Category: Business Daily

Danish shipping group Maersk, which controls more than 30 percent of cargo at the Mombasa Port, has introduced an operational cost imports (OCI) fee for cargo destined for the gateway to regional markets, sparking concerns among traders who projected higher business costs.

Kenya’s largest shipping line, which handles approximately 300,000 containers annually at the Mombasa port, this week announced it will introduce the OCI fee effective December 1, 2025, to cover additional operational expenses related to container inspections.

The fee will be billed alongside freight charges and follows similar charges OCI charges introduced for other regions, such as the Central African Republic, to address operational costs.

“As part of Maersk’s ongoing commitment to maintain high service standards and reliability across our global network, we wish to inform you of the introduction of an OCI fee for shipments destined for Kenya, effective December 1, 2025 until further notice. This surcharge is being implemented to offset the additional operational expenses associated with container inspections,” the shipping firm said in an advisory to clients.

In the tariff, the shipping line will charge $18 (Sh2328.56) for a 20-foot container and $33 (Sh4269.03) for a 40-foot container, while reefers will be charged $33 (Sh4269.03) and $43 (5562.44) for 20- and 40-foot containers, respectively.

Kephis began inspecting all cargo containers, both loaded and empty, in July 2025. The move, however, was met with an uproar, as traders in crop products reported massive disruptions to their businesses owing to the inspection rule, with some cargo consignments left behind at the Mombasa Port as impatient shipping lines set sail amid delays.

According to Kephis, all shipping lines and agents since July 1 this year are required to share the manifest for both imports and exports with the department in advance to facilitate efficient inspection and compliance.

To facilitate the inspection, shipping lines and agents were required to pay Sh500 and Sh2,000 for the container and vessel inspection fee, respectively.

Traders said that they are now worried Kenya will become one of the most expensive routes to import and export goods following the introduction of the new fees.

The Shippers Council of Eastern Africa (SCEA) CEO Agayo Ogambi said the fee will affect bulk importers due to increased cost and urged the government to rethink the funding model for government agencies.

“Traders have to increase operating fees, which will be passed on to consumers to recover the new charges imposed by Kephis. Our members have expressed deep concern regarding the potential implications of this cost on the competitiveness of Kenyan imports, the overall cost of doing business, and the stability of supply chain operations,” he said.

The official also questioned whether the surcharge was reviewed and approved in accordance with Kenya’s maritime regulatory requirements.

“Despite the costs, we want to know the methodology and justification for this levy and if it met the principles of transparency, fairness, and reasonableness expected under shipping regulation frameworks. Kenya should put measures in place to protect shippers, importers, logistics operators, and the wider economy from unilateral cost introductions by shipping lines without prior consultation,” said Mr Ogambi.

The value of foreign currency denominated assets under management in unit trusts doubled to Sh71.3 billion in the year to September 2025 from Sh34.9 billion a year earlier as investors hedged against potential economic shocks by diversifying their portfolios from shilling assets.

The sharp growth was also driven by the larger number of funds that have started offering dollar-linked unit trusts, which offer investors access to offshore bonds and equities assets.

By the end of September, the Capital Markets Authority (CMA) had approved 32 foreign currency funds, up from 25 a year earlier, cutting across the different unit trust options including money market funds, fixed income funds and Shariah funds.

The largest foreign currency fund in the period was the US dollar Sanlam fixed income fund with Sh27.14 billion in assets under management, followed by Standard Investment Bank’s Mansa X special dollar fund at Sh12.69 billion, NCBA dollar fixed income fund at Sh6.99 billion and CIC’s dollar money market fund at Sh4.26 billion.

‘Foreign currency denominated funds include dollar, euro and South African rand have continued to grow both in popularity and value in terms of assets under management,’ said the CMA in its quarterly collective investment schemes report for the period ending September 2025.

Although the shilling has stabilised at the 129 level against the dollar for the past 16 months, investors remain alive to the potential volatility in the exchange rate affecting the value of their assets, hence the need to diversify the currency exposure.

Before the current stable run, the local currency had depreciated from Sh109 to an all-time low of Sh161 to the dollar over a period of three years until February 2024.

This depreciation sparked an interest in hard currencies and a rush to dollar assets, both from those hedging against future forex losses and those looking for capital gains from their dollar assets.

Dollar-denominated unit trusts that invest offshore also offer investors an easy avenue to holding such assets without the hassle of opening trading accounts in foreign jurisdictions.

Overall, the CMA has reported a rising diversification away from the traditional money market, equities, balanced and fixed income funds by investors, highlighted by the growth in foreign currency and special funds in the last two years.

The assets under special funds climbed to Sh137.8 billion in September, up from Sh70.4 billion in December 2024, underpinning the overall jump in unit trust assets under management by Sh290.4 billion to a record high of Sh679.6 billion in the period.

In the nine-month period, assets under management in fixed income funds rose from Sh66.8 billion to Sh136.8 billion, while those in equity funds assets rose to Sh3.3 billion from Sh2.5 billion. Balanced fund assets meanwhile contracted from Sh2.22 billion to Sh1.7 billion.

The CMA attributed the sharp growth in assets under management and investor numbers to concerted marketing efforts through various digital channels by unit trust providers, whose numbers have also gone up as the regulator continues to licence more players in the industry.

By the end of September, there were 55 approved collective investment schemes -41 of which were active- offering 234 funds.

Industry leaders have been cautioned against expectations of quick fixes from Artificial Intelligence (AI) despite a heated race to adopt the technology as a booster for growth.

AI technology allows computers and machines to simulate human intelligence and problem-solving tasks. The technology can be applied to many sectors, including healthcare, manufacturing, mining, and the military.

Business leaders in Kenya have identified credit risk assessment, cybersecurity, customer service, fraud detection, and marketing as top priority areas for enhanced AI investments.

Questions, however, linger over whether the technology will deliver meaningful returns amid rising costs, data gaps, and growing security concerns.

‘AI is not something you deploy today and get returns tomorrow,’ Hani Nofal, Senior Vice President for Technology Solutions in the Middle East and Africa at business and technology services firm NTT Data, said.

‘Businesses should expect AI return on investment to be long-term. The biggest value comes when you bring AI closer to your core operations, not when you treat it as a side project,’ he told Business Daily in an interview.

According to KPMG’s 2025 Africa CEO Outlook Survey, local executives- particularly in financial services, telecoms, and retail- are preparing to increase AI spending over the next year.

Nearly 70 percent of senior executives across the region plan to allocate up to a fifth of their budgets to the technology, a trend mirrored in Kenya’s fast-digitising economy.

But leaders say the real test will be whether AI delivers long-term value, not just quick wins.

Mr Nofal said many firms are still trying to build modern AI systems on infrastructure that was never designed for it.

‘A lot of the infrastructure we’ve built for years is not ready for AI,’ he said, warning that outdated systems slow adoption and drive up costs. Security risks are also rising, with companies worried about deepfakes, automated scams, and the possibility that cybercriminals could exploit AI tools faster than regulators can respond.

‘For every good use of AI, there is a potentially harmful one,’ Nofal said. ‘We can all fall into a trap if we don’t stay ahead of it.’

Beyond the corporate concerns, public anxiety around job displacement is growing in Kenya. Many see AI as a threat rather than an opportunity. Mr Nofal, however, dismissed fears of full automation, saying AI will streamline work but not erase it.

‘AI will augment certain tasks, but the human in the loop will always be required,’ he said.

Kenya has singled out healthcare, education, and agriculture as top priority sectors in its new AI deployment strategy.

Other sectors mapped out for early focus include public service delivery, security, the creative sector, sustainability, and small and medium-sized enterprises.

Within the healthcare sector, the Kenyan government is considering the development of a maternal health chatbot in local dialects to provide accurate pregnancy and childbirth information, in addition to an expanded disease advisory system that will build on existing platforms.

Kenya’s AI strategy further notes that in the education sector, priority would go to intelligent tutoring systems and multilingual teacher training modules to improve access and quality of instruction, while emerging use cases in agriculture include translating existing data into farmer-friendly audio formats in local languages and developing AI-powered fertiliser recommendation systems.

‘Public-sector use cases include multilingual chatbots and virtual assistants to improve service delivery, while the creative sector could benefit from an AI-powered national digital creative platform to enhance market access and support local content creators,’ notes the strategy document.

To this end, the government has identified three pillars to accelerate Kenya’s AI uptake, including modernisation of the national digital infrastructure for AI access and development, the establishment of a robust and sustainable data ecosystem for AI and innovation, as well as incentivising the development of cutting-edge localised AI models and solutions through homegrown research and development.

After Iscariot, YouTube queued up John Johnny Johnté, and right away, I could tell this wasn’t a conventional short. It’s cut like a hybrid, part documentary, part scripted drama and the interplay works.

The behind-the-scenes inserts aren’t just filler; they function like intercut B-roll, giving context and rhythm to the chapters. Instead of clunky exposition, the filmmakers use those moments as bridges, so when you move from one act to the next, you’re already primed with subtext.

From a craft standpoint, the film is tight in edit and pace, and the director clearly understands what he needs to say within the given time.

The cinematography is clean, framing choices feel motivated, not accidental. Performances are great, relatable, grounded even with Nuru carrying the whole story, while the supporting cast adds depth to her story.

Sound design is thoughtful, never overmixed, and cues are placed to heighten tension without drawing attention to themselves. It’s the kind of short that respects runtime, not a single frame goes to waste.

The title in relation to the story is also very cool.

My issues with the short is it’s tied to a sensitisation campaign, and the messaging sometimes overshadows the storytelling. The polish is there, but you feel the NGO hand guiding the narrative.

That’s fine for outreach, but from a storytelling point it can flatten the drama.

Because we live in the 21st century, every male figure has to either be predatory or neutered. It’s a familiar trope, and here it limits the range of conflict by choosing to only lean into the binary of abuser and victim. The angle at the end is fantastic, but unlike Nuru, Johnny isn’t fully fleshed out for me to empathise with him.

Also, too much exposition.

John Johnny Johnté is a sharp piece of work. It’s well-cut, well-shot, and cleverly structured. It comes in, makes its point, and exits clean.

For a short that blends doc and drama, it is far more engaging than expected. I can confidently recommend this.

Safaricom has restored allocations of the popular mobile data bundle packages it quietly slashed over a week ago.

The telco has reinstated its ‘No Expiry’ package rates, whose halving from October 22 effectively doubled the cost of data, sparking uproar among customers. It blamed the cuts on a ‘technical issue.’

‘No Expiry’ package offers indefinitely valid bundles at fixed or customisable prices, and Safaricom said it is refunding the remaining data for customers who bought the bundles at the slashed rates.

‘It was a technical issue, and customers who got less data have been refunded the remaining amount,’ a spokesperson for the company told the Business Daily on Monday.

“The data offered now is more, especially for amounts from Sh11.”

SMS notifications sent out to affected customers on Sunday and Monday read: ‘Dear customer, the issue with your non-expiry bundles is fixed and extra bundles added. We apologise for the inconvenience.’

Before the data rates revision, Safaricom subscribers got 255MB of non-expiring data with Sh51. However, the allocation was slashed by more than 50 percent to 102MB in the past week.

Customers only got 200MB for Sh100, with 500MB costing Sh250. As of Monday, a spot check showed that Sh250 got 500MB of non-expiring data, while Sh250 gave 1.25GB.

Kenya’s largest telco had previously alluded to an ‘issue affecting the awarding of data bundles’ amid customer complaints on social media over the revised pricing.

‘We are aware of the issue affecting the awarding of data bundles and a resolution is underway. Apologies for the inconvenience,’ the company said on October 23 on social media platform X.

The telco had declined to officially comment on the matter at the time.

Safaricom’s mobile data and fixed internet businesses have emerged as key sales drivers alongside its mobile financial service M-Pesa.

As per its 2026 half-year financials, the Nairobi Securities Exchange (NSE)-listed company’s revenue from mobile data in the six months to September rose 18.2 percent to Sh44.4 billion.

Safaricom has a leading market share in both mobile and fixed internet services in Kenya, holding a dominant 62.8 percent in mobile broadband and 34.3 percent in fixed internet as of June 2025, according to the Communications Authority of Kenya.

Airtel is its main competitor in the mobile broadband sector. A comparison of some of the two telcos’ popular bundles shows that Airtel offers 1GB valid for one hour for Sh15, while Safaricom’s 1.2GB bundle with the same validity period goes for Sh20.

For the 24-hour bundles, Sh20 gets one 200MB on Safaricom, while a similar offering for Airtel gets one 300MB. For Sh3,000, Airtel offers a 50GB monthly bundle, while Safaricom has a 25GB monthly bundle for Sh2,000.

Safaricom has been aggressively fighting for a larger share in the data business, ramping it up with more investments in 4G and 5G networks to offset a decline in mobile calls.

In the six months to September, the voice business recorded a 0.5 percent decline in revenues to Sh41 billion, marking a big shift as mobile data for the first time overtook sales from calls.

This was partly due to saturation and rival online texting and calling platforms like WhatsApp.

Meanwhile, to maximise revenue, telcos across the world have been adopting a dynamic pricing model for services like mobile data and call minutes, where costs are adjusted in real-time based on factors like demand, consumer usage patterns and network congestion.

The model, based on big data analytics and in some cases artificial intelligence (AI), is a departure from traditional models, where shilling-per-minute or shilling-per-MB rates are fixed across all customers.

When the Kenya Revenue Authority (KRA) released the Draft Income Tax (Advance Pricing Agreement (APA) Regulations, 2025, and the Draft Income Tax (Minimum Top-Up Tax) Regulations, 2025, it signaled a welcome step towards modernising Kenya’s international tax framework.

Together, these two instruments seek to align Kenya with the evolving Organisation for Economic Co-operation and Development (OECD) standards, offering clarity on related-party pricing through the APA regime, and implementing the global 15 percent minimum effective tax rate under the GloBE (Global Anti-Base Erosion) model.

For policymakers, the ambition is commendable. But for taxpayers, the details reveal a familiar tension between compliance idealism and operational realism.

Under the draft APA Regulations, a multinational must submit a pre-filing request at least 12 months before the first covered year. At first glance, this seems procedural. In reality, it could make APAs, designed to provide certainty, inaccessible to most Kenyan-based subsidiaries of multinational groups.

Consider a company seeking an APA effective from 2026. It must begin the pre-filing process by December 2024, pay a Sh5 million application fee, and wait up to a year before coverage starts.

That timeline assumes perfect foresight in an economy where business models evolve every quarter.

Globally, South Africa, India, and the UK allow six-month pre-filing windows, balancing administrative prudence with practical timelines. By contrast, Kenya’s 12-month rule, combined with steep application fees, risks confining APAs to the largest taxpayers, leaving mid-sized compliant businesses out in the cold.

If Kenya wants to promote predictable transfer pricing outcomes, it should replace rigidity with flexibility – allowing the tax Commissioner discretion to admit later filings from compliant taxpayers and scaling fees based on turnover or transaction materiality.

The Minimum Top-Up Tax (MTT) Regulations implement Section 12G of the Income Tax Act, operationalising the OECD’s rules. Under this framework, multinational groups with global consolidated turnover of 750 million euros (Sh105 billion) face a 15 percent minimum effective tax rate across jurisdictions.

In principle, the MTT seeks to ensure fairness: profits shouldn’t escape taxation simply because they arise in lower-tax jurisdictions. But in practice, this rule will not apply to many groups following global CbCR (Country-by-Country Reporting) deregistrations.

For instance, the Swiss tax authority has confirmed that certain groups whose consolidated revenue has fallen below CHF 900 million (750 million euros) are no longer considered multimational enterprises (MNEs) under OECD GloBE rules, and thus out of scope of the MTT regime.

In short, while the MTT framework may be relevant for larger multinationals operating in Kenya, it will not affect smaller groups whose revenue falls below the threshold. Nevertheless, taxpayers should maintain effective tax rate documentation and monitor future revenue thresholds in case of re-entry into MNE status.

Kenya deserves credit for taking proactive steps to modernise its tax law.

Both the APA and MTT frameworks move the country closer to international standards, providing clarity where ambiguity has long bred dispute. But for these reforms to truly succeed, they must be fit for Kenya’s economic reality – one where compliance costs already weigh heavily, and investment decisions hinge on predictability.

Regulation must be firm, but not forbidding. A shorter APA pre-filing window and more practical fee structure would foster participation.

Similarly, Kenya should avoid rushing into complex GloBE reporting requirements for taxpayers who are clearly out of scope.

KRA’s stakeholder engagement process presents an opportunity not just to refine these drafts, but to redefine Kenya’s approach to investor relations.

By engaging industry voices early, Kenya can build a system that upholds integrity without stifling enterprise. Tax certainty should be a competitive advantage, not an administrative luxury.

Samsung has been ordered to pay a former employee Sh3.8 million after the court found that the appliance and consumer electronics firm failed to prove valid grounds for dismissing him in 2022.

The Employment and Labour Relations Court in Nairobi ruled that the multinational did not demonstrate fair and valid reasons for sending Stanley Ngigi home, who served as retail marketing manager in the firm’s IM (mobile) division.

Although Samsung’s disciplinary process substantially complied with procedure, the court said, the substantive justification for the dismissal did not meet the threshold required under the Employment Act.

Mr Ngigi was hired in March 2018 and was dismissed in December 2022 after facing allegations including failure to ensure promotional bundles were available in retail stores, not providing timely stock feedback, improper variation of dealer credit notes and failure to guide dealers on new products.

In his defence, the former manager told the court that the issues raised were either outside his control, had been addressed, or were the responsibility of other departments.

He argued that the promotional bundles had not arrived before the launch because sourcing began too late, and that he had no mandate over credit note variations. The court noted that Samsung did not produce documentation to contradict his account or to show breach of company procedures.

The court found that the South Korean corporation did not sufficiently prove any of the four grounds as valid reasons for dismissal.

‘These performance concerns were not the immediate or principal reason(s) for the termination of the Claimant’s employment as set out in the letter of termination and by dint of section 43(2) of the Employment Act, 2007,’ reads the ruling dated November 20.

‘The court is constrained to find that the respondent did not prove valid and fair reasons to terminate the claimant’s employment.’

The court, however, declined to reinstate Mr Ngigi as manager, noting the seniority of his role and Samsung’s argument that trust had broken down.

Instead, it awarded him the equivalent of five months’ salary, amounting to Sh3,777,805, plus interest and costs.

Mr Ngigi had also raised grievances of alleged harassment by his supervisor during the disciplinary process, but the court held that although these grievances were not concluded before his exit, the circumstances did not amount to a violation of fair labour practices.

The Employment Act requires employers to prove the reasons given for dismissal, which can be related to conduct, capacity, or operational requirements, and must follow a fair procedure.

The termination must be based on a reason genuinely believed by the employer and is fair. This could be due to the employee’s conduct, capacity, or the employer’s operational needs.

Additionally, the employer must provide a proper notice period or pay wages in place of notice, depending on the contract. If there is no such provision, it is based on the payment cycle.

The employer has the burden of proof to demonstrate that the reason for termination is valid and fair.

Logistics firm Cold Solutions is selling a 21.6 percent stake to South African private equity company Inspired Evolution at an estimated Sh2.58 billion ($20 million) as it seeks capital to expand operations in Kenya and the wider East African region.

Inspired Evolution, through its Evolution III Fund, is seeking regulatory approval from the Comesa Competition Commission (CCC) to acquire the minority shareholding.

The exact value of the transaction has not been disclosed by the regulator, but the Cape Town-based private equity firm announced in October that it would commit $20 million (Sh2.58 billion) to support Cold Solutions’ expansion.

Both companies have said the funds will be used to grow Cold Solutions’ food and pharmaceuticals refrigeration services across East Africa, including constructing additional cold storage facilities.

‘The proposed investment by Inspired Evolution is expected to facilitate the expansion of cold chain infrastructure across the region, underpinning critical sectors, driving regional economic development, and promoting sustainable growth,’ said the CCC in a notice of inquiry into the deal.

The commission, the antitrust regulator for the Common Market for Eastern and Southern Africa (Comesa), is reviewing the transaction rather than Kenya’s Competition Authority (CAK), as the company operates across multiple countries in the bloc.

Beyond Kenya, Cold Solutions East Africa has operations in Uganda, Rwanda, and Tanzania, though its business is largely managed from Kenya, where it has constructed its only physical storage facilities.

It currently operates two temperature-controlled warehouses in Kenya -one in Tatu City Special Economic Zone, Kiambu, and another in Mombasa – while providing logistics and distribution services nationwide.

Development of similar facilities in Uganda, Rwanda, and Tanzania remains in the planning stage, delayed by a funding shortfall that the minority stake sale aims to address.

In Uganda, land has been acquired and preparations for construction are underway.

In Rwanda, the company has broken ground on a new facility, while in Tanzania the land purchase has just been completed. Proceeds from the minority stake sale will accelerate these projects and further expand Cold Solutions’ footprint in Kenya.

Cold Solutions is currently wholly owned by an investment vehicle controlled by Arch Cold Chain East Africa, whose principal shareholder is African Rainbow Capital, majority-owned by South African billionaire Patrice Motsepe.

Inspired Evolution, also South Africa-based, has operations in Burundi, Kenya, Mauritius, Uganda, and Zimbabwe. Its investors include the African Development Bank, the International Finance Corporation, and the European Investment Bank.

Cold Solutions will be the fourth company in which the Evolution III Fund has invested, following Equator Energy in Nairobi, and Red Rocket Group and Sedgeley Solar Group, both based in Cape Town.

Faida Investment Bank (FIB) has been selected to midwife the state’s planned partial exit from Kenya Pipeline Company (KPC), in a move that will earn it millions of shillings in fees and give it visibility as the market looks to recruit more retail investors.

The Business Daily has established that FIB has received the award letter for Lead Transaction Advisor and is now earmarked to spearhead the state’s planned sale of up to 65 percent stake of KPC in a bid to raise Sh100 billion.

On October 9, the Privatisation Commission floated a tender inviting bids for provision of services related to the planned divestiture of the state from KPC, including lead Transaction Advisory, lead sponsoring stock broker, reporting accountant, legal advisory services, advertising agency services, public relations services, receiving bank services and registrar services.

Faida Investment Bank (FIB) has been selected to midwife the state’s planned partial exit from Kenya Pipeline Company (KPC), in a move that will earn it millions of shillings in fees and give it visibility as the market looks to recruit more retail investors.

The Business Daily has established that FIB has received the award letter for Lead Transaction Advisor and is now earmarked to spearhead the state’s planned sale of up to 65 percent stake of KPC in a bid to raise Sh100 billion.

On October 9, the Privatisation Commission floated a tender inviting bids for provision of services related to the planned divestiture of the state from KPC, including lead Transaction Advisory, lead sponsoring stock broker, reporting accountant, legal advisory services, advertising agency services, public relations services, receiving bank services and registrar services.

The government states that every shilling of privatisation proceeds into the National Infrastructure Fund will be expected to crowd in Sh10.0 of private capital, mainly from pension funds which currently sit on Sh2.3 trillion worth of assets under management.

‘We will introduce a financial architecture that leverages capital markets, diversifies ownership through unlocking of capital markets through privatisation, and uses the public-private partnership framework to channel private capital into public priorities.

“For decades, Kenya has privatized national assets yet we cannot point to enduring national assets built from privatisation proceeds because the funds were absorbed into budgetary support. The National Infrastructure Fund will break this cycle. All proceeds from privatisation will be ring-fenced, preserved and re-invested into new infrastructure and wealth creating assets’, President William Ruto said in his November 20 State of the Nation Address.

The KPC Initial Public Offer will be open to non-Kenyan East Africans with the government of Uganda earmarked to take a stake in the company, as the government looks to widen the pool of investors from which it will be seeking to raise capital once the company goes public.

‘There is a need for Ugandans and Kenyans, both public and private, to jointly own the Kenya Pipeline Company which provides the supply of fuel into our region,” President Ruto said on November 23 while being hosted by President Museveni during a visit to Tororo, Uganda.

“The government of Kenya will be divesting up to 65 percent and I am happy that Uganda is prepared to co-invest with us because that KPC is not just a Kenyan facility, it is a regional facility. As the government of Uganda invests in the Kenya Pipeline Company, I want to encourage Ugandans and East Africans to equally invest.”

FIB served as the Lead Transaction Advisor for I and M Bank Rwanda Rights Issue in 2020 which mobilized Sh887 million posting an oversubscription of 12 percent. The investment bank was also the Lead Transaction Advisor for CIC Insurance Group’s listing by introduction at the NSE in 2012.

Other notable undertakings by FIB in the capital markets include having served as the Transaction Advisor in the region’s debut share buyback by Nation Media Group between June and September 2021 and a subsequent share buyback by Centum Investment.

The investment bank also served as an independent financial advisor in the 2019 merger between NIC and CBA banks.

The country’s biggest lenders have seen a sharp fall in income from foreign currency trading, highlighting the impact of a calmer exchange rate environment on a line of business that had flourished during earlier bouts of market turbulence.

In the nine months ended September 2025, Kenya’s top nine banks recorded a combined decline of Sh17.27 billion in foreign currency revenue to Sh38.67 billion, representing a 30.9 percent drop from Sh55.94 billion a year earlier.

The contraction in forex income across all top banks reflects subdued activity in currency markets after the shilling’s recovery and prolonged stability against the US dollar compared with the volatility seen previously.

The shilling traded within a narrow range of between 129.15 and 129.80 units to the US dollar during the review period, curbing both trading volumes and profit margins in the foreign exchange market. This contrasts with the same period last year when local currency fluctuated widely between 128.46 and 161.36 units to the dollar.

The impact has been felt across the banking sector, with all major lenders reporting year-on-year declines in foreign exchange trading income over the nine-month period.

KCB Group recorded the largest absolute drop in foreign exchange trading income. Its earnings from currency trading declined by Sh5.52 billion to Sh8.24 billion from Sh13.76 billion in the previous year, a fall of 40.1 percent.

Standard Chartered Bank Kenya registered the steepest percentage decline, with forex trading income dropping by 58.9 percent to Sh2.74 billion from Sh6.68 billion previously-a fall of nearly Sh4 billion. Stanbic Bank Kenya also reported a contraction, with income from the segment falling by 49.2 percent to Sh3.13 billion.

Equity Group’s forex trading income declined by 5.2 percent to Sh8.76 billion. Cooperative Bank of Kenya saw a 21.7 percent drop to Sh2.92 billion, while I and M Group posted a 13.6 percent decline to Sh2.42 billion.

Absa Bank Kenya was among the least affected, with forex trading income easing by 4.8 percent to Sh4.53 billion. DTB Group’s income from currency trading fell by 40.4 percent to Sh2.22 billion while NCBA reported a 27.2 percent decline to Sh3.71 billion.

Banks had enjoyed elevated forex income during periods of elated volatility that started in Covid-19 pandemic period in 2020 and stretched to early last year as concerns lingered over the country’s ability to settle the $2 billion (Sh258.3 billion) Eurobond that was due to mature in June 2024.

Foreign currency dealings had in recent years become a major contributor to banks’ non-interest income. Banks’ forex desks benefited from the elevated activity and wider spreads that typically accompany such conditions of uncertainty.

Central Bank of Kenya (CBK) data shows income from foreign exchange trading had nearly doubled to Sh74.34 billion in the financial year ended December 2022 from Sh38.51 billion in the previous year on higher volatility on the shilling. However, the revenue from currency trades eased, dropping to Sh69.98 billion in 2023 and Sh62.52 billion last year.

The shilling had hit above 161 units to the dollar at the height of a foreign currency crisis in January last year but started improving after Kenya tapped $1.5 billion (Sh193.69 billion) Eurobond to buy back part of the $2 billion bond that was falling due in June 2024.

Foreign exchange trading income, which banks earn from buying and selling currencies for clients and their own books, usually rises during periods of sharp exchange rate movements. Volatility increases client demand for hedging and speculative trades, while also widening spreads. However, a stable currency environment limits trading volumes and dampens margins.

The issuance of a new Eurobond and the subsequent payment of the $2 billion debt ahead of schedule steadied the shilling, narrowing price movements in the market amid new CBK rules that tamed speculation and enhanced transparency in forex dealings.

The lack of large swings in the exchange rate have seen clients scale back trading activity, translating into lower earnings for banks from currency buying and selling.