Treasury unit approves 300MW Suswa geothermal project

The Geothermal Development Company (GDC) has been cleared to start feasibility studies on a 300 megawatt (MW) geothermal power project in Suswa, Narok County.

Disclosures from the Public Private Partnership (PPP) Unit show that GDC got the nod in March this year, paving the way for studies to establish the commercial viability of the project.

GDC targets to tap investors who will develop geothermal plants by June 2027, starting with an initial 50MW to 100MW, boosting Kenya Power’s efforts to meet fast-rising demand for power from homes and industries.

Kenya has, in the past three years, been forced to heavily lean on Ethiopia and Uganda to shore up supply and meet rising demand for electricity.

Reliance on the two neighbours has exposed Kenya to the risk of a crisis in case of major breakdowns of hydro plants or severe drought that can hit power production.

‘The Project Concept Note was approved in March 2026 for the project to progress to Feasibility Study,’ the PPP Unit says in the disclosures.

Development plan

The project will entail drilling of 34 geothermal wells, including re-injection wells. Investors will develop the steam field for 10 years, followed by 25 years of power production.

Electricity from geothermal sources is the third-cheapest, with a kilowatt-hour priced at an average of Sh9.48 in the year to June 2025, underscoring why the State is keen to tap the resource and boost electricity supply without steep price increments.

‘Suswa is a very strategic geothermal prospect. We plan to onboard within the next financial year,’ Stephen Busieney, the acting chief executive of GDC, said.

The Suswa fields are estimated to hold at least 750MW of geothermal power, which will be developed in phases, starting with the 300MW.

Geothermal is the country’s main source of power, and the State is keen to tap reserves in Olkaria, Menengai and Suswa along the Rift Valley.

Geothermal power plants supplied 3,127.76 gigawatt-hours (GWh) to the grid in the six months to December last year, reflecting a dominant 40.06 percent ahead of hydro at 1,745.68 GWh (22.36 percent).

Increased generation of geothermal power is central to easing Kenya’s reliance on Ethiopia and Uganda to boost supply at a time when demand has significantly grown.

For example, Kenya recorded six peak electricity demand instances in 2025 alone, driven by a spike in connections and increased demand from industries.

Development of the Olkaria, Menengai and Suswa fields is part of the State’s plan to more than double geothermal capacity from the current 940MW to 1,824MW by 2030 as part of the transition to a 100 percent clean national grid.

T-bill rate rises above 8pc as inflation pressure piles on CBK

The 91-day Treasury bill interest rate has risen above the eight percent level for the first time in eight months as investors continue to put pressure on the Central Bank of Kenya (CBK) to increase rates amid higher inflation.

The three-month T-bill settled at 8.03 percent last week, up from 7.77 percent, the highest it has reached since August 28, 2025. The 182-day paper also jumped above eight percent for the first time since September 22, 2025, settling at 8.21 percent from 7.88 percent previously.

The weekly auction on Thursday was carried out against the background of inflation jumping at the fastest pace in seven years to 5.6 percent in April, from 4.4 percent in March.

This sharp increase in inflation was attributed to higher energy prices due to the US/Israel-Iran conflict, with petrol and diesel prices rising by 10.9 percent and 17.9 percent respectively in the April 14 price review.

Core inflation also rose to 2.8 percent from 2.1 percent in March, indicating that higher fuel and transport prices have started passing through to the wider economy.

Interest rates in the economy normally rise in tandem with inflation as investors seek higher returns to compensate for the erosion in the real value of the shilling.

Higher inflation also puts pressure on the CBK to raise its own base rate to reduce demand for goods and services that pushes prices higher.

According to analysts, the market has taken cue from potential inflationary pressure due to the war and is now adjusting its rate expectations upwards.

‘As expected, interest rates trended higher as inflation expectations continue to rise. The magnitude of further increases will be dependent on the April inflation reading, available liquidity and government borrowing appetite,’ analysts at NCBA Investment Bank said in a fixed income note.

Bond market

Similar to the T-bills market, the Treasury bonds segment is also seeing increased pressure on the CBK to raise rates to keep attracting investors.

Two weeks ago, the third switch bond sale this year, targeting Sh20 billion, was largely shunned by investors, who offered only Sh1.75 billion after refusing to shift their funds to lower-paying paper.

In that sale, the CBK asked investors to swap from 10-year paper that matures in August into a 15-year bond that comes due in 2033. The 10-year paper has been paying holders 15.04 percent in annual interest, while the 15-year pays 12.65 percent.

CBK Governor Kamau Thugge attributed the poor performance of the April 13 bond to a wait-and-see approach from investors due to geopolitical uncertainty around the Iran war.

Market test

The CBK has now returned to test the market with a new switch bond targeting Sh10 billion.

Unlike the April issuance, this one will see investors get the chance to move from a 10-year bond that pays annual interest of 12.96 percent to a 20-year paper that has a rate of 13.44 percent.

It has also reopened three bonds for the May 2026 monthly sale, targeting Sh80 billion from a pair of 20-year papers first issued in 2012 and 2019 at annual interest rates of 12 percent and 12.87 percent respectively, and a 25-year bond from 2021 that pays a rate of 13.92 percent.

The reopening comes against the backdrop of total revenue collection having stood at Sh2.04 trillion in the first three quarters of the current financial year, falling behind the prescribed target by Sh84 billion.

The revenue shortfall now leaves the government grappling with elevated funding pressures, with Supplementary Budget I having increased the domestic borrowing target by 57.3 percent to Sh998.6 billion.

However, Dr Thugge has sought to allay fears that the higher borrowing target will push interest rates upwards, saying the CBK has already borrowed a net of Sh850 billion domestically, meaning only about Sh150 billion is pending to hit the new target.

‘I believe with that, we can meet that borrowing target without adding a lot of pressure on interest rates,’ Dr Thugge told the Business Daily in an interview last week.

Earlier in the year, the CBK had frontloaded on the domestic debt, taking advantage of higher investor demand for government securities and a liquid money market.

From Sh6,000 plots to millions: Utawala’s Githunguri boom outpaces infrastructure

Githunguri in Utawala does not try to impress, especially on a rainy day. The entrance feels chaotic and almost clogged. Muddy patches cut across the access roads, and puddles stubbornly pool in uneven spots. Movement slows to a crawl as vehicles, boda bodas and pedestrians negotiate the space.

Yet, as any seasoned property seeker will tell you, this is exactly the time to come looking for land. Beyond this first impression lies one of Nairobi’s fastest-evolving peri-urban zones, shaped by affordability, infrastructure expansion and relentless demand for housing and commercial space.

‘I have lived in Githunguri since 1999. That’s when I bought land and settled here,’ says Dr Charles Monda, a lecturer at St Paul’s University.

Like many early residents, his decision was driven by cost. ‘As Nairobi expanded to Thika Road, Kinoo and Rongai, plot prices were quite high. We heard that Githunguri in Utawala had cheaper plots, even though there were no proper roads at that time,’ he recalls.

Back then, the area was organised under ranching systems. Ownership came through shares, and eventual subdivision created the grid that defines Githunguri today.

‘I bought land from someone who owned 13 acres and had subdivided it into plots measuring 40 by 80 feet,’ says Dr Monda.

Those plots were incredibly affordable. ‘At the time, they were selling for just Sh6,000, and I bought my two plots for Sh12,000,’ he says. Today, the same size fetches millions. ‘Currently, the cheapest plot measuring 40 by 80 feet can be priced at Sh3 million.’

Price surge

This increase in price is closely tied to growth in infrastructure. The Eastern Bypass and the expansion of Mombasa Road and Thika Road pulled Utawala firmly into Nairobi’s commuter belt.

Construction now defines Githunguri’s identity. Unfinished buildings stand beside newly completed rental properties, while others are being built floor by floor.

‘The only problem is that, over time, we may start to experience congestion in the area. This is especially likely as more flats continue to be built,’ warns Dr Monda.

That early subdivision into 40 by 80 plots did more than make land accessible; it determined how Githunguri would grow. Buildings stand wall to wall, and schools are squeezed between rental blocks.

‘The 40 by 80 plots are small, and you can see how flats are being built. The houses will definitely be squeezed together,’ he says.

Developers continue to pour in, targeting rental income rather than owner-occupied housing.

‘People started moving to Githunguri in large numbers from 2020, especially after the Eastern Bypass was paved. You can see that the buildings are quite new, which means construction is still ongoing,’ adds Dr Monda.

Commercial shift

Closer to the main tarmac road, the commercial shift is unmistakable. Rental blocks rise to three or four storeys, competing with roadside shops.

Height restrictions, partly linked to flight paths, cap vertical expansion, but density is still increasing.

‘Some of these flats may not be very tall because this is a take-off zone for flights. The highest they’re supposed to go is three or four floors,’ Dr Monda explains.

What began as a residential area is fast becoming commercial.

‘When we bought here previously, we wanted a residential home. Unfortunately, people have turned it into a commercial area, especially since the roads were built. Sadly, we didn’t have controlled development. That’s why you see lots of flats being built,’ he says.

Drainage remains a pressing challenge. ‘There is a lot of water and sewage, especially when it rains,’ he notes.

Another long-time resident, William Kayago, echoes this concern: ‘My compound is flooded due to the rainy weather. There are a lot of rental buildings that do not have proper drainage.’

The problems also affect feeder roads, water supply and electricity.

‘Fresh water is another problem. They are laying pipes, but the water has not started flowing yet. We use borehole water, which is not very safe, so we end up buying drinking water from vendors,’ says Dr Monda.

The electricity supply is patchy. ‘Most of our streets are very dark. If you are late getting back from town, it is difficult to find your way home. It is so dark that anyone could feel unsafe.’

Growth story

For residents like Mr Kayago, growth was expected. ‘I used to live in Umoja, then in Kayole, before buying land here in Githunguri. I moved here in 2002 but did not build until 2006. What attracted me was its potential. I knew it would grow,’ he says.

Back then, even basic administration was absent. ‘We did not have a police station; we used to go all the way to Ruai. There was not even a chief’s office, but they are available now.’

His investment reflects the price advantage that once defined the area. ‘I bought my plot measuring 40 by 80 metres for Sh35,000. The area has grown significantly. We have seen a lot of businesses come in and commercial premises being built. It is not the same,’ he says.

Market today

Patrick Muchiri, a land agent and resident since the early 1990s, remembers when Githunguri was almost empty.

‘When I arrived in 1993, there were only about 10 of us. There were hardly any houses, and the area was very green,’ he says.

His first purchase reflects the undervaluation of the time. ‘I bought my plot, which is 40 by 60, for Sh16,500, even though it is near the road.’

Today’s market is unrecognisable.

‘We have plots measuring 40 by 80 metres, 30 by 60 metres and 50 by 100 metres, which are currently selling for around Sh6 million. If it is not the same size and near the tarmac, it will go for about Sh5 million,’ he says.

Availability near the main road is almost non-existent. ‘The whole area near the tarmac is full. It is full of commercial buildings.’

The buyer profile has also changed. ‘Those buying are mostly young people in their 30s who want to build commercial structures. This year, I have only sold three plots,’ says Mr Muchiri.

Rental demand reflects the population density. ‘A one-bedroom property will cost around Sh12,000 or more and a two-bedroom property up to Sh30,000,’ he notes.

StanChart puts Westlands head office building up for sale

Standard Chartered Bank Kenya plans to sell its current headquarters building in Nairobi as it continues scaling back its physical presence in the country in favour of digital banking.

Disclosures show that the lender has earmarked the Chiromo Building, located in Nairobi’s Westlands area, for sale. StanChart has valued the building, which sits on 1.88 acres, at Sh1.411 billion. The property was designated as held for sale in June 2025.

‘The Chiromo disclosure in Standard Chartered Bank Kenya’s 2025 annual report reflects a strategic property and capital optimisation initiative and is fully compliant with applicable financial reporting requirements. It does not indicate any change to the bank’s operations or long-term commitment to Kenya,’ StanChart said in response to a Business Daily inquiry.

The lender, in its annual report for 2025, valued assets held for sale at Sh3.06 billion. Assets held for sale are non-current assets that have been committed for disposal and are expected to be sold within a year.

The cost of an acre of land in Westlands averages Sh501 million, according to the HassConsult land pricing index. Going by the valuation, the land hosting the seven-storey commercial building should fetch about Sh1 billion.

Property shift

The bank has been putting its properties on the market for the past five years.

The sale of the real estate holdings signals a move in favour of renting over ownership, a shift that would see the lender focus on its core business.

StanChart estimates a market rental value of Sh196 million from the building. The bank announced it sold its Treasury Square building in Mombasa and the Nyeri branch last year.

The Mombasa property had been on the market for five years without a buyer, having been earmarked for sale in June 2020.

The sale followed the bank’s decision to revalue Treasury Square downwards by Sh23.4 million to Sh198.6 million in 2024. The property, which hosts the first branch opened in the country in 1911, had initially been valued at Sh222 million.

The Nyeri property was put up for sale in 2024 with a valuation of Sh175 million.

Disclosures in the bank’s annual report show that it sold freehold land and buildings worth Sh215.2 million last year.

Lean footprint

StanChart will remain with two properties in the country, one in Nairobi and the other in Nanyuki. The bank has a 0.38-acre plot on Kenyatta Avenue and a single-storey building on the main Nanyuki-Meru Highway.

Standard Chartered has been scaling back its operations in Africa, with the London-based bank exiting Angola, Cameroon, Gambia, Sierra Leone, Zimbabwe and Tanzania. It has also sold portions of its businesses in Botswana, Zambia and Uganda.

The lender has cut its branch network by nearly half in Kenya over the past decade as digital banking takes root.

StanChart currently has 22 branches, down from 42 outlets in 2016, with 96 percent of its transactions being non-branch.

The digital shift has seen the lender cut staff numbers each year for 11 consecutive years, reducing its total workforce to below 1,000 last year.

The bank has 942 employees, having cut 59 jobs last year, incurring redundancy costs of Sh112.27 million in the year ended December.

Cash burn, weak business models drive Kenyan startup failures

Poor financial discipline and operational inefficiencies are fuelling the rapid collapse of startups in Kenya despite rising funding inflows, analysts say.

Kenya was Africa’s top destination for venture capital in 2025, accounting for nearly a third of all startup funding raised from investors.

According to data from funding database Africa: The Big Deal, Kenya-based startups raised $984 million (Sh127.13 billion), the highest amount attracted by any African market since the 2022 funding boom.

Yet despite this capital inflow – particularly into sectors such as fintech, green energy and logistics – analysts say a recent wave of startup failures has exposed structural weaknesses in business models.

‘Startups often fail not because they lack revenue potential but because they run out of cash,’ multinational advisory firm PwC says in a new analysis. It urges investors and founders to institutionalise a ‘cash culture’ that prioritises liquidity management alongside growth.

High burn rates

Kenya is considered one of the continent’s ‘Big Four’ startup markets, alongside Egypt, South Africa and Nigeria.

In the past 16 months, more than seven high-profile, venture-backed businesses have closed, entered administration or scaled down operations, sending home large numbers of staff. They cite funding droughts, rising operating costs and delayed investor commitments.

In 2024 alone, several Kenyan startups that later shut down had collectively raised more than $270 million (Sh34.9 billion), according to the Startups Graveyard Report.

PwC attributes this trend to high burn rates – the pace at which a company consumes cash – and using more than necessary resources to complete tasks, both of which erode profitability.

Some ventures that have struggled include buy-now-pay-later firm Lipa Later, which entered administration in March last year despite raising more than $16.6 million (Sh2.1 billion).

Remittance startup Bonto also shut down less than a year after securing a licence from the Central Bank of Kenya, citing unsustainable foreign exchange margins.

In the health-tech space, Antara Health closed its Kenyan operations after raising $2 million (Sh258.4 million) in seed funding, blaming slow growth and weak demand, while Ilara Health laid off staff amid delayed funding and difficult market conditions.

E-mobility firm eBee also cut jobs and scaled down operations due to rising costs and declining revenues.

Rapid expansion

PwC argues that the core issue is not access to capital, but how that capital is deployed. Many startups, it says, prioritise rapid expansion through geographic growth or product diversification – without strengthening underlying operational capacity.

‘Pursuing rapid scale without reinforcing operational foundations introduces fragility into the business model that eventually surfaces as sustained underperformance, lower returns on investment, liquidity crunches, governance gaps and, in some cases, insolvency,’ the firm says.

To address this, PwC recommends that startups align funding milestones with operational performance indicators such as productivity and utilisation, rather than relying solely on topline metrics like revenue, sales volume and customer acquisition.

It also calls for optimisation of capital structures, including balancing debt and equity and aligning financing with working capital needs.

‘…reprofiling debt to match the company’s current cashflow profile and ensuring that the capital structure reflects an appropriate mix of equity and debt, taking into consideration funding requirements, cost of capital, debt-carrying capacity and dilution impact,’ the analysis says.

PwC warns that investor due diligence has often focused on financial performance, tax and legal matters, while overlooking a deeper understanding of business operations.

‘Due diligence must go beyond financial performance to uncover structural and operational risks early,’ the firm says.

Ruto bets on housing, roads in Sh4.8trn election budget

The Treasury has tabled the budget estimates for the year ending June 2027, offering a glimpse into President William Ruto’s strategy to win over voters by ramping up spending on roads and housing while easing tax pressure ahead of the 2027 General Election.

In the final full-year budget under the Kenya Kwanza administration, the government plans to spend Sh4.82 trillion, up from Sh4.7 trillion in the current financial year, signalling an expansionary fiscal stance despite mounting debt pressures.

The State is also keen not to impose new taxes or increase existing ones in this year’s budget proposals, apparently concerned about the possibility of sparking social unrest after deadly protests broke out in 2024 against the government’s measures to raise revenue.

More than 50 people were killed when the youth-led marches broke out in 2024, forcing President Ruto to abandon tax hikes worth Sh346 billion.

In the next financial year, the State is keen to avoid a repeat of the protests while seeking to calm voters ahead of the 2027 poll.

Spending push

At the heart of the spending plan is a deliberate shift toward infrastructure and housing – two sectors that offer highly visible and politically impactful projects.

The development expenditure has been nearly doubled to Sh840 billion from Sh482 billion, with the projects set to provide the private sector with the demand it requires for hiring and offering better pay.

The State Department for Roads has been allocated Sh176.9 billion for development, from Sh92.8 billion for the current year ending June.

This makes roads one of the biggest beneficiaries of capital spending, reflecting a push to expand connectivity across the country, particularly through low-volume seal roads that are cheaper and quicker to roll out in rural constituencies.

The housing sector has seen an equally dramatic surge, on the back of the housing levy.

The State Department for Housing and Urban Development has been allocated Sh138.3 billion, of which Sh132.7 billion is earmarked for development and Sh5.5 billion for recurrent spending.

Within this, Sh118.1 billion will go toward housing development and human settlement, while Sh19.7 billion is set aside for urban and metropolitan development.

The scale of the allocation marks a sharp increase from previous budgets, where the affordable housing programme absorbed about Sh18 billion, underscoring the government’s intent to accelerate construction and job creation in the run-up to the election.

The broader development push is reflected in total voted expenditure, which stands at Sh2.82 trillion, comprising Sh1.98 trillion in recurrent spending and Sh840.6 billion in development expenditure.

The size of the development budget signals a continued tilt toward infrastructure-led growth, with roads and housing taking centre stage.

Other infrastructure-linked sectors have also received significant allocations.

The State Department for Transport has been allocated Sh63.9 billion, including Sh56.9 billion for development, which is up from Sh5.3 billion.

The bulk of the billions will help in the extension of the standard gauge railway to western Kenya and the upgrade of the older rail in Nairobi, central Kenya and the Coast.

The State Department for Water and Sanitation will receive Sh56.5 billion, with Sh48.0 billion directed toward development projects. The State Department for Economic Planning has been allocated Sh66.5 billion, largely driven by Sh62.5 billion in development spending.

Election strategy

The emphasis on roads and housing points to a calculated election-year strategy. Roads, particularly low-volume seal roads, are highly visible and can be distributed across multiple constituencies, allowing the government to demonstrate progress at the grassroots.

Housing projects, on the other hand, offer employment opportunities while addressing urban housing shortages, making them attractive to both rural and urban voters.

At the same time, the government has signalled that it will be easing its tax stance, cutting its ordinary revenue target to about Sh2.9 trillion, down from earlier projections contained in the Budget Policy Statement 2026.

Treasury Cabinet Secretary John Mbadi recently said his ministry would prepare a Tax Laws (Amendment) Bill that would raise the threshold of untaxed income from Sh24,000 to Sh30,000 and have income falling between Sh30,000 and Sh50,000 taxed at 25 percent.

While that has not been achieved, the government has indicated that it will not make major changes.

The plan to ease the tax burden comes as the State seeks to placate the electorate in the last full fiscal year before the General Election of August 2027.

Borrowing risk

However, rather than reduce spending, the Treasury has widened its borrowing plans, pushing the fiscal deficit above Sh1.1 trillion.

Kenya’s borrowing gap has widened from Sh1.066 trillion, with the loans being funnelled into various development projects.

Dr Ruto, who is yet to complete a mega project of the magnitude of the SGR or the Nairobi Expressway launched by his predecessor Uhuru Kenyatta, has also indicated that the government will start the upgrading of the Nairobi-Nakuru-Mau Summit Highway into a dual carriageway toll road.

Read: Kenya plans more expressways to ease rising traffic

Both projects are expected to open up the Western region of the country, a vote-hunting region for President Ruto, who political analysts say will struggle to entice the populous Mount Kenya region that voted for him to the last man in the 2022 elections.

However, this has come at the cost of increased borrowing, with the fiscal deficit widening to above Sh1.1 trillion as the State seeks to sustain its spending plans.

T-bill rate rises above 8pc as inflation pressure piles on CBK

The 91-day Treasury bill interest rate has risen above the eight percent level for the first time in eight months as investors continue to put pressure on the Central Bank of Kenya (CBK) to increase rates amid higher inflation.

The three-month T-bill settled at 8.03 percent last week, up from 7.77 percent, the highest it has reached since August 28, 2025. The 182-day paper also jumped above eight percent for the first time since September 22, 2025, settling at 8.21 percent from 7.88 percent previously.

The weekly auction on Thursday was carried out against the background of inflation jumping at the fastest pace in seven years to 5.6 percent in April, from 4.4 percent in March.

This sharp increase in inflation was attributed to higher energy prices due to the US/Israel-Iran conflict, with petrol and diesel prices rising by 10.9 percent and 17.9 percent respectively in the April 14 price review.

Core inflation also rose to 2.8 percent from 2.1 percent in March, indicating that higher fuel and transport prices have started passing through to the wider economy.

Interest rates in the economy normally rise in tandem with inflation as investors seek higher returns to compensate for the erosion in the real value of the shilling.

Higher inflation also puts pressure on the CBK to raise its own base rate to reduce demand for goods and services that pushes prices higher.

According to analysts, the market has taken cue from potential inflationary pressure due to the war and is now adjusting its rate expectations upwards.

‘As expected, interest rates trended higher as inflation expectations continue to rise. The magnitude of further increases will be dependent on the April inflation reading, available liquidity and government borrowing appetite,’ analysts at NCBA Investment Bank said in a fixed income note.

Bond market

Similar to the T-bills market, the Treasury bonds segment is also seeing increased pressure on the CBK to raise rates to keep attracting investors.

Two weeks ago, the third switch bond sale this year, targeting Sh20 billion, was largely shunned by investors, who offered only Sh1.75 billion after refusing to shift their funds to lower-paying paper.

In that sale, the CBK asked investors to swap from 10-year paper that matures in August into a 15-year bond that comes due in 2033. The 10-year paper has been paying holders 15.04 percent in annual interest, while the 15-year pays 12.65 percent.

CBK Governor Kamau Thugge attributed the poor performance of the April 13 bond to a wait-and-see approach from investors due to geopolitical uncertainty around the Iran war.

Market test

The CBK has now returned to test the market with a new switch bond targeting Sh10 billion.

Unlike the April issuance, this one will see investors get the chance to move from a 10-year bond that pays annual interest of 12.96 percent to a 20-year paper that has a rate of 13.44 percent.

It has also reopened three bonds for the May 2026 monthly sale, targeting Sh80 billion from a pair of 20-year papers first issued in 2012 and 2019 at annual interest rates of 12 percent and 12.87 percent respectively, and a 25-year bond from 2021 that pays a rate of 13.92 percent.

The reopening comes against the backdrop of total revenue collection having stood at Sh2.04 trillion in the first three quarters of the current financial year, falling behind the prescribed target by Sh84 billion.

The revenue shortfall now leaves the government grappling with elevated funding pressures, with Supplementary Budget I having increased the domestic borrowing target by 57.3 percent to Sh998.6 billion.

However, Dr Thugge has sought to allay fears that the higher borrowing target will push interest rates upwards, saying the CBK has already borrowed a net of Sh850 billion domestically, meaning only about Sh150 billion is pending to hit the new target.

‘I believe with that, we can meet that borrowing target without adding a lot of pressure on interest rates,’ Dr Thugge told the Business Daily in an interview last week.

Earlier in the year, the CBK had frontloaded on the domestic debt, taking advantage of higher investor demand for government securities and a liquid money market.

Cash burn, weak business models drive Kenyan startup failures

Poor financial discipline and operational inefficiencies are fuelling the rapid collapse of startups in Kenya despite rising funding inflows, analysts say.

Kenya was Africa’s top destination for venture capital in 2025, accounting for nearly a third of all startup funding raised from investors.

According to data from funding database Africa: The Big Deal, Kenya-based startups raised $984 million (Sh127.13 billion), the highest amount attracted by any African market since the 2022 funding boom.

Yet despite this capital inflow – particularly into sectors such as fintech, green energy and logistics – analysts say a recent wave of startup failures has exposed structural weaknesses in business models.

‘Startups often fail not because they lack revenue potential but because they run out of cash,’ multinational advisory firm PwC says in a new analysis. It urges investors and founders to institutionalise a ‘cash culture’ that prioritises liquidity management alongside growth.

High burn rates

Kenya is considered one of the continent’s ‘Big Four’ startup markets, alongside Egypt, South Africa and Nigeria.

In the past 16 months, more than seven high-profile, venture-backed businesses have closed, entered administration or scaled down operations, sending home large numbers of staff. They cite funding droughts, rising operating costs and delayed investor commitments.

In 2024 alone, several Kenyan startups that later shut down had collectively raised more than $270 million (Sh34.9 billion), according to the Startups Graveyard Report.

PwC attributes this trend to high burn rates – the pace at which a company consumes cash – and using more than necessary resources to complete tasks, both of which erode profitability.

Some ventures that have struggled include buy-now-pay-later firm Lipa Later, which entered administration in March last year despite raising more than $16.6 million (Sh2.1 billion).

Remittance startup Bonto also shut down less than a year after securing a licence from the Central Bank of Kenya, citing unsustainable foreign exchange margins.

In the health-tech space, Antara Health closed its Kenyan operations after raising $2 million (Sh258.4 million) in seed funding, blaming slow growth and weak demand, while Ilara Health laid off staff amid delayed funding and difficult market conditions.

E-mobility firm eBee also cut jobs and scaled down operations due to rising costs and declining revenues.

Rapid expansion

PwC argues that the core issue is not access to capital, but how that capital is deployed. Many startups, it says, prioritise rapid expansion through geographic growth or product diversification – without strengthening underlying operational capacity.

‘Pursuing rapid scale without reinforcing operational foundations introduces fragility into the business model that eventually surfaces as sustained underperformance, lower returns on investment, liquidity crunches, governance gaps and, in some cases, insolvency,’ the firm says.

To address this, PwC recommends that startups align funding milestones with operational performance indicators such as productivity and utilisation, rather than relying solely on topline metrics like revenue, sales volume and customer acquisition.

It also calls for optimisation of capital structures, including balancing debt and equity and aligning financing with working capital needs.

‘…reprofiling debt to match the company’s current cashflow profile and ensuring that the capital structure reflects an appropriate mix of equity and debt, taking into consideration funding requirements, cost of capital, debt-carrying capacity and dilution impact,’ the analysis says.

PwC warns that investor due diligence has often focused on financial performance, tax and legal matters, while overlooking a deeper understanding of business operations.

‘Due diligence must go beyond financial performance to uncover structural and operational risks early,’ the firm says.

Passport issuance plunges to the lowest in four years

The number of passports issued dipped to a four-year low in 2025, despite printing system upgrades and the opening of more processing centres.

Official data shows that 393,567 passports were issued last year, a 36.7 percent drop from the 621,794 in 2024 and the lowest since the 273,328 issued in 2021.

The significant drop in passports issued signals prolonged delays and struggles for Kenyans seeking to travel abroad to pursue job and education opportunities.

The Kenya National Bureau of Statistics (KNBS) did not disclose the reason behind the plunge, which comes despite the government procuring new high-capacity printers, opening more centres and cutting processing times for passports for jobs abroad to 72 hours from several months.

‘Passports issued declined by 36.7 percent to 393,567 in 2025,’ KNBS says in the Economic Survey 2026.

KNBS does not disclose the annual number of passport applications, making it difficult to ascertain whether the dip in issuance could have been caused by reduced applications last year.

The number of passports issued had hit a record high of 621,794 in 2024 in the wake of system upgrades that significantly eased the processing of the documents.

Capacity push

The government bought two new high-capacity passport printers in late 2024 in a bid to reduce processing time.

Some one million passport booklets were also procured, in addition to the hiring of 286 officers, in a bid to ease pressure on existing staff.

The Immigration Services main office at Nyayo House in Nairobi has, for years, grappled with repeated breakdowns and spikes in demand as more Kenyans visit the centre in search of passports.

A shortage of passport booklets has compounded the problem as the government struggles to handle applications, which are estimated at an average of 5,000 daily or more than 1.8 million annually.

The government plans to establish new passport application centres in Nairobi and several counties across the country in a move aimed at ending chronic congestion at Nyayo House.

The Interior Ministry last year proposed new centres in Westlands, Upper Hill, Makadara, Kiserian, Athi River and Thika amid increased demand for key travel documents.

It also recommended decentralising passport services to Malindi, Voi, Kwale, Isiolo, Machakos, Lodwar, Narok and Siaya counties to ease pressure on Nairobi and reduce long-distance travel for applicants.

Nairobi satellite land boom slows as prices lock out buyers

The rapid growth of land prices in Nairobi’s satellite towns has cooled off on falling demand as middle-class home builders increasingly find it difficult to afford property whose average price per acre has now hit Sh33 million.

Analysis of Nairobi land prices by real estate firm HassConsult shows that in the year to March 2026, land prices in satellite towns grew by an average of 4.3 percent, down from 9.93 percent in the year to March 2025.

Over a five-year period, the average price per acre has risen by 50 percent, from Sh22 million to Sh33 million, and has effectively doubled from Sh16 million over a 10-year period.

This means a buyer seeking a quarter-acre plot to build a home now pays an average of Sh8.3 million in areas surrounding the city, up from Sh5.5 million in 2021 and Sh4 million in 2016.

Price pressure

Development of infrastructure such as roads, schools and shopping malls in these towns has contributed to the rise in demand for land over the past decade.

The availability of these amenities, coupled with previously affordable prices, attracted middle-class buyers seeking plots to build homes, alongside developers putting up apartments and related facilities.

‘The infrastructure-led uplift across many of Nairobi’s satellite towns that underpinned earlier growth is now largely priced into land values. Against a tighter economic backdrop, this has reduced affordability for self-build buyers, narrowing the addressable market,’ said HassConsult co-CEO and creative director Sakina Hassanali.

Highly sought-after locations such as Juja, Ngong, Mlolongo, Syokimau and Limuru, which recorded annualised land price growth of between 18 percent and 21 percent in 2023 and 2024, are now posting single-digit increases of between 0.8 percent and nine percent.

In Ngong, where annualised land price growth reached a high of 21.4 percent in December 2023, it contracted by 2.3 percent in the year to March 2026. An acre now costs Sh35.6 million, pushed up by improved access from the ongoing dualling of Ngong Road.

Mlolongo and Syokimau saw their average prices rise by 4.7 percent and 0.8 percent respectively in the year to March, down from 12.6 percent and 16.2 percent a year earlier. Their annualised land price growth had peaked at 18.5 percent and 18.1 percent in September 2024.

Ruaka remained the most expensive satellite town at Sh112.6 million per acre by the end of March, while Kiserian was the cheapest at Sh13.5 million per acre among the 14 towns surveyed by HassConsult.

Return shift

At their peak, some satellite towns were delivering returns that outperformed risk-free government bonds, whose annual interest rates reached 18.5 percent in early 2024.

The current average growth rate of 4.3 percent is now significantly below prevailing bond yields of between 11 percent and 13 percent, as well as the one-year Treasury bill rate of 8.3 percent.

In terms of availability, Kitengela and Ruiru led with 15 percent each of advertised land parcels, followed by Ngong at 14.6 percent, Ongata Rongai at 7.1 percent and Syokimau at seven percent.

Mlolongo had the least availability at 1.3 percent, followed by Limuru at three percent and Ruaka at 3.9 percent.

Satellite towns generally offer more land than the city’s suburbs, which are more densely developed and costlier to access.

The average price per acre in the 18 suburbs surveyed rose by 5.2 percent to Sh228.8 million in the 12 months to March 2026, putting these areas within reach of only deep-pocketed developers.

Upper Hill and Westlands recorded the highest prices at Sh561.1 million and Sh501.6 million per acre, respectively, followed by Parklands at Sh469.7 million.

The least expensive suburban land was in Karen at Sh77 million per acre, Lang’ata at Sh90.9 million and Ridgeways at Sh92.5 million.

Planning friction

The 5.2 percent growth in suburban land prices was largely driven by demand for space to develop detached and semi-detached units, whose prices have risen due to reduced supply as developers shift towards apartment construction.

However, HassConsult warns that suburbs are facing challenges related to planning approvals, as debate intensifies over permitted developments in various city zones.

‘Demand for land parcels for new suburban projects eased during the period (first quarter of the year), as developers continued to face uncertainty around planning approvals at county level, with some projects further delayed by resistance from resident associations,’ said Ms Hassanali.

In recent years, suburbs such as Kilimani, Kileleshwa and Parklands have shifted from predominantly single-dwelling units to multiple apartment blocks, driven by changes in zoning laws.

Some resident associations have pushed back, arguing that infrastructure, including roads, sewerage and water systems, has not been upgraded to support higher population densities.

Similarly, areas such as Westlands and Upper Hill have evolved from residential zones into commercial districts, adding pressure on infrastructure and amenities.

However, this commercialisation has driven sharp increases in land prices over the past decade, delivering significant gains to landowners selling to office developers.