Category: Business Daily

The manufacturing sector has broken into the top three most tax-compliant bracket, displacing transportation and storage from top-tier sectors in corporate income tax (CIT) payments for firms already in the tax net.

Data from the Kenya Revenue Authority (KRA) shows that manufacturing ranked third in on-time corporate tax payments for the financial year ended June 2025, recording a compliance rate of 77.09 percent.

Factories joined companies engaged in real estate activities and financial and insurance firms, which maintained their lead in tax discipline at 80.01 percent and 79.51 percent, respectively. In contrast, transportation and storage, which held third place in the 2023-24 fiscal year with a 76.07 percent compliance rate, dropped out of the top bracket.

The manufacturing sector’s stronger tax compliance coincided with renewed momentum in industrial activity, as shown in the latest quarterly data by the Kenya National Bureau of Statistics (KNBS).

Non-food manufacturing recorded gains in the second quarter of 2025, signalling renewed investor confidence, growing domestic demand, and steady capacity utilisation across factories.

Firms engaged in cement production raised output by a fifth (21 percent) to 2.47 million metric tonnes from 2.04 million tonnes in the same period last year, while production of galvanised sheets rose 11.3 percent to 77,200 tonnes.

The KNBS data further shows motor vehicle assembly increased 20.8 percent to 3,350 units in three months to June from 2,773 units a year earlier.

The KRA data, however, shows that firms in the real estate sector were the most tax-compliant for the second year in a row, posting the highest on-time payment rate of CIT at 80.01 percent in the 2024-25 financial year, up from 77.55 percent a year earlier.

The developers and landlords in the tax net were followed by those in the financial and insurance sector, which had an 79.51 percent on-time payment rate.

At the same time, the KRA data show that the financial services sector led in on-time filing of the annual corporate tax returns, registering a compliance rate of 74.20 percent, ahead of energy (74.16 percent) and construction (74.03 percent).

Firms in banking and insurance services beat those in the energy sector, which had topped the annual CIT filing chart the previous year ended June 2024 at 74.02 percent, followed by finance (73.61 percent) and construction (73.55 percent).

This came in a period when the KRA reported that 461,969 firms-about 74.73 percent or three out of four companies-did not remit any money due to profitability.

The proportion of firms that skipped CIT payments in the year to June 2025 grew from 401,274 of 556,329 registered firms last year, or 72.13 percent.

The KRA numbers suggested that an overwhelming share of companies in the tax net were either genuinely loss-making or had mastered the art of tax planning. Tax experts say the gap between registered firms and taxpayers cannot be explained by business losses alone.

Stephen Waweru, a senior manager for tax services at KPMG, said the numbers highlight structural and behavioural challenges in corporate tax compliance.

‘Many firms are registered, many file returns, but relatively few actually pay instalments,’ he told the Business Daily.

‘The level of compliance seems to be improving, but it still falls far below what one would expect if firms in the tax net were largely profitable.’

Mr Waweru says this could be explained by the share of businesses-especially small and medium-sized enterprises or new entrants-that are genuinely loss-making, often squeezed by high inflation, rising input costs, exchange rate swings, and supply chain disruptions.

Oil marketers and dealers will be required to keep customer details for at least two years or risk a fine of Sh20,000 in a fresh bid to boost safety and accountability in the use of Liquefied Petroleum Gas (LPG).

The requirement to keep details such as customer name and mobile number is contained in the Petroleum (Liquefied Petroleum Gas Regulations), 2025. A breach of this will attract a fine of Sh20,000 for every sale.

Currently, the retention period of customer details is a year with a fine of Sh50,000 for each breach.

The extended retention of customer data is meant to entrench accountability and keep track of all LPG sold from the seller to end users , ultimately placing responsibility on the seller for any mishap caused by unsafe containers.

Dealers and oil marketers will file the customer details into a central tracking system at the point of sale. The Energy and Petroleum Regulatory Authority (Epra) will be the custodian of this database.

‘A person licensed to wholesale or retail liquid petroleum gas in cylinders, shall issue a receipt at the point of sale which shall include the information in sub-regulation (1) and (2),’ the regulations read.

‘The records under this regulation shall be maintained for at least twenty-four months.’

Sellers will also be required to keep information such as unit and total price of the transaction, indicating the cylinder deposit where applicable.

The regulations are currently undergoing public scrutiny before going to Parliament for approval and then gazettement.

The requirement will also apply to the sale of LPG to wholesale traders, boosting the ease with which Epra can trace faulty cylinders especially when accidents occur when the end customers are using the commodity.

Besides safety, keeping of the records is also key in providing historical information to resolve disputes like billing that are filed with the industry regulator.

The requirement on dealers and oil marketers to issue receipts that include their details like name, contacts of the consumer, cylinder brand and serial numbers of the cylinders came into force five years ago.

The regulator has since 2019 been intensifying efforts to tighten rules and impose heavy sanctions for violations in the LPG sector, in a bid to stifle a thriving black market especially in the estate and informal areas.

Epra’s push to tighten the legal framework on the sale of LPG comes amid a spike in the use of the commodity as the preferred cooking fuel.

Consumption of cooking gas hit a record high of 413,960 tonnes last year, a growth of 14.8 percent from 360,590 tonnes used in 2023.

The growing LPG market has attracted both foreign and local firms who are keen to set up facilities for handling imported LPG or refilling stations. These firms include Lake Gas and Taifa Gas of Tanzania and Nigeria’s Asharami Energy.

The Co-operative Bank of Kenya has introduced an unsecured digital overdraft facility that allows customers to overdraw their accounts by up to Sh100,000 for transactions such as bill payments, raising competition for Equity Bank Kenya and Safaricom.

The lender has informed customers that the new short-term credit facility, called ‘Kamilisha’, will enable individuals and businesses to complete transactions when they do not have sufficient funds at a time of paying bills such as house rent, electricity, stock purchases or sending money.

‘The overdraft service allows you to complete transactions when you don’t have enough money in your bank account. It bridges the shortfall between what you have and what you need to pay, helping you complete important transactions instantly,’ the lender told customers.

The Employment and Labour Relations Court has upheld the sacking of a lecturer accused of sexual harassment by inappropriately touching female students, hugging them suggestively, and using uncomfortable terms to address them, such as ‘darling’ and ‘sweetheart.’

The court said that Oshwal College in Nairobi had a valid and fair reason for terminating the employment of Benard Nyamamba Mauti in May 2023 on grounds of gross misconduct.

After reviewing the students’ complaints, the court said, it was evident Mr Mauti’s conduct was inappropriate and amounted to sexual harassment, and his actions clearly breached the boundaries of the professional student-teacher relationship, expected of him.

As a lecturer, the claimant was under a strict obligation at all times to maintain professionalism in all interactions with his students and to refrain from any verbal or physical behaviour of a sexual nature,’ said the court.

Although the students described the lecturer as a good teacher, his conduct was unethical and inappropriate.

And while he allegedly referred to female students as ‘sweetheart’ or ‘darling,’ was overly touchy with them, hugged and whispered in their ears, it was claimed that he was notably harsh towards male students.

‘In light of the foregoing, the Court finds no reason to doubt the credibility of the students’ statements outlining the allegations against the Claimant,’ said the court.

Mr Mauti was employed by the college in 2010 as a lecturer under an open-ended contract of service and said that he performed his duties diligently throughout his employment.

He was fired on May 19, 2023, over allegations of sexual harassment, but he maintained that his termination was irregular, unlawful, unjustified, and in blatant violation of the Employment Act.

Mr Mauti wanted the court to issue a declaration that his sacking was wrongful and amounted to unfair and unlawful dismissal.

He also sought to be paid damages and compensation for breach of contract amounting to Sh22.7 million, being the wages for the remainder of the contract period from May 1, 2023, until retirement age of 60 years.

He testified that he was summoned to the principal’s office on April 26, 2023, in the presence of the Academic Registrar, where he was informed that he was under investigation based on student appraisal forms.

He said that, through threats and intimidation, the principal failed to fully disclose the nature of the investigation and did not allow him to view or examine the said appraisal forms, which allegedly contained claims of sexual harassment made against him.

A few days later, he said he was summoned to appear before a panel and informed that he was under investigation for sexual harassment allegations made by certain students.

Mr Mauti claimed that the panel, which he considered irregular and incompetent, interrogated him unlawfully without providing adequate or clear particulars of the allegations, including the identities of the complainants, the specific nature of the accusations, or any supporting evidence such as complainant statements, CCTV footage, or reports.

Despite this lack of disclosure, he answered the panel’s questions and categorically denied all allegations.

The lecturer said he granted only three days to respond to the show cause letter, yet he had not been furnished with full and detailed particulars of the allegations, including the names of the complainants, the specific allegations, and the evidence relied upon.

He maintained that the statements were fabricated and backdated to appear genuine after he had demanded them during his interrogation by the panel.

The college management defended the termination, saying the decision was conducted in accordance with the law, fair and lawful, and that he was in breach of the Employment Act and the college’s human resources manual.

The college said it first received a complaint regarding his conduct involving sexual harassment, specifically, an incident in which he kissed a student in the library.

Mr Mauti allegedly acknowledged his misconduct and, by a letter dated August 23, 2010, he tendered a written apology, undertaking that such behaviour would not recur.

About four years later, there was another complaint from a parent alleging that he had been sending inappropriate text messages to her daughter, which made the student uncomfortable.

Once again, he allegedly admitted to the conduct, apologised, and was cautioned regarding his behaviour and its potential consequences.

There were more complaints from students, with one alleging that he had inappropriately touched her, solicited and received a gift from her, and made unwarranted phone calls to another student.

Again, he was reminded of the college’s duty to maintain a safe and respectful learning environment and was issued a final warning, cautioning that any further breach of the institution’s ethical or welfare standards would lead to immediate termination of his employment.

The court said the alleged behaviour of touching and hugging female students and addressing them with terms such as ‘darling’ or ‘sweetheart’ was wholly improper and constituted sexual harassment.

‘As a learning institution, the Respondent bore a duty of care to its students to ensure that the learning environment remained safe, both physically and emotionally. This duty required the Respondent to investigate any allegations of sexual harassment and to take appropriate disciplinary measures if such allegations were substantiated,’ said the court.

The court said it should also be appreciated that the college was not required to prove the allegations against the lecturer beyond a reasonable doubt.

Kenya is introducing an integrated digital platform at the port of Mombasa for faster clearance of goods, marking a significant step in efforts to reduce congestion and shorten turnaround times at the country’s busiest maritime gateway.

The platform, known as the Port Community System (PCS), is being implemented in a joint partnership between Kenyan software development firm EMEA Port Logistics and Dubai-based logistics group DP World, working alongside the Kenya Ports Authority (KPA).

The new system is designed to link all players involved in import and export processing, including shipping lines, clearing and forwarding agents, transport firms and government departments, on a single online network.

Through the system, users can track shipments, submit documents, make payments and book gate entries electronically, replacing the multiple digital and manual steps that currently slow down cargo release.

‘This partnership with DP World marks an important step in advancing Kenya’s logistics capabilities. Together, we’re creating a connected and transparent ecosystem that benefits all players in the trade chain,’ said Jack Rono, director at EMEA Port.

DP World said the platform would simplify coordination among agencies that handle cargo clearance, allowing information to move simultaneously across institutions that traditionally rely on separate databases.

It projects that once fully deployed, the new framework could cut average cargo clearance time by about 30 percent.

The initiative seeks to address long-standing inefficiencies at Mombasa port, where overlapping systems and paper-based procedures have kept dwell times among the highest in the region.

Efficiency at the port is closely watched through Time Release Studies, which measure how long it takes for goods to move from vessel arrival to release.

The most recent review by the statistics and customs authorities put average clearance at between 13.5 days, depending on cargo type.

The Mombasa port handled 32.86 million tonnes of cargo throughput between January and September 2025, compared to 29.97 million during the same period last year, marking a 9.6 percent growth.

In the latest data, the port registered 1.55 million twenty-foot equivalent units (TEUs) between January and September 2025 compared to 1.46 million TEUs in 2024.

The increase represents a growth of 91,000 TEUs, equivalent to 6.2 percent.

Kenya operates several parallel digital tools, including the Kenya TradeNet System, which handles trade documentation, and the customs platform run by the Kenya Revenue Authority (KRA), which do not always communicate seamlessly.

By merging these processes into one interface, the PCS is expected to reduce duplication and lower compliance costs for importers and exporters.

In practice, that means information on a single container will be entered once and updated automatically across all relevant agencies.

DP World has been expanding its digital logistics platforms in Africa as part of a wider strategy to modernise trade flows.

The firm already operates similar systems in Tanzania and Mozambique, linking ports, customs agencies and transport corridors under unified data networks.

The deployment in Mombasa also underscores Kenya’s renewed push to digitise trade procedures and align with regional efficiency standards under the African Continental Free Trade Area framework.

A seamless digital chain is considered key to cutting non-tariff barriers that raise logistics costs across East Africa.

A Mombasa Air Safari plane crashed and burst into flames in Vyungwani area, Matuga, Kwale County, killing all 11 people on board.

In an official statement, the airline said the accident involved its aircraft, registration number 5Y-CAA, which was operating a scheduled flight from Diani Airport to Kichwa Tembo, Maasai Mara, on Tuesday morning, October 28, 2025.

‘Mombasa Air Safari Limited deeply regrets to confirm that one of our aircraft, registration number 5Y-CAA, was involved in an accident today, the 28th October 2025, while operating a scheduled flight from Diani Airport to Kichwa Tembo, Maasai Mara,’ the airline said.

‘Sadly, there are no survivors.’

According to the airline, the fatalities included eight Hungarian nationals, two Germans, and one Kenyan crew member.

Kwale County Police Commander Abdillahi Alio confirmed the incident, saying security and rescue teams had cordoned off the area.

The Kenya Civil Aviation Authority (KCAA) said the aircraft took off from Diani at around 8.30am and crashed shortly after.

‘Government agencies are already on site to establish the cause of the accident and its impact,’ said Emile Arao, KCAA’s Director-General.

The cause of the crash is still under investigation.

Loud bang

However, locals reported hearing a loud bang before spotting flames and smoke rising from the wreckage.

‘It was still very early when I heard a loud bang. I rushed to the scene and found that the plane had caught fire, and there was no one we could save,’ said Makopa Sazu, a resident of Vyungwani.

Witnesses said the area had experienced heavy overnight rain and thick fog on Tuesday morning, conditions that may have reduced visibility.

Aviation safety

The accident has renewed safety concerns over Kenya’s aviation sector, especially involving light aircraft.

In recent months, the country has witnessed several fatal air crashes. In August, an Amref Flying Doctors aircraft crashed in Mwihoko, Kiambu County, shortly after take-off from Wilson Airport, killing all six people on board.

Earlier in January, a light aircraft burst into flames after crash-landing in Malindi, killing three people on the ground, while the pilot and two students survived with injuries.

Just weeks later, on January 31, a Cessna A185F crashed at Kedong Ranch in Naivasha, Nakuru County, killing both occupants. Investigators cited low visibility and poor weather conditions at the time.

In March, a trainee pilot was killed when a light aircraft crashed at Ikanga, near Voi in Taita-Taveta County. And in June, two Kenya Defence Forces officers died when a KDF training aircraft went down in Kinango, Kwale County.

Eight directors of listed firm Kakuzi have gone back to court to stop an investigation by Capital Markets Authority (CMA) over alleged conflict of interest and financial impropriety.

In an application to be heard next month, the directors led by chief executive officer Christopher Flowers want the inquiry stopped, pending the hearing of an appeal they have filed.

Other directors facing the investigation are Nicholas Ng’ang’a, Graham Mclean, Andrew Njoroge, Ketan Rameshchandra, Daniel Ndonye, Stephen Waruhiu, and John Kimani.

The regulator started investigations into companies that have been doing business with Kakuzi and which have links to some of the directors.

The High Court on September 30 dismissed an appeal by the directors paving the way for the CMA to proceed with the inquiry.

But the directors submitted that they will suffer substantial prejudice if the capital markets regulator is allowed to proceed with the inquiry process, before their appeal is determined.

The court had suspended the execution of the decision for 21 days which ended on October 21. The directors formally went back to court on October 15 and the matter was fixed for highlighting submissions on November 19, 2025.

‘The appellants are reasonably apprehensive that unless the orders sought herein are granted, the respondent (CMA) will proceed with the inquiry which will further occasion great injustice to the appellants and would render the intended appeal nugatory,’ the directors said in the application.

The High Court dismissed their appeal last month saying the directors and the company failed to prove any violation of their rights and fundamental freedoms, for the court to intervene.

‘The appellants’ (Kakuzi’s) actions also seem to be premature. As such, the contention is for rejection,’ said the court.

The eight directors had faulted the investigation, which commenced in June 2021, arguing that the entire process was not fair and did not meet the constitutional requirements of right to fair hearing.

In the second appeal, the directors have faulted the court over the failure to find and uphold their constitutional right to a fair hearing and in particular, the refusal or failure to disclose the particulars of the alleged financial impropriety.

They said the failure to disclose the complaints received from third parties and failure to give reasons as to why it considered their documents submitted during the inquiry as insufficient, was wrong.

They have also submitted that the court made an error in finding that they did not prove any infractions of their rights and fundamental rights.

It is their argument that the regulator erred by withholding the particulars of the alleged financial impropriety or give reasons for the failure to provide the nature of the complaints, received from alleged third parties.

They further submitted that they were within their constitutional rights to not only request information concerning the allegations raised against them, but also the evidence and materials relied upon by the CMA.

The regulator said in its filings that it had sufficient cause to conduct the investigation, which centred on Management and Operational Services Agreements signed between Robertson Bois Dickson Anderson Limited and Kakuzi on December 11, 2017, as well as the those signed between Eastern Produce Regional Services Limited and the agricultural firm.

The regulator also intended to probe business dealings and agreements with related companies including Robertson Bois Dickson Anderson Limited, Eastern Produce Kenya Limited, EPK Empowerment Company (Kenya) Limited, Lintak Enterprises (K) Limited, Linton Park (Kenya) Limited and Siret Tea Limited.

Jepkemoi founded and now runs a midsize food processing company in Kitale. When staff ask her what the business is really trying to achieve in terms of indicators and impact, Jepkemoi brushes them off and says the job solely exists to make money and keep costs low.

Different departments within the company chase different ideas of what matters to them without an overarching unified vision. Quality eventually begins to slip.

Customers, at first, gradually and then rapidly start drifting away and finding other suppliers. The staff in turn feel tired and replaceable. Even though everyone is busy, no one is sure what they are actually building and working toward.

Researchers Gerard George, Martine Haas, Anita McGahan, Simon Schillebeeckx, and Paul Tracey warn about such purpose and meanings gaps in their widely read study.

The research states that corporate purpose exists as much more than a slogan. Rather it is a clear explanation of three distinct purposes.

First, why the firm exists. Second, who the company tries to create value for. Third, what future is the organisation trying to build. Many firms erroneously just dismiss purpose as an external facing slogan and do not cascade down the real tripart purpose that the board, and hopefully senior leadership team, already know. So, the employees are left guessing and pondering their future and meaning.

Strong purpose among the three meanings must blend both a goal view, which is what one is trying to achieve, and a duty view, which is who an entity refuses to harm and who that entity is committed to serving responsibly.

When leaders only talk about profits over and over again, but ignore the organisation’s duty of care, then employee trust collapses which eventually impacts customer faith and trust.

On the flip side, when leaders only talk about duty but ignore performance, execution stalls and come to a standstill. The work of a senior executive is to hold both dimensions as they lead.

The research outlines three stages in which leaders can shift the internal culture towards a purposeful direction. Initially, start with framing. Say in plain, direct, and specific language what the firm stands for. Capture the stance in one sentence. Do not overcomplicate it and leave out buzzwords, acronyms, and slogans.

Next, formalise the purpose. Layer the purpose into the organisational structure, human resources incentives and rewards, hiring practices and profiles, training regiment, reporting lines, and the board’s attention through specific agenda items.

If nothing inside the organisation’s internal mechanisms changes, then everything was just for talk and not substance. It is better to do nothing than to elevate staff hopes and then not proceed to change anything.

Finally, realising the purpose. Show proof that the purpose is being achieved in phases. Purpose has to result in visible benefits for customers, staff, and communities, not just merely for shareholders or else it seems meaningless.

Sometimes that can even mean walking away from easy short-term money because it clashes with what you said you stand for. As an example, Kenyan indigenous management consulting firm WYLDE International has famously walked away from public sector contracts that required implied bribes, as seen on social media and in conferences, so as to keep fidelity to one of its core purposes of business with integrity across all its business units and platforms.

The study also makes a harsher, more focused point. Purpose gets enforced by people, not posters, banners, or taglines. Business founders leave their fingerprints on what the company believes is right. But it becomes the staff that either carry it forward or quietly kill it.

Regulators, investors, and communities apply pressure when behaviour and messaging do not match. So, leaders who claim a purpose but reward the opposite behaviour are not just being fake, they are actively training their best people to leave the organisation.

Here is what executives here in Kenya can start doing this month to instill purpose. Write a one sentence honest purpose that a front-line normal employee would recognise.

Then change one real thing in how you run the business to match that sentence. Take for example things like how you pay, what you measure, or who gets promoted. Then showcase one piece of evidence to share with staff that proves you mean it. For example, farmer payouts, defect rates, staff retention, community safety, whatever fits your care purpose.

In summary, remember that purpose is not about branding.

Instead, it exists as internal wiring. When internal design and external expectation become aligned, then companies perform better and last longer. When the two fall out of sync, then you get what Jepkemoi is living with right now and the firm sinks.

A court has temporarily stopped a Chinese firm and its local partner from continuing with quarrying activities in Kilimambogo, Kiambu County, citing concerns about the environment and violations of constitutional rights.

The Environment and Lands Court orders are directed to Chinese firm Sinohydro Corporation Limited and Vallem Construction Limited, highlighting growing scrutiny over foreign-led mining projects in Kenya, particularly where local communities are sidelined.

Similar disputes arose in Kwale (titanium mining) and Kakamega (gold exploration), where human rights activists accused firms of flouting environmental laws.

The court ruled that Sinohydro Corporation and Vallem Construction must immediately cease all mining operations, including blasting, crushing stones, and excavating, or in any manner operating the quarries located at Kilimambogo.

The order remains in force pending the hearing and determination of a petition filed by a non-governmental group, the Regional Centre for Business Ethics and Research (RCBER), challenging the legality of the mining permits.

The petitioners accused Kiambu County Government of unlawfully issuing the two firms quarrying permits without conducting public participation or publishing an Environmental Impact Assessment report.

They argued that the mining activities had caused severe noise pollution, environmental degradation, and health hazards for residents.

According to court documents, residents of Kilimambogo have endured noise pollution, health hazards, and environmental degradation due to uncontrolled quarrying operations.

‘The blasting and crushing of stones have caused unbearable noise pollution, while dust and debris have contaminated water sources,’ the group said. ‘There are no proper waste disposal mechanisms, and residents suffer respiratory illnesses.’

Vallem Construction had challenged the court’s authority, arguing that disputes over mining licences should first be heard by the National Environmental Tribunal (NET) before escalating to higher courts.

However, the court dismissed the objection, ruling that the petition raised fundamental constitutional violations, including the right to a clean environment (Article 42 of the Constitution), which fall squarely under the Environment and Land Court’s jurisdiction.

The court emphasized that constitutional rights cannot be sidelined by procedural technicalities.

‘Where fundamental rights are at stake, courts must intervene,’ the ruling stated.

The court also found that the petitioners have a strong case against the mining activities and the county government, “with a probability of success”, especially on the primacy of public participation in environmental decisions.

“The applicants have demonstrated clearly that the public participation process and the approval by the third respondent (county government) were processes that were not carried out; therefore, there was no public participation on the utilisation of a natural resource which belongs to all,” said the court.

The court observed that the respondents did not deny the facts set out by the applicant, save that they claimed the court lacked jurisdiction over the dispute due to the doctrine of exhaustion having obtained approval from the county to carry out the activities.

It is the petitioner’s case that the County Government issued permits without involving the National Land Commission (NLC) or ensuring compliance with environmental safeguards.

After a full hearing of the case, they want the court to quash the permits. However, the injunction remains in force until the main petition is heard and determined.

Foreign investors’ participation at the Nairobi bourse has dipped to its lowest level in over a decade as they seek higher returns in developed markets like the US and UK.

Data from the Capital Markets Authority (CMA) for the three months to September show that the share of foreign investor participation in the NSE equities market fell to 28.01 percent in September from 31.28 percent in August and 59.51 percent in April.

This emerges in a period when foreigners have remained net sellers at the NSE for all months this year save for June and August, making local investors key drivers of the bourse, which has gained 46.6 percent since the start of the year.

Foreign investors’ net sales, when share sales surpass purchases, rose to Sh7.2 billion in the nine months to September.

Steady returns from developed markets, including the US, the United Kingdom, China and Japan, have kept the offshore investors out of the NSE.

Stocks in the advanced markets have surged on the back of improved earnings and sustained appetites for tech stocks, which have been super-charged by their exploits in artificial intelligence (AI).

The share rally in the Western capitals has seen foreign investors ignore risky emerging markets such as Kenya, which has recorded a 46.6 percent gain, which the Nairobi All Share Index (NASI) has chalked up since the start of the year.

Analysts have reckoned that the continued positive returns from global markets, notably the US, have reduced the appeal of the NSE.

‘Positive returns year-over-year in developed markets make it more difficult to justify investing in Africa from a risk/reward perspective,’ analysts at Sterling Capital stock brokerage noted previously.

This month, the US market marked the third anniversary of its most recent bull run, which has been powered by gains in mega cap technology stocks such as Meta, Microsoft, Nvidia, Alphabet, Amazon, Apple and Tesla.

The US market rally has minted multi-trillion-dollar companies with Apple and Microsoft crossing $4 trillion in valuation each on Tuesday.

Drivers include improved sales of the new iPhone for Apple and the finalisation of a stake purchase in ChatGPT maker OpenAI’s for-profit business.

The market rally has defied concerns over President Donald Trump’s trade tariffs and fears of an investment bubble around tech stocks.

The NSE faced a difficult task of shaking off recent jitters, including weak policies and currency depreciation, which have exacerbated capital outflows from emerging and frontier economies.

Kenya has yet to have calendar net inflows from foreign portfolio investments into the NSE since 2019.

‘Capital flight to hard currency-denominated assets over the past few years has largely been driven by negative sentiment toward sub-Saharan Africa as a whole due to currency depreciation, the Covid-19 pandemic and inconsistent policies negatively impacting business,’ the analysts at Sterling Capital added.

Foreign investors made a high of Sh4.9 billion in net sales from the NSE in September, offsetting inflows of Sh1.6 billion in August, according to market data compiled from stock brokerages.

The foreigners have remained net sellers so far in October, selling stocks worth Sh1.4 billion on a net basis through Monday this week.

Outflows by foreign investors are expected to continue to the end of the year if gains in advanced markets hold up in the fourth quarter.

Global volatility from US tariff policies is, however, seen driving foreigners to return to emerging and frontier economies if the investment landscape in advanced economies becomes riskier and uncertain.

NSE market gains of 46 percent are on course to be last year’s return of 34 percent in what will cement its place as the top-earning asset class.

A stable exchange rate and low inflation have anchored the market rally alongside a drop in government security yields.

This has given investors