Category: Business Daily

Investors have paid the Central Bank of Kenya (CBK) a premium price to switch their holdings in a bond maturing in February 2028 to benefit from the higher interest rate and preferential tax charge on another paper with 3.2 years left to redemption.

In the offer, investors were asked to swap Sh10 billion from a 15-year bond that was first sold in 2013 into a 10-year paper first issued in 2019.

The 2013 bond, which is to mature in February 2028, carries an annual interest rate of 11.25 percent, while the 10-year bond pays interest at 12.28 percent and matures in November 2029.

In addition to the higher coupon on the destination bond, those transferring their capital were effectively buying into a three-year exposure at a more favourable withholding tax rate of 10 percent on interest earned.

This is lower than the 15 percent tax that would be applicable if they were to purchase a brand new three-year bond. All bonds of five years and below attract a 15 percent tax on interest.

A swap bond occurs when holders of a paper that is nearing maturity are offered the exclusive chance to move all or part of their principal directly into another longer bond.

In chasing the higher return, investors offered to swap Sh13.52 billion, with the CBK taking up Sh11 billion. The bondholders agreed to an average price of Sh106.79 per bond unit of Sh100 in order to secure the swap.

However, the premium was inclusive of a Sh3.84 charge per unit to cover for accrued interest, given that they will be paid their next coupon earlier in November 2026 on the new bond as opposed to February 2027 if they had kept their money in the 15-year bond.

Ideally, a unit of a bond is priced at Sh100, with investors getting a return from the paper’s fixed interest rate. However, when a reopened bond pays a lower return compared to what the market is demanding, investors are given a discount on the Sh100 in order to entice them to lend to the government.

Alternatively, when investors indicate they are willing to take a return that is lower than a bond’s coupon rate, they end up paying a premium to the CBK in order to secure the bond.

This was the second straight switch bond sale in which investors were asked to transfer their holdings into the 10-year, 2019 paper, following the August issuance in which they swapped Sh22.5 billion from maturing T-tills and a 15-year paper from 2021.

‘The repeated use of the 10-year, 2019 bond could reflect the CBK’s efforts to proactively manage upcoming maturities while extending into a debt security that doesn’t pose much redemption risk considering the timeline and outstanding amount,’ said analysts at Sterling Capital in a note on the switch bond.

A magistrate’s court has awarded a lawyer Sh1.5 million in damages after finding that a WhatsApp message sent by his client’s opponent was defamatory and malicious.

The court said the message, sent to lawyer Thomas Moindi’s office phone after he served his client’s opponent with pleadings in a land dispute, injured his professional reputation.

The dispute began in April 2024 when Ann Bwari, a property owner in Kaputei, Kajiado County, instructed Mr Moindi to represent her in a land dispute with her neighbour, Larry Sankeet.

Mr Moindi, trading as Moindi and Co. Advocates, filed proceedings against Mr Sankeet in the Environment and Land Court at Kajiado.

On June 6, 2024, Mr Moindi sent the pleadings to Mr Sankeet through WhatsApp, notifying him of the proceedings.

Mr Sankeet responded by sending a WhatsApp communication to the law firm’s office mobile telephone. The message was received by Bridget Tuwei, an employee who handled the phone.

Mr Moindi subsequently sued, arguing that the communication attacked his integrity, qualifications, competence and fitness to practise as an advocate.

He sought Sh5 million in general damages and a further Sh2 million in punitive, exemplary and aggravated damages, making a total claim of Sh7 million.

Mr Moindi told the court that the statements were false and malicious and had damaged his professional reputation.

Ms Tuwei’s evidence was important because the communication had to reach someone other than Mr Moindi to establish publication, an essential element of a defamation claim.

‘Publication is an essential ingredient of the tort of defamation. The defamatory words must have been communicated to at least one person other than the person allegedly defamed,’ the Magistrate said.

The magistrate added: ‘The evidence of PW2 (Tuwei) therefore establishes that the communication was received by a person other than the Plaintiff.’

Mr Sankeet did not enter appearance or file a defence. Judgment was entered against him, and the matter proceeded to formal proof. The court, however, said the plaintiff still had to prove his case despite the absence of a defence.

Mr Moindi testified that he had been admitted to the Roll of Advocates in 1996 and produced the WhatsApp communication and electronic evidence in support of his case.

The court found that the statements complained of were defamatory and that Mr Moindi had proved falsity and malice on a balance of probabilities.

It said the communication was sent immediately after Mr Sankeet had been served with pleadings in proceedings in which Mr Moindi was acting for his client.

‘Rather than addressing the allegations through the judicial process or confining his response to the dispute, the defendant attacked the plaintiff personally and professionally,’ the magistrate said.

The court also considered the extent of the publication when assessing damages.

The evidence showed that the communication was sent to the law firm’s office telephone and received by Ms Tuwei. There was no evidence that it was published in a newspaper, broadcast on radio or television, posted on a public website or disseminated through a public social-media platform.

There was also no evidence of widespread republication, loss of clients, loss of professional briefs, loss of income or other specific financial loss linked to the communication.

The court said the limited publication had to be weighed against the seriousness of the attack and Mr Moindi’s professional standing.

It awarded him Sh1.2 million in general damages and Sh300,000 in aggravated damages, bringing the total to Sh1.5 million. It declined to award separate exemplary or punitive damages.

The court also ordered Mr Sankeet to issue Mr Moindi with a signed and unqualified apology and retraction within 14 days of being served with the judgment.

The apology must identify the WhatsApp communication, acknowledge that the statements were defamatory and withdraw them in full. A copy must also be sent to Mr Moindi through WhatsApp.

The magistrate declined Mr Moindi’s request for a broad permanent injunction restraining Mr Sankeet from publishing any defamatory matter concerning him.

The court said such an order could extend beyond the specific communication and potentially restrain lawful communication or comment.

The Communications Authority of Kenya (CA) plans to introduce a standalone licence for data centres as investment in cloud and artificial intelligence (AI) infrastructure expands.

The regulator says the proposed framework will improve oversight of data centre operations and align Kenya’s licensing regime with those of other jurisdictions.

The proposal would remove commercial co-location data centres from the Network Facilities Provider (NFP) Tier 2 category and place them under a dedicated regulatory regime. Currently, the NFP Tier 2 licence covers physical digital infrastructure, including co-location facilities.

‘CA proposes to introduce a standalone Data Centre licence category, rather than regulate co-location data centres under the Network Facilities Provider-Tier 2 licence category,’ the regulator said.

The move follows earlier objections from operators who argued that data centres primarily provide space, racks, power and cooling rather than telecommunications connectivity. The CA rejected the position, saying modern data centres host hyperscalers, fintechs, international transit routes and submarine cable landing services.

The revised framework marks a shift from the 2021 Telecommunications Market Structure, which did not expressly recognise data centres and required operators to engage the CA on a case-by-case basis.

Kenya’s data centre market is expanding rapidly alongside demand for cloud services, fintech and AI. Knight Frank identified data centre development as a major digital infrastructure trend in the second half of 2025.

Airtel Africa’s Nxtra has started construction of a 44-megawatt (MW) data centre at Tatu City, while IXAfrica plans to expand its Nairobi campus from 2.5MW to 22.5MW. Nxtra’s facility, expected to be completed in 2027, is designed for cloud computing and AI workloads and is expected to become East Africa’s largest by capacity.

Kenya had nearly 20MW of existing data centre capacity in 2025, with about 150MW of additional capacity planned across the region.

The government sees data centres as critical to its ambition of positioning Kenya as a digital gateway for Eastern and Central Africa.

PwC’s 2026 Kenya cloud outlook found that 90 percent of surveyed organisations had increased cloud usage to support AI and machine learning, highlighting the infrastructure demand driving the sector’s expansion.

Many Kenyans seeking greener pastures abroad imagine that you leave the country, and in a few weeks or months, you start earning good money or stumble upon your dream job.

On the contrary, some have to take whatever work is available, retrain themselves and wait years for the opportunity they actually wanted.

Stephen Ario is one such Kenyan whose dream took a detour.

He left Kenya in 2020 as a respected librarian and lecturer and never expected to end up as a manual worker earning Sh1,099 an hour, hiding from immigration officers in a stranger’s basement and living with fear of being deported.

In the US, he has worked five jobs in five years, from a manual worker on a food-production line to a quality-control worker, supervisor, assistant manager and, eventually, a registered nurse.

None of those was the career he set out to build.

The 41-year-old left Kenya for what was supposed to be a short conference in Tennessee, but the Covid-19 pandemic in 2020 stranded him in the US. Then he saw an opportunity to advance his career abroad.

‘There were no incoming flights, and there were no outgoing flights. So we had to stay back,’ he remembers.

With nowhere to go and no income, Stephen turned to a Kenyan community he barely knew in Pittsburgh. There, he learned about a food company willing to hire immigrants who had entered the US on visitors’ visas and were not yet legally allowed to work. He left Tennessee for Pennsylvania in 2020, making the day-and-a-half journey by bus.

The company, Fourth Street BBQ, made mainly sandwiches, and an Indonesian manager welcomed him alongside other Jamaican and Haitian immigrants, many of whom, like Stephen, were willing to take factory jobs for low wages.

‘It was an intense physical job,’ he says. ‘I think that’s where my perception of everything changed, and it has shaped how I see things to this day.’

‘I was doing manual jobs and being paid Sh1,099 an hour,’ he says. The shifts were unpredictable, starting sometimes at 6am, sometimes at 3pm and other times at 11 pm.

After some time, the climate for immigrants in the US grew more hostile. Immigration officers began conducting sweeps in Pennsylvania, and Stephen’s six-month visitor visa was weeks from expiring. He remembers seeing military-style trucks in his neighbourhood and running for cover with other Kenyans he lived with.

A retired white police officer who rented rooms to the Kenyans quietly offered them a place to hide in his basement. He told them he would prepare it as a refuge in case immigration officers came to the house.

The raids came close more than once. ‘One day I was outside, coming from work. The work van dropped me near McDonald’s with a couple of other immigrants. We had to run,’ he recalls.

He feared being taken to a detention centre while still recovering from Covid-19 and without a stable job.

Stephen turned to an immigration lawyer, who mapped out a legal strategy for him. The lawyer asked for Sh97,000 in legal fees, which Stephen paid in small instalments from his Sh1,099-an-hour wages.

The application was filed on August 22, 2020. Within six weeks, Stephen had received his work authorisation card, giving him a legal path to employment in the US.

A year later, in 2021, he landed a quality-control job on a production line after a chance meeting with a Kenyan coworker and a colleague from Namibia led him to a manager named Michelle.

‘I love your English,’ Michelle told him after their first conversation and sent him for advanced training.

His pay rose from Sh1,099 an hour to Sh1,250 as a supervisor and eventually to Sh2,900 as an assistant manager overseeing electronic resource processing. The role took him to other states, where he presented cost-saving systems he had designed himself.

Friends connected him to a Kenyan nurse living in New York, who would later become his wife.

‘I could finish my work at 1pm, get into my car, go to New York from Pennsylvania,’ he says.

His wife nudged him toward nursing school just as they welcomed their first child in October 2022. He describes that period as brutal.

‘I almost dropped out of nursing school thrice,’ he admits, describing sleepless nights caring for a newborn while studying for weekly exams.

He qualified as a nurse on August 5, 2023, three years and five months after he first landed in the US as a stranded conference visitor with no plan.

Is he happier with his career path now? ‘My dream is not in nursing, and has never been in nursing, but I’m proud of the job,’ he says, ‘My true ambition still points toward Kenyan politics and academia.’

Chasing a dream in 3 countries

Mercy Adhiambo has spent more than a decade chasing a career in healthcare across three countries: Lebanon, Qatar and Luxembourg. She has worked as a nursing aide, makeup artist, and wellness therapist, retraining herself along the way.

Now, at 32, she is waiting for one more email, a visa that could finally take her to Luxembourg and the healthcare career she has been trying to build.

In 2014, she took her first job abroad, in Lebanon, where she worked for two years as a caregiver in a hospice before moving into private homes, taking care of elderly patients living with Alzheimer’s and dementia.

‘I worked with patients, both in hospital and in my bedroom,’ she says.

In 2016, she moved to Qatar after paying an agent Sh120,000 to arrange her relocation. She started as a caregiver but switched paths after four months, spending the next two years working as an assistant makeup artist.

Three years later, she returned to Kenya and enrolled at MP Shah Hospital for formal healthcare-assistant training. After qualifying, she worked at Nairobi Hospital, picked up part-time nurse-assistant shifts at MP Shah and took on additional hospital and home-care jobs in Ongata Rongai.

There was no single, stable job. Instead, she pieced together work wherever she could find it, building the experience that she hoped would later help her pursue better opportunities.

‘I had a lot of jobs,’ she says.

In 2022, she returned to Qatar for a second time, this time at more than twice the cost of her first move.

‘I paid an agent Sh280,000,’ she says.

When she arrived, she found a job at a wellness centre doing therapy and massage, despite having no formal training in either.

‘I felt lost,’ she says, but was pleased with the salary which was more than she had earned from jobs back home, even if it was far removed from the healthcare work she had trained for.

Mercy enrolled in an online therapy course, studying after her shifts ended. At the same time, she completed a nurse-assistant course in Qatar, paying Sh120,000 for the training.

‘I never took a month off,’ she says.

Year after year, Mercy applied to hospitals and private clinics, only to find herself blocked by paperwork her employer refused to release.

Her qualifications were not enough; without a release letter, prospective employers could not hire her. ‘If you want to employ me, just employ me,’ she remembers telling one interviewer, frustrated by a system that kept her qualifications from opening the door to a better job.

She recalls a Syrian-owned company that offered her a formal job, but her employer still refused to release her. ‘They needed an appeal letter,’ she says, describing the same bureaucratic barrier that had blocked her before.

Mercy also tried, more than once, to leave the Gulf. In 2024, she applied for study and work programmes in Germany and Sweden, spending about Sh220,000 on the German application alone. It was rejected. She applied to Sweden weeks later, paid again and was rejected there too.

Last year, a Luxembourg job offer gave Mercy fresh hope. She passed the interview and received an offer letter. Then the waiting began again-the visa was the only thing left.

‘I have done everything. The only thing that is remaining as we speak is the visa,’ she says.

For now, the next chapter of her career sits in an inbox, waiting for an answer. If the Luxembourg opportunity does not work out, Mercy is considering staying in Qatar for a few more months, perhaps until next year. Eventually, she hopes to return to Kenya and open her own therapy business or train others in the skills she once had to teach herself online.

Her advice to anyone dreaming of working abroad is blunt. ‘Lower your expectations. Abroad is not what people think it is,’ she says.

Failed fake marriage

For Abubakar Juma, the journey to a better life abroad took years of rejection, deception and false starts before it finally began to move.

The 57-year-old tried Canada, Germany and the US, losing money to agents and schemes involving forged documents and a fake marriage plan.

At the American embassy, an official mocked the marriage plan outright to his face. ‘You must be out of your mind. Or you’re just using her to get to America,’ he was told before being denied a visa.

But he didn’t give up. Each attempt promised an escape from Kenya; each ended with another door closing.

Dubai finally opened one in 2003. But even there, success did not come quickly. He travelled to Dubai on a visit visa.

His first job attempt was to broker horticultural exports between Kenyan farmers and Dubai importers, dealing in avocados, snow peas and French beans. The business lasted about a year before the importers cut him out and began dealing directly with his Kenyan contacts.

Broke and running out of options, he took the only job he could find: a security guard position at a building on Sheikh Zayed Road. ‘If it’s the only one that I could do, I said, why not?’

He worked and saved for a driving licence, which cost about Sh230,000, hoping it would open the door to better opportunities. He earned the licence in 2004, piecing together the money from tips he received from Emirates cabin crew he had befriended at the accommodation block.

A year later, an Emirati offered him a job in cargo logistics. But when his security employer learned he wanted to leave, the company tried to block the move by imposing a two-year work ban. A sympathetic public relations officer at Emirates eventually intervened on his behalf, clearing the way for him to take the job.

Juma spent eight years in Emirates’ tracing department, tracking missing cargo shipments across airports around the world. Around 2010, he was promoted to commercial and business development, overseeing airport operations. Looking back, he describes the years before that breakthrough simply: ‘It’s nearly a decade of false starts before things finally settled.’

Looking back at the young man who once paid strangers for a fake Rwandan identity and forged German paperwork just to get on a plane, Juma says patience ultimately carried him further than any shortcut could have.

Twenty-three years after leaving Kenya, Juma left the UAE and started Fahari Ventures, a company supplying spare parts to clients in Kenya. He funded the business with savings from his years in cargo logistics and commercial operations.

Today, he continues to expand the network, connecting suppliers in Dubai with clients in Kenya. ‘We have to keep trying to find new ways,’ he says.

He has also opened a travel office in Nairobi, helping other Kenyans navigate Dubai’s visa and job opportunities, something he wishes someone had done for him. He now warns clients about the scams that once cost him money, time and years of false starts.

‘No one will give you an answer that you might not like for the first time. So I think that’s the way we need to work,’ he says.

In 1955, William Martin Jr, Chair of the US Federal Reserve (1951-1970), coined the phrase ‘removing the punch bowl’ in central banking. It describes the responsibilities of central banks to restrain wayward monetary expansion. Kenya’s gluttony dates to 1992, the first multiparty elections held in 26 years.

The 2027 playbook is similar. High-stakes power games driven by money set reformists against a severely hobbled government feeding hardliners, protecting their influence and wealth. The brazen wrecking of the economy ignores competent advice.

The Central Bank of Kenya(CBK) as the beating heart of the economy takes a beating in the fray, its foundational role overseeing financial sector safeguards challenged while it retains the key role of fiscal agency for government.

When beholden to incumbents at elections, CBK corners itself. Mysterious access to unbacked money and its dispersal portrays the cracks in intellectual and mandated regulatory independence to steer the economy, direct monetary policy, and price stability. If 2027 replicates Moi’s 1992, with its money printing and the Goldenberg fraud, expect the economy to sink- again. With only a 36.65percent vote, Moi wrestled the flawed December 26, 1992, election with hands dripping in blood and a shattered economy.

Pressures for irregular money typically begin with spikes in government spending as desperate incumbents finance corruption and flawed public finances. Tender magnates ride roughshod over the economy. Today, as 10 firms pocket 60percent state tenders, power brokers hold sway. Money stashed in gunny bags, billions in cash, sidesteps a system named Kenya Electronic Payment and Settlement System (KEPSS) serving as the country’s Real-Time Gross Settlement (RTGS) for high-value and time-critical financial transactions

All this while Safaricom (with government asset holdings now stripped in a questionable sale) still rides the waves as Kenya’s global example of cashless transactions. If the gunny bags of Ol Kalau, Mbere North etc, were unbacked monetary expansion marking CBK’s capitulation, we have failed the lessons of 1992-1993, their destructive fiasco.

As Moi siphoned off unbudgeted money expansion, the repercussions destroyed monumental assets and wealth of hardworking Kenyans and taxpayers. The costs? Inflation at 46percent in 1993; an economy at near collapse; GDP growth at near zero; mass unemployment; ethnic clashes, etc. Months after winning, Moi struggled to pull Kenya from the brink.

Donors were not playing ball; they froze $350 million in aid by November 1991 demanding both multi-party democratic elections and aggressive free-market structural adjustments – including “retention accounts” freeing exporters to retain foreign-currency earnings instead of remitting them to the CBK; freeing the prices of corn and wheat, etc.

Moi after the money printing to fund Ol Kalau/Mbere North-like briberies blamed the skyrocketing inflation, deep recession, and social hardships, on the Bretton Woods institutions, ‘cruel, dictatorial and unrealistic.’ As he suspended liberalisation, global lenders pushed back a fiercely at a meeting in London to stem monetary expansion, end corruption, cut a bloated public service, trim parastatals, and boost the private sector.

The New York Times of March 26, 1993, portrays Moi stewing in economic apocalypse, having bitten more than he could chew. Sidelining his political backers from the fiscal feeding trough, their retreat let him throw the skunk at taxpayers and a new CBK Governor famous for renaming the CBK problem: hyperinflation, amenable to ‘mopping up excess liquidity.’ CBK aggressively drove an unprecedented new model very much alive today, to the detriment of the Kenya economy: high interest rates and high-yielding Treasury bills pumped into circulation, to be redeemed by taxpayers. The Governor even staged historic comedy by burning CBK documents at Karura Forest.

Who gained from the mop-up? Principally banks, lending cheap customer deposits to government for high returns, paid for by taxpayers. Portfolio investors benefited from the dismantling of restrictive foreign exchange controls and a liberalized forex market that ended fixed exchange rates.

The CBK oversaw an escalation of interest rates as a tool to incentivise commercial banks and investors (including foreign portfolio investors) to hold government securities rather than lend for Kenya’s productive economic activities.

I have argued elsewhere that this mistaken trap defies financial intermediation. A Primary Dealers system (as in the US or even neighboring Uganda) would tap market-driven domestic debt. Results? A history of ignoring bank lending to Kenya’s fundamentals for economic output, even a lack of customer care in banking, has put blinkers into banking as a casino for securities. Two examples suffice, one as recent as the last six-month bank reports to CBK.

Today, banks’ balance sheets amass historically low-cost deposits on liabilities; the assets side prioritize risk-averse government securities and sidesteps lending to the real economy. Access to capital is decimated. The low-cost deposits include public sector accounts, Pension Funds, Insurance companies etc.

The model diminishes access to capital and growth as in Fig.1, showing the problem in global context. Kenya’s private sector credit crunch (at 31.6percent) is so severe it is inferior to the Sub-Saharan average (33.1percent). And the credit availed is never allocated by sector priorities to unlock growth and employment.

Who are the losers? The economy with only 12percent of Kenya’s labor force in formal jobs. Even highly skilled Kenyans stay unemployed. Worse, from low-cost deposits, banks set an acute margin (called the interest rate spread) to anchor sky-high profits lending to government securities. Restricted private sector access to capital is attributed to non-performing loans -NPLs. Finally, government redeems debt service from current and future taxpayers without default.

“Evidence of rip-off”

Debt Service is indeed a first claim on the Consolidated Fund, which now surpasses spending on development, education, etc.). In this sense, government pays interest on its own money by offering high interest on the securities banks purchased with deposits of public money sourced from their deposit liabilities).

It contributes to the super profits model. Starved of loans, Kenya’s economy limps on with low investment and mass unemployment. Strangely, the model parallels the fate of post-colonial coffee and tea growers. They earn peanuts from raw exports as their exports make millionaires abroad. Evidence of the rip-off? Pick Q1 2024. Kenya’s bank returns on equity (ROE) averaged 21.9percent: this was more than double the US bank ROEs averaging 10.3percent.

Second, study the official bank reports to CBK for the six months ending June 2026. Cheap customer deposits just got even cheaper (falling 8.4percent to 6.8percent). Banks increased the interest spread from 6.9percent to 7.5percent. It is very odd for customer deposits to earn banks a spread greater than the cost of customer deposits.

The top 11 lenders earned 16percent more (from Sh124bn a year ago to Sh144.9bn). Loan defaults (with the NPLs hypocrisy still intact) fell by 8.9percent for the top nine banks. Surprisingly, CBK retained its CBR at 8.75percent since February 2026. Banks’ lending rate was 14.4 percent as of June 2026. Banking needs reforms.

As we continue on our Business Talk exposé of politically exposed firms within the financial services sector in Kenya, let us now switch from banking to the insurance industry. Do politicians who own substantial shares in insurance companies make the firm more or less trustworthy for insured consumers?

Breaking down the well-researched organisational trust dimensions of ability, benevolence, and integrity, let us investigate deeper.

First, in the insurance industry, a firm could hold several insurance product lines including medical insurance, automobile and property insurance, life insurance products such as annuities and pensions, and other smaller categories including maritime, and travel among other products. Today, we shall focus on the first three product lines.

In banking whereby depositors may prefer banks with political connections, borrowers should be warry of politically exposed banks. But in insurance, it is a much harder sell.

Trust in the insurance sector is already staggeringly low. Business Talk already ran a much-quoted in-depth exposé on low trust levels and remedies in the medical insurance space back in 2021. However, now let us expand into insurance in general and with the political angle in makes the situation worse.

A political decision in 2009 with a compliance window ending in early 2013 saw the Insurance Act modified direct and indirect shareholding capped at 25 percent per insurance firm and sadly included management restrictions as well as foreign ownership limits.

This hurt many insurers by forcing them to take on unequal investors, often politicians. Similarly, other politically related newer firms were able to sneak into practice after the rules change.

A consumer logically questions the ability of an insurer that is politically connected as to whether they truly hold adequate assets and reserves to payout claims in the event of a catastrophe. In Kenya we do have strict rules on insurance reserves held by firms. Our Kenyan insurers must invest their assets according to Insurance Regulatory Authority (IRA) investment guidelines and submit an investment policy to IRA.

They must also keep a statutory deposit with the Central Bank of Kenya in Kenya Government securities. As for general insurers, the statutory deposit is the higher of Sh5 million or five percent of total assets. Those deposited securities are protected for policy liabilities. But we do not require detailed public disclosures of what securities or amounts are held per type of insurance policy category or where they are specifically held, like in the United States or Australia.

How about whether the insurer does what is right for their insured customers and actually cares for them? What consumers really want to know to make informed decisions about which medical, property, and automobile insurance firms to chose are the overall rejection rates of all types of claims that the insurance company handles, not just those that make their way to IRA for resolution.

As a Kenyan citizen, we would ideally want something very easy to understand like what happens in other countries: ‘We received 10,000 medical claims, paid 8,200, partially paid 700, and rejected 1,100, giving us an 11 percent rejection rate.’

If politicians did not hold shares in insurance firms, perhaps we in Kenya would have more transparent disclosure requirements similar to the United Kingdom whereby insurers have to disclose claims registered, claims accepted, claims rejected, claims acceptance rate, total claims payout, average claims payout, and complaints arising from claims.

Continuing on trust dimensions in politically exposed insurance firms, an integrity violation of consumer trust includes an insured individual finding it challenging when an insurer refuses to cover a claim and their recourse involves filing a complaint with IRA.

If the insurance firm is politically exposed through shareholding and everyone working in regulation knows those connections, who would be willing to challenge the political ownership and force a resolution?

IRA does publish a Claims Settlement Report on a quarterly basis where one can view the complaints against insurers as well as a rather complicated hard-to-read claims payout ratios and some insurers seem missing from the lists. More politically exposed insurers seem to have higher proportions of unresolved versus resolved claims cases.

In summary, do your research on political connections in insurance companies prior to purchasing policies. Understand claims payout rates and make an informed decision. Do not merely fall for flashy marketing material with attractive models on the covers.

Join Business Talk next week as we continue the exposé and delve into the trustworthiness of the insurance industry’s life, annuity, and pension products.

President William Ruto’s administration has clocked Sh364.24 billion in emergency spending over four years amid concerns over abuse of a constitutional provision that allows emergency withdrawals for urgent and unforeseeable items.

More than half of this amount, or Sh209.37 billion, was spent in the year ended June 2026 alone, according to official disclosures, consolidating a spending spree under Article 223 of the Constitution.

Disclosures by the Controller of Budget show that emergency spending in the year to June was triple the Sh66.5billion spent the previous year. President Ruto’s administration tapped Sh69.2 billion in emergency spending in its first financial year, while Sh19.1 billion was spent in the year ended June 2024.

Controller of Budget Margaret Nyakang’o has flagged the surge in emergency spending, warning that it raises questions about the budget process and risks of potential misuse of the funds.

Article 233 of the Constitution allows the government to spend money outside the approved budget on unforeseen and urgent items. The Treasury must, however, seek parliamentary approval within two months after the money is withdrawn.

‘The Controller of the Budget observed that some of the approvals … concerned routine, day-to-day office operations but had not been allocated funds in the budget formulation process,’ Dr Nyakang’o says.

‘The Controller of Budget recommends a review of the legislative framework governing the criteria for funding under Article 223 of the Constitution, as well as the control mechanisms to ensure fiscal integrity and safeguard budget credibility.’

Dr Ruto’s administration had, over the four years to June 2026, requested to withdraw a total of Sh522.79 billion for emergency spending, but Dr Nyakang’o declined to clear Sh158.6 billion worth of demands.

Some of the items the State seeks to fund under the emergency withdrawals are routine and predictable items that are not urgent, contradicting the legal requirements for such spending.

Auditor-General Nancy Gathungu has also flagged the growing use of the emergency spending window by the State, saying that some ministries, departments and agencies disguised routine items like travel as emergencies.

Ms Gathungu said some of the projects funded under the emergency withdrawals had stalled while others lacked documentation, exposing taxpayers to potential loss of billions of shillings besides.

Issuing of sovereign bonds to restructure debt for Sh82.88 billion and Sh58.1 billion for buyback and accrued interest of the Eurobond drove the spending spree under the emergency withdrawals in the year to June 2026.

Dr Nyakang’o said Treasury should demonstrate the fiscal gain of the buyback for the Eurobond, adding that they should be critically scrutinised at the budget drafting stage.

Items funded via the emergency withdrawals included Sh7 billion for payment of Social Health Authority (SHA) dues for teachers, Sh5 billion for subsidised fertiliser and Sh4.09 billion for termination of an undisclosed roads annuity project.

Dr Nyakang’o said some items in the draft budget were omitted in the approved budget, only to be funded under the emergency withdrawals.

She cited the Sh3.9 billion included in the draft budget to pay for the hosting rights of the 2027 African Cup of Nations. The proposal was omitted in the approved budget but was paid via the emergency window.

A similar scenario unfolded in the year ended June 2025 when Sh1.68 billion was withdrawn to pay for the hosting rights of the African Nations Championship despite the obligation being foreseeable.

The spending spree under Article 223 flies in the face of Dr Ruto’s administration having accused the previous one of using the emergency window for questionable multi-billion shilling deals without due process.

Dr Ruto particularly slammed his predecessor, Uhuru Kenyatta, for allegedly manipulating Article 223 to splash Sh6.09 billion on buying a 60 percent stake in Telkom Kenya from Mauritius-based private equity firm Jamhuri Holdings.

The acquisition, which was executed in the last months of Mr Kenyatta’s administration, was later the subject of a parliamentary probe as Dr Ruto’s administration questioned whether the Telkom deal was rushed to benefit political insiders. The matter remains active in court.

Treasury CS John Mbadi had accused his predecessors of using Article 223 to perpetrate corruption.

‘This Article 223 has largely been used by the Executive to fund corruption and projects of their interest. It is a conspiracy to steal from the public that, as a committee, we are going to stop through amendments to the Public Finance Management) Act,’ Mr Mbadi said in 2024 when he was the chairman of the Public Accounts Committee of the National Assembly.

Dr Nyakang’o has had to reject some of the withdrawal requests as questions mount over the suitability of the projects to be funded.

For example, in the year ended June 2026, the Treasury had sought approval for Sh281.46 billion under the emergency spending provision, but Dr Nyakang’o refused to clear Sh72.09 billion.

Some of the withdrawals that Dr Nyakang’o rejected were Sh2 billion for operational expenses at State House, Sh2.04 billion for the acquisition of a disaster recovery site at Konza Technopolis, and the upgrade of the ICT system of the Kenya Revenue Authority.

The Unclaimed Financial Assets Authority (UFAA) plans to mop up idle financial assets held by lawyers on behalf of their clients, a move likely to stir a standoff over the estimated billions of shillings in unclaimed cash.

Proposals by the UFAA, seen by the Business Daily, seek to declare any assets held by lawyers on behalf of their clients for more than five years as unclaimed and surrender them to the State.

Lawyers act as custodians of deposits made in commercial transactions, sums involved in ongoing litigation, settlement payments and, in some instances, money held on behalf of clients in escrow accounts awaiting instructions.

‘Assets held by advocates in the advocate’s client account which belong to a client and remain unclaimed by a client for five years are presumed abandoned,’ the UFAA proposals, which are set to undergo public participation, state in part.

UFAA is banking on working with the Law Society of Kenya (LSK) to implement the regulation if it becomes law, given the number and spread of lawyers across the country.

‘We will implement it in conjunction with the LSK, requiring advocate firms to have a disclosure in their books of accounts on client accounts that qualify as unclaimed. In addition, we will carry out a compliance audit,’ UFAA said in response to queries sent by the Business Daily.

The LSK, however, said it had not been involved in drafting the regulation and would therefore not be willing to support it, arguing that it would interfere with the relationship advocates have with their clients.

‘I don’t understand what those unclaimed financial assets mean because lawyers have their ways of engaging clients and following up when they are holding client funds. We don’t need the assistance of the Unclaimed Financial Assets Authority,’ LSK President Charles Kanjama said.

‘You cannot have a third party intervening in the advocate-client relationship, which is what would happen if the Unclaimed Financial Assets Authority starts asking us for disclosures of that kind,’ he said.

UFAA disclosed that it had no estimates of how much money lawyers could be holding in unclaimed assets.

Read: Audit, law firms targeted in ownership transparency drive

The judicial system is estimated to have Sh6.3 billion in unclaimed cash bail and bonds.

Besides lawyers, UFAA is also looking to have payment service providers licensed by the Central Bank of Kenya, including Pesapal, Flutterwave, Direct Pay Online (DPO) Pay, iPay Africa and Cellulant, surrender unclaimed money to it.

Safaricom’s M-Pesa, which is also a payment service provider, already remits funds unclaimed for more than five years under its other role as a savings/deposit product.

UFAA is also looking to have deposits for goods included among unclaimed assets. Currently, the Act covers deposits made for utility services such as water and electricity.

‘Section 9 is proposed to be deleted and replaced with a section clearly including deposits for goods over and above deposits for utility services as unclaimed assets qualifying after two years of presumed abandonment,’ reads the proposed Bill.

UFAA has lined up a raft of policy changes, including easing penalties and extending the dormancy period, in a bid to mop up idle resources in the country.

A survey conducted last year showed there were unclaimed assets valued at Sh394.9 billion yet to be remitted to UFAA, which has already received Sh126 billion in shares and cash.

Commercial banks are said to hold the largest share of unremitted assets, at Sh133.8 billion. The manufacturing sector holds Sh24.2 billion in unpaid wages, according to the survey, while universities have Sh8.3 billion associated with caution money deposited with the institutions by first-year students.

Kenya’s manufacturing sector has steadily worked to deepen its contribution to the economy while enhancing its local and global competitiveness. This progress has been driven by sustained investment, innovation and a strong commitment to creating jobs, generating value and supporting inclusive economic growth.

Manufacturing is the single largest contributor to Kenya’s tax base. Data from Kenya Revenue Authority (KRA) shows it contributed Sh460 billion in 2025/26, accounting for 16.2 percent of total revenue collected. When manufacturing grows, the benefits extend beyond factories and supply chains and translate into jobs, incomes, investment and government revenue.

These figures indicate what Kenya could achieve. With the right policy environment to reward investment, boost competitiveness and enable businesses to grow, the sector could contribute even more. Therefore, the question is how Kenya can create the conditions for manufacturing to realise its full potential.

The introduction of excise duty under the Finance Act, 2026 on key industrial inputs including industrial sugar, particleboard and medium-density fibreboard (MDF), raises concerns for the manufacturing sector.

At a time when Kenya should be looking to strengthen the competitiveness and productive capacity of local manufacturers, increasing the cost of essential inputs risks working against that very objective.

Other critical inputs, including printing inks, resins and kraft paper, continue to attract high excise duties despite being essential to industries such as beverages, confectionery, furniture, packaging and printing.

Importantly, all these products are raw materials or intermediate inputs into domestic manufacturing. Imposing heavy taxation at the input stage represents a fundamental distortion of sound fiscal and industrial policy, which should seek to protect and promote local value addition.

While fiscal policy remains an important instrument for revenue generation, additional excise taxes significantly increase production costs which are ultimately passed along the value chain. Because these costs are non-claimable, they place additional pressure on manufacturers, eroding export competitiveness and potentially reversing trade gains by making imported goods more attractive.

Some provisions were not part of the Finance Bill, 2026. Clauses on wood-based panels such as MDF and industrial sugar did not benefit from the same level of stakeholder engagement as the others during the public participation process.

The provision on excise duty on wood-based panels was introduced through a Supplementary Order Paper during the later stages of the Parliamentary process. Industry players along the affected value chain and Kenyans had no opportunity to assess the proposals, quantify their potential impact or provide feedback on measures with significant implications.

The Departmental Committee on Finance and National Planning later recommended a process of local capacity verification, but the period before the Second Reading was short, posing a challenge in conducting a comprehensive assessment.

The increase in excise duty on imported sugar from Sh7.5 to Sh40 per kilogramme, a 433 percent increase, is a significant and disproportionate policy change for local industry.

While the objective of promoting local value addition and supporting domestic sugar production is commendable, this is set to drive up the cost of industrial sugar, a critical input for manufacturers of beverages, confectionery, pharmaceuticals and baked goods.

For manufacturers that rely on industrial sugar, the higher duty is expected to drive up production costs, affecting competitiveness in domestic and export markets where margins range from 3-5 percent. The effects will reverberate across interconnected sectors in packaging and logistics.

Kenya currently has limited capacity to produce industrial-grade sugar at the scale and specifications required by manufacturers and rely on imports.

Unlike household sugar, industrial sugar serves specialised manufacturing needs and does not directly compete with locally produced sugar. A sharp increase in taxation may not immediately encourage import substitution but could instead raise the cost of production for manufacturers.

A more balanced approach would be to support the gradual development of local industrial sugar capacity while ensuring manufacturers retain access to competitively priced inputs during the transition.

The 30 percent excise duty on wood-based panels risks reversing policy measures that previously supported the growth of the furniture industry. In recent years, the government has deliberately created a tax differential between imported finished furniture and raw materials used by local manufacturers.

This approach helped make local production more competitive, encouraged investment in furniture manufacturing, created jobs and supported the expansion of furniture exports into regional markets.

The introduction of additional excise duty on wood-based panels and related inputs could erode these gains and eliminate the competitive advantage that has enabled the sector to grow.

Subsequently, making imported finished furniture comparatively more attractive and potentially discouraging further investment in local manufacturing. Government has, without intending to, protected the foreign manufacturer’s cost advantage rather than the Kenyan manufacturer’s market.

Modern manufacturing systems globally rely on integrated supply chains that combine locally produced and imported inputs to achieve efficiency, quality and scale. Additional excise duties on key imported industrial inputs could inadvertently weaken the competitiveness of local manufacturers.

The proposal also comes at a time when Kenya is actively promoting industrialization, regional trade integration and export-led growth through various trade frameworks. Manufacturers have made investment decisions based on a policy environment that encourages value addition and regional competitiveness.

Any significant increase in the cost of key production inputs should be carefully assessed to ensure it does not unintentionally undermine these objectives.

While excise duty is intended to be a neutral domestic tax applied regardless of a product’s origin, its practical impact can sometimes differ depending on how it affects production costs within a value chain. Where taxes significantly increase the cost of essential inputs, they inadvertently reduce manufacturers’ ability to compete against finished products entering the country.

A balanced policy approach should support the development of local input industries while preserving the competitiveness of downstream manufacturers. By maintaining a predictable and growth-oriented investment environment, Kenya can continue to strengthen its manufacturing base, expand exports and advance broader industrialization ambitions.

As the country continues to position itself as a regional manufacturing hub, domestic policies need to align with these broader economic objectives.

Excise duty is not a tool of industrial protection. Its increasing application on raw materials and intermediate inputs represents a fundamental misapplication of the tax. We must carefully assess the broader implications of taxation measures on strategic manufacturing inputs.

Dangote Industries Limited, led by its Vice-President for Oil and Gas and ultimate beneficial owner, Aliko Dangote, has formally communicated a proposal to construct a greenfield 700,000 bpd petroleum refinery on Lamu Island, Lamu County.

Preliminary site selection, geotechnical soil testing, and Front-End Engineering Design (FEED) work are already under way.

Groundbreaking is targeted before end of this month, with a construction window of three to five years.

Lamu is a Unesco World Heritage site holding over 41 percent of Kenya’s total mangrove value, extensive coral reefs, and marine breeding grounds on which thousands of artisanal fishing households depend.

Kenya’s Courts have twice intervened decisively in comparable Lamu infrastructure projects, halting a coal plant’s environmental licence outright and awarding Sh1.76 billion in compensation over the Lamu Port project, each time for the same underlying failure: inadequate strategic and environmental impact assessment (SEIA), and public participation treated as a formality rather than a constitutional obligation.

A project of this scale cannot survive the same mistakes.

This proposal sets out how Government should approach the project so that it is bankable for the investor, defensible in court, and beneficial to the people of Lamu. All these three objectives are inseparable.

Three factors elevate this from a routine investment approval to a sui generis whole-of-government undertaking.

First, its Costing of Sh2.2 trillion makes it larger than several recent national budgets’ entire development expenditure, and will require Parliamentary-level, land, fiscal and treaty instruments, not ministerial sign-off alone. The approvals will cut across many Ministries, State Departments, State Corporations and Lamu County.

Secondly, that it is located in Lamu Archipelago, a Unesco World Heritage Site with Mangrove forests valued at Sh3.96 billion per annum and representing 41.5 percent of Kenya’s total mangrove value; the surrounding waters are breeding grounds for fish stocks that sustain the local artisanal fishing economy.

And thirdly, the Government has already lost one Lamu energy-infrastructure licence in the courts (the Amu Power Coal Plant). The Government also paid out Sh1.76 billion in compensation over the Lamu Port project, on nearly identical procedural grounds. The legal system has already told Government, in binding terms, what it must do differently this time.

The project will require approvals from inter alia the following laws, Petroleum Act, Energy Act, Environmental Management and Co-ordination Act, Special Economic Zones Act, Land Act, Physical and Land Use Planning Act, Government Owned Enterprises Act, Water Act and Occupational Safety and Health Act.

For the project to surmount Political, Legislative, Bureaucratic and Legal mine fields, the following need to be done: –

Establish an inter-agency and inter-ministerial Regulatory Secretarial that will be jointly chaired by The Attorney General and the Cabinet Secretary, Energy. The Secretarial will house all the applicable regulatory bodies, agencies and Lamu County.

To avoid delay, design the site boundary and it will involve mangrove area, wetland, riparian and beach frontage

Commission the Strategic Environmental Assessment before any project levies licence.

Initiate a public participation process that will survive Lamu Coal Project Court scrutiny.

Structure public compensation way before displacement begins.

Make local content and CSR commitment specific and enforceable.

A Host Governor Agreement has to be detailed enough that will provide in the long term, fiscal, operational and legal certainty.

An implementation Roadmap is required that will set out all the sequential steps from foundation until completion. This will cover statutory and legal approvals, public participation, commitment and legal costs et al.

If the above sequential steps are not followed, a loophole will be opened for litigation by way of Constitutional Reference in the High Court or Injunctive Orders in the Environment Court. The Government is forewarned how to make its biggest investment yet realisable and open doors for similar big-ticket investment. How we handle Dangote Refinery will be boon or boon to our future economy.