Category: Business Daily

The Kenya Medical Supplies Authority (Kemsa) delivered only 41 percent of medicines and medical supplies ordered by public health facilities in the financial year ending June 2025, leaving facilities without essential drugs, and forcing some to either turn away patients or opt for expensive sources.

Auditor-General Nancy Gathungu said the 41 percent order fill rate fell far below Kemsa’s internal performance target of 90 percent. The authority’s sales revenue also declined to Sh4.89 billion from Sh5.80 billion the previous year.

The order fill rate measures the proportion of items delivered against those ordered. For instance, a facility that orders 10 units but receives four records has a 40 percent fill rate.

The latest performance marks a continued downward trend that has continued to cripple medical supplies to facilites.

Kemsa’s fill rate stood at 69 percent in 2019/20, dropped to 54 percent in 2020/21, then to 50 percent, before slightly improving to 51 percent and 52 percent in the following years-only to plunge to 41 percent in 2024/25. This is the first time in six years that the rate has fallen below 50 percent.

The decline is largely attributed to a mounting Sh6.28 billion debt owed by county governments and public health facilities, which has significantly constrained Kemsa’s ability to procure stock.

Of this amount, nearly Sh3 billion has been outstanding for over a year without repayment plans. Kemsa now waits an average of 487 days, more than 16 months, to receive payments, far exceeding its 45-day credit policy.

The cash flow strain has in turn affected Kemsa’s ability to pay its own suppliers. During the review period, the authority owed suppliers Sh5.71 billion, including Sh1.73 billion that had remained unpaid for more than 90 days without repayment arrangements.

Operational challenges have also worsened. By June 2025, hospitals were waiting an average of 19.5 days for deliveries, nearly three times the seven-day target.

Dispensaries and smaller facilities faced even longer delays, averaging 24.2 days against a target of ten days.

Even donor-funded programmes for HIV, tuberculosis, malaria, and family planning failed to meet expectations, achieving a fill rate of 79 percent, stilll below the 90 percent benchmark.

Ms Gathungu noted that Kemsa’s performance has been undermined by multiple systemic challenges, including reduced capital investment, limited stock availability, inefficient logistics, and rising operational pressures.

‘Between FY 2019/20 and FY 2024/25, Kemsa’s capital order fill rates were 69 percent, 54 percent, 50 percent, 51 percent, 52 percent, and 41 percent, consistently falling short of the 90 percent target,’ she said.

Meanwhile, a Sh499.7 million integrated computer system intended to link all Kemsa warehouses in real time and enable regional order processing remains incomplete. The system, contracted in November 2023, was only 70 percent complete by May 2025, one year past its deadline, raising concerns over value for money.

Distribution inefficiencies are further compounded by underutilised infrastructure. Of Kemsa’s seven regional warehouses, only the Kisumu facility is partially operational. The remaining depots in Eldoret, Mombasa, Nyeri, Meru, Kakamega, and Nairobi’s commercial street function merely as passive storage sites without distribution capacity.

Banks expect the Central Bank of Kenya (CBK) to raise its benchmark rate for the first time since February 2024, in response to a spike in inflation and emerging currency pressures following the Iran war, which is likely to trigger an increase in borrowing costs.

The move would impact borrowers, reversing a recent trend in which the cost of loans has softened due to falling inflation and adoption of a more transparent pricing model.

The banking sector lobby- the Kenya Bankers Association (KBA)-expects CBK to raise the key reference rate next month when the apex bank’s monetary policy committee meets on June 9.

The bankers lobby remains fretful of weaker purchasing power following a surge in inflation and expects the rise in cost-of-living measures to dampen demand for loans and escalate loan defaults.

Last month, CBK paused its rate-cutting cycle on Wednesday, keeping its benchmark lending rate at 8.75 percent to monitor second-round effects from a surge in global energy prices triggered by the Iran war.

The decision followed 10 consecutive rate cuts.

April inflation rose at the quickest pace in seven years to 5.6 percent from 4.4 percent as the global oil price shock hit home.

A further rise in fuel prices in May is seen pushing the change in consumer prices closer to the 7.5 percent ceiling.

‘All indicators from fuel to consumer prices are showing that there is going to be a markup in the Central Bank Rate (CBR),’ said Raimond Molenje, Kenya Bankers Association (KBA) chief executive officer.

‘All eyes will be on CBK, and we expect pressure to raise the CBR as we look at rising inflation in the economy and a test on currency stability.’

Kenya’s inflation rate has climbed above the preferred mid-point of five percent, pointing to underlying consumer cost pressures, but the shilling has largely held steady, keeping within a narrow range of Sh129 and Sh130 against the US dollar.

A further escalation in inflation and/or volatility in the Kenya shilling could force CBK to react with an upward recalibration to the CBR.

This would immediately lift the cost of borrowing as most banks have pegged pricing on the CBK benchmark rate.

Nearly three-quarters of banks snubbed use of the new risk-based pricing formula and instead adopted CBR as their pricing benchmark.

An analysis of bank disclosures shows that 27 of 37 banks opted for the CBR as their key reference rate, with only a minority opting for the Kenya Shilling Overnight Interbank Average (Kesonia).

The adoption of the revised risk-based pricing model has created transparency while also aligning bank interest rates with the CBK benchmark, shortening the translation period between when CBK recalibrates the rate and when banks adopt it.

Commercial banks’ interest rates have eased in line with the improved pricing metric and lower inflation.

Average lending rates eased slightly in March to 14.7 percent from 14.8 percent in February 2026.

Private sector credit growth continued to strengthen and reached 8.1 percent in March 2026 from 7.4 percent in February, and from a contraction of 2.9 percent in January 2025.

Banks, however, continued to struggle with asset quality, where the ratio of gross non-performing loans to gross loans climbed to 15.6 percent in March from 15.4 percent in December 2025.

A rise in the CBR is expected to impact not just borrowing costs but also private sector credit growth and non-performing loans, likely to make all three metrics worse.

KBA, however, says it is more worried about the health of the consumer, where a deterioration will dampen the demand for new loans faster and hasten the drop in industry asset quality.

‘The biggest worry we have is on purchasing power in the economy because you could have an economy where borrowing rates are up, but people are consuming more,’ added Mr Molenje.

‘It’s not such a big hit when interest rates go up, but consumer demand is sustained. The challenge right now for government and policymakers is to ensure that prices don’t go up. The challenge is when items like fares go up, it’s very difficult for them to come down, even when oil prices are turned down.’

CBK had been on a rate-easing cycle from August of 2024 to April this year and has not raised the key benchmark rate since February 2024.

Kenya trails other African economies in introducing energy-saving measures, including use of public transport, work-from-home practices and limits on travel to shield consumers from soaring energy costs.

A tracker from the International Energy Agency (IEA) shows that Egypt leads on the continent with measures such as asking the public to limit fuel usage, cutting travel by State officials, and working from home for government employees.

Ethiopia, Mauritius, Mozambique and Senegal have also asked their citizens to avoid unnecessary travel and other fuel-consuming activities.

Tanzania has ordered government officials to travel collectively in buses, while Madagascar declared a state of emergency for 15 days.

Other countries have shut schools or reduced days spent in classrooms and launched campaigns asking the public to be “frugal” in use of fuel.

The measures help in conserving fuel stocks amid supply disruptions as well as reduce energy bills.

Kenya is missing from the IEA tracker on government actions to conserve energy, with the country turning on tax cuts and subsidies to ease the surge in fuel prices.

Rising fuel prices have triggered deadly protests in Kenya and forced countries across Africa to take emergency measures, as a deepening energy crisis drives severe disruption across the continent.

Diesel and petrol prices at the pump have surged in recent weeks, as the economic shock of the war in the Middle East starts to reach consumers across sub-Saharan Africa.

Spiraling fuel prices have turned out to be the biggest headache for the Kenya government, despite concerns that failure to conserve fuel could haunt the economy in the coming months if disruptions of the Middle East war persist.

‘This is increasingly a ‘higher for longer’ environment, which we expect to last for the next few months,’ Mark Russell, CEO of Puma Energy, was quoted by Financial Times.

Puma Energy operates more than 700 fuel stations in Africa and 2,200 globally and many other oil firms are smarting from the supply disruptions.

Countries such as Malawi have depleted their strategic supplies of diesel and petrol, while Mozambique is grappling with a severe supply crisis, mainly in the capital, Maputo.

Iran’s blockade of the Strait of Hormuz, where nearly a quarter of the world’s fuel passes, and attacks on major refineries in the Gulf region have led to the supply crisis.

Kenya was nearly plunged into a shortage of petrol last month when one of the vessels carrying 85,000 metric tons of the fuel was unable to leave the port of Jebel Ali in the United Arab Emirates.

But the country shipped in an emergency cargo outside the government-to-government (G-to-G) framework with three Gulf oil majors, helping avert the crisis.

But the G-to-G suppliers have already warned that they have been forced to source fuel from alternative places outside the Gulf region, signaling that Kenya could face a supply crisis if the Middle East war does not stop in the coming months.

Four Kenyans died over the price of moving fuel. A war 6,000 kilometres away rewrote the cost base of every business in this republic overnight.

A maritime chokepoint nobody in Nairobi voted for, nobody in any founder’s morning routine could have prevented, quietly swallowed the margins that months of grinding had built.

The country paused for two days. Not metaphorically. The kind of pause where cold chains break, logistics stall, and a family in Kwale quietly recalculates dinner.

No founder hustled their way out of that week.

That is the opening premise of this column, and I want to sit with its discomfort before offering a resolution.

The most dangerous thing I could do is rush to the lesson. The wound needs to be named first.

Here is what this column is not arguing. It is not arguing that hard work is a lie, that discipline is a performance, or that the founders grinding through hostile conditions should stop. That would be its own kind of cruelty, advising stillness to people for whom motion is survival. Hustle is real. The problem is not hustle. The problem is the story we built around it.

The story went like this. If you outwork the room, the room eventually rewards you. Wake earlier. Sleep later. Carry more than your share. Survive on conviction. In Africa, the founder who suffered most was treated as most deserving of success. Hustle was not a strategy. It was a moral position. A theology, almost.

That theology did not save the cold chain founder watching her margin dissolve before her morning tea. It did not move the fuel review. It did not open the shipping lane.

Call it the hustle ceiling. The invisible altitude above which no amount of individual effort can climb, because the factors of production that determine outcomes, energy, currency, interest rates, capital access, regulatory discretion, and inherited networks, never belonged to the founder. We sometimes forgot. The harder we worked, the more completely we forgot.

The strongest counter-argument is this. What else would you have founders do? Sit down? The networks may be biased, the capital may recognise certain faces before others, the conditions may be hostile, and yet, if the hand goes down entirely, nothing moves at all.

This is the honest place where the argument sharpens into something that cannot be resolved cleanly. You cannot stop hustling. You cannot fully trust it either. Both are true at the same time, and collapsing one to make the other comfortable is the dishonesty this column refuses.

Whole generations of African founders have been grinding inside a system that quietly rigged who would scale and who would only ever survive. The grinding was necessary. The grinding was also never sufficient. Holding both truths without flinching is the beginning of a different operating system.

This week, a thread in our FBX founder community made me laugh, then think. Someone asked, in genuine confusion, what kerosene is still used for.

The replies arrived fast and merciless. One member noted the question was almost a confession of class. Another wrote that kerosene was still the original multitasker, lighting homes and cooking dinner in places no fuel review ever reaches. A third compared it to asking what a landline is for.

The exchange was funny. It lingered. We are not all hustling on the same playing field. Some founders are modelling diesel hedging strategies while millions of Kenyans are calculating whether tonight’s meal can be cooked at all. The hustle myth flattens that gap, and the flattening is itself violence. It tells the family in Kwale that the gap is a motivation problem.

It is not. Some weeks ago, I had dinner at a restaurant in a city I love. On a weathered wall hung a Hamsa, the open hand that crosses Islamic, Jewish, and North African traditions. Five fingers raised. An eye on the palm. Dense, illegible script swirling around it, like noise pressing in from every direction. I did not think of the image again until this week, when I needed it.

There are two hands a founder lifts. The hustle hand is clenched. It performs. It grinds. It mistakes motion for meaning. It wakes at four, answers every message, misses dinner, and quietly resents its own discipline.

The Hamsa is the other hand. Open. Watchful. It does not claim to control what surrounds it. It holds its shape against the noise. Composure, not exhaustion. Awareness, not speed.

The maturing founder learns which hand to lift, and when.

The hustle hand still has its hours. The Hamsa hand carries you through weeks that the hustle cannot reach. The mindset that refuses to read a market shock as a personal verdict. The emotional honesty to admit fatigue rather than perform optimism.

The social instinct is to lean into trusted peers rather than disappear into isolation. The strategic patience to absorb before reacting. The spiritual conviction that the work still has meaning, even when the system insists otherwise.

Nobody names the second-order consequence of the hustle gospel. What breaks first is not the business. It is the founder who confused suffering with strategy. So how do you wake up on a week like this one?

Not because the world cooperated. Not because hard work was rewarded. You wake up because something inside you has stopped confusing exhaustion with virtue. You make the call you did not want to make.

You protect what moves the needle. You hold your shape.

That is the entire deliverable for some weeks, and it is enough.

The hustle was never the whole game. The founders who last finally learn the rest of it.

The grinding opens doors. The open hand decides what you carry through them.

Supermarkets are today full of drinks that claim to be good for your stomach. Products such as kombucha, probiotic yoghurts, fibre-infused juices and prebiotic sodas are marketed as good for your health with claims that they support digestion, ease bloating and boost immunity. But how much of what they promise is actually backed by science?

‘Probiotics are essentially beneficial microorganisms, including both bacteria and fungi, that originate from the foods and drinks we consume,’ explains Dr Huzefa Iqbal, a senior medical practitioner at Halcyon Multispecialty Hospital.

Prebiotics act as food for these microorganisms.

“They are mostly found in fibre-rich foods, which are digested by the good bacteria and help them grow and stay active in supporting normal gut function,” explains Irene Jahenda, a nutritionist from Placid Nutrition Centre.

When used correctly, prebiotics and probiotics have scientifically proven benefits for gut health.

“Remember, they are good bacteria, so they balance the harmful bacteria that we ingest in the gut,” says Dr Iqbal. “They do this by competing for space and nutrients within the digestive system and stabilising the pH, which helps limit the overgrowth of bad bacteria.”

According to Dr Huzefa, this balance can help prevent or reduce certain digestive issues, including different forms of diarrhoea.

“From diarrhoea caused by infections and medication to people struggling with irritable bowel syndrome (IBS), prebiotics and probiotics help reduce inflammation and minimise toxins from the harmful bacteria causing the diarrhoea,” he says.

Moreover, they might help boost the immune system in the body.

“Fun fact: around 70 percent of immune cells are found in the gut,” says Dr Huzefa. Therefore, a healthy gut has a direct impact on how effectively the immune system functions.

However, experts note that not all supermarket drinks that are promoted as good for gut health are beneficial.

“For them to work meaningfully in our bodies, they need to contain a certain quantity of live cultures,” says Irene. “The beneficial threshold is usually around 15 to 20 billion colony-forming units.”

The intended use of the product and the type of strain involved are other factors that determine effectiveness. According to experts, different probiotic strains offer different health benefits. One of the more common strains is Lactobacillus rhamnosus GG, which can help to prevent diarrhoea.

The nutritionist also says that added sugars can lower the overall effectiveness of probiotic and prebiotic drinks.

“They are generally added to improve taste and boost sales, but too much sugar can weaken the probiotics and interfere with the very benefits consumers are trying to achieve. Excess sugar can also promote inflammation within the digestive system and increase the risk of sugar spikes or high blood sugar levels,’ she says.

While some people may benefit from these drinks, experts say they can also have adverse effects on others.

“They may actually cause digestive issues such as bloating in some people. This especially happens if the probiotics and prebiotics are unnecessary or are taken in the wrong dosage,’ says Dr Huzefa.

The doctor adds that certain groups of people should avoid these drinks entirely or only consume them under medical guidance. These include people who are immunocompromised, such as those living with HIV/Aids or tuberculosis, critically ill patients, people recovering from surgery and persons already experiencing severe digestive issues.

The doctor adds that certain groups of people should either avoid them entirely or only take them under medical supervision. These includes people who are immuno-compromised, such as patients living with HIV/Aids or tuberculosis, critically ill patients, people recovering from surgery and those already experiencing severe digestive issues.

However, while some of these drinks can be beneficial, experts advise that natural food sources are a better way to get prebiotics and probiotics. “Food provides more wholesome benefits than drinks. With a food like sauerkraut, for example, you get probiotics, fibre, vitamins, and other minerals,” says Irene.

Alternative sources of probiotics beyond processed drinks include yoghurt, mursik (fermented milk), fermented cassava flour, kimchi, sauerkraut and kefir. The most common sources of prebiotics include garlic, onions, bananas, certain oats, legumes and beans.

According to Irene, if the gut is not functioning properly, this can manifest as symptoms in different parts of the body, including acne. To promote overall well-being, she emphasises the importance of protecting the gut with a balanced diet that supports healthy bacteria.

However, the doctor cautions against unnecessarily consuming prebiotic and probiotic products.

‘If you are not in pain, you wouldn’t take a painkiller,’ he says. Similarly, if you do not have a gut issue or a doctor’s prescription, these drinks may not be necessary.’

Investors in the Talanta bond that was used to build Raila Odinga stadium will receive Sh6.5 billion from July 7 on the back of Sh24.8 billion gambling taxes.

The government last year raised Sh44.79 billion through a 15-year bond whose returns are paid from betting taxes, which are housed under the Sports Fund.

This will be the first full year payment for the investors who received their first paycheck on January 7, of an estimated Sh3.25 billion.

Proceeds from gambling taxes under the Sports Fund are expected to increase 35.3 percent to Sh24.8 billion, up from Sh18.3 billion in the last financial year, making it easier for the State to settle the bondholders.

The Sports Fund is mainly funded by taxes and levies raised from the betting industry, with the fund targeting Sh2.07 billion per month, indicating the large spending by Kenyans in gambling.

‘This reflects the projected increase in appropriation in aid collections to the Sports, Arts and Social Development Fund (SASDF). The ministry of sports projects to collect Sh2.07 billion per month,’ said National Treasury Director of Budget Albert Mwenda.

‘This includes the amount to be set aside for the settlement of the loan linked to the Talanta Stadium loan.’

The investors will on July 7, receive Sh3.25 billion being the first coupon payment of the financial year, before the second payment on January 7 of Sh3.25 billion.

The money from gamblers is received daily by a fund manager who invests it before making the scheduled coupon payments. The payout to investors includes interest and investment income earned by the fund manager.

The securitisation managers, Liaison Capital, did not disclose the exact amount paid out to investors of the bond in January, as the amount will differ in each coupon payment based on the investment income.

The bond has a 15.04 percent rate of return, which will earn investors Sh57.6 billion in interest over the life of the bond.

The interest income from the bond is tax-exempt, giving it the same status as the government-issued infrastructure bonds.

As per the information memorandum, the government has an extra three-day window to make payments before it is considered to be in default, meaning it has an effective deadline of July 10 to make the payment.

The issuer of the bond, Liaison Group, through a special vehicle, Linzi FinCo 003 Trust, has arranged a standby letter of credit with KCB Bank to be used in case of delayed disbursements from Treasury.

Proceeds of the bond were directed to the completion of the 60,000-seater stadium, which has since been renamed Raila Odinga International Stadium.

As of last week, the stadium was 91 percent complete, as per a statement by the Ministry of Sports after a site tour.

As of April last year, the stadium was 37 percent complete, with the government having paid only five percent of the construction costs.

The contractor, China Roads and Bridge Corporation, had agreed to continue being active at the site as the government sought funds. The Ministry of Defence was given supervisory powers over the project owing to the army’s reputation for prompt execution.

However, monies used by the Ministry of Defence are difficult to audit due to the sensitivity of the docket.

The Raila Odinga Stadium is earmarked as one of the grounds to host the 2027 Africa Cup of Nations (Afcon).

The National Treasury has also set aside an additional Sh1.5 billion for preparations towards the Pamoja Afcon games, which Kenya will host alongside Uganda and Tanzania.

The budget includes Sh828 million as wages for temporary employees, underscoring the magnitude of the games and the manpower needed to execute.

Printing, advertising and information supplies have been allocated Sh200 million, while insurance costs have a Sh200 million budget.

An insurance contract, worth Sh42 million for the CHAN Pamoja games hosted by the three East African countries last year, is at the centre of corruption allegations against the top hierarchy of the Football Kenya Federation.

The Treasury has earmarked Sh271 million for other operating expenses relating to the games scheduled to take place between June 17 and July 19 next year.

The Raila Odinga Stadium will serve as a main venue for the opening and closing ceremonies, as well as matches of the Afcon games.

Notably, the Sports Fund’s 10-year tenure lapses in August 2028, a year after the games, clouding the payouts of the 15-year bond, with the government yet to issue guarantees of its renewal.

The Talanta bond did not have a government guarantee, with investors relying on the Public Finance Management Act, which establishes the Sports Fund, declaring the Treasury’s obligation to take up the liabilities of the fund if it is dissolved.

Pension funds sponsored by public entities belong to contributors and are not public funds subject to State procurement laws, the Supreme Court has ruled.

In a landmark victory for the retirement benefits industry and pensioners, the apex court ruled that pension savings managed under public entity-sponsored schemes are private trust funds owned by employees and cannot be treated as public money under the Public Procurement and Asset Disposal Act (PPADA).

‘Based on what we have stated so far, we entertain no doubt that a pension fund sponsored by a public entity was not contemplated in the enactment of Article 227 of the Constitution to be an entity that was intended to undertake public procurement and thereby to be bound by the provisions of the PPADA,’ the court said.

The country’s top court overturned earlier decisions by both the High Court and Court of Appeal, which had held that pension schemes linked to public institutions qualified as public entities because of their public function and State oversight.

The Supreme Court instead found that Section 2(o) of the PPADA unconstitutionally expanded the meaning of a public entity beyond what was envisaged under Article 227 of the Constitution.

‘Ultimately, we find merit in the appeal and accordingly allow it. We set aside the judgment of the Court of Appeal dated April 28, 2022, and in terms of Article 2(4) of the Constitution, declare Section 2(o) of the PPADA inconsistent with Article 227(1) of the Constitution and therefore void to the extent that it subjects pension funds for a public entity to the application of public procurement systems,’ the judges ruled.

The case was filed by the Association of Retirement Benefits Schemes, representing pension schemes, employers and service providers in Kenya’s retirement benefits industry.

The association challenged the constitutionality of Section 2(o) of the PPADA after pension funds sponsored by public entities were required to comply with public procurement laws in the disposal and acquisition of assets.

The association argued that pension schemes are established as irrevocable trusts under the Retirement Benefits Act and are fundamentally private arrangements between employees and trustees.

According to the association, employers merely remit contributions as part of contractual obligations, while the funds remain autonomous entities separate from sponsoring public institutions.

The association told the court that subjecting such schemes to procurement laws imposed ‘onerous responsibilities’ with severe financial implications for retirees and beneficiaries.

They also argued that the law discriminated against pension funds linked to public entities, because private sector pension schemes were exempt from the same requirements despite operating under the same legal framework.

According to the association, the additional compliance burden increased administrative costs and ultimately reduced members’ retirement benefits, infringing on constitutional protections for property rights and equality.

The Retirement Benefits Authority (RBA), which had initially supported the petition before the High Court and the Court of Appeal, later changed its position before the Supreme Court, stating the constitutionality of the challenged section.

The Authority argued that procurement oversight was necessary to prevent corruption and mismanagement of pension savings.

RBA maintained that pension schemes sponsored by public bodies served a public interest because they involved contributions from public employees and employers. It also argued that procurement safeguards promoted transparency, accountability and good governance.

However, the Supreme Court criticised the Authority’s shift in position and rejected the argument that State regulation automatically transforms pension funds into public entities.

The judges held that pension schemes, whether public or private, are savings vehicles managed independently by trustees solely for the benefit of employees.

‘It was therefore in error for the two courts below, to conclude that pension funds perform duties of a public nature and are public bodies,’ the court stated.

The judges emphasised that once pension contributions are remitted into a scheme, they cease to be public property and instead become private trust funds belonging to employees.

‘This legal structure effects a fundamental transformation. Once the contributions are made into an employee’s account in the scheme, it ceases to be public property. They become part of a private trust fund, held and managed by trustees for the exclusive benefit of the members,’ the court said.

The court further noted that trustees and administrators of pension funds do not perform government functions and are not paid from the Consolidated Fund or through parliamentary appropriations.

The court warned against equating pension savings with public funds merely because the employer is a public institution.

‘With this autonomy, it matters not that the sponsor is a public entity. Pension, just as a salary, is a benefit to the employee,’ the court observed.

‘Extrapolating the findings of the courts below would be absurd, as that would be tantamount to asserting that merely because an employee earns a salary from a public entity, then the employee’s expenditure should equally be regulated as part of public funds.’

The court distinguished between regulatory oversight and direct State control, saying the Retirement Benefits Authority’s supervisory role did not make pension schemes instruments of government.

‘The test requires more than mere regulatory oversight; it requires such a degree of control that the entity can be seen as an instrumentality of the State. The retirement benefit schemes lack this character,’ the judges ruled.

The Supreme Court also found that Article 227 of the Constitution was intended to govern public procurement involving taxpayer-funded entities and State organs, not private pension savings.

‘There was never any intention by the makers of the Constitution to include private enterprises and private pension funds, and in particular a segment of the funds sponsored by public entities, as part of the public finance and funds,’ the court stated.

The Employment and Labour Relations Court has upheld the dismissal of a former Co-operative Bank of Kenya relationship manager accused of helping fraudsters reactivate dormant customer accounts, including one belonging to a deceased client.

The court also ordered the former manager, Amos Koech, to repay the bank a Sh2.9 million staff loan following dismissal over suspicious viewing of customer accounts and alleged involvement in fraud.

Dismissing Mr Koech’s claim, the court found that Co-op Bank had valid grounds to fire him over suspected fraud and breach of customer confidentiality rules. He was a relationship manager in the bank’s Diaspora Banking Unit.

Mr Koech had sued the bank in December 2023 seeking compensation for unfair dismissal, gratuity, 12 months’ salary compensation amounting to Sh2 million and an order compelling the bank to lift the suspension of his banking licence.

He argued that the bank unlawfully and maliciously terminated his employment in November 2020 despite his explanations to allegations linking him to fraudulent activities involving customer accounts.

Court documents show Mr Koech joined Co-op Bank in May 2013 as a graduate clerk at the Lang’ata branch before rising through the ranks to become a relationship manager in July 2020.

Bank’s defence

However, the bank told the court that investigations established that the employee improperly facilitated activation of dormant accounts targeted by fraudsters impersonating genuine customers.

One of the accounts belonged to a deceased customer. The bank said that fraudsters attempted to reactivate an account using forged documents, including a purported prison discharge certificate, to falsely explain why the dormant account had remained inactive.

According to the bank, Mr Koech contacted officials at the Kimathi branch and facilitated activation of an account under suspicious circumstances despite knowing the purported account holder was an impostor.

The bank also accused him of helping fraudsters activate another dormant account belonging to a customer at the bank’s Kariobangi branch.

It was said that this account was later targeted by impostors who allegedly conducted unauthorised transactions that caused financial loss.

Co-op Bank said audit trails and system logs showed the employee accessed sensitive customer accounts unrelated to his duties and breached the lender’s confidentiality and ethics policies.

Court’s findings

‘The court is satisfied that suspicion of fraud in a banking environment, supported by audit logs and internal investigation findings, constitutes a valid and fair reason for dismissal,’ said the judge in Nairobi.

The court held that banking employees hold positions requiring high levels of integrity and accountability because of the sensitive nature of financial institutions.

The former manager denied sharing confidential customer information with outsiders and maintained that he had not participated in any fraudulent scheme.

However, during cross-examination, Mr Koech admitted that he viewed accounts outside his mandate and acknowledged that such access breached the bank’s code of conduct.

He also confirmed attending a disciplinary hearing and signing minutes of the proceedings.

The court found that the bank complied with procedural fairness requirements under employment law by issuing a show-cause letter, conducting a disciplinary hearing and allowing the employee to appeal the dismissal.

‘The evidence before the court shows that the claimant was suspended, issued with a notice to show cause which he responded to in writing, invited to a disciplinary hearing and finally informed of the outcome,’ the court said.

The verdict

It rejected the former employee’s argument that he was unfairly dismissed and declined all claims for compensation and gratuity.

The court found that the employee was not entitled to service pay because the bank had been remitting provident fund and National Social Security Fund deductions during his employment.

Also dismissed was his request for reinstatement of his banking licence, saying the court lacked jurisdiction and noting that the employment relationship ended in 2020.

The court also allowed the bank’s counterclaim seeking recovery of an outstanding staff loan of Sh2.9 million issued to Mr Koech in June 2019, plus contractual interest.

Co-op Bank argued that its staff manual allowed recall of employee loans once employment ended and said the former employee had defaulted after dismissal.

The court noted that Mr Koech did not dispute the outstanding balance or challenge the counterclaim during the proceedings.

The Kenya Revenue Authority (KRA) has netted Sh7.8 billion this year from 97,000 individuals and entities that were not paying taxes previously as the taxman makes modest progress on revenue base expansion to reach hard-to-tax sectors such as MSMEs.

The KRA has credited the new receipts to recent interventions, including the digitisation of services, which have improved how taxes are assessed, collected, and monitored.

The government is backing the KRA tax base expansion to prop up domestic revenue mobilisation against difficulties in adopting aggressive tax measures.

Widespread opposition to tough taxation measures has shifted the responsibility for mobilising higher domestic revenues from the National Treasury and the National Assembly to the KRA.

‘Just looking at this year, from people who have never paid a single shilling in direct tax, by now they have paid Sh7.8 billion,’ said George Obell, the KRA Commissioner, Micro and Small Taxpayers.

‘That is just 97,000 taxpayers who have come on board. They had never paid a single coin, but in four months they have now paid Sh7.8 billion and they have done it voluntarily.’

The KRA has pushed to reach the hard-to-tax economic sectors through changes, mostly to the Tax Procedures Act, amid backlash on the creation of an all-powerful tax czar. The Treasury has empowered the KRA to go after the hard-to-tax sectors amid a trend where most businesses and jobs are being created in the informal sector.

‘The hard-to-tax sectors are characterised by informality, limited record keeping, lack of visibility of transactions by taxpayers in these sectors and inadequate regulation. Most players in these sectors believe that they are not obligated to pay any taxes on self-generated incomes, leading to high levels of non-compliance,’ the Treasury said in its medium-term revenue strategy report.

Proposals contained in the Finance Bill, 2026, seek to further embolden the taxman, including allowing the KRA to issue an assessment on the income of a person relying on third-party data and generation of pre-populated returns based on information available to the agency.

The KRA has cited digital transformation as the key driver for the emerging tax base expansion. ‘Historically, our tax administration model was heavily manual, fragmented and transaction-based. Compliance relied substantially on physical interactions, paperwork and post-transaction audits,’ added Mr Obell.

It is now clear that the Iran war will have a huge effect on global oil markets and prices over the next year.

In fact, oil market analysts project that even if the war ended today, it would take at least six months for the situation to stabilise – pump prices and global benchmarks to get to pre-war levels.

It will take even longer – up to mid-2027 if damage to oil infrastructure in the gulf has been greater than estimated, and it takes longer to rebuild inventories.

What this means is that oil prices will not drop to pre-war levels within the remainder of this financial year.

Responsible governments should level with the public, communicate this clearly and adjust macro-economic plans accordingly.

Nonetheless, what the government of Kenya has done, and looks bent on continuing to do, is to take small reactive policy responses that remain vulnerable to continued volatility to geopolitics of the US war with Iran and will not actually stabilise the economy, let alone cushion businesses and wananchi.

The policy stance taken will only mean more weird Epra price adjustments and State House vetoes and u-turns that will further dim market confidence and sustain price volatility that will end in slower growth and revenue.

This is what government must do now: The Treasury Cabinet Secretary must now go to the budget proposals for FY2026/27 and find Sh50 billion recurrent expenditure to cut.

That will reduce revenue demands by an equal amount and obviate the need to raise the prices of oil. Here is why: Kenya raises about Sh330 billion annually from taxes on oil.

Broken down, as per FY2024/25 outturns, this is about Sh119 billion from Road Maintenance Levy Fund (RMLF); Sh36 billion from Railway Development Levy (RDL) on oil; Sh100 billion from VAT on fuel; and Sh70 billion from excise

duty on petroleum.

Analysis of the impact of Iran war on global crude oil prices has been estimated to be up to about 15 percent. This computed means that the war will cause at least Sh50 billion increase in the economic burden that ordinary Kenyans and businesses have to bear in FY2026/27 for the government to maintain the Sh330 billion revenues it expects from tax on oil.

Since Kenya has already securitised [or planned to securitise] RMLF and RDL, which reels in the most oil taxes, it leaves VAT and Excise Duty as the only other options, policy tools, to apply to reduce taxes on oil and stabilise oil prices.

VAT brings on average Sh100 billion annually. Cutting the rate by half, from eight percent to four percent, would generate the Sh50billion needed in this instance to stay the cost of oil products, critical to the economy, where they were pre-

war.

Of course this will cause a 1.4 percent cut in total government revenue and increase the FY2026/27 budget deficit by about 1.6 percent (to about Sh300 billion or widen by about 1.1 percent of GDP); which will make those folks in Washing-

ton DC to come shouting about fiscal risk.

But what is the responsible and patriotic thing to do right now? Looking outside and watching the empty streets, burning tyres and blocked streets, businesses staring at further turmoil and citizens in despair?

To be frank, the options are not many. It could take the direction of more domestic borrowing, which nobody wants at this stage as it would push interest rates further and crowd-out credit for local businesses especially MSMEs.

External borrowing, from the usual suspects, would further expand the external debt burden and exacerbate forex risks. The Treasury could also tap into cash reserves it obtained from asset sales and recent Eurobond issues.

The more realistic option is to cut spending. Reduce unnecessary recurrent government expenditure by Sh50 billion this year to cover the revenue loss from halving VAT on oil at this dire season of global turmoil. There is still space to meaningfully cut recurrent spending, and we must now do it.

If Sh50 billion worth of expenditure cuts that government can do without this year is what is needed to stabilise things over the next six months, then we must do it. Now you see why those ridiculous expenditures in renovating houses, buying new cars and traveling to every corner of planet earth mean something? Someone said that we lose Sh2 billion a day, that

would be just 25 days to sort out this ‘small matter’!