However, not every asset forms part of an estate. Jointly owned property, Mr Muri says, are generally passed on automatically to the surviving owner, while nominated pension benefits and insurance proceeds go directly to the named beneficiaries. Mortgaged property presents one of the biggest challenges during succession.

According to Mr Muri, beneficiaries can continue servicing the mortgage and retain the property, redeem the outstanding loan, rely on mortgage life insurance where available, sell the property to clear the debt or allow the lender to realise its security through an auction.

He notes that while banks holding charged property can exercise their security rights, they must comply with statutory notice requirements before selling the property.

The position is different for unsecured creditors. Mr Muri says lenders without security cannot simply send auctioneers to seize estate assets. Instead, they must pursue repayment through succession proceedings or obtain the necessary legal authority before recovering any money.

He adds that digital loans are often overlooked during estate planning despite their potential to complicate succession.

Mr Muri says many liabilities only emerge after death when lenders present claims against an estate, resulting in delays, disagreements among beneficiaries.

He recalls advising in a succession matter involving a businessman who died intestate while owing Sh17 million secured against a commercial property in Nairobi.

The family spent almost two years disagreeing over who should administer the estate. During that time, the loan attracted penalty interest, pushing the debt above Sh23 million before the lender moved to auction the property.

When administrators eventually obtained a grant, the court declined to stop the sale, allowing the lender to recover the outstanding loan, accrued interest and related charges from the proceeds.

“A Will would have brought clarity right from the beginning,” Mr Muri says.

Estate planning, Mr Muri says, goes beyond writing a Will. He advises borrowers to maintain an updated record of assets, liabilities, guarantees and insurance policies, ensure trusted family members know where financial information is kept, maintain mortgage life insurance where appropriate and regularly review beneficiary nominations.

He also cautions against keeping debts secret. “Avoid hiding loans from your spouse or adult children; secrecy is a major source of shock, anger and litigation after death,” Mr Muri says.

Rich Kenyans often hold their wealth through family companies and trusts. Mr Muri likens such arrangements to ‘three separate cups’. One holding wealth, the individual, the company and the trust. Each of these are governed by different legal rules.

‘Personal debts, like loans taken or guarantees made in a person’s own name, are still paid from their personal estate after death,’ Mr Muri says. The deceased’s shares go through succession. Similarly, trust property belongs to the trust rather than the settlor personally, meaning creditors cannot automatically claim trust assets simply because the settlor has died.

Even so, Mr Muri cautions against viewing trusts and companies as a way of escaping liabilities. ‘Kenyan insolvency law and court practice allow challenges where someone transfers assets into a trust or company in order to cheat or evade creditors,’ he says.

Lorries deliver thousands of factory-sealed and plastic-packaged products to supermarkets across the country daily. Boxes of cooking oil, milk, detergent, bottled water and packaged foods move quickly from loading bays to shelves.

Retail workers count deliveries, inspect damaged cartons and record invoices before customers see the goods.

Until this year, retailers were not expected to determine whether the manufacturers of those products had complied with environmental laws.

That changed when the National Environment Management Authority (Nema) began enforcing the Extended Producer Responsibility (EPR) regime, a framework rolled out in November 2024 requiring manufacturers, importers and brand owners to finance and manage the collection, recycling and disposal of packaging materials after consumers discard them under the “polluter pays” principle.

According to the ERP regulations, producers are obligated to design products and packaging materials that minimise waste, facilitate reuse, recycling, recovery and use of secondary raw materials where possible, and are environmentally friendly at their end of life.

It also makes producers take financial, organisational and physical responsibility for the management, treatment and disposal of their post- consumer products and end-of-life treatment for the waste generated by the products.

‘Provide consumers with information and raise awareness on management of post-consumer products they introduce in the market; carry out product life cycle assessment in relation to their products for enhancing environmental sustainability; and put in place circular economy initiatives and any other measures to reduce impact of their product on health and environment,’ the EPR policy states.

The policy has not been challenged in court. Its implementation is, however, under court scrutiny over Nema’s move to shift statutory compliance and verification duties from package producers to retailers.

The dispute is not over whether producers should pay for the waste they generate. It is about supermarkets being required to enforce those obligations on behalf of the government before stocking factory-sealed goods.

The row has grown into a constitutional case testing if Nema can demand a private business to enforce another’s statutory obligations before products reach consumers.

Last week, the Environment and Land Court in Kisumu halted that enforcement model after the Retail Trade Association of Kenya (RETRAK) challenged Nema directives requiring retailers to verify manufacturers’ compliance before accepting deliveries.

The court barred Nema from conducting raids, closing stores, seizing inventory, arresting retailers or prosecuting them over plastic packaging violations attributed to manufacturers and suppliers until the petition is heard.

The court also stopped the regulator from compelling supermarkets to verify producer registration, Producer Responsibility Organisation (PRO) membership, EPR payment compliance and plastic packaging permits before receiving, storing or selling sealed third-party products.

The orders shifted attention from a routine injunction application to a broader governance question: where does environmental enforcement end and private commercial responsibility begin?

RETRAK, which represents supermarkets, convenience stores and other organised retailers employing more than 250,000 people, says retailers neither make products nor choose the packaging used by suppliers. Their role, it says, begins only after goods leave factories.

In court papers, the association described retailing as a strict pass-through business. It said retailers receive products already sealed by manufacturers and are legally prohibited from altering packaging before sale.

“The practical effect of this directive was to convert private retail delivery bays into first-line compliance checkpoints for public regulatory obligations,” RETRAK said.

The origin of the dispute is a January 2026 Nema order requiring retailers to verify four compliance documents before stocking products.

They are producer registration certificates, plastic packaging licences, Producer Responsibility Organisation registration certificates and evidence of current compliance clearance.

RETRAK responded by asking the authority to publish what it described as a promised master register of compliant producers.

According to court filings, the regulator acknowledged that such a database was being prepared.

The association says the register never arrived. Instead, Nema issued additional enforcement notices, informing retailers that they risked prosecution if they stocked products from non-compliant manufacturers.

The association argues that supermarket receiving clerks have neither the legal authority nor technical capacity to perform the checks.

“Retail employees do not have the authority of environmental inspectors, lack laboratory testing capabilities and cannot access Nema databases needed to establish if manufacturers have complied with environmental obligations,” it said.

Without an official register, RETRAK argues, retailers were expected to verify information they could neither independently obtain nor authenticate.

The association said manufacturers’ compliance remained below five percent, prompting suppliers to suspend deliveries rather than risk enforcement action.

That, RETRAK insisted, disrupted transport schedules, spoiled perishable goods and denied supermarkets about Sh500 million in sales every day.

The court examined the evidence before issuing the temporary orders.

“The applicant has demonstrated that its members possess a constitutional right to engage in lawful trade, the right to the protection of their property under Article 40 of the Constitution and an inherent right to fair, lawful and reasonable administrative action under Article 47,” the judge said.

The court further observed that requiring retailers to police packaging compliance for products they neither manufacture, import nor control appeared to amount to delegation of Nema’s statutory mandate.

At the same time, the judge said the regulator remained free to investigate manufacturers, importers and producers directly while the constitutional challenge proceeds.

The petition asks whether environmental regulation can lawfully shift statutory verification duties from the state to private businesses that stand at the end, rather than the beginning, of the supply chain.

The value of development projects funded through taxes in the financial year ended June 2026 grew at the fastest pace in more than a decade, signalling a renewed push to finance infrastructure ahead of the 2027 General Election.

Exchequer-funded development expenditure jumped 36.4 percent to Sh457.2 billion, latest Treasury disclosures show, reversing years of budget cuts that had steadily squeezed capital investment to below one-tenth of total national government spending.

The increase, which excludes funding from loans and grants, marked the biggest annual expansion in at least a decade.

This ended a prolonged run in which capital spending either declined or posted only modest recoveries, with debt repayments and recurrent expenditure dominating government spending of taxpayers’ funds.

Development expenditure, directly from taxes, had fallen for three consecutive years between 2020/21 and 2022/23 before posting modest growth over the following two financial years.

The latest annual spending represents an additional Sh122.1 billion channelled to government-funded projects compared with the previous financial year ended June 2025.

The higher spending reflects the government’s policy to accelerate implementation of projects under President William Ruto’s Bottom-Up Economic Transformation Agenda and the country’s long-term development blueprint, the Vision 2030.

Treasury officials insist priority is given to completing ongoing projects, particularly infrastructure works with the greatest potential to reduce poverty, create jobs and spur economic activity, rather than launching new ones.

The government also protected funding for counterpart financing required to unlock billions of shillings in loans and grants from development partners, while directing additional resources to strategic national programmes, regional integration initiatives, social equity and environmental conservation.

Road infrastructure emerged among the biggest beneficiaries of the renewed investment drive, receiving Sh92.3 billion, a 44.2 percent increase from the previous financial year.

The higher spending coincided with the resumption of several road projects that had stalled after contractors accumulated billions of shillings in pending bills during the government’s fiscal consolidation programme.

Agriculture also featured in renewed development spending plans, with funding for crop development rising 82 percent to Sh45.7 billion, reflecting increased emphasis on food production through projects such as fertiliser subsidy.

Water and sanitation recorded the fastest growth among the major departments, with allocations expanding 124.9 percent to Sh34.5 billion, more than doubling from the previous financial year.

Energy development funding increased 34.8 percent to Sh22.7 billion, supporting investments in electricity infrastructure and power transmission projects.

The distribution of development spending points to a government raising investment in transport and logistics, agriculture, water and energy projects, sectors that have potential to stimulate economic activity and attract private investment.

The latest increase lifted development spending to 10.97 percent of the Sh4.17 trillion spent by the national government during the financial year to June 2026.

Although that represents the first significant recovery in years, the ratio remains less than half the level recorded a decade ago, underscoring the continued dominance of recurrent expenditure in the national budget.

As a share of total national government expenditure, development spending from taxes shrank from 23 percent in 2016/17 to 9.15 percent in 2023/24 and 9.39 percent in 2024/25, highlighting how investment spending was gradually crowded out by recurrent expenditure.

The latest rebound also comes after the Treasury acknowledged it had repeatedly fallen short of the Public Finance Management (PFM) Act requirement that total development expenditure[including portion from development partners] account for at least 30 percent of spending.

In the latest Budget Policy Statement tabled in Parliament last February, Treasury officials said actual development spending in the 2024/25 financial year, for example, accounted for 25.1 percent of ministerial expenditure, below the statutory threshold. They blamed the shortfall on “expenditure rationalisation measures undertaken during budget execution’.

The Treasury added that the lower-than-expected share reflected spending cuts implemented during the year, with development outlays falling short of the earlier projection of 26.2 percent.

The rebound nonetheless comes against a backdrop of persistent delays in implementing development projects, suggesting that higher allocations alone may not automatically translate into faster execution of infrastructure ventures.

The Parliamentary Budget Office notes that “there have been persistently low absorption rates of development expenditure in recent years, which has led to stalled progress on key projects despite overall budget increases’.

The findings of the office, which advises lawmakers on fiscal affairs, highlight longstanding bottlenecks in procurement, project execution and fund absorption that continue to delay completion of public investment projects.

Kenya will ask firms to reveal their litigation history and anti-corruption oaths before they are contracted for unsolicited public-private partnership (PPP) in the aftermath of the cancellation of Adani’s Sh2.7 billion deals and in response to World Bank pressures.

Each firm or a member of a consortium will be required to reveal previous and ongoing legal tussles under the newly proposed Public Private Partnerships (Project Management) Regulations of 2026, which is partly the product of the World Bank push for transparency.

The multilateral lender warns that the so-called Privately Initiated Proposals (PIPs) could undermine public confidence in the search for private investors to build infrastructure, triggering protests that could turn deadly. With the government running out of space to tap additional loans, it has turned to deep-pocketed private investors such as India’s billionaire Gautam Adani to close mega infrastructure projects and recoup their investments through avenues such as tolling.

President William Ruto in November 2024 ordered the cancellation of Adani’s deals, building of electricity transmission lines and upgrading of Jomo Kenyatta International Airport (JKIA), after group founder Gautam Adani was indicted in the United States for allegedly paying about $265 million (Sh34.2 billion) in bribes to Indian government officials.

The US Department of Justice dropped criminal charges against Adani in May this year, after the Indian billionaire agreed to settle a separate civil case.

Kenya wants firms seeking PPP deals to reveal this kind of legal spat for guidance on the approval of the contracts.

‘A private party or consortium of private parties, shall, for purposes of undertaking a detailed assessment of the due diligence elements…shall provide…its litigation history or that of the consortium and its affiliates, and the measures that the private party or each member of the consortium took or intends to take to mitigate escalation of the disputes, if any,’ reads part of the proposed regulations.

The proponent of an unsolicited deal will be required to also disclose its corporate and governance structure, prove that it has not been debarred or disqualified by any country or international organization from participating in PPP deals, and give a notarized declaration that it is not corrupt or has engaged in acts of corruption.

The World Bank Group recently cautioned Kenya against seeking unsolicited PPP deals following the cancellation of two contracts linked to Adani Group companies.

The multilateral noted that the privately initiated proposals (PIPs) could undermine public confidence in the search of private investors to build infrastructure, triggering protests that could turn deadly.

The lender instead encourages Kenya to seek competitively sourced PPPs amid concerns that unsolicited deals are shrouded in secrecy, leading critics to believe that the contracts do not offer taxpayers value for money.

‘I think with PPPs, it’s very clear. International good practice leans on competitive tendering and I think the same applies to Kenya,’ Marek Hanusch, the lead economist for the World Bank’s economic policy in Kenya, said previously.

He echoed comments captured in a biannually published report by the bank on the country’s economic outlook.

‘Going forward, the country’s success in PPP projects will depend on putting in place good governance, oversight, planning and accountability…including strengthening of practices around unsolicited project proposals to foster predictability and confidence in PPP project development,’ the World Bank said.

The freshly published regulations are a requirement by the World Bank, if Kenya is to continue having access to loans under the development policy operations (DPO) option.

One of the triggers to unlocking further funding under a third DPO disbursement is the adoption of PPP regulations, restricting the use of unrestricted proposals.

In late June, the World Bank approved a $750 million budget-support loan for Kenya and a $500 million sustainability-linked facility that will cut the country’s reliance on expensive domestic debt and bolster economic reforms.

Under the regulations, a firm that submits a privately initiated proposal for a project shall demonstrate why the project is not suitable for competitive bidding, including showing where there is an urgent need for continuity in a project which would render a competitive procurement process impractical.

The firm must also prove that it’s the only company capable of undertaking the project or show that its proposal is anchored on unique elements.

The increased use of PPPs to finance infrastructure projects is aimed at reducing the use of debt and taxes to build roads, airports, power plants and electricity transmission lines

Public debt went up following five years of increased borrowing, making it sustainable. Under PPP deals, private financiers build roads and recoup their investments through avenues such as tolling.

Across Africa last year, fewer people were uncertain about obtaining adequate food or were forced to reduce the quality and quantity of what they ate. The hunger rate fell for the first time in nearly 10 years, from 20.3 percent in 2024 to 20 percent in 2025.

Moderate or severe food insecurity fell from 58.5 to 56.6 per cent, or 8.6 million fewer people. Severe food insecurity also declined. Child stunting is falling. Even hunger, which had been rising in Africa since 2017, appears to have stopped climbing.

The change is modest, but it could mark a turning point. After a decade of deterioration, Africa has shown that the architecture behind food security can work. Keeping that progress alive will need a second shift: from reducing hunger alone to making nutritious diets affordable.

For decades, the address mattered as much as the house itself. If Kenya’s wealthy bought a second home abroad, chances were it overlooked Manhattan’s skyline, London’s parks or Dubai’s glittering waterfront.

Today, however, another skyline is gradually replacing those familiar postcards. Johannesburg and Cape Town are emerging as the new addresses of choice for Kenya’s affluent, reflecting a shift in how wealth is being preserved, diversified and deployed across Africa.

Knight Frank’s Wealth and Investment Trends 2026 report shows South Africa has overtaken the United States as the preferred offshore residential property destination for Kenyan high-net-worth individuals.

The finding signals that investors increasingly looking south rather than west as Africa’s largest economies become more interconnected through business, aviation and capital.

‘Among secondary destinations, the United Kingdom ranked at 25 percent, while South Africa also emerges as a notable regional option at 15 percent. In the previous year, the United States and the United Kingdom featured more prominently as offshore destinations,’ wrote Knight Frank in the report.

‘In 2026, the UK retains its strong position, while South Africa has emerged as a more visible alternative within Africa.’

Years ago, offshore investing was largely synonymous with Europe and North America, where property ownership symbolised status as much as financial success.

Today, Africa itself is beginning to offer many of the ingredients wealthy investors once searched for overseas, including mature property markets, professional asset managers, deeper financial systems and internationally recognised cities.

‘South Africa’s increasing relevance reflects its position as a more mature and diversified African economy, with a well-developed financial system and sophisticated commercial and residential property markets,’ said Knight Frank.

‘Its inclusion among preferred destinations signals a gradual broadening of intra-African investment flows among Kenyan HNWIs (High Networth Individuals), alongside established Western markets.’

According to Hass Consult co-Chief Executive Sakina Hassanali, African wealth is becoming increasingly regional, with the wealthy looking more within the continent as a result of matured regional markets.

‘South Africa offers a sophisticated residential market, attractive lifestyle appeal and is far more accessible for Kenyan investors,’ says Ms Hassanali.

But that accessibility stretches beyond flight times. Buying and managing property in Johannesburg is considerably easier than maintaining an apartment in New York, where taxation, regulations, financing structures and professional management requirements are significantly more complex.

African investors increasingly understand neighbouring markets better than distant global cities, making cross-border decisions less intimidating than they were a decade ago.

Despite South Africa’s growing attraction, Knight Frank’s findings indicate that, Kenya remains the dominant investment destination for affluent households, although preference slipped to 60 percent from 66 percent last year, a trend Ms Hassanali describes as typical progression as wealth grows.

‘Investors naturally move from concentrating their wealth in one market to diversifying across multiple geographies and asset classes. I don’t see this as a loss of confidence in Kenya, but rather as a sign of increasingly sophisticated portfolio construction,’ she observes.

Half of wealth advisers surveyed said fewer than 10 percent of their clients are pursuing second citizenships, while 38 percent reported none are seeking alternative passports. Those figures paint a picture of wealthy families diversifying assets without physical relocation.

The report attributes that confidence to substantial investments already anchored in Kenya across property, agriculture, technology and privately owned businesses.

Knight Frank says deep-rooted social connections and multigenerational family structures also continue influencing residency decisions as much as financial considerations.

‘The continued preference for retaining primary residency in Kenya reflects sustained confidence in the country’s long-term economic prospects and investment environment, despite prevailing global uncertainties,’ noted Knight Frank in the report.

‘Deep-rooted family structures, generational ties and community networks also continue to play a central role in residency decisions, reinforcing long-term attachment to the local market and limiting outward migration among Kenya’s wealthy population.’

The survey also found most wealthy Kenyans still keep only a small proportion of their residential wealth overseas. Thirty-five percent of advisers said less than one-fifth of clients’ residential property holdings are located outside Kenya, reinforcing the country’s position as the centre of their wealth strategies.

Ms Hassanali projects that while international diversification is likely to continue, it will not replace domestic investment.

‘Overseas property ownership comes with greater complexity from taxation and regulation to ongoing management and resale,’ she says.

‘For most Kenyan Investors, international property is likely to remain a complement to their Kenyan portfolio rather than a replacement for it.’

The findings contrast with a rapidly expanding global market for investment migration where wealthy individuals increasingly acquire alternative citizenships to secure easier travel, tax planning opportunities, as well as access to more stable jurisdictions.

Countries including Portugal, Greece, Malta, the United Arab Emirates and several Caribbean states have in recent years attracted affluent investors through residency-by-investment and citizenship-by-investment programmes.

The programmes typically require qualifying investments in property, government securities or local businesses in exchange for residency rights or eventual citizenship.

Global demand for such programmes has accelerated following geopolitical conflicts, tighter immigration rules, rising taxation, as well as heightened political uncertainty across several regions.

Cumulatively, goods worth Sh2.76 trillion exported from China to Kenya over the five years to December 2025 do not appear in KRA’s import records.

GACC says that between 2021 and 2025 the country exported goods valued at Sh5.35 trillion against KRA’s import figure of Sh2.587 trillion, leaving an unexplained gap of Sh2.76 trillion.

China has been Kenya’s largest source of imports for more than a decade, accounting for about a quarter of all goods brought into the country.

Customs taxes on imports are also one of the government’s biggest sources of revenue, making any persistent discrepancy in import records significant for both tax administration and trade policy.

While differences in trade statistics can arise from factors such as the timing of shipments, goods routed through third countries and differences in statistical classification, experts say a persistent gap of this magnitude warrants closer scrutiny because it could point to under-declaration of imports, trade mis-invoicing or other forms of customs leakage.

If a significant part of the discrepancy reflects imports that escaped customs declaration, the government may have lost substantial import tax revenue while some goods may have bypassed regulatory checks, experts argue.

The Sh629 billion gap represented about 49 percent of the value of goods that China recorded as exports to Kenya in 2025, continuing a pattern that has persisted for at least five consecutive years.

The discrepancy was Sh96 billion higher than the Sh533 billion gap recorded in 2024, which came after a Sh733 billion gap in 2023, a year when the Kenyan Shilling had significantly depreciated against major currencies.

The persistent gap between China’s export records and Kenya’s import statistics has raised questions about whether it reflects statistical differences, goods routed through intermediary countries or under-declaration of imports that could have reduced customs tax collections.

‘It has several policy implications, because with such a huge gap it points to possible revenue leakages that may have been missed,’ said economist Churchill Ogutu, head of research at Capital A Investment Bank.

The KRA did not respond to detailed questions on the source of the discrepancies via an email sent to the tax agency on July 18.

However, the Treasury has previously revealed plans to have the KRA work with its counterpart agencies in other jurisdictions to determine the true value of imports shipped in from China.

As part of its revenue strategy for the medium term, the Treasury disclosed that the government will be working with other tax authorities in determining the true value of ‘high-risk imports from China,’ which is aimed at addressing the problem of mis-invoicing.

Trade mis-invoicing involves manipulating the price, quantity, or quality of a good or service on an invoice so as to shift capital illicitly across borders.

The government reckons that the value of most of these products-especially electronics such as mobile phones and computers – has not been accurately priced, leading to tax leakages running into billions of shillings.

‘Specific tax measures to be implemented include…to establish a clear framework on the exchange of information (EOI) with other tax jurisdictions for both domestic taxes and customs to ensure the flow of information e.g. valuation of high-risk imports from China and Transfer pricing paused by multinationals,’ the Treasury said in its medium-term revenue strategy for the period 2024-2027.

Customs taxes remain one of the KRA’s biggest revenue streams. In the nine months to March 2026, the authority collected Sh733.7 billion in customs revenue, accounting for 36 percent of all tax collections, underscoring the importance of accurately recording imports.

Between 2021 and 2025, the Kenya National Bureau of Statistics recorded exports to China totalling Sh121.5 billion, while the GACC recorded Sh151.9 billion. The difference of Sh30.4 billion is the cost of shipping and insurance.

‘It’s normal to see what’s recorded as imports being slightly higher than what’s the equivalent exports from the source country because one is FOB and the other includes shipping costs,’ said Mr Ogutu.

‘But a situation where imports are less than exports is difficult to explain. It could be a result of several factors.’

Some scholars have attributed such discrepancies in records to goods smuggling, especially when the goods have been illegally obtained, are contraband, or when importers want to evade paying taxes.

Motor dealer DT Dobie Kenya, now in liquidation, has been ordered to pay Sh1.1 billion in customs duty on imported vehicle parts after the National Treasury failed to honour its promise to settle the tax.

The Tax Appeals Tribunal dismissed the company’s appeal against the Kenya Revenue Authority (KRA), ruling that the Treasury’s undertaking did not extinguish the importer’s legal obligation to pay customs duty.

The dispute stemmed from duty-free imports of semi-knocked down (SKD) vehicle kits under a 2016 government programme aimed at reviving local vehicle assembly.

SKD kits are imported vehicle parts assembled locally. Unlike completely knocked down (CKD) kits, which qualified for duty-free importation under the customs regime, SKD kits were never exempted by law.

The tribunal upheld KRA’s review decision confirming customs duties of Sh1.11 billion, finding that no legislation had ever granted SKD imports a customs duty exemption.

The dispute originated under the Kenya Industrialisation Transformation Programme, through which the government sought to revive local vehicle assembly.

In 2016, the government negotiated with Volkswagen South Africa to re-establish Volkswagen assembly in Kenya after nearly four decades. Later that year, the government, Volkswagen South Africa and DT Dobie signed a Letter of Commitment appointing D.T. Dobie as Volkswagen’s local implementation partner.

The programme involved assembling Volkswagen Polo Vivo vehicles at the Kenya Vehicle Manufacturers (KVM) plant in Thika using SKD kits and establishing a training centre to develop local automotive skills.

To facilitate the project, the National Treasury instructed KRA to clear SKD imports without collecting customs duty immediately and undertook to pay the taxes pending amendments to revenue laws that would align the treatment of SKD kits with CKD kits. KRA implemented the arrangement by issuing exemption codes for the imports.

However, the promised legal amendments were never enacted.

Following a post-clearance compliance review, KRA in September 2025 demanded Sh1.39 billion in unpaid customs duties. After D.T. Dobie objected, the taxman removed declarations falling outside the statutory audit period and reduced the assessment to Sh1.11 billion, covering imports made between September 2020 and May 2025.

DT Dobie argued that it imported the kits only after the government committed to granting duty relief and that KRA had consistently implemented the arrangement by clearing the consignments duty-free for several years.

The company said it had invested in local assembly in reliance on Treasury’s undertaking and argued that KRA had breached its legitimate expectation by later demanding payment.

The tribunal rejected the argument, holding that administrative assurances could not replace legislation.

“The exemption from customs duty is a creature of statute,” the tribunal ruled, adding that “the anticipated legal framework never came into being.”

It added: “To date, therefore, SKDs are not exempt from customs duty.”

The judges held that the duty-free clearance merely deferred payment and did not extinguish the tax liability.

“The duty was always due; what was deferred was its payment, not its imposition,” the ruling stated.

The tribunal further found that the National Treasury’s undertaking did not transfer the statutory obligation to pay customs duty from the importer.

“The appellant’s remedy, if any, for the National Treasury’s failure to meet its promise lies against the National Treasury. It does not lie in resisting a duty that the EACCMA fixes upon the appellant as owner,” the tribunal said.

It noted that under the East African Community Customs Management Act (EACCMA), import duty exemptions are available only where expressly provided by law or under the East African Community Common External Tariff.

“Exemptions are to be strictly construed, and the party asserting an exemption bears the burden of bringing the goods squarely within the exempting provision,” the tribunal said.

On legitimate expectation, the tribunal ruled that no public authority could create a tax exemption through administrative action where Parliament had not enacted one.

“There can be no legitimate expectation against clear provisions of the law,” it held.

The tribunal also dismissed DT Dobie’s claim that the assessment had been issued outside statutory timelines, finding that KRA had already excluded declarations falling beyond the five-year limitation period before confirming the final assessment.

The main feasibility study for the planned 243-kilometer dual toll Mau Summit-Malaba highway will kick off within the first quarter of the 2026/27 financial year, the public-private-partnership (PPP) directorate of the National Treasury has said.

‘The pre-feasibility study commenced in November 2025 and was completed in May 2026. Feasibility study to commence in quarter one of the financial year 2026/2027,’ the directorate said.

The project comprises upgrading the 243-kilometer Mau Summit-Malaba highway, converting it into an access-controlled tolled road and expanding its capacity from 2 lanes to 4 lanes. The strategic transport route is part of the Northern Corridor connecting western Kenya and Uganda and will complement the upstream Nairobi-Mau Summit highway already under construction.

‘The highway is also one of 9 roads that constitute the Trans-African Highway Network, a continental development policy coordinated by the African Union,’ the directorate said.

A consortium of Canadian and Kenyan firms conducted the pre-feasibility studies to expand the Mau Summit-Eldoret-Malaba highway under the PPP model. The study was funded by the Asia Infrastructure Investment Bank (AIIB). CPCS of Canada and Kenya’s Avatech Engineering undertook the pre-study that will anchor the cost of the project and toll fees to be charged by the investors who will fund the project.

The project will join the Sh170 billion Rironi-Mau Summit dual highway, marking a departure from the earlier plan, which was to extend it on the Kisumu-Busia-Malaba side. China Road and Bridge Corporation and the National Social Security Fund have already started work on the 236-kilometre section from Rironi through Nakuru to Mau Summit.

The Mau Summit-Eldoret-Malaba section, which is part of the Northern Corridor, currently experiences heavy traffic and is prone to accidents.

The government had earlier said that the dual carriageway would be extended to Malaba through Kisumu and Busia. It had remained mum on the Mau Summit-Eldoret-Malaba section.

The Kenya National Highways Authority (KeNHA) had earlier disclosed that 24 percent of the Northern Corridor roads were in deplorable condition by 2018, forcing transporters to endure over 100 hours moving from Mombasa to Malaba, against the targeted 78 hours.

Besides the existing 27-kilometre Nairobi Expressway, KeNHA plans to construct more expressways on key transport corridors to ease the rising traffic congestion and spur both local and foreign investment.

Expressways are typically high-capacity roads designed to allow vehicles to travel quickly and efficiently over long distances with minimal interruptions. They are built to handle large volumes of traffic at relatively high speeds compared to ordinary roads and often involve tolls.

‘Major road corridors, including the Northern Corridor and routes connecting Nairobi to Central and Eastern Kenya, are increasingly congested, impeding efficient movement,’ KeNHA said in a disclosure.

‘The government recognises the significant impact that inadequate infrastructure has on economic growth and poverty reduction. It has already begun to observe how infrastructure bottlenecks are hindering both foreign and domestic investment,’ the agency added.

The National Treasury has introduced new restrictions on the transfer of cryptocurrency licences, requiring operators to hold and actively use their permits for at least three years before they can be sold or assigned to another party.

The new Virtual Asset Service Providers (VASP) Regulations, 2026, published by Treasury Cabinet Secretary John Mbadi, also require successful applicants to commence operations within 12 months of receiving a licence.

The rules aim to curb speculative licence trading, where individuals or firms acquire regulatory licences not to operate cryptocurrency businesses but to later sell or transfer the permits for a profit once they become scarce or more valuable.

‘Upon grant of a licence under these rules, a licensee shall commence its virtual asset business within twelve months of the date of grant of the licence,’ the regulations say.

The rules require that a licensee seeking to assign or transfer a licence apply in writing to the relevant regulator and pay the prescribed fee. However, the application will only be considered if the licensee has held the licence for at least 36 months from the date operations began.

‘An application (for transfer of a licence) shall only be considered if the licensee has commenced virtual asset business and operated in accordance with any conditions imposed on the licence and held the licence for a minimum period of 36 months from the date of commencement of business,’ the new rules say.

By requiring licensees to commence operations within a year and hold their licences for at least three years before transferring them, the Treasury is seeking to ensure licences are issued only to genuine operators with long-term business plans, rather than investors looking to flip regulatory approvals.

The new guidelines form subsidiary legislation for the Virtual Assets Service Providers Act 2025, which became effective in November 2025.

The Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) are mandated to jointly license, supervise and regulate cryptocurrency exchanges, wallet providers, stablecoin issuers and other virtual asset businesses operating in the country.

Under the framework, cryptocurrency firms seeking licences are required to submit audited financial statements for the three years preceding the application. Newly incorporated firms must instead provide opening financial statements verified by an auditor.

Where the applicant is a subsidiary of a foreign-incorporated company, the regulations require submission of the parent company’s audited consolidated financial statements for the previous three years. The CBK and CMA will determine licence applications within 30 days after receiving all required documents and completing due diligence on the applicant.

Meanwhile, virtual asset exchanges will pay an initial licence fee of Sh1 million and an annual renewal fee of Sh500,000 or 0.5 percent of gross revenue, whichever is higher.

Wallet providers will pay Sh500,000 for both initial licensing and renewal, or 0.15 percent of gross turnover, while stablecoin issuers are required to pay Sh2 million for both.

Asset managers will pay an initial Sh200,000, with annual renewal fees set at 0.05 percent of assets under management, subject to a minimum of Sh200,000 and a maximum of Sh5 million.

The Treasury has allowed firms to obtain a single licence covering more than one virtual asset activity, provided that they constitute distinct lines of business with independent risk profiles or share common infrastructure.