Category: Business Daily

Picture this. At 7pm on a weekday evening, a Grade 7 pupil sits at their home study table surrounded by books, a tablet and a pile of printed worksheets.

One assignment requires researching a local environmental issue and presenting it using pictures and charts. Another could involve a creative arts project that needs coloured paper, glue and markers. A third task must be typed, uploaded online and submitted before midnight.

As the child works through their homework, the parent is required to print documents at a nearby cyber café, load mobile data for online research, and buy stationery needed for assignments. This is just a glimpse of the life of a Competency-Based Education (CBE) parents like Raymond Musungu.

‘Education expenses start building up from upper primary and shoot up in junior secondary,’ he says the parent who has two learners under CBE. With his eldest child who studied under the 8-4-4 system, the expenses, he says, were manageable, with the heaviest financial burden kicking in at secondary and university levels.

‘With CBE it is front-loaded pressure,’ he says describing the financial differences between the two education systems.

This front-loaded pressure is pushing parents to reassess how they plan for education costs.

According to financial advisers, some parents are reconsidering the adequacy and timing of their education savings as expenses accumulate earlier than they once did.

Dennis Mworia, Britam Life Assurance general manager, says the most visible shift has been how parents structure their education savings rather than whether they save at all.Under the 8-4-4 framework, education-related pay-outs were typically spread over four years before maturity. Under CBE, costs are incurred earlier, particularly around the transition into junior secondary, prompting a need for earlier access to funds.

‘The key difference is largely in the structure of pay outs, with fewer but earlier releases compared to the old system,’ Dennis says.

More policies, longer planning

Junior secondary has emerged as a particularly cost-intensive phase, driven by subject-based learning, practical assessments and additional learning materials that parents must cover. As a result, families can no longer rely on savings plans that only release funds at traditional secondary school entry.

To manage this, financial advisers say some parents are spreading their education savings across different timelines to match education stages more closely, rather than relying on a single lump sum later in the child’s schooling.

While there is a perception that CBE has made education insurance more expensive, Dennis argues that rising coverage amounts are largely a response to inflation rather than changes in the education system itself.

For parents who began saving when their children were younger or when the 8-4-4 system was still dominant, inflation has reduced the real value of earlier plans.

Financial advisers increasingly recommend periodic reviews to identify gaps caused by rising costs or structural changes in the education system. These reviews are particularly relevant for families considering alternative curricula, such as Cambridge, which can significantly alter funding needs.

Beyond savings structure, education planning also plays a role in household risk management. Eliud Kavogi, Eliud Kavogi, a Senior Financial Advisor at Kenindia Assurance in Nairobi, says education savings are more resilient when combined with risk protection.

Education-focused savings plans are often structured as endowment policies linked to life insurance, meaning that savings continue even when a parent is no longer able to contribute due to death, disability or serious illness.

A key feature in such arrangements is the waiver of premium. If the parent experiences a qualifying life event, future contributions are covered, allowing the education plan to continue as scheduled. This ensures that a child’s education funding does not collapse at the same time the family loses income.

Depending on policy terms, some plans also provide immediate financial support to the family while maintaining future education pay-outs. Coverage may also extend to disability and critical illness, helping families maintain education savings during periods of medical or income stress.

The best practice

Financial advisers generally agree that earlier planning provides greater flexibility. Starting education savings when children are young allows families to spread costs over a longer period, reducing pressure during high-expense years.

CBE has further reinforced the importance of aligning savings timelines with education milestones, as costs now arise earlier and more gradually rather than peaking sharply at secondary school entry.

However, balancing education planning with other financial needs remains critical. Advisers recommend that parents regularly review their overall financial position to ensure that education savings do not crowd out essentials such as medical cover, emergency funds or day-to-day living expenses.

‘Carry out a comprehensive review of your current financial state and future goals. Live within your means and ensure that your earnings can cover the current needs plus be able to save for future large expenses such as higher education for all your children,’ Dennis says.

You have probably seen photographs online of carcasses, dry and cracked grounds, mothers carrying children on their backs while rolling jerricans in search of water or half-naked hungry and emaciated children.

Most of these photos were taken in the arid and semi-arid lands (Asals) of Kenya.

Asal regions cover close to 80 percent of the country’s land mass, meaning a large part of Kenya remains underutilised and inaccessible.

These counties have remained highly vulnerable to the worst impacts of climate change, giving rise to some of the most dehumanising experiences for communities there.

For a long time, the regions have faced the worst impacts of global warming, manifested by persistent droughts, deadly floods, disease outbreaks and other resultant issues like resource-based conflicts and displacements.

These conflicts are a result of competition over scarce water and pasture, as the communities in Asals are predominantly pastoralist.

Coupled with the existing challenges, the disputes make the situation worse, leading to high levels of poverty and vulnerability.

The situation will not get any better soon. A State of the Climate report by the World Meteorological Organisation(WMO), released at the UN Climate Conference (COP 30) in Belem, Brazil, late last year revealed that greenhouse gases responsible for climate change reached record observed levels in 2024 and continue to rise even this year, meaning we are not out of danger of the effects.

Asal regions will most likely continue to be impacted by the adverse effects of this climate change phenomenon.

As all this happens, there is a heated debate on why the regions continue to lag in development, evidenced by the low standards of education, malnutrition – especially among children – insecurity and other endless tragedies witnessed and reported every year.

Coupled with these are the many questions around the flow of funds to counties in these regions, with indications showing that trillions of shillings have been sent there to improve socio-economic welfare of communities.

For many decades, non-governmental organisations (NGOs) have camped in these counties, pumping in massive amounts of money and other resources to improve lives and livelihoods.

With these realities, why do Asals continue to lag behind other regions in Kenya in terms of development?

What should be done now and urgently to secure a dignified and sustainable future for these communities?

There is need for an urgent shift of Asal development to climate-resilience focused, which includes deliberately investing in renewable energy like solar and wind; tourism; and even climate-smart livestock.

All these must be backed by strong policies that support pastoral economies and strengthen value chains.

Take the case of climate-smart livestock systems. Animal breeds can be modernised and strengthened, coupled with better rangeland management, veterinary and water infrastructure.

If early warning systems are put in place and innovative ways are developed to share timely climate information, there will be an automatic reduction of losses and deaths of camels, goats, donkeys, sheep and cattle during floods, droughts and related calamities.

Livelihood diversification is a necessity as that will help move the communities beyond traditional pastoralism.

These and related interventions are transformational in intent and design.

Without strengthened governance accountability and coordination to ensure investments deliver short and long-term outcomes, Asal regions will continue to experience poverty, disease outbreaks, deadly conflicts and other preventable suffering.

Whether NGOs multiply or new sources of funding are realised, the regions will remain the least developed in Kenya, denying the country the much-needed contribution to the GDP that could be easily carved from their solar energy, tourism, lakes, minerals and livestock value chains for leather, milk and meat.

Perhaps, the challenge facing Asal development can best be captured by Chinua Achebe’s central argument in The Trouble with Nigeria: it is a failure of leadership.

As the new year gets underway, one number tells a bigger story than any speech could. On December 3, 2025, our national electricity demand hit a historic peak of 2,439 megawatts (MW).

It was neither an accident nor a statistical curiosity. It was the clearest signal yet that the Kenyan economy is alive, expanding, and utilising energy to create real impact.

Electricity demand does not rise just because of good intentions. It rises when factories run longer shifts, when homes are newly connected and actually consume energy, when transport is electrified, and when power becomes central to how people cook, move, and earn a living.

Over the past 19 months alone, peak demand has grown by 12 percent. That is the footprint of growth, in real terms.

Behind this surge are several deliberate choices. Existing industrial, commercial, and residential customers are consuming more power because activity is increasing. Cold-season demand has risen as variable renewables temporarily reduce self-generation. E-mobility is no longer theoretical. Electric motorcycles, buses, and the requisite charging infrastructure are quietly adding load to the grid.

More than 400,000 new customers were connected in the 2024/25 financial year, a majority through the last-mile connectivity programme, and they are not just switching on lights but powering livelihoods.

At the same time, productive uses of electricity, including e-cooking initiatives, are reshaping household energy demand.

The monthly trend tells the story clearly. Peak demand rose from 2,362 MW in July, to 2,392 MW in August, crossed 2,412 MW in October, and reached 2,439 MW in December 2025. This is sustained momentum, not a one-off spike.

This growth, however, brings responsibility. Kenya’s firm capacity, the power reliably available at peak periods, stands at about 2,495 MW, with effective contracted capacity of 3,108 MW and a total installed capacity of 3,236 MW. The margin is workable, but tight. As demand climbs, adequacy, stability, and reliability cannot be left to chance.

That is why, in the short-term, we are acting decisively. Kenya Power is enhancing imports of up to 120 MW from Uganda when required. We are negotiating with Ethiopia for an additional 150 MW of peak power by December 2026. These regional interconnections are not signs of weakness but of smart grid management in an integrated East African power market.

At home, generation projects are moving with urgency. Two geothermal plants in Menengai, 70 MW of total capacity, are being fast-tracked for commissioning before March. Olkaria I power plant is undergoing rehabilitation to restore 60.5 MW by June. Sondu Unit 2’s 30 MW hydro turbine is being repaired and returned to service.

At the same time, key transmission lines are being commissioned to evacuate power more effectively to areas that have experienced rationing, including parts of Western Kenya, the Coastal, and the Central regions.

Reliability is not just about megawatts. It is also about reducing losses, strengthening the grid, and managing demand intelligently. Over the past year, system losses have fallen, smart meters are being rolled out, and targeted feeder upgrades are improving efficiency. These are unglamorous investments, but they are the backbone of reduced outages and better service.

These are deliberate plans, being executed with ruthless efficiency. It boils down to leadership. President William Ruto is leading from the front, with the Ministry of Energy and Petroleum in tow. There’s no room for guesswork.

As we stabilise the present, we are also building the future. Our pathway for increasing generation capacity is anchored in clean, firm, and scalable power.

Geothermal remains the backbone. We are already a global geothermal leader, and that leadership is being recognised internationally. In 2025, Nairobi was selected to host the World Geothermal Congress in 2029, the first time this iconic global event will be held on African soil.

This is not symbolic. It reflects years of investment, technical competence, and policy consistency in geothermal development, and it positions Kenya as a hub for technology, skills, and investment in clean baseload power.

Beyond power generation, we are integrating energy with industrial growth.

Projects such as the geothermal-powered green fertiliser initiative at Olkaria demonstrate how electricity can drive value addition, food security, and export competitiveness, while cutting emissions. This is the logic that will guide our medium-term planning: electricity not just as a utility, but as an engine of industrialisation.

Looking ahead, demand will continue to rise. Visionary infrastructure projects, expanding manufacturing, digital services, electric transport, and a growing population all point in one direction.

Our task is to stay ahead of that curve. Over the medium term, multiple generation and transmission projects are in advanced stages of completion to prepare the country for this unprecedented growth and to support ambitious national development goals.

To Kenyans who have experienced outages or constraints, we want to be clear. We hear you. Reliability is not optional in a modern economy. It is a commitment.

Through diversified generation, regional power trade, grid investments, and disciplined planning, we are working to ensure that power shortages do not become the tax on growth.

The record peak demand of December 2025 should be seen for what it is: evidence of a bustling economy and a country using energy to move forward.

Our responsibility now is to match that demand with reliable supply, today and tomorrow, so that every megawatt consumed continues to translate into jobs, opportunity, and shared prosperity.

Kenya’s power moment is here. The work ahead is to sustain it.

The State Officers’ House Mortgage Scheme Fund is seeking amendments to the Public Finance Management Regulations to expand its mandate beyond the purchase of completed houses to include house improvement and the purchase of plots for future residential development.

The current regulations limit the Fund to financing only completed houses, excluding home renovations and use of gratuity -a payment, often a lump sum, given as a reward for service, typically upon retirement or resignation- for loan repayment.

In a report by the Auditor-General for the financial year 2024/25, the fund, which has been facing high default rates on mortgages to public servants, added that it is facing insufficient funds to meet increasing demand following the inclusion of additional state officers, such as military personnel.

‘The Fund has had its own fair share of challenges. The main challenge being that PFM (State Officers House Mortgage Scheme Fund) Regulations 2015 . do not cover the following main areas: purchase and improvement of house, purchase of plot for future development of a residential house, and lack of adequate funds with the inclusion of state officers such as officers serving as brigadiers and above in line and officers serving as ambassadors, high commissioners, diplomats and /or consular rep,’ the report says.

‘I am of the opinion that the regulations need to be amended to cover the above-mentioned areas so that the objectives of the Fund can be met with minimal challenges,’ said Julius Wairagu, the fund manager.

In the period under review, the fund completed 241 applications with supporting documents and recommended them to banks for mortgage processing valued Sh6.584 billion.

A total of 205 loans were fully disbursed to applicants, totaling Sh5.30 billion, while 26 applications valued Sh619 million were approved and are pending disbursement.

‘Other areas of consideration include the requirement for an unexpired lease term of at least 45 years, termination of employment or expiry of term of a state officer when the loan is being processed, applications which are for plot purchase, inadequacy of Funds, arrears by officers whose terms have expired, and utilisation of gratuity for loan repayment,’ added Mr Wairagu.

He adds that these gaps, including the lack of clear guidance on loan management when a state officer’s term expires or on using gratuity for repayment, have constrained the Fund’s ability to meet demand and serve all eligible officials effectively.

Only four percent of Kenyans can afford a Sh10 million mortgage amid rising home prices, according to a survey by Zamara, the Centre for Affordable Housing Finance in Africa, and FSD Kenya.

It shows that just 6,146 out of 145,205 pension scheme members, or 4.23 percent, can take a loan above Sh10 million.

Central Bank of Kenya data confirms the trend, with the average home loan rising from Sh6.9 million in 2013 to Sh7.5 million in 2014, and now standing at Sh9 million, driven by high property prices and upfront fees.

Billionaire investor Baloobhai Patel purchased an additional 6.59 million shares with a current market value of Sh169.9 million in the four months to December 2025, entrenching his position as the lender’s top individual shareholder.

Regulatory filings show that Mr Patel’s holdings in the bank had grown to 100 million shares in December, giving him a 1.84 percent stake.

This was up from 93.48 million shares, equivalent to a 1.72 percent interest he held in August 2025.

Mr Patel, a long-term investor in Nairobi Securities Exchange (NSE)-listed blue-chip stocks, accumulated Absa shares throughout most of last year.

The purchases have raised his interest in the lender substantially, with his ownership rising from December 2024, when he held 65 million shares amounting to a 1.2 percent stake.

Mr Patel was among the major investors who raised their ownership in banks last year, setting themselves up for gains in one of the best performing industries on the NSE.

Co-operative Bank of Kenya’s Chief Executive Officer Gideon Muriuki also bought an additional 5.5 million shares with a current market value of Sh148.2 million in the country’s third largest bank in the seven months to December 2025, lifting his ownership to a new high of 2.3 percent.

Mr Muriuki had maintained a 2 percent interest in the bank for years until early 2025, when he embarked on a new accumulation of the lender’s shares.

The expansion of his stake has cemented his position as the top individual investor in the lender.

He is followed by Mr Patel who spent years buying Co-op Bank shares to reach 100 million units, equivalent to a 1.7 percent stake.

Mr Patel’s expanded investment in Absa comes as the lender continued to report higher dividends and earnings, which drove up its share price to a new high of Sh26.5 on January 6.

Absa posted a 14.7 percent increase in net profit to Sh16.9 billion for the nine months ended September 2025, on lower provisions for bad debts and cheaper cost of funds.

The company saw its net income rise from Sh14.7 billion a year earlier.

The lender rode on a 39.6 percent cut in provisions for bad debts and 28.5 percent drop in interest paid to customers to shield its profitability against a drop in interest income.

The bank has been increasing its dividend payout in recent years on the back of improved earnings. The lender paid a dividend of Sh1.75 per share for the year ended December 2024.

Absa maintained an interim dividend of Sh0.2 per share when it announced its results for the half year to June 2025.

Retaining the total dividend payout at Sh1.75 per share puts Mr Patel in line to earn Sh166.3 million per year based on his stake as of December 2025.

Provision of banking services in Africa continues to undergo profound digital transformation where most transactions are conducted virtually via digital devices and cash moved electronically.

Mobile banking, fintech innovation, and cross-border digital payments have reshaped how individuals and businesses consume financial services. In Kenya and across the continent, banks face sharp scrutiny from expanding regulatory landscape, including anti-money laundering (AML), combating the financing of terrorism (CFT) and combating the financing of proliferation (CPF).

With increased cross-border trade, everyone, including governments, look upon banks to provide Know Your Customer (KYC) services, fraud risk management, and increasingly adhere to stringent data protection and privacy regulations as well as Environmental, Social, and Governance (ESG) reporting standards.

Compliance is no longer a back-office obligation. And this calls for increased investments in technology, particularly artificial intelligence (AI) and machine learning (ML) to enable banks to meet compliance requirements.

AI and ML models offer practical solutions to compliance challenges by learning and tracking typical behavioural patterns by customer, product, and corridor, flagging anomalies such as unusual counterparties, transaction values, or routing patterns in cross-border flows.

These tools can also generate more accurate and complete assessments of ongoing customer due diligence and customer risk, which can be updated to account for new and emerging threats in real time.

By detecting potential violations of normal customer profiles in data or groups of customers with higher-risk characteristics, AI has streamlined priorities towards high-risk cases and reduced the time spent on false positives.

This capability is increasingly critical as transaction volumes and complexity grow. Such technological advances transform compliance from a costly obligation into a strategic advantage.

Customers do not need to know one another to execute a transaction since AI-powered identity authenticates customer identity through document scanning, biometric verification and mobile-based identity solutions. These solutions have also enabled banks to onboard new customers remotely without the need to visit a physical bank to fill in registration details.

Accounts are fully secure and only users who pass the mobile-based identity verification are allowed access thereby preventing fraud.

This also supports financial inclusion by enabling access to financial services for individuals who struggle to provide adequate identification documents for opening bank accounts.

In addition, Regulatory Technology (RegTech) solutions enable financial institutions to monitor regulatory developments, map obligations across their operations, conduct initial gap assessments, ensure that policies and procedures are always up to date and streamline regulatory reporting.

This capability is particularly valuable for pan-African institutions in ensuring agility while responding to regulatory changes across multiple jurisdictions. With its presence in 34 African countries, Ecobank advocates for harmonised payment systems and regulatory frameworks as a catalyst for accelerating intra-African trade.

Regional regulatory alignment further amplifies these gains. As African regulators work towards greater harmonisation of standards, banks with pan-African footprints are uniquely positioned to bridge local realities with global expectations, enabling smoother cross-border transactions and reducing friction for businesses operating across multiple markets.

The convergence of digital innovation and regulation presents an opportunity to support regional integration and strengthen public confidence. Banks that integrate compliance into their digital strategies, invest in ethical AI, enforce strong governance, and actively engage regulators will be best positioned to compete, facilitate trade, and protect financial integrity.

On an Africa-wide platform, traders want a synchronised platform that provides them with end-to-end solutions. Say Ecobank Group’s AML monitoring and sanctions screening capabilities within its SWIFT payment infrastructure ensure that all cross-border payment messages undergo real-time compliance checks prior to fund settlement.

With increased intra-Africa trade that rides on online platforms, accelerated digitalisation of cross-border transactions, timely, efficient, and secure payment processing is paramount. Real-time compliance monitoring is a non-negotiable cornerstone of safeguarding the integrity of international payment flows.

Ultimately, the future of banking in Africa will be defined by how institutions harness technology to meet regulatory obligations, deter financial crime, and foster trust among businesses, consumers, and public institutions alike.

Compliance is no longer a constraint on growth; it is a foundation for sustainable innovation, regional integration, and long-term confidence in Africa’s financial system.

The Postal Corporation of Kenya (PCK) plans to increase private letter box and bag rental fees by up to 12.4 percent, citing rising operating costs.

A disclosure by the Communications Authority of Kenya (CA) shows that PCK targets to revise the individual letter box annual rental fees by 10 percent to Sh2,200 from the current Sh2,000. The State agency, also known as Posta, wants to raise corporate box rates by 5.8 percent to Sh10,000 from the current Sh9,450.

Special corporate customers would also see their fees go up 12.4 percent from Sh6,225 to Sh7,000, if the proposal is approved, while for learning and religious institutions, rental charges would increase 3.6 percent to Sh8,000 from Sh7,725.

At the same time, key deposit and lock replacement fees have sharper adjustments, with both proposed to rise to Sh1,000. This is a 78.6 percent and 69.2 percent increase from the current Sh560 and Sh650, respectively.

Posta said the existing Sh1,320 fee for sub-post offices would be ‘harmonised,’ without specifying the new rate. Posta has not disclosed when it seeks to implement the price increases. The corporation did not respond to Business Daily’s request for comment.

‘PCK . has applied to CA for approval to review their private letter box/bag rental fees owing to the increased costs associated with service delivery,’ CA said.

‘Any person or local authority, company or body of persons devious of making any representation on or objection to the proposed revision must do so vide a letter addressed to the Director General, Communications Authority of Kenya . on or before expiry of thirty (30) days from the date of publication of this notice and must forward to PCK a copy of the representation or objection.’

Posta’s use has been declining locally in recent years due to the rise of digital communication and competition from private courier services, which have tapped into the parcel delivery and e-commerce logistics market. Upcountry matatu Saccos have also begun offering parcel delivery, acting as informal couriers alongside their commuter services.

CA data shows that the State corporation’s domestic letter traffic declined by 17.2 percent from 174,057 in June 2025 to 144,087 in September 2025. Parcels sent domestically fell by 19.8 percent from 141,932 to 113,874 during the same period.

This is in contrast to private courier services, which over the three months, saw letters and parcels sent locally grow 14.6 percent and 2.2 percent, respectively.

However, Posta’s international outgoing parcels rose by 18.2 percent, which CA attributed to PCK’s automation to comply with its card issuance requirements.

To arrest the declining numbers, the government plans to spend Sh3.1 billion by 2027 on improving the local postal and courier network by setting up ‘citizen service centres’ to serve as consolidation points, according to the regulator’s 2023-2027 Universal Service Fund (USF) strategy.

The State also seeks to spur e-commerce growth in rural areas by improving last-mile efficiency with the multi-billion-shilling investment.

ya Power accrued Sh19.4 billion in losses from implementing the government’s Rural Electrification Scheme (RES) by June 2025, new details show amid plans to pass the costs to consumers through power bills.

The loss was part of the Sh34.49 billion costs the company had accrued while implementing the RES on behalf of the national government, though the Ministry of Energy has been slow at making refunds, a new audit shows.

Kenya Power has been implementing RES to ensure electricity connections to poor households, with the agreement that the State refunds its costs involved in the connections, leading to a surge in losses since the project has not been economically viable.

In a report for the company for the year ending June 2025, Auditor-General Nancy Gathungu reckons that the Ministry of Energy owed Kenya Power upwards of Sh34.49 billion in costs incurred in the RES by the end of June last year.

‘The Schemes of RES are considered sub-economic, given that their operational and maintenance costs exceed their revenues, and it was agreed that the government will reimburse the company any deficit arising from the scheme,’ Ms Gathungu says.

‘As at June 30, 2025, no reimbursement had been made to cover the deficits despite a Cabinet resolution to disburse Sh19.4 billion to settle the RES losses,’ she adds.

The Sh34.49 billion was a 12 percent increase from the Sh30.73 billion costs accumulated by the end of the previous fiscal year, the audit shows.

RES costs have been rising by over Sh4 billion on average over the past three years, up from Sh26.9 billion by June 2023.

MPs late last year intensified the push to have electricity consumers cover the programme’s costs, asking the Energy and Petroleum Regulatory Authority (Epra) to introduce pass-through costs starting July this year, to help Kenya Power recover the billions it has spent on the programme.

‘Within six months upon adoption of this report, Epra institutes a review of pass-through costs to introduce a recovery mechanism for the operating deficits for RES, and that in the next tariff control period, the same be factored into the base tariff,’ said the National Assembly’s Committee on Energy.

The committee’s position came in the wake of a realisation that Treasury had failed to honour an agreement requiring it to reimburse Kenya Power costs for the last-mile programme.

The Sh34.49 billion RES programme costs and losses were listed as part of debts owed to Kenya Power, which totalled Sh98.4 billion as of June 2025. The audit noted that the company was owed Sh55 billion by government entities and Sh39 billion by other electricity customers.

Kenya Power made provisions to the tune of Sh21.13 billion during the year. The company generated Sh2.37 billion in revenues from the customers connected under the RES out of the total revenues of Sh219.28 billion during the year.

Deputy President Kithure Kindiki overshot his entire annual recurrent budget by Sh219.3 million within just six months, raising fresh questions about expenditure controls amid heightened political mobilisation late last year.

Treasury disclosures show the Office of the Deputy President (DP) had spent Sh3.2 billion by the end of December 2025, against an annual recurrent allocation of Sh2.97 billion for the financial year ending June 2026.

The spending means the office had already exceeded its full-year recurrent budget by 7.4 percent halfway through the fiscal year, leaving no headroom for operations in the remaining six months.

The accelerated expenditure coincided with an intense period of political activity, including Prof Kindiki’s high-profile involvement in the Mbeere North Parliamentary by-election held on November 27.

During the campaign period, the DP led daily rallies, tours, and grassroots engagements in Embu County as the chief mobiliser for the government-backed candidate.

While Treasury records do not provide a detailed breakdown, recurrent spending typically covers travel, accommodation, allowances, operations, and administrative costs incurred by the DP’s office.

The six-month spending marks a sharp escalation from the first quarter, when the office had consumed Sh1.34 billion, representing 44.9 percent of its annual recurrent allocation.

The overshoot comes at a time when the government is under pressure to rein in recurrent expenditure as part of broader fiscal consolidation efforts led by the National Treasury.

Recurrent expenditure in ministries largely covers day-to-day operations such as utility bills,travel, allowances and salaries.

Treasury has, in recent years, struggled to enforce spending discipline, with several ministries and offices repeatedly exceeding approved limits.

President William Ruto’s administration has repeatedly pledged to curb wasteful spending, arguing that high recurrent costs have crowded out development expenditure and fueled debt accumulation.

Prof Kindiki assumed office on November 1, 2024, following the impeachment and removal of his predecessor, Rigathi Gachagua, earlier that October.

Since taking office, Prof Kindiki has spearheaded a series of government-branded economic empowerment programmes across multiple counties.

Official schedules show the initiatives involved cooperative mobilisation forums, small business outreach, and public engagement events held in Meru, Nyeri, Bungoma, Kisii, Narok, Kwale, and Embu.

The programmes have formed a central pillar of the administration’s political messaging, particularly in regions viewed as electorally competitive ahead of the general contest next year.

The overspending signals that the DP’s office will require a supplementary budget to continue operating through to June.

The high absorption rate comes amid growing scrutiny of public expenditure, with fiscal managers urging ministries and departments to align spending to quarterly limits to prevent funding shortfalls later in the year.

It also tests President Ruto’s austerity pledges aimed at reversing a past trend of borrowing to fund government operations.

Kenyan investors have been allocated up to 60 percent of the 11.81 billion Kenya Pipeline Company (KPC) shares the government is offloading in an initial public offering (IPO), which opened on Monday.

The IPO, whose sale period runs until February 19, 2026, has been priced at Sh9 per share. It is expected to yield gross proceeds of Sh106.3 billion, if fully subscribed.

The Treasury is selling a 65 percent stake in the pipeline company, and will retain a holding of 6.36 billion shares that are equivalent to 35 percent of its 18.17 billion issued shares.

The offer thus values KPC at Sh163.56 billion, which at Monday’s prices at the Nairobi Securities Exchange (NSE) would make it the fifth largest listed firm behind Safaricom, Equity Group, KCB Group, and East African Breweries Plc (EABL).

The Treasury said it has set aside 20 percent or 2.36 billion shares in the IPO for each of the local retail and local institutional investor pools, 15 percent or 1.77 billion shares for oil marketing companies operating in Kenya, and five percent or 590.63 million shares for KPC employees.

Foreign investors have been allocated 20 percent, the same as the allotment to investors from East African Community (EAC) member states, comprising the Democratic Republic of Congo, Burundi, South Sudan, Somalia, Rwanda, Uganda, and Tanzania.

This allocation formula, according to the government, will allow for a fair distribution of the stock between institutions, companies, and individual members of the public, in addition to ensuring that employees of KPC participate in the offer.

‘In cases of undersubscription, valid applications in the affected category be allocated in full, with remaining shares reallocated in the following priority order: local retail, then local institutional, EAC investors, international investors, and oil marketing companies,’ said the Treasury, KPC, and the Privatisation Authority in an information memorandum on the IPO.

‘In cases of oversubscription, Kenyan investors will be given priority,’ it added.

The bulk of the IPO proceeds is expected to go into the proposed infrastructure fund. The KPC offer is the first divestiture of a government company through the stock market for nearly 18 years, with the last such sale having been the Safaricom IPO, which was on sale in April 2008.

At Sh106.3 billion, the sale is also expected to become the largest IPO ever issued in Kenya and the East Africa region, if fully subscribed, eclipsing the Safaricom issuance, which netted Sh51 billion from the sale of 10 billion shares or 25 percent of the telecoms operator at Sh5 each.

The KPC offer also marks an end to a decade-long IPO drought at the Nairobi bourse. The most recent public share sales were the October 2015 listing of the Stanlib Fahari Income Real Estate Investment Trust, the NSE’s self-listing in September 2014, and Britam’s IPO in September 2011.

In the previous decade, the market had seen a succession of high-value IPOs that helped introduce more than two million new investors to the bourse.

Besides Safaricom, other major market entries in the period came from KenGen in April 2006, ScanGroup in June 2006, Eveready East Africa in October 2006, and Mumias Sugar’s additional offer or secondary IPO in December 2006.

In 2007, the market welcomed Access Kenya in March and Kenya Re in July, with Co-operative Bank of Kenya rounding off the decade’s IPOs with its October 2008 entry.

For the Safaricom and KenGen IPOs, the investor categories differed significantly compared to that of the KPC offer, with a higher allocation of shares earmarked for local investors.

Safaricom had two main pools known as domestic and international, which had an initial allocation of 65 percent (6.5 billion shares) and 35 percent (3.5 billion shares), respectively.

The domestic pool had four mini-classifications within it, including the retail sub-pool that comprised Kenyan and East African individual and corporate investors, the qualified institutional investor category that housed investment banks, collective investment schemes, and pension funds, an employee pool, and an authorised Safaricom dealers pool.

The Safaricom IPO’s rules, however, stated that the issuer had the right to claw back up to 15 percent of the shares allocated to the international pool in case local investors oversubscribed the offer by more than 200 percent. If the two main pools ended up with similar subscription numbers, the State would claw back 15 percent from the local pool to satisfy the international investors.

Ultimately, the Safaricom IPO was oversubscribed by 432 percent, as investors placed bids worth Sh231 billion, resulting in a higher allocation for the domestic investor pool.

In the KenGen IPO, the government floated 659.5 million shares, at a price of Sh11.90 for a gross target of Sh7.84 billion.

There were two applicant categories in the offer, the first being the employee pool, which had an allocation of five percent, and a main pool, which was allocated 95 percent of the shares.

The main pool contained local and international retail and institutional investors.

In case the employee pool failed to take up its full allocation, the balance was to be reallocated to the main pool.

The IPO was oversubscribed by 233 percent, which under the rules resulted in a pro rata allocation formula in which only those with the minimum application of 500 shares were given their full lot of shares.