Category: Business Daily

The Kenya Association of Manufacturers (KAM) has warned that the post-election disruptions in neighbouring Tanzania could threaten trade in the East African region.

This follows the contentious 2025 presidential election in Tanzania, where unrest has spilt across the border into the Kenyan town of Namanga, halting trade and prompting calls for calm amid a nationwide Internet blackout.

Demonstrations during the elections in Tanzania prompted curfews in major cities, including Dar es Salaam, Arusha and Mwanza, halting cross-border trade and transport operations.

‘What is happening in Tanzania is of interest to Kenya, the country exported goods in 2024, worth Sh67 billion to Tanzania, and imported goods worth about Sh58 billion. So that shows you Tanzania is a market that we need to have,’ Mr Tobias Alando, KAM chief executive, told the Business Daily.

‘If there is chaos in Tanzania, it means our businessmen who are exporting their products there are not able to access that market and we have to get concerned . and the businesses that also import some materials or some products from Tanzania are not able to import those products because of what is happening or what has been happening in Tanzania.’

Asked about how much manufacturers have lost to these disruptions, Mr Alando said: ‘We’ve not quantified yet, but I’ve just given you the figures in terms of what we’re exporting, and if that doesn’t continue, it means generally a loss to our markets, both in and out.’

Kenya imports a variety of goods from Tanzania, primarily food and agricultural products like maize, onions, and edible fruits.

The unrest in the country has impacted the movement of goods, raw materials, and finished products.

Treasury Cabinet Secretary John Mbadi said on Tuesday that the ongoing unrest in Tanzania has disrupted trade between the two nations and, if it persists, could result in high inflation as goods from the neighbouring country will become scarce and expensive.

‘There is no economy that can succeed without peace. Peace is paramount, and peace is key.

‘Just see what happened in our neighbourhood a couple of days ago, there was a disturbance in our neighbourhood, even the food that used to come to Marikiti stopped coming,’ he said.

Mr Alando said political uncertainty affects trade in the East African Community bloc.

‘Peace and stability in the East African region are good for all of us. When one East African country is burning, then it affects every one of us.You see, logistics is affected, we can’t move people, we can’t move goods, we can’t move our trucks in and out of Tanzania,’ he said.

‘The airport, the air traffic is also affected. Traders who go in, pick certain goods from Tanzania and come back are also affected. So our prayer is that we need to work together to support Tanzania so that it comes back to stability.’

The Employment and Labour Relations Court has absolved a senior bank manager of wrongdoing following alleged contravention of Consolidated Bank’s credit procedures regarding loan facilities issued to customers.

Subsequently, the court ordered Consolidated Bank to pay its former Mombasa branch manager, Geoffrey Kisaka, Sh3.4 million in compensation for unfair dismissal.

The court ruled that the summary dismissal against Mr Kisaka was invalid, unreasonable and cannot be justified by the bank’s audit report.

‘The alleged breach of credit policy and procedures occurred in the credit department not with the claimant (Mr Kisaka), as the proposer (of the loan) he was not the ultimate approver,’ ruled the court.

The court said that, since the management credit committee members failed to undertake their due diligence, blaming Mr Kisaka was not the answer.

It also noted that the audit team had recommended that the management credit committee members undergo a refresher training in credit appraisal.

The court noted that the bank’s human resources manager had testified that several employees had been invited to show cause, but that only two, including Mr Kisaka, were suspended and denied access to work records to facilitate their responses.

The court also noted that the HR manager also testified that several credit department employees mentioned in the internal audit were not taken through the disciplinary process.

The court noted that on November 1, 2022, the head of credit, the credit analyst and the manager of credit, under the credit and finance committee, approved Sh51 million loan for a customer, a transaction which was further approved by the management credit committee, comprising the head of credit, head of finance, manager of legal affairs, head of operations and central processing, chief commercial officer and the chief executive officer.

‘All these officers are senior and supervise the claimant,’ noted the court in its October 30 judgment.

The court said that Mr Kisaka had served the bank diligently since 2010, rising through the ranks to become a branch manager. It also said that he had no record until the incident involving the customer, during which he secured benefits for the bank, but the credit department failed to provide him with the necessary support.

‘Blaming the claimant is shifting responsibility to the wrong employee,’ ruled the court.

The court ruled that Sections 41, 43 and 45 of the Employment Act not only concern the presence of valid reasons or grounds for termination of employment, but also require the employer to observe due process when dismissing an offending employee.

‘The employee must be informed of the accusations against him, given a chance to defend himself, permitted to call witnesses in support of his case and notified of the decision taken by the employer to terminate his services,’ ruled the court.

The claimant told the court that he had worked as the branch manager until October 17, 2024 and had been issued a notice to show cause dated August 20, 2024 regarding allegations that he had contravened the bank’s credit policy and procedures with respect to a loan facility advanced to Jowak Agencies Ltd and David Kanyi, and his related accounts, African Budget and Executive Homes Company Ltd.

The reasons, the court heard, were that the claimant had flouted the bank’s credit policy procedures, thereby exposing it to imminent loss.

However, Mr Kisaka said that the reasons were invalid because he had conducted due diligence when appraising the loan facilities for Jowak Agencies Limited and Mr Kanyi, as well as his related account of African Budget and Executive Homes Company Ltd. As the branch manager, he only recommended approval of the loan facility, he said, not approving it himself.

He said that the loan facilities had been analysed and approved by the credit department, management credit and the board of directors in accordance with the delegated limits, and not by the branch or himself.

The bank claimed that the audit review revealed flaws in the process of granting loans amounting to Sh75 million to the client and his related accounts, from the branch to the credit department at the head office.

The bank argued that the audit team had concluded that there were many obvious inadequacies in the customer’s application, which the branch and the credit department should have noted, resulting in the application being declined.

The bank told the court that it had identified significant flaws in the claimant’s handling of the loan applications, and that the disciplinary committee had deemed his integrity questionable, given that many of the errors could have been avoided based on his experience as a bank manager.

Fertiliser prices have sustained a rising trend globally, signalling possible renewed pressure on Kenya’s food production expenses ahead of the next planting season.

The latest World Bank’s Commodity Markets Outlook for October 2025 shows fertiliser prices rising by an average of 19 to 21 percent year-on-year, making them the only major commodity group to defy the global trend of easing prices.

‘Fertiliser prices have continued to climb, by 19 percent in the first nine months of 2025 (year-on-year), reflecting strong demand, the effects of trade restrictions, and production shortfalls,’ notes the Bank.

‘Fertiliser prices are projected to rise by 21 percent in 2025.’

The outlook attributes the sustained high costs to export restrictions in China, continued sanctions on Belarus and Russia, and logistical constraints that have kept supply tight through much of the year.

‘China has restricted exports of nitrogen and phosphate fertilisers, while Belarus -a major potash supplier- remains under EU sanctions. Together with Russia, it is also subject to new EU tariffs on fertilisers,’ says the World Bank.

In contrast, the report projects global energy prices to fall by 12 percent in 2025 and by another 10 percent in 2026, while food and metal prices are expected to ease modestly.

The divergence leaves fertiliser as an outlier, with market prices remaining far above their pre-pandemic averages.

Kenya relies heavily on imports for its fertiliser supply, sourcing most of its stocks from China, Russia, and Saudi Arabia.

The global price stickiness means that local procurement and retail prices could stay elevated, even as the government continues to implement subsidies under the national fertiliser support programme.

Latest data from the Kenya Bureau of Statistics shows that last month, consumer prices of key food items rose by double-digit percentage points when compared against a similar period last year, underscoring the impact of higher production costs.

Prices of tomatoes, for instance, grew 37.3 percent during the referenced period, while those of sifted maize flour and loose maize grain rose 16.4 percent and 13.7 percent, respectively.

Other food items whose prices recorded significant growth year-on-year included fortified maize flour (16.5 percent), sukuma wiki (15.4 percent), spinach (11.9 percent), cabbage (20.3 percent) and onions (12 percent).

The government has, in recent years, expanded the national fertiliser subsidy programme, under which farmers access discounted inputs through the National Cereals and Produce Board.

While the scheme aims to stabilise food prices by lowering farmers’ production costs, the sustained increase in global prices may put a limit on how far the subsidies can go in offsetting import costs.

According to the World Bank, global fertiliser markets have struggled to normalise since the supply disruptions that began in 2022 following the conflict in Ukraine.

Production capacity in key exporting countries remains constrained, while shipping and energy costs- though easing-have not fallen enough to offset structural shortages.

The World Bank, however, expects the prices to decline slightly by about five percent in 2026, but warns that any rebound in natural gas prices or extension of export curbs could reverse the trend.

For Kenya, the sustained global prices come at a time when food inflation remains sensitive to agricultural input costs. Official data shows that agriculture accounts for nearly one-fifth of the gross domestic product, and fertiliser is one of its largest recurrent input expenses.

Since the introduction of the subsidy programme, retail fertiliser prices have eased from highs of above Sh6,500 per 50-kilogramme bag at the peak of 2022, to between Sh1,775 and Sh3,500 in selected counties.

Fertiliser imports also account for a significant portion of Kenya’s foreign exchange spending on non-fuel commodities. A prolonged period of elevated global prices is, thus, a recipe for pressure on the import bill, especially during the main planting seasons when volumes peak.

They say that the higher you go, the colder it becomes. Many leaders discover this truth only after securing the promotion or executive role they worked so hard to achieve. Along with influence and recognition comes an unexpected reality; loneliness. The leadership seat is visible, influential, and admired from afar, yet often emotionally isolating.

Leadership today demands navigating multiple pressures. A leader must satisfy board expectations, manage employee morale, deliver results, adapt to market shifts, maintain stakeholder confidence, and uphold personal values.

These pressures converge in one office, the leader’s, and while they are surrounded by people, very few of those are safe to speak to openly.

Decisions meant to safeguard the organisation may disappoint employees, people-centred choices may upset shareholders who may think the leader is more concerned with employees interests than business outcomes.

Every action has a ripple effect, and the leader carries both the responsibility and the emotional weight.

In Kenya, leadership is also intertwined with cultural expectations. When someone rises to a senior position, family and community often assume newfound wealth and influence.

Relatives anticipate assistance, society expects composure and generosity, and any sign of struggle may be judged harshly. This adds emotional pressure and makes vulnerability difficult. Leaders learn to ‘perform strength,’ even when tired, overwhelmed, or uncertain.

Leadership loneliness is real, but it can be managed. Leaders can take intentional steps to reduce loneliness.

Involve others in decision-making and solution building: Leadership does not mean having all the answers. Involving teams, departments, and cross-functional colleagues not only improves the quality of solutions, it reduces isolation.

Collaborative planning builds trust and encourages ownership. When people contribute to decisions, they support them more readily, and freely interact with the leaders.

Hold personalised meetings with managers and peers: Schedule regular, private check-ins, not just for performance discussions, but for genuine conversation.

These engagements help leaders stay connected to the pulse of the organisation and reduce emotional distance. Such meetings encourage transparency, strengthen rapport, and allow leaders to receive honest feedback in a moderated, respectful setting.

Be true to self: Authenticity remains one of the strongest remedies to loneliness. Leaders who are grounded in their values, identity, and purpose are less shaken by external expectations.

Being true to self means maintaining integrity even under pressure, acknowledging emotions rather than suppressing them, and allowing others to see you as human, not a symbol of perfection.

Seek coaching support: A leadership coach provides a confidential, non-judgmental space to process decisions, emotions, and personal challenges. Coaching enhances self-awareness, strengthens emotional intelligence, and helps leaders build clarity and resilience.

Build diverse networks: Cultivate meaningful relationships beyond the immediate workplace. Professional bodies, alumni networks, hobbies, and community groups, offering mentorship offer balanced perspectives and emotional grounding.

Establish a trusted inner circle

Identify a small group of people-inside or outside the organisation-who provide truth, empathy, and confidentiality and honest feedback to you.

Strengthen Emotional Intelligence: This enables leaders to develop self-awareness, understand and manage their emotions, and of others, interpret situations thoughtfully, and respond rather than react. It supports empathy, clarity, and healthier engagement, and reduces stress.

Leadership may sometimes feel lonely, but it does not need to be isolating. When leaders intentionally build connection, maintain self-awareness, and seek meaningful support, they lead not just with authority, but with emotional intelligence, which has been globally identified as key catalysts of transformational leadership. And that is the kind of leadership that transforms organisations, communities, and people.

The value of unpaid work done by each Kenyan woman has for the first time been set at Sh118,845 per year, putting the collective worth of the hours spent cooking, cleaning and caring for their families at Sh1.89 trillion.

The inaugural Kenya National Bureau of Statistics (KNBS) report, titled Economic Value of Unpaid Domestic and Care Work in Kenya 2025, reveals a stark gender gap in unpaid labour, showing that women’s contribution far outweighs that of men.

According to the study, each Kenyan man performs unpaid work valued just Sh22,676 per year, putting men’s total contribution to unpaid domestic and care work (UDCW) at Sh353.89 billion.

This means women’s unpaid labour amounts to more than five times the collective Sh2.423 trillion annual UDCW, underlining the disproportionate burden of care and domestic responsibilities borne by women across the country.

This marks the first time Kenya has quantified the economic value of unpaid household and care work, offering a glimpse into the hidden economy that sustains millions of families but is not captured in the country’s traditional measures such as Gross Domestic Product.

‘On average, if UDCW activities had been remunerated, each woman aged 15 years and above would have earned Sh118,845 in 2021, whilst men aged 15 years and above would each have earned Sh22,676 for the same period,’ said KNBS in the new study.

The dominance of women in the unpaid labour ties with the 2021 Time Use Survey Report in which KNBS showed women spent 25.8 billion hours on unpaid domestic and care work while men spent 4.8 billion hours.

KNBS equates the Sh2.423 trillion to nearly a quarter (23.1 percent) of the value of Kenya’s economy in 2021, a revelation that reignites the global debate on the economic invisibility of domestic and care work.

The findings mirror a growing recognition worldwide that unpaid household labour – mostly performed by women – forms a vital yet uncounted pillar of economic productivity.

By quantifying its value, the report exposes the huge contribution women make to sustain households, communities and the formal economy, despite receiving neither pay nor recognition for it.

The study relied on the 2021 Time Use Survey Report and the Kenya Continuous Household Survey to quantify how much time women and men spent on household and care activities and assigned an equivalent market wage to that labour.

The report identifies food and meals management and preparation as the single most valuable category of unpaid work for women in Kenya at Sh1.073 trillion from 14.7 billion hours compared to men’s Sh157 billion courtesy of 2.1 billion hours.

The second most valuable form of unpaid work was caring and maintenance of textiles and footwear, where women’s unpaid work was valued Sh295.98 billion compared with men’s Sh55.33 billion.

Cleaning and maintaining the home and its surroundings was the third highest unpaid work for women at Sh192.92 billion while that of men was Sh48.17 billion.

Caring for children including feeding, cleaning and physical care came fourth with women at Sh176.83 billion and men at Sh7.12 billion.

Rounding out the top five categories was shopping for household and family members where women devoted hours valued Sh65.58 billion compared with men’s Sh27.64 billion.

The findings could reshape how Kenya measures and plans for economic development. Many policy experts and champions of equality have argued that not recognising or valuing the unpaid work perpetuates income gaps, lowers productivity and constrains national growth.

The valuation of the unpaid domestic and care work was based on data from the 2021 Kenya Continuous Household Survey which included a Time Use Survey (TUS) module.

The TUS module captured detailed information on how individuals aged 15 years and above spent their time over a 24-hour period, allowing the KNBS to quantify the total hours devoted to unpaid domestic and caregiving tasks.

The value of unpaid work was estimated by multiplying the total time spent on each type of unpaid activity by an appropriate wage rate that would be paid to a market worker performing similar services.

The rise of digital payment systems in Kenya has reshaped how people access and interact with financial markets. From M-Pesa mobile money transfers to bank-linked online wallets, traders now have faster and safer ways to deposit and withdraw funds from their trading accounts. This accessibility is one of the main factors driving the growth of retail forex participation in the country.

For those beginning their journey, understanding what is forex trading and how does it work is essential before leveraging the advantages of digital payments. Once the fundamentals are clear, traders can take full advantage of the speed and efficiency offered by modern payment solutions, allowing them to focus on strategy and execution rather than worrying about transaction delays.

The Role of Digital Payments in the Forex Market

In the past, moving money in and out of a trading account could be slow and expensive, especially for traders outside major financial hubs. Bank transfers often took days, and fees could eat into profits. In Kenya, this used to be a significant barrier for many aspiring traders.

Today, the situation is very different. Digital payment platforms now offer near-instant deposits and quick withdrawals. This means Kenyan traders can respond faster to market opportunities, increasing their ability to trade efficiently. They can also manage risk better by adding or removing capital from their accounts as needed without long waiting periods.

Mobile Money as a Game Changer

Kenya is recognised globally for its mobile money adoption, with M-Pesa leading the way. Many brokers serving the Kenyan market now integrate M-Pesa directly into their funding systems. This allows traders to top up their trading accounts from a phone in just a few steps.

This level of convenience is particularly helpful for traders in rural areas or those without easy access to traditional banking services. It levels the playing field, giving more people the chance to participate in the forex market without logistical limitations.

Benefits of Digital Payments for Kenyan Forex Traders

Digital payments bring multiple benefits to traders in Kenya, making them an integral part of the trading process.

Speed: Instant or same-day deposits mean traders can act quickly on emerging opportunities.

Lower Costs: Reduced transfer fees compared to traditional banking methods.

Accessibility: Easier access for those without bank accounts through mobile money services.

Security: Encrypted payment systems help protect funds and personal information.

By reducing both time and cost barriers, these benefits contribute to a more inclusive trading environment.

Impact on Risk Management

One of the less obvious advantages of digital payments is their effect on risk management. Traders can quickly add funds to cover margin requirements if markets move unexpectedly. Similarly, they can withdraw profits regularly to secure gains outside of their trading account.

For Kenyan traders, this ability to move funds in real time reduces the risk of margin calls during volatile periods and ensures that profits are not left exposed to market fluctuations.

Encouraging More Participation in the Market

As funding and withdrawal processes become faster and more reliable, more Kenyans are exploring forex as an investment and income opportunity. The convenience of digital payments removes one of the main concerns for new traders: the ability to access their money when needed.

This is especially important for younger, tech-savvy individuals who expect seamless financial transactions. By meeting these expectations, brokers and payment providers are encouraging a new generation of traders to engage with the market.

Integrating Digital Payments with Trading Platforms

The best brokers in Kenya are now fully integrating digital payment options into their platforms. This means traders can initiate deposits or withdrawals without leaving their trading interface.

Such integration not only saves time but also ensures that traders stay focused on market activity. They do not need to navigate multiple websites or apps, which can be distracting during active trading sessions.

Challenges to Consider

While digital payments offer many benefits, there are still challenges to address. Fraud and phishing remain concerns, especially when traders are not careful about where they share personal and financial information. It is important to use secure networks and work only with regulated brokers that have strong data protection policies.

Transaction limits on some mobile money services can also be restrictive for high-volume traders. In such cases, combining mobile money with bank transfers or e-wallets can provide greater flexibility.

The Future of Digital Payments in Kenyan Forex Trading

The growth of digital payments in Kenya is expected to continue, with more innovation on the horizon. Faster settlement times, expanded payment limits, and broader integration with international financial systems will further improve the experience for traders.

For the forex market, this means even more people will be able to participate with fewer barriers. As brokers and payment providers compete to offer better services, traders will benefit from increased efficiency and convenience.

Final Thoughts

Digital payment solutions have opened the door for more Kenyans to participate in forex trading than ever before. The ability to deposit and withdraw funds quickly, securely, and at low cost makes it easier for traders to focus on market opportunities rather than logistical challenges.

For those who understand what is forex trading and how does it work, the combination of knowledge and modern payment systems can be a powerful advantage. By choosing reliable payment methods and working with reputable brokers, Kenyan traders can fully enjoy the benefits of this new era in forex trading.

The Treasury on Tuesday made a stark admission of the shilling being undervalued against the dollar, placing Kenya on a collision course with the International Monetary Fund (IMF) that advocates a freely traded exchange rate.

Treasury Cabinet Secretary John Mbadi said at a press briefing on Tuesday that the shilling could strengthen to Sh118 to the dollar if allowed to fall freely in a setting of increased inflows of the US currency.

This suggests that Kenya has been influencing the trade of the shilling against the dollar, adding the exchange rate to the monetary policy tools for managing inflation.

The IMF expressed concern over the unchanged value of the shilling against the dollar, despite global shifts that were expected to see a stronger local currency.

It termed the shilling too stable, having traded on a narrow range between Sh129.22 and Sh129.24 since the start of the year despite weakening against other major world currencies, including the euro and British Pound at 12 percent and 6.1 percent, respectively.

‘By the way, the stability of the shilling has a basis. I was even saying, if it [the shilling] is just allowed free fall, the shilling would even trade at 118 to the dollar,’ said Mr Mbadi, suggesting a State bias for a weaker shilling.

‘Because our current account balance has been improving. Our exports are doing better.’

Mr Mbadi says the local currency’s stability is backed by improving macroeconomic fundamentals, including improved diaspora remittances, tourist receipts and strong export earnings.

A stronger shilling leads to cheaper imports and makes domestically focused companies that rely on inputs from overseas in foreign currency face lower input costs, easing inflation.

It also weakens the Kenyan firms’ foreign earnings, while also making local goods expensive abroad.

Analysts who spoke to the Business Daily anonymously said that the government was likely intervening to keep the shilling weak through purchase of dollars by the Central Bank of Kenya (CBK).

The CBK’s position is that Kenya has a flexible rate policy and only intervenes to smooth volatility.

Mr Mbadi said that the stability of the shilling was supported by a steady inflow of earnings from exports and tourism as well as diaspora remittances.

Export earnings fell 3.06 percent to Sh554 billion in the six months to June, while tourism receipts are expected at between Sh560 billion and Sh650 billion this year from Sh452.2 billion in 2024.

Remittances rose 5.88 percent to $2.519 billion in the six months to June, with the foreign exchange reserves of about $12.1 billion (Sh1.56 trillion) providing ample cover.

The stable shilling got a boost from the 2023 deal to purchase fuel on credit from three state-owned Gulf companies, allowing the country to build up dollars for the purchase over time, rather than requiring about $500 million every month to pay for imports.

Dr David Ndii, the chairperson of the Presidential Council of Economic Advisers, argued that the CBK had been switching between setting interest rates and creating a dollar peg as a measure to check imported inflation.

Most critical goods, including food and petroleum products, are imported and paid for in dollars.

‘We say our [monetary] instrument is interest rates, but when you try to uncover it, it flips between the two [interest rate and exchange rate]. Sometimes we use interest rates and sometimes we use the exchange rate and that’s what I call common sense,’ said Dr Ndii at the NCBA Economic Forum last week.

Dr Ndii further said that Kenya, unlike developed markets, could not rely on interest rates alone as the key monetary policy tool, as the economy is too small and open to shocks, which limits the transmission of interest rate decisions.

Under the IMF’s policy orthodoxy, the exchange rate is expected to serve as a shock absorber – adjusting naturally to external pressures rather than being fixed or heavily managed to help the economy adjust automatically to global shocks.

For instance, if exports slow, a weaker shilling makes Kenyan goods cheaper abroad, helping exporters recover, hence ‘absorbing’ part of the shock.

However, for most frontier economies such as Kenya, which carry large external debt obligations, allowing the exchange rate to adjust freely not only leads to a higher import bill but also increases debt servicing costs, since much of their borrowing is denominated in foreign currency.

Even countries under severe fiscal strain have been known to support their currencies artificially, despite being led by avowed free market advocates.

A case in point is Argentina’s libertarian President Javier Milei, who has intervened in the market to stabilise the peso despite his ideological commitment to minimal state interference.

Mr Milei, who inherited an economy battered by hyperinflation and chronic debt, has propped up the peso through market intervention, a strategy that has eroded foreign reserves but is intended to contain inflationary pressures.

Mr Mbadi said the government’s failure to proactively manage its liabilities ahead of the bullet repayment of a $2 billion Eurobond signalled to international markets that Kenya was at risk of default – a development that, he added, contributed to the shilling’s sharp weakening.

‘After managing the Eurobond of 2024, this year, we thought quickly and managed the 2027 Eurobond when the markets were open,’ he said.

Kenya’s monthly diaspora remittances from Saudi Arabia have dropped to the lowest levels in four years in the wake of the implementation of a new skills-based foreign worker permit system in the Gulf nation.

Central Bank of Kenya (CBK) data shows cash wired back home by Kenyans in Saudi Arabia slid to $16.30 million (Sh2.11 billion) in August and $16.85 million (Sh2.18 billion) in September.

The flows in those two months have nearly halved (fallen by 46.83 percent) from an average of $31.17 million (Sh4.03 billion) in the first seven months of the year, falling to levels last seen in September 2021 at $16.61 million (Sh2.15 billion).

The inflows are also 50.67 percent lower than $33.59 million (Sh4.34 billion) monthly average for 2024, signalling a sudden break in a corridor that had previously been Kenya’s fastest-growing source of diaspora dollars.

Saudi Arabia implemented a skill-based work-permit system mid this year, with reclassification of existing workers starting June 18 and categorisation for new arrivals from July 1.

Enforcement of the new policy for existing workers, including thousands of Kenyans, kicked in on July 5, while new recruits were put on the new regime from August 3.

The new framework has placed foreign workers in three skill groups -highly skilled, skilled and basic- using a mix of academic qualifications, experience, technical capabilities, wage brackets and age.

The highly skilled tier includes doctors, engineers, IT specialists and corporate executives, requiring at least a bachelor’s degree and five years’ experience.

The skilled category covers technicians, mid-level supervisors and craftsmen with at least secondary or vocational training plus a minimum of two years’ experience.

The basic tier, on the other hand, covers entry-level and manual labour roles, with no formal education requirement, but is restricted to workers below the age of 60.

The shift has replaced the decades-old, one-size-fits-all iqama model under which all foreign workers- from janitors to surgeons- held the same residency and work permit category regardless of job description, education or work experience.

Saudi Arabia’s Ministry of Human Resources and Social Development enforced the reform to align talent deployment with the country’s economic transformation priorities, curb over-reliance on low-skilled staff and boost productivity.

But for Kenya, whose migrant flows to Saudi Arabia are dominated by basic and lower-skilled categories, the transition appears to have interrupted wages, contract renewals, onboarding schedules and cash transmission.

The slowdown cut the diaspora remittance flows from Saudi Arabia by 16.87 percent in the first nine months of 2025 to $251.33 million (Sh32.48 billion) from $302.35 million (Sh39.08 billion)-the first annual contraction since the CBK started publishing full-year country-level series in 2020.

That has allowed the UK to leapfrog Riyadh to become Kenya’s second-biggest source of diaspora dollars for the first time since the January-September 2022 period.

The CBK’s tallies show Saudi Arabia had been the single most significant driver of incremental remittances between 2021 and 2024, widening from $88.32 million (Sh11.41 billion) in January-September 2020 to more than $300 million in the same window last year.

That expansion, driven by domestic work placements, contract formalisation and rising Gulf wage floors, had turned Saudi from a fringe source into a macro factor in Kenya’s foreign exchange flows.

By contrast, the diaspora flows from the UK have been gentler, rising from about $150.52 million (Sh19.45 billion) in the first nine months of 2020 to $262.53 million (Sh33.93 billion) in the same period this year. However, this year’s flows have fallen 2.97 percent from the record $270.58 billion in the January-September 2024 period.

The slowdown from Saudi Arabia has come in the middle of a policy transition window.

Since taking office in September 2022, President William Ruto has framed bilateral labour deals as a foreign-policy instrument to create offshore jobs for Kenyan youth and to raise remittance inflows.

‘It is my intention that every year we should be able to send 250,000 Kenyans to work in different parts of the world so that we can enhance and increase the number of people working abroad and enhance our remittances from abroad,’ Dr Ruto said in May 2024. ‘I am committed, and I believe that is doable because I can see that we are on the right trajectory.’

The United States has maintained the anchor, with flows in the January-September 2025 period crossing $2 billion for the first time, accounting for more than 54 percent of total flows.

Kenyans in the US sent back home $2.05 billion (Sh264.94 billion) in the review nine-month period, a rise of 5.70 percent, or $110.42 million (Sh14.27 billion), over $1.94 billion (Sh250.73 billion) a year ago.

The US stability has helped push Kenya’s aggregate inflows to more than $3.77 billion (Sh487.23 billion) in the first nine months of 2025 from $3.64 billion (Sh470.43 billion) last year -a growth of 3.70 percent.

A recent Daily Maverick op-ed critical that the reference to businesses in South African townships as ‘informal’ conveys bias, prompted me to question local practice. Maxwell Gomera and Miles Kubheka make a strong case that using the word suggests that the businesses are somehow ‘incomplete, waiting to be fixed, registered or rescued’.

The usage of the word has been commonplace in Kenya since at least 1970. In the ensuing 55 years, the duality of our economy has been the subject of numerous reports and studies. The analysis has, however, remained firmly rooted in convention.

That sounds very much like most popular entertainment spots in urban Kenya. Informality is the noun denoting absence of formality. It also denotes the grammatical structures, vocabulary and idiom suitable to everyday language and conversation rather than formal contexts.

Formal, also an adjective, is something done in accordance with convention or etiquette; suitable for or constituting something that is officially sanctioned or recognised. It sounds much like large manufacturing enterprise in Kenya.

Tucked away in industrial areas, visited only by invitation. Formality, therefore, is the rigid observance of convention, or a thing that is done to comply with convention, regulations, or custom.

The majority of business in African chose the relaxed, friendly manner, using everyday language, over the more stifled officious manner.

There are academic debates about whether the choice is voluntary or by necessity. Whatever the case, the rules of formality were not made with them in mind.

Governments do of course try to create the correct rules for small business. In 2008, the Ministry of Investments, Trade and Industry (MITI) was implementing the Micro, Small and Medium enterprises (MSME) Competitiveness Project.

One component ‘improving the business environment’ was intended to increase the number of formally registered MSMEs. An early study for the component showed surprising results.

Conducted by Ernst and Young and Kenya Institute for Public Policy Research and Analysis (Kippra), the study found that more than half (53 percent) of the 2,800 firms surveyed countrywide were more than five years old.

So, contrary to conventional wisdom of that time, small businesses were surviving beyond the first 3-5 years, suggesting that they were sustainable, profit making enterprises.

Then and now, small business were believed to face difficulties in accessing financial services, high costs of production due to poor infrastructure and unfriendly regulatory environments, constraints in accessing raw materials, and lack of ready markets for their products.

These problems are believed to make small businesses unable to sustain their operations, lowering their survival rate.

On the formal-informal dichotomy, the data showed that only 28 percent of firms surveyed either had a single business permit (SBP) or were registered by the Business Registration Service (BRS), then Registrar of Companies.

The study revealed that majority of firms delayed formalisation of their operations by an average of 4.4 years.

The results supported the informality by choice theories. There were variations in costs of obtaining the SBP both across sectors and across regions countrywide. Businesses in areas and sectors where the SBP was costly were slow to register or formalise.

Other issues inhibiting formalisation included the number of licenses required in a particular sector and the average time taken to register a business. Record-keeping varied depending on the sector, type of ownership, and the level of education of the owner or manager.

There was also a strong belief that business registration invited the attention of KRA.

Sixty nine percent of all the businesses and a full 86 percent of non-registered firms were not paying taxes, which tied in with the issue of non-registration of businesses.

The policy response was the automation of business registration, now available on e-citizen. The electronic registry was to harmonise records of licences issued by various regulatory and licensing agencies including county governments.

This was expected to hasten the business registration process and curb corruption.

But perhaps the conventional approach was blinding us.

Today, Kenyans move more than three times the annual gross domestic product on mobile money platforms.

These platforms are relaxed and friendly. The successful mobile money operators advertise and communicate using everyday language.

Those that don’t have been consigned to the periphery. It is time to dump the conventional thinking. The informal is the main sector. Kenyan is a good name for it.

Savings and credit co-operative societies (saccos) are enlisting the services of financial consultants to advise and help secure funding from foreign lenders, signalling a gradual shift from overreliance on the conventional local bank loans and member deposits.

Local financial and management consultancy AVLC Group said it had structured financing deals for more than five saccos to secure funding from the World Bank valued at more than Sh1.3 billion this year.

The consultancy said it was receiving more requests from other saccos seeking funding for on-lending to small businesses in various sectors, including trade financing, agriculture and startups.

The loans are being disbursed in Kenya shillings at varying interest rates, with the World Bank, for instance, offering saccos cheaper funding at nine percent.

This means that the societies can on-lend the funds at 12 percent and profit from the interest rate spread -the interest saccos earn on loans they disburse and the cost of interest of securing the same funds.

‘So far, we have over five saccos with a total value processed of over Sh1.3 billion. But it is an ongoing process because right now we are in discussions with other saccos that have been reaching out to us to assist them, especially for the financial year 2026,’ AVLC chief executive Andrew Kanyutu told the Business Daily.

‘We have also had saccos, which are making enquiries from Uganda, Tanzania, to structure deals to access not only the World Bank funding but to tap into other funding available.’

He added that the institution is engaging multiple financiers from the US, the UK and the United Arab Emirates.

Saccos are targeting funding from international financiers to boost their lending capacity amid a challenging domestic economic environment that has severely impacted incomes for households and businesses.

For instance, the consultancy served as the lead arranger in a Sh500 million facility for Githunguri Dairy Farmers Cooperative Sacco under the World Bank-backed SAFER Fund, playing a key role in structuring the transaction, ensuring compliance with international financing standards and aligning the process with sustainability and impact goals.

‘The World Bank’s SAFER Fund was meant to boost post-Covid, but you see, after boosting, now people would want to get to the next level, now you have stabilised, you need growth,’ said Mr Kanyutu.

‘The World Bank still has those kinds of funds and partners they work with to bring on board that funding. Those partners are even private entities who are willing to put funds, but their core business is not monitoring performances, but they are willing to do so through foundations, through certain channels.’

Structuring a financial deal means creating the specific framework and terms for a transaction, including how it is financed, how risk is allocated and how it will be repaid. It involves various components, including pricing, tax implications of the transaction, collateral, guarantees, and repayment schedules to meet specific objectives and manage risks.

In Kenya, the external borrowing ratio for regulated saccos, which measures the proportion of total liabilities from external sources, mainly commercial banks, has been set at a statutory maximum of 25 percent.

According to the Sacco Societies Regulatory Authority, the overall trend analysis of the external borrowing ratio of regulated saccos over the years shows a progressive decline.

The external borrowing ratio for deposit-taking saccos dropped to 2.51 percent in 2024 from a high of 3.02 percent in 2023, while that for non-withdrawable deposit-taking saccos dropped to 1.46 percent from 1.62 percent in the same period.

‘Most lenders want to ensure their funds are safe and, apart from safety, that it is reaching the intended purposes. So they are looking at working with entities and consultants who can understand the customers’ local needs, for example, if you come to Kenya, it is easier for you to lend through a sacco than to come and establish a company and start lending because your core business is not creating the credit models or creating the recovery models,’ said Mr Kanyutu.

‘Your core business you have seen an opportunity, you need to invest, so you work with structured and regulated entities like Saccos who have been able to manage their risks because of the group lending which mitigate default and self- guaranteeing and also they reach the actual intended persons on the ground.’

In December 2021 the World Bank launched a $100 million (Sh13 billion) financing programme for small businesses destroyed by the economic fallout of the Covid-19 pandemic under a five-year programme seeking to safeguard recovery of about 70 percent of the affected firms.

The programme dubbed ‘Supporting Access to Finance and Enterprise Recovery (SAFER) fund’ has opened a window for saccos to strengthen their cash positions through cheaper funding away from bank loans.

The funds are being channeled through the Kenya Development Corporation (KDC).

The bank estimates that about two-third of small businesses in Kenya were affected by the Covid-19 crisis in 2020, with hopes that about 70 percent of them will resume operations based on the financial support.