Category: Business Daily

During a recent chat with a friend, we somehow drifted into a discussion about some of the complex terms and capital market products. Something interesting that caught my attention, was how money market funds and Ziidi Trader dominated the conversation. Securities lending and borrowing (SLB) also came up.

SLB is the lending and/or borrowing of capital market securities (shares, bonds, among others) for a definite period, with a simultaneous agreement to return them (or their cash equivalent) at an agreed future date, together with an agreed lending/borrowing fee.

Under SLB, one can lend ‘idle’ securities they own but do not intend to sell. This therefore implies that for it to be successful, an SLB transaction needs to have a lender, a borrower, an agreement (usually referred to as SLB agreement), an SLB consideration (or fee) and a platform where the transaction is effected.

A common question is: why would someone participate in an SLB transaction? An SLB transaction is driven by one of three reasons: First, a borrower may need to settle an existing securities debt arising from a previous transaction, where they owe securities to a counterparty.

Secondly, there may be a need to sell borrowed securities with the expectation that prices will fall, allowing the borrower to repurchase them at a lower price, make a profit, and settle their obligation. This is known as short selling.

Thirdly, a borrower with an underlying derivative contract (such as a future, forward, or option) may use SLB to hedge against potential losses by protecting themselves from adverse price movements in the underlying asset.

SLB can generate forward and backward linkages with stakeholders such as custodians, clearing and settlement institutions, derivatives traders, fund managers, pension schemes and investment banks among others, contributing to the establishment and sustenance of a vibrant SLB market.

For securities lenders specifically, it is an ideal opportunity to make extra income by availing their ‘idle’ securities portfolios to those willing to borrow them at a fee, with a commitment to return them at the agreed time.

One of the most important documents in any SLB transaction is the agreement; a contract between counterparties in the transaction. This allows temporary transfer of securities from the lender to the borrower for a fee. It details the name of the borrower/lender identification, the loaned securities, fees payable, collateral provided (by the borrower) to stand-in for the value of the borrowed securities.

The agreement also includes details on how corporate actions (dividends, interest, or voting rights to the lender) will be handled, default provisions, the applicable law and agreement termination clauses. At the international stage, we have the Global Master Securities Lending Agreement, which is a standardised legal framework that governs cross-border securities lending transactions.

So, how are SLB transactions executed? There are three main ways; trading through SLB through bilateral trading, screen-based trading, and hybrid trading. In bilateral trades agreements are direct over the counter customised deals with lenders (like custodians, pension schemes, stockbrokers etc.) using an SLB to directly lend securities to interested borrowers.

Bilateral SLB transactions allow flexible terms on dates, fees and margins among others.

In screen-traded SLB, multilateral transactions involving many borrowers and lenders are executed through an on-exchange formal platform that uses automated processes to execute transactions with borrow/lend orders being matched, based on price-time priority of the SLB orders.

On its part, hybrid SLB trading implies that stakeholders use a combination of both screen-based and bilateral approaches. This leverages quick, anonymous, exchange-traded transactions with the need for customized transactions to optimise efficiency and improve liquidity.

However, SLB activity in Kenya’s capital markets has remained relatively low since the framework was introduced, with only a handful of transactions recorded.

This is largely due to low market awareness, limited availability of lendable securities, operational complexities, and cautious risk appetite among market participants.

To address these challenges, SLB needs positioning as a key tool for improving market liquidity, price discovery, and overall efficiency in Kenya’s capital markets.

In terms of the regulatory environment for SLB in Kenya, all SLB activity is regulated by the Capital Markets Authority (CMA) under the Capital Markets (Securities Lending, Borrowing and Short Selling) Regulations 2017, and the Central Depository (Securities Lending and Borrowing) Rules 2019.

The two legal instruments guide CMA in ensuring market discipline through regulatory oversight, approval and supervision and policy advisory. The Central Depository and Settlement Corporation (CDSC) ensures protection of the parties to any SLB transaction through mandatory collateralisation, daily transaction monitoring and provision of settlement guarantee services for all executed transactions.

However, SLB activity in Kenya’s capital markets has remained relatively low since the framework was introduced, with only a handful of transactions recorded. This subdued uptake is attributed to factors such as low market awareness, limited availability of lendable securities, operational complexities, and cautious risk appetite among market participants.

To address these challenges, SLB needs positioning as a key tool for improving market liquidity, price discovery, and overall efficiency in Kenya’s capital markets.

The Office of the Data Protection Commissioner (ODPC) has recommended the prosecution of directors of a micro-lender for failing to respond to a complaint filed by a former employee over the publication of his images on social media without consent.

Data Protection Commissioner Immaculate Kassait said LOLC Micro Finance Bank published the personal data of Peter Macharia Waithira in public notices and on its social media platforms without his consent.

Ms Kassait noted that despite being served with notification of the complaint, the micro-lender failed to respond.

She said the directors should be prosecuted for obstructing the Data Commissioner, contrary to Section 61(b) of the Act.

‘By failing to respond to the notification of complaint, the respondent obstructed the Data Commissioner in the exercise of her powers under Section 9,’ Ms Kassait said.

Evidence presented before the ODPC showed that Mr Macharia was previously employed by the lender on a contract basis.

On July 28, 2025, he formally tendered his resignation via email, which was received by the employer.

Despite his resignation, the micro-lender allegedly proceeded to publish highly sensitive public notices on its social media platforms, claiming he was no longer associated with the institution and warning the public against transacting with him.

The commissioner noted that the microfinance posted Mr Macharia’s images on its Facebook platform.

During the hearing, the complainant maintained that he did not consent to the processing of his personal data.

‘In light of the above, the office finds that the respondent unlawfully processed the complainant’s personal data,’ Ms Kassait said.

The commissioner added that the lender failed to demonstrate a lawful basis for processing the complainant’s personal data by not responding to the notification.

The lender was given 14 days from the date of the decision to erase the complainant’s images from its online platforms. Failure to comply will result in an enforcement notice being issued against the bank.

The Kenya Revenue Authority (KRA) has directed oil marketing firms to reconfigure their invoicing systems to align with the reduced eight percent value-added tax (VAT) on fuel, intensifying a compliance race and exposing petrol stations to audits.

The directive, issued through KRA’s eTIMS/TIMS operations office, requires fuel stations using third-party tax invoicing systems to introduce a new tax category and update product classification codes.

They are also required to control how the reduced VAT rate is applied within a defined three-month window ending mid-July.

‘The TIS [third-party Tax Invoicing Solutions] should restrict the inclusion of items created with the UNSPSC codes with Tax Type – 8 percent in original sales invoices to between April 15, 2026, and July 14, 2026,’ KRA said in the circular, effectively locking businesses into a narrow compliance timeline with little room for error.

‘Credit notes shall be generated as per the prevailing credit note business rules,’ the taxman said.

The United Nations Standard Products and Services Code (UNSPSC) is a global system used to classify goods and services for financial reporting within enterprise resource planning (ERP) systems.

The VAT cut directive by President William Ruto has proved an operational challenge for fuel stations, which must ensure every transaction is correctly coded, timed and reported within the tax authority’s digital system.

The challenge is compounded by the integration of business systems with KRA’s electronic Tax Invoice Management System (eTIMS), which captures transactions in real time.

This means any errors in applying the new VAT rate – whether due to incorrect coding or timing – are immediately recorded, increasing the risk of penalties and future audits.

The compliance burden is heavier for smaller businesses that rely on external vendors to manage invoicing systems. The tax change requires system updates, testing and deployment within tight timelines, raising costs.

Audit trail

Industry insiders told Business Daily that the directive signals a heightened audit environment. By enforcing strict tax codes and timelines through eTIMS, KRA is creating a detailed digital trail of transactions that can be analysed for compliance after the three-month relief period ends.

This raises the likelihood of scrutiny over how firms applied the reduced VAT rate, particularly where transactions fall outside the prescribed window or system errors occur.

The VAT relief saw the price of super petrol in Nairobi drop by Sh9.37 to Sh197.60 a litre in the latest review by the Energy and Petroleum Regulatory Authority, while diesel declined by Sh10.21 to Sh196.63.

The reductions came barely 24 hours after prices had surged past Sh206 per litre under a 13 percent VAT regime, itself a short-lived revision from the statutory 16 percent rate.

While the temporary VAT cut has eased inflationary pressure in the short term for an economy that runs on fuel, the accompanying compliance demands highlight the trade-off between policy responsiveness and operational stability.

Sidian Bank has raised Sh3 billion in fresh capital through a rights issue, consolidating a series of fundraisers as it seeks to boost capital and sustain growth.

The money was raised in two tranches in January and February this year, following approval by the bank’s management board on November 28, 2025.

The latest fundraiser means that Sidian has now increased its capital for the third straight year through a rights issue, coinciding with a strong growth phase for the lender, which has been elevated to a mid-tier bank.

‘The capital injection will support continued business growth and improve the bank’s regulatory capital,’ says the lender in its latest annual report.

Sidian says it raised Sh1.935 billion in January this year, followed by Sh1.065 billion in February. The latest round of capital-raising follows the Sh1.095 billion raised in 2025 and Sh1.891 billion in the previous year from shareholders.

This means that over the past three years, Sidian has raised close to Sh6 billion in fresh capital from shareholders to firm up its growth strategy. The lender graduated to tier II (medium bank) status in the third quarter of last year from a tier III (small lender) ranking.

The lender now wants to sustain the momentum through various strategies, including digital banking, anchor clients and ecosystem banking, trade finance, infrastructure financing, brand positioning, sustainability, and risk management.

‘As at September 30, 2025, the bank attained tier II (medium) status based on its growth. The bank’s strategies in 2026 are aimed at further growing and propelling the bank towards becoming a top-tier II bank,’ said the lender.

Sidian’s core capital rose to Sh11.63 billion as at the end of February 2026 from Sh8.15 billion it held at the end of December last year, pointing to the impact of the rights issue on the balance sheet.

The lender’s series of fundraising comes amid the revised core capital requirements for Kenyan banks, from a minimum of Sh1 billion to Sh10 billion, which banks have to comply with by the end of 2029 in phases.

The Business Laws (Amendment) Act 2024 revised the minimum core capital in the banking sector from Sh1 billion to Sh3 billion by the end of December 2025, Sh5 billion by the close of 2026, Sh6 billion by the end of 2027, Sh8 billion in 2028, and Sh10 billion by the close of 2029.

Sidian’s latest core capital means it may still require some additional capital for full compliance come December 2029, unless organic growth fully covers the shortfall.

The lender has seen an accelerated pace of growth over the last two years, with net profit rising six times to Sh1.72 billion in 2025 from Sh287.35 million in 2024. It had posted a net loss of Sh447.95 million in 2023.

Sidian’s assets hit Sh90.8 billion as of December 2025, up from 60.2 billion in a similar period in 2024 and Sh44.74 billion in 2023.

Deposits from customers have more than doubled in three years to hit Sh72.3 billion in December 2025 from Sh27.6 billion in December 2023.

When fuel prices rise in Kenya, the first instinct is to look inward. The debate quickly turns to taxes, subsidies, and government policy.

But the latest increase calls for a different reading. This is not, at its core, a domestic crisis. It is a global shock landing in a vulnerable economy.

Kenyans need to appreciate what is happening. The recent surge in oil prices has less to do with decisions made in Nairobi than with tensions far beyond Kenya’s borders.

Developments in Venezuela, and more recently the Middle East, have unsettled energy markets and pushed prices upward. For an oil-importing frontier economy such as Kenya, those effects are felt almost immediately.

Oil markets move not only on supply, but also on fear, speculation, and expectation. The mere possibility of conflict, sanctions, or disruption raises risk premiums. Those costs are then passed on to consumers. Kenya does not determine global oil prices. It absorbs them. That distinction matters, because it shifts the conversation from blame to preparation.

The effects are already plain to see. Higher fuel prices feed directly into transport costs, food prices, and business expenses. For many households, inflation is not a matter of charts and percentages.

It is the daily struggle of commuting, shopping, and keeping small businesses afloat. What looks like a domestic price spike is in fact the local face of global instability.

This does not mean domestic policy is irrelevant. Taxes, levies, and regulatory choices influence how pain is distributed across the economy. But they do not create the initial shock. When discussion focuses only on local policy, it risks missing the larger issue. Kenya remains deeply exposed to changes in global energy markets, and that exposure is structural.

The macroeconomic consequences are serious. Higher oil prices raise the import bill, widen the current account deficit, and put pressure on the shilling. Once the currency weakens, imports become more expensive, and inflation grows harder to contain.

The central bank is then forced into an uncomfortable trade-off. It may need to keep monetary policy tight to tame prices, but that comes at the cost of slower economic activity and more expensive credit.

The fiscal picture is no easier. As fuel prices rise, pressure mounts on the government to respond through subsidies, tax relief, or both. Yet Kenya’s fiscal room is already narrow.

Debt servicing obligations are heavy, and recent revenue measures have already met public resistance. Policymakers are left trying to cushion a blow they did not cause, using tools that are increasingly constrained.

There is also a political side to this, especially as the country moves closer to another election cycle. Fuel prices are among the most visible and politically charged indicators in any economy.

They shape public perceptions quickly, regardless of where the shock began. When an externally driven rise is read only as a domestic failure, frustration deepens and the pressure for quick fixes grows. In that setting, leaders may be tempted to pursue politically attractive but fiscally reckless measures.

That is why public communication matters. Citizens need honesty about the fact that not every economic shock begins at home.

What is happening now is unlikely to be the last episode of this kind. The world economy is entering a period of sharper geopolitical rivalry, where conflict and instability increasingly shape markets. From Eastern Europe to the Middle East and Latin America, disruption is becoming normal.

For countries like Kenya, this means external shocks will arrive more often and with less warning.

That should force a change in how Kenya thinks about resilience. Reducing dependence on imported oil is no longer only a climate question. It is a hard economic necessity.

Kenya’s geothermal, wind, and solar investments offer some insulation, but the pace needs to quicken. The same applies to trade, manufacturing, and debt management.

A country cannot control global turbulence, but it can reduce how exposed it is to it.

The rise in fuel prices should therefore be understood for what it is: not simply a domestic policy failure, but a sign of Kenya’s place in a volatile world. The sooner that is understood, the better the country can respond.

The sustained slowdown in Starlink’s subscriber growth has exposed the structural limits of satellite internet in Kenya, even as demand for high-speed connectivity continues to surge.

Latest data from the Communications Authority of Kenya (CA) shows the Elon Musk-owned provider added just 3,136 new users in 2025, a sharp deceleration from the explosive uptake seen in its first year of operations.

The modest additions pushed Starlink’s market share down to 0.9 percent as of last December, from 1.1 percent in a similar month a year earlier, signalling a loss of momentum in a fast-expanding fixed internet market.

This contrasts sharply with its early trajectory following its July 2023 entry, when pent-up demand for reliable, high-speed internet drove rapid adoption across households, businesses, and public institutions.

Starlink signed up 8,063 users in its first full year of operations and added a further 11,083 subscribers within the successive six months, underlining the initial strength of its value proposition in underserved areas.

The early surge was driven by its promise of speeds exceeding 200 megabits per second in regions where fiber rollout had lagged, positioning the service as a premium alternative to terrestrial networks.

Capacity strain

The rapid uptake, however, now appears to have strained its capacity, exposing limitations in its satellite-based model when confronted with concentrated urban demand.

The firm was, for instance, forced to suspend new activations in key counties including Nairobi, Kiambu, Machakos, Kajiado and Murang’a in 2024, citing network congestion and the need to stabilise performance.

This marked a turning point in its Kenyan expansion, demonstrating that global satellite infrastructure alone could not seamlessly absorb the intensity of local demand without complementary ground capacity.

Users would later begin reporting declining speeds and increased latency, eroding the premium experience that had initially distinguished Starlink from fibre and fixed wireless alternatives.

The performance challenges coincided with aggressive price cuts by the multinational, aimed at sustaining growth, including a reduction in hardware costs and the introduction of rental plans to lower entry barriers.

While the pricing strategy attracted new users, it also deepened network strain by onboarding more subscribers onto already congested satellite beams, undermining quality.

Market positioning

The resultant dynamic has since reshaped the competitive positioning of Kenya’s broadband market, where terrestrial providers have capitalised on Starlink’s constraints to reinforce their dominance.

Market leader Safaricom has stamped its lead in fixed internet, closing last year with 858,394 subscribers, which accounted for 34.9 percent market share.

Jamii Telecommunications follows with 494,150 users, as Wananchi Group-owned Zuku comes third with 272,802 subscribers, with the two accounting for 20.1 percent and 11.1 percent share of the market, respectively.

The broader fixed internet market expanded rapidly, with total subscriptions across all operators rising 43.2 percent to 2.5 million by the close of last year, up from 1.7 million a year earlier, highlighting strong underlying demand.

Fibre networks, while capital-intensive, offer consistent speeds and scalability in dense urban settings, giving them an advantage over satellite solutions in high-demand environments.

Satellite internet, on the other hand, is better suited for low-density and remote regions where laying fibre is either uneconomical or logistically challenging.

Strategic pivot

Starlink’s experience in Kenya has forced it into a strategic pivot, culminating in a partnership with Safaricom through the latter’s South African parent firm Vodacom to stabilise operations and expand reach.

The deal allows Safaricom to distribute Starlink kits and integrate satellite backhaul into its network, particularly in rural areas where fibre expansion remains limited.

For Starlink, the partnership provides access to established distribution channels and local infrastructure, helping manage congestion while maintaining local market relevance.

Airtel has also partnered with Musk’s SpaceX to introduce Starlink’s direct-to-cell (D2C) satellite technology to all its 14 African markets, including Kenya.

The service, which works by turning satellites into space-based mobile towers and allows phones to connect in areas where terrestrial networks are absent or unreliable, marks the first time in Kenya that a satellite operator is collaborating with a mobile phone network to provide telecommunications services from space.

SpaceX says it operates over 8,000 low-Earth orbit satellites, 650 of which are dedicated to D2C services.

The Kenya Revenue Authority (KRA) has directed oil marketing firms to reconfigure their invoicing systems to align with the reduced eight percent value-added tax (VAT) on fuel, intensifying a compliance race and exposing petrol stations to audits.

The directive, issued through KRA’s eTIMS/TIMS operations office, requires fuel stations using third-party tax invoicing systems to introduce a new tax category and update product classification codes.

They are also required to control how the reduced VAT rate is applied within a defined three-month window ending mid-July.

‘The TIS [third-party Tax Invoicing Solutions] should restrict the inclusion of items created with the UNSPSC codes with Tax Type – 8 percent in original sales invoices to between April 15, 2026, and July 14, 2026,’ KRA said in the circular, effectively locking businesses into a narrow compliance timeline with little room for error.

‘Credit notes shall be generated as per the prevailing credit note business rules,’ the taxman said.

The United Nations Standard Products and Services Code (UNSPSC) is a global system used to classify goods and services for financial reporting within enterprise resource planning (ERP) systems.

The VAT cut directive by President William Ruto has proved an operational challenge for fuel stations, which must ensure every transaction is correctly coded, timed and reported within the tax authority’s digital system.

Read: Ruto VAT flip-flop triggers compliance chaos for oil firms

The challenge is compounded by the integration of business systems with KRA’s electronic Tax Invoice Management System (eTIMS), which captures transactions in real time.

This means any errors in applying the new VAT rate – whether due to incorrect coding or timing – are immediately recorded, increasing the risk of penalties and future audits.

The compliance burden is heavier for smaller businesses that rely on external vendors to manage invoicing systems. The tax change requires system updates, testing and deployment within tight timelines, raising costs.

Audit trail

Industry insiders told Business Daily that the directive signals a heightened audit environment. By enforcing strict tax codes and timelines through eTIMS, KRA is creating a detailed digital trail of transactions that can be analysed for compliance after the three-month relief period ends.

This raises the likelihood of scrutiny over how firms applied the reduced VAT rate, particularly where transactions fall outside the prescribed window or system errors occur.

The VAT relief saw the price of super petrol in Nairobi drop by Sh9.37 to Sh197.60 a litre in the latest review by the Energy and Petroleum Regulatory Authority, while diesel declined by Sh10.21 to Sh196.63.

The reductions came barely 24 hours after prices had surged past Sh206 per litre under a 13 percent VAT regime, itself a short-lived revision from the statutory 16 percent rate.

While the temporary VAT cut has eased inflationary pressure in the short term for an economy that runs on fuel, the accompanying compliance demands highlight the trade-off between policy responsiveness and operational stability.

Sameer Africa Plc is targeting the close of a Sh919 million land sale deal by the end of June 2026 as it seeks to settle debt.

The Nairobi Securities Exchange-listed firm said it expects to complete the sale of a 3.75-acre parcel of land valued at Sh919.69 million ($7.12 million) in the second quarter (April-June) of this year.

‘Assets held for sale relate to 3.75 acres of undeveloped leasehold land. The sale was initiated in 2024 and is likely to conclude in the 2nd quarter of 2026. The transaction value of the asset held for sale is $7,128,891 or equivalent Sh919,698,228 at the year-end US dollar closing rate of 129.01,’ the company said in its 2025 annual report.

The company has previously missed three self-imposed deadlines for the sale. Sameer Africa first disclosed the proposed disposal in 2022, setting a 2023 target to conclude the deal.

It planned to use proceeds from the sale to fund an infill project, retire debt and reduce exposure to foreign exchange losses.

The Sameer Infill Project is a Sh260 million industrial warehousing development located at the company’s head office along Mombasa Road in Nairobi.

The project forms part of the firm’s strategic shift from tyre manufacturing towards higher-yield commercial real estate investment.

The company has previously missed three self-imposed deadlines for the sale. Sameer Africa first disclosed the proposed disposal in 2022, setting a 2023 target to conclude the deal.

It planned to use proceeds from the sale to fund an infill project, retire debt and reduce exposure to foreign exchange losses.

The Sameer Infill Project is a Sh260 million industrial warehousing development located at the company’s head office along Mombasa Road in Nairobi.

The project forms part of the firm’s strategic shift from tyre manufacturing towards higher-yield commercial real estate investment.

The High Court has faulted an administrator-led plan to sell assets of Mount Kenya Breweries Limited, a collapsed firm weighed down by Sh5.37 billion in liabilities, citing a lack of transparency.

Raising concerns over secrecy in the court-supervised disposal process, the court said the planned sale by the official receiver breached key transparency safeguards by failing to circulate proposals to creditors and shareholders. It also faulted the process for inadequate stakeholder involvement.

However, the court upheld the administrator’s legal mandate to proceed with the asset sale, affirming that the official receiver is entitled to dispose of the company’s assets where rescue is no longer feasible.

The dispute arose after the company’s directors – Caesar Ngige, Salomon Wahome and Mary Muthoni – challenged a tender issued in November 2025 inviting bids to purchase land, buildings and machinery.

They alleged gross undervaluation and exclusion from the process.

The directors accused the administrator of acting like a liquidator without following the law, saying no valuation was shared, no creditor meetings were convened, and no formal proposal was circulated.

They also claimed assets were removed or interfered with under the administrator’s watch, risking irreparable loss to shareholders and creditors.

Receiver defence

The official receiver rejected the claims, stating it was appointed on June 7, 2025, following default on loans owed to Kenya Development Corporation, the holder of a Sh90.1 million floating charge.

In an affidavit sworn by Sylvia Githungo, the receiver told the court the company had ceased operations years earlier and could not be revived without significant capital injection.

A site visit in July 2025 revealed extensive vandalism, with buildings damaged and equipment stripped. The administrator said the destruction occurred before it took control.

The receiver said that as of December 2025, the company’s known liabilities stood at Sh5.37 billion against assets valued at Sh50 million.

Two valuation reports showed a sharp decline in value, with an earlier estimate placing assets at Sh69 million before a later assessment gave an open market value of Sh50 million.

With liabilities running into billions, the administrator argued there was no realistic prospect of rescuing the company as a going concern.

It added that administration costs had already been incurred and continue to rise, with monthly expenses of Sh200,000 required to preserve and safeguard the premises.

The brewer, based in Nanyuki, was once positioned as a regional manufacturing venture but has remained dormant for years.

Court filings show loan defaults date back to around 2019, with the facility falling into disrepair before administration.

The receiver said it opted to sell the assets for the benefit of creditors, citing Section 569 of the Insolvency Act, which allows disposal of charged property where revival is not feasible.

Court findings

The court agreed that the administrator had the power to sell and was not required to convene an initial creditors’ meeting, given the company’s financial position.

However, it identified a critical procedural failure: although the administrator prepared a proposal within the statutory timeline, it was not circulated to creditors and shareholders.

‘The administrator’s power to sell assets ought to be done in a manner that is transparent,’ the judge said, stressing that circulation of proposals is mandatory even where meetings are not held.

He dismissed the directors’ claims that vandalism occurred under the administrator’s watch, noting there was no supporting evidence, such as police reports.

At the same time, the court rebuked the directors for failing to cooperate, saying they had not provided a statement of the company’s financial position as required.

‘The directors and shareholders should know that the company is in a mess during their watch. Thus, they bear the greatest duty to support measures that ensure the creditors are paid, and the company gets out of the mess,’ the court said.

‘They have no right to take a posture that prejudices the creditors or derives benefits to them at the expense of or before the creditors,’ the judge added.

The court ordered the directors to submit a verified statement of assets, debts, and creditors within 14 days.

The administrator was directed to circulate the proposal within 30 days and secure the company’s assets. Interim orders stopping the sale remain in force until further directions.

Kenya’s newly enacted Virtual Asset Service Providers (VASP) Act, 2025, which imposes tighter checks on digital financial transactions, could help the country exit the global financial crimes watchdog’s grey list, experts say.

Analysts at law firm Bowmans say the new rules mark a major shift by drawing cryptocurrency businesses into the formal financial system, aligning the country with global anti-money laundering standards set by the Financial Action Task Force (FATF).

The Paris-based FATF added Kenya to its list of countries under special scrutiny in February 2024 due to loopholes in countering money laundering and terrorism financing.

‘The Act marks a significant shift for Kenya’s digital economy. It brings virtual asset businesses into the formal regulatory framework through licensing, governance standards, and alignment with Kenya’s anti-money laundering regime,’ analysts at Bowmans said in a note on the VASP Act.

They said the new law could improve Kenya’s standing into a ‘more credible, investor-friendly market’ if effectively implemented.

When a country is grey-listed, its banks face tighter due diligence from foreign lenders, some international transactions are delayed, and investors flag compliance risk in country assessments.

Kenya hopes to be removed from the global financial crimes watchdog’s ‘grey list’ by May 2026 as it tightens its tools to detect and block illicit money flows.

‘Everyone should go do their work to ensure we are out of that grey list by May,’ Treasury Principal Secretary Chris Kiptoo said in February.

Kenya says it is sharpening its tools to detect money laundering and terrorist financing and aims to operationalise Anti-Money Laundering and Countering the Financing of Terrorism Committees.

Under the International Cooperation Review Group process, Kenyan financial institutions and designated businesses are implementing stronger Customer Due Diligence measures, including verification of beneficial ownership and monitoring of high-risk transactions.

The Treasury says financial institutions have also heightened Suspicious Transaction Reporting, with enhanced mechanisms to ensure timely reporting and analysis of suspicious financial activities.

Kenya has also adopted an inter-agency coordination approach involving the Directorate of Criminal Investigations (DCI), the Attorney General’s office, and select State departments as part of a strategy to clean up its financial services sector and exit the grey list.

Crypto oversight

The VASP Act places crypto businesses, including platforms dealing in Bitcoin, stablecoins and non-fungible tokens (NFTs), under the joint supervision of the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).

Firms dealing in virtual assets are required to obtain licences, conduct Know Your Customer (KYC) checks, report suspicious transactions, and cooperate with agencies such as the Financial Reporting Centre (FRC) and the DCI.

Draft regulations further require stablecoin issuers to file monthly reports detailing transaction volumes, asset holders and reserve composition. Capital requirements range from Sh30 million for brokers to as high as Sh500 million for issuers.

The government has also proposed a 0.05 percent transaction levy on exchanges and token platforms.

Kenya’s crypto market has been expanding rapidly, driven by stablecoin use for remittances, merchant payments and cross-border transactions. Stablecoins are digital currencies whose value is pegged to assets such as the US dollar.

Recently, the country was ranked fifth worldwide by cryptocurrency transaction volumes in the 2025 World Crypto Rankings report by global crypto exchange Bybit. Data from US-based blockchain analytics firm Chainalysis shows that stablecoin transactions worth about Sh426.2 billion ($3.3 billion) were processed in the year to June 2024.

However, the sector has raised concerns among regulators due to its susceptibility to illicit activity, given the pseudonymous and decentralised nature of digital assets.

Industry pushback

Still, the government’s regulatory push has raised concerns among industry players, who say high capital thresholds, transaction fees and compliance requirements risk importing rigid frameworks from traditional finance into a nascent and globally competitive sector.

They argue that the rules could stifle innovation and push startups to more favourable regional jurisdictions.

‘When most of the local crypto startups have not even raised that much equity or debt capital, it becomes hard to do business here,’ Allan Kakai, director at the Virtual Assets Chamber of Commerce, told the Business Daily in a recent interview.

Bowmans cautions that while the legal framework aligns well with FATF standards on paper, its effectiveness will depend on implementation.

‘Practical enforcement, regulatory capacity, and coordination between agencies will be critical,’ the firm said, raising questions over whether CBK and CMA have the technical expertise and resources to supervise the complex and fast-evolving crypto sector.

‘How effectively will coordination work between the two regulators and other key agencies, particularly the Financial Reporting Centre?’

The FRC reported nearly Sh6.976 trillion in suspicious financial transaction reports over three years through 2023, with most (around 91 percent) funnelled through banks.

The report said money is laundered mostly through real estate, lawyers and accountants.