Category: Business Daily

The Central Bank of Kenya (CBK) will partially buy back a Sh76.5 billion bond set to mature in May next year as part of initiatives to reduce pressure from domestic debt maturities.

The apex bank has invited holders of the paper to voluntarily participate in the early buyback offer targeting redemptions of Sh30 billion with the auction closing on November 17.

Investors may opt to sell-back part or the entire holding/face value in the bond.

This is the second domestic buyback by CBK after a February redemption of Sh50 billion on three bonds that were due to mature in April and May, easing the headache of heavy payments in the two months from the exchequer.

CBK is expected to foot the buyback bill from proceeds of an auction on re-opened 20- and 15-year bonds that seeks to raise Sh40 billion.

The paper targeted for the early buyback has a coupon or interest charge of 14.2280 percent, signalling lower debt service cost for the government going forward, when contrasted to the lower paying reopened bonds which have coupons of 12 percent (re-opened 20-year) and 13.9420 (re-opened 15-year).

The auction for the re-opened bonds runs until November 5.

The early buyback of the Sh76.5 billion bond was initially targeted for September, according to the National Treasury 2025/26 annual borrowing plan.

Funding for the buyback was also to be made available from proceeds of bonds with tenures of between 10 and 15 years.

The Treasury bond issuance calendar for the 2025/26 fiscal cycle has planned for five additional domestic bond buybacks, including papers valued Sh103.4 billion with an August 2026 maturity and Sh144.5 billion maturing in September 2027.

The National Treasury is expected to deploy a mix of buyback and switch auctions to manage debt service costs.

‘The liability management plan via bond buyback and switch auctions on domestic debt will be part of the borrowing strategy in the 2025/26 fiscal year,’ the exchequer stated.

‘This will be implemented by selecting the optimal mix of instruments to replace maturing bonds with the aim of reducing maturity pressure and smoothening the redemption profile.’

The government says it is fully committed to proactive liability management, leveraging both market and non-market-based operations to reduce debt service costs, mitigate refinancing risks and ensure the stability and sustainability of the public debt portfolio.

A buyback allows the government to purchase its own debt from holders/investors before the maturity date in a move that saves on interest cost by replacing high-interest instruments that will lower paying papers.

Switch bonds on the other hand refer to transactions where an investor or bond holder rolls over their expected final payout to another instrument, mostly one with a longer maturity profile.

Kenya has previously taped switch auctions to move holders of shorter dated Treasury bills into longer-term bonds.

Tata Chemicals Magadi Limited has won a long-running dispute with Kajiado County after the Court of Appeal quashed a Sh17.4 billion demand for payment of land rates and royalties for exploiting soda ash.

A bench of three judges of the appellate court quashed the demand for payment, saying the Kajiado County Finance Act, 2014, which the devolved unit was using to demand the money, offended the Mining Act and Article 62(1) and (3) of the Constitution.

The court further said the revenue-raising conduct of the county government contravened Article 209(5) insofar as the operations of the company, formerly Magadi Soda, were paralysed to force it to pay the amount in question.

‘We have looked at the Colonial Lease and the Further Lease of 7th December 2004. They were between the appellant, Tata Chemicals and the Government of Kenya. The lease was extended to 2053. In both leases, the respondent (Kajiado) was not a contracting party. The land rates and royalties were reserved and payable to the Government of Kenya,’ said the court.

The county government demanded the amount from accrued land rates arrears since 2013, for the 224,000 acres of land, used to exploit soda ash.

The county government later enacted the Kajiado Finance Bills 2013/2014, 2015/2016, 2016/2017, and 2017/2018, levying and increasing land rates to Sh11,000 per acre and Sh14,000 per acre, for the railway line, respectively. The company complained about the exponential increase, which it said was going to paralyse its operations.

This was because it was operating with negative net worth and had been kept going by a line of credit from the parent company.

The county went ahead and enacted the Kajiado County Finance Bill 2018/2019, which prescribed land rates at Sh2,000 per acre, but the company contested the Bill, saying they had not been gazetted in the Kenya Gazette.

The court said even assuming that all the premises leased from the national government by the company were not public land, and were rateable properties, the determination of the land rates payable was under the repealed Rating Act and the Valuation for Rating Act.

The court pointed out that the Acts mandated a formal process for valuing properties, including the creation and maintenance of a valuation roll, which was essential for determining fair rates based on the property’s value.

The appellate court said the legislation ensured legal compliance, fairness, and transparency in land rating, as the laws provided a uniform framework for valuation, public participation, and establishment of valuation rolls.

‘They allowed landowners to object to valuations and ensure their interests were considered. Lastly, the Acts prevented arbitrary taxation and ensured accountability in revenue collection for public service,’ said the court.

The court said there was no indication that when the county government asked for the payment of land rates from the company, it was as a result of a determination under the Rating Act and the Valuation for Rating Act.

According to the court, without the rates having been determined under the Rating Act and the Valuation for Rating Act, the demand made to the county government was arbitrary and illegal.

This was because the county government did not put in place an open and accountable framework for determining the payable land rates, and the company, as a landowner, was not provided with an open and objective framework that allowed it the opportunity to challenge whatever rates were being proposed, in breach of the constitution.

‘In conclusion, we determine that the appellant was not obliged to pay the Sh. 17,448,485,646/= as demanded by the respondent because the land rates had not been determined in compliance with the Rating Act, the Valuation of Rating Act Articles 201 and 209(3) and (5) of the Constitution,’ said the court.

Sale of salvage motor vehicles by insurance companies is exempt from Value Added Tax (VAT), the High Court in Nairobi has declared, handing insurers a major victory against the taxman.

The court dismissed the Kenya Revenue Authority’s (KRA) appeal, upholding a Tax Appeals Tribunal decision that earlier ruled in favour of ICEA Lion General Insurance Company.

The judgement has also prevented the increase in the the cost of salvaged cars by 16 percent.

Citing The First Schedule of the VAT Act on exemption for ‘insurance and reinsurance services”, the court explained that sale of salvage vehicles is aimed at mitigating the loss incurred from paying the claim and cannot be deemed as income.

Salvaged cars are vehicles declared total loss due to accidents or vandalism and whose repair costs exceed or a near their market value.

They can be repaired or dismantled for parts.

“When an insured’s motor vehicle is written off and the insurer pays the agreed value, the insurer acquires a right to the salvage. This is not a commercial purchase. No separate consideration is paid for th”Sale of the motor vehicles salvages is part of insurance compensation,” the tribunal ruled.

In the appeal, the KRA’s Commissioner of Domestic Taxes argued that the tribunal failed to appreciate that the VAT Act 2013 does not list the sale of motor vehicle salvages as an exempt or zero-rated supply.

“The tribunal erred in law and in fact in failing to appreciate that the proceeds collected from the sale of motor vehicle salvages is to be treated as income and not compensation,” argued the Commissioner.

Another argument was that it was wrong for the tribunal to conclude that disposal of salvages is part of insurance industry business and does not attract any VAT liability.

However, the High Court’s decision to dismiss the appeal was hinged on three critical legal principles, including the insurance indemnity and subrogation doctrine.

The court affirmed that when an insurer compensates a policyholder for a total loss vehicle, it acquires salvage rights under the principle of subrogation, where the insurer steps into the shoes of the insured.

“The disposal of salvage is not a commercial sale but a recovery mechanism to mitigate losses,” the court ruled. “The transaction is one of recoupment, not of trade,” it added.

The court declined KRA’s argument that salvage sales were distinct taxable transactions. The court adopted European VAT jurisprudence to hold that salvage disposal is incidental to insurance services and cannot be artificially separated for taxation.

“The European Union VAT jurisprudence, which heavily influences Kenyan VAT structure, dictates that where two or more elements supplied to the customer are so closely linked that they form, objectively, a single indivisible economic supply, they must not be artificially separated,” said the court.

Further, the court embraced the principle of harmonious interpretation of tax laws.

The judge rejected KRA’s strict reading of the VAT Act, instead interpreting it alongside the Insurance Act, which defines insurance business broadly to include “any business incidental to insurance.”

“To read the VAT Act in isolation would ignore legislative intent,” the court stated, emphasising that tax exemptions should be resolved in favour of taxpayers where ambiguity exists.

The ruling provides much-needed clarity for insurers, who routinely sell salvaged vehicles recovered from claims.

Had KRA succeeded, insurers would have faced additional VAT burdens, potentially increasing premiums for policyholders.e wreck. The acquisition of the salvage is a legal consequence of the contract of indemnity,” affirmed the court in a judgment that sets a precedent that may influence similar disputes involving financial services and VAT exemptions.

The case stemmed from a Sh88.8 million VAT assessment imposed by the KRA on ICEA Lion for the sale of salvage motor vehicles between 2015 and 2018.

KRA had initially demanded Sh122.1 million in corporation tax and Sh88.8 million in VAT from ICEA Lion following an audit.

While the corporation tax dispute was settled through alternative dispute resolution, the VAT issue remained unresolved, leading to litigation.

The Tax Appeals Tribunal ruled in May 2023 that salvage disposal was an integral part of insurance services, which are VAT-exempt, prompting KRA to challenge the decision in the High Court.

The tribunal found that income from sale of salvaged vehicles is part of VAT exemption for insurance services.

Rising smartphone ownership has lifted mobile banking uptake in recent years, with the share of banked Kenyans using the service growing from 25.3 percent in 2019 to 32.6 percent in 2024.

Commercial banks have expanded mobile applications and USSD platforms to keep pace with customer demand for faster and cheaper services, reducing reliance on branch visits and ATMs as the phone becomes the preferred point of contact for routine banking.

Industry data shows that nearly one in three adults now uses a phone to access bank services, affirming the growing role of digital channels in extending access to formal finance across both urban and rural populations.

The Central Bank of Kenya’s (CBK)’s 2024 FinAccess Household Survey shows that in towns, about 46 percent of adults bank through mobile applications compared to 27 percent in rural areas, reflecting how stronger internet connectivity and higher income levels have accelerated the shift to mobile in urban centres. The Communications Authority of Kenya (CA) estimates smartphone penetration at about 83.5 percent of active mobile devices by June 2025, or 43.8 million devices, a prevalence that has expanded access to digital platforms, including formal banking services and other everyday transactions such as e-commerce and bill payments.

The growth has coincided with increased investment by banks in mobile infrastructure as institutions align with customer preference for self-service transactions and remote account management through mobile platforms, a shift that has also reduced operational overheads and improved service efficiency.

Most lenders now operate dedicated mobile applications alongside USSD services to accommodate both smartphone and feature phone users, widening the reach and cutting transaction costs associated with physical branches while responding to evolving customer expectations for convenience and reliability.

The FinAccess data shows that education and income remain key determinants of usage, with adults holding tertiary education more likely to bank through mobile channels than those without formal schooling, while men account for a higher share of mobile-bank users than women, reflecting broader access disparities.

The adoption of mobile banking has also been supported by competition among lenders to digitise credit, deposit and payment services as customers favour real-time transactions and 24-hour access through their phones, a trend that has forced banks to innovate faster to retain market share.

Over the past decade, mobile money usage has expanded sharply, with subscriptions rising from 27.7 million in June 2015 to 47.7 million in June 2025, while the number of active agents grew from 129,000 to 373,000, according to CA data, underlining the scale of Kenya’s digital finance ecosystem and the convergence between banking and payment platforms.

Mobile-bank usage has, however, been found to be limited by factors such as cost, trust and awareness among low-income users who continue to rely mainly on mobile money services, highlighting the need for deeper financial literacy and simpler digital products.

Formal financial inclusion reached 84.8 percent of adults in 2024, marginally higher than 83.7 percent three years earlier, underlining the role of digital channels in maintaining access as banks push more services onto mobile platforms and as smartphones become nearly ubiquitous.

The CBK has, over the years, encouraged digital innovation in the sector, noting that mobile banking has improved service reach and efficiency while reducing cash handling and branch congestion for both lenders and customers, an evolution that continues to redefine banking models.

The growing dependence on phones has also allowed banks to streamline operations, expand reach and reduce transaction costs, entrenching mobile as a key driver of Kenya’s banking model and a pillar of the broader digital economy that continues to shape how financial services are delivered.

Kenya stands on the cusp of a remarkable opportunity in its economic partnership with China. For years, Beijing has been one of Nairobi’s most significant trading partners, a key financier of infrastructure projects, and an enabler of industrial transformation.

While the trade balance has long tilted in China’s favour, largely due to Kenya’s heavy importation of machinery, construction materials, and manufactured goods, the story is not one of inequality but of potential.

Now, with China having announced preferential tariff treatment for African countries, including Kenya, there is a genuine chance to turn this long-standing relationship into a more balanced and mutually beneficial partnership.

Recent figures from the Kenya National Bureau of Statistics (KNBS) show that China’s trade surplus with Kenya rose to about Sh295 billion in the first half of 2025. Imports from China reached over Sh304 billion, while exports from Kenya fell to just under Sh9 billion.

On the surface, these numbers appear worrying. Yet they also reflect Kenya’s continued reliance on Chinese technology, which has powered much of the country’s modernisation, from the standard gauge railway to digital connectivity and industrial development.

The challenge now is not to limit imports but to expand exports, turning the relationship from one of dependency into reciprocity.

China’s recent announcement of preferential tariff treatment for African countries, which includes a wide range of Kenyan products, offers a timely and transformative solution.

Under this initiative, key agricultural exports such as tea, coffee, avocados, and cut flowers will enjoy duty-free access to the Chinese market. For a nation whose economy still draws strength from agriculture, this development is more than a diplomatic gesture-it is an open invitation to scale up production, improve quality, and tap into one of the largest consumer markets in the world.

The Chinese market is not only vast but increasingly sophisticated. A growing middle class is demanding premium, organic, and ethically sourced products. Kenyan goods enjoy a strong reputation globally for their purity and quality, making this a natural match. With tariff barriers lifted, Kenyan exporters now have a direct path to reach consumers who value authenticity and sustainability.

To fully benefit, however, Kenya must prepare for this new phase. Tariff removal alone will not guarantee export growth. The country must enhance production capacity, maintain strict quality standards, and ensure compliance with China’s import requirements.

This means investing in agricultural technology, farmer training, and product certification. It also requires efficient logistics-from cold storage to transport-to meet international standards.

Kenyan exporters should see China not just as a distant market but as a partner in improving standards and competitiveness.

Equally vital is the need to move beyond raw exports. For decades, Kenya’s export basket has been dominated by unprocessed goods that fetch lower global prices. The time has come to shift toward value-added products-blended teas, roasted coffee, processed avocado oil, and branded macadamia snacks.

Exporting finished products would allow Kenya to capture more value domestically, create jobs, and strengthen rural industries. China’s own journey from a raw material exporter to a manufacturing powerhouse offers valuable lessons Kenya can adapt to its local context.

There is also immense potential for deeper industrial cooperation. Rather than viewing Chinese imports as competition, Kenya can see them as catalysts for growth.

Joint ventures between Chinese and Kenyan enterprises could facilitate technology transfer, enhance skills, and boost productivity.

Collaboration in agro-processing, light manufacturing, and e-commerce could open new markets. Digital platforms such as Alibaba and JD.com already provide avenues for African goods to reach Chinese consumers directly. Kenya should leverage these to promote its agricultural and craft products to a fast-growing, quality-conscious audience.

Infrastructure remains central to export success. Thanks to China’s partnership through the Belt and Road Initiative, Kenya now enjoys modern ports, railways, and highways that can support expanded trade.

The next step is to refine logistics by improving customs efficiency, expanding cold-chain capacity, and streamlining cargo handling at ports and airports. These upgrades will make exports more competitive and reliable.

Policy alignment is equally crucial. Kenya must accelerate its Integrated National Export Development and Promotion Strategy, emphasizing diversification and product quality.

Establishing permanent trade offices in Chinese cities such as Guangzhou, Hunan, and Fujian could help exporters understand market trends and build lasting partnerships. These efforts would convert diplomatic goodwill into measurable economic progress.

It is important to recognise that China’s preferential tariff treatment reflects a spirit of partnership, not charity. It embodies Beijing’s vision of shared growth with Africa-an understanding that mutual prosperity benefits both sides. A stronger Kenyan export sector complements China’s interest in stable, growing African economies.

This gesture of openness underscores China’s long-term commitment to cooperation and balanced development.

Kenya must seize this moment. The widening trade deficit should not be seen as a weakness but as a call to action-to produce more, innovate more, and trade smarter.

By embracing value addition, fostering industrial collaboration, and aligning policy with opportunity, Kenya can bridge the trade gap not through confrontation but through cooperation.

China has extended a hand of partnership; it is now up to Kenya to grasp it firmly. With strategic investment, discipline, and creativity, this preferential tariff treatment could mark the beginning of a new era-one where trade between Kenya and China reflects not imbalance, but shared progress, mutual respect, and lasting prosperity.

In Kenya today, media isn’t just entertainment-it’s the heartbeat of youth culture. It’s the Gengetone beat pulsing through TikTok dances, the graffiti on matatus turning public transport into a gallery, the viral YouTube skits that echo our humour, and the Showmax series that finally reflect our lives on screen.

For a generation raised online, content is currency. It’s how we express ourselves, connect, and dream.

But behind this cultural boom, a quiet theft is unfolding. Piracy is bleeding our creative economy dry. And the most painful truth? It’s not faceless hackers or shadowy syndicates doing the damage. It’s us.

Every time we stream a pirated link, repost a TikTok without credit, or download a movie from a sketchy site, we’re not just breaking the law-we’re breaking the backs of the very creators we claim to support. It feels harmless. Convenient. Even justified. After all, who wants to pay for something they can get for free?

But here’s what that ‘free’ costs: a filmmaker in Kisumu goes unpaid. A dancer in Mombasa loses recognition. A podcaster in Nairobi misses out on sponsorship.

Every stolen view is a stolen opportunity. And when those opportunities vanish, so do the stories, the beats, the voices that make Kenyan culture so electric.

Globally, digital piracy costs the media and entertainment industry over $75 billion annually, with projections pushing that number to $125 billion by 2028. More than 229 billion visits to piracy websites were recorded in 2023 alone, with Gen Z and millennials contributing to over 70percent of those visits. This isn’t just a global problem-it’s a generational one.

And Kenya is not immune. Our creative economy, though still emerging, is already a vital part of our national identity and economic potential.

According to the Kenya National Bureau of Statistics, the creative sector employs over 1.5 million youth, accounting for approximately 10 percent of total youth employment. Yet despite this promise, the sector remains heavily informal, fragmented, and vulnerable to exploitation.

In 2023, Kenya’s creative economy contributed 0.2percent to GDP and 0.25percent of total wage employment. Those numbers may seem small, but they represent a foundation that could grow exponentially-if protected. With 75percent of Kenya’s population now under the age of 35, the creative industry is not just a niche-it’s a national opportunity.

Platforms like Showmax have given Kenyan stories a stage. But piracy threatens all of this. Every illegal download chips away at the foundation of our creative economy. It tells our artists their work isn’t worth paying for. It tells our youth that shortcuts are acceptable. It tells our culture that it’s disposable.

This isn’t just a legal issue. It’s a moral one. If you love Kenyan content-if you share that TikTok skit, stream that Gengetone anthem, binge that Showmax drama-then you have a responsibility. Protect what you love.

Stream from legitimate platforms. Pay for subscriptions. Refuse to share pirated links. Report illegal uploads. Support campaigns like Partners Against Piracy (PAP) that fight for creators’ rights.

Because every time you choose legit content over a pirated version, you’re investing in Kenyan talent. You’re saying yes to a future where our stories are told, our voices are heard, and our culture thrives.

And the stakes are high. Piracy doesn’t just hurt creators-it hurts the economy. In Kenya, where 43percent of youth are unemployed, protecting creative jobs isn’t optional-it’s urgent.

In Kenya today, media isn’t just entertainment-it’s the heartbeat of youth culture. It’s the Gengetone beat pulsing through TikTok dances, the graffiti on matatus turning public transport into a gallery, the viral YouTube skits that echo our humour, and the Showmax series that finally reflect our lives on screen.

For a generation raised online, content is currency. It’s how we express ourselves, connect, and dream.

But behind this cultural boom, a quiet theft is unfolding. Piracy is bleeding our creative economy dry. And the most painful truth? It’s not faceless hackers or shadowy syndicates doing the damage. It’s us.

Every time we stream a pirated link, repost a TikTok without credit, or download a movie from a sketchy site, we’re not just breaking the law-we’re breaking the backs of the very creators we claim to support. It feels harmless. Convenient. Even justified. After all, who wants to pay for something they can get for free?

But here’s what that ‘free’ costs: a filmmaker in Kisumu goes unpaid. A dancer in Mombasa loses recognition. A podcaster in Nairobi misses out on sponsorship.

Every stolen view is a stolen opportunity. And when those opportunities vanish, so do the stories, the beats, the voices that make Kenyan culture so electric.

Globally, digital piracy costs the media and entertainment industry over $75 billion annually, with projections pushing that number to $125 billion by 2028. More than 229 billion visits to piracy websites were recorded in 2023 alone, with Gen Z and millennials contributing to over 70percent of those visits. This isn’t just a global problem-it’s a generational one.

And Kenya is not immune. Our creative economy, though still emerging, is already a vital part of our national identity and economic potential.

According to the Kenya National Bureau of Statistics, the creative sector employs over 1.5 million youth, accounting for approximately 10 percent of total youth employment. Yet despite this promise, the sector remains heavily informal, fragmented, and vulnerable to exploitation.

In 2023, Kenya’s creative economy contributed 0.2percent to GDP and 0.25percent of total wage employment. Those numbers may seem small, but they represent a foundation that could grow exponentially-if protected. With 75percent of Kenya’s population now under the age of 35, the creative industry is not just a niche-it’s a national opportunity.

Platforms like Showmax have given Kenyan stories a stage. But piracy threatens all of this. Every illegal download chips away at the foundation of our creative economy. It tells our artists their work isn’t worth paying for. It tells our youth that shortcuts are acceptable. It tells our culture that it’s disposable.

This isn’t just a legal issue. It’s a moral one. If you love Kenyan content-if you share that TikTok skit, stream that Gengetone anthem, binge that Showmax drama-then you have a responsibility. Protect what you love.

Stream from legitimate platforms. Pay for subscriptions. Refuse to share pirated links. Report illegal uploads. Support campaigns like Partners Against Piracy (PAP) that fight for creators’ rights.

Because every time you choose legit content over a pirated version, you’re investing in Kenyan talent. You’re saying yes to a future where our stories are told, our voices are heard, and our culture thrives.

And the stakes are high. Piracy doesn’t just hurt creators-it hurts the economy. In Kenya, where 43percent of youth are unemployed, protecting creative jobs isn’t optional-it’s urgent.

Mobile phones have emerged as the most frequently under-declared items arriving at Eldoret International Airport, which has become a key gateway for consolidated cargo brought in by small-scale traders largely importing goods from Dubai and China.

Undeclared imported goods mean items that have not been properly reported or declared to customs agencies upon import. They may include items that are completely hidden or simply have incorrect information, such as a lower value, in an effort to avoid paying duties or taxes.

The Kenya Revenue Authority (KRA) has reported repeat cases of traders attempting to disguise new mobile phones as refurbished ones in a bid to reduce the declared value and lower payable taxes.

‘We have encountered several cases where traders classify both new and refurbished mobile phones under the same category. We can easily tell the difference because new phones cannot be treated as refurbished ones. The valuation is different, and that determines the correct taxes to be paid,’ Abdi Malik Hussein, KRA’s Chief Manager for Customs and Border Control in the Rift Valley and North Rift region, said.

‘Some mobile phone consignments arrive with unfamiliar brand names. Even after taxes are paid, agencies such as the Kenya Bureau of Standards (Kebs) and the Anti-Counterfeit Authority must verify that the products meet national requirements.’

The KRA bases its taxation on the customs value of imported goods, meaning that a new device attracts a higher duty than a used one because of the higher unit price. While tax rates remain constant, the total payable amount varies with declared value.

Importers of mobile phones into Kenya pay a duty of 25 percent, an excise tax of 10 percent on the customs value, and a 16 percent Value Added Tax (VAT) applied on the total of the customs value plus the import and excise duties. ‘We have encountered several cases where traders classify both new and refurbished mobile phones under the same category. We can easily tell the difference because new phones cannot be treated as refurbished ones. The valuation is different, and that determines the correct taxes to be paid,’ Abdi Malik Hussein, KRA’s Chief Manager for Customs and Border Control in the Rift Valley and North Rift region, said.

‘Some mobile phone consignments arrive with unfamiliar brand names. Even after taxes are paid, agencies such as the Kenya Bureau of Standards (Kebs) and the Anti-Counterfeit Authority must verify that the products meet national requirements.’

The KRA bases its taxation on the customs value of imported goods, meaning that a new device attracts a higher duty than a used one because of the higher unit price. While tax rates remain constant, the total payable amount varies with declared value.

Importers of mobile phones into Kenya pay a duty of 25 percent, an excise tax of 10 percent on the customs value, and a 16 percent Value Added Tax (VAT) applied on the total of the customs value plus the import and excise duties.

The Kenya Revenue Authority (KRA)’s vigorous pursuit of tax dues has put it at odds with Members of Parliament (MPs), who want the agency to soften its approach despite pressure to raise more revenue.

The aggressive stance saw MPs deny the taxman a request to change its name from the KRA to Kenya Revenue Service (KRS) as part of a planned rebrand, according to its board chairman, Ndiritu Muriithi.

The freeze on the name change is intended to give the taxman time to improve its relationship with taxpayers. The Tax Procedures Act, strengthened in recent years, empowers the KRA to pursue taxpayers aggressively, including by serving demand notices and freezing bank accounts.

‘There was a proposal (to change the name of KRA), but when the proposal went to Parliament, it was not passed,’ said Mr Muriithi.

‘In the debate, Members of Parliament said that it was not about the change of name but that a change in the culture of the organisation was needed to make KRA a service. I think that this is fair.’

Walking the talk

KRA first mulled a name change in 2021 as part of a rebranding strategy that would see the word ‘Authority’ dropped due to its connotations with command.

Former KRA chairman Francis Muthaura noted that KRA works for the people, hence the need for a rebrand that would align the role of the taxman with service delivery.

‘The term ‘Authority’ sometimes has connotations of command. Commanding is not the real role of KRA. We are the servants of the people, who are the taxpayers,’ he said.

Read: Why KRA is mulling name change in its rebrand plan

According to the general provisions relating to administrative penalties and offences, when a person commits an act or omission liable under a tax law, the KRA Commissioner is expected to either demand the penalty or prosecute the offence.

The KRA Commissioner notifies individuals in writing about the penalty demand, setting out the amount and the payment deadline.

The taxman says it is now making improvements to better its relationship with taxpayers as part of efforts to become a service even as it eyes a new attempt at the name change.

‘It’s about being customer-centric and actually walking the talk, the language of our letters, the way we communicate with our customers, and how we resolve problems,’ added Mr Muriithi.

‘Change is happening as we speak, and we are taking stock of where our culture is.’

Revenue targets

KRA remains under pressure to raise higher revenues from taxes by sealing loopholes that have allowed for tax evasion and avoidance, and expanding the tax base to hard-to-tax sectors such as agriculture and the digital economy.

KRA collected Sh2.42 trillion from taxes in the fiscal year ended June 2025, representing a growth rate of 5.7 percent from Sh2.2 trillion previously, as per data from the National Treasury.

The collections were, however, Sh76 billion below target as several tax heads underperformed estimates, including income tax, excise duty, and investment revenue.

KRA is expected to ramp up its collection to at least Sh2.75 trillion in the fiscal year to June 2026 and Sh2.99 trillion in the 2026/27 period.

The taxman’s citizens’ service delivery charter dictates that it treats customers with courtesy and respect, while proactively in responding to their problems.

The Central Bank of Kenya’s (CBK) introduction of the Kenya Shilling Overnight Interbank Average (Kesonia) as the new reference rate for variable-interest loans marks a pivotal moment for Kenya’s financial markets.

From 1 September 2025, all variable-rate loans have been priced as ‘Kesonia + K’, where K represents a margin based on the borrower’s risk profile, administrative costs, and other factors. By February 28, 2026 all existing variable-rate loans are expected to transition to this new structure.

For the first time, Kenya’s lending rates will be anchored to a transparent, market-determined benchmark that reflects the real cost of liquidity in the interbank market. Why CBK’s new loan model long overdueThis means that changes in monetary policy, whether tightening or easing, will now be transmitted swiftly and predictably through the financial system. In many ways, it represents Kenya’s most meaningful step yet toward establishing a market-based anchor for credit pricing.

However, the success of Kesonia will depend on how effectively the broader financial ecosystem supports it. For this new benchmark to achieve its full potential, Kenya must strengthen competition in the banking sector, enhance transparency, and improve credit information systems.

Borrowers should be able to move their loans between banks with ease, enabling them to benefit from more competitive pricing. Yet, today, the process remains cumbersome, particularly for loans secured by property.

The slow and often costly process of transferring property charges is a major obstacle to loan portability. Digitising the land registry would make it easier, cheaper and faster for borrowers to switch lender, driving greater competition and ensuring that rate changes are quickly passed on.

Transparency will also be critical. Every bank should clearly disclose both the prevailing Kesonia rate and the specific margin applied to each loan.

Borrowers deserve to know what drives their borrowing costs and to compare offers across lenders on an equal footing. Such openness would foster accountability and trust, two elements that have been missing in Kenya’s credit market for too long.

Equally important is the need to link pricing to credit ratings. Kenya’s financial system must evolve toward a model where individuals and SMEs can influence their borrowing costs through their own credit behaviour.

A borrower with a strong repayment history should enjoy a smaller margin, while higher-risk borrowers should pay more. This approach would reward financial discipline and provide a data-driven framework for lenders to assess and price risk fairly.

Kesonia also aligns Kenya with international best practice. Around the world, markets have shifted away from administratively set benchmarks toward transaction-based reference rates. Adoption of Kesonia places it firmly within that modern framework, where monetary policy is guided by real market signals rather than administrative directives.

The real challenge now lies in execution. Banks must embrace transparency and healthy competition. Borrowers must be empowered to understand and question the pricing of their loans. Regulators, in turn, must strengthen credit information systems, enforce disclosure standards, and maintain oversight to ensure that the spirit of reform is not lost.

If these elements align, Kesonia could finally deliver what the CBR never quite achieved, a clear, efficient, and predictable channel for monetary policy transmission, that benefits both lenders and borrowers. It would also restore confidence in the power of monetary policy as a genuine lever of economic stability.

Ultimately, this reform is more than a shift in interest rate calculation. It represents a cultural change, one that redefines how Kenya prices risk, rewards financial discipline, and ensures that CBK decisions are finally felt where they matter most: at the borrower’s desk.