Category: Business Daily

The National Treasury has refrained from introducing higher taxes to fund this year’s Sh4.845 trillion budget, as lessons from the controversial Finance Bill 2024, which triggered deadly protests, continue to influence the government’s revenue-raising measures.

For the second year running, Treasury Cabinet Secretary John Mbadi is banking on aggressive tax enforcement and other administrative measures to raise total revenue by Sh232 billion to Sh3.67 trillion in the 2026/27 budget.

The measures include stricter validation of expenses on the Kenya Revenue Authority (KRA) Electronic Tax Invoice Management System (eTIMS), integrating the KRA’s systems with eCitizen and other digital payment platforms, and inspections to net more taxpayers from the informal sector.

The government has also made changes to the Income Tax Act, introducing withholding taxes on interchange and merchant service fees on card-based payment transactions.

Treasury has also introduced an amendment seeking to establish a floor of 60 percent of a company’s undistributed income that may be treated as a deemed dividend, which would then be subjected to a withholding tax.

Currently, there are no thresholds on the proportion of undistributed income that the KRA could deem as dividends.

Explaining this year’s Finance Bill, which is targeting Sh120 billion in new revenue, Mr Mbadi said that the limited room for higher tax rates will see the focus is on expanding the tax net and ensuring equity and fairness in the tax regime.

‘We are alive to the fact that the options of raising more taxes are limited because Kenyans have complained loudly before of high taxation. We are also aware that we have limited options in borrowing money to finance our budget, which continues to increase, especially as a result of debt service cost,’ said Mr Mbadi in a briefing on May 25.

‘We have gone back to the basics of taxation, which ensures equity, fairness and simplicity. Therefore, the proposals in this Bill are going to enhance simplicity to help us in tax administration.’

Previously, Finance Bills relied on measures such as higher excise duty on products such as alcohol, cigarettes, confectionery, imported goods, motorcycles and mobile phone airtime to drive higher revenue.

The 2024 Bill that sought additional revenue of Sh360 billion introduced unpopular amendments including VAT on bread, and an annual motor vehicle tax set at 2.5 percent of the value of a vehicle, capped at Sh100,000.

The changes were later discarded after President William Ruto declined to sign the Bill in the aftermath of the protests, although some of the Bill’s clauses were reintroduced later in the year through a Tax Laws Amendment Bill.

Having taken heed of the protests a year earlier, the Finance Bill 2025 went after the government’s tax expenditure (foregone taxes) by shifting a raft of manufacturing inputs from VAT zero-rated status to exempt status. This bill had a more modest new revenue target of Sh30 billion.

Manufacturers are able to claim VAT refunds from the government on inputs used to produce zero-rated products. On exempt goods, they are unable to do so, and therefore this cost is usually passed on to the final consumer.

Products targeted under the VAT change included locally assembled mobile phones, animal feed, raw materials for pharmaceutical products, solar and lithium batteries and electric bicycles.

Beyond the taxation measures, the government has in the last two years sought to expand its options for financing development projects amid a widening deficit and a stubborn inability to implement fiscal consolidation through spending cuts.

The 2026/2027 budget has a deficit of Sh1.174 trillion, which is equivalent to 5.6 percent of GDP. This deficit will be funded through domestic borrowing of Sh1.06 trillion, and external borrowing of Sh116.2 billion.

With the development vote in the budget set at Sh749 billion, or 15.5 percent of the total expenditure for the year, the State has been forced to turn to alternative financing options for its multi-billion-shilling capital projects and settle pending bills.

These include public-private partnerships (PPPs), securitisation of levies and sale of public assets.

‘The 2026 Budget Policy Statement marks a clear strategic shift in how Kenya approaches development financing, moving away from a model heavily reliant on public resources toward one centred on mobilising private capital at scale,’ according to tax experts at PwC Kenya in a pre-budget bulletin.

‘The shift reflects both necessity and policy evolution: public resources alone are no longer sufficient to meet Kenya’s growing development needs.’

In the 2026/2027 budget, the State has a target of mobilising Sh80 billion through PPPs in sectors such as roads, irrigation and power transmission.

It is also eyeing a Sh120 billion roads bond backed by future collections from the Road Maintenance Levy Fund (RMLF), earmarked for clearing pending bills in the sector and putting up new roads.

The State is also mulling a Sh100 billion bond that will securitise future inflows from the Affordable Housing Levy.

The proceeds are expected to address a funding gap of Sh118 billion in the Kenya Kwanza administration’s goal of building one million affordable houses by June 2027.

The budget is also likely to be boosted by the proceeds of the government’s Sh244.5 billion sale of a 15 percent stake in Safaricom to South Africa’s Vodacom Group.

The proceeds from the sale of public assets will be allocated to the recently established infrastructure fund, which aims to crowd private capital into public projects.

Over the last decade, few locally situated power stations have been onboarded in Kenya. There have been multiple moratoria and investigations on power procurement.

Successive governments in both the Executive and Legislature have been on a wild goose chase for benefactors, ignoring the need to execute plans for new generation capacity.

As happened in the early 2000s, the chickens are back to roost. We are staring at undersupply, load shedding, and emergency power procurement at guaranteed higher costs related to the volatility in fuel prices, including LNG. This crisis is a result of sustained political meddling in planning and onboarding of new power plants.

There is a notion that the power business is lucrative and must be controlled by bedfellows, and that our bedfellows deserve it more than theirs.

Outside of this, no one moves; we would rather have a standoff and let demand race beyond supply. Manufacturing a crisis, again, fighting and trading salvos over who gets to own the stopgap measure. An approach bereft of strategic long-term thinking.

There are no magic bullets to lower the cost of power. Kenya must run competitive procurement processes open to all.

Identify these opportunities to auction through the least cost power development plan (LCPDP) that is not tampered with to suit personal interests. Lower costs will be achieved with time if we can prove to be honest and diligent stewards of investment opportunities.

Investors have been waiting for Kenya to show this trait. Funding is available. Any promises of imminence in the reduction of the cost of power are pure wishful thinking; we have to do the work, spend the time and show resolve.

That said, we are where we are, and I can smell the coffee. Demand is set to outstrip supply, especially during peak hours. We need to quickly onboard capacity at the lowest cost and with the least long-term commitment. In the meantime, we should license and source cheaper long-term alternatives in parallel. This is the lesson from the Westmont barge of the early 2000s.

Our options are to expand imports from Uganda and Ethiopia, open to more captive supply, shift demand or engage another hydrocarbon barge. The first three in unison can also be thought of as an option.

In my view, expanding imports from Ethiopia and Uganda offers the best short-term approach. Kenya should strategically push for the operationalisation of the EAPP day-ahead market.

This will allow the country to procure additional short-term capacity (two to four years) from hydropower in Ethiopia, Uganda and Tanzania.

It will not require protracted PPA negotiations with neighbouring countries, as is the case with current bilateral agreements. Commitment should be on a short-term basis to better utilise cheaper installed capacity in the region and allow Kenya time to build new local generation.

The second option is to encourage an increase in captive supply.

This will occur anyway if the utility is unable to supply but can also be a strategic move to counter undersupply and provide consumers with control over their supply.

The removal of restrictions on captive supply has pulled South Africa out of load shedding in recent years. The quick resolution of all pending formalities to allow wheeling of power will further enable self-supply. This option has minimal direct costs for the government.

A third option is to incentivise the consumption of power away from peak hours. Lower prices can be offered to consumers to use power during periods of low utilisation, typically between 10pm and 6am.

Load shedding is prevalent during peak hours. We plan new generation based on the peak. Generation is underutilised outside peak hours. Shifting some demand away from the peak will reduce the pressure.

These three options together will solve our short-term supply challenges. We have better options than those available in the early 2000s. We simply require focused application.

An emergency hydrocarbon barge plant is the last option and should not be at the top of our priorities.

The irony is that we have recently decommissioned hydrocarbon plants that were fully paid for and could still run for 10 years, that we could have had for a peppercorn. However, a strategic longer-term LNG plant should be planned for grid stability.

The High Court has ordered the Kenya Revenue Authority (KRA) to pay Sh29.4 million in tax refunds to Pernod Ricard Kenya after finding that the taxman failed to determine the company’s refund applications within the 90 days required by law.

The court dismissed KRA’s appeal against a Tax Appeals Tribunal decision that found the authority’s delayed response automatically validated the liquor firm’s refund claims under the Tax Procedures Act.

The dispute arose after Pernod Ricard Kenya, a subsidiary of global wine and spirits company Pernod Ricard, applied for tax refunds on December 6, 2022.

The company sought reimbursement of overpaid taxes for different periods, including claims amounting to Sh25.9 million for July 2019 to June 2020 and Sh3.4 million for July 2020 to June 2021.

Under Section 47 of the Tax Procedures Act, the Commissioner of Domestic Taxes is required to determine a refund application within 90 days of receiving it.

Pernod Ricard Kenya argued that KRA failed to comply with the deadline. The company’s brands include Jameson, Absolut, Chivas Regal, Martell and Ballantine’s.

The company told the court that although KRA eventually rejected the applications, the decision was dated April 6, 2023 and communicated on May 23, 2023, long after the statutory deadline had expired.

‘The tribunal correctly held that the refund was deemed allowed by operation of law,’ the company argued.

KRA challenged that finding and asked the High Court to overturn the tribunal’s judgment delivered on June 7, 2024.

The authority maintained that it had made a refund decision on March 1, 2023, within the prescribed period.

KRA said the decision had been communicated by email to Pernod Ricard’s tax agent, PricewaterhouseCoopers, and advised the company that outstanding tax liabilities had to be resolved before any refund could be processed.

The authority further argued that the tribunal erred in disregarding that evidence. It also contended that Pernod Ricard’s appeal before the tribunal was defective because no proper notice of appeal had been filed against the commissioner’s decision.

The court, however, rejected those arguments, noting that the tribunal had found no evidence that the alleged March 1 communication had been produced before it.

Court findings

‘The tribunal notes the respondent’s reference or averment that it had communicated to the appellant on March 1, 2023. However, it failed to adduce the said communication or correspondence in its pleadings,’ the judge said.

The court noted that KRA had itself acknowledged that the refund decision was dated April 6, 2023 and communicated on May 23, 2023.

‘Noting that the respondent had no knowledge of the decision dated March 1, 2023, it is questionable why the appellant went ahead to acknowledge the decision dated April 6, 2023 as opposed to March 1, 2023. Was this an afterthought ploy by the Appellant?’ the court said.

It agreed with the tribunal’s computation that the period between the December 6, 2022 application and the April 6, 2023 decision was 147 days. The duration stretched to 169 days when calculated up to May 23, 2023, the date the decision was communicated.

‘In both instances the period within which the KRA ought to have rendered its decision is outside the statutory timelines as envisaged under Section 47(3) of the Tax Procedures Act,’ the judge said.

Quoting the law, the judge added: ‘Where the Commissioner fails to ascertain and determine an application under subsection (1) within 90 days, the same shall be deemed ascertained and approved.’

The court dismissed the appeal for lack of merit and upheld the tribunal’s decision.

Uncertainty over the ongoing US-Israel war with Iran placed the Central Bank of Kenya (CBK) policy maneuvers on ice, with the apex bank keeping its benchmark rate unchanged at 8.75 percent for a second consecutive round.

The CBK sees the higher inflation emanating from the war as transitory, even as it assesses other macroeconomic factors, including food prices and the exchange rate, as stable. The apex bank does not expect the inflation rate to breach the 7.5 percent ceiling over the next 12 months but is banking on a near-term de-escalation in the Middle East for its softer inflation outlook to hold.

‘The decision on whether to tighten or ease monetary policy is based on the data we receive during the monetary policy committee (MPC) meeting,’ CBK Governor Kamau Thugge said on Wednesday.

‘At this stage, it’s difficult to say what will happen. We have to wait and see the developments. These hostilities could seize very quickly.’

CBK’s core mandate entails maintaining price stability in the economy and has a set inflation target ranging from 2.5 percent to 7.5 percent.

The relatively softer inflation outlook implies that the CBK will be unlikely to raise its benchmark lending rate from the current 8.75 percent as inflationary pressures from higher fuel prices are seen to be a passing cloud.

The CBK has nevertheless maintained that it is data-dependent, implying that a higher headline inflation would climb above 7.5 percent or a rise in core inflation, which measures changes in non-food/non-fuel commodities, could warrant a change in stance.

Kenya’s inflation raced to its highest level in 28 months to print 6.7 percent in May from 5.6 percent in April on account of higher energy prices, particularly fuel and gas prices, even as some food commodities like tomatoes and cabbages registered greater sticker prices.

Non-food/non-fuel inflation or core inflation rose to 3.2 percent from 2.8 percent in the same period, mostly on higher transport costs.

CBK targets three percent and below as the sweet spot for core inflation.

Improved weather conditions are expected to cancel out further food price escalations in the coming months, anchoring CBK’s expectations, which are further complemented by a stable exchange rate.

The Kenya shilling has traded in a narrow-bound range against the US dollar, between 129 and 13 units to the greenback, providing a major offset to inflation concerns.

Kenya’s inflation is expected to rise to 7.2 percent by February 2027 but hold below the ceiling of 7.5 percent through June next year if the US-Israel-Iran conflict reaches a quick resolution.

‘Overall inflation is expected to remain within the target range in the near-term, assuming a de-escalation of the conflict in the Middle East, and supported by appropriate monetary policy action, government interventions including subsidies and temporary reduction of VAT on fuel, expected stability in food prices due to favourable weather conditions and a stable exchange rate,’ Thugge added.

The CBK will have its next MPC meeting in early August but usually stands ready to meet in the interim outside of its schedule if macroeconomic conditions require it to.

A microfinance institution has been ordered to refund Sh150 million to the Youth Enterprise Development Fund after the High Court found it had breached the terms of a credit guarantee deal by failing to secure a commitment by a commercial bank to cover losses if the loan terms are not met.

The court directed Indo Africa Ltd to repay the Sh150 million plus interest at six percent per year above the prevailing Central Bank of Kenya indicative lending rate from May 14, 2014 until payment in full.

The court also issued an injunction barring the financial institution from transferring, withdrawing or otherwise dealing with funds held in its account at Co-operative Bank’s Westlands branch, except for purposes of settling the judgment debt.

The court upheld a deed of guarantee signed on November 12, 2012 between the Youth Enterprise Development Fund Board and Indo Africa Ltd under the Fund’s Credit Guarantee Scheme. A deed of guarantee is a contract in which a third party (the guarantor) promises to repay a debt or fulfill obligations if the primary borrower defaults.

The scheme was designed to facilitate access to credit for youth-owned enterprises through participating financial institutions.

Under the agreement, the Youth Fund committed Sh150 million while Indo Africa was to contribute Sh600 million, creating a total loan portfolio of Sh750 million for lending to youth enterprises. The agreement required Indo Africa to provide a bank guarantee worth Sh150 million as security before the Fund’s contribution could be released.

Court documents show that the Youth Fund remitted the Sh150 million into a Co-operative Bank account nominated by Indo Africa. The money was then supposed to be transferred to ABC Bank to activate the guarantee required under the agreement.

However, the fund argued that Indo Africa failed to transfer the money to ABC Bank, rendering the guarantee ineffective from the outset.

The fund further accused the lender of misrepresenting the existence and validity of the guarantee for more than eight months before ABC Bank formally confirmed that no effective guarantee had been established.

According to the fund, it repeatedly demanded that Indo Africa rectify the situation by providing a valid replacement guarantee or refunding the money, but the lender failed to comply.

The court agreed with the fund’s position, finding that it was not disputed that the money remained in Indo Africa’s Co-operative Bank account and was never remitted to ABC Bank as required. As a result, ABC Bank told the Youth Fund in October 2013 that the guarantee was ineffective.

The court rejected Indo Africa’s argument that the fund was responsible for collapse of the guarantee because it deposited the money into the lender’s Co-operative Bank account instead of directly remitting it to ABC Bank.

“The record further demonstrates that the Plaintiff afforded the Defendant multiple opportunities to rectify the situation, including a final demand dated February 21, 2014 requiring the Defendant to provide a replacement guarantee or otherwise cure the defect. The Defendant failed to comply,” the judge said.

The judge held that the Fund had merely acted on the instructions provided by Indo Africa and could not be blamed for the lender’s subsequent failure to transfer the funds.

“It is impermissible for a party to instruct another to carry out an act, acquiesce in its performance, and subsequently contend that such conduct amounts to a breach or frustration of the contract,” the court ruled.

The court further found that Indo Africa could not rely on the doctrine of frustration because any difficulties with the guarantee stemmed from its own failure to transfer the funds and its subsequent conduct.

Indo Africa defended itself saying it had fully utilised the Sh150 million in lending to youth enterprises and had disbursed more than Sh581 million to beneficiaries under the programme.

The lender argued that it acted in good faith and later obtained an alternative guarantee from Co-operative Bank after problems emerged with the ABC Bank guarantee.

It accused the Youth Fund of unreasonably rejecting the alternative guarantee and frustrating performance of the contract.

The company also contended that the agreement expired in November 2017 and that the suit could no longer yield practical relief.

In addition, Indo Africa filed a counterclaim seeking Sh761 million, including disbursement fees, interest, costs associated with procuring bank guarantees, losses arising from blocked deposits, reputational damage and loss of business opportunities.

However, the court dismissed the entire counterclaim, finding that it lacked merit.

The judge noted that Indo Africa was attempting to recover substantial sums from public funds for losses it had failed to prove and which it had previously attributed to ABC Bank in separate proceedings.

“In the present matter, the Defendant seeks to recover colossal sums from public funds for losses which, by its own admission in another suit, were occasioned by ABC Bank and not the Plaintiff,” the court said.

“To permit such a claim would amount to unjust enrichment at the expense of the Kenyan public.”

The court consequently upheld the validity and enforceability of the Deed of Guarantee and ordered Indo Africa to refund the Sh150 million together with accrued interest and costs.

Having studied entrepreneurship at Strathmore Business School in Kenya and later at Babson College and Stanford University in the US, Eric Muli was bubbling with ideas.

One day, he went to a phone shop in Nairobi and asked if he could buy a device in instalments. The attendant told him that such an arrangement could only be done with a bank.

That was when it hit him.

‘Of course, banks are not looking at my 23-year-old self to give a Sh15,000 loan to buy a phone,’ the 34-year-old recalled in an interview with the BDLife.

‘The concept started with us trying to allow people to access essential items. You know, a phone is essential,’ he said.

That aha moment birthed what came to be known as Lipa Later, a buy-now-pay later service that enabled a person to pay a deposit, buy an asset, then settle the balance over time.

Mr Muli founded Lipa Later in 2017. To facilitate its take-off, he secured financing from venture capitalists in the US. ‘One thing that the US taught me is that anything is possible,’ he said. ‘You can start something from nothing, go look for the resources…and get it done.’

He managed to make Lipa Later a giant firm.

‘At some point, we had hired over 200 permanent staff. I think we had close to almost 1,000 agents that we were working with. We had issued about $100 million (Sh12.9 billion) worth of credit at our peak. We served close to one million customers. [Despite] the challenges that we had in the very beginning, it was widely accepted. We also had markets in Rwanda, Uganda, Nigeria as well. So, the business grew very well,’ said Mr Muli, who was the CEO.

Lipa Later would enter deals with companies like Hotpoint, a home appliances company, assuring buyers of swift purchases.

The business model

Mr Muli admitted that the Lipa Later model was an iteration of the old hire purchase system: customers paid a deposit, took the item immediately, and settled the balance in instalments.

‘The difference was that we did not own our stock. We didn’t have any stock. But the concept was essentially hire purchase,’ he said.

He believes the firm pioneered the reimagined hire purchase model of owning phones and other assets in Kenya.

‘We were the pioneers of this space,’ he said. ‘Now I see around town that the concept of lipa later, lipa mdogo mdogo [is widespread].’

And whereas the old model was a slow, paper-based affair negotiated between a buyer and a shop, Lipa Later digitised the entire chain, paid retailers upfront, and collected from customers over time.

‘We were also empowering the retailer,’ said Mr Muli. ‘We were working with very small ones. For those small businesses, we would increase their revenue by like 30 percent on a monthly basis.’

Venture capitalists kept pumping in money, with Lipa Later getting more than 10 rounds of capital injection.

Then came Covid-19 that realigned the business world in ways not seen before. Mr Muli said they managed to raise more money from US investors and digitised their ecosystem.

In 2021, Lipa Later acquired SkyGarden, an e-commerce platform.

‘We wanted to reach more customers,’ Mr Muli explained on the acquisition rationale. ‘They had a good customer base, and we felt that if we acquired them, we would be able to sell online easier.’

SkyGarden, also previously backed by venture capitalists, had reached a point where it couldn’t raise more money.

Unexpected downfall

It was going well for Lipa Later until it wasn’t. Its fall was unexpected, but when it happened, it put them in the category of Kenyan start-ups that began with promise but crashed hard. That list has firms like Bonto, Antara Health, among others.

‘We did our best. We built a very big company,’ said Mr Muli.

By 2024, the income sources were drying up as it faced an uphill task securing more funds. In March 2025, Lipa Later was placed under administration, and Mr Muli has no say in what is happening with it.

What led to Lipa Later’s fall?

The entrepreneur said problems came from many corners. For one, the firm’s model required enormous amounts of capital as they had to pay retailers immediately while waiting for customers to pay back gradually.

As the Covid-19 cast a shadow on Kenya’s economy, repayment became an issue.

‘You find that you are lending Sh1 million, but coming back as Sh100,000 instead of Sh3 million,’ said Mr Muli. ‘That was the origin of a lot of the challenges that we experienced.’

Some ‘pay later’ lending companies today employ technology set up in such a way that if you don’t pay for a phone, you can’t use it. Could Lipa Later have taken it up? Mr Muli was not sure.

‘I don’t believe punishing borrowers is the solution to enhancing credit in a market. I don’t believe that is necessarily the best way to do it,’ he said.

‘It is useful; yes. We did not have some of those mechanisms that I think now have been commoditised. When we were at our peak, the phone companies were trying to figure it out. We didn’t have that luxury. So, I can see now it has helped people, but I don’t think it solves [the non-repayment issues] completely,’ added Mr Muli.

But perhaps the biggest issue that befell Lipa Later was the financing model. For one, the money the investors had put in was repaid in US dollars, which meant immediate losses when the shilling depreciated.

‘When you borrow money in dollars when the rate is Sh100, and you repay it at Sh170, that’s a 70 percent loss on your money,’ said Mr Muli, who made it to the Business Daily’s ‘Top 40 under 40’ list in 2015, which celebrates Kenya’s most outstanding men under the age of 40.

Moreover, Mr Muli believes the investors barely understood the Lipa Later business model.

‘Their needs and ours were not aligned,’ he noted. ‘They put pressure on the organisation to do things that were not necessarily the best thing for the business.’

Such misalignments, he said, have plagued various start-ups in Kenya.

‘The challenges came where they couldn’t raise more money. The money dried out. You know the post-effects of Covid. Money dries out and the business model needs to change drastically,’ said Mr Muli.

Firms like Copia, which also relied heavily on venture funding, did not last long post-Covid. It is also under administration.

Other mistakes

As for the collapse of Lipa Later, Mr Muli also pointed to his own inexperience. Starting a business of Lipa Later’s complexity at 23, he said, meant there were things he could not see at the time.

‘Now, looking at things in hindsight, you see a lot of other mistakes, ways you could have done things better. Maybe you could have caught something earlier. Those are things you can only see looking backwards,’ he said.

Asked what he observed about Kenyans’ borrowing habits through Lipa Later, he singled out a trend he found peculiar: people would pay the 10 percent deposit to buy an item, resell the same item at half the market price, then dodge Lipa Later, refusing to pay the amount owed.

‘Kenyans are also very entrepreneurial,’ he says, adding that the credit reference bureaus were also not as sophisticated as they are today.

However, there were positives.

‘I would say that there are hundreds of thousands, if not millions, of Kenyans who could be very good borrowers and good additions to the financial ecosystem. It’s just that they don’t have the infrastructure to get onto the platforms and build up a credit system that can be useful to their lives,’ he said.

When Lipa Later went into administration, it was placed under Joy Vipinchandra Bhatt of Moore JVB Consulting.

Not long after, at least three firms expressed interest in buying and refinancing the firm. They include Canada’s Engage Capital, which tabled a $24.5 million (Sh3.2 billion) offer, and London-based Advance Global Capital, which offered a $5 million (Sh647 million) loan facility.

So, how much did he lose with the fall of Lipa later?

‘The company was big,’ he answered. ‘At one point, we were close to a $100 million (Sh12.9 billion) business. Yes, it was worth about $100 million at some point. So, you can start calculating from there. It was a big company; a very big company. We definitely built something large.’

No shame

With Lipa Later going through the motions of administration, Mr Muli doesn’t want to feel ashamed of the fact that he failed there and has moved to another business.

‘I think part of the challenge that exists in our market that stops entrepreneurship is crucifying entrepreneurs. People are afraid of starting businesses because they don’t want to fail. But in the West, you find that those people who have failed are even heroes because they learn a lot,’ he said.

‘And I don’t believe that because I have had some kind of challenges with my hard work and ambition, now I should stop providing for my family. In fact, I should even work harder,’ he added.

He has since founded MRE Real Estate Limited, which describes itself as ‘a real estate investment and development company delivering retail and workspace solutions in Kenya’s fastest-growing areas’.

‘Started in 2025, MRE is a fast-growing real estate company with developments across Kenya and a growing portfolio estimated at about Sh5 billion,’ said a brief shared with this reporter.

When we queried Mr Muli to explain about the Sh5 billion, he said that some of the Lipa Later investors have also followed him to the new venture.

‘What we do is we buy land, build on it, and manage. We build commercial real estate on land that we purchase and then we essentially manage it. So, we are building a big portfolio of real estate. What we do is essentially strip malls, shopping centres, that’s where we started. We also do shared spaces and at the same time we are looking at other lines of real estate that we possibly get into,’ said Mr Muli, who now wears the hat of MRE’s managing director.

At the time of the interview, he said MRE had ‘just secured’ funding for a project in Machakos.

‘It is a big project that we want to be rolling out quite soon. That will be our first one that I think will be out of Nairobi. But, for the most part, we have been focused on Nairobi,’ he said.

Real estate, he observed, is an easy sell even to local financiers.

‘The banks understand hard assets. They understand traditional business. That’s their bread and butter,’ he said.

As for the previous investors backing his new venture, he said: ‘People were even more excited to support such a venture because it’s more long-term.’

‘A lot of the supporters and backers of my current venture are actually Lipa Later investors who have even invested more money into what we are doing,’ he added.

Asked what businesses he is idolising in his real estate venture, he mentioned Kenya’s Acorn Holdings and a US firm called Perform Properties.

The problem with real estate, he noted, is the entry barrier.

‘On the lower side, each of our projects is close to Sh400 or so million per project because we buy land, build, and manage. That’s where the challenge usually comes. But because I managed to learn a lot, building a business that size, I learnt how to structure finance, how to do partnerships and so on. That’s what led me to believe it’s possible to get these things done,’ he said.

‘I kind of sat down and I felt that I wanted to do something that has a lot more long-term impact; something that has longevity; something that you can kind of predict how things are going to go and you’re in control of,’ added Mr Muli.

His other business

The entrepreneurial spirit abounds in him because Alpha Force Security, a firm he started in 2011, is still running. The company has a workforce ‘north of 200’ as he put it and an independent management arm.

‘In our estate, we didn’t have guards. And that’s actually how we started,’ he said, adding that he has since quit being the CEO and that he only serves as the board chair whereas the day-to-day running is left to a dedicated team.

When asked about what sparked his entrepreneurial spirit, he went philosophical.

‘Sometimes they say whether it is nature or nurture. I think mine is both. I’ve always been passionate about creating things; starting things from nothing and building them into something. That has been a passion of mine from a very early age,’ he said. ‘I think there’s nothing more exciting than turning an idea into reality.’

The ratio of loan defaults to total lending in the banking sector shrunk to a two year low of 15.3 percent in May from 17.5 percent a year ago following write-offs of bad debt and a growth in credit as interest rates declined.

The Central Bank of Kenya (CBK) data indicates that the non-performing loans (NPLs) portfolio stood at Sh694.8 billion in May, down from Sh728.2 billion 12 months ago.

The decline in bad loans ratio follows disclosure of the huge write-offs made by banks last year with listed lenders writing off loans worth Sh75.06 billion last year.

Banks are required to write-off a bad loan if it is classified as non-performing for a year. Credit to the private sector grew by 9.3 percent in May being the fastest pace recorded in the last two years. Growth of the loan book by disbursing credit to households and businesses with strong ability to repay enables banks to improve the quality of their balance sheet.

‘The ratio of gross non-performing loans (NPLs) to gross loans stood at 15.3 percent in May 2026, down from 15.6 percent in February 2026, and 17.6 percent in August 2025,’ the Monetary Policy Committee, the rate-setting arm of the CBK, said in a statement.

CBK cited households, transport and communications, and mining and quarrying sectors as those that had recorded drops in NPLs.

The industry loan book grew to Sh4.54 trillion up from Sh4.15 trillion a year ago as the price of loans dropped following pressure on banks by CBK to reduce interest rates.

Average lending rates were 14.5 percent in May down from highs of 17.2 in November 2024.

‘Growth in commercial banks’ lending to the private sector improved to 9.3 percent in May 2026, compared to 7.1 percent in April 2026 and negative 2.9 percent in January 2025,’ said the MPC, adding; “Growth in credit to key sectors of the economy, particularly trade, building and construction, agriculture, and consumer durables remained strong, reflecting improved demand for credit in line with the decline in lending interest rates.’

Banks have also been aggressive to recover loans from borrowers including auctioning of collateral and going to court to recover from corporates that have defaulted on their loan obligations. Conclusion of long running court cases, including resolution of large corporate defaults in favour of banks, has also helped improve the lender’s loan book quality.

Some of the cases recently concluded include Equity Bank Kenya’s enforcement action against Transcentury Limited and its subsidiary East African Cables Limited.

Improvement of the loan book allows banks to carry less loan loss provisions which are marked as expenses on their profit and loss accounts. This means with an improved loan book the lenders are expected to cut back their provisions which will boost their profitability.

Banks have disclosed intentions to pressurise households and businesses to clear defaults in order to further improve the quality of their loan books.

‘For the quarter ending June 30, 2026, banks expect to intensify their credit recovery efforts in nine economic sectors,” says a CBK report.

The intensified recovery efforts are aimed at improving the overall quality of the asset portfolio,’ a survey on banks’ credit officers by the Central Bank of Kenya disclosed.

‘Until you make the unconscious conscious, it will direct your life and you will call it fate’- Carl Jung, the Swiss founder of analytical psychology.

Ever find yourself upset with someone for no apparent reason? Where do those dark thoughts come from? Does having a mass of [no thinking required] facts and figures on tap thanks to AI, really help? Or, is there a need to work through problems, building a model for yourself, understanding the hidden structure? Can the approach to problem solving used in a university founded in 1209 help your business?

‘You have two minds. One is conscious. The other one is categorically unconscious. One is present, the other one is behind the curtain. One displays your ego, the other one represses the notions that violate or contradict your ego. One is light, the other one is dark,’ writes Rachel Mariotti.

Go beyond the obvious

Conscious mind is like the screen, or keyboard on your laptop, it’s what you see, on the surface. Unconscious mind is the programming language, the software, in the central processing unit that is hidden, but controlling just about everything. The power behind the throne.

At the risk of trivialising Jung’s thinking – he believed that we all have a ‘Shadow’ deep within our unconscious. That repressed, hidden, or darker part of one’s personality. Jung argued that ignoring these traits leads to projecting them onto others. Ultimately, he believed one has to confront one’s inner darkness to grow.

What is required is ‘learning how to learn’, often called double – loop learning, that awareness of recognising how a system really works.

For centuries, alchemists dreamed of turning lead into gold – not through magic, but by unlocking the hidden potential within metals themselves. Their approach was to try and understand the structure of matter.

Try building a model

One of the ways in business to solve a pressing problem is to try and build a model of how it works. Visualise it, map it out on paper. Use system thinking to define the inputs, the environment that the system operates in, the outputs, and feedback loops. Donella Meadow’s practical book Thinking in Systems has become a classic guide, readily available in paperback.

Helps to be able to compress complexity into a model. University of Cambridge in England, founded roughly 800 years ago ‘has produced an extraordinary number of thinkers who became powerful because beyond simply collecting tonnes of facts, they learned to build abstractions that captured the deep structure between webs of facts.’

Isaac Newton, Charles Darwin, John Maynard Keynes, Stephen Hawkings and Jane Goodall are but a few who took on the university’s approach to problem solving, with the need to understand the underlying structure.

‘And the great thinker Alan Turing, father of modern computing is a perfect example. During his time at King’s College, Cambridge, he conceived of what is now called the Turing machine, a universal mathematical model of computation that could imitate all possible calculating devices. And that’s an astonishing act of compression. You see the amazing thing is that he didn’t merely describe one machine. He abstracted the idea of computability itself. Cambridge’s own account calls it one of the most influential mathematical abstractions of the 20th century. But this is exactly the kind of thinking most people and most students never train. Most remain only at the level of being able to describe ideas in terms of examples, anecdotes or isolated instances. Yet a Cambridge style mind asks a different question. What is the minimal structure underneath all these cases? What’s the model here? What is the smallest set of rules that explains the biggest range of phenomena?’ says scholar Stephen Petro.

Cambridge’s culture, partially through the supervision system, in small group tutorials rewards the person who is proactive, in action, trying to derive, test, and rebuild things from the inside, rather than merely repeating what was said in the lecture.

But how can you apply this in your business?

Helps to rethink, reframe the business question or problem and highlight the specific step where you’re getting stuck. This will allow you with laser precision to identify the right approach you need to engage in, going forward. Your goal is not to be right on the first pass.

Instead, your goal is to build a mind that knows how to solve business problems proactively, before the help even arrives. And, that is much closer to how Cambridge actually trains people, not relying on passive notetaking. But instead, understanding the underlying structure of the problem and dynamics of the system.

Are our business problems just fate, or our lack of understanding? William Shakespeare in Julius Caesar put it best: “The fault, dear Brutus, is not in our stars, but in ourselves’.

For years, Kenya’s mining sector has carried an uncomfortable label, a country rich in minerals but poor in measurable mining contribution to the economy. In public discourse, the sector is routinely described as contributing about 1 percent to the GDP, sometimes even less depending on the year and method used.

Yet this is the same country with reported mineral occurrences across all 47 counties, including gold, copper, graphite, manganese, iron ore, nickel, coltan, gemstones, rare earth elements and industrial minerals.

This contradiction should concern policymakers, investors and communities alike. How can a country with such mineral diversity and widespread mining activity still appear economically insignificant in national statistics?

Part of the answer lies not only in the performance of the sector, but in how Kenya measures mining contribution in the first place.

For too long, mining GDP has been viewed mainly through the lens of formal exports, royalties and the performance of a few large-scale operations.

The closure and slowdown of major export-facing projects such as Base Titanium reinforced the narrative that mining is a very small insignificant sector. But reducing mining to export tonnage alone ignores the much larger ecosystem that sustains livelihoods and local businesses.

Mining is not only what leaves the port as mineral exports. Mining is also the economic activity created long before minerals reach export markets.

Across many counties, mining is one of the most important local economic activities. In regions with gold, gemstones, quarry stone, sand, limestone, gypsum, manganese and other minerals, entire local economies depend on mining directly or indirectly.

Thousands of households rely on artisanal and small-scale mining (ASM) for income. Local transporters move ore and equipment.

Welders fabricate tools, women supply food to mining sites, youth provide security and labour, mechanics repair machinery, traders buy and sell minerals and land owners earn lease payments.

Yet much of this local content economy remains invisible in national accounting systems.

The widely repeated projection that mining contributes around one percent to GDP is largely rooted in older measurement frameworks that heavily prioritised formal reporting and exports.

But stakeholders across the sector increasingly question whether this figure reflects today’s reality. Many believe it significantly understates the true scale of mining’s economic footprint.

One major reason is the rapid growth of artisanal and small-scale mining. A World Bank-linked estimate from 2018 placed the number of people dependent on artisanal mining at about 800,000.

Today, sector stakeholders believe the real number could be approaching two million people when direct miners, dependents and linked livelihoods are included. These are not marginal numbers; they represent a major rural economic system operating largely outside formal measurement structures.

When mining contribution is measured narrowly through export revenues and a few licensed operators, the country risks missing the broader value chain that mining supports locally.

This weakens the sector politically and economically, repeatedly branding mining as a ‘one percent sector’ lowers national ambition, discourages serious public investment, limits institutional support and creates the impression that mining is too small to matter.

The sector’s local content contribution includes employment, procurement, transport, fuel supply, catering, equipment fabrication, mineral processing, accommodation, financial services, county revenues, professional consultancy, logistics, security services and informal trade. In many rural areas, mining acts as a stabiliser of household income where few alternative economic opportunities exist.

Exports alone therefore cannot be the only, or even the best measure of mining’s economic contribution.

Kenya now needs a more complete and modern way of measuring mining impact. The Kenya National Bureau of Statistics, together with the State Department for Mining, county governments, universities, industry associations and private sector players, should develop a Mining Local Content and Value Chain framework that captures the full ecosystem around mining activity.

Such a framework should measure not only export earnings and royalties, but also artisanal mining livelihoods, local procurement, mine support services, processing activities, supply chains, equipment manufacturing, transport networks, county-level economic multipliers and community employment.

Better data collection would help government make better policy decisions, improve formalisation of ASM, strengthen safety standards, unlock financing, attract serious investors and support value addition. It would also allow counties hosting mineral resources to better understand the true economic role mining plays within their jurisdictions.

Kenya cannot build a globally competitive mining sector while relying on incomplete measurements that fail to capture the realities on the ground.

If the country continues counting only formal exports, it may continue underestimating one of its most important emerging rural industrial sectors.

After hours of heavy rain in Nairobi earlier this year, residents of one apartment suddenly lost water for two days after the estate’s borehole pump failed under pressure.

The replacement motor had only been installed a few months earlier because it was cheaper than the recommended option. It failed again during the downpour, forcing the management to organise emergency water bowser deliveries while technicians searched for spares.

The rains exposed a common problem afflicting Kenya’s real estate sector: Lack of maintenance. Most property crises begin long before flooding, water shortages, or equipment breakdowns occur.

They begin with delayed maintenance, weak governance, poor planning, and the growing culture of prioritising short-term savings over long-term sustainability.

Kenya’s National Building Maintenance Policy acknowledges that maintenance in the country is often treated as a peripheral activity, leading to deteriorating buildings, delayed repairs, and weak maintenance culture. The policy further warns that many structures suffer because maintenance is approached reactively rather than preventively.

Heavy rains, flooding, power outages, and business disruptions in Nairobi and several other parts of Kenya have exposed how vulnerable many developments remain whenever infrastructure is tested under pressure.

The conversation around real estate in Kenya often focuses on construction, occupancy rates, rental income, and sales. Yet little attention is paid to what happens after occupation.

Every property depends on functioning drainage systems, pumps, roofing, electrical infrastructure, and preventive maintenance.

When those systems fail, the consequences quickly become financial and, in some cases, dangerous.

The challenge is especially visible in apartments where owners and tenants share the same infrastructure but often approach maintenance differently. Some owners rarely participate in operational matters, while tenants still expect uninterrupted services. In many estates, service charge collection becomes difficult because some residents view it as optional rather than essential.

The consequences are now visible across residential and commercial properties in Nairobi. Gutters remain clogged for months, especially in leafy suburbs where falling leaves block pipes and flat-roof drainage outlets. Water accumulates on rooftops, causing leakages into apartments, offices, parking areas, and electrical rooms.

During rainy seasons, frequent power outages and surges also damage pumps, lifts, CCTV systems, generators, and electrical panels in developments that lack proper protection systems or timely servicing.

A University of Nairobi research warned that poor maintenance culture continues to contribute to deterioration in many urban residential buildings. From my experience in managing high-end apartment developments, I have seen how poor maintenance decisions quickly become expensive operational crises.

One of the biggest misconceptions in property management is the belief that maintenance costs are unnecessary expenses rather than investments in preserving assets.

Residents often question why service charges increase, yet the cost of labour, electricity, spares, fuel, water, and technical maintenance continue to rise every year. Infrastructure does not maintain itself. Delaying maintenance only postpones failure until it becomes larger, more disruptive, and more expensive.

Yet, maintenance failures directly affect daily life. Elderly residents become stranded when lifts fail. Families go for days without water after pump breakdowns.

Businesses lose customers because flooded entrances cut off access. Roof leakages damage offices, electronics, ceilings, and stock. Most of these situations are preventable through proper planning, realistic budgeting, and timely maintenance decisions.

The true measure of a successful property is not how impressive it looks during launch day, but how well it functions years later during heavy rains, flooding, water shortages, or power failures. Nairobi’s skyline continues to grow rapidly every year.

The question is whether we are building sustainable properties for the future or creating tomorrow’s maintenance disasters hidden behind modern finishes and glossy brochures.