Category: Business Daily

Thousands of taxpayers were granted penalty waivers on Sh4.76 billion owed to the Kenya Revenue Authority (KRA) in breach of amnesty rules, raising questions on the handling of the scheme.

The Auditor-General’s report on the KRA for the year to June 2025 shows that 4,677 taxpayers ben-efited from the scheme without having a repayment plan for the billions of shillings owed in principal taxes.

The audit shows the taxpayers, including individuals and businesses, were forgiven Sh290.48 million penalties and interest, marking a breach of the law since they had not settled the principal taxes.

The report notes that the KRA breached the Tax Procedures (Amendment) Act, 2024, which sets conditions for forgiveness of penalties and interest, including the requirement that one must have fully settled the principal tax or shared a repayment plan.

KRA staff have been previously accused of helping to fraudulently clear cargo and alter records to help people dodge tax payments, leading to revenue losses.

The tax amnesty scheme was aimed at boosting revenues amid pressure on the KRA to weed out tax evaders and raise collections through increased compliance.

‘Review of the tax amnesty uptake indicated that it was granted on penalties, interest and fines of Sh290.48 million to 4,677 taxpayers, despite the taxpayers owing the authority Sh4.75 billion in outstanding principal taxes, relating to tax periods up to 31 December, 2023,’ says the audit report.

‘This was contrary to the Tax Procedures (Amendment) Act, 2024, which requires that, to qualify for amnesty, a taxpayer must have either fully paid all principal taxes or have an approved payment plan under which the outstanding principal taxes would be fully settled by 30 June, 2025.’

Under the law, taxpayers qualify for amnesty after settling the principal tax or tabling an approved payment plan that guarantees full settlement of the principal before June 30, 2025.

The audit, however, indicates that these conditions were not met, yet the penalties were written off.

The programme was first introduced in 2023, granting tax amnesty on penalties and interest for periods up to the end of December 2022. It initially ran until June 2024 before being extended to June 30, 2025, allowing for the waiver of penalties and interest accrued on tax debts for periods up to the end of December 2023.

The KRA has in the past praised the programme for generating Sh29 billion while bringing 3.5 million taxpayers into compliance-a performance it termed as ‘a proof to our balanced approach of enforcement and facilitation.’

The audit findings raise questions on the credibility of the amnesty programme, which was designed to encourage tax compliance while helping the KRA collect principal taxes.

The audit further raises red flags over how the amnesty was implemented in the tax system. It found that there was use of direct record deletions instead of standard accounting procedures, where the trail must remain visible in the system.

The audit found that tax relief amounting to Sh1.29 billion was processed through direct deletion from taxpayers’ ledgers instead of processing them through credit entries.

‘Further, a tax amnesty of Sh1,288,365,274 was implemented by direct deletion from taxpayer ledgers rather than being offset through credit entries. ln the circumstances, management was in breach of the law,’ said the audit.

Under accounting rules of double entry, the tax amnesty should have been recorded as a credit against a taxpayer’s account, preserving an audit trail that shows the original liability, the relief granted and the resulting balance. Direct deletion removes the liability without leaving a clear record of the adjustment, making it difficult to track the application of the amnesty across individual accounts.

The tax amnesty programme was intended to unlock collections from non-compliant taxpayers as part of the country’s tax administration reforms aimed at expanding the revenue base and reducing reliance on debt.

The spotlight on the handling of the amnesty programme came in the period Auditor-General Nancy Gathungu disclosed that the KRA had issued tax compliance certificates (TCCs) to 3,054 taxpayers despite them having Sh3.12 billion tax arrears and without a payment plan in place.

The report indicates that the affected taxpayers had not objected to the tax assessments or entered into any structured payment plans-conditions that would have allowed them to legally qualify for the certificates.

Ms Gathungu’s findings come at a time when the government is under pressure to boost revenue collection amid rising fiscal constraints and public scrutiny over tax fairness.

State House has previously accused the tax collection agency’s staff of cutting government revenue by engaging in corruption, colluding with tax evaders and taking bribes.

President William Ruto also accused KRA staff of resisting and sabotaging attempts to digitise revenue collection in the past to prevent the government from sealing loopholes.

In terms of tax collected as a proportion of annual economic output, Kenya has been underperforming other nations like South Africa as it struggles to widen the tax net.

The KRA’s revenue collections were Sh2.257 trillion in the financial year ended June 2025 against the targeted Sh2.305 trillion, being a Sh48 billion shortfall.

In the current financial year ending June 2026, the KRA is banking on increased deployment of technology and other enforcement tools to raise Sh932 billion in the final three months in a bid to meet its Sh2.97 trillion annual revenue target.

The aggressive final-quarter push comes after the agency collected Sh2.038 trillion by the end of March, the first time it has crossed the Sh2 trillion mark within nine months.

There is a kind of theft of public resources that does not appear in the reports of the Ethics and Anti-Corruption Commission. No safe is cracked.

The thief wears a pressed suit, sits on an armchair in a red-carpeted office, drives an SUV, and is protected by armed bodyguards. He steals through delay. This is the story of the Mombasa Gate Bridge – and Kenya’s taxpayers are the victims.

The facts are damning enough without embellishment. In 2019, Kenya and Japan signed a loan agreement for a bridge across the Likoni Channel – one of the most dangerous crossings on the East African coast.

The terms are the envy of any finance minister in Africa: interest at 0.1 percent, a 12-year grace period, a 30-year repayment window, and an outright grant element worth Sh6 billion.

The first tranche of the loan was disbursed. Advance payments flowed to consultants. A procurement competition was run to its conclusion. A winner emerged. And then – nothing. For nearly two years, the procurement entity has sat on the award while the Kenyan taxpayer has haemorrhaged an estimated Sh4 billion in commitment fees.

Four billion shillings for a bridge that has not broken a single centimetre of ground.

Procurement delay of this nature – deliberate, sustained, after a competition has produced a winner – is not administrative backlog. It is the machinery of corruption in its most sophisticated form.

Someone is using bureaucratic inertia as a weapon. The goal is to manufacture enough fiscal pain and political fatigue that the original arrangement collapses – and a new one, more favourable to different interests, takes its place.

Now, a new narrative is being floated within government circles: that the project is too expensive and the financing model should be rethought. That Kenya could instead mobilise domestic resources -pension funds and institutional investors – through an infrastructure fund model.

That a securitisation structure, possibly involving a Chinese contractor, could deliver the same project more cheaply. We are told that now that the Dongo Kundu bypass road is complete, the Likoni crossing is less urgent.

Each argument deserves to be called what it is: financially unsound, strategically reckless, or both. Pension fund money carries market return expectations – a far higher cost of capital than 0.1 percent.

Securitisation with a Chinese contractor embeds financing costs inside the construction price, making it opaque and almost always more expensive in aggregate.

Do we really want to hand back the Sh6 billion grant element on the Japanese loan? As for the bypass argument – have you driven on it on a Thursday or Friday when it clogs? The ambition was to build a link of higher quality to support and attract investment at the Ndongo Kundu SEZ.

Then there is the diplomatic cost, which appears to have entered no calculation at the National Treasury. Japan helped author the Mombasa master plan. Japan is funding the ongoing rehabilitation of Mombasa port.

Japan designed the Dongo Kundu Special Economic Zone as the flagship of Kenya’s entire SEZ programme – the first domino in a sequence intended to include Naivasha and Kisumu.

Cancel this credit, pivot to a Chinese deal, and we must look Tokyo in the eye and explain ourselves. We must be prepared for the consequences at the port, at Dongo Kundu, and in every future ODA conversation with an ally cultivated over decades – all to spare someone the inconvenience of a transparent procurement outcome they did not control.

The 12-year grace period on the Japanese loan was structured with a specific intention: that it expires at roughly the same time the bridge opens, so that toll revenues service the debt from day one.

Every month of delay closes that window. At some point – and the government must be honest about how close that point is – Kenya will begin repaying a loan on a bridge that does not exist. No minister will volunteer to explain it. But the taxpayer will feel it.

The government should award the contract immediately. Not merely because Japan deserves the gesture, though they do. Not merely because the diplomatic relationship demands it, though it does.

Award it because the people of the South Coast have waited long enough. Award it because the Likoni Channel has claimed lives that a bridge would have saved. Award it because the law requires that a completed procurement be concluded – and the law is not a suggestion.

Grand corruption does not always arrive with a smoking gun. Sometimes it comes as a memo recommending delay. Sometimes it wears the language of fiscal prudence and alternative financing mechanisms.

Sometimes it sits in a procurement committee and does absolutely nothing – and collects its reward precisely because nothing is what was required. I rest my case.

Kenya has announced a strategy shift in its mining sector from exporting raw minerals to processing them locally, in a bid to unlock jobs and generate higher earnings from exports. Secretary of Mines in the Ministry of Mining, Blue Economy and Maritime Affairs and chief executive to the Mineral Rights Board Thomas Mutwiwa explains the policy push, the delays around key value addition projects and how reforms are reshaping the sector.

Kenya has long exported raw minerals. Why the shift to value addition now?

For many years, we have looked at mining from a very traditional perspective, which is extract and export. But if you look at countries that have succeeded, they have moved beyond that. They process, they manufacture and they industrialise around their minerals. That is where the real value is.

In Kenya, we have the mineral potential, but that potential has not translated into significant GDP (gross domestic product) contribution. We deliberately want to move from just mining to value addition, so that we can create jobs, increase exports and earn more as a country.

What does this value addition look like in practical terms for Kenya?

It means putting in place facilities that can process minerals to internationally acceptable standards before export. Take gold as an example. Instead of exporting semi-processed gold, we will refine it locally to 99.99 percent purity. That is what fetches better prices in the international market.

We have started doing this for gemstones. Rather than exporting rough stones, we have started cutting and polishing them locally.

The same applies to industrial minerals like limestone, silica sand and others. We have built industries around limestone, and Kenya is now a net exporter of cement. We can also build more factories around silica sands which are used in glass manufacturing.

The Kakamega gold refinery is central to this plan, but it is behind the initial June 2025 schedule. What went wrong and where are you with this project?

The refinery is about 80 percent complete. Ideally, this is something that should have been done much earlier. But like many large projects, there have been challenges, mainly legal issues and litigation involving contractors.

We have addressed most of those issues, and we expect that within the next six months or so, the refinery should be up and running. Once operational, it will be a key facility in anchoring the gold value chain in this country and region.

How will the refinery change the gold sector?

The gold space in Kenya is enormous, especially along the greenstone belt stretching from Narok through Migori, Kakamega and into Turkana and Marsabit. A large population depends on this sector, particularly artisanal miners.

Right now, much of the gold leaves the country in raw or semi-processed form, and a lot of it is unaccounted for. With a refinery, we will create a structured system where gold from artisanal miners, small-scale miners and even large-scale operations is processed locally to international standards.

You have acknowledged that a lot of gold is smuggled out of the country. How does value addition address this?

Smuggling has been a big challenge because the value chain was not properly structured. What we are doing now is licensing every stage: from artisanal miners to dealers, leaching plants and elution plants.

The idea is to ensure that gold produced in Kenya moves through a formal system, right from extraction to processing to refining. Ultimately, we want most of the gold to be sold within the country and exported through a controlled channel.

Where do artisanal gold miners fit into this new model?

They are central to this project. We have already formed dozens of artisanal mining committees and licensed over 200 cooperatives. These miners produce a significant portion of the gold, but historically they have operated informally.

Now, we are bringing them into the formal system. We are also licensing facilities such as carbon-in-pulp and carbon-in-leach processors to handle their output. This ensures that even the tailings-the material previously considered waste-can be processed and contribute to overall production.

Apart from gold, what other value addition initiatives are underway?

The Voi Gemstone Centre is already operational. It is a common user facility serving the gemstone belt along the Mozambican geological formation. Artisanal miners can bring their stones there for value addition, including cutting, polishing and grading, before sale or export. We also have potential in industrial minerals. We already export clinker and cement products, but there is room to expand further.

You mentioned the need for more gold refineries. What is the plan ?

Kakamega is a starting point, but it will not be enough as production increases. There is room for at least one or two additional refineries, possibly in Nairobi or Machakos, to serve as aggregation and processing centres. However, those decisions will be made by higher authorities.

Critics say Kenya’s problem is not just processing but lack of credible data on mineral deposits. How are you addressing that?

That is a valid point. One of the reasons we have not realised our potential is limited investment in exploration. Without proper data, it is difficult to attract serious investors.

We recently conducted an airborne geophysical survey [between 2019 and 2022] and identified about 970 mineral anomalies. We are currently doing ground trothing. Once we have quantifiable data, we can convert these into bankable resources and move into production.

You have also tightened licensing rules after lifting the moratorium. Aren’t these reforms discouraging small players?

The intention is not to lock out genuine investors, but to ensure that only serious players enter the sector. In the past, we had what we call ‘briefcase miners’. Now, applicants must demonstrate financial capability, submit feasibility studies and provide clear work programmes. This ensures that licences go to those who can actually invest and deliver results.

How are communities benefiting from the resources mined from their areas?

The Mining Act 2016 introduced a structured system for sharing benefits. Royalties are distributed with 70 percent going to the national government, 20 percent to counties and 10 percent to communities. In addition, there is a requirement that at least 1 percent of gross sales go into community development agreements. These funds support local projects.

What revenues is the sector generating to the exchequer?

Over the past four years, we have collected about Sh15.6 billion in royalties. In between that period, there have been fluctuations and one of the reasons is the exit of Base Titanium which actually had an impact on revenues. But we are working to close that gap.

The recent recruitment of judges to the High Court and the Environment and Land Court marks a significant milestone in Kenya’s journey toward a more robust judicial system.

As an advocate and a candidate in the recent process, I extend my heartfelt congratulations to the 37 women and men who will soon be sworn in as judges to protect our rights and to safeguard the rule of law. Appointment as a judge is a calling to a high station.

Taking oath of office will place important demands to those who got the privilege for appointment not just legal expertise, but a profound commitment to the soul of our nation.

To the judges -in-waiting and indeed to all judicial officers and administrators within the justice sector, the rule of law is the bedrock upon which our democracy rests. It is the silent guardian of every Kenyan’s rights, ensuring that the powerful are restrained and the vulnerable are shielded.

All judicial officers are expected to strictly adhere to the Bangalore Principles of Judicial Conduct. Two pillars stand out as non-negotiable: impartiality and integrity. A judge’s desk must be a place where bias dies and the truth is the only currency. Without public confidence in your integrity, the authority of the court is but a hollow shell.

During my interview, I was concerned about the role of the Judiciary in national development. I was excited when one of the commissioners took me on arbitration law and its application in Kenya.

The Judiciary is more than a place of resolving disputes. It is an engine for national development.

Courts play a pivotal role in resolving commercial disputes, which often lock up billions of shillings in capital that could otherwise drive our economy. By providing swift, predictable, and fair resolutions, the Judiciary unlocks this capital, fostering an environment where businesses thrive and investors feel secure.

Protecting property rights and ensuring contractual fidelity are direct contributions to our GDP and our collective prosperity.

We must take a moment to thank the Judicial Service Commission (JSC), led by Chief Justice Martha Koome.

The recruitment process was exemplary. It was characterised by openness, transparency and conducted with a level of rigour that reflected the high calibre of the candidates.

The JSC balanced various constitutional considerations, ensuring that the bench reflects the diversity and excellence of the Kenyan people.

To my colleagues who were unsuccessful in this round, I ask you to remember the words of the Chief Justice. Our calling to serve Kenyans does not end with a particular title or position. Whether in private practice, public or private service.

As for my own journey, my focus now shifts fully to a different kind of power. Nuclear power, the energy that will drive Kenya into the next frontier.

At the Nuclear Power and Energy Agency, we are dedicated to realising President William Ruto’s vision of transforming Kenya into a first-world nation. Our very own ‘Singapore’ by 2050.

Justice and energy are essential to the Kenyan dream. Let us all, in our respective roles, work tirelessly to build the Kenya we deserve.

The High Court has dealt a blow to aggressive debt recovery methods used by the Kenya Revenue Authority (KRA), blocking the agency from directly raiding a taxpayer’s bank accounts to recover dues, citing due process violations.

The court nullified agency notices issued to NCBA Bank Kenya Limited and Stanbic Bank Kenya Limited, which had been directed to remit funds held in accounts belonging to Katahira and Engineers International Limited.

An agency notice is a directive issued by the taxman under Section 42 of the Tax Procedures Act, compelling a third party, such as a bank or employer, to recover unpaid taxes from a defaulter’s account and remit them to KRA.

The notices, issued on December 15, 2025, demanded Sh139.4 million from the firm’s accounts under powers granted by the Tax Procedures Act, triggering a freeze that disrupted its operations.

The company sued, arguing that the enforcement action ignored a binding decision by the Tax Appeals Tribunal that had already nullified the underlying tax assessment.

It said the move crippled its operations and disrupted contractual obligations after its bankers were directed to remit funds to the tax authority.

In its filings, the firm said the agency notices were issued ‘in blatant disregard of a valid, final and binding judgment’ that had set aside the tax claims.

It argued that the tax authority had become functus officio and could not lawfully pursue recovery on a matter already determined. Functus officio is a legal term indicating that a party has exhausted its authority after issuing a final decision.

Katahira and Engineers International Limited added that the notices caused ‘grave financial and operational prejudice,’ including disruption of banking and contractual obligations following the freezing of its accounts.

KRA defence

KRA defended its actions, saying the notices were based on fresh assessments and were lawfully issued after the company failed to settle outstanding taxes.

It also argued that the taxpayer had not followed proper dispute resolution channels before moving to court.

However, the court found no evidence that new assessments had been issued or that proper demand notices had been served on the company.

The court held that enforcement through banks is an extreme measure that can only be invoked after a clear assessment and demand process.

‘There was no demonstration of any assessment or demand for payment,’ the court found, noting that the authority ‘jumped the gun’ by moving directly to recover funds from the company’s bankers.

The court said tax enforcement must comply with constitutional guarantees on fair administrative action, including transparency, lawfulness and procedural fairness.

Under the Tax Procedures Act, such notices allow KRA to appoint banks as agents to recover unpaid taxes from customer accounts.

However, the court emphasised that this power can only be exercised after a lawful assessment and demand, and upon failure by the taxpayer to settle.

The company had argued that the notices were ‘illegal, irrational and procedurally unfair,’ adding that they amounted to harassment and abuse of statutory power.

The court agreed, finding that the enforcement breached the firm’s rights to fair administrative action and property.

The court quashed the agency notices, effectively lifting the freeze on the company’s accounts.

An order of prohibition was also issued, barring the authority from enforcing or reissuing similar notices based on the same tax demand that had already been set aside.

The court further directed KRA to withdraw the notices issued to the banks.

However, it declined to award punitive damages, noting that the dispute arose from procedural illegality rather than malicious conduct.

Data annotation company Sama, which provides training data for artificial intelligence (AI) systems, has issued redundancy notices to 1,108 employees at its Nairobi office following the termination of a major contract by Meta.

The layoffs, set to take effect later this month, will largely affect workers attached to the discontinued workstream, underscoring the vulnerability of Kenya’s fast-growing outsourcing sector to shifts in global technology demand.

Sama employs thousands of workers in digital tasks such as image and video labelling and has built a significant presence in Nairobi as part of Kenya’s emergence as a hub for outsourced AI support services.

The company said it had engaged Meta in an attempt to retain the contract and protect jobs at its Nairobi delivery centre, but noted that the discussions were unsuccessful, forcing it to initiate the redundancy process.

‘As is standard in our industry, client programmes evolve, and we work closely with our partners to manage these transitions responsibly,’ said Sama Country Lead and Vice President for Global Delivery Annepeace Alwala.

‘Our immediate priority is supporting our employees through this change and ensuring continuity across our broader operations,’ she added.

Contract risk

The job cuts highlight the concentration risk faced by outsourcing firms that rely heavily on a small number of large international clients for revenue, particularly in the AI data services segment.

The development also comes at a time when global technology firms are reassessing costs and restructuring operations amid shifting demand for digital services and advances in automation.

Kenya has in recent years attracted global firms offering content moderation, data labelling and machine learning support services, leveraging a young, English-speaking workforce and relatively lower labour costs.

This has seen Nairobi emerge as a key centre in the global AI value chain, with companies such as Sama employing thousands of workers to handle data-intensive back-end tasks for major technology firms.

The sector has, however, faced scrutiny over working conditions and job security, with roles often tied to specific contracts that can be scaled down or terminated with little notice.

The High Court has dismissed a petition by a Chinese firm seeking to suspend a multibillion-shilling tender by the Kenya Bureau of Standards (Kebs) for the pre-inspection of goods destined for the Kenyan market.

The court ruled that World Standardisation, Certification and Testing Group (Shenzen) Co. Ltd had failed to prove that the due diligence conducted by the Kebs evaluation committee was flawed.

The court further said the Public Procurement Administrative Review Board, which subsequently dismissed the firm’s request for review, properly analysed the evidence, applied the correct legal principles, and arrived at a reasoned conclusion.

Shenzen had previously won the Pre-export Verification of Conformity (PVoC) contract on May 9, 2022, covering the inspection of motor vehicles, spare parts, and other equipment to ensure compliance with Kenyan standards.

It was, however, disqualified from the 2025-2028 tender. In a letter dated September 23, 2025, Kebs accused the firm of repeatedly breaching its contract, allegedly compromising public safety.

Although Kebs said the firm met the minimum prequalification requirements, issues were noted during the due diligence process.

Shenzen had last year successfully petitioned the court to compel Kebs to conduct fresh due diligence on its qualifications and integrity.

And according to the court, having accepted the remedy, the firm cannot be seen to challenge the composition of the committee it embraced and subjected itself to, just because it lost.

‘Having accepted the benefit of the Board’s decision directing a fresh due diligence, the Applicant cannot now seek to prevent the very exercise it successfully sought,’ said the court.

The court said the firm’s argument that an evaluation committee whose membership is drawn from the staff of a procuring entity cannot preside over a complaint raised against the same procuring entity was misplaced.

The court said the evaluation committee was not adjudicating a dispute between the firm and Kebs but was performing a statutory function of verifying its qualifications and integrity as required by law.

The company then challenged the disqualification, and the procurement watchdog found that it had not been given an opportunity to respond to the allegations relied on by the evaluation committee.

The board directed Kebs to conduct fresh due diligence. This was done, after which the firm was again disqualified.

The Chinese firm challenged the second disqualification before the board, but the request was dismissed in February. Kebs was directed to conclude the prequalification exercise while excluding the applicant’s bid. The firm then appealed to the High Court.

Kebs had invited bids for the tender earlier this year, attracting 19 firms, including the Chinese company. Nine bids were disqualified at the preliminary stage for being non-responsive.

The remaining 10 firms met all mandatory requirements and advanced to the technical evaluation stage. All were recommended for prequalification, subject to due diligence.

The board was told that Kebs’ head of procurement had reviewed the entire process and supported the decision not to prequalify the Chinese firm.

The company challenged the decision, saying Kebs failed to provide evidence of the alleged breaches. It argued that the claims arose from an ongoing contract that is already the subject of a court case.

The firm said its disqualification would result in financial losses and reputational damage, despite meeting all technical, eligibility and financial requirements.

It also faulted the board, arguing that instead of addressing the matter before it, it went on a tangent by effectively adopting the position of the evaluation committee and seeking to re-evaluate the tender.

After the Showman Residence by Nyashinski (which was a scream), a friend suggested we stop by a new bar for one drink.

He’s a young fellow, this friend, though his ex-rugby frame hides it. Inside, he’s still a boy searching for his true north. I tend to attract these young cats – looking for something: purpose, fathers, friend.

We ended up at Loco Moto, a place I know well but not as Loco Moto. It used to be a carwash. Then someone opened a bar. Now it’s this thing.

I hadn’t been in ages, partly because a friend who loved it moved to Congo to work on wealthy Congolese teeth. He’s a dentist. The bar was loud. Not me showing my age – just a fact. But we were already there, so what the hell.

He knew everyone. From the guards at the door, he was shaking hands, doing a small lap of honour before we sat. We joined a table with his friends – ex-rugby fellows, softening at the midsection but not yet settled into their mid-30s. There were also two girls at the table, mid-to-late 20s. A bottle of Johnnie Walker Black stood in the middle of this gathering. I ordered water.

Someone was talking about someone making serious money from some government import deal. I could tell he was lying. You can always tell an embellisher. They don’t pause. Even when it’s not their turn, they are still speaking.

Another fellow was trying to get the attention of a girl with dark lipstick. One ignored the other girl entirely, constantly scrolling through game score – probably gambling.

I felt out of place. Tired of the loud music. The room was young. But then, many rooms are getting younger.

I started thinking of a hot shower and my bed. So I told my friend I’d turn in early. My issues aside, Loco Moto is the kind of local that you’d fall in love with for its lack of pretense.

Uchumi Supermarkets has disclosed that it was technically insolvent to the tune of Sh7.05 billion as at June 2025, ahead of its first shareholder meeting in eight years.

This represents a massive 106.74 percent jump from a negative equity position of Sh3.41 billion as at June 30, 2017 and reflects accumulated losses and liabilities that heavily weighed down the retailer’s recovery prospects.

The company, in its latest annual report for the financial year to June 30, 2025, said despite the improvement in its operational performance, it continues to carry significant historical liabilities that have accumulated over previous years, pushing it into a the deeper negative equity position of Sh7.05 billion.

‘The board and management remain committed to addressing these legacy obligations through ongoing restructuring efforts and continued improvement in operating performance,’ the company says.

A negative equity position occurs when a company’s total liabilities exceed its total assets, resulting in a negative net worth or book value. This financial state often signals distress, caused by prolonged operating losses, heavy debt, or massive asset write-downs, and can indicate insolvency.

Over the last eight years (2018-2025), Uchumi, which is owned 14.7 percent by the National Treasury, has been in a sustained critical financial crisis, characterised by technical insolvency, massive accumulated losses, and reliance on a court-supervised debt restructuring plan called Company Voluntary Arrangement which is an agreement between the company and its creditors.

However, as of late 2025, the company has shown flashing signs of a recovery driven by a shift from a retail business model to a rental income model.

As a result of the improvement in revenue and the continued implementation of strict cost management measures, Uchumi reported a rare profit of Sh8.7 million for the year ended June 2025 marking a turnaround from a loss of Sh 167.8 million recorded in the previous financial year, largely driven by rental income.

‘This improvement reflects the positive impact of management’s restructuring initiatives and the board’s continued focus on restoring operational stability,’ the company says.

‘While the group continues to face legacy financial challenges, the improvement in operating performance recorded during the year demonstrates that the recovery strategy is gaining traction.’

This marks the first time in years that the debt-ridden retailer has posted a profit, even as it faces the risk that the outcome of the legal battle with the Kenya Defence Forces over the ownership of 17-acre land in Kasarani, Nairobi, could make or break its revival.

Uchumi’s CVA framework, a key component of the group’s financial restructuring strategy, was set up in March 2020, providing a roadmap for settling preferential and unsecured debts over a six-year period ending June 2026.

The company is set to hold its first annual general meeting (AGM) in eight years this month, on April 29, where shareholders are expected to receive and adopt financial statements for the eight financial years from June 2018 to June 2025.

The company last held an AGM in March 2018 at a time when there was optimism that it would secure a strategic investor to inject Sh3.5 billion capital to help its turnaround.

A standoff between the Kenya Electricity Generating Company (KenGen) and its financier, the European Investment Bank (EIB), has stalled a key consultancy tender for the Sh32 billion Olkaria VII geothermal project.

The High Court has now backed KenGen’s decision to terminate the procurement for the consultancy services, quashing a tribunal’s ruling that had ordered the process to proceed despite the funding stalemate.

In a judgment delivered in Nairobi, the court found that the tender could not lawfully continue after EIB declined to issue a mandatory ‘no objection’ letter required under the financing framework.

‘The question is whether KenGen could reasonably be expected to move forward with the procurement process, award contracts, or implement those contracts without confirmed and adequate budgetary provision and funding. The answer is a big NO,’ the judge ruled.

The dispute centres on a tender for consultancy services linked to the Olkaria VII geothermal power plant, one of Kenya’s flagship renewable energy projects.

The 80.3-megawatt power plant in Naivasha’s Olkaria field project was designed to expand the country’s renewable energy capacity and strengthen power supply.

It was formally initiated through feasibility and planning processes beginning in 2022, when KenGen called for studies to support its development. The project gained further momentum with government approvals in 2025, setting it on course for construction and eventual delivery to the grid by 2027.

KenGen had initiated the procurement in September 2024, indicating that the contract would be financed by the EIB and governed by the bank’s procurement guidelines.

Those guidelines required the financier’s approval at every critical stage, including before award and contract execution.

After completing the evaluation and recommending a winning bidder, KenGen sought the EIB’s clearance in January 2026.

The bank declined to approve. KenGen then terminated the tender, stating that without the financier’s concurrence, there would be no funds to meet contractual obligations.

However, the Public Procurement Administrative Review Board overturned that decision in February 2026 following an application for review lodged by Sintecnica Engineering S.R.L in joint venture with Steam S.R.L, the bidder recommended for award of the consultancy tender.

The board had found that KenGen had not sufficiently justified the termination. It ordered the company to proceed with the procurement to its logical conclusion, triggering a court challenge by KenGen.

The High Court found that the tribunal misdirected itself on the legal effect of the donor’s refusal and issued orders that could not be implemented.

‘The financier’s ‘no objection’ was a mandatory condition precedent to award and contract execution,’ the court ruled, adding that treating the requirement as optional amounted to a fundamental error of law.

‘It was not open to the Review Board to direct continuation of a procurement process in disregard of an express financing condition,’ the court said. The ruling further held that the tribunal exceeded its jurisdiction by interrogating and overriding EIB’s decision.

According to the court, decisions relating to donor concurrence fall within the financier’s contractual mandate and cannot be substituted by a local review body.

The judgment also faulted the board for conflating the broader project financing with the specific tender structure.

While the Olkaria VII project is co-financed by multiple partners, including KenGen and other development agencies, the consultancy tender was expressly tied to EIB funding.

The court said the absence of EIB approval meant the procurement could not legally progress, regardless of other funding sources for the wider project.

‘Funding for the overall project does not equate to availability of financing for this particular tender,’ the court noted.

It warned that compelling KenGen to proceed without confirmed financing would expose the public entity to unlawful financial commitments.

The court stressed that public procurement must align with constitutional principles on prudent use of public funds.

‘It would be irrational and unlawful to compel progression of a process that cannot be implemented,’ the judge said.

The decision effectively restores KenGen’s termination of the tender and halts the procurement unless the financier reverses its position or new funding arrangements are secured.