Category: Business Daily

The Nairobi Securities Exchange (NSE) has revived its plan to upgrade its automated trading system (ATS) after a bumper year in which its total revenues crossed the Sh1 billion mark for the first time.

The bourse had shelved a planned upgrade of the ATS due to runaway costs, which saw its net earnings drop 21.1 percent to Sh54.7 million in the half-year to June 2024.

The NSE said the revived Sh234 million upgrade will involve phasing out the Broker Back Office (BBO) system and replacing the current ATS software, derivatives software and other related systems with new market infrastructure.

‘The capital commitment (Sh234 million) relates to the expected implementation and project management costs on a new comprehensive market infrastructure solution which includes automated trading, surveillance, depository and clearing systems,’ the bourse said.

The bourse recorded a 134 percent growth in net profit to Sh272.2 million in 2025 from Sh116.3 million in 2024, while total revenues grew to Sh1.08 billion from Sh828 million in the same period.

NSE chief executive Frank Mwiti said the process of procuring the software is ongoing, with the new system expected to go live in the first quarter (January-March) of 2027.

System overhaul

‘We are upgrading our trading systems for equities, fixed income, derivatives, as well as our unquoted securities platform.

‘We are upgrading the surveillance system. We are also working with the Central Depository and Settlement Corporation using one common process to upgrade the depository system,’ he told Business Daily in an interview.

The upgrade is expected to strengthen trading efficiency, transparency and support a diversified portfolio of investment products, alongside a target of nine million new active retail investors by 2029 under its five-year growth plan.

‘The plan is to run between now and the end of Q1 next year, but we haven’t finished the planning process, so the correct position will be provided when we finish the planning process and have the kick-off session.’

NSE is also phasing out the BBO, which was officially launched in 2012 to link stockbrokers and investment banks directly to the trading platform.

‘That was a system that we were supporting, but brokers now have more capability, so it is not even required. We also need to modernise it anyway. It was a system that we had procured for the market to enable brokers to access our trading systems.’

NSE discontinued the BBO in 2025, with the remaining net book value written off.

‘The company will be replacing the current automated trading system software, derivatives software and other related software with new market infrastructure in 2026. These systems have no resale value and will have no further economic use. An impairment provision on the remaining net book value has therefore been booked in these 2025 financial statements. The related computer equipment has also been impaired,’ NSE said in its annual report (2025).

The usage of automatic teller machines (ATMs) has dropped to the lowest level since the Central Bank of Kenya (CBK) began reporting the transactions, underscoring the impact of a shift to cashless banking.

There were, for instance, 3.2 million transactions conducted through ATMs in February this year, a sharp fall from peak figures in 2012 when more than 20 million transactions were processed monthly.

The introduction of digital payment platforms has heavily impacted ATM usage as customers seek convenience.

The ability to transfer money from bank accounts to mobile wallets has reduced the need for ATMs, with customers increasingly paying for goods and services directly from their phones.

‘We are back to the peak that we achieved during Covid when people wanted to only transact digitally,’ said Equity Group chief executive James Mwangi during a recent investor briefing.

‘This digitisation is not led by the bank but by the customers, and you can see the channels that are driving this digitisation – mobile money.’

ATM use took a hit in mid-2020 owing to health protocols imposed to curb the spread of Covid-19, with authorities encouraging cashless payments.

The shift has persisted even after the lifting of the restrictions, with the number of registered mobile money accounts hitting a record 91.3 million and agents exceeding 500,000 in February.

Card paradox

Notably, the number of ATM cards issued has declined at a slower pace than transaction volumes, indicating banks are still issuing cards even as usage falls.

There were 10.7 million cards in circulation in February 2026, compared with a peak of 16.2 million at the beginning of 2019 – a 33.4 percent decline.

In contrast, transaction volumes have fallen to about an eighth of the 28 million peak, suggesting customers are holding cards but not using them.

‘It is a factor of culture. The culture of using cards is not ingrained in us, unlike in Western markets, where they view cards as money. For us, cards were introduced as access to money,’ said Francis Mutonyi, a financial consultant at Goldplus Advisory.

‘Banks are hoping that the use of prepaid cards by high school students will instil a new culture of using cards,’ he added.

Most high schools now insist on prepaid cards for students’ pocket money to reduce the use of cash.

Uptake of prepaid cards has grown nearly fourfold over the past five years to 1.95 million cards in February.

Customers also prefer prepaid cards for online transactions, including subscriptions for services such as Netflix, due to lower exposure to fraud.

POS limits

‘The banks have to push for the use of cards at the point of sale (POS) because currently it is mainly at petrol stations and upper-end establishments,’ said Mr Mutonyi.

Use of cards at POS has hovered between five million and 5.5 million transactions per month over the past 18 months.

Installation of POS machines remains costly for banks, limiting deployment compared with mobile money solutions that are easier for businesses to adopt.

Banks such as KCB, GT Bank and Standard Chartered have introduced tap-and-go cards using near-field technology to ease transactions.

Card processing has also been made faster, compared with earlier systems where customers waited up to two weeks due to centralised production.

There were 2,257 ATMs in the country as of February 2026, down from 2,267 a year earlier, with banks responding differently to the decline in usage.

Co-operative Bank increased its machines to 620 from 617, while Equity reduced its network to 328 from 345. Absa Bank added one machine to reach 204.

Banks are increasingly investing in cash deposit machines, which allow customers – especially businesses and mobile money agents – to deposit funds beyond normal banking hours.

Some machines are automated to ensure immediate reflection of funds in customer accounts.

Value trend

The value of ATM transactions has declined to a six-year low of Sh34 billion, a slower drop than transaction volumes, indicating a rise in average transaction value.

Mobile money transactions are charged on a graduated scale, while ATM withdrawals typically attract a fixed fee of about Sh30, regardless of the amount.

Banks also charge fees for transfers between bank accounts and mobile wallets, although some have waived charges to attract deposits.

To counter the dominance of telecoms in mobile money, banks developed the interbank transfer platform Pesalink.

Pesalink allows customers to move money between banks instantly, with usage rising steadily.

The value of monthly transactions on the platform has grown 41 percent year-on-year to Sh110 billion.

East African agritech company Apollo Agriculture has raised Sh276 million in local currency debt to support the financing of inputs for nearly 24,000 smallholder farmers in Kenya.

Under the venture, Apollo will fund inputs, including seeds and fertiliser, while part of the farmers’ harvest will be sold to recoup the investment under a securitisation plan. IDH Farmfit Fund, a blended finance impact fund, has mobilised the bulk of the Sh276 million debt financing while Kaleidofin, an India headquartered financial services platform, has de-risked the project by providing credit rating services.

The parties have not disclosed terms of the financing to farmers including interest rate charged.

Inputs to farmers are, however, provided under the buy now, pay later model which prices in interest costs upfront.

Securitisation push

Apollo founder and CEO Eli Pollak says the securitisation venture has enabled the firm to unlock bank financing in local currency which is cheaper than hard currency facilities.

Securitisation allows a firm to raise funds by converting future customer repayments for financed products into investable assets. ‘Securitisation has allowed us to create a framework in which commercial banks can come in but with their risks mitigated,’ Mr Pollak told this publication.

‘Historically, we needed to raise working capital mostly in dollars or euros then lending it on in Kenya shillings which is expensive. What we are creating is a powerful model as it would be difficult for a bank to make a small loan to an individual smallholder farmer because of the perceived risks.”

The structure is expected to allow the startup to recycle capital efficiently and align financing to seasonal agriculture cycles while providing investors with improved visibility into underlying asset risk.

Farmer financing

A farmer will receive input on credit from Apollo at the start of the crop season and will only be required to make payments for the financing after the sale of the harvest.

Apollo is betting on the model to lower its costs of funds, passing on the savings to farmers by making the loan terms more affordable, increasing the likelihood of repayments and enabling reinvestments in farms.

The parties to the venture expect to scale the project to mobilise Sh2.37 billion while reaching 130,000 farmers over time.

Apollo has received a credit rating from Kaleidofin, anchoring the startup’s access to institutional financing from entities like the IDH Farmfit Fund.

Kaleidofin’s co-founder and chief executive officer Sucharita Mukherjee says ratings of smallholder focused businesses have been critical in enabling the underwriting of loans from established financial institutions like banks.

‘What has been really lacking is the understanding of this consumer segment, hence our role in providing these credit scores. This is important because there are originators including fintechs, agri-techs and micro-finance institutions who need financing,’ she said.

‘There are sources of capital, but what is needed to make the flow of capital happen is a credit score which helps bridge that gap in understanding.’

Market expansion

Kaleidofin sees the potential of securitisation in the private sector across multiple value chains.

‘We believe there is a huge potential for securitisation and in general, the development of debt capital markets. Securitisation is however just one tool of course,’ added Ms Mukherjee.

‘We are already working on value chains like horticulture, the small business lending space, women entrepreneurship and dairy farming.’

Other local start-ups including Sun King and d. Light have leveraged securitisation to mobilise dollar denominated financing to support growth and scaling.

Kamau led a widely respected manufacturing firm in the industrial area of Nairobi for six years. He steered his firm through supply chain shocks, currency exchange fluctuations impacting the price of inputs, and a difficult expansion into East Africa. All the while, his board of directors praised both his discipline and his calm temperament.

Unfortunately, trouble quietly started the same year that two of his rival chief executives at competing firms in the same industry began appearing in glossy business magazines, winning prestigious leadership awards by Kenyan and East African associations, and getting public applause at corporate events and conferences.

Kamau noticed that his board’s whole tone shifted even though the numbers in his own company had not collapsed at all. But each board meeting started off with uncomfortable comparisons of chief executives in the industry.

Even though margins and the bottom line continued to improve steadily, board members who had once rightfully focused on internal company metrics later started to hound Kamau about why rival firms seemed more visible, celebrated, and admired.

He sadly learned that external flattery of the company or him as the CEO made board members feel better about bragging to their friends about sitting on the board or just making them solid in their convictions because of senseless external validation.

CEO’s survival

In many firms, such a subtle shift can prove dangerous to a CEO’s survival and good relations with his or her board because boards do not merely judge how a company performs. They also judge how that performance looks relative to peers, and board members often do not have the time or the will to adequately go through actual figures about a company’s true internal performance.

A new just published study by Jingyu Li, Steven Boivie, and Yi Yang examines the shocking process of board distraction, incompetence, and misdirection. The research shows that boards of directors do not rely only on raw financial and operation results when deciding whether to keep or dismiss a particular chief executive officer.

Instead, boards also absorb external comparison signals from the wider industry and professional environment no matter how frivolous. Surprisingly, one especially powerful signal comes when competing CEOs receive prestigious awards from visible institutions, industry associations, or publications. Such recognition from newspaper headlines and awards dinners quietly subconsciously reshapes how boards of directors interpret the performance of their own CEO.

The above occurs even when times are good at the company. But what can make matters worse is that if a firm’s performance is already weak or shaky, a competitor CEO winning an award can just turn into a negativity spiral in the minds of different directors on the board and they then judge their own firm’s underperformance far more harshly than is justified.

Humans as a social species hold a bias whereby accolades, whether earned, paid for, justified or not, creates a living mental image of a benchmark of what strong leadership supposedly should look like in the same competitive environment.

Directors start asking themselves a painful internal question not knowing it originates from bias or misdirection in that if other CEOs can earn public validation under similar market conditions, then why can our own CEO not do the same. They wrongly feel that their CEO might have managerial inadequacy.

Psychological expectations

Further, the research shows that higher paid CEOs also carry higher psychological expectations from the board. Also, board members who are more dissimilar to the CEO in terms of age, background, ethnicity and career, will end up judging the executive more harshly due to simple similarity and dissimilarity bias with regards to how their brains unknowingly process empathy.

In summary, boards do not dismiss chief executives based on financial and operational success or failure alone. The lenses through which boards view success are biased by the stories, comparisons, reputations, and public signals that they hear.

Once we understand this reality, we better understand why some leaders seem to survive difficult corporate situations better than others even though public relations can be bought, undeserved, or gotten through family contacts of a cousin who is an editor. Still, boards absorb it and believe it.

So, one of the most critical CEO personal survivor strategies can be to recruit and retain a highly competent head of communications as well as a public relations firm. While benefits to the firm might be only marginal depending on the industry, the reality is that you need the support in order to keep positive attention from your board of directors.

Holders of domestic bonds, including commercial banks, insurance firms, pension funds and households, will earn nearly Sh1 trillion in interest in the financial year starting July 1, highlighting the impact of local borrowing on taxpayers.

Debt service on domestic debt is set to rise by Sh103 billion, reaching Sh986.7 billion in the financial year ending June 30, 2027, from Sh883.7 billion in the current fiscal year.

Interest on internal debt has risen in tandem with the State’s increasing reliance on domestic borrowing to plug the annual budget deficit as access to external financing remains volatile.

Domestic interest payments are projected to hit a record Sh1 trillion in the financial year starting July 1, 2028, as internal borrowing remains prevalent.

Domestic interest payments have trended upwards, rising from Sh622.5 billion in the 2023/24 cycle to Sh784.1 billion in FY 2024/25.

The National Treasury estimates domestic debt service at Sh883.7 billion in the current fiscal cycle to June 30.

The rise in domestic debt service for the financial year starting July 1 comes amid an escalation in borrowing, which is set to contribute 81.8 percent of deficit financing.

‘Fiscal deficit including grants for the FY2025/26 is therefore projected at Sh1.22 trillion, up from Sh901 billion, and will be financed by net external financing of Sh225.8 billion and Sh998.6 billion in net domestic financing,’ the Treasury said.

Investor gains

The Treasury primarily borrows through Treasury bonds in the domestic market, although a smaller share is held in short-dated Treasury bills.

Financial corporations, including commercial banks, pension funds and insurance companies, hold the bulk of government domestic debt at 79.9 percent as of April 24, 2026, making them the largest beneficiaries of the increased interest payout.

Read: State to borrow Sh635bn from domestic market

Households hold 6.3 percent, followed by non-residents at 4.3 percent, non-financial corporations at 1.6 percent and non-profit institutions at one percent.

Total domestic debt stood at Sh6.8 trillion at the end of January 2026, exceeding external debt of Sh5.5 trillion.

The outsized domestic debt stock is expected to keep pushing up debt service costs even as the Treasury anticipates some relief from falling interest rates.

‘Short-term interest rates declined in line with easing monetary policy, with the 91-day Treasury bill rate falling to 7.8 percent from 10.3 percent as of December 2025,’ the Treasury said in its latest quarterly economic and budget report.

‘Similarly, the 182-day Treasury bill rate declined to 7.8 percent in December 2025 from 10.4 percent previously, while the 364-day Treasury bill rate fell to 9.3 percent from 11.8 percent over the same period.

The decline in interest rates on the government’s short-term borrowing instruments has led to lower domestic borrowing rates, thereby contributing to a reduction in government debt-servicing costs.’

Funding pressure

The government is expected to rely on domestic borrowing over the medium term, with the share of internal funding set at 72 percent against 28 percent for external financing.

Access to external financing has been volatile amid global shocks, which have increased the pricing of instruments in international capital markets such as Eurobonds.

Concessional financing from multilateral lenders such as the World Bank and the International Monetary Fund (IMF) has also been limited as Kenya struggles to meet key conditions such as revenue targets and debt sustainability.

Kenya did not receive financing from the World Bank and the IMF in the 2025 calendar year, resulting in a squeeze that saw the government double down on domestic borrowing to plug the fiscal deficit.

Flood-related claims cost Old Mutual General Insurance about Sh200 million last year, with the insurer now assessing fresh losses from recent rains in a sign of escalating climate risks in the market.

Japheth Ogalloh, the managing director of Old Mutual General Insurance, said floods were one of the main drivers of claims settled in the year ended December 2025, alongside a rise in the price of spare parts, with effects felt across medical and motor covers.

‘We had floods last year and into this year in the first quarter. Last year, we paid over Sh200 million worth of flood-related claims. In general, risks related to climate change are becoming more frequent and severe,’ said Mr Ogalloh.

The insurer joins a growing list of firms disclosing payouts worth millions of shillings as the frequency and intensity of floods rise in Kenya.

The floods have left a trail of death, injuries and destruction of property such as vehicles, houses, crops and livestock.

Floods are increasingly weighing on insurers’ balance sheets, with the worst in recent years seen in 2024 when claims topped Sh5 billion.

The 2024 floods left CIC General and Britam General with about Sh700 million and Sh400 million in claims to settle.

Industry pressure

The pattern persisted last year and has resurfaced this year, forcing underwriters to consider reviewing premium rates even as more customers inquire about flood cover.

Several other insurers, including CIC General, Britam General, Sanlam Allianz General and APA, said recently that climate-related risks are testing their models and could eventually force a reassessment of pricing, coverage terms and flood-risk exposure, particularly in high-risk urban areas.

‘We have assessed how we can approach climate-related risks. We are now using models that identify risk areas and strengthen our underwriting terms. We want to ensure risk mitigation is done on time and the pricing is right,’ said Mr Ogalloh.

Kenyans have been increasing their appetite for climate-related covers, with industry data showing that premiums for crop and livestock covers hit Sh1.2 billion at the end of 2024, qualifying customers for payouts of about Sh36.73 billion if the covered losses occur.

The Kenyan economy is highly exposed to climate-related hazards and the implications of climate change, according to the International Monetary Fund (IMF).

This is largely due to the climate-sensitive nature of its economy, with agriculture, water, energy, tourism and wildlife sectors playing an important role.

The agriculture and tourism sectors – the two key climate-sensitive sectors – comprise over half of Kenya’s GDP, with agriculture providing employment to about 80 percent of the rural workforce.

Property developer Centum Real Estate (Centum Re) is counting on discounted fixed mortgage rates of 8.9 percent to boost sales of its housing units to buyers.

Centum Re has entered into a partnership with KCB Bank Kenya to allow its customers to tap into mortgages, which will be fixed for the loan period of up to 25 years.

The 8.9 percent fixed rate is lower than the average pricing of between 11 and 15 percent charged by commercial banks as of March 2026. Centum Re said the deal with KCB aims to cut costs for both the salaried and the self-employed.

‘A good home should be more than something people admire from a distance. It should be something they can understand, plan for and move toward with confidence. That is the spirit behind this partnership,’ said Kenneth Mbae, managing director at Centum Re.

‘By connecting quality homes with a more predictable financing path, we want to help more customers see ownership as something they can realistically work toward.’

The fixed rate means customers who take up the deal will be cushioned from a potential rise in servicing costs, as is the case with mortgages offered on variable interest rate terms.

Central Bank of Kenya data shows that about 85.9 percent of mortgage loans were at variable interest rates in 2024, as compared to 88.4 percent in 2023, exposing the majority of borrowers to the movements in interest rates.

‘We want to help customers start with a monthly number they can understand, plan for and work toward with confidence,’ said Caroline Wanjeri, KCB Bank director of mortgage business.

Speaking at the signing ceremony, KCB Bank Director of Mortgage Business Caroline Wanjeri noted that too many people end their dreams of home ownership at the headline price of a house (millions), viewing it as being out of reach.

‘We want to help customers start with a monthly number they can understand, plan for and work toward with confidence,’ said Ms Wanjeri.

The Nairobi County government has agreed to pay Sh1.55 billion as part of a debt to Kenya Power, softening an earlier hardline stance that triggered a retaliatory standoff between the two entities in 2025.

The county made the disclosure in its debt management plan but did not state when it will remit the money.

Nairobi County had an unpaid power bill of Sh3.01 billion at the end of 2024, making it the biggest defaulter among the 47 counties.

Payment plan

Kenya Power and Nairobi County have, in recent years, been involved in public disputes over unpaid electricity bills.

The electricity distributor has on several occasions disconnected power supply to City Hall, drawing retaliation by the devolved unit, including clamping of its vehicles and dumping of waste at the utility’s premises.

‘Finally, a plan has been developed for remittance of Sh1.55 billion owed to Kenya Power Company, subject to verification of meters,’ the county says in newly published disclosures.

In April last year, Governor Johnson Sakaja told Parliament that Nairobi County would cross-check the bill against all meters to determine what would be paid to Kenya Power.

Remittance of the money marks a shift from an earlier position where the Sakaja-led administration had repeatedly resisted Kenya Power’s push to recover the unpaid electricity bills.

Wayleave row

City Hall wrote to Kenya Power in December 2024, demanding Sh5.64 billion in unpaid wayleave charges that accrued from 2016 to 2024.

It is, however, unclear whether City Hall is still pursuing the Sh5.64 billion claim.

The county bases this demand on its Finance Act 2025, which introduced charges of between Sh150 and Sh200 per metre for any electricity line on its territory.

The demand for settlement of the wayleave bill came weeks after disclosures from the National Treasury showed that City Hall had yet to pay Sh3.01 billion for power.

Inability to collect payment from counties is a major challenge for Kenya Power and has prompted the utility to seek help from Parliament to recover the billions of shillings owed.

I and M Bank Kenya will use part of the proceeds from its May corporate bond to retire dollar denominated debt to the tune of $50 million (Sh6.5 billion) and mitigate the firm’s exposure to elevated risks stemming from carrying hard currency debt on its balance sheet.

The bank is in the market with a five-year year bond issuance priced at 12.2 percent seeking to raise Sh10 billion with a green shoe option of up to 30 percent, indicating that the lender could raise as much as Sh13 billion depending on investor appetite.

I and M Bank Kenya’s leaning towards local currency debt comes at a time when the evolving macroeconomic environment is being characterised by growing pressure on the country’s foreign exchange position owing to spillovers from the war on Iran.

Kenya’s foreign exchange reserves closed April at $13.22 billion (Sh1.71 trillion) down from a peak of $14.59 billion (Sh1.88 trillion) at the start of March as the Central Bank of Kenya moved to support the local unit amidst rising pressures from the global markets.

‘We’ve got about $50 million of Tier II debt that we have on our books with varying dates of maturity, some being as early as 2027 and we felt that we needed to be able to replace that,” I and M Holdings regional CEO Kihara Maina told the Business Daily.

“This was the right time to go to market because it allows us to front-load our planned local currency debt raise as well as anticipate the maturities that are coming as well as build up a lending pipeline.’

He said the lender has always preferred to issue Kenya Shilling debt but the realities of the market in the past few years have been such that it was difficult to sell this type of corporate debt. The last two issuances the bank did were in US dollars, one being an issuance to the International Finance Corporation, he noted.

The new bond which is being arranged by Standard Investment Bank opened on April 30 and will be closing on May 15 at 5 pm with the listing on the Nairobi Securities Exchange (NSE) slated for May 21.

I and M Bank Kenya’s latest bond issuance is part of a larger Sh20 billion Medium-Term Note programme through which the institution is looking to strengthen its capital position to support accelerated lending.

The bank has in the recent past been aggressive in making forays into the vast retail segment in the market, with its loan book having closed 2025 at Sh217 billion.

‘We have been expanding into the retail and micro, small and medium size enterprises space as part of our Imara Strategy. A lot of our clients in that space want to borrow long-term and on a fixed rate basis. This market particularly likes fixed rate paper,’ Mr Maina says.

I and M Bank’s net profit for the year ended 2025 stood at Sh15.3 billion, 30.4 percent higher than the bank registered in the previous year. The bank’s earnings were driven by a 16.9 percent increase in net interest income to Sh34.4 billion and a 38.3 percent increase in non-interest income to Sh12.4 billion.

State House’s budget for the new fiscal year from July 1 has been slashed by Sh3.9 billion, signalling a significant revision of domestic travel and motor vehicle purchase plans amid public scrutiny over spending by the office.

Total State House spending will fall to Sh13.6 billion from Sh17.5 billion in the current financial year ending June 30, 2026, according to fresh data from the National Treasury.

Spending linked to President William Ruto’s office in Nairobi doubled in the current financial year from the Sh7.68 billion approved in June 2025 after the budget was boosted by Sh8.4 billion to cater for increased travel, hospitality and other operational expenses.

This pushed State House’s annual spending past equivalent offices in developed nations such as the US, Germany and Portugal, while the allocation was the highest since 2013.

Spending scrutiny

The lower budget for the next financial year signals a moderation in spending amid scrutiny over budget overshoots flagged by oversight offices such as the Controller of Budget (CoB).

The allocation to State House, Nairobi – which carries the bulk of the Presidency’s budget – is set to fall to Sh11.1 billion from Sh14.7 billion.

The reduction reflects cuts across several items, including personal allowances paid as reimbursements, which drop to Sh127 million from Sh663.2 million.

Domestic travel and other transport costs will fall from Sh2.2 billion to Sh1.9 billion, while spending on the purchase of vehicles and other transport equipment declines from Sh297.8 million to Sh86.7 million.

Expenditure under a less transparent budget line labelled ‘other operating expenses’, which rose by Sh4 billion under the first 2025/26 supplementary budget, will fall from Sh5.74 billion to Sh3.5 billion in the next fiscal cycle.

Overspend risk

Spending by State House has been under sharp scrutiny in recent months after the office overshot its full-year recurrent allocation within seven months, prompting a significant boost in funding under the supplementary budget.

State House had spent Sh10.4 billion by the end of January 2026 against an allocation of Sh7.6 billion.

Recurrent expenditures typically cover costs such as travel, accommodation, allowances, hospitality and administrative support tied to the daily functioning of State institutions.

The increase in spending in the current fiscal year signals heightened operational activity for the office, which also administers statutory benefits for retired presidents and deputy presidents.

Spending on the administration of these benefits is set to fall from Sh432.6 million to Sh362 million following the end of funding for the office of former Prime Minister Raila Odinga, who died in 2025.

The allocation for the ex-PM office stood at Sh58.2 million for the cycle ending June 30, 2026.

Budget warning

Controller of Budget Margaret Nyakang’o had earlier flagged the risk of the office depleting its budget midstream despite a high expenditure absorption rate.

‘Whereas this reflected efficient budget execution, it also presented the risk of budget depletion before the end of the financial year 2025/26, leading to budget non-credibility,’ she said.

Scrutiny on State House spending has intensified following disclosures that President William Ruto is running one of the most expensive presidencies, with spending on key offices reaching Sh100 billion in the current financial year.