Category: Business Daily

Fuel is not merely a commodity consumed at the pump. It is a strategic enabler of productivity, trade, mobility, food security, manufacturing, and public service delivery. When its price rises sharply, every sector of the economy as well as every household feels the strain.

Earlier this month, petrol in Nairobi rose to Sh214.25 per litre and diesel climbed to a historic Sh242.92 per litre. The immediate reaction from transport operators, businesses, and consumers reflected the central role fuel plays in determining both the cost of living and the cost of doing business.

The government’s subsequent engagement with stakeholders and measures aimed at easing diesel prices were therefore timely and welcome, but it was a response, not a solution. The real economic lesson from this crisis lies beyond the pump.

The numbers make our dependence plain.

According to the 2026 Kenya National Bureau of Statistics Economic Survey, the transport and storage sector alone consumed petroleum products valued at approximately Sh550.7 billion. National demand grew from 5.2 million tonnes in 2024 to 5.7 million tonnes in 2025, with diesel consumption exceeding 2.4 million tonnes.

Kenya imports every litre of its refined petroleum, leaving us fully exposed to global oil market volatility, geopolitical tensions, and the depreciation of the shilling, which ensures that even when global crude prices ease, relief at the pump is partial at best.

The consequences are particularly severe for small and medium enterprises (SMEs), which form the backbone of Kenya’s economy. Many lack the financial buffers necessary to absorb sudden cost increases.

Higher fuel prices translate directly into reduced profitability, constrained growth, and increased pressure on employment. Rising logistics and production costs also undermine Kenya’s competitiveness within the region. But 80 percent of Kenya’s workforce in the informal economy boda boda operators, market traders, jua kali artisans are hit harder still. Their losses do not appear in corporate accounts. They appear in fewer trips made, thinner margins, and children kept home when school fees cannot be met.

Perhaps the most pressing issue exposed by the fuel crisis is the shrinking disposable income of Kenyan households. Even before the recent fuel price increases, many salaried workers were already grappling with reduced take-home pay due to PAYE obligations, Affordable Housing Levy contributions, SHIF deductions, and higher NSSF rates.

The result is a narrowing of household purchasing power at precisely the moment when the prices of essential goods and services are rising.

A more progressive PAYE structure with wider tax bands and lower marginal rates would restore spending power, stimulate demand, and ultimately broaden the tax base. Protecting household incomes is not a welfare measure; it is an economic stabilisation tool.

The urgency of these interventions becomes clearer when viewed against Kenya’s recent progress in managing inflation. Inflation declined from 4.5 percent in 2024 to 4.1 per cent in 2025, while transport inflation fell from 5 per cent to 3.2 percent.

These hard-won gains are now directly at risk. Fuel shocks cascade into food prices, manufacturing costs, and public service delivery budgets at the county level.

Allowing them to pass through unchecked is a policy choice, not an inevitability.

What Kenya requires is a structural reform. A Strategic Petroleum Reserve Act should mandate a minimum 90-day domestic reserve, funded through a transparent, auditable levy. A price-smoothing mechanism of the kind operating in Chile, Malaysia, and India should prevent global volatility from being transmitted immediately to consumers.

and in full to consumers. A review of the fuel tax architecture should seek a balance between revenue mobilisation and economic competitiveness. Inefficiencies in fuel clearance and supply chains must be addressed.

At the same time, the country should accelerate investments in electric mobility, charging infrastructure, and strategic fuel reserves to strengthen resilience against future shocks.

Yet structural reform means little without accountability for what has already been collected. Parliament’s Public Investment Committee on Commercial and Energy Affairs recently directed the Auditor-General to carry out a forensic audit of revenue generated by the Kenya Roads Board from the fuel levy for the financial years 2020/21 to 2022/23, a direct response to a Ksh2.76 billion unreconciled variance between what KRB recorded as payable to the Kenya Urban Roads Authority and what KURA recorded as receivable.

The Auditor-General had already flagged that Road Maintenance Levy Fund receivables of Ksh5.18 billion ‘could not be confirmed.’ This is not an isolated discrepancy.

A prior special audit found that Ksh18.14 billion from the Petroleum Development Levy Fund was illegally redirected to road construction projects, while a further Ksh4.54 billion was transferred to the Ministry of Energy for purposes unrelated to petroleum. In 2024/25, KRA collected a record Ksh119.7 billion from the Roads Maintenance Levy alone. Motorists are paying more than ever. The question is whether they are getting what they paid for.

ICPAK’s role in this conversation extends beyond tax reform. As the professional body representing accountants in Kenya, we should be demanding accountability and transparency of the billions collected through fuel levies each year, including the Petroleum Development Levy and the Road Maintenance Levy. Accountability for public revenues is not merely a technical exercise. It is a civic and moral obligation, and we intend to pursue it.

Sustainable prosperity will come from a country that has built strategic reserves, reformed its price architecture, protected the purchasing power of its workers, and structured its institutions to manage energy as the national asset it is, not the revenue instrument it has become.

That is the real economic lesson from Kenya’s fuel crisis. The question is whether we are ready to act on it.

The Kenya Roads Board (KRB) has trimmed its roads bond target to Sh120 billion from Sh175 billion, revealing a reduced quantum of funding to reimburse bank loans taken to compensate contractors for pending bills.

The National Assembly Committee on Transport has revealed the reduced roads bond target but has not disclosed timelines for the floating of the securitised instrument.

The KRB had been expected to raise Sh175 billion from a bond by the first quarter of 2026, to repay commercial bank loans, which were obtained as a bridge facility to fast-track the clearance of road sector pending bills.

The government has turned to securitisation to clear the significant pile of unpaid funds to contractors amid a fiscal straitjacket, which has seen the majority of tax revenues channelled to debt service.

‘The committee noted that the securitisation process supported by the Sh5 per litre from the fuel levy has commenced,’ the Budget and Appropriation Committee observed, referencing submissions by its Transport counterpart, in a report considering the final 2026-27 budget estimates.

‘Once the bond is floated, it is expected to mobilise approximately Sh120 billion.’

The committee did not give the timelines for the bond, while the National Treasury also failed to disclose timelines for the paper’s issuance from recent enquiries by this publication.

President William Ruto, in March, said the government planned to sell the bond to the public and list the securities on the Nairobi Securities Exchange (NSE).

The KRB had previously proposed to mobilise funds for the bond from investment clubs.

Proceeds from the bond will settle a portion of an estimated Sh175 billion in bank loans, which helped clear historical road sector pending bills up to December 2024.

Investors in the bond are to receive payments from the securitised Road Maintenance Levy Fund (RMLF), where Sh7 of every Sh25 from the sale of a litre of petrol and diesel is hived off.

‘In the course of this year, we will be bringing to the market the road maintenance levy fund securitisation bond, which has enabled us to settle the pending bills crisis that had stalled road projects everywhere in Kenya,’ President Ruto said in March.

‘The RMLF has raised for us Sh175 billion, and we will be bringing it here (to the Nairobi Securities Exchange) so people can trade it as well.’

President Ruto also failed to set a date for the bond’s issuance.

Four commercial banks, including the Trade and Development Bank, KCB Bank Kenya, Absa Bank Kenya and UBA Kenya Bank, provided financing to clear the contractors’ arrears ahead of the issuance of the roads bond programme.

The Sh175 billion bond was to be the first of two, with the government mulling a second paper to raise Sh125 billion to cover future arrears to contractors in the sector.

The Cabinet approved the setting aside of Sh12 from the Road Maintenance Levy Fund (per sale of a litre of petrol or diesel) to facilitate payments to investors in the two bonds.

The settlement of road sector pending bills has enabled contractors to resume works, contributing to the rebound of the construction sector in 2025.

The construction industry grew by 6.8 percent in 2025, recovering from a 0.7 percent contraction in 2024 as per data from the Kenya National Bureau of Statistics (KNBS).

‘Cement consumption increased by 20.3 percent to 10,300 tonnes. The length of paved roads stood at 25,400 kilometres in 2025, while residential housing units completed by the State Department for Housing and Urban Development more than quadrupled, from 1,655 units in 2024 to 6,738 units in 2025,’ the KNBS said in its 2026 Economic Survey report.

The National Assembly has pushed for powers to inspect the securitisation of government revenues as the State leverages the innovation as a new avenue for projects’ cash.

Securitisation refers to the ring-fencing of specific revenue streams to pay lenders funding various government projects, with the money acting as collateral.

The Public Debt and Privatisation Committee has previously warned that the reliance on alternative funding approaches may create additional debt risks while hiding shortfalls in the availability of mainstream financing, like external debt.

The International Monetary Fund, meanwhile, wants Kenya to include funds raised from securitisation as part of the public debt stock.

The stock of national government pending bills stood at Sh471.7 billion in March 2026, rising slightly from Sh468.5 billion in December 2025.

Kenya plans to further securitise the yearly Sh32 billion Railway Development Levy Fund to help fund the extension of the standard gauge railway from Naivasha to Kisumu, and onwards to Malaba on the border with Uganda.

As visitors streamed through the aisles of this year’s International Floriculture Trade Exhibition (IFTEX) in Nairobi, many found themselves pausing at one particular stand.

Towering above arrangements of fresh-cut blooms was a life-sized horse sculpture crafted entirely from flowers. Built by Kenyan exporter Ole Engai Growers, the installation quickly became one of the exhibition’s most photographed attractions, drawing visitors eager to capture its intricate details and imposing presence.

Yet beyond its artistic appeal, the floral horse told a deeper story about the realities of Kenya’s flower industry. Despite growing pressures, the industry continues to grow in ambition and resilience.

“The inspiration came from the zodiac and the idea of energy, endurance and growth,” said Anjili Shah, the company’s co-director. “The horse symbolises all of that, and we wanted to translate it using the flowers we grow ourselves.”

Business growth

The concept was developed by the company’s creative management team and executed by a senior designer. The effort earned the company a Silver Award for Design Excellence at this year’s IFTEX.

Operating on approximately 29 hectares in Uasin Gishu County, the family-run enterprise produces premium cut flowers for export. While gypsophila remains its flagship product, the farm also grows a wide range of varieties, including delphiniums, asters, kangaroo paws, dianthus and kiwi mellow cultivars.

“We are essentially a family-run flower business, with partners working together,” said co-founder and director Sanir Shah. “Our main production is gypsophila, but we also grow a wide range of varieties depending on market demand.”

The company exports an estimated 1,200 tonnes of flowers annually, serving primarily European markets while expanding its presence in the Middle East. Like many flower exporters, however, its growth ambitions are increasingly shaped by factors beyond the farm gate.

Rising uncertainty

Behind the colourful displays and commercial deals at IFTEX lies an industry grappling with rising costs, climate uncertainty and intensifying competition.

Freight costs, in particular, have emerged as one of the biggest challenges.

“Five years ago, we were paying around $1.40 per kilo for freight. Now it is over $4 per kilo,” said Shah. “That is a massive increase. You can imagine the pressure on margins.”

For flower exporters, whose products must reach overseas markets quickly and in perfect condition, transport costs can determine profitability.

The Kenya Flower Council (KFC) says rising freight charges, coupled with fuel price increases, have become a major concern across the sector.

Speaking during the official opening of IFTEX 2026, KFC chief executive Clement Tulezi said escalating logistics costs were placing significant operational pressure on exporters.

According to the council, freight rates have risen from approximately $3.10 per kilogramme to nearly $5.00 per kilogramme in a relatively short period. During peak seasons, freight can account for more than 40 percent of total export costs.

The industry is also contending with higher fertiliser prices, increased production expenses and delayed tax refunds, factors that have squeezed cash flow for many growers.

Sh10 billion VAT refunds

KFC is urging the government to release pending VAT refunds worth approximately Sh10 billion and to consider tax relief measures on key agricultural inputs.

Exporters say countries such as Ethiopia continue to enjoy lower logistics costs, making it difficult for Kenyan growers to remain competitive in some international markets.

“We cannot easily increase flower prices because the market is very sensitive,” said Shah. “When freight costs increase, we are hit directly.”

Global events have further complicated operations. Conflicts affecting international flight routes have occasionally disrupted cargo availability, while changing weather patterns have made production planning increasingly unpredictable.

“This year, we expected a dry spell in January, February and March, but instead we had unexpected rain,” Shah said. “You cannot fully predict the weather anymore, and that affects everything from planting schedules to quality control.”

Despite these headwinds, Kenya’s flower industry remains one of the country’s most important export earners.

The sector generated approximately $845 million in 2025, contributing around 1.5 percent of GDP and maintaining its position as the largest segment within horticulture.

Kenya exports flowers to more than 60 countries, with roughly 70 percent destined for the European Union. The Netherlands remains the primary gateway into European markets, while demand from the Middle East, Asia and Eastern Europe continues to expand.

The 2026 edition of IFTEX, themed “Shaping the Future of Floriculture”, brought together more than 200 exhibitors from across the value chain, including breeders, growers, logistics providers and input suppliers.

Kenya has frozen a planned review of electricity prices for the year starting July 1, dealing a blow to efforts to increase revenues for Kenya Power and other utilities in the energy sector.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi said on Wednesday that Kenya Power had withdrawn its application for new tariffs amid concerns that a review could have led to higher electricity costs.

The withdrawal of the tariff application is set to derail efforts to secure additional funding for utilities in the energy sector, raising questions about their ability to deliver key projects if alternative funding sources are not found.

The proposed tariffs could have seen households and businesses pay more for electricity, potentially triggering public backlash at a time when the government is grappling with growing outrage over the cost of living.

Inflation currently stands at a 28-month high of 6.7 percent, recorded last month, and higher electricity prices could have added further pressure on consumer costs.

‘Following consultations within government and engagement with key stakeholders in the sector, the retail electricity tariff review application that was submitted on March 31 this year by Kenya Power on behalf of the sector has been withdrawn,’ Mr Wandayi said on Wednesday.

‘This decision reflects the need to buttress a sustainable energy sector while protecting households, businesses and industries from possible cost escalation.’

The new tariffs were expected to be in force for the three years to June 2029 and were seen as critical to expanding the funding pool for critical projects such as upgrading the electricity transmission and distribution network.

Kenya Power’s decision to withdraw the application comes barely a week after the energy regulator postponed public participation meetings on the proposed tariffs.

The Energy Act, 2019 allows Kenya Power to apply for a review of electricity tariffs every three years. The current tariffs came into force in April 2023 and are due to expire at the end of this month.

Medical insurance claims have nearly doubled over the past five years to Sh52.61 billion, driven by rising healthcare costs and increased utilisation, forcing insurers to raise premiums to remain viable.

Latest industry data shows claims rose by 97.7 percent from Sh26.69 billion in 2021 to Sh52.61 billion last year, underlining mounting pressure on underwriters as more Kenyans seek treatment and the cost of care escalates.

The surge in claims has been accompanied by a steady increase in premiums, which grew by 81.1 percent from Sh51.42 billion in 2021 to Sh93.28 billion last year. This reflects insurers’ efforts to price in higher risks and sustain their medical books amid shrinking margins.

Medical insurance remains the largest segment in the general insurance business, accounting for 41 percent of Sh227.16 billion total premiums last year. The outsized share of medical insurance highlights its central role in the sector’s growth as well as its vulnerability to cost pressures.

Rising medical inflation has compounded the challenge. Kenya’s healthcare costs are projected to grow by 13.5 percent in this year, up from 9.8 percent in 2023, according to Aon medical trends report.

At 13.5 percent, the country ranks among African markets with the fastest-rising medical costs, trailing only high-inflation economies such as Nigeria (43 percent), Ethiopia (42 percent), Malawi (27.1 percent) and Zimbabwe (22.5 percent).

The increase in claims has also been linked to higher uptake of insurance covers, particularly employer-sponsored schemes, as well as expanded benefits that encourage greater utilisation of healthcare services.

Disclosures by listed firms show billions of shillings spent annually on staff medical cover, with KCB Group having spent Sh2.37 billion last year as that of Co-operative Bank of Kenya and NCBA Group came in at Sh962.12 million and Sh727.76 million, respectively.

To manage the cost spiral, employers are adopting measures such as higher deductibles, co-payments and tighter claims management as well as reviewing benefit structures, according to Aon.

‘To mitigate rising costs and the risks they bring, employers are focusing primarily on hard negotiations with insurance carriers and other vendors,’ said Aon.

Medical insurance has a higher market concentration in Kenya. The top five medical underwriters, led by Jubilee Health, AAR and Old Mutual, control over 63 percent of the market, giving them significant influence over pricing and product structures.

The trend of rising claims is unlikely to ease in the near term, as hospitals continue to adjust prices upward and patients increasingly seek specialised care.

The overlapping mandates between county and national governments are back in the spotlight amid a fresh row over proposed tobacco control laws, adding to a growing list of disputes over the cost of doing business.

Overlapping roles in the Fourth Schedule of the Constitution have, over the years, triggered conflicts between the national government and devolved units in key areas such as public health management, business licensing and revenue collection, public land, and physical planning.

For instance, farmers in counties including Kiambu are locked in court battles over what they term ‘double taxation’ by the two levels of government on farm produce such as tea, coffee and milk. There have also been frequent clashes between county and national governments over the procurement of medical equipment, management of health workers and the development of key infrastructure such as roads.

Turf wars

A fresh conflict is now simmering over regulation of the multi-billion-shilling tobacco industry, with the Tobacco Control (Amendment) Bill 2024 proposing mandatory licensing by county governments for all dealers in tobacco and nicotine products, including manufacturers, importers, distributors and retailers.

Manufacturers and traders have opposed the proposal, terming it duplicative of the role already played by the Ministry of Health and warning that it will increase the cost of doing business while fuelling illicit trade.

‘These proposals run against the Government of Kenya’s commitment to facilitate the ease of doing business, and risk creating significant disruption for compliant enterprises. This provision introduces unnecessary regulatory duplication, higher compliance costs, and administrative inefficiencies,’ the Kenya Association of Manufacturers (KAM) said in its submission to the Senate on the Tobacco Control (Amendment) Bill 2024.

‘Further, layering multiple licensing requirements at both national and county levels is likely to result in inconsistent enforcement, regulatory uncertainty and barriers to formal trade, while inadvertently incentivising illicit trade growth, which is already estimated to account for nearly half of the market,’ it added, urging that the provision be deleted from the Bill.

The Kenya National Chamber of Commerce and Industry (KNCCI) also criticised the additional regulations, terming them counterproductive.

‘The Chamber’s position is that regulating the same commercial activity through parallel approval regimes risks duplication, increased compliance costs and fragmented enforcement across multiple authorities,’ it said.

‘From a business continuity perspective, duplicative licensing requirements create uncertainty for traders who are already subject to a variety of obligations under county trade licensing regimes, national standards, tax administration rules and sector-specific controls,’ KNCCI chief executive Kenneth Mutahi said in submissions to the Senate.

Constitutional grey areas

The rising regulatory conflicts are partly tied to provisions in the Constitution. The Fourth Schedule, which outlines the distribution of functions between the national and county governments, grants devolved units responsibility for trade development and regulation, including markets, trade licences (excluding regulation of professions), fair trading practices, local tourism and cooperative societies.

The Fourth Schedule also grants the national government regulatory powers over critical areas such as health policy, placing the tobacco industry at the centre of a dispute over overlapping mandates between the two levels of government.

‘There are grey areas in law on the roles of the two levels of government that need to be addressed. Many economic sectors have raised concerns about being caught up in overlapping regulations,’ said John Otieno, a business analyst.

A regulatory audit report released by KAM in March 2026 revealed a heavy burden on businesses arising from duplicative actions by national and county governments.

‘The cumulative regulatory burden on manufacturers has grown significantly over time. In some manufacturing sectors, businesses must obtain more than 50 licences, permits, fees and charges from multiple regulatory agencies at both national and county levels,’ KAM chief executive Tobias Alando said during the launch of the report on March 10, 2026.

‘For example, the proposed additional licensing requirements will impose additional costs and complexity, which is burdensome, particularly for some small traders whose livelihoods depend on the sector,’ BAT Kenya managing director Crispin Ochola said in a submission to the Senate.

Regulatory clash

Beyond the overlapping mandates of national and county governments, industry players also pointed to conflicting regulations within the national framework, particularly proposals in the Tobacco Control Bill 2024 aimed at tackling plastic pollution.

The Bill proposes a ban on the use of single-use plastics.

‘While the objective of addressing plastic pollution is acknowledged and supported, the proposed approach raises significant concerns from a regulatory coherence and policy alignment perspective,’ KAM said.

Manufacturers noted that Kenya already has a comprehensive environmental governance framework under the Environmental Management and Co-ordination Act (EMCA), which provides an economy-wide mechanism for managing plastic waste and packaging materials.

‘This framework is operationalised through binding subsidiary legislation, including the Extended Producer Responsibility (EPR) Regulations, 2021, and the Management and Control of Plastic Packaging Materials Regulations, 2024. These regulations apply uniformly across all sectors and impose clear obligations on producers, importers and retailers,’ the lobby said.

Manufacturers added that the current framework includes mandatory registration with the National Environment Management Authority (Nema), financing of collection and recycling schemes, licensing of plastic packaging materials, traceability requirements and the progressive redesign of packaging to support circular economy outcomes.

KAM argued that introducing a sector-specific statutory ban within tobacco legislation risks creating regulatory fragmentation.

‘It would effectively subordinate EMCA’s coordinating role by singling out one sector for an outright prohibition, while other sectors remain governed by harmonised, proportionate controls under existing environmental law,’ it said.

‘Such an outcome undermines policy consistency and introduces unnecessary legal misalignment. Further, the proposed ban does not sufficiently take into account ongoing regulatory implementation processes being led by Nema. Nema has consistently communicated that enforcement will focus on EPR compliance, licensing of plastic packaging, and operational take-back schemes,’ the lobby added.

KAM warned that the proposed ban would disrupt the agreed compliance pathway and create uncertainty for manufacturers, distributors and retailers.

Industry pushback

As part of its opposition to the Bill, BAT Kenya is also seeking a review of the proposed prohibition of additives and flavours, arguing that it would fuel illicit trade.

The company said flavour bans have failed in several European countries, including the Netherlands, Estonia and Denmark, and have instead fuelled black-market activity and increased access by underage consumers.

‘If a regulation in effect for 12 years has been found ineffective, overly complex and unenforceable by 27 European jurisdictions, it is extremely ill-advised to pursue a similar failed approach in Kenyan regulation,’ BAT Kenya said.

‘Excessively restricting the range of available flavours, through restriction of ingredients or outright banning additives which result in a characterising flavour, could also push smokeless product consumers into an illegal, unregulated market, encourage potentially dangerous home-mixing of flavours or motivate them to return to smoking,’ Mr Ochola said.

Bolt has dismissed claims it plans to exit the Kenyan market next week amid ongoing tension between the ride-hailing firm and its motorcycle riders over fares and earnings.

The Estonian firm’s senior general manager for East Africa, Dimmy Kanyankole, said the company remains fully operational, and a letter circulating on social media claiming they will exit Kenya on June 8 is fake.

Motorcycle riders on Bolt recently staged demonstrations in Nairobi, demanding higher fares and harmonisation of pricing between petrol-powered and electric motorbikes.

The letter, dated June 1 and purportedly signed by a senior Bolt official, claimed the company had decided to shut down its Kenyan operations after failing to address the drivers’ concerns while maintaining a sustainable business model. Bolt has partners in the car and motorcycle public transport business.

‘This document is fake and did not originate from Bolt Kenya or any of its authorised representatives,’ Mr Kanyakole said in a statement.

‘Bolt Kenya remains fully operational and committed to serving our driver partners and customers across the country.’

The letter advised drivers and client to make arrangements ahead of the closure date. ‘Despite our efforts, we have been unable to satisfactorily address the concerns and demands raised by our driver-partners while maintaining a sustainable business model,’ the notice stated.

There have been tension between ride-hailing platforms and Kenyan drivers over fares, commissions, and earnings. Last week, Bolt’s motorcycle riders, commonly known as boda bodas, staged a protest in Nairobi over the company’s recent move to lower the price of electric bike rides, which they said has significantly squeezed their earnings.

Until last year, Bolt’s boda boda trips would cost more on an e-bike than a petrol-powered equivalent.

But the company revised the pricing downward to incentivise the electric motorcycles, which promise higher driver profits due to their lower fuel and maintenance costs. E-bike riders say the new structure has sharply cut take-home earnings.

‘For a 32-kilometre trip to Kitengela, I can get Sh600. After deductions, I remain with about Sh450. Swapping the battery costs Sh265, and at the end of the day, I still have to repay my motorbike loan of Sh500 daily,’ one rider told the Business Daily in an interview last week.

‘My earnings do not make sense. Am I working, or is this a charity? It is not sustainable.’

At the same time, there is disgruntlement among Bolt’s petrol bike operators after the company in May raised fares for car rides by six percent over higher fuel prices, but excluded motorcycle riders from the adjustments.

The Middle East conflict has pushed the price of a litre of petrol in Kenya up by 20.2 percent in the past three months. With a litre of petrol now retailing at Sh214, the riders argue that their costs have jumped.

Riders want fare increases of up to 80 percent, which ride-hailing firms are adamant about, as it would negatively affect ride demand.

Kenya is pushing for minimum fare regulations for ride-hailing services to resolve long-running disputes between digital taxi platforms and drivers.

The State wants a national pricing model for both traditional taxis and digital ride-hailing operators, including reviews of fuel costs, maintenance expenses, insurance, and commissions.

Currently, the National Transport and Safety Authority (NTSA) caps commissions on digital ride-hailing platforms at 18 percent per trip, including the digital service tax.

Patients on company-sponsored insurance covers are bearing a higher cost of their hospital bills through co-payment after medical bills jumped 13 percent last year, surpassing the global average.

The workers are also being asked to shoulder an additional part of the insurance premiums as employers race to curb a rise in medical costs.

Findings from Aon’s Global Medical Trend Rates Report 2026 forecast that medical costs in Kenya will be stiffest this year at 13.5 percent, outpacing the global average of 9.8 percent.

The rising costs are now forcing employers to rethink the structure of medical cover.

Aon says many firms in countries experiencing double-digit medical inflation are shifting part of the burden to employees through higher deductibles, co-payments and caps on benefits, effectively reducing the value of health insurance packages.

‘To mitigate rising costs and the risks they bring, employers are focusing primarily on hard negotiations with insurance carriers and other vendors. About three-quarters of companies plan to negotiate with existing vendors, and about two-thirds plan to go to RFP (request for proposals).

Firms use RFP to solicit competitive bids from potential vendors or contractors, especially when they feel the current service providers are expensive or not delivering quality services.

Companies in Kenya spend millions of shillings on employee medical schemes annually, making it a key component of staff costs.

For instance, KCB Group medical costs rose to Sh2.37 billion last year from Sh1.94 billion in 2024.

That of NCBA went up to Sh727.76 million from Sh632.36 million while that of Co-operative Bank of Kenya hit Sh962.12 million from Sh849.92 million amid medical inflation and increased staff size. Insurers usually revise premiums upwards on higher claims from employees as well as pressure from hospitals seeking higher fees on medical services.

Last year, Nairobi Hospital proposed a new pricing structure that would have pushed patient charges up by as much as 61.3 percent. However, insurers pushed back saying the increase had not been anticipated in their renewed cover terms with clients.

Aon says other cost containment measures being looked at by local firms as well as multinationals include implementing well-being initiatives, offering flexible benefits, introducing or increasing employee cost-sharing, reducing high-cost benefits and tightening benefit eligibility rules.

‘As with multinationals, local companies are looking to mitigate increased costs and are using a similar set of strategies that are unchanged from last year. While these strategies to contain costs haven’t changed much year over year, the number of companies employing these strategies has gone up,’ said Aon.

Kenya’s situation is better than that of several African countries such as Nigeria where the rise is projected at 43 percent this year, Ethiopia (42 percent), Angola (30 percent), Malawi (27.1 percent), Zimbabwe (22.5 percent) and Ghana (21.6 percent).

By comparison, Europe is expects to record about 8.2 percent, while Latin America and the Caribbean averages 10.3 percent, showing that emerging markets like Africa are experiencing steeper cost escalations.

Aon says the medical trend is used as a tool to forecast rising healthcare expenses by considering factors like inflation, service utilisation, prescription drug costs, and advancements in medical technology.

‘We asked Aon professionals for their insights on how they expect medical rates to change, based on their consultations with clients and the carriers represented in their medical plan portfolio,’ says Aon in the report.

Aon, a London-headquartered professional services firm, says the estimates in the report are based on interviews with its team of brokers, administrators and advisors of employer-sponsored medical plans across more than 100 countries and locations around the world.

The projections on Kenya’s medical inflation were based on an assumed general inflation rate of 4.9 percent this year.

The widening gap between medical inflation and general inflation is particularly concerning for employers, as it directly impacts the affordability of comprehensive health cover. For many firms, especially small and medium-sized enterprises, sustaining medical benefits is becoming increasingly untenable.

Many workers are bearing the brunt of these adjustments, with the reduced inpatient and outpatient limits and narrower provider networks increasing their out-of-pocket expenses.

Globally, firms are becoming proactive in controlling medical costs by investing in preventive care programmes and promoting wellness initiatives.

‘These initiatives help to control costs in a couple of ways. First, by encouraging utilization of preventative care, they can avoid more expensive care down the road,’ said Aon.

‘Second, by keeping employees engaged in their wellbeing, they can reduce the stress that can exacerbate other health conditions. Eighty-six percent of countries report this as the most prevalent cost mitigation measure.’

Aon expects cost-containment measures, including higher deductibles, co-payments and tighter referral requirements to remain widely used this year.

‘More significant plan design changes such as the use of flexible benefit plans to cap overall benefit costs and access and delivery restrictions are all measures designed to incentivise plan members to seek care in a cost-effective manner,’ said Aon.

The Communications Authority of Kenya (CA) will use part of the money contributed by telecommunication operators to the Universal Service Fund (USF) to refurbish and repurpose some of Posta’s unviable branches, keeping them from closure.

Appearing before the Senate Committee on Information, Communication, and Technology last week, representatives from CA said funds from the kitty are already being used to refurbish some 17 Posta branches.

Posta CEO John Tonui confirmed that the 17 branches are among the 125 commercially unviable branches the State-owned corporation had planned to shut down, and the USF funds will help keep them open and repurpose them for a more digital use.

‘The 125 are currently rented offices we will convert to smart post offices using the money,’ Mr Tonui told Business Daily, but did not confirm how much exactly is ring-fenced for Posta.

Posta had targeted to close down 20 percent of its branch network by end of this year, to cut on costs amounting to Sh1 billion annually, spent on rent and staffing them.

With the CA injection, Mr Tonui says the branches will now be kept open and will be converted to smart post offices, with virtual postal addresses using the corporation’s M-Post platform.

The USF has historically been used to build mobile network masts and lay fibre optic cables to improve connectivity, but the regulator last year announced a plan to expand the fund’s mandate to include legacy broadcasting and postal and courier systems.

The fund was established to support ICT infrastructure in areas considered commercially unviable by private companies. It is financed through mandatory contributions from licensed operators in the sector.

In its strategy running up to 2027, CA had earmarked Sh3.1 billion to improve postal and courier services in the country, part of which will now go to help sustain the commercially unviable branches.

The funds come at a time when the Postal Corporation of Kenya is undergoing a major restructuring, aimed at improving its commercial viability after years of loss-making due to dying core businesses.

In the year to June 2025, Posta made a rare profit of Sh488 million, up from a loss of Sh1.08 billion the previous year, supported by recovery of Sh1.5 billion rent arrears it was owed by Huduma Kenya.

To shore up revenue and sustain its operations, Posta has been forced to cut back on spending and increase its revenue streams. This year, it plans to raise letter box rental fees by up to 12.4 percent to increase income.

It is also seeking a strategic e-commerce partner to invest up to Sh2.5 billion, in exchange for stake in its courier business EMS.

Global payments giant PayPal has frozen money in an unknown number of Kenyans’ accounts and permanently banned other users over failure to prove their employment and residential details.

The company has been demanding that Kenyan users receiving money from overseas give details of their contracts for the work being paid for, bank statements and proof of their physical addresses to access their money.

Users who do not provide these details have been blocked from transferring their cash to other users or withdrawing the funds for at least six months.

The affected PayPal users range from individual sellers to start-up companies, creative artists and impromptu philanthropists.

‘We are no longer offering PayPal services for this account. Sometimes we can’t process account activity for a variety of reasons, including local laws, our policies, or the policies of our partner banks and card networks,’ reads a notice displayed in one of the deactivated Kenya accounts.

Kenya remains in the list of countries at high risk for money laundering and terrorist financing, with the Financial Action Task Force (FATF) placing the country on its ‘grey list.’

When it was founded in 1998, PayPal was among the first companies that allowed people to easily transmit funds to one another over the internet.

Now, the firm has tightened its anti-money laundering rules and put in place aggressive anti-fraud measures.

The firm earlier said one potential sign of fraud is an unusually large transaction.

Another warning sign is a spike in activity, like a sudden burst of transactions in a formerly quiet account.

In Kenya, the affected users can still access account information, including the transaction details and account balance but are unable to send or receive payments.

The American firm told the affected users that the remaining balances may be held for up to 180 days before being cleared for withdrawal.

‘Before you can withdraw or transfer any remaining funds from your account, we need to hold them for 180 days to cover things like chargebacks or other financial liabilities,’ the company informed the frozen users in a notice seen by the Business Daily.

PayPal has demanded documentation like proof of physical addresses from some Kenyans despite providing evidence of legitimate business activity.

Lack of home address labelling has made it difficult for some users to comply with the tough PayPal conditions.

A Kenyan freelance writer whose account the Business Daily saw cannot access $190 (Sh24,500) paid by a UK-based client after PayPal flagged the transaction for review.

‘You can no longer use PayPal as we’ve decided to permanently limit your account after a review,’ reads a notice sent by the company.

PayPal requested copies of the contract related to the work performed, as well as identity documents whose names exactly matched the details registered on the PayPal account.

He uploaded the documents, but after attempting to transfer the funds to his Kenyan bank account, PayPal permanently limited the account. The firm said it had detected suspicious activity.

‘We noticed activity in your account that’s inconsistent with our user agreement, and we no longer offer you PayPal services,’ reads another notice.

On its website, PayPal says it screens customer accounts against government watch lists.

Under PayPal’s policies, bank accounts or payment cards linked to a restricted account cannot be removed or used to create another PayPal account.

The user was also informed that future payments may be subject to holds of up to 21 days.

Another Kenyan user whose funds have been frozen for more than two months said PayPal asked for proof of physical address through utility bills, such as electricity, water, gas or internet statements.

‘It is frustrating because we do not use a formal residential addressing system like the US or Europe; we rely on landmarks and unstructured street names. Does that mean I cannot receive money?’ he told the Business Daily.

Paypal is one of the largest digital payments firms globally, handling payments worth $464 billion (Sh60 trillion) between January and March 2026 alone.

The firm has over 439 million accounts globally, although it does not disclose its Kenya or Africa numbers.

In Kenya, the platform is mostly preferred by freelancers and online workers who receive payments from clients abroad, as well as users who shop online and do not want to share credit card or bank details.

The company has been criticised for freezing users’ money for years, especially in African markets like Nigeria, which have been under global watch for money laundering.

PayPal did not respond to Business Daily’s queries on the frozen and blocked accounts.

Under PayPal’s customer identification process, users are required to scan government-issued identification documents and verify their identity through facial recognition technology.

PayPal does not have offices in Africa and instead operates through partnerships with financial institutions and telcos across the continent.

In Kenya, Equity Bank is the only lender with a direct withdrawal partnership with PayPal, allowing customers to transfer funds from their PayPal balances directly into bank accounts.

Safaricom’s M-Pesa also operates a similar integration with PayPal.

For other banks, customers link Visa and Mastercard payment cards issued by the lenders to fund purchases and receive withdrawals.