Category: Business Daily

The National Treasury eyes Sh42.26 billion toll deals for two major bypass roads in Nairobi and Mombasa under concession terms.

Disclosures show that the Nairobi Southern Bypass, which is complete and in use, is earmarked for a Sh12.265 billion operations, maintenance and tolling concession, while the planned Mombasa Northern Bypass has a proposed investment value of Sh30 billion under a ‘user- tolls; viability gap funding (VGF) financed’ model. The ‘user-pay: tolls’ model for the Southern Bypass means that instead of using general taxpayer money to fund a project, only the motorists or citizens who actually utilise the infrastructure pay for its operations, maintenance and tolling concessions.

In the case of the planned Mombasa Northern Bypass project, the ‘user tolls: VGF’ model means that the construction costs would be split between government grants and private funding, and the private investors would later recover their money directly by charging the public a fee (toll) to use it.

The Treasury said a proposal by the Kenya National Highways Authority(KeNHA) to introduce tolls on the Southern Bypass is awaiting approval.

The 28.6-kilometre Southern Bypass links Nairobi and Kiambu counties through Langata and Kikuyu suburbs.

Mombasa Northern Bypass is a planned 38.6-kilometre road infrastructure project by KeNHA, which is aimed at easing traffic congestion and improving freight movement in Mombasa County.

The road project will have two sections, including the main Mombasa Northern Bypass (27.1 km), which connects the Mombasa-Nairobi Highway (A8) at Miritini to the Mombasa-Malindi Road (A7) at Kwa Kadzengo, Mtwapa.

The second component, known as Bamburi Link Road (11.5 km), links the new bypass to the Mombasa-Malindi Road (A7) at Bamburi.

The proposed concessions would add to the toll-road user charges on the 27-kilometre Nairobi Expressway, where motorists pay between Sh170 and Sh500 depending on the distance travelled and vehicle category.

The government is also pursuing tolling proposals for other major roads, including the Dongo Kundu Bypass in Mombasa, as it seeks to recover infrastructure costs, sustain completed assets and mobilise resources for new projects.

Treasury has also estimated a road infrastructure funding deficit of Sh1.5 trillion over five years and Sh4 trillion over a decade.

The government published a draft tolling policy in March 2026 as it sought to establish a framework for collecting road-user charges to supplement the existing financing mechanisms, including the Roads Maintenance Levy Fund, which is funded through a Sh25 charge on every litre of petrol and diesel.

Besides the Southern Bypass, Nairobi also hosts the 21km Nairobi Northern Bypass highway that serves as a ring road around Nairobi, connecting Ruaka on Limuru Road to Ruiru on Thika Road and the Eastern Bypass.

The Nairobi Northern Bypass traverses areas such as Runda, with an overpass spanning Kiambu Road, Thome Estate, Kahawa West, Githurai, and Ngumba Estate before reaching its eastern terminus.

The city also has the Western Bypass, which is a four-lane dual carriageway that connects the Nairobi Southern Bypass at Gitaru to the Northern Bypass at Ruaka. It passes through major hubs like Wangige, Kihara, and Ndenderu, serving as the final ring road to decongest Nairobi.

On September 17, the High Court handed down a judgment that will shape how Kenya structures public-private partnerships (PPPs) for years to come.

In the petition brought by the Katiba Institute, Justice Nyaundi declared sections 59, 60 and 72(1) of the Public Private Partnerships Act, 2021 unconstitutional to the extent they allow PPP projects that create government expenditure, guarantees, public debt or other public liability to proceed without parliamentary approval.

Parliament need not approve the project itself, but it must approve the spending and commitments that come with it.

The hard question is, with Kenya increasingly relying on private capital to build infrastructure, what message does the ruling send to investors, lenders and project sponsors that the country depends on? PPPs involve collaboration between a government agency and a private-sector company.

They can be used to finance, build, and operate projects, such as public transportation networks, parks, and convention centres.

The court rejected the proposition that structuring a transaction as a “PPP” can, by itself, take it outside Parliament’s oversight of public expenditure.

The test is whether the arrangement, in substance, exposes the national government to spending, borrowing, a guarantee or other public liability. If so, the court held that parliamentary approval is constitutionally required, regardless of the structure adopted for the transaction.

The PPP Committee was created under Kenya’s PPP framework in 2013 and re-established under the 2021 Act. Under the Act, PPPs do not need prior parliamentary approval, and Katiba Institute argued that leaving final approval with the PPP Committee shuts Parliament out of decisions that commit public funds.

There were counter arguments that Parliament stays informed through annual reports, but the court held that this does not meet the constitutional requirement of oversight. This being the case, the PPP Committee’s sign off will no longer be the last word in the case of PPPs that put public money or guarantees on the line.

This ruling could change the picture for one instrument in particular: the Letter of Support. Letters of Support have long been a compromise instrument providing lenders and investors comfort that government stands behind a project without the rigours, cost and time required for a full sovereign guarantee.

The court names government support measures such as Letters of Support as arrangements that can expose the State to substantial fiscal obligations. This being the case, where a letter contains provisions that work like or may be construed as a guarantee, it may need to be treated, and approved, as one, regardless of its name.

This may have practical consequences for how these instruments get negotiated going forward. Sponsors and lenders will likely push for Letters of Support with genuine payment obligations because that is what makes a project bankable.

They will however have to allow for additional time for parliamentary approval, rather than relying on PPP Committee sign-off alone. Contracting authorities on the other hand may try to draft support provisions that stop short of binding payment commitments, to keep the instrument outside the scope of parliamentary approval.

Whether that satisfies lenders and investors is a separate question altogether.

The court suspended its declaration of invalidity for six months to let Parliament make the necessary amendments. The challenge for Parliament is therefore how to strengthen oversight without undermining investor confidence.

Investors and lenders will be watching for clear guidance as to how parliamentary oversight will be exercised, which support arrangements need approval, a predictable timetable for getting it, and how projects already at an advanced stage will be treated.

Getting this right could strengthen Kenya’s PPP regime but getting it wrong could give way to hesitation by investors and financiers.

As for now, expect longer negotiation cycles in the near term as both sides work out how to navigate the new requirement, at least until Parliament’s amendment gives the market clearer direction.

State-backed pension schemes, including the National Social Security Fund (NSSF), failed in their push to sell Kenya Pipeline Company (KPC) shares to Aliko Dangote at Sh9.50 a piece, with the 46 cents difference having threatened to kill the deal.

Mr Dangote, Africa’s richest man, had threatened to walk away from the transaction if the fund managers acting for the pension schemes insisted on demanding a 5.3 percent premium on the shares’ market price at the Nairobi bourse, say the deal makers familiar with the deal.

In the end, the pension schemes accepted Sh9.04 per share, a small premium on the KPC’s market price of Sh9.02.

Mr Dangote sweetened the deal by forgoing the dividends he would have earned for closing the deal before closure of KPC books, ceding Sh1.4 billion to the eight pension schemes that sold the tycoon 24.7 percent stake for Sh42.5 billion.

KPC declared a dividend of Sh0.32 a share that was to be paid to investors on the firm’s books by November 30.

Mr Dangote offered to factor in the Sh1.4 billion dividend or Sh0.32 on the offer prices, pushing the cost of the deal to Sh9.36.

He snatched the Sh42.5 billion KPC share purchase deal from global oil majors who dragged their feet when presented with the opportunity to acquire the 24.7 percent stake in the newly listed firm.

Kenne Belgrad, the managing director of Rock Investment Bank, which acted as the selling broker, argues the final price of Sh9.36 was a fair valuation of KPC shares, insisting that there was no other premium to be extracted from the deal.

The NSSF, the Public Service Superannuation Fund (PSSF) and the County Pension Fund (CPF) sold part of their stakes in KPC while smaller schemes including Lapfund, Laptrust, Kenya Power Pension Scheme and the Kenya Ports Authority (KPA) Pension Scheme made full exits.

The Unclaimed Financial Assets Authority (UFAA) and Kenya Re Insurance Corporation did not sell any shares.

The broker says they engaged with fund managers acting on behalf of the holders and not the entities.

UFAA and Kenya Re have no external fund managers, explaining why they were left out of the transaction.

‘We began initial discussions with Dangote with an asking price of Sh10 and then brought it down to Sh9.50. Even after four rounds of negotiations, he (Dangote) did not accept that price,’ Mr Belgrade told the Business Daily in an interview.

He dismissed claims that the pension schemes lost money in the deal, arguing that the transaction costs were capped at around one percent of the transaction.

The State-backed agencies, the NSSF, the PSSF, CPF and UFAA, had a combined stake of 38.35 percent.

Others were pension funds in parastatals such as Kenya Power, KPC and Kenya Ports Authority (KPA).

Their combined stake has been cut to less than 15 percent, altering the ownership of KPC, less than eight months since its listing on the Nairobi Securities Exchange (NSE).

‘At Sh9.36, you have a four percent return for the holding period, translating to an annualised return of eight percent, which is above inflation. Even after adjusting for a maximum one percent transaction costs, you still get a return close to the prevailing T-bill rates,’ said Mr Belgrad.

‘The narrative that money was lost is misguided and malicious. Reading from the lens of an investor, chasing the dividend earlier was the right thing to do as the cash can be allocated elsewhere instead of waiting to receive the same 32 cents in December with a static share price of Sh9.’

KPC share remained little changed at the NSE when compared to its IPO price of Sh9.

But the share has rallied post the sale of the 24.76 percent stake. It continued rallying on Friday, reaching an all-time high of Sh10.55 at the close of trading on Friday, signalling the Dangote investment as a vote of confidence in KPC.

KPC opened trading at Sh9 a piece on the day the Dangote transaction was executed.

Mr Dangote’s presence at KPC has been likened to strategic Vodacom ownership at Safaricom Plc-with the South African telecom giant viewed as an anchor steward of the Kenyan telco.

With the acquisition, Mr Dangote is now the second-largest shareholder of KPC behind the Kenyan government, which retained a 35 percent stake in the company at the IPO.

The government of Uganda holds a further 20.15 percent through the Uganda National Oil Corporation (UNOC).

No other shareholder holds a significant stake, with the ownership of local pension schemes combined falling below 15 percent.

Mr Dangote is set to nominate a director to the board of KPC, handing him influence and voting rights on the strategic direction of the firm, having attained a significant stake in line with the company’s articles of association.

‘So long as oil marketing companies (OMCs) jointly, or any other shareholder, hold at least 20 percent of the issued share capital of the company, 30 days before the date of each annual general meeting shall be entitled to nominate one director to the board (the institutional director),’ reads part of KPC’s articles of association.

Murang’a, Kirinyaga and Nyeri are reporting imported malaria cases, making it harder for them to eradicate the disease even as confirmed infections have increased.

According to health sector data, Murang’a recorded a 92 percent increase in confirmed outpatient malaria cases between 2021 and September 2026, while cases in Kirinyaga rose by 33 percent and in Nyeri by 12 percent.

However, the latest data does not specify the counties or regions where the imported infections in the three counties are originating.

Imported malaria occurs when a person contracts the infection in one area but is diagnosed in another. Infected travellers can carry the parasite into counties with low local transmission, where mosquitoes may spread it to others.

These infections may be linked to travel from regions with higher malaria transmission, including areas around Lake Victoria and the coast.

These three counties, alongside Laikipia and Nyandarua, are among the five targeted by the government for malaria elimination by 2027/28.

Earlier in the year, the Principal Secretary for Public Health, Mary Muthoni, said that Kirinyaga had recorded near-zero malaria cases acquired through local transmission in recent years.

‘Kirinyaga has recorded near-zero indigenous cases in recent years and is part of the Mt Kenya region counties targeted for elimination,’ she said.

Nationally, confirmed outpatient malaria cases declined from 5.54 million in 2023 to 3.64 million in the 12 months to September 2026. The confirmed case rate also fell from 104.4 per 1,000 people in 2023 to 64.2 in the latest reporting period.

“The changes deserve investigation”

Despite the national decline, 12 counties recorded increases in confirmed cases, while 35 registered reductions.

‘Most counties recorded fewer confirmed malaria cases than in 2021, but increases were concentrated in 12 counties.’ Mandera had the largest percentage rise, followed by Homa Bay and Murang’a. These changes deserve investigation, particularly given that the increase in cases also represents a substantial number of patients,’ the health sector document stated.

Mandera recorded the largest percentage increase in confirmed cases, at 362 percent, followed by Homa Bay at 142 percent and Murang’a at 92 percent.

This trend was also evident in the malaria rate, relative to the population size. Six counties recorded higher confirmed rates per 1,000 people: Mandera, Homa Bay, Murang’a, Marsabit, Kirinyaga and Turkana. Wajir and Migori remained relatively stable, while the other counties recorded declines.

‘Six counties recorded higher confirmed malaria rates per 1,000 people: Mandera, Homa Bay, Murang’a, Marsabit, Kirinyaga and Turkana. Wajir and Migori remained relatively stable. The remaining counties recorded reductions, although continued surveillance is needed to understand local differences,’ the document stated.

The Treasury has committed to uncovering secret owners of companies as part of measures to exit the money laundering grey list and boost the country’s economic turnaround.

The plan, outlined in the draft 2027 Budget Policy Statement, seeks to improve beneficial ownership transparency, helping authorities identify the individuals who ultimately own or control companies and trace suspicious financial transactions.

Kenya has struggled to comply fully with regulations that demand disclosing the identities of secret shareholders who control more than 10 percent in firms to the Attorney-General through the Business Registration Service (BRS).

The requirement for filing beneficial ownership information seeks to cover risks of the entities being misused to facilitate criminal activity such as corruption, money laundering, financing of terrorism and the proliferation of tax evasion.

The international crime watchdog Financial Action Task Force (FATF) placed Kenya on its “grey list” of countries that require special scrutiny in 2024 on concerns about money laundering and terrorist financing.

The Treasury push comes after FATF maintained Kenya’s grey-list status in June, more than two years after the country was placed under increased monitoring in February 2024.

The details required for filing in the beneficial ownership disclosures include the names of the substantial shareholder, KRA PIN, National ID or passport copies, postal address, residential address, occupation, telephone number and the date when the investor became a beneficial owner.

‘The National Treasury chairs the National Taskforce on AML/CFT/CPF and will continue to lead a Whole-of-Government effort to complete the remaining items in the FATF Action Plan,’ the Treasury writes in the draft 2027 Budget Policy Statement (BPS).

Countries on the list undergo increased monitoring and must actively work with the FATF, a body that groups countries from the United States to China to tackle financial crime, to correct deficiencies. Research suggests an upgrade from the grey list could trigger more foreign direct investment.

The greater disclosure push also targets trusts, following the enactment of the Trust Administration Act, 2026, which requires existing trusts to submit registers of their beneficial owners within 24 months of the law coming into force.

The law, enacted in September, provides for ownership information to be accessible to authorities such as the Financial Reporting Centre (FRC) and reporting institutions, including financial institutions and designated non-financial businesses and professions.

Greater transparency is intended to make it harder for individuals to conceal their interests behind legal entities, helping authorities investigate suspicious transactions and identify people who benefit from potentially illicit financial flows.

Beneficial ownership requirements already apply to companies trading with the government, partly to expose individuals who secretly benefit from fatty public contracts, including politically exposed persons and public officials.

The Treasury’s latest commitments come as Kenya seeks to end increased monitoring imposed in February 2024 over deficiencies in its efforts to combat money laundering and terrorism financing.

FRC Director-General Naphtaly Rono told Parliament earlier this month that Kenya had addressed 19 of the 21 items in the country’s FATF action plan.

‘Where we are in our efforts to delist from the grey list as a country is …a fairly good place,’ Mr Rono told the National Assembly Committee on Delegated Legislation.

‘We are optimistic that with the momentum and with the support from yourselves and the other stakeholders, we should be able to exit the grey list by April next year,’ he added.

The plan on secret company owners is part of reforms aimed at stepping up money laundering investigations and prosecutions, strengthening the use of financial intelligence and tightening oversight of financial institutions through risk-based supervision.

The government also intends to introduce risk-based regulation of non-profit organisations, which can be vulnerable to abuse for terrorism financing, and align its targeted financial sanctions framework with FATF standards.

These measures build on legislative changes, including the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2025, and the Virtual Asset Service Providers Act, 2025, which established a framework for licensing and supervising digital asset firms such as cryptocurrency firms.

The Public Benefit Organisations Regulatory Authority has said Kenya’s grey listing reflected deficiencies in prosecuting money laundering and terrorism financing offences, regulating non-profit organisations, addressing virtual asset risks and enforcing beneficial ownership requirements.

Despite the reforms, risks persist in sectors exposed to illicit financial flows. A 2025 FRC risk assessment found that 282 of 442 entities profiled across four sectors fell into medium- or high-risk categories.

Real estate recorded the highest exposure, with 153 agencies classified as medium or high risk, compared with 40 rated low risk. Law firms followed, with 74 firms in the medium-to-high-risk category and 12 considered low risk.

The findings underline the challenge of ensuring that new laws and tighter supervision translate into effective enforcement, stronger investigations and successful prosecutions.

The Treasury says it will continue reporting progress to FATF and the Eastern and Southern Africa Anti-Money Laundering Group as Kenya works to complete its action plan.

‘Safeguarding the integrity of Kenya’s financial system remains a priority, given its importance for investor confidence, correspondent banking relationships and the cost of external financing,’ the Treasury says in the draft 2027 budget plan.

Kenyan businesses are moving from using artificial intelligence (AI) for simple tasks like answering customer questions to deploying systems that can execute tasks on their behalf, and experts point to an emerging cybersecurity challenge – how to protect the digital identities and privileges granted to these AI agents.

Conventional chatbots such as ChatGPT, Gemini and Claude mainly generate responses. But AI agents can be connected to company applications, databases and internal systems to perform tasks with limited human intervention.

This makes them useful for automating business processes, but also creates another potential entry point for cybercriminals if their access is compromised or poorly controlled.

For Kenyan businesses adopting AI to streamline operations, an agent with extensive permissions could expose sensitive information or allow an attacker to move deeper into corporate systems if its identity is hijacked.

‘AI agents are what we call privileged users in your environment,’ Robert Ng’etich, the team lead for threat intelligence in East Africa at the global IT services firm NTT Data, told the Business Daily.

‘For such users, one of the biggest risks they present is that if their identities are compromised, they can lead to a broader business compromise.’

The risk reflects a wider shift in cybersecurity, where attackers increasingly exploit existing identities and login credentials rather than relying only on technical vulnerabilities to break into systems.

Using legitimate credentials can help hackers disguise their actions as routine user activity, making it harder for organisations to identify an intrusion.

Because AI agents gain access to business applications and data, cyber experts say companies will need to extend identity protection and access controls to these non-human users, just as they do for employees and other privileged accounts.

This includes ensuring that agents have access only to the information and systems needed for their assigned tasks, monitoring their activity and protecting the credentials that allow them to operate. An agent that can access several business systems may become an attractive target if its permissions are not carefully managed.

The threat is emerging as cybercriminals increasingly harness AI to improve the speed, scale and credibility of their attacks.

The Communications Authority of Kenya (CA) detected 11.1 billion cyber-threat incidents in the year to June 2026, a 29 percent increase from 8.6 billion a year earlier.

Distributed denial-of-service attacks, where hackers flood websites, servers and networks with huge volumes of malicious traffic to make them inaccessible, rose 114.3 percent to 72.16 million in the year ended June 2026, up from 33.68 million a year earlier.

This was the highest growth among the cyber threats tracked by the regulator, highlighting the growing exposure of businesses and public systems as more services move online.

Web application attacks targeting flaws, poor coding, or security gaps in websites, web services, and application programme interfaces increased 99 percent to 51.51 million, from 25.89 million in the previous year.

Cyber experts say attackers are using AI to generate more convincing phishing messages, translate scams into local languages such as Swahili, and create deepfake voices and videos that imitate real people.

These techniques can be used to trick employees into disclosing information, authorising payments or carrying out instructions they believe came from a colleague or senior executive.

‘Before, it used to take a lot of time for attackers to find ways to exploit systems. But now, with the help of AI, what would have taken maybe three weeks to one month is now taking hours,’ said Mr Ng’etich.

‘We are seeing a lot more attacks on websites and other systems because attackers are using AI to enhance their vulnerability research, increasing the speed with which they are finding loopholes.’

Still, the same technology is being adopted by cybersecurity teams to strengthen their defences, setting up a contest in which both sides are seeking to improve their speed and effectiveness.

Security operations centres (SOCs), which monitor networks and investigate suspicious activity, are using AI to analyse and correlate far more signals than human analysts could reasonably examine manually.

Events such as a user login, access to a file and other seemingly minor activities can be assessed together to reveal patterns that might indicate a wider attack.

Mr Ng’etich says AI can help security teams examine hundreds of data points and connect events that, viewed individually, may appear insignificant.

‘We can also do summaries using AI, report on incidents using AI, whether to technical or executive teams in a business,’ he said.

‘The SOC is also able to use AI for vulnerability search too, the same way as attackers. And because of that, they can arrest, or they can address vulnerabilities at a much faster pace.’

Security practitioners are also deploying AI agents to handle repetitive work, including case summaries, event correlation, prioritisation and certain standardised responses, such as blocking elements associated with an attack.

The aim, he says, is not to replace human analysts but to help them respond more quickly and concentrate on decisions that require judgement. It increases the volume of security events they investigate and shortens the time between detecting a threat and taking action.

The High Court dismissed a petition by the owners of Nairobi’s 14 Riverside complex, which houses the DusitD2 hotel, challenging part of the Banking Act that excludes judgment debtors from protection against runaway interest.

Cape Holdings and its directors challenged Section 44A(4) of the Banking Act, which excludes judgment debts and court decrees from the in duplum rule. The in duplum rule is a legal protection that caps the total recoverable interest, fees, and charges on a non-performing loan at an amount equal to the outstanding principal. This means that once the unpaid interest equals the principal debt, it stops accumulating for recovery purposes, preventing borrowers from being trapped in endless debt cycles.

The court, however, upheld Synergy Industrial Credit Limited’s objection, ruling that Cape Holdings attempted to reopen a dispute that had been determined through a constitutional petition.

‘It is evident that the Petition is yet another attempt to avoid complying with and settling the arbitral award, now crystallised as a decree of the Court. This Court cannot consider the Petition in isolation from the extensive litigation history that frames it,’ the court said.

The dismissal leaves Cape Holdings facing the prospect of having its 14 Riverside Drive development auctioned to recover the Sh10.6 billion debt, which has grown from an original Sh570 million.

‘The court has previously pronounced itself on the applicability of articles 10(2b), 25, 40, and 50 to the decree. The claim that this is a constitutional challenge to section 44 of the Banking Act cannot, therefore, salvage this petition,’ the court said.

The judge held that the prayers sought by Cape Holdings showed that the company attempted to relitigate issues that had already been determined conclusively.

‘In conclusion, the preliminary objection is upheld on the ground that the matter is res judicata and accordingly the petition is dismissed. Costs are awarded to the first respondent (Synergy),’ the court said.

Cape Holdings has signalled its intention to appeal against the ruling.

The company had asked the court to determine whether enforcing the debt, now calculated at more than Sh10.6 billion, against the entire 14 Riverside Drive development would disproportionately limit its right to property under Article 40 of the Constitution, in a manner that cannot be justified under Article 24.

Cape Holdings argued that the debt exceeds the development’s estimated value of Sh7.3 billion as of October 2025, despite the original transaction involving only one block within the complex.

The petition arose from a long-running commercial dispute between Cape Holdings and Synergy over an aborted transaction involving a block in the 14 Riverside Drive development in Nairobi.

Cape Holdings told the court that about Sh9.013 billion of the amount claimed comprises compound interest, accounting for approximately 84 per cent of the total debt.

The company argued that the interest had grown far beyond the original award and that the debt now exceeds the property’s open-market value, raising questions about the proportionality of the proposed enforcement.

Synergy opposed the petition and asked the court to strike it out.

Earlier this month, the court ruled that the procedures followed by Synergy and Moran Auctioneers in a proposed public auction scheduled for May 26, 2026, were defective and invalid.

However, the judge said Synergy could issue fresh notices and execution documents, provided they complied with the law.

‘I have carefully considered the material record. I find that contrary to Synergy’s submission, the execution instruments relied upon were defective,’ the judge said.

The court declared invalid the notification of sale, warrants of sale, auctioneer’s notice and advertisement.

The Insurance Regulatory Authority (IRA) and the Retirement Benefits Authority (RBA) plan a lifetime health cover for retirees, which would allow the pensioners to pay for it using their accumulated post-retirement medical savings.

The regulators say the plan aims to reduce the risk of exhausting their funds, as is common under the current model of buying annual medical covers.

The IRA and the RBA say the market currently lacks medical insurance products that operate like an annuity, allowing workers to use their savings to secure cover for the rest of their lives after retirement.

They said the absence of such a product forces retirees to rely on their post-retirement medical funds to buy annual health insurance, which can be costly and subject to premium increases as the risk of illness rises. This exposes retirees to the risk of depleting their medical savings within a few years of leaving employment, potentially leaving them without adequate funds to meet healthcare costs in old age.

The two regulators now want to engage industry players, including insurers and actuaries, in developing products that would allow retirees to convert their accumulated post-retirement medical savings into a single premium for lifetime health insurance.

‘We are assessing whether insurers, including the Social Health Insurance Fund, would be willing and able to develop medical insurance that covers retirees for the rest of their lives,’ Peter Mugambi Muthuri, the principal officer for the supervision directorate at RBA, said on Thursday during a stakeholder meeting convened by Liaison Group.

‘If insurers are willing to take an annuity and make payments for the rest of a person’s life, there is a possibility they could also be willing to cover medical needs from the age of 60 until death through a single premium.’

RBA data shows contributions to the post-retirement medical fund hit Sh220.7 million at the end of June 2026 from Sh164.6 million in a similar period, pointing to continued uptake.

Mr Muthuri said there have been questions about the adequacy of the contributions to fund annual medical covers once members retire, prompting the need for reforms.

Kalai Musee, the director of supervision at the IRA, said the proposal for a single premium to cover retirees’ medical needs for the rest of their lives is under consideration. He expects such products to encourage uptake of savings in the medical schemes.

‘The IRA commissioner sits on the RBA board, while the RBA chief executive sits on the IRA board, so discussions are ongoing. Instead of buying cover every year, the proposed model would provide cover for multiple years, mirroring what is done with annuities,’ said Mr Musee.

He explained that insurers are free to develop such products, but would require actuarial studies before introducing them in the market.

Millicent Onditi, chairperson of the board of trustees at the Kenya Utalii College Pension Scheme, said shifting to multi-year medical cover would help distinguish post-retirement medical funds from ordinary pension savings, which many retirees also end up utilising on healthcare costs.

‘We need a roadmap on how this fund can be futuristic. The current model where you save and once you retire you start buying annual medical covers is not sustainable. This will ensure those retiring do not deplete this fund and turn to pension and end up exposed,’ she said.

Customer inquiries

Dennis Karanja, general manager for regional business at Liaison Group, said there have been inquiries from customers about the structuring of the post-medical insurance covers, pointing to the need for the insurance industry to respond through multi-year covers.

‘The question is no longer just whether one is insured or not. It is about the quality of the cover and whether it can absorb shocks. The post-retirement medical fund was crafted to secure workers’ health in retirement, and therefore any gaps speak to the need for changes,’ said Mr Karanja.

Retirement Benefits Regulation was amended in 2016 to allow members of retirement benefit schemes to make additional voluntary contributions to a medical fund for accessing medical benefits in retirement.

The RBA Act was amended in 2023 to formally recognise post-retirement medical schemes, followed by the gazettement of regulations for such schemes in August 2026. As at the end of September, there were 97 active schemes, with 19 sponsored by employers.

Kenyan banks fell off the list of the fastest-growing lenders in Africa, a new ranking by Financial Times (FT) showed, partly due to a stable shilling against the dollar.

The FT’s latest listing of the World’s top 1000 banks shows no Kenyan lender made it to the list of the top 10 highest movers.

Last year, four Kenyan banks ranked among the fastest-growing lenders in Africa, with KCB Group leading the pack followed by Co-op Bank, Equity Group and NCBA.

‘The dramatic dollar gains the Kenyan banking sector enjoyed in 2024 thanks to the strengthening of the shilling were not repeated last year, with the currency largely unchanged against the greenback due to the central bank’s ‘crawling peg’ strategy,’ said The Banker.

‘The stability of the shilling saw Kenyan lenders slip down the rankings at the expense of other lenders in countries where currencies strengthened against the dollar, even as all but one (Standard Chartered Bank Kenya, whose capital position slipped) recorded increases in Tier 1 capital, assets and pre-tax profits,’ it added.

The shilling had traded in a tight band of Sh129.00 to Sh129.92 against the dollar -the most widely used currency in global transactions– for an extended period.

Kenya’s two dominant lenders, KCB Group and Equity Bank, both slipped by two places in Africa rankings, to 15th and 17th, respectively, despite rising in the global rankings.

Globally, KCB Group ranked at position 542, up from 590, while Equity was at position 573 compared to 590 the previous year.

I and M debuted on the list of the world’s largest banks that is published by FT’s The Banker magazine at position 945 which also had Co-operative Bank (842) and NCBA ranked 924.

The Banker ranks the world’s top lenders based on a number of parameters including the size of shareholders’ own capital (tier 1 capital), profitability, operational efficiency, asset quality, liquidity and return on risk.

Kenyan banks also missed out in the list of African banks with the top five return on assets – a parameter they previously dominated at a continental and global platform. Return on assets measures the efficiency of a bank.

The measure is largely driven by wide interest spreads, with the fall of Kenyan banks from the list signalling a narrowing of the spread in the country.

Kenyan banks were replaced on the list by lenders from Nigeria, Egypt and Morocco, which benefited from gains of their local currencies compared to the greenback.

‘Following the sharp devaluation of the naira from 2023, the Central Bank of Nigeria in March 2024 significantly increased paid-in capital requirements for commercial, merchant and non-interest banks in 2024, obliging banks to change their licence status, inject additional equity or pursue mergers,’ said The Banker.

‘Widespread equity raising by lenders saw Tier 1 capital increase by 36 per cent in dollar terms during the year, with Stanbic IBTC Holdings, Standard Chartered Nigeria and Access Holding posting the largest overall gains,’ it added.

Access Bank, which acquired National Bank of Kenya from KCB Group to deepen its presence in Kenya, and Zenith Bank, which acquired Paramount Bank to enter the Kenyan market, are some of the lenders who improved their rankings, overtaking Kenyan banks.

Fourteen of the banks ranked among the top 25 lenders in Africa have a presence in Kenya, underlining the lure of the Kenyan market as a launch pad into the East African market and the competitiveness of its banking sector.

Standard Bank Group, which retained its ranking as the top bank in the country, has a presence in the country through its subsidiary Stanbic Bank. Others are South African Absa Group, which ranked third; Nedbank, which bought into NCBA Bank, positioned 5th; Moroccan Bank of Africa (7th) and CIB Egypt (8th).

Kenyan banks are yet to expand to South and West African nations owing largely to their smaller size.

The Eastern African nations where Kenyan lenders have presence have been cash cows owing to their low financial inclusion that has allowed the banks to exercise technological advantage to reap huge.

Markets such as the Democratic Republic of Congo and South Sudan are considered to be volatile, limiting the number of entrants and allowing for wider margins to compensate for the risk.

Kenya has bought a building hosting its High Commission in London for £16,250,000 (Sh2.8 billion) as Nairobi shifts to property ownership for its diplomatic missions abroad to cut rental costs.

A report tabled in Parliament shows that Kenya has already paid for the property located at 45 Portland Place and is awaiting registration and transfer of the title of the property. The building has been purchased under a 999-year lease.

The purchase of the premises will save Kenya Sh103million in annual rent, disclosures showed.

‘The Government of Kenya has now successfully secured a long-term lease interest in the property through acquisition of a 999-year lease at a total cost of approximately £16,250,000 (Sh2.84 billion). The mission is waiting for the title documents from the HRM registry,’ the National Assembly committee on Defence and Foreign Relations says in the report.

‘The full purchase price has been paid, and the conveyance process, including transfer and registration of title, is ongoing’

The purchase of the building marks a shift where Kenya is now purchasing properties for the offices and residences of its diplomatic missions in efforts to reduce the rental costs that are estimated at above Sh3 billion annually.

Rising rent prices and renovation costs are a major headache for Kenya, a matter worsened by budget cuts for these foreign missions.

Kenya launched a phased programme to purchase property for its diplomatic missions in September 2021, with the acquisitions set to be staggered over 15 years.

Besides London, Kenya also bought property for the mission in New York and is also set to complete a similar deal for the also keen to buy property for its envoy in Geneva, Switzerland.

Geneva, New York and London attract some of the steepest rents in the world, underscoring why buying properties in these cities will be instrumental in cutting the rent costs that Kenya incurs every year.

The mission in London had operated from the property on a 67-year lease that expired in October 2021. Kenya then re-negotiated to continue using the residence by paying £350,000 (Sh60.87 million) in rent with an agreement to buy the property.

The market rent of the property was £568,250 (Sh98.4 million) but Kenya secured a lower rate of £350,000 (Sh60.87 million) on the promise to purchase it permanently.

Efforts to purchase a permanent chancery in London started in October 2021, but the first attempt failed after the tender was declared unresponsive.

A second attempt was made the following year but would be cancelled in May 2023 due to procedural concerns tied to the political transition after the 2022 General Elections.

‘Owning the Chancery in London supports prudent financial management by eliminating exposure to escalating rental costs in a high-value property, thereby delivering long-term cost efficiency and value for money,’ the committee says in the report.

Besides the London Chancery along 45 Portland Place, Kenya also owns a property along 78 Winnington Road and another along 48 Connaught Drive, both in London and which are owned on a freehold basis.

The property along 78 Winnington Road is the official residence of the High Commissioner to the UK, while the one along 48 Connaught Drive is the official residence of the Deputy Chief of Mission.

Besides buying properties, plans to facelift of its diplomatic missions in six African countries under a public-private partnership (PPP) arrangement as part of a policy shift aimed at easing reliance on Exchequer funding.

As part of the policy shift, Kenya targets a new arrangement whereby private investors will build, rehabilitate, and maintain diplomatic properties in Cairo, Lusaka, Harare, Bujumbura, Juba, and Kinshasa under the PPP model.

The works will entail the construction of purpose-built chanceries, consular halls, ambassadorial residences, and staff housing units.

Investors will design and finance the construction of the properties, then maintain them over a concession period to recoup their money before handing them back to the government of Kenya.