Category: Business Daily

Liquefied petroleum gas (LPG) firm Proto Energy will install autogas filling pumps at all stations owned by Ola Energy Kenya in Nairobi, as the firms move to tap into growing demand from gas-powered vehicles.

The companies signed the deal yesterday that will see autogas pumps installed across all Ola Energy’s stations in the capital before scaling it across the country. Ola has over 100 fuel stations in Kenya.

Uptake of autogas has been on a steady rise in the past few years, with official data showing that over 20,000 LPG-powered vehicles (mostly converted units) in the country in March 2024 as motorists turn to the fuel whose price per litre is cheaper by at least Sh60 compared to a litre of petrol and diesel.

Converting the vehicles to run on gas entails adding a separate fuel system and tank for autogas, making the vehicles dual-fuel (able to switch between LPG and diesel or petrol) even while in motion.

A litre of autogas is retailing between Sh95 and Sh115 in Nairobi compared to Sh184.52 and Sh171.47 per litre of petrol and diesel respectively, highlighting the fuel savings that are attracting operators of ride-hailing services and Public Service Vehicles.

The commodity is sold by multiple players and its price is not regulated.

‘This partnership with OLA Energy allows us to take OTO Gas closer to the everyday motorist by integrating LPG into a trusted retail environment,’ Joel Kamau, the CEO of Proto Energy said on Wednesday.

‘Leveraging our existing network allows us to introduce cleaner fuel solutions without requiring entirely new infrastructure. This model is commercially sound, scalable and aligned with the future of energy retailing in Kenya,’ Mohamed Elhoderi, the Managing Director of Ola Energy added.

Proto and Ola did not disclose the revenue sharing ratio under the deal.

Inadequate refilling stations for autogas is one of the key hurdles in growing uptake of LPG-powered vehicles, highlighting the opportunity for Ola and Proto.

Like many other economies, Kenya is racing to ramp up the number of vehicles running on autogas and electricity in order to cut environmental pollution caused by fossil fuels.

Mr Kamau had last year disclosed that the company has been recording a growing number of motorists, especially commercial ones seeking to convert their vehicles to autogas.

It costs an average of Sh65,000 to convert a diesel or petrol-powered vehicle to autogas. Upon conversion, a vehicle can still use either diesel or petrol. Proto is one of the firms converting petrol or diesel-powered vehicles to autogas.

Ola Energy is the fourth biggest oil marketer in Kenya and had a market share of 4.3 percent as at June 2025, with the deal with Proto set to contribute to its revenue.

Mr Kamau had last year disclosed that Proto Energy would rely on a mix of its own autogas filling stations and partnering with oil marketers to deliver a last-mile model of the commodity and ensure that motorists outside the major cities can charge their vehicles.

Britam General Insurance has failed in its attempt to block the award of a Sh218.99 million health insurance tender by Makueni County to Jubilee Health Insurance.

The Public Procurement Regulatory Authority’s tribunal has dismissed Britam’s application for review of the tender that had attracted three other insurers-Star Discovery, CIC General, and Madison General-, clearing the way for the contract to proceed.

The Public Procurement Administrative Review Board (PPARB) found that Britam had not met the legal threshold required to overturn or suspend the county’s procurement process for the provision of a comprehensive medical cover for county staff and their dependents.

The tribunal noted that the evaluation committee applied the criteria set out in the tender documents when it marked Britam’s bid as non-responsive.

It was found that Britam had failed to complete the code of ethics conduct form and also omitted the tender identification number during application.

In addition, Britam’s proposal was found to have negated the Salaries and Remuneration Commission guidelines on staff medical benefits and the requirement to provide a uniform provider network to all staff without categorisation.

‘It is evident that a procuring entity cannot waive a mandatory requirement or term it as a “minor deviation” since a mandatory requirement is instrumental in determining the responsiveness of a tender and is a first hurdle that a tender must overcome in order to be considered for further evaluation,’ said the review board.

‘… public procurement espouses the principle of competition, which requires that participating tenderers should compete on equal footing such that any non-compliance with any tender requirement calls for the automatic disqualification of the non-compliant tender.’

The findings will see Jubilee awarded the multi-million shillings tender to provide inpatient, outpatient, and specialised medical service cover.

Britam had moved to the board challenging the award, arguing that the evaluation process was flawed and that the procuring entity failed to adhere to the requirements of the Public Procurement and Asset Disposal Act.

The insurer sought orders to nullify the award to Jubilee Health Insurance and compel the county to re-evaluate the bids or retender. It challenged the county’s decision to disqualify its tender as non-responsive at the preliminary stage.

However, in its ruling, the board held that Makueni County had acted within the law and followed the stipulated procurement procedures.

The board further observed that a procuring entity is entitled to select the bidder that best meets the technical and financial requirements of a tender, provided the process complies with the law.

The tribunal lifted interim orders that had temporarily halted the conclusion of the contract. This decision allows the county to proceed with awarding the health insurance cover with Jubilee Health Insurance.

‘If I had an hour to solve a problem and my life depended on the solution, I would spend the first 55 minutes determining the proper question to ask . for once I know the proper question, I could solve the problem in less than five minutes’ said Albert Einstein.

Why do we have this infatuation with the right answer? Are smart managers often confused, or hesitant – while the ‘stupid’ always have the right solution? Can knowledge and insight come from the most unexpected places? Are the real masters of the business universe those who can chart the right line of enquiry? What is system 1 and system 2 thinking?

Our human brain is metabolically expensive, consuming approximately 20 percent of metabolic energy, despite comprising only two percent of our body weight. Unlike a muscle, it has no way to store energy.

Risk of leaping to a quick fix

Success in business is all about asking the right questions.

Not very helpful to get the right answer to the wrong question. The Japanese are masters of this, always taking the time to reach a Quaker like consensus on the right questions to ask – and not leaping to quick answers that are often more fueled by managers’ ‘attempting to look good’ egos.

Useful to take some time to ‘think about how we think’. How is it that we can jump to quick decisions in business that turn out to be dead wrong?

Imagine the fund manager who tastes the food products of a manufacturer listed on the Nairobi Stock Exchange. ‘Wow, I love all their tasty products, plus their distribution and packaging is first class’ says the potential investor.

Their literally gut feel, their intuition tells them this is great company with mouth watering products and the fund should make a significant investment.

Fund manager trusts his deep down inside feeling, his intuition and will recommend to his board to buy up a significant block of their stock.

Stop a minute and let’s push the pause button. What is the question the fund manager should really be asking? Correct question is – Is the stock currently under priced?

Why didn’t they do this? The reason is our brains sometimes work on the ‘law of least effort’. When faced with a tricky difficult question, we all too often answer the easier question instead. The problem is that we don’t notice that this substitution of the correct question is happening. We take the easy way out.

The fund manager is not alone, we all do this, trusting our intuition and just plain gut feel, which is hopefully often right, but can be very wrong.

Fancy term for this is the ‘affect heuristic’. Heuristic is the name of the process of how we find out things for our ourselves, from the Greek word to discover.

Driven by emotion

When we do this, our judgment and discussions are guided by our feelings of like or dislike, by just plain emotion, without any deeper deliberation or reasoning. One can easily see this on NSE share prices that are often more driven by investors’ emotions than business fundamentals.

Daniel Kahneman, the winner of the 2002 Nobel Prize for economics and one of the founders of the school of behavioral economics believes our thinking decision making processes can be described as: fast thinking system 1 and slow thinking system 2.

Your system 1 thinking is always automatically on allowing us to survive, so that when you see a stop sign you know instantly what it means. Or, when you see an expression of grief on someone’s face you can instantly tell how they are feeling.

System 1 is where your gut feel and intuition lie, where there is stereotyping, with all the prejudice and biases that comes with it.

System 2 is thinking that requires an effortful mental activity, as in what is 17 x 24 ? It is system 2 that is operating if you are talking to your boss on the phone while driving and he or she asks you a difficult and sensitive question.

Your brain can only process so much information and can get easily overloaded – which is why talking on your cell while driving is forbidden in Kenya.

Notice the programming

Next time you are making a business decision remember you can’t stop the automatic programming of system 1 that is built into your grey matter’s CPU.

But notice this is happening and be ready to dig deeper with some analysis, that may require some number crunching and research.

There is a world of difference between a strategy and an operational plan.

What most Kenyan businesses have is a ‘hope for the best’ operational plan, often based more on [system 1] emotions and gut feel — where a distinctive strategy based on [system 2] solid diagnosis, taking time to ask the right questions is just not there.

At the heart of strategy is a deep understanding of what your product or service is all about.

Part of this is asking the fundamental system 2 question of: What does the customer really want ? In the best of all possible worlds one would be able to answer the question and even be able to reinvent the category. In others words, be able to reinvent the basis of competition, ideally inventing a whole new category. That might be too ambitious for today but 17 x 24 is 408.

‘Smart people learn from everything and everyone, average people from their experiences, stupid people already have all the answers,” advised Socrates.

Kenya’s capital markets have long been viewed as a critical pillar for mobilsing long-term funding, broadening ownership of productive enterprises, and supporting inclusive economic growth.

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Yet, despite this strategic importance, new listings at the Nairobi Securities Exchange (NSE) have been few and far between over the last decade.

As policymakers and market stakeholders reflect on how to reinvigorate the listings pipeline, one policy lever stands out as both practical and proven elsewhere: tax exemptions for newly listed companies.

If Kenya is keen on encouraging more companies to list, then the conversation must shift to what happens after listing, particularly how newly listed companies are supported through competitive tax incentives.

A good case study is Jamaica. With a population of just around 2.8 million people, Jamaica has built one of the most vibrant equity markets among small economies.

The Jamaica Stock Exchange (JSE) boasts over 100 listed companies, a remarkable feat when viewed against Kenya’s population of over 55 million and an NSE with 65 listed firms. The difference is not explained by economic size alone. A key driver has been Jamaica’s deliberate and generous tax policy aimed at encouraging companies to list.

Under Jamaica’s framework, companies listing on the Junior Market enjoy a corporate income tax holiday of up to 10 years, 100 percent exemption for the first five years and 50 percent exemption for the next five. This incentive materially improves post-listing cash flows, making the costs of listing worthwhile and attractive.

The result has been a steady pipeline of new issuers, including small and medium-sized enterprises that would otherwise have remained private. The tax incentive is simple, predictable, and substantial enough to change corporate behaviour.

Kenya has experimented with tax incentives for listed companies in the past, but the impact has been limited largely because the incentives were modest. Historically, newly listed firms have benefited from a reduction in corporate income tax, typically a 5 percentage point reduction (from 30 percent to 25 percent) for a limited period, often five years.

While helpful, this saving is relatively small when weighed against listing costs, ongoing disclosure obligations, market volatility, and the loss of control perceived by some promoters.

Unsurprisingly, these incentives did not meaningfully shift listing decisions, and the NSE did not experience a sustained increase in new entrants.

In other markets, Malaysia offers a clear example of deliberate post-listing support through tax policy. Companies listing on Bursa Malaysia, particularly on the ACE Market, have historically benefited from partial corporate income tax exemptions for several years after listing, directly improving post-IPO profitability and easing the transition to life as a public company.

In addition, IPO-related expenses such as advisory, underwriting, and professional fees are tax-deductible, significantly reducing the effective cost of going public. Importantly, Malaysia treats liquidity-enhancing corporate actions including share splits, bonus issues, and rights issues as tax-neutral at the point of issuance, meaning no immediate tax is triggered when companies restructure their share capital to broaden ownership or improve tradability.

With no capital gains tax on listed equities for investors, these measures collectively encourage strong investor participation, healthier secondary-market trading, and a sustained pipeline of new listings demonstrating how targeted tax incentives can support companies well beyond the IPO stage. Whilst IPO costs were tax deductible in Kenya, these incentives were also removed.

Kenya now has a timely opportunity to rethink its approach. The anticipated Kenya Pipeline Company (KPC) initial public offering, expected in the first quarter of 2026, could be a landmark transaction for the NSE.

As a strategic national asset, KPC’s listing has the potential to deepen the market, attract domestic and foreign investors, and set a benchmark for future State and private sector listings. However, for this listing to achieve its full impact, it must be supported by a well-designed tax incentive framework.

Beyond the initial IPO, corporate actions such as share splits may be considered in the future to increase the number of issued shares and improve liquidity and retail participation. While share splits are value-neutral in economic terms, they can trigger tax implications depending on how they are structured and interpreted under tax law.

If such actions attract taxes-whether stamp duty, capital gains-related considerations, or other transaction taxes-there is a strong case for extending tax incentives to cover these post-listing activities. Penalising companies for measures aimed at improving liquidity runs counter to the objective of building a vibrant secondary market.

Carefully designed tax exemptions would not erode the tax base in the long run; rather, they would expand it by bringing more companies into the formal, transparent market environment. In addition, dividends will remain subject to withholding tax.

Ultimately, the goal is not to offer incentives indefinitely, but to use them strategically to unlock listings that would otherwise not happen. The Jamaican experience demonstrates that when incentives are meaningful, companies respond. Kenya’s previous incentives, though well intentioned, were simply not significant enough to overcome structural and perception barriers to listing.

If Kenya wants more Kenyan companies to list and stay listed then tax policy must be bold, clear, and competitive. Supporting companies post listing through well-calibrated tax exemptions is not a giveaway; it is an investment in market depth, investor confidence, and long-term economic growth.

As the country looks ahead to major listings such as KPC and beyond, now is the time to align tax policy with capital market ambitions.

Let us support Kenyan companies not just to list, but to thrive after listing.

Green gram and cowpeas exports grew sharply in the quarter to September 2025, bucking a trend of slumps in the shipment of Kenya’s main food crops to lucrative markets due to a policy priority to service domestic consumers.

Analysis of data by the Agriculture and Food Authority (AFA) showed that shipments of green grams, cowpeas, and beans posted explosive growth in the quarter to September, with cowpea exports rising over 724 percent, driven by high demand from Asia and the Middle East, handing a boost to producers servicing the well-paying markets abroad.

Contrastingly, exports of major cereals like rice and maize remained minimal amid a policy priority to satisfy local consumption in the wake of tight production volumes locally.

Kenya’s rice exports slumped 99 percent to 12.23 tonnes in the quarter to September 2025, compared to 1,561.69 tonnes in a similar period of 2024, indicating a major shift of available supplies to the domestic market.

Maize and wheat exports showed significant percentage growth from a very small base (increasing to 77.74 tonnes and 223 tonnes, respectively, although their absolute volumes remained negligible, continuing the trend of prioritising local consumption.

‘On the other hand, the pulse sector demonstrated growth, driving Kenya’s overall export performance. Green gram exports more than doubled, surging from 5,519.55 tonnes to 13,241.49 tonnes, with a particularly massive shipment in July 2025,’ the regulator said.

Cowpea exports saw an increase of over 724 percent, jumping from 645 tonnes to 5,317.41 tonnes, the quarterly data showed, while bean exports also grew by 14 percent to 8,059.55 tonnes.

The only pulse that recorded a reduction was pigeon peas, which fell by 16 percent to 17,453.21 tonnes, though it remained the second-highest export crop by volume. Irish potato exports fell sharply by 95 percent to 14.94 tonnes.

‘In general, the period was marked by a strategic pivot where cereal exports were heavily constrained, while pulses, particularly green grams and cowpeas, flourished in the international market,’ AFA said.

‘Kenya’s agricultural exports are highly concentrated in specific, strategic international markets. The data reveals a clear reliance on a few key destinations for each commodity,’ it added.

In the quarter to September, the export of pulses was mainly directed toward Asian markets. India was the near-total destination for cowpeas (99.95 percent) and the dominant buyer of pigeon peas (92.43 percent).

Similarly, the bean market was led by India (40.03 percent) and Pakistan (32.77 percent). Green grams found their primary markets in Thailand (37.98 percent), the United Arab Emirates (UAE) (20.60 percent), and Indonesia (20.28 percent).

Thailand bought 5,029 tonnes of green gram from Kenya valued Sh554.79 million, while the UAE purchased 2,728 tonnes of the commodity valued Sh282.45million. Indonesia was also a big buyer of Kenya’s green grams in the quarter to September 2025, with 2,685tonnes valued Sh295.3 million bought.

East African Breweries Limited (EABL) chief financial officer Risper Ohaga will leave her position at the end of June, ending a six-year tenure during which she played a central role in strengthening the brewer’s financial position and governance.

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The exit comes ahead of EABL’s parent company Diageo selling its 65 percent stake to Japan’s Asahi Group, which will control the beer maker going forward.

In a staff announcement on Tuesday, EABL Group Chief Executive Officer Jane Karuku and Group Human Resources Director Jackie Chimhanzi said Ms Ohaga will leave the company to pursue interests in line with her career aspirations.

She will remain in office until June 30, to allow for an orderly transition, with her successor to be announced later.

Ms Ohaga joined EABL in February 2020 from Absa Group, then known as Barclays, where she had worked for more than a decade in senior finance and audit roles across Africa.

Her appointment coincided with the onset of the Covid-19 pandemic, a period that placed unprecedented strain on corporate balance sheets and funding.

‘She has led in delivering the 2021 and 2025 medium-term notes, saving the business significant amounts in interest costs, demonstrating her financial acuity and bold decision-making,’ the company said in a statement.

The statement added that Ms Ohaga also placed strong emphasis on talent development, with members of the EABL finance team winning Diageo global finance awards a record three times in the past four years.

At EABL, she is credited with optimising the company’s balance sheet and securing funding to fully support its strategy while tightly managing costs. She led the issuance of the brewer’s 2021 and 2025 medium-term notes, transactions that the company says delivered significant savings in interest costs and strengthened its funding profile.

Under her leadership, EABL said, the company reinforced its financial controls and governance structures, enhanced investor relations, and delivered strong results in a challenging operating environment.

‘A number of Finance staff have taken up international assignments both globally and within EABL, with secondments to senior roles in Japan, Ghana, India, Ireland, and Singapore, among others. She believes in nurturing and developing talent as evidenced by the number of finance staff promoted and/or taking on new challenges under her leadership.’

Before joining EABL, Ms Ohaga served as Chief Financial Officer for Absa’s Zambian unit between November 2015 and February 2020. She previously held the role of Managing Director for Barclays Internal Audit, Africa Retail and Business Banking, where she was accountable for audit delivery across 13 African countries.

Earlier, she was Director, Africa, at Barclays Internal Audit, overseeing retail and business banking audits in 12 countries, including Kenya, South Africa, Uganda, Tanzania, Ghana, and Egypt. Her career at Barclays began as Regional Director for Internal Audit for East and West Africa.

Ms Ohaga earlier worked at KPMG, where she spent more than nine years as a senior manager between 1999 and 2008.

Kenya cut its spending on pharmaceutical imports by 22 percent during the first nine months of 2025, as the country shifted toward lower-cost procurement strategies.

Between January and September 2025, the country spent Sh62.1 billion on medicinal and pharmaceutical products, down from Sh79.6 billion over the same period in 2024-a reduction of Sh17.5 billion, according to the Kenya National Bureau of Statistics (KNBS).

Medicinal and pharmaceutical products refer to finished dosage forms of medications and related healthcare products that are ready for distribution.

They include prescription drugs that require a doctor’s authorisation, over-the-counter medicines such as painkillers and cough syrups, vaccines, and both generic and branded medicines, medical supplies like syringes and diagnostic test kits.

The drop in spending came even as the volume of pharmaceutical imports rose slightly by 1.2 percent, from 29,324.5 tonnes to 29,664.7 tonnes.

This means Kenya is paying about 23 percent less per tonne of medicines than it did a year earlier, pointing to a shift to cheaper types of medicines being imported.

The trend was most evident in the third quarter of 2025, when Kenya spent just Sh19.6 billion on pharmaceutical imports, the lowest quarterly figure on record and a 32.1 percent decline from the Sh28.9 billion spent in the third quarter of 2024.

Over the same period, import volumes jumped to 12,239.7 tonnes, the highest quarterly level and 21.6 percent more than in the corresponding quarter a year earlier.

The lower import bill could be linked to a shift toward generic medicines rather than more expensive branded drugs, as well as improved pricing through bulk-purchase agreements with international suppliers. Government efforts to contain healthcare costs through initiatives such as the Universal Health Coverage (UHC) may also be shaping procurement decisions.

The pattern observed during the first nine months of 2025 was projected in late 2024. In the fourth quarter of 2024, pharmaceutical imports fell sharply to Sh20.3 billion -a 29.8 percent drop from the third-quarter peak, marking a turning point that was carried into 2025 and established a trend of reduced spending.

Despite its heavy reliance on imports, Kenya has established itself as the third-largest pharmaceutical exporter in Africa and the leading exporter within the Common Market for Eastern and Southern Africa (Comesa) region. Exports of medicinal and pharmaceutical products reached Sh19.2 billion in 2024 and stood at Sh12.9 billion in the nine months to September 2025.

Kenya’s main export destinations include Uganda, Ethiopia, Malawi and Rwanda.

However, about 70 percent of medicines consumed domestically are still imported, with local manufacturers supplying only around 30 percent of national pharmaceutical demand.

‘With over 30 pharmaceutical manufacturing plants, Kenya’s pharmaceutical industry is the largest in the Common Market for the Eastern and Southern Africa region. However, insufficient drugs are manufactured in Kenya to meet domestic needs. As a result, approximately 70 percent of locally used drugs are imported,’ the 2024 Kenya Pharmaceutical Industry diagnostic report says.

The government has set a target to increase local production by at least 60 percent by 2026.

‘Our priority is to advance technology transfer, industrial collaboration, and sustainable systems strengthening, fully aligned with the President’s role as African Union Champion for Local Manufacturing -to reduce dependency and enhance Africa’s capacity to produce essential health commodities,’ Health Cabinet Secretary Aden Duale said during an official visit in India last month.

The Kenyan government’s motor vehicle leasing programme has created clear winners across manufacturing, security and public finance -while exposing pressure points around delivery timelines, financial costs and supplier concentration.

Since inception in 2013, the programme has seen 3,548 vehicles leased, anchoring demand for locally assembled vehicles and reshaping how the state procures and manages its transport fleet.

The biggest beneficiaries have been local vehicle assemblers and suppliers, with the programme supporting 1,813 full-time jobs and the local assembly of more than 10,000 vehicles.

Local content in vehicle assembly has risen sharply, from nine percent to 38 percent, reflecting increased sourcing of parts and services domestically.

Parts and accessory manufacturers have secured business estimated at Sh400 million, while the expanded fleet has created a Sh2.2 billion annual market for oil and petroleum products.

The Treasury has also emerged as a net winner. Programme data shows Sh2.69 billion in government revenue generated alongside Sh1.6 billion in tax remittances, helping offset some of the programme’s costs.

By shifting from outright purchases to leasing, the government has also reduced upfront capital expenditure, smoothing cash flows even as fleet size expanded.

The expanded vehicle fleet has coincided with measurable improvements in security outcomes, particularly within the police service.

Kenya recorded a crime index of 196 incidents per 100,000 people over the past eight years, while incidents where police failed to respond to emergencies fell from 49 percent in 2012 to 22.1 per cent in 2024.

Police surveillance coverage increased by 25.4 percent, and response times to distress calls were cut by 50 percent between 2012 and 2022, gains officials attribute partly to improved fleet availability.

One of the biggest corporate beneficiaries has been Isuzu East Africa, which is set to supply 591 vehicles in the latest instalment of the National Police Service (NPS) leasing programme.

Isuzu last week delivered the first 95 vehicles under the contract in which other dealers are also participating.

The contract reinforces Isuzu’s dominant position in Kenya’s commercial vehicle market and underscores the importance of state-backed demand in sustaining local assembly operations.

As the government continues to rely on leasing for official transport, the programme is increasingly being judged not just on fleet numbers, but on its ability to support local manufacturing, improve service delivery and deliver value for taxpayers.

Higher share prices at the Nairobi Securities Exchange (NSE) have cut the dividend yields for a majority of companies to single digits, forcing investors to consider alternative performance metrics such as profit ratios when making their stock picks in the market.

The bourse has seen its valuation go up by Sh1 trillion or 49.3 percent to Sh3.04 trillion over the last 12 months, mainly on double-digit percentage gains among large blue chip stocks that are also the more consistent dividend payers in the market.

Before the bull run of the last two years, dividend paying stocks were offering investors high yields that competed favourably with returns on government paper, including tax free infrastructure bonds.

The yields are calculated on the dividend per share as a percentage of share price, meaning they tend to fall when share prices rally, unless the companies raise their payout at a similar pace to their share prices.

Investors in the stock market earn a return on their capital when share prices go up, better known as capital gains, or through dividend payouts.

Dividend yields are, however, only one of the several metrics that an investor can use to identify investable stocks. For those chasing capital gains, a stock’s trading multiple is an indicator of whether it is cheap or expensive, which determines the potential to gain or lose value in future.

‘Dividends had been a key driver of investor trading activity on the NSE especially in the 2018 – 2023 period given that it was on a long bear (downward trending) run,’ said analysts at Sterling Capital in an equities note published on Wednesday.

‘However, investors are increasingly gravitating towards valuing stocks through earnings multiples (price to earnings and price to book) as the NSE bull (upward trending) market has gained steam.’

Out of the 31 companies that paid a dividend for the 2024 financial year, only four have a trailing dividend yield of more than 10 percent -Standard Chartered Bank Kenya (14.7 percent), BAT Kenya (10.64 percent), Kapchorua Tea (10.59 percent) and Stanbic Holdings (10.48 percent).

One year ago, 11 companies were returning above 10 percent, led by cross-listed Ugandan power utility Umeme at 15.8 percent and KenGen at 15.2 percent. Yields for 11 companies have fallen below five percent, including large blue-chip firms Safaricom (4.1 percent), EABL (3.14 percent) and KCB Group (4.48 percent).

These large companies are the top dividend payers in the market, making them a favoured investment option for institutional and foreign investors who buy stocks with a longer term outlook, as opposed to speculators who take positions solely to benefit from short term share price increases.

A company’s ability to pay and increase dividends is also seen as a strong indicator of good financial health and stability, and when that is combined with a high yield as a result of low share price, it can point to an undervalued company.

Majority of companies are also offering investors an annual return that is well below what they would be getting from short term government securities over the same period.

The 91-day and 364-day Treasury bills are currently offering investors pre-tax interest returns of 7.7 percent and 9.2 percent respectively, having halved from highs of 16.9 percent in September 2024. Treasury bonds are meanwhile paying annual returns or coupons of between 12 and 14 percent.

The Kenya Association of Travel Agents (KATA) has joined global industry bodies in opposing a decision by the International Air Transport Association (IATA) to impose standardised Billing and Settlement Plan (BSP) remittance periods across all markets.

IATA, through a recent member vote, adopted a resolution to introduce uniform global remittance terms by mid-2026, eliminating the long-standing flexibility for local market determination under joint governance mechanisms between airlines and agents.

The BSP, which presently covers more than 207 countries and over 400 airlines, is used to track and manage air ticket sales and the associated financial transactions. It facilitates and simplifies financial transactions between IATA-accredited Passenger Sales Agents and BSP airlines, while also helping improve financial control and efficiency.

IATA said the changes are intended to harmonise settlement processes across markets and strengthen the efficiency and security of airline revenue collection under the BSP framework.

KATA, however, warned that the move risks destabilising Kenya’s travel trade, raising ticket prices and pushing local agencies out of business.

The association argues that the decision dismantles long-standing locally agreed arrangements that reflect domestic financial systems, payment behaviour and commercial realities in markets such as Kenya.

‘Our local market is very unique. Kenya is still largely a credit market, with a bigger portion of our travel comprising corporate and government travel. For both corporate and government travel, you are never paid upfront or immediately. We still issue tickets on credit and then get paid later,’ says KATA chief executive officer Nicanor Sabula.

Remitting funds

According to Mr Sabula, delayed payments are a structural feature of the Kenyan market, with settlement periods often stretching far beyond a month.

To accommodate these realities, Kenya’s BSP remittance cycles have historically been determined locally through the Agency Programme Joint Council (APJC), a platform that brings together airlines and travel agents to jointly agree on settlement terms.

‘Currently, we remit twice a month.’ Mr Sabula says.

Under the BSP, IATA-accredited agents centrally remit funds to IATA, which then distributes them to participating airlines according to their share of ticket sales.

Critics said shortening and strictly standardising remittance periods would require agents to pre-finance customer payments to a greater extent and advance money to airlines before (corporate) clients have paid in full.

KATA said the move towards global standardisation gives IATA the power to unilaterally alter settlement cycles, including shifting markets such as Kenya to weekly remittance, a model already applied in parts of Europe and other Western markets.

‘In those markets, they don’t have such a huge credit market for travel. People pay via credit cards or cash, so it’s easier to turn around the money,’ Mr Sabula said. ‘Those are local conditions that need to be factored in.’

Mr Sabula adds that forcing agents to settle weekly would significantly increase their reliance on bank financing. ‘If the travel agent has to cover that credit, it means they must go to banks for overdraft facilities, and that is costly. It makes the cost of doing business high,’ he says.

KATA maintains that the current remittance framework, although sometimes tight, has supported the sustainability of agencies by aligning settlement timelines with corporate and government payment cycles.

‘Even though it’s a bit pressed, remitting twice a month means we are able to access credit within that period and settle, knowing that most corporates and government pay monthly. The credit taken from banks is for a shorter period, so it’s easier to cover,’ Mr Sabula says.

KATA fears

He says a shift to weekly remittance would raise capital requirements across the industry. ‘This will challenge both big and small agencies because the capital demand will be much higher. The risk is that we are going to see a lot of travel agents pushed out of business.’

Beyond business closures, KATA fears the policy could shrink Kenya’s travel market by tilting competition in favour of large international travel sellers with access to cheaper offshore capital.

‘We are likely to lose business to international travel sellers who can access capital elsewhere and then service the local market. They will be able to price their tickets lower than our local players, squeezing Kenyan agents out of the ticket market,’ Mr Sabula says.

KATA also warned of a likely rise in ticket prices for consumers as higher financing costs are passed down the value chain.

‘If the cost of accessing credit goes up, somebody has to cover that cost, and that is likely to be passed on to the consumer,’ Mr Sabula says.

On governance, KATA criticised what it described as inadequate consultation during the IATA mail-vote process.

‘We have not seen the engagement of the travel agency community, which is unacceptable. IATA regulations call for a participatory approach where agents and airlines sit and agree. To unilaterally make these changes completely skews the relationship. IATA is almost taking a monopoly position on a very significant decision that could affect the market,’ Mr Sabula says.

The association has aligned itself with concerns raised by the United Federation of Travel Agents’ Associations (UFTAA), calling for a reconsideration of the policy and a return to consultative governance.

‘We are disappointed by IATA’s unilateral decision to change a system that has worked well and served the Kenyan market effectively for many years. Any global intervention that overlooks local market conditions risks destabilising the travel distribution ecosystem,’ says KATA chairman Dr Joseph Kithitu.