Category: Business Daily

The billing for Kenya’s electricity imports from Ethiopia nearly tripled to Sh8.68 billion (Birr 10.45 billion) in the year ended July 2025, signalling the country’s deepening reliance on power supply from Addis Ababa.

Disclosures from Ethiopia Electric Power (EEP) show this was a 187.8 percent increase from Sh3.01 billion (Birr 3.63 billion) the previous year.

Kenya has, in recent years, increased its reliance on Ethiopia to avert blackouts, importing 1,274.42 gigawatt-hours (GWh) in the year ended June 2025.

Kenya recorded six peak electricity demand instances last year, highlighting fast-growing demand driven by economic activity and increased household connections, with customers surpassing 10 million.

Power shift

A freeze on new power purchase agreements worsened Kenya’s generation challenges, forcing the country to rely more on Ethiopia to shore up supply and avert outages.

Without imports from Ethiopia, Kenya Power would likely have been forced to ration electricity more widely, especially during evening peak demand. Peak demand currently stands at 2,439MW, recorded on December 4, 2025.

Increased imports have made Ethiopia the third-largest source of electricity to Kenya Power, with a 9.88 percent share last year, behind Lake Turkana Wind Power (9.97 percent) and KenGen (57.49 percent).

‘Kenya’s spinning reserves (extra unused electricity) are currently below five percent, putting the country on the verge of potentially significant blackouts,’ Principal Secretary for Energy Alex Wachira recently told this publication.

Spinning reserves refer to backup power that is available and ready for rapid deployment during outages. The globally recommended range is between seven percent and 15 percent.

Kenya Power was barred from signing new power purchase agreements in 2018. The moratorium was intended to allow scrutiny of existing contracts blamed for high electricity costs.

However, the freeze – lifted in late 2025 – saw local generation lag behind rising demand, forcing rationing in some areas during evening peaks.

Kenya turned to Ethiopia to prevent a full-blown crisis. The two countries signed a deal in 2023, allowing Ethiopia to supply up to 200MW of relatively cheap power to the national grid.

Kenya pays $0.065 (Sh8.39) per kilowatt-hour, making Ethiopian power the second cheapest after locally produced hydro at Sh3.27 per unit.

Cheaper hydro imports have helped Kenya meet rising demand without significantly increasing consumer tariffs over the past three years.

Supply risk

However, growing dependence on Ethiopian electricity exposes Kenya to risks in the event of supply disruptions.

Kenya Power managing director Joseph Siror recently said the country could face a crisis if major hydropower plants in Ethiopia fail, highlighting the downside of this reliance.

‘My concern is that this is hydropower from these countries, and in a situation where there is serious drought, then they might be left in a position where they might be unable to meet this obligation (supplying electricity),’ Dr Siror said late last year.

Imported electricity has also reduced reliance on costly thermal power plants, particularly during peak demand. Thermal power costs an average of Sh35.09 per unit, making it the most expensive source in the national grid.

The imports have eased pressure on local generation, which has struggled to keep pace with rising demand.

Ethiopia’s contribution is expected to grow further, with imports set to double from the end of this year.

The agreement between EEP and Kenya Power allows imports to rise to 400MW from December, with a review of the unit price scheduled for next year.

Besides Ethiopia, Kenya also has power exchange agreements with Uganda and Tanzania, where the net importer pays the exporting country.

Kenya has largely remained a net importer and pays Uganda an average of $0.09 (Sh11.6) per kilowatt-hour.

Equity Group significantly reduced interest rates on customer deposits to 3.3 percent in 2025 from 8 percent the previous year, leveraging lower funding costs to widen margins and boost profitability during the period.

Disclosures in the bank’s 2025 annual report show that term deposits grew by 4.6 percent, or Sh18.3 billion, to Sh416.05 billion, while non-interest and low-interest deposits rose by 3.5 percent, or Sh35.5 billion, to Sh1.04 trillion.

Banks generally benefited from a decline in funding costs last year as interest rates fell in line with cuts to the Central Bank Rate, which signals the risk-free floor of the cost of money in the economy.

As a result, Equity’s net interest income rose by 16.8 percent to Sh126.94 billion. Interest expense on customer deposits fell by 26.4 percent to Sh35.7 billion, helping the lender lower its overall cost of funding by 24.2 percent to Sh46.7 billion.

The bank reported a 54.6 percent increase in net profit to Sh71.9 billion in 2025.

‘The defensive strategy in growing net interest income was on how to reduce the cost of funding. The topline was not about growth; it was about efficiency. So we reduced our cost of funding by 24 percent,’ said Equity Group chief executive officer James Mwangi when releasing the bank’s financials last month.

Customer deposits

Term deposit accounts typically offer competitive fixed interest rates for a specified period, calculated daily and paid at maturity. Banks use such accounts to attract sticky deposits that can support longer-term lending.

Savings accounts, which allow customers to set aside money regularly, also pay interest but at relatively lower rates compared with term deposits.

Latest Central Bank of Kenya data shows that, at the end of February 2026, the average term deposit rate in the banking sector stood at 6.82 percent, down from 10.45 percent in December 2024. The average savings rate declined to 2.41 percent from 4.25 percent over the same period.

Non-interest-earning accounts include current accounts, whose funds can be accessed on demand but are subject to transaction and monthly maintenance charges. Banks also offer transactional accounts that can be accessed without restrictions or withdrawal limits.

Equity says in its 2025 annual report that retail customers grew their term deposits by a quarter to Sh116.9 billion from Sh92.4 billion in 2024. Their current, savings and transactional deposits, meanwhile, rose from Sh456.9 billion in 2024 to Sh515.3 billion last year.

Corporate customers, on the other hand, reduced term deposits from Sh305.4 billion to Sh299.2 billion, while also cutting holdings in current and savings accounts from Sh546.7 billion to Sh523.7 billion.

The lender’s total customer deposits grew by 3.8 percent to Sh1.45 trillion over the year.

Overall, tier-one banks increased their combined customer deposits by Sh553 billion to Sh6.18 trillion. Interest expense on these deposits fell by 24 percent to Sh201.83 billion, underscoring the impact of declining interest rates on their books.

The banks’ average spread – the difference between lending and deposit rates – was 7.51 percent in December 2025, compared with 6.44 percent a year earlier.

Last year marked a shift from 2024, when banks had raised deposit returns to a 26-year high of 11.48 percent to attract customers away from government securities, where bond and Treasury bill rates had risen above 17 percent.

The first quarter of 2026 opened with a fresh external shock following the US-Israel war on Iran, adding to global market uncertainty.

Despite this, the Central Bank of Kenya (CBK) has continued its rate-cutting cycle, signalling a supportive environment for investors.

In this episode of the Make Money podcast, Teddy Irungu, Head of Research at Rock Advisors Investment Bank, breaks down the Q1 2026 investing scorecard, examining market resilience, the outlook for the Nairobi Securities Exchange (NSE) and where opportunities still lie.

Residential property developer, Mi Vida Homes, has launched a Sh5.6 billion ($42 million) project in Tatu City, marking its entry into Kenya’s luxury housing segment.

The development, known as 156 Elara, will comprise 156 low-density townhouses on five acres.

“Our entry into the premium segment with 156 Elara is a deliberate evolution driven by market maturity and growing demand for low-density, high-quality homes,” said Samuel Kariuki, Mivida Homes, chief executive officer.

The project will have a range of housing units, including three-bedroom duplexes priced at Sh25.6 million and four-bedroom triplexes at Sh44.5 million.

“This strategic expansion positions us to deliver across affordable, mid-market, and luxury tiers over the next five years,” said Mr Kariuki.

Mi Vida said the move is driven by strong sales of high-end homes in the first quarter of 2026.

The project is located in Kiambu County, where satellite towns continue to attract real estate investment due to improved infrastructure and lower land costs.

Tatu City has grown into a key hub, drawing both homeowners and investors.

The development adds to Mi Vida’s projects in Kiambu, including Keza Laika, and supports expansion beyond its traditional focus on mid-market and affordable housing.

Stephen Jennings, founder and CEO of Rendeavour, the company behind Tatu City, said the project will expand housing options in the area.

“With partners such as Mi Vida Homes, we are expanding housing options to meet growing demand driven by migration from traditional urban centres and the rapid growth of Tatu City itself,” he said.

Tatu City currently hosts more than 7,000 residents, with growth expected as more families and businesses relocate.

Mi Vida has previously developed housing projects at Garden City and expanded to locations including Riruta and Ruaka.

The firm has been delivering affordable and mid-market housing, targeting Kenya’s growing middle class with units priced below the luxury bracket while still offering modern amenities and planned-community living.

The company was earlier backed by Actis and Shapoorji Pallonji Kenya, which exited the investment, leaving the developer under local ownership.

The prices of several models of imported second-hand vehicles have risen as high as Sh429,000 due to the controversial computation of import duty, hitting buyers who are now forced to dig deeper into their pockets.

For example, the cost of a Honda Insight 2019 model with a 1500cc engine has jumped to Sh2.6 million from an average of Sh2.2 million, after its duty charge rose to Sh791,000 from Sh362,000.

A 2019 model of the 1200cc electric Nissan Note is now going for an average of Sh1.4 million from Sh1.15 million, after taxes on the unit rose by Sh210,000 to Sh448,000.

Dealers say that new taxes that the Kenya Revenue Authority (KRA) is charging are clouded in secrecy, adding that most of the affected vehicles are not captured in the vehicle price list published in 2019, and which forms the basis of computing taxes for imported used vehicles.

The surge in duties has hit buyers and dealers, triggering slow sales.

The contested computation of the taxes comes at a time when KRA is barred from enforcing the new list that forms the basis of computing taxes (Current Retail Selling Price).

‘You bring a vehicle like a 1000cc Toyota Passo expecting to pay duty of Sh220,000, but then KRA tells you that it is Sh282,000. The small engine models, whose popularity is fast rising, are the most affected,’ Charles Munyori, Secretary General of industry lobby, Kenya Auto Bazaar Association, said.

Most of the affected cars have, over the years, become popular, especially among ride-hailing operators like Uber and Bolt, and the middle class, largely due to their affordability and small engines.

The price of a Toyota Raize 2019 model, with a 1000cc engine, has jumped to an average of Sh2.65 million from Sh2.35 million, mirroring the Sh245,000 rise in duty to Sh518,000.

Duty on an imported used Nissan Dayz 2019 model with an engine of 660cc has jumped by Sh92,000 to Sh247,000, pushing its car-yard price to an average of Sh980,000 from Sh850,000.

‘If a car model is not in the CRSP of 2029, then KRA is mainly using the manufacturer’s retail price in the source market. This has the impact of significantly increasing prices of the cars whose prices went up in the country of origin,’ added another dealer who sought anonymity.

KRA had not responded to queries on the matter, which has since sparked uproar as dealers grappled with reduced orders and increased costs of doing business.

The High Court last year barred KRA from enforcing a new CRSP until the hearing and determination of a case where dealers sued the taxman for lack of sufficient public participation in coming up with the new CRSP.

The new CRSP was to take effect from July 1, 2025, and would have seen prices of some imported used vehicles jump by upwards of 145 percent.

KRA charges five taxes on imported second-hand vehicles. These are import duty of 35 percent, excise duty of between 20-35 percent based on the engine size, and Value Added Tax of 16 percent.

The units also attract an Import declaration fee of 2.5 percent of the customs value and a railway development levy of two percent of the customs value in each case.

The uncertainty arising from disruptions in the flow of goods through the Strait of Hormuz has finally reached Kenya in the form of ‘tail risks.’ Although we all quietly expected it, the announcement of a sharp rise in fuel prices mid this month has still come as a shock.

Economists describe the current situation as a ‘tail risk’ because most models did not anticipate that the blockage of such a narrow waterway would occur, or, if it did, that it would have such far-reaching consequences for global supply chains and financial markets.

Before this war began, few people were familiar with terms like ‘Strait’ or ‘Hormuz.’ Today, phrases such as ‘blocking of the Strait of Hormuz’ have become part of everyday conversation.

Just this week, I overheard someone jokingly threaten to block another person’s ‘Strait of Hormuz.’ I did not follow up to understand what they meant, but the reference itself reflects how quickly global events have entered local discourse.

Beyond the terminology, what we will feel most are the economic consequences arising from the current situation. While the transmission of this shock was initially delayed by the Energy and Petroleum Regulatory Authority (Epra) statutory pricing regime, fuel costs have now caught up with global market prices.

For other cost-areas outside Epra, the effects of this tail risk now have no ‘delayer’.

Transport costs are expected to quickly rise, increasing the cost of moving goods across the country. Manufacturers and farmers, facing higher transport and production expenses, will pass these costs on to consumers.

Ultimately, the costs of goods in supermarket shelves will shortly increase. The result is broad-based, persistent, and systemic cost-push inflation.

In the real economy, consider large corporates with sufficient capital buffers in sectors such as transport, logistics, agriculture, and manufacturing, but which heavily dependent on fuel.

Even if they initially resist raising prices, increased operating costs will quickly erode profitability and capital, potentially pushing them out of business. The rational response, regardless of firm size, is to adjust prices accordingly.

Unlike demand-push inflation, which can be managed through interest rate adjustments, cost-push inflation creates a difficult trade-off between controlling inflation and supporting economic growth.

Raising interest rates may help stabilise prices but risks slowing growth by making borrowing more expensive. Conversely, keeping rates low may support growth but risks weakening the currency and amplifying imported inflation.

On the exchange rate front, higher oil prices have increased Kenya’s import bill, widening the current account deficit. This continues to put downward pressure on the Kenyan shilling. A weaker currency, in turn, makes imports more expensive, reinforcing inflationary pressures.

Rising fuel and food prices are also eroding household disposable income, forcing consumers to prioritise essential spending. As incomes shrink, less money is available for loan repayments. Micro, small, and medium enterprises, particularly those in non-essential sectors, are likely to be among the hardest hit due to declining sales.

As prices rise across the board, demand will likely decline. Reduced demand leads to lower output, delayed investments, and eventually layoffs. Job losses then hitback and reduce household income, further increasing credit risk across the economy.

As incomes fall, borrowers’ credit profiles deteriorate, increasing their probability of default. Under risk-based pricing frameworks, this leads to higher interest rates, which in turn raise loan repayment burdens and further strain household and business finances.

Lenders, facing elevated credit risk, will need to increase provisions, limiting their capacity to extend additional credit to the market.

This is how a geopolitical conflict thousands of kilometres away ultimately imports risks which eventually affects everyone.

Are there other tail risks ahead? No one knows. What is clear, however, is that the impact of Strait of Hormuz disruption on inflation, and the resulting pressure on the broader financial system requires urgent attention.

Motorists are grappling with an inconsistent supply of fuel in the wake of smaller cargo deliveries at the Mombasa port and cash-flow woes facing oil marketers.

A spot-check in Nairobi revealed that several retail outlets owned by majors such as Vivo Energy and Rubis Energie Kenya have been grappling with stock-outs over the past week, with diesel being the most affected.

Oil executives say that smaller cargoes, mainly of diesel since last month have forced oil marketers to share smaller volumes of fuel, reducing the number of days the stocks can last before the next shipment.

For example, diesel cargoes of between 85,000 tonnes and 100,000 tonnes are traditionally delivered at the port of Mombasa. But disruptions due to the US-Israel war on Iran have forced the country to ship in products using smaller vessels, some with a capacity as low as 37,000 tonnes.

‘Most of us do not have enough product. We normally receive big vessels for diesel, but the Middle East disruptions in the global market have forced us to get smaller ones. These hitches will persist up to around early next month when hopefully, the big vessels will come,’ said one of the executives.

‘Our cargoes for diesel are traditionally big, like 85,000 tonnes, but now we are getting vessels of 37,000 tonnes. These small vessels cannot meet our needs, and we are in a situation where much of these are going straight to the pump.’

The war, which broke out in February this year, disrupted global fuel supply chains notably through the closure of the critical Strait of Hormuz and attacks on refineries in the Gulf region.

Besides smaller cargoes, a steep subsidy of Sh23.92 and Sh108.10 per litre of diesel and kerosene, respectively, applied in the monthly cycle ending May 14, 2026, means that marketers have to wait longer for the Sh6.2 billion compensation further hurting their cash flows.

Most oil marketers started experiencing supply hitches early last month after a vessel carrying petrol was stranded at the Port of Jebel Ali in Dubai due to Iran’s blockade of the Strait of Hormuz.

The ship carried 60,000 tonnes, and its inability to deliver the product in Mombasa forced Kenya to seek alternatives to plug the gap and avert a crisis.

‘Vivo Energy has been operating at very thin PMS (petrol) stock (hand to mouth). Due to the current supply uncertainty, we have experienced increased uplift from our retail sites, which has made the situation worse,’ Vivo Energy CEO, Peter Murungi, had said in a letter to the Ministry of Energy Petroleum on March 12, 2026.

Another executive said the big companies are now pushing most of the product to their retail outlets and reducing the volumes available for the small independents in the wholesale market.

Additionally, costly fuel means that most of the dealers for the big marketers are getting less volumes for the same amount of money (credit limits). These stocks last fewer days, and delays in getting fresh deliveries trigger the inconsistent supply.

‘Due to the higher prices of the product, big marketers would rather push more product to their retail stations instead of selling in the wholesale market and waiting for the government subsidy,’ said the executive.

Sources in the industry say big oil marketers have shunned small independent firms and pushed much of their product to their retail outlets in a bid to ease the impact of the subsidy.

Small independent firms own most of the retail outlets outside the major cities, and buy their fuel from the oil majors at subsidised wholesale prices.

Several dealers, contracted by oil majors have also been hit, given that the costly fuel translates to reduced volumes based on their credit limits.

‘Most of the majors operate via the dealership model, and these dealers have credit limits. For example, a dealer with a credit limit of Sh10 million worth of fuel will now get less product because the prices have gone up, but the credit limit is unchanged,’ said an executive.

The cost of fuel that was imported into the country last month was significantly high, pushing oil marketers to spend more to get the product. This has been exacerbated by the steep subsidy that the government has yet to pay them.

Average landed cost (price of product and transport costs) of kerosene skyrocketed by 105.15 percent to $1,311.93 (Sh170,655.85) per cubic metre last month, while a similar quantity of diesel jumped by 68.72 percent to $1,073.82 (Sh139,682.50).

The cost of petrol went up by 41.53 percent to $823.87 (Sh107,169) per cubic metre last month, underscoring the impact of the US-Iran war on global markets.

The Middle East conflict has put pressure on Kenya’s fuel importation structures, forcing the government to seek emergency supplies to avert a crisis.

Kenya imports fuel under a government-backed deal with Saudi Aramco Trading Fujairah, Abu Dhabi’s ADNOC Global Trading Ltd, and Emirates National Oil Company Singapore Ltd.

The fuel is imported on a credit period of 180 days. The three oil majors handpicked a number of local oil marketers to ship the fuel on behalf of the country.

During a recent forum, the CEO of the Retirement Benefits Authority, Charles Machira, set out a clear direction for the pensions industry.

He highlighted priorities that will shape the next phase: innovation with safeguards, expanding coverage, using pension funds to support economic growth, and improving outcomes for members. At the centre of this shift are trustees.

These priorities come at a time when pension assets stand at nearly Sh2.81 trillion. But growth alone is not success when the coverage gap remains Kenya’s biggest challenge. Only about a quarter of Kenya’s workforce is covered by a pension scheme, leaving the majority without structured retirement savings, especially in the informal sector, which accounts for over 80 percent of employment.

This is where the next phase of the sector must focus: expanding access while improving outcomes. Kenya has already shown how innovation can expand access. Mobile money transformed financial inclusion. Today, micro-pension products and digital platforms are extending retirement savings to informal sector workers such as boda boda riders, traders, and small business owners.

But as we adopt innovation, it must be practical. Trustees must ensure these products are simple, affordable, and built for long-term savings. Without this, adoption will remain low.

As coverage expands, the question of returns becomes crucial. Today, pension portfolios remain heavily weighted toward traditional assets. Over 90 percent of funds are still invested in government securities, equities, guaranteed funds, and property. Government securities alone account for more than half of total assets.

While this has provided stability, it also limits growth. Encouragingly, there is a gradual shift. Allocations to private equity, corporate bonds, and other alternative assets are increasing, offering the potential for stronger long-term returns.

This is where trustees play a decisive role to strike the right balance between stability and growth. Too much conservatism erodes value over time, especially in an inflationary environment. Poorly assessed risk, on the other hand, can lead to losses.

The third priority is that as pension funds serve members, they must also serve the economy. Kenya faces an annual infrastructure financing gap exceeding Sh330 billion, pension funds have the assets. We are already seeing pension capital financing infrastructure, real estate, and businesses that create jobs. These investments are shaping Kenya’s development while generating returns for members.

But they must be approached carefully. Trustees must ensure that every allocation is justified, well-structured, and aligned to long-term obligations. The goal is not to follow trends, but to make decisions that improve outcomes for members.

Ultimately, the purpose of a pension system is to provide security in retirement. For many Kenyans, the biggest risks are rising healthcare costs and longer life expectancy. Savings that appear adequate can quickly diminish. Solutions such as post-retirement medical funds and more flexible savings structures are therefore critical, but only if they are well implemented.

Trustees must move beyond a compliance-driven approach and take full responsibility for member outcomes.

It is no longer sufficient to meet regulatory requirements; they must ensure that members are saving enough and that investments deliver consistent performance over time.

This calls for stronger capability, active oversight, and the confidence to challenge decisions to ensure products remain relevant and risks are effectively managed.

The next phase of the pension sector will be defined by whether trustees can expand access, invest more strategically, and focus on delivering meaningful retirement outcomes. Their actions will determine whether the sector fulfills its promise or leaves many Kenyans without adequate support in retirement.

Kenya will buy an additional $25 million (Sh3.23 billion) stake in Africa Finance Corporation (AFC) as the infrastructure development-focused multilateral institution moves to set up its first office outside Nigeria in Nairobi.

President William Ruto said on Wednesday during ongoing ‘The Africa we Build Summit 2026’ in Nairobi, the investment is part of Kenya’s move to continue strengthening regional development finance institutions.

Kenya has been one of the shareholders in AFC since 2017.

The pledge for additional equity came as AFC president and CEO Samaila Zubairu announced that the firm was going to set up a regional office in Nairobi. This will be AFC’s first office outside its headquarters in Lagos.

‘I want to inform AFC fraternity that as you set up office in Nairobi, the Kenya government is going to enhance its equity by $25 million as a demonstration of the confidence we have in African financial institutions,’ said Dr Ruto.

Mr Zubairu, who said AFC reached the agreement with Kenya officials to set up Nairobi office, explained that the office will be the first one outside Nigeria and aims to ride on opportunities in the East African region.

‘This is strategic. Nairobi sits at the heart of a region where trade capital, energy and industrial opportunity are increasingly interconnected. Establishing a presence here will allow us to work more closely with East African governments and partners who are moving from plans to projects and from commitment to capital,’ said Mr Zubairu.

‘It allows us to support what comes next- integrated corridors, regional energy platforms, industrial ecosystems, pipelines and domestic capital mobilisation at scale.’

AFC was created to help Africa nations plug infrastructure gaps via financing. Global shocks and geopolitical shifts have made it harder for African nations to raise funds for development abroad, making it imperative states can draw on internal capital.

But that is not happening enough, according to the AFC’s annual study, the State of Africa’s Infrastructure Report published on Thursday at the start of a two-day meeting in Nairobi.

The talks will try to achieve deals for infrastructure projects in Africa.

Mr Zubairu said domestic funds focused too much on low-risk assets such as government bonds that do not fully translate into productive investments. The need was to invest in infrastructure, which creates jobs and can have wider economic benefits.

“The Africa of will not be shaped by hope alone. It will be shaped by what we build,” he said.

Kenya’s planned fresh equity in AFC follows a similar move in the likes of African Export-Import Bank (Afreximbank), African Development Bank (AfDB) and African Trade and Investment Development Insurance (Atidi) and Trade and Development Bank (TDB) where the country has been increasing its equity.

In 2023, Kenya raised its stake in TDB by about $40 million (Sh5.17 billion), making it among the countries with highest stake in the Bujumbura-based institution. President Ruto said he has held talks with TDB for further injection.

‘We have already discussed how Kenya, being among the highest shareholders of TDB, is going to enhance our equity and shareholding. We are doing it intentionally and deliberately. We will continue as leaders in this continent to continue building our own Africa financial institutions and give them capacity,’ said President Ruto.

AFC has over 47 shareholders including sovereigns, pension funds, banks, and multilaterals across Africa. Since the start of the equity raise in 2018, the corporation has cumulatively mobilised over $1.1 billion (Sh142.1 billion).

The corporation plans to further diversify its shareholding by attracting investment from regional and non-regional institutional investors and double its current capital size to accelerate Africa’s infrastructure development and economic growth.

Technology firm Craft Silicon is best known for the taxi hailing provider, Little, which is locked in market share fight with giants-Uber and Bolt.

But behind the scene, the firm is cutting multi-million shilling deals in the sale of banking software and digital payment solutions in over 30 countries across Africa and Asia.

The firm’s founder and CEO, Kamal Budhabhatti, sat down with the Business Daily to discuss Craft Silicon’s diversification, expansion and building a global tech business from Kenya.

Craft Silicon is in 30 markets across Africa and Asia. What is the company’s game plan when it comes to scaling internationally?

When it comes to smart payments, the adoption is more in Africa compared to several Asian countries where we operate, like India and Indonesia. It is an opportunity for us to have Kenya or even the East African region, where the people are more receptive to newer technology.

At the same time, some products, like Little, are capital-intensive. We are in Kenya, Uganda, Tanzania and Ethiopia. In any new market that we go into where the marketing cost of the product is very high, we wait until we become profitable before entering a new market.

Your products, such as Little Cab, came after other global technology firms like Uber and Bolt set up shop here, and more are entering the market. Do you see any threat in competing with giants, and what sets you apart?

Obviously, we will get stiff competition when the bigger players from outside come, but we have our own niche, and we have our own unique proposition to the market. That’s why we always survived and scaled up. We welcome them and are also now in a position to acquire some of them.

We understand the local market well, compared to a player coming from outside, in terms of pricing and costing. Our prices are much lower.

It is also about making our value proposition unique.

With Little, for instance, we went beyond corporate ride-hailing to logistics in 2022. We are the only player with an array of solutions from two-wheelers like boda-bodas, three-wheelers, all the way to the 40-wheeler large trucks and containers. Now, the logistics arm has picked up well and accounts for 30 percent of what our platform generates.

Companies regionally are diversifying to cut reliance on a single product line. With your new platform, why did you want to get into tourism, and what opportunity do you see?

It was borne out of a problem that tourists, including my relatives when they visit from India, face. Many places they would go to do not accept cards, and without local SIM cards, they end up either carrying cash or having me pay on their behalf.

If it is convenient for tourists to do the transaction, their spending will also go up. Going to a forex bureau, converting the cash and carrying around Sh50,000 is not easy. It is more convenient to tap and pay with a card, and it brings in the larger transaction volume, which also helps our economy to scale.

The plan is to roll out Tourist Tap here and enter Uganda, Tanzania and Ethiopia in the next three months, and before the end of the year, head to West Africa. We are evaluating markets outside Africa. We are targeting countries where mobile wallets are very pervasive and dominant, so South Africa, for example, would not be ideal because cards are everywhere, compared to Zimbabwe.

What would you want to see more of to create a more enabling environment for local technology firms to thrive?

Even though I feel that regulators are supporting the innovation, M-Pesa is still very dominant, which sometimes puts some innovations at risk, in that everything has to end up in M-Pesa. More players would help us to remain more innovative.

Do you think current rules in Kenya and across Africa support or hinder innovation in fintech?

I would personally vouch for regulators. They are doing an amazing job and are also very pro-innovation.

As an innovator, what have you learned from failure?

We have tried many products and failed many times, but I think our key strength is that we have remained very agile. I like fostering a company culture where we allow people to try out everything that they feel could be interesting. And if the product fails, then it’s okay. We figure out why or what made it fail and learn from there.

What do you want your legacy to be?

I want to ensure that I run several companies like Elon Musk. He has done so many companies. I want all the companies I run to be profitable and innovative, but I don’t have to be in their day-to-day operations.

My mantra has always been to remain innovative and continue delivering. I believe things will fall in place if you have the right product.