Category: Business Daily

Nairobi County’s own source revenue in the first quarter ended September hit a record high of Sh2.05 billion, buoyed by steady growth in the advertising, food handling and Unified Business Permits (UBPs) streams.

This is a 13.8 percent rise from the Sh1.8 billion raised in the same period a year earlier and was driven by increases of 981.4 percent, 868 percent and 403 percent in revenues from advertising, food handling and UBPs respectively.

Improved collections are critical to helping the county to wean off its reliance on disbursements from the National Treasury in running daily operations and delivering key services.

The county attributed the rise to enhanced revenue collection systems that have helped cut default rate besides reducing leakages.

An analysis of the data shows that receipts from issuance of billboards and advertising rose to Sh200.85 million in the first quarter of the current fiscal year from Sh18.57 million a year ago followed by those for food handling that rose to Sh28.51 million from Sh2.95 million.

Collections for UBPs jumped to Sh348.09 million in the first quarter of the financial year from Sh275.8 million in the same period a year earlier.

Land rates -traditionally the single biggest revenue stream for the county- posted a marginal growth to hit Sh212.3 million from Sh196 million last year.

The steady rise in the three streams helped to ease the impact of reduced collections from parking fees and building permits. Nairobi County’s collections from parking fees dipped six percent to Sh408.5 million in the first quarter from Sh434.4 million in the same period last year while building permits fell to Sh378.9 million from Sh484.4 million.

Besides land rates, parking fees, UBPs and billboards and advertising are the other big revenue streams for the devolved unit.

Increased collections are critical to boosting the county’s efforts of avoiding a near paralysis of operations whenever the National Treasury delays in remitting the equitable share to counties.

Dismal internal revenue collections since the start of devolution in 2013 have forced all 47 counties to overly rely on the equitable share to run operations. Delays in the release of this cash have in the past affected operations.

This is the second time that the county has raised more than Sh2 billion in its own source revenue in the first quarter of a fiscal year, with the other time being in 2017 when it clocked Sh2.04 billion.

But despite the growth in the collections in the first quarter of this financial year, Nairobi has been singled out for grossly mobilising revenues way below its potential.

The Own Source Revenue Potential and Tax Gap study puts the potential of Nairobi County at Sh25 billion in a financial year, which is nearly double the current collections.

The study, jointly done by the World Bank and Commission of Revenue Allocation shows that all the 47 counties are grossly under-collecting internal revenues largely due to weak systems, use of manual platforms and corruption.

Taxpayers are spending more than Sh1 trillion annually to keep loss-making State corporations afloat, preventing private investments and suppressing growth in formal job openings for youth.

A joint survey by the World Bank and the Competition Authority of Kenya (CAK) has established that the government injects an equivalent of six to seven percent of gross domestic product (GDP) into under-performing State-owned enterprises (SOEs) every year.

The report says that majority of 209 government-linked entities survive on continuous injections of taxpayer funds despite delivering consistently poor performance rather than their commercial viability.

The support comes in form of structurally entrenched subsidies, bailouts, debt write-offs and loan guarantees – boost which not only consumes public resources but also distorts markets and crowds out private investment.

The report, which analysed the financial drain on taxpayers between financial year 2019/20 and 2023/24, puts the value of support in the year to June 2024 at Sh1.199 trillion, one of the highest levels globally.

The World Bank and CAK researchers cite neighbouring Tanzania, which has State corporation footprint that is comparable to Kenya’s but allocates 1.5 percent of GDP.

‘To make up for their poor performance, SOEs are often subsidised, bailed out, or backstopped financially by GOK at great cost to Kenyan taxpayers,’ the From Barriers to Bridges report states.

‘SOEs also have financing advantages given their access to on-lent and government-guaranteed debt.’

The competitiveness report places Kenya third worst globally for market distortions created by public ownership of enterprises in key economic sectors, ranking only above Mexico and Trkiye.

The more than 200 SOEs in Kenya -one of the largest portfolios among emerging economies-operate across sectors such as energy, agriculture and transport.

The report says most struggle to meet basic financial and operational benchmarks. It, for example, puts the SOEs’ average labour productivity at 72 percent lower than comparable partially State-owned firms in other countries, reflecting long-standing governance weaknesses and a lack of competitive pressure.

‘With the financial advantage of being able to run losses and/or receive financing below market rates, SOEs can squeeze out even more productive private competitors by offering suppliers higher prices and/or charging customers less,’ the report states.

‘In the short run, suppliers and customers of the SOEs benefit, but this comes at great fiscal cost and disincentivises private sector investments and productivity improvements-which in turn drive jobs and wages-in the long run.’

The report cites the sugar sector as offering a glaring example of decline that comes with entrenched inefficiencies despite heavy State bailouts.

The performance of six government-controlled sugar mills-South Nyanza Sugar (Sony), Mumias Sugar, Muhoroni Sugar, Chemelil Sugar, Nzoia Sugar and Miwani Sugar (which have since been leased to private investors)- has deteriorated despite decades of being propped up by the State.

The factories recorded more than Sh17 billion in net losses over the three years to June 2023, according to the report.

In the energy sector, entities such as Kenya Power and Kenya Electricity Transmission Company benefit from policy protections that prevent genuine competition and contribute to high electricity prices.

The report also cites Kenya Ports Authority and Kenya Railways in transport and logistics sector which continue to dominate systems that could be made more efficient and cost-competitive with greater private participation.

In fertiliser distribution, the role of the National Cereals and Produce Board has been singled out for discouraging competitive pricing and efficient delivery.

The Central Bank of Kenya (CBK) raised an early red flag in 2022 when it cautioned banks against indiscriminate lending to SOEs after discovering that many were using long-term commercial loans to pay salaries and other recurrent expenses rather than to fund investments.

‘The SOEs used long-term debt to finance operations expenses rather than investments to generate revenues to service future debt,’ the CBK warned, adding that the practice severely undermined the enterprises’ productivity and long-term viability.

The result has been a pattern of declining performance, mounting debt and recurring bailouts-one that weighs heavily on taxpayers while discouraging private-sector expansion.

President William Ruto has in the past also acknowledged the crisis of continued State financial support to the SOEs, saying that many of them have become a ‘drain on the Exchequer’.

Dr Ruto told heads of parastatals at State House on March 26, 2024, that most SOEs have become financially unsustainable and criticised the culture of repeated bailouts for firms with overlapping mandates and years of losses.

‘We cannot continue accumulating debt. Borrowing will only lead us down the cliff. We must get it right. We must do what is right. This is the time,’ he said at the time. ‘It is illogical [to continue funding loss-making firms with duplicated and overlapping roles. We have to shut down some of these loss-making parastatals. We must end excess capacity.’

The report warns that that without reforms, Kenya will remain locked into a costly and inefficient SOE model that drains public resources while delivering minimal value.

It recommends phasing out unconditional fiscal transfers to commercial SOEs, ending debt bailouts except in cases with clear public service mandates, and linking any State support to strict performance targets.

The World Bank and CAK further suggests opening up protected sectors to competition, especially where SOEs crowd out more efficient private operators.

Traditional tea tasting at the Mombasa auction has ignited a debate on whether it affects the quality of produce sold with some dealers claiming the method does not give accurate results.

Since introduction of Mombasa Tea Auction, which dates back to colonial times, tasting has been a hectic process involving specialists who determine the beverage’s quality.

During a National Assembly Committee on Agriculture and Livestock’s visit to the East Africa Tea Trade Association (EATTA), where the auction is conducted, the debate on whether to adopt laboratory tea testing over the physical method emerged, with dealers maintaining that no machine can match the sip-and-spit method.

“During our visit to different tea factories, the issue of how an individual can determine different tea tastes emerged. Why has the industry never adopted any modern technology to replace sip and spitting traditional method?” asked committee chairperson John Mutunga.

Peter Kimanga, a seasoned tea taster, said no machine has ever been invented to match human beings, saying the process involves human senses. According to him, what you see, smell, and taste is done with the consumer in mind.

Mr Kimanga said laboratory tests can only detect certain qualities, but ageing of the tea, harshness, and market targets cannot be felt.

“People ask how few people can taste more than 500 cups of tea and get the right quality? The process resembles that of dog training which can pick narcotics even after sniffing hundreds of bags,” said Mr Kimanga.

Mr Kimanga said a tea taster always has the target market in mind depending on factors including whether the consumer prefers raw or processed tea, if tea is served in glass, steel, or melamine cups, or if it’s taken with sugar or milk.

EATTA managing director George Omuga said there are a number of aspects determined in tea tasting, including leaf appearance, colour/brightness, briskness, aroma, flavour or strength, and infusion.

“We are asking tea dealers not to politicise tea pricing since there has never been favoritism in tea price tagging and tea prices from the West of Rift Valley compared to that of East of Rift Valley is as a result of climate, soil, and processing of the tea,” said Mr Omuga.

On the issue of introducing blind tasting, Mr Omuga said teas being given codes and not the company of origin will disadvantage those with credible histories, as they are always in demand.

Every week at the Mombasa tea tasting offices, about 10 people are lined up days before the auction on Mondays and Tuesdays to determine tea quality using their tongues.

In the process, different tea types and categories are lined up in small cups where a taster sips each brew, gives it a quick swirl around the mouth, and spits into a giant steel spittoon.

John Waki, another taster, said it’s a process he uses to prepare for scheduled weekly tea auctions.

‘One has to test all the packages presented prior to auction day to determine the quality of the tea which will ultimately determine the price of the beverage,’ said Mr Waki.

In the tongue-tasting procedure, tasters said good tea is bright, each leaf has a different flavour, and a good taster is able to pick the difference between each cup.

The debate on whether the Tea Board of Kenya should establish a tea quality laboratory to serve as a scientific testing centre, replacing the old system as tea volumes increase, has intensified.

‘The laboratory will use technology to determine the quality and flavour of tea being sold to end the tiresome process of tongue tea tasting. Numbers of tea volumes are increasing and quality tea determination will have to change with time,’ said Agriculture Permanent Secretary Dr Kipronoh Ronoh.

Debate on adoption of a new tea-testing method comes a year after the Mombasa Tea Auction abandoned the decades-old open-outcry system that had seen it rise to the top of the international tea scene, replacing it with an entirely electronic auction in 2013.

The online tea auction is meant to increase efficiency and boost Mombasa’s already high profile in the tea world. But the change swept away decades of tradition, and some fear the city isn’t ready for such a dramatic shift.

Kenya has made a last-minute decision to split the contract for the Nairobi-Nakuru-Mau Summit toll road to avoid scrutiny and lengthy approval by the Chinese government.

In a U-turn, the Kenya National Highways Authority (KeNHA) has revealed that it is reinstating the runner-up from the original bids and giving it a section of the 236-kilometre road network, while the initial contract winner will handle the remaining portion.

This follows revelations that the winning bidder — China Road and Bridge Corporation (CRBC)-would require a lengthy internal review from Beijing, which demands its approval for overseas projects exceeding $1 billion (Sh129.6 billion) that are handled by state-owned Chinese companies.

The highways regulator has since offered CRBC a smaller deal involving 81 kilometres from Nairobi to Gilgil via Naivasha and a 58 kilometre-stretch from Nairobi to Naivasha through Maai Mahiu.

Another Chinese firm — Shandong Hi-Speed Road and Bridge International Engineering (SDRBI)-will construct the 94 kilometres stretching from Gilgil to Mau Summit.

The split gave SDRBI a piece of the deal after it lost in the initial bidding for projects to a consortium of CRBC and the National Social Security Fund (NSSF), which had a more competitive bid and offered lower base toll rates.

The consortium was in October awarded the entire Sh170 billion project, with President William Ruto announcing that it will be launched this Friday after meeting with the president of the China Communications Construction Company (CCC), CRBC’s parent firm.

But the launch looked set to be derailed after CRBC said the investment would attract ‘extensive and tedious’ scrutiny by the Chinese government because of the $1 billion threshold, arguing that it would take more than a year to get approvals from Beijing.

This prompted the split of the contract.

‘With neither of the proponents able to deliver the full corridor within the terms of the PPP Act, the contracting authority [KeNHA], guided by the National Treasury and Economic Planning, initiated evaluation of the feasibility study reports of the alternative split-scope proposals earlier submitted by the proponents,’ KeNHA said in a new disclosure.

The two Chinese firms will have to harmonise their toll charges for the roads.

The NSSF consortium edged out SDRBI, which had also submitted a privately initiated proposal (P-i-P), after quoting a lower base toll rate.

Kefa Seda, the director-general of the Public-Private Partnerships (PPP) Directorate, told the Business Daily that the split will not translate into different toll fees for the different sections, even though the two companies had initially proposed different rates.

‘The rates must be harmonised. Each developer will individually manage and toll the section they have constructed, but the fees will be the same across the road network,’ he said.

‘There will be a framework that will go through Parliament to harmonise that tolling rate, so that even though the implementing companies are different, the tolls will be the same.’

The winning consortium also agreed to absorb traffic-volume risk rather than pass it to the government-a departure from a proposal by the French contractors, who were awarded the deal during President Uhuru Kenyatta’s era and wanted the State to shoulder the cost of any fall in traffic.

The French deal was cancelled in favour of the Chinese.

The ability to work under a tight deadline was another factor in favour of the CRBC-NSSF bid, as the Ruto administration rushes to complete the project before the next elections in 2027.

The two Chinese companies have already conducted feasibility studies for the full project and the alternative split, meaning construction could begin once KeNHA completes negotiations and project agreements are signed.

KeNHA has not ruled out the option of a single contractor for the entire project and is inviting other interested firms to submit counter-proposals.

‘To promote competition and openness in privately initiated proposals, the public is hereby notified that any other qualified private party with the technical and financial capacity may, within the statutory timelines, submit a competing privately initiated proposal (PIP) for the project,’ the authority said.

The Nairobi-Nakuru-Mau Summit toll road project has been in the pipeline since 2016. According to KeNHA plans, at completion, it will be a dual-carriage four-lane road, and all of it will be tolled. The administration of former President Kenyatta awarded the contract to a French consortium led by Vinci SA Highway.

But President Ruto’s government terminated the deal valued at Sh190 billion in 2022, citing high costs.

While this will be SDRBI’s first major project in Kenya, CRBC is no stranger to large infrastructure works in the country.

It constructed the standard gauge railway (SGR), the Nairobi Expressway, the Nairobi western, eastern, and northern bypasses, and is currently building the Sh44 billion Talanta Stadium.

President Ruto is keen to see the project completed before the next polls, a key campaign pitch to residents of the Rift Valley, Western Kenya and Nyanza, where motorists often endure long traffic snarl-ups, especially during festive seasons.

The road is expected to significantly cut travel time along the corridor, easing congestion on the main artery from Nairobi to western Kenya and neighbouring Uganda, Rwanda and the Democratic Republic of the Congo.

The Ruto administration cancelled the deal inked by his predecessor with the three French contractors, terming it too expensive. The government is expected to pay termination fees of around Sh7.2 billion to the French consortium led by Vinci SA Highway.

Technology CEO Wanjala decided to thrust his firm into the corporate social responsibility (CSR) space in Kenya. He proceeded to trumpet a massive cash donation to a struggling Nairobi hospital. In so doing, he sought immediate public acclaim and publicity.

However, the tech firm that Wanjala led routinely disregarded local environmental standards regarding production waste that sparked widespread local anger in the communities near the firm’s facilities.

Once Wanjala’s CSR donation hit the news wire, stakeholders immediately denounced the seemingly tactical charitable move, labeling it a cynical public relations stunt.

They wondered, how can an executive cause health problems through pollution one day but donate to health another day? The CEO’s shallow attempt to gain public admiration backfired dramatically, which ended up costing the firm more crucial community trust and seriously damaging its reputational standing in the broader industry.

A brand new study released last week that is gaining much attention in academic circles dissects how a CEO’s narcissistic personality shapes their company’s CSR activities. Tine Buyl, Boris Lokshin, and Christophe Boone posit that institutional contexts direct what external stakeholder audiences praise or dismiss in regards to corporate social actions.

The research develops an interesting model proving that a narcissistic CEO tailors his or her firm’s CSR activities to incessantly seek to achieve excellence and gain continuous approval within their specific market environment.

The study analyses panel data spanning a 21- year period across 18 different countries. In liberal market economies that champion strong shareholder primacy, narcissistic CEOs pursue greater corporate philanthropy.

Such tactical performative high-visibility giving provides rapid reputational returns that in turn secures immediate praise from key financial stakeholders.

Conversely, in coordinated market economies that focus on consistency of social norms and demand embedded long-term commitment from companies, narcissistic CEOs overwhelmingly favoured much more strategic CSR.

These latter CEOs implemented substantial resource commitments and organisational changes that resulted in stakeholder admiration for the firms deeper structural engagement.

Here in East Africa, do you work for a narcissist? How about your firm’s CEO? Companies must recognise the context-dependent nature of narcissistic CEO behaviour.

Boards of Directors now wield a proven mechanism to influence executive action. In so doing, they can oddly harness their CEOs narcissism and channel it toward desired CSR outcomes by formally emphasising and rewarding the appropriate type of social investment.

A board operating in a liberal market like Kenya, Zambia, and South Africa, for example, can prioritise investment transparency and clear short-term shareholder value thus promoting well-publicised philanthropic giving.

While a board in a coordinated market more similar to Tanzania, China, and Rwanda can demand measurable, embedded environmental and social policy changes, reinforcing strategic, long-term investments.

Multinational firms operating across borders can further utilise this research to formulate unique tailored global strategies. They should stop implementing a universal one-size-fits-all CSR approach across all subsidiaries.

The firm’s leadership should adjust its CSR portfolio country by country to ensure that local actions match local institutional norms. Such strategic adaptation allows a company to gain legitimacy, avoid reputational damage, and secure essential stakeholder approval in every market it enters.

In short, boards must understand the OCEAN big five personality of their executives as well as the three dark personality traits that include narcissism.

CEOs have a higher rate of narcissism than the general population because that same narcissism coincides with their confidence and drive and therefore more get to executive roles.

But boards with narcissistic CEOs must structure executive compensation packages specifically designed for narcissistic leaders. In so doing, they can directly tie bonuses to excelling in the type of CSR activity most valued by their operating institutional context.

Kenya and the United States are set for a new partnership that will change how donor-funded health programmes are managed.

The five-year Memorandum of Understanding (MoU), which is currently in its final stages of refinement, introduces a more integrated, accountable, and sustainable model for Kenya’s public health system.

The initiative is expected to restructure how HIV, tuberculosis, malaria, and maternal health programmes are delivered.

Previously, America provided funding through USAid, which implemented programmes via separate structures running alongside Kenya’s public health system, such as donor-managed clinics, project-specific staff contracts, and independent supply chains for medicines.

Under the new arrangement, the Kenyan government will manage the funds and oversee programme implementation directly, while the US continues as the primary donor.

“The whole essence about it is that they [US] want to enhance efficiency in the way they are doing funding. They also want the government to be at the forefront. That means the government is the one that is leading,” said Dr Ouma Oluga, Principal Secretary for Health, in an interview with the Business Daily.

According to Dr Oluga, this MoU is expected to be completed by the end of the month following an agreement between President William Ruto and US Secretary of State Marco Rubio on the sidelines of the UN General Assembly (UNGA) in September.

“This is a mutual partnership anchored in shared priorities. The previous model worked for its time, but Kenya’s needs have evolved. We can no longer run parallel systems inside public facilities,” Dr Oluga told the Business Daily.

“Most policy components have already been cleared by the Ministry of Foreign Affairs, leaving only legal language to be finalised.”

According to Dr Oluga, who is at the centre of the shift, the partnership will focus on six key areas, including ensuring the continuity of frontline services such as HIV, TB, malaria, and maternal and child health, as well as strengthening outbreak response.

It will also include support for the health workforce and improving access to essential health products and technologies.

The negotiations come just two months after the US government scrapped the USAid’s direct funding model after imposing a 90-day halt under a controversial executive order affecting foreign organisations.

While some essential services continued through temporary arrangements, many USAid-financed programmes remained unfunded, exposing Kenya’s vulnerability to external funding systems and putting over 1.4 million people who depend on uninterrupted HIV treatment, and millions more who require TB, malaria, and maternal health services, at risk.

However, Dr Oluga noted that patients have not missed their HIV medication during this period.

“The government had to step in quietly and fill the gaps,” he said, adding that the six-month disruption exposed deep structural flaws in how donor-funded programmes had been operating.

Dr Oluga noted that the partnership focuses on achieving outcomes rather than just completing activities. Key performance indicators include a 97 percent viral suppression rate among individuals living with HIV.

It also aims to enhance disease surveillance, support for healthcare workers, reliable supply chains for essential medicines, improved data systems, and long-term sustainability efforts.

An estimated 1.378 million Kenyans are currently living with HIV, with 97 percent receiving treatment through a network of over 3,500 treatment sites.

Similarly, Kenya has achieved remarkable progress, with 98 percent of people living with HIV aware of their status and on treatment, and 94 percent achieving viral suppression.

Unfortunately, the country still faces 355 maternal deaths for every 100,000 live births, translating to approximately 6,000 preventable deaths annually, or about 16 women dying every day.

With concerns among healthcare workers who previously depended on donor-funded contracts, Dr Oluga said the most severe disruptions already happened during the USAid wind-down earlier in the year.

“The worst is behind us. This new partnership is not designed to cut jobs but to stabilise services and prevent future shocks to the workforce,” he said.

When politicians are having a go at each other, they will dismiss an opponent’s statements as empty talk. Those are ‘just words’ they will say, to imply that their rivals are making rhetorical statements, or promises, but not taking meaningful action.

Words are, however, powerful tools for persuasion, influence, and governance. Taking cue from Demosthenes of ancient Athens, politicians use words to influence public opinion, often inspiring or discouraging, action.

They use rhetorical devices – such as emotional appeals, metaphors and repetition – to make their messages memorable and connect with voters.

Language shapes the peoples’ understanding of the economy and political issues. The choice of words frames debate, highlights policy, and portrays opponents in a specific light. Words themselves can constitute harm such as in hate speech.

And words are driving negativity in our society today. Politicians are using negative language to exploit a weird combination of inherent psychological biases and environmental factors, to amplify our pessimism and conflict.

Some literature suggests that we were “hardwired” to focus on negative information as a survival mechanism. It helped our ancestors identify and avoid dangers.

Today, this bias causes people to dwell on insults more than compliments, losses more than gains, and a single piece of bad news, than the dozen good ones.

Past trauma, unresolved personal pain, and general insecurities are often projected outward as bitterness, judgment, and aggression. Low self-confidence leads people to criticize others to feel better about themselves.

Many individuals struggle with emotions such as anger, fear, and frustration, leading to outbursts or withdrawal, as a coping mechanisms.

News reporting focuses on drama, conflict, and alarm to generate clicks and grab attention. This feeds the negativity bias, creating a skewed perception that Kenya is struggling more than it actually is.

Social media rewards outrage and sarcasm with more engagement (likes, shares), than reason and empathy. The imagined anonymity of the internet emboldens users to behave more negatively than they would in person. And because we stay within our groups, it creates echo chambers.

Current concerns about cost of living, job security, financial instability, societal expectations of success, can create chronic stress and a sense of helplessness. Both manifest as cynicism and negativity.

We learn behavioural and thinking patterns from those around us. So being consistently exposed to negative sentiments and role models leads us to adopt similar pessimistic outlooks.

Kenyan political and media strategists often exploit the negativity bias by using fear and outrage to engage and mobilise audiences. This deepens societal divisions and makes compromise seem impossible. Witness the on-going by-elections.

Yet, in all instances, context infuses perspective, itself communicated through words. As we debated the causes of current negativity with friends from the education sector last weekend, we marveled at how clean Kisumu City is.

We were impressed by the road infrastructure. We marveled that Kisumu is thriving, while Nyeri seems stagnated, yet the city is often caricatured as the hotbed of street protest while Mt Kenya is seen as too posh and businesslike to picket. But as interchanges spring up in the lakeside City, Nyeri retains its colonial one-street character.

Holding government to account, including through street protest, has not stopped Kisumu from being a first-class city! Context. Perspective.

After hosting the Africa Smart Cities Alliance Summit two months ago, Kisumu is now the hub for smart growth on the continent. Murang’a County has adopted the smart towns programme. While Laikipia, where the idea came earlier, has thrown it into the dustbin, moth balling it on the altar of political expediency.

While receiving a lifetime achievement award at the Annual Journalism Excellence Awards, Mr Lee Njiru told me a gem.

Communication can build or destroy, he said. A report of you in the national park with three women, could imply that you are amorous, bringing your name into some disrepute. And, as a statement fact, it would not be actionable in court. Except of course you were with your wife and sisters, on a game drive after church! Context drives perspective!

Negative communication is driving negative sentiment. Negativity influences behaviour. Negative sentiments means businesses and consumers remain restrained, and demand weak. Rather than ‘just words’, what politicians say matters.

However, investors in the Safaricom security will be taking home a higher return as the green bond does not attract 15 percent withholding tax that is payable on interest earned from corporate bonds like the one issued by EABL.

This means the Safaricom bond is offering an equivalent of 12.35 percent if it were tax inclusive – being a higher yield than EABL’s 11.8 percent return.

Safaricom is seeking billions of shillings to broaden its 4G and 5G networks as it ramps up its data business to offset a decline in mobile calls, where it has seen a small revenue fall due to saturation.

Data is one of Safaricom’s fastest-growing revenue lines and it hopes that increased smartphone usage will boost it further.

In Ethiopia, it plans to boost its network expansion and ease cash flow for the subsidiary where it owns a 53.7 percent stake.

So-called green bonds are fixed income securities that raise capital for projects in renewable energy, energy efficiency, green transport and waste-water treatment.

Safaricom is raising the funds to carry out sustainability projects in Kenya and Ethiopia. The projects are hinged on five pillars, which include energy efficiency, use of renewable energy, green buildings, pollution prevention and environmentally sustainable management of living resources and land use.

Some of the projects include use of solar energy to power its sites, upgrades to 5G networks, renovate existing building to make them green compliant, implement AI backed programs to reduce energy consumption.

The telcom will have a 24-month window to put the bond proceeds in the sustainable projects during which it will have an option to invest the funds in other income earning assets.

‘As at the date of this Information Memorandum, interest income payable on the Notes under any Tranche that are certified to be used to raise funds for infrastructure, projects and assets defined under Green Bonds Standards and Guidelines, and other social services, where such Tranche has a tenor of at least three (3) years will be exempt from withholding tax,’ reads Safaricom’s Information Memorandum.

Safaricom can raise a maximum of Sh20 billion from the first tranche in case of an oversubscription as it can take an extra Sh5 billion in what is termed a greenshoe option.

The green bond comes at a time when interest rates have been on a downward trend as the Central Bank of Kenya rejects high-priced money in Treasury bills and bonds markets.

Currently, a 10-year bond is trading at 13.05 percent, being 2.87percentage points lower than rates offered a year ago.

‘Despite the lower yield, we anticipate strong, potentially oversubscribed demand for the note, supported by the company’s low-risk credit profile, large customer base, and the growing global and local appetite for ESG-linked investments,’ said Valerie Okello, a research analyst at Capital A Investment Bank.

EABL raised Sh16.7 billion in the first tranche of its Sh20 billion bond in which it was targeting Sh11 billion signalling market appetite for well rewarding corporate bonds.

‘Environmental Social and Governance instruments are typically floated below market rates to attract the expanding pool of sustainability-focused investors, and Safaricom is leveraging both the greenium narrative and the broader social impact of the note to justify the modest pricing,’ said Ms Okello.

She noted that issuing a corporate bond is a more cost-effective funding option for Safaricom compared to sourcing bank loans, which would likely come at significantly higher rates.

Safaricom’s first corporate bond is expected to revitalise a debt market which has been in a lull for years as Treasury bonds dominate.

Only Sh25.9 billion worth of corporate bonds were outstanding at the NSE at the end of September, including notes by EABL, Family Bank, the Kenya Mortgage Refinance Company, Linzi Finco Trust and Batian Income Properties.

The corporate debt segment was dented by issuers who went belly up soon after issuing their notes, including Imperial Bank.

Micro-lender Real People, which has Sh1.63 billion in outstanding notes, also ran into financial headwinds soon after issuing its medium-term notes.

Safaricom reported a 52.1 percent rise in its half-year profit to Sh42.7 billion, helped by a smaller loss in Ethiopia and M-Pesa’s double-digit growth.

Its net profit grew from Sh28.11 billion the previous year, and it expects to declare an interim dividend in February.

The Kenya business continued to be the main profit driver on the back of M-Pesa, the firm’s largest unit and on course to generate half of the telco’s revenues.

Its reported loss in Ethiopia dropped by 59 percent compared to the first half of the previous financial year, which was heavily impacted by a depreciation of the birr currency.

The loss in Ethiopia that is attributed to Safaricom dropped to Sh15.2 billion from Sh19.4 billion in the same period a year earlier, translating to a gain of Sh4.2 billion.

Safaricom launched in Ethiopia in 2022 as the Addis government opened up the tightly-controlled economy to foreign competition and is hoping its presence in Africa’s second most populous country will power future growth.

Its diversification from the saturated voice and SMS business is paying off, with M-Pesa, mobile data and fixed internet emerging as sales drivers.

Safaricom’s revenue rose to Sh199.9 billion in the six months to September, from Sh179.9 billion in the same period a year earlier, reflecting a 11.1 percent growth.

Revenue from mobile financial service M-Pesa rose to Sh88.1 billion from Sh77.2 billion previously, reflecting a growth of 14 percent.

Family Bank has tapped transactional advisors for its listing at the Nairobi Securities Exchange as it announced a 56 percent increase in net profit for the nine months to September on the back of earnings from government securities.

The bank reported a net profit of Sh3.5 billion, up from Sh2.3 billion in a similar period a year earlier.

The improved performance was on the back of a 43.1 percent jump in interest earned from Treasury bills and bonds to Sh5.5 billion, up from Sh3.8 billion.

The medium sized bank, which has flirted with public listing by introduction for over a decade, plans to sell its shares on the Nairobi Securities Exchange by mid next year, disclosing it had contracted advisors to guide the process.

‘We have already visited the Capital Markets Authority so that we know what we need to do and we have engaged transaction advisers to guide us in the journey to listing with a target of the first half of next year,’ said the bank’s Chief Finance Officer, Paul Ngaragari.

The bank disclosed it hopes to get approvals from the regulators, Central Bank of Kenya and Capital Markets Authority, by the end of this year.

Listing by introduction means the bank does not plan to raise additional capital with the share sale but instead gives shareholders a trading platform to make their stocks more liquid.

The lender recently concluded a Sh6.2 billion capital raising among existing shareholders in what is referred to as private placement.

Family bank said the private placement was successful but failed to give details, citing regulatory approvals.

‘Results of the private placement will be announced next week by the chairman as we are still awaiting regulatory approvals,’ said Mr Ngaragari.

Shareholders of the bank approved the listing last month. Top ownership of the bank is dominated by the founder Titus Muya and his family. It also includes the Kenya Tea Development Agency with 16.2 percent stake.

Family Bank reported a 10.1 percent growth of its loan book to Sh103.7 billion at a time when credit expansion had lagged due to a tough economic environment.

Interest income from lending to the private sector jumped 12.1 percent riding on the larger loan book and increased uptake of digital loans which have higher turnovers.

Customer savings with the bank expanded 15.1 percent to Sh147.3 billion, a bulk of which was invested in government securities as credit growth lagged.

Other income of the bank, which reflects earning from trading of government securities, more than doubled to Sh1.2 billion compared to Sh526.4 million a year earlier.

As Europeans started getting comfortable living in Kenya in the early 1900s, they gradually established private member clubs, where settlers would gather to enjoy games and to dine as they socialised.

After independence, the clubs shifted from being a whites-only affair, though the elites of the young republic maintained the traditions of their erstwhile colonisers.

Today, as some of the clubs mark a century of existence, there is the burning question of whether they are locking out the youthful populations through their pricing policies and the rules of engagement.

‘There are some clubs where most people are old generation and the young men have not come in,’ says Mr Felix Okatch, one of the directors at the United Kenya Club.

Mr Okatch, who has been a member of one club or another since 1983, says clubs should make it conducive for young people to join as they form the majority of the population.

‘I encourage young men to join, particularly those who have started business,’ Mr Okatch notes.

Private member clubs, which are designed to be a confluence point for the wealthy, exist for various reasons.

‘One benefit is social, where people of a class come together – those who are capable or the top cream,’ says Mr Okatch, who is also an author.

‘Over time, these clubs have developed facilities like golf, squash, cricket, lawn tennis, swimming pool, gym, and many more activities. The clubs also have bars, restaurants, accommodation, and some have apartments.’

The clubs also help businesspeople as they can be used to host crucial meetings.

‘You come with a car, you park, then you secure a deal,’ says Mr Okatch.

Another benefit is that a member of a club in one part of Kenya can travel to another part of the country and enjoy benefits of another club if the two have a reciprocating arrangement.

‘If somebody’s in Eldoret Club, he can go to Nyanza Club, to Nyeri Club, Mombasa Club, Kitale Club, and enjoy like the other [members],’ says Mr Okatch.

The clubs are also known for the strict rules they enforce. There are guidelines on the dress code, conduct within the premises, welcoming guests, among others.

In a number of the clubs, making a phone call in some spaces can earn someone a fine. Some do not permit wearing a cap in some areas while others prohibit donning denim clothing. A collarless T-shirt is hardly allowed in most clubs, as are sandals.

A recently determined court case, pitting lawyer Donald Kipkorir against the Muthaiga Country Club, revealed how stringent some of the requirements can be. Mr Kipkorir was denied entry at the club in August 2024 on various grounds.

Mr Kipkorir later sued the club, saying the manner in which he had been turned away went against his right to dignity as no sufficient explanation was given.

The court heard that the lawyer visited the premises to meet his clients who are members of the club. However, on that day, he was denied entry. The club argued that it reserved the right of admission, noting that even though its more than 6,500 members are free to invite guests, its by-laws prohibit admission of non-members who are not in reciprocating clubs.

The club said an earlier incident in October 2022, where the lawyer was also denied entry but later allowed in, informed their decision.

Mr Kipkorir said he was treated ‘like a stray dog, a homeless hound that had trespassed on the hallowed grounds of the privileged elite’. A Nairobi court agreed with the lawyer’s arguments and awarded him Sh1 million in damages.

With strictly enforced laws and an old guard not willing to depart from the traditional way of doing things, younger Kenyans in the private clubs ecosystem have sometimes been dismissed as lowering the standards. A former chairman of a private club who spoke with Nation Lifestyle held this view, though he did not wish to share his remarks on record.

We spoke to Jessy Ndegwa, the chairman of the Ruiru Sports Club, and asked him: ‘Is your club doing enough to attract younger members?’

He was candid enough to admit that there are no products targeting youth of 35 and below.

‘However, this being a family-oriented club, we have conversions from junior members to single members. And we have a lot of those. When you have a family [package], the club allows your children to transition to single membership after 25 years. So, what we have, we don’t let go of. We encourage them to graduate and take responsibility for their own membership,’ he says.

Graduating junior members to the senior category after the age of 25 is a common phenomenon in private member clubs across the country. The Wadi Degla clubs-Kenya, a recent entrant in the space, also considers 25 as the age when junior membership ends.

‘They will only pay a subscription [upon converting to single members]. They will not pay entry fees,’ says Mr Ndegwa.

To obtain family membership at the Ruiru club, one needs to pay Sh600,000. To become an individual member, on the other hand, one needs to pay Sh450,000. On top of the membership fee, a member of Ruiru Sports Club should pay an annual subscription fee of Sh24,000 for the family package and Sh16,000 for the individual package.

That isn’t too far from what other clubs charge. As per the last published rates online, the Royal Nairobi Golf Club that has been in existence since 1906 charges a joining fee of Sh595,000 and an annual subscription of Sh61,460.

The Parklands Sports Club, which will be 120 years old next year, charges a full member admission fee of Sh775,000.

The United Kenya Club, on the other hand, charges Sh150,000 to admit a member living in the city, with a Sh20,000 annual subscription required.

Asked whether the fees are too high to discourage younger Kenyans, Mr Ndegwa says: ‘True and not true.’

He notes that besides the option of juniors graduating to full members after their 25th birthdays, there are occasional membership discounts that prospective signees can grab.

‘Sometimes we have [recruitment] drives. So, for those who want to join and they do not have resources right now, I encourage them to keep looking out for when we have drives. And during drives, sometimes we give up to 50 percent of the classes that we present to potential members,’ he says.

A top contributor to younger Kenyans joining private clubs is the fact that some corporates have been buying membership for some of their staff.

Mr Okatch, who is a marketer by profession, joined his first club because his employer paid for it.

‘The aim then was for me to meet people who matter in business circles. In the club, there was encouragement for me to play golf as my children were busy enjoying swimming and other things,’ he says.

The United Kenya Club, where he is a director, has a package for corporate membership where a company can pay Sh650,000 to admit up to five employees. This is followed by an annual subscription of Sh100,000 for the members.

The thinking behind some employers getting their staff in such clubs, he says, is to give them access to potential clients.

‘It’s not to sell your product, but to meet the who-is-who. It opens ways for you to get into the marketing field,’ argues Mr Okatch. ‘Corporate organisations can pay for their members up to Sh1 million.because you meet those who matter.’

Dr Mike Iravo, a specialist in human resources management and a lecturer at the Jomo Kenyatta University of Agriculture and Technology, says there are many benefits that an employer gets from buying club membership for an employee.

He adds that such an arrangement can improve “productivity, motivation, among many other things that an individual employee would benefit [from]’.

Asked what portion among the 2,800 members of Ruiru Sports Club were brought in by corporates, Mr Ndegwa says there is less than five percent. He attributes this to the fact that Ruiru has not been widely known.

‘Ruiru, until recently, was not known in the circles of clubs. The clubs that were known were Muthaiga, Karen, Limuru, and Sigona,’ he says, noting that the club – which sits on 235 acres of land – is currently on a rapid expansion drive, driven by a 45-year masterplan.

The benefit a corporate gets by buying club membership for staff, Mr Ndegwa says, is that it gets ready buyers.

‘Being a member, knowing that you are going to interact with these people day in, day out, every other week, gives you an opportunity for people whom you would not have spoken to if you met in the streets just like that. But in the evening here, if you join a table, you join as a member and it is very easy to start a conversation. And they already trust you and you already trust each other,’ says Mr Ndegwa.