Category: Business Daily

Commercial banks are using the Central Bank Rate (CBR) as their benchmark in setting loan prices, despite earlier rejecting it and negotiating the creation of the Kenya Shilling Overnight Interbank Average (Kesonia) which they have now shelved.

Banks including KCB, Equity, Absa, NCBA and DTB have issued notices that they will be using CBR as their reference rate in the risk based pricing model which took effect on December 1.

Banks were expected to use Kesonia -which is based on the price at which banks borrow from each other referred to as interbank rate- as they are the ones who had pushed for its creation after they rejected the Central Bank of Kenya proposal to use the CBR as a benchmark for loan pricing.

‘All new local currency variable rate loan facilities processed from December 1, 2025 will be priced under the revised model which comprises a common reference rate plus a premium (K),” said Absa Bank Kenya in a public notice.

“The common reference rate applicable will be the Central Bank Rate as determined by the monetary policy committee of the Central Bank of Kenya while the premium is determined by customer specific risk profile among other factors.”

The bank said it was testing its core system before using Kesonia as its benchmark rate.

‘We are doing thorough testing on Kesonia including tests with our core banking and related systems that use Kesonia. We will avail Kesonia for use by our customers when we conclude the systems work,’ said Yusuf Omari, Absa’s chief finance officer.

Banks had the option of using Kesonia or CBR as their reference rate under the new risk-based pricing model. Co-operative Bank of Kenya and its subsidiary Kingdom Bank are the only ones who have notified the public of adopting Kesonia.

The Kenyan banks had rejected the use of CBR in April, arguing that it was equivalent to reintroducing interest rate capping because CBR is not market driven but set in a boardroom by the CBK’s monetary policy committee.

‘By choosing to use CBR, a bank allows itself time to learn and accommodate system upgrades required before Kesonia use,’ said Kenya Bankers Association chief executive Raimond Molenje.

‘The industry remains committed to ensuring that pricing of credit always reflects market conditions and economic fundamentals,’ he added.

Insiders in the industry said the banks were reluctant to use Kesonia as it was volatile indicating they would have to review lending rates regularly. Such reviews need to be authorized by the CBK and communicated to the customers before they take effect.

Banks had earlier insisted on the use of the interbank rate arguing it captured market dynamics unlike the CBR.

‘KBA does not support the CBK proposal in its entirety. By rejecting the interbank rate as a preferred unified base rate and proposing the CBR, the CBK will not operationalize the policy decision after setting the CBR,’ Mr Molenje had argued in a memo rejecting use of CBR.

CBK has been publishing Kesonia on its website as it prepares the market to use it as the benchmark rate. Kesonia is currently at 9.25 percent equaling the CBR which was set at 9.25 percent in MPC’s October meeting.

‘We continue to engage with CBK to ensure the transition is smooth and does not inconvenience customers while also observing all relevant laws governing the credit market,’ said Mr Molenje.

Banks are expected to transition loans issued before December 1 to the new loan pricing model by February 28, 2026.

Credit Bank is eying Sh4.5 billion fresh capital through a private placement, in the race to comply with the new capital rules that require commercial lenders to have at least Sh3 billion core capital by the end of this month.

The lender, which ended September with core capital of Sh1.23 billion, now needs at least Sh1.77 billion to comply with the new law.

The legislation raised the minimum core capital requirement from Sh1 billion and provides for a gradual increase to Sh10 billion by 2029.

The bank has called an extraordinary general meeting (EGM) on December 19 for shareholders to vote on the proposal to issue up to 45 million ordinary shares to existing and new investors at a price of Sh100 each.

Ahead of the EGM, the lender has received a boost after two key shareholders -ShoreCap III LP and Sansora Group of Companies- committed to the Central Bank of Kenya (CBK) that they are going to inject into Credit Bank Sh1 billion each by the end of this month.

Letters seen by this publication show Sansora Group of Companies CEO Leon Nyachae has written to CBK director of banking supervision making the commitment.

Equator Capital Partners (ECP), the investment manager for ShoreCap III, has also made a similar commitment in writing.

‘Our board of directors has recently considered the matter and resolved to invest an additional Sh1 billion in Credit Bank PLC by 31st December 2025,’ said Mr Nyachae in the letter.

Further, Sansora sought CBK approval to allow it and its associate companies to temporarily exceed the 25 percent limit for aggregate shareholding in Credit Bank for a period of 36 months as the lender continues to scout for new investors.

ECP chief investment officer Suleiman Kiggundu said in the letter to the CBK the conditions for the Sh1 billion injection will include an additional board seat and the listing of the bank’s share on the Nairobi Securities Exchange within three years.

‘We look forward to working closely with the CBK towards finalising the underlying processes to enable the follow-on investment to be funded by a target completion date of 15th December 2025,’ said Mr Kiggundu in the letter.

Credit Bank’s cash call reflects a similar move by other lenders such as African Banking Corporation (ABC) Bank, Paramount Bank and Sidian Bank, which have turned to a rights issue to secure fresh capital for immediate and long-term compliance. This is after a change in law compelling banks to build core capital gradually up to Sh10 billion by 2029.

The Sh2 billion to be raised from the two institutional investors will lift Credit Bank’s core capital to at least Sh3.23 billion, making it compliant with the Sh3 billion minimum capital required by the end of December. This will give the lender room to look for additional capital to comply with a higher bar come the end of next year.

At the EGM, Credit Bank is also seeking approval to issue a $1.5 million (Sh194.1 million) convertible note for supplementary capital. This will have a maturity of at least five years priced at six percent annually.

The minimum core capital in the banking sector was, through the Business Laws (Amendment) Act 2024, revised upward from Sh1 billion to Sh3 billion by the end of December, 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.

When many of us think back to our early years in school, we remember the simplicity of learning. A wooden desk, a battered exercise book, and the determination of a teacher who insisted that neat handwriting was a non-negotiable life skill.

In many Kenyan classrooms, those early habits shaped the way we think, write, and express ourselves. Yet, along the way, foundational learning, the bedrock of every child’s education, has started to slip through the cracks.

But the uncomfortable truth is that a child’s future still hinges on whether they can read confidently, write clearly, and express their ideas with curiosity and imagination. No tablet can replace the discipline of forming a sentence.

No smartboard can substitute the mental work of sounding out syllables.

The basics remain the anchor. Teachers are sounding the alarm. Many report that learners in upper primary and even junior secondary are struggling with reading comprehension and handwriting. Some pupils can navigate digital devices with ease yet freeze when asked to summarise a paragraph.

Others can scroll but cannot spell. These are not isolated stories, they reflect a deeper national challenge. Foundational learning is weakening at the very moment the demands of the modern world are increasing.

Today’s classrooms are evolving quickly, and teachers are working hard to balance many new expectations. With expanded curricula, emerging competencies, and growing class sizes in some areas, it has become more challenging to dedicate consistent time to the slow, steady practice that strengthens early literacy and writing.

Across the country, teachers are doing their best to support learners within the realities of their environments, often adapting creatively to ensure every child gets the attention they need.

Yet foundational learning is not simply about academics. It shapes confidence. A child who can write a clear sentence begins to believe in their ability to communicate. A child who reads widely develops curiosity and imagination.

A child encouraged to draw, colour, and create builds problem-solving skills long before encountering formal definitions of critical thinking. These are the small, everyday acts of learning that determine whether a young person later thrives in science, business, entrepreneurship, or civic life.

This is where the quiet story of simple tools comes in. Ask any Kenyan adult about their earliest memories of school and you will hear about the value placed on a basic pen, pencil, or exercise book.

The simplicity of those tools taught discipline, responsibility, and the idea that learning was something you carried with you.

Today, the story has shifted. Many learners still lack or experience limited access to essential classroom materials, especially in communities where economic pressures make it difficult for families to provide everything children need for school.

In these contexts, teachers and community groups often step in with ingenuity and resourcefulness, ensuring learners continue to participate fully.

This is not a sentimental argument romanticising the past. It is a practical one. Foundational learning improves when children have what they need to practice. Countries that outperform globally in literacy and numeracy from Singapore to Rwanda consistently invest in early learning tools, teacher support, and classroom engagement.

Kenya has made remarkable progress in expanding school enrolment, but enrolment without foundational mastery is an illusion of success.

The good news is that change is entirely within reach. Across the country, teachers are leading the way, innovating, adapting, and finding creative methods to keep foundational learning alive. Some schools have introduced morning reading circles where learners read aloud together. Others use peer-learning stations where older pupils support younger ones.

Community libraries are emerging in neighbourhoods where books were once a rarity. These efforts prove that when we prioritise the basics, learning accelerates.

The private sector has also played a meaningful role by supporting classroom materials and creative expression programs. Initiatives such as school pen donations and creative writing workshops demonstrate that partnerships can strengthen learning ecosystems, particularly in underserved communities.

These efforts are not about products, they are about opportunity. A child who finally gets their own pen or book is a child who can participate actively, not passively.

But lasting transformation requires a national rethink. Foundational learning must be treated not as a nostalgic memory, but as a strategic investment. We cannot expect young people to excel in STEM fields if they struggle with written instructions.

We cannot build a knowledge economy if reading for pleasure declines. We cannot demand innovation while neglecting the tools that cultivate imagination.

Parents also have a role to play. Reading at home, encouraging handwriting practice, and nurturing curiosity can make a significant difference.

Foundational skills are not built in school alone, they are reinforced in homes, libraries, through play, and community spaces. When a child sees adults reading or writing, it normalises the culture of learning.

Ultimately, Kenya’s future depends on whether we choose to rebuild the strong base on which all other learning rests. Strong foundational skills produce confident, articulate, creative citizens capable of navigating the demands of a rapidly changing world. This is not an education agenda, it is a national development agenda.

If we want a generation that thinks critically, communicates clearly, and competes globally, we must return to the basics with renewed urgency. The tools may be simple, but their impact is profound. A pen, a book, a teacher, and a child eager to learn, that is still where Kenya’s future begins.

Listed utility firm Kenya Power earned Sh940.6 million from the government in the year ended June 2025 for work done on the national fibre-optic rollout under the State-backed Digital Super Highway project, new disclosures show.

The payout reflects partial payment for design, supply and installation of last-mile fibre infrastructure to government institutions under a contract awarded through the ICT Authority (ICTA). Kenya Power is deploying 100,000 kilometres of fibre, riding on its electricity network to connect 53,000 public offices, schools, hospitals and agencies countrywide.

The project is estimated to cost Sh10 billion in its first phase, making it one of the largest public ICT infrastructure rollouts in recent years.

‘The Government, through ICTA, contracted the Company to implement the Last-Mile Fibre Optic Connectivity to government institutions across the country under the Digital Super Highway (DSH) Project,’ wrote Kenya Power in its latest annual report.

‘The Company’s mandate includes the design, supply, and installation of fibre infrastructure nationwide. In line with the agreed project milestones and deliverables, the Company received a reimbursement of Sh940.6 million from ICTA as at June 30, 2025.’

This amount, the power utility says, represents a partial settlement of the contract sum invoiced for works partially completed in accordance with the project agreement.

Kenya Power’s nationwide pole network gives the government a cheaper way to extend broadband compared to trenching new routes or leasing space from private carriers.

The DSH rollout is part of the State’s push to ease public access to vital services such as digital learning and telemedicine, in addition to supporting the shift to electronic government records.

It is also poised to attract data-driven businesses to towns that have historically relied on costly satellite internet.

Using existing utility infrastructure to deliver broadband is seen as an easier route for the government to speed up coverage while reducing duplication of public spending.

For Kenya Power, the deal provides a new revenue stream outside electricity sales at a time the company is under pressure to improve cash generation.

The move marks one of the firm’s most visible diversification steps as it seeks to broaden its earnings beyond a tariff-regulated electricity business.

At its inception, the President William Ruto-led Kenya Kwanza administration spelt out a plan to lay down at least 100,000 kilometres of fibre optic across the country to improve network connectivity, amid network challenges in high security-risk areas.

Also read: Kenya Power to connect public schools with internet

The project, first announced by the president a month after he assumed office in 2022, falls under the infrastructure pillar of the country’s digital transformation agenda and is aimed at boosting internet connectivity across the country and making its access stable and reliable.

‘The Government is committed to invest in the digital superhighway and the creative economy, which will be enablers of transformation, productivity and overall competitiveness,’ the president said at the time.

‘Over the next five years, the Government will ensure universal broadband availability by hastening the roll-out of connectivity throughout the country. The laying out of an additional 100,000km of the national fibre-optic network is expected to deliver this target,’ he added.

In Kenya today, an unexpected illness can be more than a medical crisis; it can become a financial catastrophe. We have heard of mothers who postponed treatment because they couldn’t afford lump-sum payments.

We have seen families scramble to raise funds while conditions of their loved one’s get worse. There have been cases of people who walked out of hospital wards, not because they were healed, but because they couldn’t bear the soaring medical bills.

It is a sobering truth that in the 21st century, access to care still depends largely on income and place of work.

Health insurance, meant to cushion families from medical shocks, remains a privilege enjoyed by a few. According to the Insurance Regulatory Authority, Kenya’s insurance penetration is about 2.4 percent of the GDP, among the lowest in Africa. Most Kenyans remain uninsured and vulnerable to the financial strain of illness.

Even so, Kenya stands at a turning point. Technology, new payment models, and partnerships are beginning to redefine what access can mean. The challenge then is to move from good intentions to workable solutions that fit how Kenyans actually live and earn.

For most Kenyans, the traditional model of paying annual premiums upfront is almost unrealistic. Most Kenyans (about 80 percent) work in the informal sector. Their earnings are irregular.

Expecting such households to pay large lump sums at once shuts them out. At Jubilee Health Insurance, we have tested smaller, more flexible installment options in the form of monthly or quarterly plans under the Lipa Pole Pole model. It is almost similar to how people budget for airtime or transport. This is based on the observation that inclusion grows when cost meets reality.

Unfortunately, even when affordable, insurance remains poorly understood. Many see it as a product for salaried professionals, not for market traders or boda riders.

A 2024 survey found that while 53 percent of Kenyans have some form of medical cover, many remain uninsured. One in three people cited cost as the main barrier. But beneath that lies a deeper trust issue.

People must believe a the policy will work when needed. That belief comes, not from advertisements, but from seeing neighbours who have used their cover and recovered. Clear communication and transparent service remain as vital as pricing.

Distance and paperwork are also becoming barriers. A farmer in Kisii or a student in Lodwar do not have to visit an office to access care. Mobile enrollment, tele-consultations, and e-pharmacy services are now present-day necessities. Kenya’s strength in mobile innovation gives it an advantage, one that we in the insurance space must use wisely.

A good health cover should be judged, not by the size of its office network, but by how fast one can enroll or seek help using a smartphone. It is also important to reiterate that no single player can deliver universal access alone. Banks can offer the channels, insurers the products, and community groups the trust.

The government has a role too, setting incentives that encourage inclusion rather than bureaucracy. When a pharmacy, an insurer, and a digital payment platform integrate seamlessly, access expands at scale.

A well-insured society is inherently more productive. When people recover faster, they return to work sooner and spend less time in financial distress. For businesses, staff health cover translates into fewer sick days and stronger morale. The economic ripple effect is wide and measurable.

But challenges remain.

Uptake is low by global standards while mistrust lingers from past inefficiencies, and much of the informal economy remains beyond formal reach. But these are even more reasons to adapt.

Our goal at Jubilee Health Insurance is to make health cover fit people’s everyday lives. That means creating products that match real needs, allowing flexible ways to pay, and working with more partners so that quality healthcare is within everyone’s reach.

For insurers, the task now is to turn that belief into policy, product, and practice. When a hospital visit becomes about healing rather than hardship, Kenya will have bridged both a financial gap and a moral one too.

Kenyan MultiChoice subscribers could lose access to 12 Warner Bros. Discovery channels from next month as the DStv and GOtv operator’s distribution agreement with the global media giant expires at the end of December.

MultiChoice says its contract with Warner Bros. ends on December 31, and negotiations for renewal have yet to yield an agreement.

‘The distribution agreement between MultiChoice and Warner Bros. Discovery is scheduled to end on December 31, 2025. While discussions between the parties continue, no agreement has been reached at this stage,’ the Johannesburg-based company said in a notice to South African customers.

Kenyan MultiChoice subscribers could lose access to 12 Warner Bros. Discovery channels from next month as the DStv and GOtv operator’s distribution agreement with the global media giant expires at the end of December.

MultiChoice says its contract with Warner Bros. ends on December 31, and negotiations for renewal have yet to yield an agreement.

‘The distribution agreement between MultiChoice and Warner Bros. Discovery is scheduled to end on December 31, 2025. While discussions between the parties continue, no agreement has been reached at this stage,’ the Johannesburg-based company said in a notice to South African customers.

The World Bank Group and the Competition Authority of Kenya (CAK) have raised fresh concerns over the government’s leasing of four state-owned sugar factories, warning that flaws in the process risk distorting the market further.

The World Bank Group and CAK reckon that the lease of Nzoia, Muhoroni, Sony and Chemelil sugar factories to private operators for 30 years from May 2025, may fail to deliver genuine market discipline if competition issues in both the leasing process and the broader market are not addressed.

This could entrench weak competition in the sector, the joint World Bank-CAK report states, subjecting consumers to even higher prices for the sweetener.

‘The GoK [government] has sought to increase private investment and market discipline through the leasing of state-owned mills, although competition concerns remain in the implementation of leasing processes, both in terms of the leasing processes themselves and the overarching market conditions under which leasing occurred,’ they said in a report.

The report argues that the government’s heavy financial support to State-owned millers over the past decade, including debt write-offs and direct grants, has severely distorted competition, shielding inefficient firms from market forces and preventing more efficient private players from expanding.

The support comprises Sh117 billion debt waiver by the State in 2023, which included loans from the Sugar Development Fund and accumulated taxes and penalties.

A debt of Sh62 billion was wiped off the books of the State-owned sugar factories in 2020 by the predecessor regime of President Uhuru Kenyatta, the report notes.

Further support has come in the form of direct cash injections, the report adds, such as a Sh150 million bonus to Mumias farmers in January 2025 and a Sh166 million non-reimbursable grant to Muhoroni in 2022 to settle arrears to farmers and suppliers.

‘Such transfers from Kenyan taxpayers to state-owned mills create an unlevel playing field between private and state-owned mills, preventing more efficient firms from expanding and putting resources to higher-value use,’ the World Bank and CAK warn.

A key structural concern is that domestic production of sugar remains significantly more expensive than imports- a gap that continues to widen. Domestic ex-factory prices in 2022 and 2023, for example, jumped more than 40 percent annually, faster than cane prices and global trends, according to the report.

‘Benefits from higher prices accrued to millers as opposed to farmers,’ the report states, adding that restrictive trade policies have prevented imports from reducing retail sugar prices.

The government in May leased Nzoia to West Kenya Sugar Company, Chemelil to Kibos Sugar and Allied Industries Ltd, Sony to Busia Sugar Industry Ltd and Muhoroni to West Valley Sugar Company Ltd.

The government argues that the leasing of the four State-owned sugar factories is meant to inject private capital and improve operational efficiencies.

CAK’s director for Competition and Consumer Protection, Amenya Omari, said the authority lacks the legal mandate to safeguard competition during major privatisation programmes – a loophole that exposes the sugar sector to risks of entrenched market dominance.

‘The greatest challenge is the lack of an enabling legal provision that enables the Competition Authority to have a bigger role in the privatisation process,’ Mr Omari said on November 24.

‘It is through competition analysis and public-interest analysis that the Authority is able to assess the potential impact of a privatisation process.’

Concerns over the process of handing over management of the sugar mills to the private sector have also been raised in Parliament.

Lawmakers in June demanded answers on the transparency and fairness of the leasing process, seeking disclosures on the beneficial owners of the winning firms, the criteria used to select them, their qualifications, evidence of public participation, and the financial terms of the 30-year deals.

Agriculture Cabinet Secretary Mutahi Kagwe said in May that the government has retained ownership of all assets tied to the four sugar factories, including land.

Mr Kagwe stated that the assets have been leased to the private firms on an annual basis at prevailing market rates, with all the proceeds channelled to the Kenya Sugar Board to finance cane development programmes and reinvest in communities surrounding the mills.

In his third State of the Nation Address on November 20, President William Ruto said the sector was ‘stabilising,’ citing a 76 percent jump in sugar output to 815,000 tonnes, a 200,000-acre expansion in area under cane, and a drop in imports.

‘To secure this progress, we have leased Nzoia, Muhoroni, Sony, and Chemelil factories to competent private sector operators,’ Dr Ruto said.

Africa’s next decade of socio-economic growth will be defined by one core principle; data-first financial market solutions. We already see demand for better, faster, and fairer financial services. The missing link is neither talent nor capital alone; it is systematic, ethical use of data to democratise access to meaningful, affordable credit and financial products at scale.

A data-first approach begins with rethinking what data means across African markets. Traditional credit histories are sparse for large segments of the population and Micro, Small and Medium Enterprises operating on the continent.

Despite being the life-blood of Africa’s economy, the funding gap is acute, with only about 29 percent of these MSMEs having access to credit or overdraft facilities. Similarly, despite great progress achieved in terms of financial inclusion across Africa over the past decade, average household credit penetration rate of six percent for Kenya and nine percent for South Africa is still low compared to the global average of 19 percent.

That scarcity is not a barrier, it is an opportunity. By combining alternative data sources such as mobile usage patterns, bill payments, local transaction flows, agent network footprints and psychometric indicators, fintechs can build more accurate risk profiles that reflect real borrower behaviour rather than legacy paperwork.

These profiles allow us to price risk dynamically, extend loans, credit lines and overdraft facilities responsibly, and onboard customers previously excluded by conventional scoring.

But ‘data-first’ is more than assembling large datasets.

It requires rigorous governance: privacy-first collection, transparent modelling, explainable algorithms, regulatory disclosures, and robust consent mechanisms. Trust is the currency of financial inclusion.

Consumers will only share sensitive signals when they believe the outcome is fair and legible. Fintech firms that set the bar for privacy and transparency will win both market share and regulatory goodwill.

Operationalising data-first methods also means embedding analytics into every stage of product design. Start with a question: what customer problem are we solving? Then move from the question to a hypothesis that proposes a solution to the customer problem.

After that, instrument the product to capture signal-rich events, run rapid tests, and iterate based on causal evidence. This scientific loop shortens learning cycles, reduces wasted spend on poor product-market fit, and produces measurable impact on default rates, customer retention, and lifetime value.

Partnerships are central to data-first approaches and scaling solutions. No single firm holds all the data or distribution needed to scale across diverse African markets.

Strategic alliances with telcos, utilities, banks, and retail networks unlock complementary datasets and distribution channels while sharing the cost and complexity of onboarding. These partnerships must be governed by clear data-sharing agreements that protect consumers and comply with local regulations.

Regulators across Africa increasingly appreciate the power of responsible data usage to expand financial access. Constructive engagement with policymakers including offering anonymised insights, pilot results, and risk mitigation playbooks can accelerate approvals and create sandboxed environments for innovation.

We must be proactive collaborators, not defensive reactors, shaping rules that protect customers while enabling experimentation.

Another critical lever is operationalising machine learning responsibly. AI can surface subtle signals that humans overlook, but models must be continuously monitored for bias and drift.

Investing in model explainability tools and bias audits avoids systemic exclusion of vulnerable groups and preserves product fairness. In parallel, robust fraud-detection systems built on real-time anomaly detection reduce losses and protect consumer trust.

Finally, scale requires sustainable unit economics. Data-first strategies often lower customer acquisition and default costs by enabling precision targeting and dynamic pricing. But they demand upfront investment in engineering and analytics talent. Leadership must balance short-term profitability pressures with strategic allocation to data infrastructure.

Real estate developer, Erdemann Property Limited, has won a reprieve after the Court of Appeal halted any further dealings on its Sh2 billion in Mavoko, Machakos County, which was auctioned last year to Credit Bank Limited over loan default.

The court issued far-reaching orders stopping Credit Bank from selling, transferring, or otherwise disposing of the disputed property pending the determination of Erdemann’s appeal.

The verdict marks a crucial turning point in a commercial dispute that has stretched for years and spawned at least eight separate injunction applications.

At the centre of the contest is a property registered as LR 12876/13 (IR 36277) in Mavoko Municipality, which was used as security for a loan but auctioned in June 2024 for Sh1.125 billion after the developer defaulted on a Sh817.8 million loan.

Erdemann, through its managing director Zeyun Yang, alleges that the bank acted fraudulently by selling the property to itself at an undervalued price.

The company insists it has an arguable appeal and faults the High Court’s earlier decision dismissing its July 2024 application because the High Court was functus officio (had performed its duty earlier).

In asking the appellate judges to intervene, the developer warned that the property could be passed on to third parties, thereby complicating an already entangled dispute.

Erdemann claimed that Credit Bank lacked the financial strength to compensate it if the appeal ultimately succeeds.

The firm put the open market value of the property at Sh2 billion and pointed to the bank’s net profit of Sh32.4 million in 2023 as evidence that the lender would be unable to cover any potential loss.

‘Unless the orders sought are granted, the intended appeal will be rendered nugatory,’ the developer submitted.

Also read: Erdemann halts Sh2.4bn project in row with London Distillers

Credit Bank, however, maintained in its replying affidavit that the sale was lawful, commercially justified, and conducted in compliance with the Land Act and Auctioneers’ Rules.

It argued that Erdemann’s default was undisputed and that statutory notices had been properly served.

The lender insisted that the developer’s appropriate remedy lay in damages, citing Section 99(4) of the Land Act, which states that ‘a person prejudiced by an unauthorized, improper, or irregular exercise of the power of sale shall have a remedy in damages against the person exercising that power.’

The bank further argued that Section 100(3) of the Land Act permits a chargee to bid at a public auction and purchase the property so long as the highest bid or reserve price requirements are met.

However, the judges noted gaps in the bank’s explanation of how the auction was conducted, particularly whether other bidders participated and what the highest bid was.

Also read: MPs hand developer reprieve in Athi River project standoff

‘It is not clear how the public auction was conducted on June 5, 2024. The Court was not told whether there were other bidders and what the highest bid price was,’ the bench stated, adding that strict compliance with Section 100(3) must be demonstrated where a chargee buys charged land.

The court also highlighted the developer’s evidence that Credit Bank had repeatedly struggled to attract bidders, partly because Erdemann ran ‘full-page adverts of a caveat emptor in local newspapers’ intended to discourage prospective buyers.

The judges observed that this may have contributed to the bank purchasing the property itself.

On the central question of whether Erdemann’s appeal was arguable, the court held that the issues raised-including the allegation of sale at an undervalue and questions surrounding the chargee’s purchase of the property-were not frivolous.

‘Whether the suit property was sold at an undervalue is not an issue for our determination at this stage. It is an arguable issue,’ the judges said.

Regarding the risk that the appeal could be rendered useless if the injunction was denied, the court noted that the bank had not responded to Erdemann’s claims about its inability to compensate the developer.

This silence, combined with the disputed valuation and the high value of the property, persuaded the judges that both limbs required for granting an injunction had been met.

‘We are persuaded that in the prevailing circumstances, it is necessary to inhibit any onward sale or transfer of the suit property pending hearing and determination of the appeal,’ the bench ruled.

The court also suspended proceedings in the High Court and ordered the parties to fast-track the appeal, directing that it be filed and served within 14 days if not already lodged.

Submissions are to be filed within the same period, and the appeal will be listed for hearing on a priority basis within 60 working days.

Family Bank’s former chief executive officer, Peter Munyiri Maina, has been awarded Sh30.6 million by the Court of Appeal in the form of gratuity payments following a protracted legal battle with his former employer, though he had sought a larger payout of Sh57 million.

While the amount falls short of his claim, the judgment provides clarity on executive compensation disputes in Kenya’s banking sector and reinforces the binding nature of contractual terms.

The seven-year legal dispute centered on interpreting Mr Maina’s employment contract, which stipulated a 10 percent gratuity payout for his first year (2011-2012) and stated subsequent rates would be ‘aligned with banking industry rates.’

While both parties agreed on the wording, they sharply disagreed on what constituted the ‘banking industry rate’ for a Tier 2 institution such as Family Bank.

The Court of Appeal clarified that once gratuity terms were included in a contract, they ceased to be discretionary and must be awarded strictly in accordance with contractual provisions.

Mr Maina, who served as CEO of the mid-tier lender from July 2011 to July 2016, maintained that comparable banks paid their managing directors gratuity at 31 percent of their gross annual basic salary. He wanted to be paid the same for each of his last four years of his contract.

To support his claim, he cited a 2016 PricewaterhouseCoopers (PwC) Employee Benefits Guide and findings from Manpower Services Kenya, which indicated that banking sector CEOs typically received gratuity rates between 30 percent and 31 percent.

He also referenced comparable practices at Housing Finance Company of Kenya and National Bank of Kenya, both of which set executive gratuity at 31 percent.

Family Bank, however, rejected the 31 percent benchmark, arguing that the PwC survey was not bank-specific and failed to account for mid-tier banks.

The bank presented a subsequent PwC survey it commissioned in October 2016 -limited exclusively to Tier 2 institutions- which found that only five out of 14 sampled banks offered gratuity, averaging 18 percent.

It contended that this figure represented the true ‘banking industry rate’ as intended in Mr Maina’s contract. The bank maintained this specialised data, which better reflected the contractual term ‘banking industry rates’ as applied to their tier classification.

Both the Employment and Labour Relations Court in its 2019 ruling, and now the Court of Appeal in 2025, sided with Family Bank.

While acknowledging the broader industry averages cited by Mr Maina, judges noted Kenya’s banking sector operates under strict Central Bank of Kenya classifications, making tier-specific comparisons most relevant.

Recognising that the April 2016 PwC report indicated a 30 percent average gratuity rate for senior executives, the appellate judges noted that the survey covered 41 organisations from all economic sectors and industries, both large and small, with only eight banks.

By contrast, the second PwC report directly addressed the dispute’s central question; the average gratuity rate for Tier 2 banks between 2012 and 2016.

The court deemed this distinction critical, emphasising that Kenya’s banking sector is formally classified into three tiers by CBK with Family Bank falling under Tier 2.

‘In view of the classification of banks. the correct banking industry rates would be those of the tier in which the respondent was classified,’ the judges ruled, affirming that the 18 percent rate accurately reflected contractual obligations.

Additionally, the Court of Appeal upheld the Labour Court’s rejection of the Manpower Services report, noting that it was never formally submitted as evidence and was improperly introduced during submissions.

Although the appellate judges dismissed Mr Maina’s push for a higher gratuity rate, they identified an error in the Labour Court’s calculations, which had applied a flat monthly salary of Sh3.1 million across all four disputed years.

Records showed that Mr Maina’s salary increased to Sh3.6 million in August 2015, meaning his fifth-year gratuity should have been based on this higher figure.

The Court of Appeal rectified the computation, recalculating the amounts using the 18 percent rate.

The final award remained Sh30.6 million -unchanged from the Labour Court’s total- but now correctly broken down as Sh2.7 million for the first year, Sh6.696 million for each of the second, third, and fourth years, and Sh7.867 million for the fifth.

The court also rejected Mr Maina’s request for interest dating back to 2016, stating that the gratuity rate had never been mutually agreed upon and required judicial determination.

Additionally, it declined to award legal costs, citing the nature of the employer-employee relationship and the fact that the contract had expired naturally.

The ruling sets a notable precedent in Kenya’s banking sector, reinforcing the importance of precise contractual language and tier-specific benchmarks in executive compensation disputes.