Category: Business Daily

My explanation of the size of the Mt Kenya economy on Radio Generations last week elicited many comments on Tiktok. My point? Perspective drives action.

For all our difficulties, Kenya has immense opportunities. We should not squander them, imprisoned by self-pity, recriminations, and name calling. Rather, leaders should reduce their daily political battles, and inspire Kenyans to greatness.

As long as domestic borrowing continues to expand, monetary adjustments by the Central Bank of Kenya (CBK) will remain cosmetic and ineffective.

In Kenya’s current fiscal landscape, the greatest paradox is not simply that the government owes more than it possesses in liquid resources, but that the remedies prescribed to address this imbalance often serve the State more than the people.

When total debt far outpaces cash and cash equivalents, the economy is effectively living on borrowed time, with liquidity shortages constraining the ability of both the government and the private sector to function. According to recent reports, public debt in 2025 has climbed above Sh11 trillion, even as revenue growth remains sluggish and falling short of what is needed to service the debt without sacrificing other obligations.

The Central Bank of Kenya has tried to portray monetary policy as the engine for recovery. Rate cuts, revised loan pricing formulas, and persuasion to commercial banks to reduce lending rates are part of this strategy.

These moves might appear reassuring: in April 2025, the CBK lowered its policy rate by 75 basis points to around 10.00 percent, aiming to stimulate credit growth.

Yet these policy shifts neglect the reality that the state itself remains the chief claimant on domestic capital. When the government continues to issue domestic debt-such as long-term Treasury bonds with coupon rates upward of 13.20 percent to 13.40 percent, and funds being raised at these levels-banks and investors naturally find government securities more attractive and safer than private sector loans.

Private sector credit tells the more concerning side of the story. By December 2024, credit to the private sector stood at Sh3.86 trillion, but growth was negative in Q4, with a 1.4 percent year-on-year decline-even as households, the trade and manufacturing sectors remain important borrowers.

Households took about Sh1,317.4 billion (34.1 percent of private credit), while trade and manufacturing took 16.9 percent and 15.0 percent, respectively.

These figures suggest that demand remains, but the supply of credit is choked-banks are reticent to lend to riskier private actors when government securities provide relatively high, risk-free returns.

In addition, Treasury bill yields, and bond coupon levels remain high, reinforcing what is already obvious: the state is crowding out the private sector.

The result is a vicious cycle where private investment is starved, households and businesses remain credit-constrained, and growth slows. Inflation and borrowing costs remain elevated.

With each round of short-term domestic borrowing, rollover risk increases. The state’s solvency becomes the central concern, not inclusive growth.

Kenya’s path out of this quagmire requires much more than lower rates. Structural reforms are necessary: debt issuance must shift toward long dated, concessional financing; incentives and guarantees need to encourage banks to lend to SMEs and productive sectors; fiscal discipline must be strengthened; and transparency in debt, cash holdings, and liquidity management must improve so that policy signals are credible.

The CBK, as monetary custodian, must act not as the Treasury’s enabler but as a guardian of an inclusive financial system. Unless domestic borrowing is contained, unless the incentives change, CBK’s well-intentioned adjustments will remain cosmetic and ineffective. And unless monetary policy is not aligned with fiscal policy, anything else is a mirage.

Investors demand yields for government securities in double digits, especially for long-term bonds. These attractive rates make lending to government very appealing, while loans to households or small businesses offer less return for more risk. Hence, even though the policy rate is lowered, the transmission to private lending rates is weak.

The high yields on government paper effectively provide a safe harbor for liquidity that might otherwise flow to more productive but riskier private investments.

The logic of cuts in rates or adjustments to pricing formulas assumes that banks will reorient their balance sheets toward growth-oriented lending. But when the state is issuing large volumes of debt-bills and bonds-and offering high rates on government paper, that assumption fails.

Banks are profit-seeking entities; for them, holding government securities is often the lower-risk, higher-return path. Private sector lending suffers not just because of risk or demand but because supply of credit is diverted toward sovereign debt.

This dynamic reveals the deeper contradiction: CBK’s monetary adjustments are less about empowering private growth and more about easing the government’s debt servicing burden.

Debt service is elevated, liquidity margins are thin, and the government depends heavily on domestic borrowing to meet recurrent expenses. Under these conditions, rate cuts and loan formula tweaks are at best marginal relief at worst promotional rhetoric.

Shares at the Nairobi Securities Exchange (NSE) rewarded investors with the highest returns in the third quarter of the year, eclipsing bonds and cash deposits whose gains dropped in the wake of falling interest rates.

During the three months to September, investor wealth at the bourse, as measured by market capitalisation, rose by 15.1 percent, or Sh367.4 billion, to reach Sh2.78 trillion.

The Employment and Labour Relations Court has faulted Consolidated Bank of Kenya for the unfair dismissal of one of its business development officers over allegations of improper loan approvals totalling Sh102 million.

Justice Monica Mbaru stated that it was improper for the bank to hold Emmanuel Wambua responsible for a non-verified asset used to secure the debt, noting further inconsistencies in the lender’s actions.

Early last month, Karen Thaba, a digital marketer, was approached by an agency to apply for a social media role and content creator. After she shared, the agency wrote back asking for a full social media strategy plus a two-week content creator calendar in 36 hours for a specific brand as an assignment.

“I checked the brand they requested I make the content for and noticed they could be their client,” she recalls.

A judge has reprimanded Kenya Power for repeatedly violating a former employee’s rights by subjecting her to repeated temporary three-month job contracts for eight years.

Employment and Labour Relations Court Judge James Rika said offering short-term contracts to employees for prolonged periods is casualisation of labour, which deprives workers of job security and terminal benefits due to permanent and pensionable employees.

Family Bank of Kenya has called an extraordinary general meeting of its shareholders to seek their approval to list on the Nairobi Securities Exchange (NSE).

The medium sized bank, which has flirted with public listing for over a decade, will be listing by way of introduction, meaning it does not plan to sell new shares but will be giving shareholders a trading platform to make their stocks more liquid.

In rural Kenya, the daily ritual of cooking is a battle against time and soot – mothers gathering firewood, smoke from cooking fire filling homes, clothes and lungs coated in layers of ash, painting the walls black.

It is the life of 90 percent of households; millions of people, in what is a quiet struggle for a clean flame. So, how can they move away from the choking, billowing smoke to clean fuels?

Policymakers are grappling with how to re-engineer county governments to drive the clean energy agenda and unlock the potential of renewable sources like solar and geothermal, not just for power grids, but for homes and small businesses.

This is a subtle acknowledgment that national-level solution is not enough; there’s need to empower counties to close the gap from the ground up.

The journey toward a cleaner energy future is already underway, but there are challenges that counties, investors, and other players face.

A year ago, the government began implementing the LPG Growth Strategy, an initiative to transition 80 percent of the population from biomass to clean LPG by 2026.

The strategy aims to boost the per capita LPG consumption from 6.5 kg to 15 kg by 2030 by upgrading the infrastructure, introducing LPG for schools, availing subsidised cylinders, and enacting legal and regulatory reforms.

While LPG uptake within urban centres has made tremendous gains, rural areas still lag due to reported county regulatory barriers.

Investors say county levies are exorbitant and often come in multiple forms-from branding, parking, and licence fees to business permits. They cite hostility from county and law enforcement officials.

Counties need to generate revenue, but they also need to keep energy prices affordable to promote adoption.

The Energy Regulatory Authority is urging counties to adopt incentives like Time-of-Use tariffs to reduce operational costs and drive industrial growth, and partner with the private sector on captive energy generation and storage.

According to Dr Stephen Ikiki, Senior Economist, National Treasury, inter-county collaborations could help unlock innovative financing models, such as blended finance or green bonds. This approach would allow counties to attract and negotiate large-scale sustainable energy investments, weaving them directly into their budgets.

Counties have a different story. For instance, in Kilifi County, Mr Wilfred Baya, the Director of Energy, shared how the county is empowering communities to lead the charge.

They have adopted a community-driven model where former charcoal sellers are now the biggest LPG investors and ambassadors. The county is also allocating land for LPG refill infrastructure and considering new policy incentives to stimulate investment. These efforts are making energy a central part of the County Integrated Development Plan.

The Energy and Petroleum Regulatory Authority (Epra) is supporting the transition through regulation that bolsters business operations for solutions like Autogas, smart LPG meters, and reticulation, says Stella Opakas, Deputy Director Mid and Downstream Petroleum.

The Energy (Integrated National Energy Plan) Regulations, 2025, have been gazetted to enhance energy access and reliability in counties through the integrated national energy planning committee that draws representation from the Ministry of Energy and Petroleum, Council of Governors, Epra and sector agencies.

One of its primary tasks is to track implementation of the county energy plans and the integrated national energy plan. The challenge now is finding the right balance.

A recent post on a popular Facebook group for mothers of teenagers sparked debate after one parent shared her shock when her son announced he had a girlfriend.

The post drew hundreds of comments, with many mothers admitting that teenage romance is a common yet unsettling milestone in parenting. Most confessed they were unsure how to handle it, often choosing to step back and wait for the ‘love bug’ to fade as their children grew older.

Regulated Saccos recruited over 637,696 new members last year as deposits crossed the Sh700 billion mark, pointing to the sustained interest of Kenyans in co-operatives.

Latest industry data shows the 177 deposit-taking (DT) Saccos and 178 non-withdrawable deposit-taking (NWDT) Saccos under Sacco Societies Regulatory Authority (Sasra) supervision, saw their membership rise by 26.3 percent from 504,915 in 2023.