Category: Business Daily

Renowned Kenyan filmmaker David Tosh Gitonga has been slapped with a Sh7,000 costs bill for wasting the court’s time as his woes over a Sh1.1 million debt arising from a Netflix-backed film project deepen.

Last month, Tosh, as he is popularly known, was ordered to pay a total of Sh1.1 million to German filmmaker Christian Kramer after losing an appeal at the High Court over a WhatsApp agreement that helped him secure funding from Netflix for his Volume series, which is available on the streaming platform.

Following the failed appeal, Tosh moved to the Small Claims Court, seeking permission to settle the Sh1.1 million debt in monthly instalments of Sh10,000 instead of one lump sum.

The filmmaker told the court that he was facing severe financial difficulties that had left him unable to settle the debt in a lump sum. He attributed his financial position to diminished business operations and prevailing economic conditions.

But Kramer opposed the application, accusing Tosh of ‘being economical with the truth’.

The German editor told the Small Claims Court that Tosh had released a new film and a television series that had recently premiered on Citizen TV, contradicting his claims of financial hardship.

In considering the submissions by both parties, Adjudicator Stella Wanjiru faulted Tosh for failing to provide sufficient evidence to support his claim that he was unable to settle the debt in full.

‘My view is, an applicant who wishes a court to exercise its discretion and order payment of a decretal sum by way of installments must be very candid with the court. Such an applicant must present to the court sufficient material to show that he/she is a person of no means, that whatever income she/he has is lawfully committed elsewhere,’ the adjudicator stated.

‘The duty of the applicant (Tosh) therefore was to demonstrate that he was not in a position to settle the decree in a lump sum. The applicant did not demonstrate their monthly income, did not give their assets and liabilities. The applicant asked the court to allow payment in instalments because they were facing financial difficulties or their financial situation; however, nothing was placed on record to support this assertion,’ she added.

The court subsequently dismissed Tosh’s pleading and ordered him to pay Sh7,000 in costs, finding that he had failed to meet the threshold required for the court to exercise its discretion.

‘In my considered opinion, the applicant has not met the threshold enough for the court to exercise its discretion, the upshot of which is that the application is dismissed with costs of Sh7,000,’ the adjudicator stated.

Tosh’s legal troubles trace back to a WhatsApp conversation sometime between 2022 and 2023, when he engaged Kramer to provide services that helped him secure undisclosed Netflix funding for his series Volume. The series would later earn three nominations at the prestigious Zanzibar International Film Festival in 2024.

A payment dispute subsequently arose between the two filmmakers, with Kramer, who worked on the Volume pilot, accusing Tosh of refusing to honour their agreement.

The two had agreed that Kramer would be paid pound 4,000 (Sh678,403) for his work, prompting him to move to the Small Claims Court in 2023 to recover the money.

At the Small Claims Court, Tosh disputed Kramer’s claim, arguing that there was no formal written contract between them that could be considered legally binding or sufficient to compel him to make the payment.

The court, however, ruled in Kramer’s favour, finding that the WhatsApp exchanges between the two filmmakers amounted to a legally binding agreement.

Unhappy with the decision, Tosh appealed to the High Court, arguing, among other things, that the lower court had erred in treating their WhatsApp exchanges as a contract.

He further argued that the adjudicator had ignored and/or failed to consider his testimony and evidence, instead placing reliance on the evidence and material presented by Kramer, resulting in what he described as a manifestly unfair decision.

The filmmaker maintained that the lower court had erroneously inferred a contractual relationship from assumptions and informal interactions, failing to appreciate that there was no formal agreement, written correspondence or credible testimony evidencing an offer and subsequent acceptance.

According to Tosh, the work submitted by Kramer consisted merely of voluntary samples provided for vetting in what was effectively an interview-like scenario, with no mutual intention to create legal relations.

In his view, the lower court had unjustly converted a prospective employment evaluation into a billable commercial transaction, resulting in a miscarriage of justice.

Kramer opposed the appeal, maintaining that the trial court had correctly found a valid and binding contract between the parties, established through phone calls, WhatsApp chats and the subsequent performance and conduct of the two filmmakers.

The German film editor maintained that after he successfully edited and delivered the Volume trailer, which Tosh subsequently used to secure funding from Netflix, the Kenyan filmmaker acted deceitfully by awarding the promised substantive editing work to other local editors behind his back and failing to pay him at the agreed market rate.

Kramer further argued that a valid contract can be formed electronically without traditional written formalities, and that an exchange of WhatsApp messages can constitute a concluded and binding agreement.

After reviewing the pleadings and evidence, the High Court found that the adjudicator had correctly exercised her discretion and that Tosh had failed to demonstrate how the lower court had erred in its decision. The High Court consequently upheld the Small Claims Court’s judgment, effectively bringing the three-year legal battle to an end and leaving Tosh liable for Sh1.1 million.

The amount comprised Kramer’s compensation, calculated with interest at the court’s prescribed rate, as well as Sh200,000 in auctioneers’ fees.

The dispute had already resulted in an auctioneer’s intervention in October 2024, when Interfield Auctioneers stormed Primary Pictures’ offices and proclaimed assets valued at Sh985,884 in an attempt to recover Kramer’s debt.

At the time, the outstanding amount had risen to Sh778,084 following Tosh’s failure to honour the Small Claims Court judgment delivered in June 2024, which ordered him to pay Kramer.

Tosh subsequently moved to the High Court in November 2024, challenging the lower court’s decision. He argued that he had not been properly heard and maintained that there was no legally binding contract between him and Kramer.

As the appeal proceeded, the High Court ordered Tosh to deposit Sh400,000 with the court pending the hearing and determination of the matter. He ultimately lost the appeal last month, with the High Court noting that its judgment was final, leaving Tosh with no further avenue of appeal and an obligation to settle the Sh1.1 million debt.

Tosh, widely regarded as one of Kenya’s prominent filmmakers, shot into the limelight in 2012 for his work on Nairobi Half Life, a film drama that made history as the first Kenyan film to be selected for consideration at the 85th Academy Awards.

Over the years, Gitonga has built an extensive film portfolio, producing and directing several notable productions, including The Wedding Planner and The First Grader, among others.

His disputed Volume series later earned three nominations at the Zanzibar International Film Festival in 2024.

The hold has found further support from the continued exchange rate stability as the Kenyan shilling remains largely unchanged against the US dollar, where it has traded in a narrow-bound range of between 129 and 130 units since the onset of the Middle East crisis.

This is even as Kenya’s official foreign currency reserves come under pressure from an increased fuel import bill and reduced diaspora remittances.

Lending to businesses and households (private sector lending) has also remained robust, climbing back to double-digit levels in the months of June and July 2026 for the first time since February 2024.

The average lending rate by commercial banks stood at 14.3 percent in July, falling from 14.4 percent in June and 17.2 percent in November 2025.

The ease in lending rates has continued despite the pause in monetary policy, revealing the continued transmission of previous cuts into the economy.

The apex bank has credited the new loan-pricing and monetary policy framework for bringing down lending costs.

CBK, however, acknowledges that banks were initially resistant to the changes as they bickered over the choice to adopt the CBR or the Kesonia as the benchmark for pricing loans.

Most banks in the end favoured the CBR over Kesonia, but both rates have since converged as the CBK exercises its other open market operations tool to prop liquidity in the interbank market, keeping the overnight lending rate close to the CBR.

The CBK has an established interest rate corridor where the interbank rate, or Kesonia, hovers at no more than 0.5 percentage points above or below the CBR.

Both the CBR and Kesonia are currently tied at the hip at 8.75 percent.

‘Our original proposal was to have the CBR as the benchmark, but banks complained, saying that we were trying to control interest rates. We allowed them to do so, but today the interbank rate is the same as the policy rate. We are okay with whichever benchmark a bank chooses because this framework has ensured that both the policy rate and Kesonia move in tandem,’ Thugge added.

Kenyan architecture is undergoing a rapid digital revolution. From Nairobi’s design hubs to the coast, artificial intelligence (AI) is transforming how spaces are conceived, designed and built.

Specialised parametric software is no longer a futuristic novelty but an active participant in modern Kenyan design studios.

Yet as AI becomes embedded in the industry, it raises a critical question: Will it dilute the rich cultural fabric of Kenyan architecture into generic glass boxes, or catalyse localised, sustainable innovation?

The main concern is architectural homogenisation. Kenya’s architectural history is deeply rooted in local traditions, from coastal Swahili designs to traditional layouts centred on community life. There is a valid fear that reliance on global AI models, largely trained on Western data, could produce designs detached from the Kenyan context.

However, creativity need not be a zero-sum contest between humans and machines. AI thrives on the prompts it receives. Guided by a culturally conscious architect, it can analyse historical data, local material properties and climatic conditions to generate distinctive concepts.

Rather than killing creativity, AI can serve as a tireless brainstorming partner, suggesting forms and material combinations a designer might not initially consider. Ultimately, architectural uniqueness will depend on the intent and critical judgement of the human architect.

For Kenya to adopt AI without compromising professional integrity, responsible integration is essential.

Regulatory bodies such as the Board of Registration of Architects and Quantity Surveyors and the Architectural Association of Kenya should establish ethical guidelines, ensuring AI remains a tool for augmentation rather than a substitute for professional judgment.

Architectural education must also evolve. Universities should teach students to critically think, curate and direct AI tools while emphasising local materials such as bamboo, earth blocks and coral stone.

Kenya’s architecture industry can harness AI to improve structural efficiency and reduce material waste.

By embracing technology critically while keeping culture, sustainability and human empathy at the centre, Kenyan architects can build a future that is technologically advanced and authentically African.

Banks and other financial institutions face higher fines of up to Sh20 million for breaches of new terror-financing rules as Kenya races to curb suspicious financial flows.

New regulations by the Ministry of Interior and National Administration raise the maximum penalty for financial institutions more than sixfold from Sh3 million and the jail term for offending officials to 10 years from seven years previously.

The regulations, gazetted on September 7, 2026, replace those in use since 2023 and impose more detailed obligations on institutions handling accounts and assets linked to people or entities subject to terrorist sanctions.

The rules, however, cut the fines for individuals to a maximum of Sh1 million from Sh3 million-a compromise offset by the longer 10-year jail term.

‘A person who contravenes the provisions of these regulations, where a specific penalty is not provided for, shall be liable- on conviction, to imprisonment for a term not exceeding 10 years, in the case of a natural person,’ state the revised regulations.

‘In the case of a legal person, to a fine not exceeding Sh20 million…or in the case of a natural person, to a fine not exceeding Sh1 million.’

The changes come as Kenya seeks to address weaknesses identified by the global financial watchdog, the Financial Action Task Force (FATF), which placed the country under increased monitoring, commonly known as the grey list, in February 2024.

Kenya remains on the FATF list and was among countries whose progress was reviewed in June 2026.

The watchdog asked Kenya to improve its risk-based supervision of financial institutions and designated non-financial businesses and strengthen preventive measures and suspicious transaction reporting.

Under the new anti-terrorism rules, banks will have to report action taken against sanctioned accounts to the Counter Financing of Terrorism Inter-Ministerial Committee within 24 hours.

The rules state that the report must disclose the account number, account holder, exact time of freezing, balance at the time of freezing and details of related accounts, including the reason those accounts were identified as related.

Institutions must also now report attempted transactions after an asset freeze, including the account involved, time of the attempted transaction, account balance and details of the person attempting the transaction.

The rules further require reporting institutions to regularly review the domestic and United Nations sanctions lists and continuously monitor transactions involving listed people or entities.

The requirement to freeze terrorist-linked funds without prior notice has been retained, but the timelines tightened. The 2026 rules require holders of targeted funds to freeze assets owned or controlled directly or indirectly by a person on the sanctions list.

For banks, this means sanctions screening will need to move beyond the main account holder to connected accounts and attempted dealings, increasing the importance of real-time screening.

The regulations require banks to freeze the assets without delay once an individual or company has been put on the United Nations Security Council (UNSC) or domestic committee sanctions list.

While the 2023 regulations defined ‘without delay’ as action taken within 24 hours of a person or entity being put on the sanctions list, the 2026 rules require action ‘within a matter of hours’ of the designation while retaining the 24-hour deadline.

The Financial Reporting Centre (FRC) told the Business Daily the new definition of ‘without delay’ has tightened the timeline for implementing terrorist sanctions, requiring authorities and reporting institutions to act within hours rather than waiting for the end of the 24-hour window.

‘This now requires immediacy of implementation to ensure that the freezing takes place almost immediately (within a matter of hours),’ said the FRC.

‘Authorities and reporting institutions must now take action immediately upon publication of the designation by the UNSC. Ultimately, the regulations clarify that the 24-hour countdown begins when the UNSC lists.’

The regulations further broaden the compliance net by defining a reporting institution to include financial institutions, designated non-financial businesses and professions, and virtual asset service providers.

Another key change is the formal treatment of people who may be unfairly caught by sanctions. The 2026 regulations introduce provisions on false positives, providing safeguards for people whose assets are wrongly frozen.

People who feel they have been unfairly included in a terrorism-linked list will now apply to the committee for a repeal.

The committee is required to determine such applications and communicate the decision to holders of the frozen assets.

The tougher rules signal Kenya’s push to close gaps in its anti-money laundering and counter-terrorist financing regime as the country pushes to exit the grey list.

Kenya was added to the FATF grey list in February 2024 and remained under increased monitoring in the watchdog’s June 2026 review. FATF describes the grey list as covering jurisdictions working to address ‘strategic deficiencies’ within agreed timeframes.

FATF said in a June assessment that Kenya has taken steps towards improving its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime, including by increasing financial institutions’ and designated non-financial businesses and professions’ understanding of targeted financial sanctions.

The watchdog added that Kenya needs to continue implementing its FATF action plan to address its ‘strategic deficiencies’ through measures such as improving risk-based supervision and use of financial intelligence.

FATF also asked Kenya to strengthen investigations and prosecutions and address gaps in the regulation of trusts and beneficial ownership information. Kenya has since implemented a new law that compels trusts to disclose beneficial owners.

There are major jitters in the market as investors continue to digest Tuesday’s High Court ruling nullifying the government’s sale of a 15 percent stake in Safaricom to Vodacom.

The broader policy concern is this: a foreign investor planning to establish a project in Kenya must now price judicial activism and litigation uncertainty into the investment risk.

The Safaricom divestiture is only the latest illustration of a paradox we have lived with since the promulgation of the 2010 Constitution: the growing assertiveness and high profile of the courts in public finance and economic policymaking. This is a significant paradox because courts have, in effect, become co-authors of fiscal policy. We appear to be gradually outsourcing economic policymaking to the judiciary.

Judges are increasingly being asked to arbitrate complex infrastructure-financing models, major public transactions and specialised financial arrangements. Administrative and constitutional courts now routinely stop or disrupt the implementation of economic policies and programmes. They issue stay orders, quash statutory instruments and strike down revenue-raising provisions.

There is an important downside. When tax laws or other revenue-raising mechanisms are invalidated in the middle of a financial year, the Treasury faces unexpected revenue shortfalls. It must then cut spending through supplementary budgets or increase borrowing.

Can emergency stabilisation measures, foreign-exchange interventions or urgent adjustments to fiscal targets survive months of mandatory notices, public hearings and litigation over whether consultation requirements were met? To be clear, none of this is an argument against judicial oversight. The case for limits on executive power and scrutiny of government decisions cannot be gainsaid.

My point is that, 16 years after the Constitution came into force, we owe ourselves an honest audit of how the Haki Yetu constitutional order has reshaped economic policymaking in Kenya-and at what cost.

Kenya urgently needs a consensus on the minimum requirements that must be met before the constitutional threshold for meaningful public participation can be regarded as satisfied.

The current regime is vague. It does not adequately define the scope, content or procedure of public participation. How many meetings are sufficient? Should participation be measured by attendance, the diversity of views, opinion polls or written submissions from experts and think tanks? Must every citizen be reached?

The result is that a process designed as an important democratic safeguard has become a box-ticking compliance exercise.Stakeholders and ministries increasingly treat public forums not as spaces for genuine deliberation, but as legal shields designed to withstand judicial scrutiny.

If a court demands a paper trail of town-hall meetings, the State dutifully produces thousands of pages of minutes-regardless of whether a single citizen’s contribution altered the policy or fiscal proposal.

National Treasury Cabinet Secretary John Mbadi captured the paradox when he questioned the court’s finding on public participation in the Safaricom transaction. He pointed out that the decision had been subjected to scrutiny and approval by the Cabinet, a parliamentary committee and the National Assembly, alongside weeks of public hearings.

Yet a government policy can now be subjected to the most rigorous, publicised and multi-stakeholder process imaginable and still be declared insufficiently participatory by a court.

The Senate is currently inviting written submissions on the Public Participation Bill, 2025, which seeks to establish common rules for public participation across public institutions and government decision-making processes. The deadline for submissions is September 28. Let us hope that this legislation gives Kenya a clearer framework and helps establish a workable consensus on what meaningful participation requires.

A closing anecdote from recent experience: Two weeks ago, I was invited to participate in a panel of non-State actors at the Katiba 16 symposium, only to arrive and find that the non-state actors’ session had been omitted from the programme.

I had prepared a short presentation titled: The contradictions and paradoxes at the heart of our Haki Yetu Constitution: The impact on economic policy-making-and why judges should urgently take refresher courses in economics, particularly in investment banking, structured finance and the nuances of complex infrastructure-financing models.That may sound provocative. But the question is serious.

Judicial oversight is indispensable. So is economic literacy within the institutions that review public finance and investment decisions. A constitutional democracy cannot function properly if courts protect participation while failing to understand the broader financial and economic implications underlying the decisions they are asked to review.

The challenge before Kenya is to find a balance between accountability and governability: between ensuring that public decisions are lawful and ensuring that the country remains capable of making timely, predictable and economically coherent policy.

Investor wealth at the Nairobi Securities Exchange (NSE) had dipped below the Sh4 trillion mark for the first time since crossing this milestone a month ago, weighed down by retreating blue-chip stocks driven by heightened selling by foreign and local investors.

The bourse closed Thursday with a valuation of Sh3.948 trillion, having shed Sh178.7 billion in two days to wipe out nearly a fifth of its gains in the year-to-date.

Traders said that share prices were hit by continued selling activity from investors, resulting in supply outstripping demand on most counters.

Foreign investors have sold a net of Sh2 billion worth of shares in the last three days, putting large stocks under pressure.

The biggest losers in the last two days in terms of market capitalisation are Safaricom at Sh52.1 billion, Co-operative Bank of Kenya (Sh24.9 billion), Equity Group (Sh21.7 billion), KCB Group (Sh18.5 billion) and Absa Bank Kenya (Sh16.3 billion).

‘There has been some correction on large counters over the last couple of days, as investors continued taking profits and locking in substantial capital gains after the strong rally,’ said Melodie Ndanu, a research analyst at Standard Investment Bank (SIB).

When sellers outnumber buyers in a session, prices usually trend downwards as those offloading units quote their stocks at the lower end of the daily price limit in the hope of securing takers for their shares ahead of competing sellers.

Alternatively, when demand exceeds supply, sellers are able to quote and get paid prices that are near the upper daily limit, setting off a rally.

The daily movement of a stock is capped at 10 percent relative to the previous day’s weighted average closing price, except on days when there is a material announcement on the counter such as an announcement of financial results.

The losses over the last two trading sessions have extended the dip that started over a week ago, when investors started selling stocks to lock in gains that had accrued during the August market rally.

The exchange’s larger stocks such as Safaricom, Equity, KCB and Co-op Bank have accounted for the bulk of the losses seen over the last week-and-a-half.

The banking stocks were trading at their all-time high levels as of September 3, when the NSE touched its highest ever valuation of Sh4.285 trillion.

Equity, KCB and Co-op Bank traded at Sh106, Sh98.55 and Sh38.55 per share respectively as of September 3, while Safaricom was trading at a multi-year high of Sh37.94 per share.

At the close of trading on Thursday, Safaricom’s share price stood at Sh35.20, while Equity’s price had fallen to Sh96 per share. KCB and Co-op Bank closed the day at Sh84.25 and Sh31.95 per share, respectively.

The sell-off on the Nairobi Securities Exchange (NSE) comes amid rising jitters among international investors over the escalation of US-Iran tensions in the Middle East.

Attacks by Yemeni Houthi rebels on the Red Sea shipping channel have also caused a jump in benchmark oil prices, triggering fears of a new round of higher global inflation.

Due to the rising geopolitical tension, the yield on the US 10-year bonds has hit the key five percent threshold for the first time since 2023. The US Federal Reserve also raised its benchmark rate by 0.25 percentage points on Wednesday, signalling concerns of higher inflation in the world’s largest economy.

The benchmark US 10-year bond rate and the Fed rate are a closely watched gauge of market inflation expectations, influencing capital movement across the globe.

For the equities markets, higher US rates tend to cause capital flight from smaller, riskier markets, especially when they are accompanied by a strengthening of the dollar in the forex market.

The capital flight ultimately weighs down share prices of stocks that are favoured by foreign investors, which in Kenya are primarily Safaricom, EABL, Equity and KCB.

A dispute between former shareholders and business partners of Savannah Cement over a controversial Sh4.5 billion bank loan has moved to the Court of Appeal.

Savannah Heights Limited and businessman John Gachanga Kaiganaine have challenged a High Court decision that halted the criminal prosecution of Benson Sande Ndeta over alleged fraud in the contested loan tapped from Absa Bank.

Mr Ndeta, Mr Kaiganaine and businessman Donald Kiboro Mwaura were directors of Savannah Heights Limited, which was a major shareholder of Savannah Cement Ltd before it collapsed in 2022.

The notice of appeal challenges the entire judgment delivered by the High Court on September 7, 2026, which declared Mr Ndeta’s prosecution unlawful, null and void and barred further proceedings arising from the disputed bank loan and corporate transactions.

The appeal keeps alive a dispute that began inside Savannah Cement, once a key player in the construction industry before it was placed under administration in November 2022 with debts exceeding Sh14 billion.

Mr Ndeta was charged alongside Mr Charles Hill Jr over allegations that they used forged corporate documents, guarantees and board resolutions to obtain a $35 million (Sh4.5 billion) facility from Absa Bank Kenya in 2017 and 2018.

Prosecutors alleged that the two presented themselves as authorised representatives of Savannah Cement when securing the financing.

Mr Ndeta denied the allegations and challenged the prosecution, arguing that the criminal case was being used to settle a shareholder and corporate control dispute. He maintained that the validity of the borrowing arrangements had already been addressed in related civil proceedings.

The judge found that an earlier commercial court decision had upheld the resolutions authorising the Absa borrowing. The court held that allowing the criminal case to proceed would require the trial court to revisit issues that the High Court had already determined.

The court also faulted the Director of Public Prosecutions for failing to consider material that could have supported Ndeta’s defence, including Absa’s confirmation that the loan had been legally offered and accepted.

‘If the borrowing resolutions were valid, it is difficult to see how the Petitioner can be criminally liable for obtaining credit by false pretence or for forging minutes that were, according to a competent court of concurrent jurisdiction, valid,’ the court said.

But Savannah Heights and Kaiganaine dispute that reasoning. They argue the commercial case concerned corporate resolutions, not criminal offences.

They say a valid borrowing resolution does not automatically rule out the possibility that unauthorised documents were later used or false representations made during the loan process. They maintained that the bank’s confirmation of the loan did not conclusively negate internal fraud or forgery.

They also argued that the Constitutional Court should not assess evidence belonging before the criminal trial court. They maintained that the DPP enjoys constitutional independence and that prosecution should only be stopped where clear illegality, abuse of process or rights violations are demonstrated.

Another argument is that some findings relied upon by the court concerned attendance at a meeting linked to a Kenya Commercial Bank loan facility, rather than the Absa transaction forming the basis of the criminal charges.

The dispute also involves another partner, Mr Mwaura, who alleges that Mr Hill lacked authority to act for Savannah Heights after a contested share purchase arrangement collapsed.

Mr Mwaura says the disputed documents exposed the company and its directors to liability for the loan.

Savannah Cement was acquired in August 2025 by Mombasa Maize Millers, Kitui Flour Mills and Eldoret Grains Limited. The investors renamed the business Savannah Cement 2025 Limited. The cement manufacturer is based in Athi River.

Savannah Heights Limited was one of Savannah Cement’s shareholders. It nominated three directors to Savannah Cement’s board, including Mr Kaiganaine, Mr Mwaura and Mr Ndeta.

The Court of Appeal is expected to determine whether the High Court correctly stopped the prosecution or improperly prevented criminal allegations from being tested at trial.

Co-operative Bank of Kenya has boosted its capacity to provide long-term dollar financing to Kenyan businesses after securing a $100 million (Sh12.9 billion) currency swap programme with the European Bank for Reconstruction and Development (EBRD).

A currency swap allows two parties to exchange a loan in one currency for an equivalent loan in another currency. The swap locks in a pre-agreed exchange rate, protecting both parties from market changes.

At the start, they exchange the principal amounts at an agreed exchange rate. During the swap, each party pays interest on the currency it has received. At the end, the principal amounts are exchanged back.

Currency swaps are used to obtain foreign currency loans at a better interest rate than a company could obtain by borrowing directly in a foreign market.

The first $50 million (Sh6.5 billion) tranche of the programme has been executed through a cross-currency swap using the Kenya Shilling Overnight Interbank Average (Kesonia) as a reference rate, making it the first such transaction in the country to use the benchmark.

The arrangement is expected to strengthen Co-op Bank’s ability to provide long-term foreign-currency financing to businesses, particularly those with revenues, costs or contractual obligations denominated in foreign currencies.

The structure gives Co-op Bank additional capacity to mobilise dollar funding while managing the foreign-currency and interest-rate risks associated with conventional dollar borrowing.

Co-op Bank’s chief executive Gideon Muriuki said the currency swap with the multilateral bank would enhance the local lender’s ability to provide long-term foreign-currency financing to businesses.

‘Our partnership with the EBRD under this $100 million currency swap programme represents an important milestone in our commitment to supporting Kenyan businesses with innovative financing solutions,’ said Mr Muriuki.

‘The first $50 million tranche enhances our ability to provide long-term, competitively priced foreign currency financing to help businesses strengthen their competitiveness while contributing to Kenya’s economic development and job creation.’

The bank’s target sectors include exporters, manufacturers, agriculture and agro-processing, horticulture, floriculture, logistics and tourism.

The arrangement is especially relevant to companies participating in regional and global value chains, which often have revenues, costs or contractual obligations denominated in foreign currencies.

Businesses can use the financing to acquire machinery, equipment, technology and raw materials, as well as meet working-capital requirements linked to imports and exports.

EBRD regional head of Local-Currency Portfolio Management, Abdessamad Abouti, said the transaction demonstrates the use of Kenya’s new benchmark in an international financial-market transaction, following efforts to develop local capital markets.

‘We have worked closely with local authorities and market participants to support the development of Kesonia, and this swap shows how reforms can move from design to implementation, reflecting the EBRD’s longstanding commitment to developing local capital markets,’ said Mr Abouti.

The EBRD deal is part of Co-op Bank’s strategy of working with international financial institutions to increase funding available to Kenyan enterprises and support trade and investment.

Should employers make statutory deductions like affordable housing levy, Social Health Insurance Fund (SHIF) and PAYE from court awards for terminal dues? Picture a scenario that has become all too familiar: an employee is awarded compensation for unfair termination by the Employment and Labour Relations Court.

Keen to comply with the law, the employer deducts PAYE, NSSF, SHIF contribution and the Affordable Housing Levy, remits those sums to the relevant statutory bodies, and pays the balance to the former employee.

It is then promptly hauled back to court for further recovery on the claim that the decree has been underpaid. Had it paid the award without statutory deductions, the taxman would certainly have come calling, armed with penalties and interest.

For the better part of a decade, the law appeared settled. On the face of it, Section 49(2) of the Employment Act contemplates that remedies for unfair termination are subject to all applicable statutory deductions. Sections 3 and 5(2) of the Income Tax Act go further by classifying any amount received as compensation for the termination of a contract of employment as gains or profits from employment, taxable whether the contract itself provided for such payment, or not.

The Court of Appeal appeared to place the matter beyond controversy in Directline Assurance Co. Ltd v Jeremiah Wachira Ichaura [2016] KECA 118 (KLR), holding that it is trite law that lump-sum terminal dues are subject to statutory deductions and that damages fall to be computed on net, rather than gross, salary.

The Employment Court itself embraced that position in a long and consistent line of authorities from William Kilonzi v Bamburi Cement Limited [2016] KEELRC 690 (KLR), through Ndungu v Safaricom PLC [2025] KEELRC 2234 (KLR), to Njuguna v Sybrin Kenya [2026] KEELRC 92 (KLR), where the court reaffirmed an employer’s obligation under Section 37 of the Income Tax Act to deduct the appropriate tax from any lump-sum payment before releasing the balance. Employers, advocates and the revenue authorities alike arranged their affairs on that understanding.

Then came the rupture: in Stubbs v Fourt Generation Capital Limited [2025] KEELRC 3305 (KLR), the Employment Court held that although PAYE was properly deductible from an unfair termination award, contributions to the SHIF, the Affordable Housing Levy and the National Social Security Fund were not.

The court reasoned that those statutory levies are inextricably linked to a subsisting employment relationship: they are deducted through payroll, complemented by employer contributions, and confer benefits associated with active service.

To impose them upon a post-employment compensatory award, the court held, would amount to an impermissible double burden that would be inconsistent with the constitutional guarantee of fair labour practices.

Another decision of the same court has travelled even further, holding that not even PAYE is deductible from such compensation. The result is a jurisprudence in disarray. In one court the award is taxed in full; in another, only in part; and in a third, not at all.

It should be acknowledged that the reasoning in Stubbs is not without intuitive appeal. There is something inherently strange about deducting a housing levy or health insurance contribution from a person whose employment, and with it any corresponding entitlement, has already come to an end.

However, intuitive appeal is not the governing principle; judicial precedent is.

The Directline case is a decision of the Court of Appeal, and the doctrine of precedent does not permit the Employment Court, however well-intentioned, to chart an independent course in the face of a binding appellate authority.

A court of first instance that considers a Court of Appeal decision that should be ripe for reconsideration has one lawful course: to apply it while expressing, with appropriate restraint, the reasons why such reconsideration may be warranted.

It would have no mandate to legislate through judicial decision-making.

The consequences of the present uncertainty are neither theoretical nor remote. Employers cannot calculate settlement sums with confidence, and every shilling deducted or omitted becomes the seed that bears fruit to further litigation. Employees whose claims are otherwise identical now risk receiving materially different awards dependent on the adjudicating court.

Settlement negotiations risk becoming compromised because the parties are unable to agree on the correct net figure, and this increases case backlog. NSSF, SHIF and the Affordable Housing Fund are left uncertain as to the scope of their own statutory entitlements. The uncertainty of this magnitude is a cost that is unduly imposed upon the smooth administration of justice.

To resolve this confusion, the Court of Appeal should, at the earliest opportunity, confront the divergence directly and pronounce with finality which statutory deductions, if any, should be properly applied towards compensation for unfair termination and the statutory basis upon which such application should be made.

If the court concludes that the newer statutory levies introduced long after the Directline case should stand on a different legal footing from PAYE or NSSF, then it should say so in clear and unequivocal terms.

Should Parliament consider that outcome undesirable, the appropriate remedy lies in legislative amendment to the Affordable Housing Act, the Social Health Insurance Act and the Employment Act, rather than in judicial improvisation.

Until then, should a dispute arise on the applicable deductions to be applied towards compensatory awards, prudence may now require employers to seek judicial interpretation on the applicable deductions rather than deducting at source, remitting and allowing for such disputes to be resolved through recovery proceedings.

The conflicting judicial positions call for authoritative resolution, and the courts, especially the Court of Appeal, should bring clarity to the law and end this uncertainty.

Kenyan firms are making progress in recognising climate change as a business issue but are struggling to translate this concern into measurable financial and operational data, exposing a key gap ahead of mandatory sustainability reporting next year.

A 2026 market readiness study by the Institute of Certified Public Accountants of Kenya (ICPAK), based on self-reported and unaudited data from 385 entities, shows many firms face a race against time to build the systems and data needed to quantify climate-related risks.

The gap between intention and ability to measure responses to climate-related risks piles pressure on firms as the clock ticks towards the January 2027 date, by which large firms must comply with International Financial Reporting Standards (IFRS) rulebooks for reporting on how environmental and sustainability issues affect their business.

The two climate-related global reporting standards are IFRS S1 and S2. While IFRS S1 is the general rulebook for all sustainability and Environmental, Social and Governance financial risks, IFRS S2 is focused only on climate change.

IFRS S1 will force companies to start sharing any sustainability-related risk that could change their financial future, while IFRS S2 will require them to provide exact details about how global warming, extreme weather and the shift to green energy will hurt or help their operations.

Kenyan firms classified as public interest entities (PIEs), which include large and high-impact firms such as those listed at the Nairobi Securities Exchange (NSE), will start mandatory disclosure from January 2027, followed by large non-PIEs (January 2028).

However, ICPAK study shows strategic intent from boards of companies towards sustainability reporting is advancing faster than the firms’ ability to produce the detailed disclosures required under the new standards.

The report describes this as a ‘readiness paradox,’ adding that the gap is widest in the sectors with the least regulatory pressure.