Category: Business Daily

Stocks of bottled water manufactured or imported before July 1, 2026 have been exempted from a directive requiring traders and manufacturers to surrender all unused excise stamps after the commodity was removed from the list of excisable goods through the Finance Act, 2026.

‘Taxpayers holding unused V4 excise stamps for bottled water as at 1 July 2026 are required to return the stamps to the Kenya Revenue Authority in accordance with these guidelines,’ the Kenya Revenue Authority said.

‘However, taxpayers should note that bottled water lawfully manufactured or imported and stamped before July 1, 2026 may continue to be sold with the affixed stamps.’

The exemption is expected to provide relief to traders and manufacturers who may now avoid the logistical challenges of a multiple-step procedure of surrendering unused stamps.

A schedule by KRA showed that those returning excise stamps would initiate the process by logging in to the Excise Goods Management System (EGMS). Upon submission of the excise stamps return request in the EGMS system, KRA shall process the application and either approve or reject the request.

This would be followed by a physical surrender of the paper stamps before any reimbursements would be processed.

Excise duty on bottled water was charged at Sh6.41 per litre until late last month, when it was abolished by the Finance Act, 2026.

This marked the end of nearly a decade of excise taxation on one of Kenya’s fastest-growing consumer products.

As an excisable product, every bottle of water sold in Kenya was required to bear an excise stamp to track production and confirm that the requisite tax had been paid.

An excise stamp is a revenue marker affixed to excisable goods to demonstrate that excise duty -popularly referred to as the “sin tax”- has been paid by the manufacturer.

The removal of the tax came against the backdrop of a rapidly expanding bottled water market, fueled by growing health consciousness, rapid urbanisation and persistent concerns over the quality and safety of piped water supplies.

The government first introduced excise duty on bottled water through the Excise Duty Act, 2015, as part of broader tax reforms aimed at widening the tax base and increasing domestic revenue collection. The move also reflected an expansion of excise taxation beyond its traditional focus on alcohol and tobacco to include selected non-alcoholic beverages and other consumer goods.

To safeguard revenue collection, KRA requires all licensed manufacturers and importers of excisable goods to purchase digital excise stamps, which are affixed to products before they leave the factory.

The stamps, administered through the EGMS, enable the taxman to monitor production volumes, verify tax payments and curb tax evasion and illicit trade.

Initially introduced for alcoholic beverages and tobacco products, the digital stamps were later extended to bottled water, juices, soft drinks, energy drinks and cosmetics as the government intensified efforts to plug revenue leakages.

Drivers on ride-hailing platforms such as Uber and Bolt could get a reprieve on how fares and commissions are set under proposed new competition rules aimed at curbing the abuse of market power.

The government has proposed new legislation to crack down on online platforms that exploit businesses that depend on them by unilaterally slashing prices, imposing unfair commercial terms or using their influence to dictate trading conditions.

The proposals, contained in the Competition (Amendment) Bill, 2026, are expected to place ride-hailing companies under greater regulatory scrutiny following years of disputes with Kenyan drivers over fare reductions and commission structures that the latter say have steadily eroded their earnings.

The Bill introduces the concept of a strategic market position, defining it as a situation where a company is able to influence market prices, quality, service, output or innovation to an appreciable extent independently of competitors, suppliers, users or consumers.

“A person has a strategic market position in a market if the person influences market prices, quality, service, output or innovation to an appreciable extent independent of competitors, suppliers, users or consumers,” says the Bill.

In determining whether a person holds a strategic market position, the CAK will consider factors including the firm’s presence across digital markets, control of data, network effects, switching costs, barriers to entry, financial strength and the degree of dependence by business users and consumers on its platform.

A bruising price war involving American ride-hailing company Uber, Estonia’s Bolt and local start-ups Little and Faras has driven fares down to a level that many drivers say is unsustainable, prompting some of them to defy algorithms and to set their own higher rates.

Kenya, Nigeria and Tanzania – with their growing economies and relatively low car ownership rates – are among the most important markets for Uber in Africa.

Drivers have repeatedly accused the multinational technology firms of using algorithms to determine fares in a manner that favours the platforms at the expense of those providing the transport service.

The concerns have fuelled frequent standoffs between drivers and the companies, with some motorists resorting to negotiating fares directly with passengers instead of accepting the prices generated by the applications.

Through the proposed amendments, the Competition Authority of Kenya (CAK) is seeking to regulate businesses that, although they may not necessarily dominate a market, wield disproportionate bargaining power over businesses that have few viable alternatives.

It also introduces the concept of superior bargaining position, recognising that companies can exploit trading partners because of economic dependence, even where they do not enjoy a dominant market share.

Under the Bill, “a person has a superior bargaining position in a market if the person creates an imbalance in the rights and obligations relating to its commercial relations with a counterparty and the counterparty cannot find a viable and satisfactory alternative in the market.”

Unlike existing competition law, which primarily focuses on dominant market positions, the amendments seek to regulate commercial relationships where one party possesses overwhelming negotiating leverage even in competitive markets.

The competition watchdog says the reforms are necessary because digital platforms have created new forms of market power that are not adequately addressed by the current law.

In its submission to Parliament, the agency says the digital economy has introduced unique competition concerns arising from the growing influence of large online platforms.

“The increasing prominence of large digital platforms has created risks associated with the concentration of market power, unfair trading practices, economic dependence, exclusionary conduct, and barriers to market entry,” the CAK director-general, David Kemei, told the National Assembly’s Finance and National Planning Committee.

According to the regulator, online platforms derive competitive advantages from strong network effects, access to vast amounts of user data and integrated digital ecosystems, allowing them to acquire and entrench market power more rapidly than traditional businesses.

The authority argues that this has created regulatory gaps because the existing Competition Act does not expressly provide for the regulation of competition in digital markets despite virtual marketplaces becoming a critical part of the economy.

The amendments, therefore, introduce a framework for determining whether a business holds a strategic market position in the digital economy.

The competition watchdog will also examine whether a platform acts as a gatekeeper between businesses and consumers, whether competitors require access to that platform to compete effectively, whether the company controls the rules governing the digital ecosystem and whether network effects have caused the market to tip overwhelmingly in favour of a single platform.

The concept, it says, mirrors approaches adopted in major jurisdictions that have had to grapple with the growing influence of internet giants.

In Europe, competition regulators have already relied on similar concepts in regulating companies such as Google, Apple and Meta, leading to billions of dollars in penalties over practices including self-preferencing, anti-steering rules and restrictions on competition in digital markets.

The proposed amendments would also significantly strengthen enforcement powers.

The Bill proposes a fine of up to Sh10 million, imprisonment for up to five years, or both, for a person found to have abused a strategic market position or superior bargaining position by imposing unfair trading conditions on another undertaking.

The proposed reforms come as the Ministry of Roads and Transport moves to introduce a new minimum compensation per trip for ride-hailing drivers and motorcycle operators, setting the stage for yet another showdown between the government and technology companies over pricing.

The Competition Authority is keen to address the wider imbalance in bargaining power between digital platforms and businesses that depend on them.

To address such situations, the Bill empowers the Competition Authority to develop codes of practice governing commercial relationships in sectors where abuse of strategic market position or superior bargaining position is likely to occur.

Once issued, the codes would become binding on businesses operating within those sectors, providing a framework for resolving disputes over pricing, commissions and other commercial terms.

The Authority says this flexibility will allow it to respond to rapidly evolving digital markets without having to seek fresh legislation whenever new business models emerge.

The proposals closely mirror reforms already adopted in several advanced economies.

The European Union has introduced rules targeting large digital “gatekeepers” whose platforms have become indispensable to businesses and consumers.

Companies including Google, Apple and Meta have faced regulatory action and multibillion-shilling penalties over practices ranging from self-preferencing their own services to restricting competition on their platforms.

Ride-hailing platforms have also come under increasing scrutiny.

The Central Bank of Kenya (CBK) wants the Microfinance Bill 2026 amended to expressly grant it powers to enforce anti-money laundering measures, warning that the omission would compromise the country’s efforts to exit a global watch list on illicit financing.

CBK Governor Kamau Thugge said the proposed law on micro lenders doesn’t sufficiently align with the country’s anti-money laundering framework.

‘The CBK has reviewed the Microfinance Bill No.9 of 2026 and is supportive of it. Nonetheless, the Bill does not contain provisions on powers of the Central Bank to regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism, and countering proliferation financing,’ he said in a submission to the National Assembly’s Finance and Planning Committee.

The Paris-based Financial Action Task Force (FATF) added Kenya to the list of countries under special scrutiny in February 2024, due to loopholes in countering money laundering and terrorism financing.

Kenya’s listing by the FATF has subjected the country to increased scrutiny due to strategic deficiencies in its measures to combat illicit financial flows. When a country is grey-listed, its banks face tighter due diligence from foreign banks, some international transactions experience delays, and investors flag compliance risk in country risk assessments.

The country has been sharpening its tools to detect and block illicit money flows, with hope of being removed from the financial crimes watchdog’s ‘grey list’.

Kenya adopted its Anti-money laundering and Combating Terrorism Financing (Amendment) Act in 2025, providing a legal framework that closes loopholes in the fight against illicit financial flows by targeting avenues such as the real estate sector, betting firms, and Saccos.

‘Penalties for violation of money laundering and terrorism financing are also not included in the Bill. These provisions are contained in the current Microfinance Act 2006 at Section 36B and 36C following AML(Anti-Money Laundering )/CFT(Countering the Financing of Terrorism) /CPF(Countering Proliferation Financing) deficiencies captured in Kenya’s Mutual Evaluation report of 2022. In this regard, the provisions of Section 36B and 36C of the Microfinance Act 2006 should be lifted verbatim to the Microfinance Bill 2026,’ Dr Thugge said.

The State-backed Microfinance Bill No.9 of 2026 was tabled in the National Assembly on May 29, 2026, and aims to introduce a raft of changes, including raising the minimum core capital for micro lenders to Sh250million, up from Sh60million.

The micro-banks are expected to comply with the new capital requirements within five years after the government-sponsored Bill is passed in Parliament.

‘The objective of this bill is to repeal and replace the Microfinance Act, 2006, to address the evolving business of banking as well as the institutions offering microfinance banking services,’ reads the memorandum accompanying the Microfinance Bill of 2026.

‘The Bill therefore seeks to provide a safe and sound environment for the Microfinance Banks to meet the evolving needs of the consumers they serve. This is in line with Section 4(2) of the Central Bank of Kenya Act, which mandates CBK to foster the liquidity, solvency and proper functioning of a stable market-based financial system.’

The proposed changes are anticipated to trigger a new wave of mergers and acquisitions in the micro-finance sector. At least half of Kenya’s 14 microfinance banks face pressure to raise an estimated Sh2.9 billion to meet newly proposed minimum core capital requirements by the CBK, signalling a fresh wave of acquisition deals in the lending sub-sector.

Records show that as of December 31, 2024, the number of licensed microfinance banks held steady at 14, but the overall financial position weakened from 2023 with notable decreases in net advances and borrowings.

As of December 31, 2024, the sector MFBs experienced a 9.8 percent decline in total assets in 2024 to Sh57.9 billion. Net loans and advances to customers decreased significantly by 16.8 percent from Sh37.5 billion in 2023 to Sh31.2 billion in December 2024.

Unpredictable government policies have overtaken tax incentives as the biggest concern among foreign investors eyeing Kenya, signaling the weak spot for the State as it seeks to woo fresh global capital.

The shift points to a fundamental change in what multinationals prioritise when choosing investment destinations across the world.

This comes after the 2026 World Investment Report by the United Nations Conference on Trade and Development (UNCTAD) estimated Kenya received a record $3.2 billion (Sh413.6 billion) in foreign direct investment last year, a 37.7 percent jump from revised $2.32 billion (Sh299.9 billion) in 2024.

Kenya Investment Authority (Invest Kenya) chief executive John Mwendwa says policy predictability is the issue raised most frequently in meetings with prospective investors, reflecting growing concern over abrupt regulatory changes.

“Top of mind, the first thing that investors want is predictability,” Mr Mwendwa said in an interview with Business Daily. “Predictability enables them to plan and model assumptions that resonate with their expectations.”

Multinational companies making long-term investments, he said, increasingly want governments to provide stable tax, regulatory and policy environments that allow them to forecast returns with greater certainty.

Mr Mwendwa acknowledged that investors become uneasy when governments introduce policy changes without adequate consultation or advance notice, forcing businesses to revisit investment assumptions after capital has already been committed.

“Sometimes when changes occur that investors say are not pre-communicated, it becomes an issue,” he said.

Apart from policy uncertainty, investors also raise concerns over the speed of regulatory approvals, including company registration, land titling, work permits and licensing.

Invest Kenya is attempting to address those concerns through an investment deal room that brings together government agencies to resolve bottlenecks affecting strategic projects.

The concerns mirror longstanding complaints by business lobbies, who say an increasingly complex and unpredictable regulatory environment has become one of the biggest drivers of business costs and, in some cases, forces entrepreneurs to abandon investment projects altogether.

The Kenya Association of Manufacturers (KAM) says delays in obtaining licences and permits have prompted some investors to shelve projects, while an expanding web of compliance obligations is making it harder for firms to innovate and compete.

“The excessive red tape and compliance requirements imposed by labour laws, tax regulations and other legal obligations result in increased expenses for businesses,” KAM says in one of its policy reports.

The lobby says lengthy bureaucratic procedures divert resources away from core business operations, while frequently changing regulatory barriers discourage new enterprises from entering the market, limiting competition and slowing economic growth.

Businesses have also complained of overlapping requirements imposed by national and county governments, arguing that multiple agencies often perform duplicative regulatory roles that inflate compliance costs.

Depending on the sector, companies may be required to secure close to 20 licences and permits covering business registration, environmental compliance, occupational safety, food processing, waste management, water and sewerage, construction, noise control and county levies.

Kenya has traditionally competed for foreign investment through tax incentives, special economic zones and aggressive investment promotion campaigns led by senior government officials.

But Mr Mwendwa said investors now evaluate a much broader ecosystem before committing capital.

“Our view is investors are not only looking for incentives; they are looking at an ecosystem,” he said.

That ecosystem includes skilled labour, reliable infrastructure, affordable energy, market access, efficient public institutions and confidence that the rules governing investments will remain stable throughout a project’s lifespan.

Mr Mwendwa argued Kenya remains well positioned because of its skilled workforce, electricity generated largely from renewable sources and preferential access to major export markets across Africa, the United States, the United Kingdom, the United Arab Emirates and China.

Jubilee Health Insurance has partnered with Singapore-headquartered insurtech bolttech to expand access to health insurance by embedding its products into digital platforms that consumers already use.

The partnership, announced on Thursday, will enable Jubilee to distribute health policies through partner platforms such as banks, petrol stations, retailers and digital marketplaces, allowing customers to buy insurance as part of everyday transactions rather than through traditional channels.

Embedded insurance integrates cover directly into the purchase of a product or service. For example, a customer taking a digital loan or buying goods on credit could add a daily hospital cash policy before completing the transaction, while online shoppers could purchase health cover with a single click.

Jubilee Health chief executive Njeri Jomo said the model reflects changing consumer behaviour as more Kenyans access financial and commercial services through digital platforms.

‘Healthcare protection should be available where people already live, work and transact. Embedding insurance into trusted platforms allows us to scale faster and extend cover to underserved communities,’ she said.

Jubilee, Kenya’s largest health insurer with a 14.08 percent market share in the first quarter of 2026, said it is already engaging telcos, petrol stations and buy-now-pay-later providers to expand distribution.

Under the partnership, bolttech will provide an API-driven platform enabling businesses to integrate Jubilee’s insurance products into their systems, supporting customer onboarding, policy administration and claims processing.

The rollout will begin with Jubilee’s Hospicash product, which provides daily cash benefits during hospitalisation, before expanding to other health insurance products.

A new analysis warning that a Super El Niño could threaten 500 million farmers worldwide and wipe $342 billion from global agricultural output may sound like a future crisis.

For many Kenyan farmers, it is already today’s reality. The warning underscores a lesson the agricultural sector can no longer ignore: climate resilience is no longer an environmental add-on. It has become the foundation of agricultural productivity.

About 98 percent of Kenya’s agriculture is rain-fed, meaning a failed rainy season can determine an entire harvest.

Drought has already devastated livestock herds in Turkana and Marsabit, while climate stress in Tana River has reduced pasture, milk production and household food security. Families recovering from one climate shock are often hit by another before they regain their footing.

The old distinction between productivity and resilience no longer holds. Productivity depends on resilience, and so does access to finance. Farmers who cannot withstand climate shocks become riskier borrowers, making it harder to secure the credit needed to invest in their farms.

The effects quickly spread beyond the farm. Poor harvests reduce household incomes, affect children’s education and nutrition, and leave farmers without resources to buy inputs for the next season. Floods often destroy both crops and the roads needed to transport them to market, compounding losses.

Smallholder farmers produce up to 80 percent of the food consumed in sub-Saharan Africa. When their resilience weakens, the consequences ripple through food supplies, inflation and national economies.

Livestock-dependent communities face even greater risks. While crops may recover with better rains, rebuilding herds can take years. Protecting livestock through better animal health, water access and drought preparedness is therefore central to safeguarding livelihoods.

Kenya has already begun investing in locally led climate action, supporting community projects that strengthen agriculture, water and environmental management. The next step is to treat water harvesting, drought-tolerant crops, livestock health services, climate information, solar-powered cold chains and agricultural insurance as productive infrastructure rather than optional development projects.

Kenya Breweries Ltd (KBL) has returned to court seeking to stop publication of an arbitral award in a dispute over the refurbishment of its Sh3.4 billion Kisumu brewery project, just days after the High Court lifted a 19-month freeze on the award.

In fresh filings before the High Court in Nairobi, the brewer argues that a recently concluded investigation by the Directorate of Criminal Investigations (DCI) uncovered what it describes as “grand corruption” in the arbitration process. However, the court yesterday declined to issue immediate orders halting publication of the award pending determination of the application.

KBL is asking the court to review its July 16 ruling, arguing that the DCI investigation produced new and important evidence that was unavailable when the earlier application was heard. The company says the findings justify reinstating conservatory orders that had barred publication of the arbitral award since December 2024.

The dispute stems from refurbishment contracts awarded between 2017 and 2019 to Jilk Construction Company for works at KBL’s Kisumu brewery under the “Project Nafasi” initiative. Jilk maintains that it completed the contracted works and handed over the project, but disagreements later emerged over payment and implementation, prompting arbitration.

KBL argues that releasing the arbitral award before its review application is determined would undermine both the review proceedings and its constitutional petition challenging the arbitration process.

“The publication of the arbitral award will render both the review application and the petition nugatory,” the brewer says in a supporting affidavit.

The company relies on call data and communication records obtained during the DCI investigation, claiming they reveal contact between the arbitrator and individuals associated with Jilk Construction. According to KBL, the records support allegations that the arbitration process was tainted by corruption, misconduct and extortion.

However, a DCI affidavit filed by Police Constable Alex Wekesa paints a different picture. While investigators confirmed communication between the arbitrator and persons linked to Jilk Construction, they found no evidence of criminal conduct.

“Based on the evidence obtained, no prima facie case was established against any person,” Mr Wekesa states. He further adds that there is no evidence demonstrating that the communications amounted to a criminal offence.

The affidavit, dated July 10, 2026, says investigations have been completed and the inquiry file forwarded to the Office of the Director of Public Prosecutions for review and directions.

The High Court declined to certify KBL’s application as urgent. Although the application alleges corruption and malpractice by both the arbitrator and the respondent, the judge ruled that he did not discern any immediate danger warranting urgent intervention.

The court directed KBL to serve the application, gave the respondents 14 days to file responses and scheduled the hearing for September 21 after the court recess.

?jwangui@ke.nationmedia.com

Talent, Emmanuel Mugo says, has never been the hardest part of acting.

Rejection is.

Before working on the second season of The Agency, the American spy thriller television series featuring Michael Fassbender and Richard Gere, Mugo spent years navigating failed auditions, financial uncertainty and long stretches without work.

Those setbacks, he says, became the foundation of a career that has taken him from a Tahidi High extra to one of Kenya’s most experienced stunt performers on international productions.

“There has been a lot of learning, a lot of connecting with fellow artistes and learning from them, but there has also been rejection. You can be very good and still not get the role.”

For many aspiring actors, rejection is interpreted as failure. For Mugo, it eventually became part of the job description.

“That experience years has helped me build resilience and self-acceptance. Even if you’ve been rejected, you have to keep moving.”

Unlike traditional professions where progression follows a predictable ladder, acting often means long periods of waiting punctuated by short bursts of intense activity. There are months when projects flow and months when phones simply stop ringing.

“That’s why diversification is key. Having a side hustle is important in this industry.”

While many know him as an actor, Mugo has steadily expanded his skill set over the years, becoming a stunt performer, stunt coordinator and assistant director. Today, he co-runs a company known as Stunt It alongside fellow stunt performer Mickey Stunts.

His entry into stunt work came more than a decade ago through veteran Kenyan stunt coordinator Charles Kembero.

“He got me into the first season of Sense8, trained me on the basics and we kicked off from there. Without Kembero, honestly, The Agency would not exist for me. Sense8 was my first stunt gig ever.”

Mugo’s fascination with acting began in childhood while watching the 1990s action series Renegade starring Lorenzo Lamas.

“I really wanted to do what he was doing,” he recalls.

His TV opportunity came in 2012 as an extra in the Kenyan teen drama, Tahidi High. It would take another 13 years before he found himself working on The Agency.

From there came commercials, supporting roles and more auditions.

“Every opportunity and every place you go, you make sure you leave a lasting impression because you’re only as good as your last gig.”

The transition into stunt coordination happened almost by accident.

After working on productions including Mission to Rescue and the Maisha Magic drama Kina, Mugo began taking on more responsibility for action sequences and eventually coordinated one of the show’s major stunt scenes involving weapons and a wedding shootout.

By the time The Agency came calling, Mugo was a multi-skilled creative capable of contributing in several departments. He joined the production through the stunt team rather than a traditional audition process.

Produced by Hollywood star George Clooney’s Smokehouse Pictures for Paramount+, The Agency is among the highest-profile international productions to film in Kenya in recent years. The espionage thriller became Showtime’s most-streamed new series ever following its launch, drawing 5.1 million viewers globally during its opening weekend.

The Treasury has cut its target for net domestic borrowing for the fiscal year ending next June by Sh132 billion, reducing the risk of crowding out the private sector in access to credit and easing pressure on borrowing costs.

The target for net domestic financing has been lowered to Sh898 billion from Sh1.03 trillion, just a month after the 2026/27 Budget Statement was presented on June 11.

The Treasury will instead borrow more from foreign markets to offset the reduction in domestic borrowing from banks, pension funds and insurance firms through Treasury bills and bonds, underscoring improved prospects for securing external financing.

The cut in domestic borrowing is expected to increase the pool of funds available in banks for lending to households and businesses.

It will also strengthen the government’s efforts to lower borrowing costs by reducing competition for funds in the domestic market, allowing banks to lower deposit and lending rates.

The government’s overall borrowing target for the fiscal year remains unchanged at Sh1.145 trillion.

“The resulting fiscal deficit, including grants, is Sh1.145 trillion (5.5 percent of GDP) and will be financed by net external financing of Sh247.2 billion (1.2 percent of GDP) and net domestic financing of Sh898 billion (4.3 percent of GDP),” the National Treasury said in its latest disclosures.

The Treasury had initially planned to finance the deficit through Sh116.2 billion in net external borrowing – equivalent to 0.6 percent of GDP – and Sh1.03 trillion in net domestic borrowing, equivalent to 4.9 percent of GDP.

The increase in external financing reflects improved prospects for raising funds abroad as the Treasury seeks to diversify its borrowing sources.

The diversification of external funding is aimed at improving debt sustainability by broadening the investor base, extending debt maturities and lowering financing costs.

“The government is evaluating opportunities to access new and diversified international capital markets. This includes the potential issuance of Samurai bonds in the Japanese market and Panda bonds in the Chinese domestic market,” Treasury Cabinet Secretary John Mbadi said on June 11.

“By tapping into these markets, the government stands to benefit from deep and diversified pools of capital, secure potentially competitive financing terms, and promote currency diversification within the debt portfolio, thereby reducing reliance on traditional funding sources.”

The lower target for domestic financing is expected to ease pressure on credit markets and support continued growth in private sector lending.

Private sector credit has recovered over the past 20 months, growing 9.3 percent in May 2026 compared with two percent a year earlier.

The recovery has been supported by successive cuts in the Central Bank Rate (CBR), which has fallen from 13 percent in 2024 to 8.75 percent.

Average lending rates declined to 14.5 percent in May 2026 from 15.4 percent a year earlier.

Credit growth has remained strong in key sectors of the economy, particularly trade, agriculture, and building and construction.

The revised financing plan will hold if the Exchequer meets its tax revenue targets or contains public spending.

In previous years, revenue shortfalls have widened the fiscal deficit, forcing the government to borrow more domestically.

For instance, the Treasury exceeded its net domestic borrowing target by Sh161.7 billion in the fiscal year ended June 2026.

Net domestic borrowing totalled Sh1.135 trillion, against an approved target of Sh973.6 billion.

Of this amount, Sh993.1 billion was raised through the sale of Treasury bills and bonds by the Central Bank of Kenya (CBK).

When I assumed leadership of the Central Bank of Somalia, one question drove much of my thinking: how can we build an economy that matches the aspirations of our people?

Part of the answer lies in the financial infrastructure that allows money to move securely, businesses to trade and citizens to participate.

For years, Somalia’s payments landscape was fragmented. Banks and mobile money operators ran closed-loop, non-interoperable systems, preventing seamless transfers across providers and creating costly inefficiencies and financial exclusion.

In 2021, the Central Bank connected commercial banks through the National Payment System for large-value transfers, enabling reliable real-time gross settlement and automated clearing of interbank transactions.

However, the system did not fully address the need for a 24/7 infrastructure capable of supporting everyday retail economy. SIPS fills that gap.

Launched in January 2025 and built on ISO 20022, Somalia’s instant payment system (SIPS) enables instant, interoperable payments across participating institutions. When fully integrated, it will connect 14 commercial banks and eight mobile money and e-wallet providers through a single network.

SIPS supports person-to-person transfers, merchant payments, payments to government and government disbursements to citizens. Business-to-person, business-to-government and business-to-business services are also being developed.

Its integration with SOMQR, Somalia’s standardised QR code, will make digital payments easier for merchants, including informal businesses that drive much of daily commerce.

SIPS did not emerge from a government mandate alone. The Somalia Payment Switch, which operates SIPS, was established as a partnership between the Central Bank and 13 commercial banks. That structure was deliberate.

I believe that shared infrastructure built through collaboration is more resilient than infrastructure fully operated by the Central Bank.

The next priority is integrating mobile money operators, which serve most Somalis in their daily financial lives. Once connected, the real scale of this system will become visible, making every Somali with a mobile wallet is part of the same interoperable network, turning SIPS into a powerful engine of financial inclusion.

Somalia’s ambitions also extend beyond its borders. As the newest member of the East African Community, we intend to contribute to modern regional payment infrastructure.

We are also working to connect SIPS to the Pan-African Payment and Settlement System before end of 2026. For a country where remittances are a major source of household income, payment efficiency is an economic, social and strategic priority.

SIPS demonstrates that modern financial infrastructure can be built even in fragile context when policy direction, institutional commitment and market collaboration align. We are laying the foundation for a more connected, inclusive and competitive digital economy.