Category: Business Daily

Transporters and clearing and forwarding agents have threatened to down their tools, if shipping lines and the Kenya Ports Authority (KPA) fail to address congestion at various container freight stations (CFSs) and container depots in seven days.

At multiple CFSs, long queues of trucks loaded with empty containers are waiting to be offloaded as depots struggle with serious congestion caused by a lack of container repatriation.

Many shipping lines have opted to prioritise picking up exports while leaving behind empty containers at a time, when the port of Mombasa is experiencing an influx of cargo due to the festive-season peak and cargo being diverted from Dar es Salaam following the just-concluded General Election in the neighbouring country.

As a result of the congestion, transporters have introduced a Sh38,000 per truck inconvenience fee. Clearing and forwarding agents are also threatening to down their tools, a move that would further disrupt the supply chain.

According to Kenya International Freight and Warehousing Association (Kifwa) National Secretary Musa Mbira, the port of Mombasa has for months been overwhelmed by a surge in containers, worsened by vessels diverting from Dar es Salaam.

He said that efforts to urge KPA and shipping lines to coordinate sweepers (special vessels to mop up containers) have been unfruitful.

‘We have asked the national government to intervene and sort out the current congestion at the port and CFSs. If this persists, we shall take measures, even downing our tools to totally disrupt the supply chain at the port of Mombasa,’ warned Mr Mbira.

During a stakeholders’ press briefing in Mombasa, Mr Mbira also challenged the Kenya Maritime Authority (KMA) to compel shipping lines to comply with shipping directives to offer the same waivers, saying refusal undermines the entire relief effort.

‘We appreciate KPA and Kenya Revenue Authority (KRA) for honouring the agreed 100 percent waivers on storage and customs warehouse fees. Unfortunately, shipping lines have refused to offer the same waivers,’ said Mr Mbira.

Mombasa Kifwa chairman Rajab Hamisi accused shipping lines of delaying documentation, imposing arbitrary charges, demanding huge deposits and penalising agents for delays caused by their own depots.

‘While same shipping lines comply fully with regulations in Tanzania, here in Kenya they act with impunity, even diverting our transit business. We call on the government and regulatory agencies to act firmly and protect Kenyans from these abuses. If the situation continues, we will be forced to charge shipping lines for delays caused by their own inefficiencies,’ said Mr Rajab.

Transporters and clearing and forwarding agents are also engaging the County Government of Mombasa for space, where they can deposit containers that shipping lines refuse to accept, allowing the lines to collect them at their own cost and time.

Last week, KMA Director-General Omae Nyarandi raised concerns over the ongoing congestion and issued several directives to protect traders.

Mr Nyarandi said that to reduce the cost of returning empty containers, the authority has directed shipping lines to stop charging delay fees on any container delayed from being repatriated once it arrives at the designated container depot.

‘Demurrage charges shall cease to accrue once it is confirmed that an empty container is ready at the designated drop-off depot but cannot be offloaded due to capacity constraints at that depot,’ said Mr Nyarandi in a notice to shipping lines dated November 7.

On the inconvenience fee, Kenya Transporters Association (KTA) chairman Newton Wang’oo said the charge will apply as a truck demurrage or truck detention fee per day, to the contracting clearing agent or freight forwarder whenever trucks are held due to congestion or refusal of containers at shipping-line-designated depots.

Mr Wang’oo said transporters returning empty containers to the designated depots are routinely finding these facilities operating at full capacity and unable to receive additional containers.

‘There has been a serious congestion at the port and different CFSs resulting to operational consequences which include immobilisation of trucks still loaded with shipping line containers, inability of transporters to offload containers and redeploy their trucks, and accumulation of substantial truck delays and financial losses attributable to circumstances beyond the transporter’s control,’ said Mr Wang’oo.

He added: ‘The new fees introduced are as a result of inconveniences since truck owners are in business and it’s just a part to cushion them against losses.’

Mr Wang’oo said transporters shall not bear the financial burden arising from congestion at empty container depots or from any failure by shipping lines to provide a legally compliant and operational return location for their containers.

The chairman said the clearing agents’ inability or unwillingness to compel shipping lines to accept liability shall not, under any circumstances, be transferred to transporters.

‘The advisory is issued to safeguard transporters from unjustifiable operational, financial, and legal losses and exposure,” he said.

Shipping lines are obligated to fulfil their contractual duties, and clearing agents/freight forwarders are required to ensure that liability is directed to the appropriate responsible party.

The association has urged CFSs to maintain comprehensive documentation of attempted deliveries, including photographs, timestamps, entry logs, and any written or verbal rejection notices issued by the depot.

‘We urge owners of depots to communicate all such delays and related incidents promptly and formally to the contracting party, ensuring that written records are preserved for evidentiary purposes,’ said Mr Wang’oo.

Let me start by simply saying, go watch this film. Unseen, 21st and 28th November.

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I understand there is a common complaint that Kenyan film and TV stick too closely to the same genres, drama, comedy, and crime, often featuring the same familiar faces. A creative stagnation.

Yes, I also want to see musicals, horror, sci-fi (this one especially), but I’m also a firm believer that genre is never the problem, it’s what the creative does with it that matters. This movie is a perfect example of that.

The Dog

This is a Swedish-Kenyan crime thriller, though the credits suggest it’s more of a Swedish-owned Kenyan story, directed, produced, and written by Baker Karim.

It follows MZ (Alexander Karim), a small-time drug dealer in Mombasa, who descends into a desperate, high-stakes spiral after a dangerous obsession with Kadzo, an escort played by Caroline Muthoni. The story also features Lorna Lermi and veterans like Caroline Midimo and Robert Agengo.

It’s a character examination, a perfect embodiment of the ‘F around and find out’ meme, plunging us into the dark, perverse madness of Mombasa’s criminal underbelly.

The good

The director’s vision is clear from the opening tracking shot. Character arcs, motivations, and themes are clear without being preachy, striking a perfect balance between tackling social issues and entertainment.

The film’s opening, including the title card’s claustrophobic font choice, placement, size, and case, lays the groundwork for a cold, brutal, and unforgiving universe. It’s a well-thought-out world, complete with rules, hierarchies, and consequences, or ‘tax,’ in this case, all given a cinematic yet consistently grounded touch.

The cinematography is a step beyond standard good lighting and blocking. Its strength is the exceptional utilisation of the location, with one of the best uses of the coastal city I’ve ever seen.

The camera moves through the concrete jungle of the city centre, the ghettos, and the lush resorts, capturing the story’s economic contrast and giving the city an expansive, lived-in feel. I also can’t understate how the director and cinematographers handle the raunchy and horrific moments.

The diverse casting surprisingly captures the reality of the coastal city’s inhabitants. Alexander Karim, with his chiselled action-movie look, brings MZ to life, but I found him far more effective when silent, limited to expressions, the dialect coach failed. Caroline Muthoni is pivotal as Kadzo, steering some of the story’s more complex material in the second and third acts.

Caroline Midimo is interesting in her role, maximising her somewhat one-dimensional character. But for me, Robert Agengo steals the movie, often without having to say a word. His timing and delivery are stellar. Lorna Lermi delivered a tight, intense role with her limited screen time, playing one of the film’s most believable characters.

The costumes and make-up team clearly aimed for realism, successfully making the characters look like real people with outfits that reflect their economic status, including small details like capturing the coastal humidity.

This grounded approach extends to the props, with scenes featuring everyday items, like the interesting use of a tomato sauce sachet, which further grounds the film, as does MZ’s visual motif and the texture of the blood.

The writing effectively uses street-level lingo, helping sell the authenticity of the premise. The tight, creative editing keeps the narrative punchy and fast-paced. The score is intense, and the sound design utilises silence and specific sonic details (like the call to prayer) to elevate the realism in some scenes.

Gripes

I’m pro-collaboration, but I find it fascinating that for a movie labelled a Kenyan film, Kenyans behind the scenes are relegated to principal photography, what I can playfully refer to as watu wa mkono, with no executive producer, producer, editor, sound designer, or colourist from the country. This, for me, blurs the line between collaboration and cultural exploitation.

Alex Karim is incredible in this, but his coastal Swahili is jarring, the immersion is broken every time he opens his mouth. In fact, generally, the Swahili in the film lacks the distinct rhythm and charm of the coast. Frankly, the movie could have been set in Nairobi without a noticeable linguistic difference.

I also think MZ makes conveniently stupid decisions for a character who was not established as a beginner in the game.

Though the performances are strong, some feel overly theatrical, like straight-up stage play.

The Sadam character is one-dimensional, and I thought the creators missed an opportunity to challenge the audience by imbuing the character with charm or a subtly lovable style, lending complexity that throws the audience into moral limbo.

The pacing is everywhere, randomly jumping from pockets of slow, character-building moments to high-octane sequences, noticeable for those going in for a constant thrill ride.

The gruesome scenes are welcomed, but one specific, technically impressive sequence felt purely like it was designed for shock value, lacking the creative thoughtfulness of an earlier, equally unsettling scene (the tuna scene), which was effective because it engaged the viewer’s imagination. A few well-placed red herrings could have significantly spiced up the narrative, as the film follows a familiar structure.

My biggest problem, however, is the marketing. I can bet most people reading this haven’t heard of the film. The PR and marketing team (if they existed) failed to put this movie in the public eye, failing to leverage the veteran, crowd-favourite actors and Kenyans’ diverse media landscape (podcasts and legacy media).

Summary

This is where I write a cool, philosophical, thoughtful summary of everything I’ve mentioned above, but let’s keep it simple this time, just go watch this movie.

The fear of risk among retail investors and relatively stable returns from instruments such as money market funds (MMF), have seen equity funds struggle to pull in investors even as the stock market rallies.

The assets under management in equity funds -a class of collective investment schemes investing primarily in stocks- remain subdued at Sh2.8 billion, representing about one percent of the unit trust industry assets.

The number of equity funds also remains low at 15 as per data from the Capital Markets Authority (CMA) as of June 2025. In contrast, the number of MMFs, the most popular class of unit trusts, stands at 52 with assets of Sh372.8 billion over the same period.

According to analysts, investors have gravitated towards the much simpler MMFs, which ensure capital preservation and some returns depending on the level of interest rates in the economy.

Additionally, individual investors have shied from the stock market which is deemed as volatile, oscillating between booms and bust.

Most retail investors also choose to participate in equities by direct investments rather than through funds which charge a fee.

‘For every Sh100 invested in unit trusts, only about Sh0.50 goes into equity funds,’ said Richard Muriithi, a Senior Portfolio Manager at ICEA Lion Group told the Business Daily.

‘The mentality that most investors have is that they want their money to earn more than what they achieve by putting their money in the bank and that’s the offering from a money market fund. An equity fund is a very different conversation as you are looking at a longer investment horizon, usually between three and four years.’

Equity funds also face competition from investors directly taking stakes in the stock markets through brokerage accounts which allows them to pick individual stocks.

Technological advancements and market innovations such as the ability of investors to buy a single share have democratised market participation allowing more individuals to own equities directly.

Equities have returned to the investment radar boosted by the recovery of the stock market which delivered average gains of 34 percent in 2024 and 51.7 percent year-to-date, lifting investors’ paper wealth at the Nairobi Securities Exchange (NSE) by over Sh1 trillion.

The recovery of the market is expected to revitalise interest in not just direct share ownership but also indirect participation through proxies such as equity funds.

Fund managers expect to stand out from the expertise offered to investing clients where the professionals bet on themselves to deliver more steady return by picking winning stocks in both a bull and bear run.

Equity funds charge investors a fee of between 2 percent and 3 percent on average, while the price of a unit of the fund is based on the collection of stocks comprising each fund.

‘A portfolio manager’s work is to combine stocks to be able to earn a return both in terms of capital appreciation and dividend income. The manager can play on both strengths to create a less risky basket,’ added Mr Muriithi.

‘You can see the benefit of the expertise offered during adverse market cycles as they can select stocks that will ride the wave, shifting the approach from seeking capital gains to more income-oriented counters.’

Equity funds’ managers also set aside cash allowing them to be agile by deploying funds to emerging opportunities including investing in high-yielding cash instruments, a move which can provide buffers in periods of a market downturn.

The stock centred funds have similarities to other types of unit trusts by offering low entry requirements including a minimum investment as low as Sh500 which gives investors exposure to a variety of counters at affordable rates.

Fund managers are betting on more investor education to popularize not just equity funds but also the stock market with the number of individual share accounts at the NSE remaining below 1.3 million as of September 2025.

‘The conversation is not as easy to position while the understanding of cash products is much simpler. There is room for people to appreciate the role of equities in wealth creation,’ Richard Muriithi said.

Kenya Power targets to onboard power plants with a combined 1,112 Megawatts (MW) to the national grid, with talks with producers set to speed up after Parliament lifted a freeze on new power purchase agreements (PPAs).

A brief from the Cabinet Secretary for Energy and Petroleum, Opiyo Wandayi shows that the negotiations with the 54 power producers are at various stages, with some set for further talks this month.

Parliament lifted a seven-year moratorium on new PPAs last week paving the way for resumption of the talks with concerns that the country is tinkering on a crisis amid power rationing and increased reliance on imports from Ethiopia and Uganda. Majority of the 54 power plants are for hydropower with the rest being for wind and solar. The biggest one of these will be two wind power plants, each with a capacity of 100 MW.

‘KPLC commenced engagement on PPAs with 65 generation projects with a total of 1,112 MW and majority being small hydropower,’ the brief reads.

‘Developer shared a marked-up draft PPA and updated the financial model. However, mark up showed the developer disagreed with most of KPLC’s position. Requested developer to share matrix of issues and final positions on issues before team resumes PPA drafting.

Developer scheduled for a meeting within November 2025,’ Kenya Power says on one of the plants.

The negotiations include four other wind plants, each with a capacity of 50 MW. These are owned by Chania Green, Prunus Energy Systems, Aperture Green and Sub-Sahara W.

One of the 100 MW wind plant is owned by Hewani Energy whose joint owners are Seriti Green of South Africa and Eurus Energy of Japan.

This plant will be built in Meru County. The other is owned Kipeto Energy, a power producer which already has another running PPA with Kenya Power. Most of the negotiations were put on ice after MPs extended the freeze on new PPAs two years ago as the lawmakers sought more time to investigate the existing PPAs blamed for steep prices of electricity.

The moratorium has left Kenya in a scenario where a surging demand has outstripped local generation, forcing Kenya Power to increasingly lean on Ethiopia and Uganda to shore up supplies.

Electricity imports have significantly grown over the last four years with their share in the national grid more than doubling to 10.6 percent or 1.53 billion kilowatt-hours (kWh) in the year to June 2025 up from 4.87 percent a year earlier and one percent in 2021.

Increased importation of electricity from Ethiopia and Uganda has helped to avert power rationing (from 5pm to 10pm) on a bigger scale.

Power rationing is the controlled and temporary cutting of electricity supply to consumers to avert overloads on the grid when demand exceeds the available generation capacity.

Kenya Power is now expected to speed up talks with the power producers following the lifting of the moratorium.

Expeditious talks are critical in helping to avert the power generation crisis by ensuring no further delays to efforts of onboarding new power plants. It takes at least one and half years to construct a plant.

The disclosures further show that Kenya Power held a number of meetings with the power producers last month. Most of the firms are pushing for financial closures to pave the way for the start of the projects.

The High Court has struck out a petition seeking the removal of Kenya Railways Managing Director Philip Mainga over allegations of corruption, irregular procurement and fraudulent land compensation payments.

In its decision, the court ruled that it lacks jurisdiction to intervene in matters reserved for statutory bodies.

Human rights defender Eric Kithinji Mwiti had petitioned the court in September 2024, accusing Mr Mainga of violating constitutional principles under Articles 10 (national values), 73 (leadership integrity), and 232 (public service ethics). The petitioner alleged that Mr Mainga engaged in irregular procurement.

He also alleged fictitious compensation payments for land in the Datuto/Dafur Settlement Scheme and embezzlement of public funds, undermining Kenya Railways’ financial integrity.

The petitioner sought an order declaring Mr Mainga’s continued stay in office was against public interest, a criminal investigation by the Ethics and Anti-Corruption Commission (EACC), prosecution by the DPP, and an injunction halting further compensation payments.

However, the court upheld Mr Mainga’s preliminary objection, emphasizing the separation of powers and statutory mandates.

It was argued that the CEO’s removal was beyond the court’s powers. Mr Mainga argued that Kenya Railways Corporation Act vests removal powers exclusively in the Cabinet Secretary, not the Judiciary.

He stated that bypassing statutory removal processes would violate legal procedures, adding that challenges to land payments fall under the Land Acquisition Tribunal and the Environment and Land Court, not constitutional petitions.

The court conceded, ruling that though corruption allegations remain serious, petitioners must use proper legal channels and the anti-corruption legal framework.

‘The body with which the petitioner ought to have raised this complaint first is the EACC, as it is the one with the primary mandate to oversee public officers on matters of values and principles of governance under Chapter 6 of the Constitution,’ said the court.

It noted that the petitioner had not complained to the EACC.

Another finding was that the EACC and DPP operate independently under Articles 249 and 157 of the Constitution and courts can only intervene if these bodies abdicate their duties.

Since no such failure was proven, the petition was dismissed.

‘This is a perfect case to invoke the doctrine of judicial abstention, which allows this court to refrain from overstepping its judicial authority to allow the proper functioning of other government organs or bodies. The Petition is therefore struck out,’ said the court.

Kenya’s tax system is entering a new era of automation. On November 7, the Kenya Revenue Authority (KRA) announced that from 2026, it will automatically verify tax returns against eTIMS invoices, withholding tax (WHT) filings and customs records to ensure that expenses and incomes match official data.

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On November 12, KRA further announced that effective December 1, all bank guarantees shall be executed exclusively through the integrated Customs Management System (iCMS).

This shift marks a decisive move toward tech-driven tax verification, promising speed and efficiency – but also raising the stakes for taxpayers. It comes at a time when KRA is under pressure to expand the tax base and raise tax-to-GDP ratio to 22 percent. The journey to this point has been gradual. It began with the introduction of the Tax Invoice Management System (TIMS) in 2022 to replace the Electronic Tax Register (ETR) regime in force since 2005. TIMS required VAT-registered businesses to purchase specialised devices to issue invoices.

The aim was to create a secure, standardised way of capturing VAT transactions and transmitting them to KRA real time. It also made it harder to fake invoices or manipulate records while making VAT audits easier by closing gaps on VAT reporting.

However, the hardware requirement and technical hurdles made it costly for businesses. In response, KRA launched eTIMS in 2023 – a software solution accessible via computers, smartphones, and USSD.

At this point the focus also expanded to cover income tax.

Initially, eTIMS compliance was limited to VAT-registered taxpayers. However, legislative changes under the Finance Act 2023 and the Tax Procedures (Electronic Tax Invoice) Regulations, 2024 expanded the scope significantly.

From January 1, 2024, all businesses – whether VAT-registered or not – were required to issue eTIMS invoices. The rationale was simple: for an expense to qualify for income tax deduction, it must be supported by an eTIMS-compliant invoice.

The regulations also revoked the exemption that spared traders with annual turnover of below Sh5 million from mandatory eTIMS compliance. KRA argued the exemption hindered efforts to expand the tax base and track financial flows in the informal sector.

To accommodate small enterprises, simplified solutions such as eTIMS Lite (Web), a mobile app, and a USSD option (*222#) were introduced, ensuring accessibility in remote areas.

Initially, compliance uptake remained slow due to technological barriers and limited awareness. As a result, KRA extended onboarding deadlines, intensified public education, and introduced sector-specific solutions like the eTIMS Fuel Station System – mandatory for all petroleum retailers by June 30, 2025 as the latest eTIMS update.

eTIMS has redefined the approach to tax compliance. First, it creates a direct link between the income declared by one taxpayer and the corresponding expense claimed by another. Every electronic invoice is transmitted to KRA real time and linked to the seller’s and buyer’s PIN.

When the buyer claims that invoice as an expense, KRA will match the figures and descriptions. This creates a traceable link by ensuring both sides of the transaction are visible and subject to the correct tax treatment.

Second, automated checks ensure expenses are not claimed multiple times or by entities that did not incur them. It blocks inflated or fictitious expenses-since only costs supported by valid eTIMS invoices can be deducted. Finally, by requiring all businesses to issue eTIMS invoices, it brings previously unrecorded transactions into the tax net.

The KRA uses WHT records for several checks. First, if you earn income subject to WHT, the taxman compares the gross amount in the WHT return with what you declared in your tax return.

If the figures don not match, this gap is identified and a compliance alert raised.

The check also links the payer’s WHT filing to the payee’s tax return to prevent situations where one party claims an expense, but the other fails to declare the income.

Second, for businesses claiming expenses where WHT applies (like professional fees or rent), KRA checks if WHT was remitted. For customs, the system match tax returns with declarations in iCMS to confirm goods were actually imported, values align with customs records, and duties were paid.

Looking ahead, the integration of eTIMS with other compliance tools will deepen. KRA has already linked Tax Compliance Certificate issuance from October 2025 to eTIMS registration.

To succeed in this automated environment, businesses must ensure harmony across all records. All data points – financial statements, eTIMS invoices, WHT records, and customs records – must tell the same story to avoid costly mismatches.

The Supreme Court has overturned a Sh34 billion exposure against Standard Chartered Bank in a long-running dispute with clothes maker-Manchester Outfitters over a loan borrowed in 1982.

In a landmark decision, the apex court held that a debenture and other securities remain valid and enforceable for both the original and subsequent loans, ensuring that the original security agreements continue to apply for future advances unless they are formally discharged.

The verdict, delivered on Friday, reversed a December 2022 Court of Appeal decision that had directed Standard Chartered Financial Services Limited to pay Manchester Outfitters (now King Woolen Mills Limited) damages, after it appointed receivers for the firm and later auctioned its property over a defaulted Sh9 million loan.

The appellate court had reasoned that Standard Chartered should have sought fresh securities when the foreign currency loan was converted into Kenya shillings. It held that the appointment of the receiver-manager and the subsequent auction were irregular, leading to a damages award that grew to Sh34 billion, according to submissions made by lawyers in court.

However, the apex court overturned the decision noting that the bank did not need to obtain new securities following the conversion of the loan to Kenya Shillings.

‘It is our considered position that a bank or financier is not required, as a matter of law, to register fresh securities every time a new advance is made, where existing securities remain valid and undischarged, unless the terms provide otherwise,’ the court said.

The Supreme Court clarified that lenders are not required to register fresh securities when loans are converted into local currency. The apex court added that charges and guarantees are only cleared when the proper documents are signed and the charge is removed from the register.

The dispute dates back to 1982, when Manchester Outfitters borrowed a loan from Standard Chartered Merchant Bank (SCMB), London.

To secure the loans, Standard Chartered Financial Services Ltd guaranteed the loan in favour of SCMB, while Manchester Outfitters provided additional securities.

On October 7, 1986, Standard Chartered Financial Services took over and settled the foreign loan, converting the outstanding balance into a local currency loan of Sh9 million.

The appellate court had reasoned that Standard Chartered should have sought fresh securities when the foreign currency loan was converted into Kenya shillings. It held that the appointment of the receiver-manager and the subsequent auction were irregular, leading to a damages award that grew to Sh34 billion, according to submissions made by lawyers in court.

However, the apex court overturned the decision noting that the bank did not need to obtain new securities following the conversion of the loan to Kenya Shillings.

‘It is our considered position that a bank or financier is not required, as a matter of law, to register fresh securities every time a new advance is made, where existing securities remain valid and undischarged, unless the terms provide otherwise,’ the court said.

The Supreme Court clarified that lenders are not required to register fresh securities when loans are converted into local currency. The apex court added that charges and guarantees are only cleared when the proper documents are signed and the charge is removed from the register.

The dispute dates back to 1982, when Manchester Outfitters borrowed a loan from Standard Chartered Merchant Bank (SCMB), London.

To secure the loans, Standard Chartered Financial Services Ltd guaranteed the loan in favour of SCMB, while Manchester Outfitters provided additional securities.

On October 7, 1986, Standard Chartered Financial Services took over and settled the foreign loan, converting the outstanding balance into a local currency loan of Sh9 million.

East African cities such as Nairobi, Kampala and Dar es Salaam are witnessing an expansion of digital infrastructure on a scale not seen before. Banks are embracing cloud computing; governments are digitising public services and mobile platforms have become the default channel for millions of citizens.

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These innovations will help people get into the economy and work better. But now, the region must deal with a new reality.

When important services depend on digital infrastructure, any threat to the infrastructure is not just an IT problem. It is a public and economic risk. This has elevated cyber risk to a core government and boardroom issue.

Globally, cybersecurity strategies are shifting to meet these new realities. The NTT DATA Technology Foresight 2025 report highlights ‘accelerated security fusion,’ an approach that integrates real-time analytics, AI-powered threat detection and advanced security tools into unified systems.

For East African enterprises, this model offers a way to overcome persistent challenges of fragmented infrastructure and limited resources.

Traditional perimeter-based security approaches are no longer sufficient, especially in an era of hybrid work and cloud-driven operations.

A zero trust architecture – where every access request is treated as untrusted until verified – provides a more dynamic and effective way of managing risk.

Artificial intelligence is at the centre of the new cybersecurity battlefield. On the one hand, AI-driven behavioural analytics can detect anomalies that point to insider threats or compromised accounts.

Local banks, phone companies or even county governments can now put in systems that watch for strange patterns in real time. These systems can look for suspicious transactions that may show fraud or money laundering. On the other hand, AI is a double-edged sword.

The same tools that defenders use to detect anomalies can be exploited by attackers to craft highly convincing phishing messages or automate intrusion attempts. In a region already grappling with a shortage of cybersecurity professionals, the risk of falling behind in this AI-powered arms race is significant.

Addressing these challenges requires collaboration. Cyberfusion centres, which bring together threat intelligence, incident response and risk management, offer a proactive model for security.

While building such centres may appear beyond the reach of many East African firms, regulators, industry players and technology providers can collaborate to create shared intelligence frameworks and sector-wide defences. Information-sharing and joint capacity-building initiatives could help spread best practices across borders, reducing the asymmetry between attackers and defenders.

At the same time, the region must prepare for tomorrow’s risks. The coming era of quantum computing poses an entirely new frontier of danger, with the potential to render current encryption standards obsolete.

For institutions managing sensitive data – such as national ID registries, financial systems or health records – preparing for post-quantum security is no longer theoretical; it is a present-day necessity. Similarly, identity protection must evolve.

Biometrics, multiple-factor authentication and continuous verification must be part of user experiences. This will ensure protection without making it harder to use. Cyber risk should also be elevated firmly into the boardroom agenda, with directors treating it as a core business issue rather than a back-office technical matter.

Technology alone, however, cannot secure East Africa’s digital future. Human capital is equally critical. Closing the cybersecurity skills gap requires investment in training, university programs, industry partnerships and regional centres of excellence. Just as important is public awareness.

Many breaches still begin with a simple human error – a careless click on a phishing link or a weak password. Getting people to do small but helpful things, like making it easier to log in with more than one password or reporting suspicious emails, can help the region become more resilient.

Securing our digital world is not only a technical challenge – it is a societal responsibility. Governments, businesses and individuals must all play their part. East Africa’s digital future is filled with promise, but that promise will only be realised if it rests on a foundation of trust, resilience and security.

The question is not whether the region will face another breach, but how prepared it will be when that breach comes. The time to act is now. By adopting advanced strategies, collaborating across sectors and investing in both technology and talent, East Africa can stay ahead in the cyber arms race and secure a digital future that benefits all its citizens.

Kenya Electricity Generating Company (KenGen) has set aside Sh1.37 billion to cover for expected defaults from suppliers led by Kenya Power, which owed the generator Sh16.65 billion in June.

Latest disclosures show the allowance for impairment hit Sh1.37 billion in the year ended June 2025 from Sh774.71 million in the preceding financial year, on the backdrop of rising debts from its key commercial customer-Kenya Power-and non-commercial clients.

KenGen’s latest financial statements show the power producer increased the impairment allowance by 78 percent to Sh830.99 million, on the Sh16.65 billion due from Kenya Power as at end of June this year. The non-commercial clients category has been backed by a provision of Sh545 million, up 76.9 percent from Sh308 million a year earlier with the receivables closing June at Sh1.27 billion from Sh982.42 million.

A large share of the Sh1.27 billion overdue balance is from two firms, including a foreign entity, which collectively owe Sh890 million.

The Auditor-General Nancy Gathungu said in an audit report that most of KenGen’s receivables exceed the typical 30-90-day credit window, with delays mainly attributed to weak contractual terms that do not enforce timely settlement.

‘The extended outstanding receivables are attributed to weak contractual terms with clients which do not sufficiently safeguard timely payment,’ said Ms Gathungu.

‘Delayed collection of receivables would negatively affect the company’s cashflows and working capital position, while the prolonged outstanding balances increases the risk of bad debts, which may require additional provisions and results in financial losses. The situation could also impact on the company’s ability to fund operations and meet its obligations when they fall due.’

KenGen has a credit period of 40 days with Kenya Power and 30 days for other customers, after which they are considered as credit impaired.

These are assessed for impairment on a continuing basis and an estimate of doubtful receivables is made based on a review of all outstanding amounts at the year end.

The Kenya Power debt jumped slightly from Sh16.62 billion, as difficulty by KenGen to receive money from its main customer within the agreed 40-day credit period persisted.

The audit report shows Kenya Power’s actual payment cycle averages 113 days.

The delays in payment have forced KenGen to increase its loss allowance as Ms Gathungu cautions that late collections and weak dispute-resolution mechanisms could strain its working capital and heighten the risk of write-offs.

‘In the circumstances, failure to collect receivables in optimal time and lack of an effective regular resolution of reconciliation items leading to delays in settling of the outstanding amounts, negatively impacts the company’s working capital which could lead to future disputes and eventual risk of impairment,’ says Ms Gathungu.

Under the non-commercial category, the audit singles out an engagement with the government of Djibouti where there are contractual obligations to KenGen under the Galla-le-Koma Geothermal Project.

Ms Gathungu noted that even though the Djibouti government, through its embassy in Kenya, reaffirmed commitment to pay once donor funds are released, ‘the existence of an effective enforcement mechanism of payment and debt recovery strategies could not be confirmed.’

Kenyan banks’ are facing increased loan default risks as their impaired loan ratio -which stood at 17.6 percent as of June- is expected to remain high into 2026 due to large outstanding public-sector arrears.

The pending bills have adversely impacted borrowers’ debt servicing capacity, global rating agency Fitch warns.

The agency says the industry’s impaired loans are unlikely to decline materially, until substantial progress is made in reducing the outstanding public sector debt in arrears, which is likely to remain elevated in the short term despite efforts to improve public financial management. ‘Impaired loans are unlikely to decline materially until substantial progress is made in reducing the outstanding public sector debt in arrears, which is likely to remain elevated in the short term despite efforts to improve public financial management,’ the agency says in a statement dated November 12.

‘Delayed government payments have significantly strained borrowers’ ability to service debt, which was further pressured by the pandemic and, more recently, by exchange-rate volatility, high inflation and interest rates.’

An impaired loan ratio is a measure of a bank’s asset quality, calculated by dividing its non-performing loans (NPLs) by its total gross loans. It indicates the share of a bank’s loan portfolio that is at risk of default, providing a key measure of potential credit risk.

A higher ratio suggests a greater risk in the bank’s loan portfolio. Increased provisions for NPLs reduces banks’ profit margins and dividends for shareholders.

Fitch says the rise in the Kenyan banking sector’s impaired loans ratio in the last 10 years from 6.8 percent in 2015 to a peak of 17.6 percent at the end of June this year, has been heavily influenced by large public-sector arrears to contractors and service providers.

Kenya’s pending bills owed to contractors and suppliers have continued to grow, with unpaid obligations increasing to Sh524.84 billion by June 2025, up from Sh516.27 billion earlier in the financial year, according to figures from the office of the controller of budget.

Fitch however says the banking sector’s high pre-impairment operating profit (profit before setting aside money for loan losses), will be sufficient to comfortably absorb the loan impairment charges, while allowing for increased capital and loan growth.

In the nine months to September this year, the banking industry’s impaired loans to gross loans stood at 17.1 percent, a slight decline compared to 17.6 percent in the first half ( January-June ) of the year. In 2023 and 2024, the ratio stood at 15.6 percent and 17.1 percent respectively.

An impaired loan is a loan where there is clear evidence of a loss, meaning the lender expects to lose some or all of the money they loaned out.

This happens when a borrower is unlikely to repay the loan in full, and the lender has to recognise this potential loss in its financial statements.

According to Fitch, the banking sector’s total loan loss allowance coverage of impaired loans was 59 percent at the end of June this year, reflecting some reliance on collateral and recoveries.

The net impaired loans were 23 percent of the banking sector’s total equity in the first half of this year but risks to capital are mitigated by high pre-impairment operating profit which provides a large buffer to absorb loan impairment charges while allowing for capital accretion and increased loan growth.

‘Though pre-impairment operating profit as a percentage of gross loans is expected to fall due to higher loan growth and net interest margin pressure from lower interest rates, it will remain sufficient to comfortably cover loan impairment charges,’ the agency says.

Of the four Fitch rated banks – KCB, NCBA Bank Kenya, I and M Bank Ltd and Stanbic Bank Kenya Ltd- KCB had the highest impaired loans ratio of 21.3 percent in the first half of this year (2025), followed by NCBA Bank (13.2 percent), I and M Bank (12.9 percent ) and Stanbic Bank Kenya Ltd (9.5 percent).

‘All four banks’ pre-impairment operating profit (ranging from an annualized 8 percent of average loans in [first half of 2025] to 10 percent) provides a large buffer to absorb potential loan impairment charges,’ says Fitch.

Fitch says high interest rates have suppressed demand for credit while credit supply has been constrained by the weak credit landscape and comparatively favorable yields on government securities due to high government issuance, which incentivized banks to deploy funds into treasury bills and bonds.

‘As a result, forex-adjusted loan growth was anemic in 2024 and second half of 2025 (one percent in each period), which contributed to the sector’s elevated impaired loans ratio,’ it says.

The decline in the banking sector’s impaired loan ratio to 17.1 percent in the nine months to September this year was partly driven by resumed loan growth.

The central bank started easing monetary policy in August 2024 in response to moderating inflation and exchange rate pressures and has since cut the Central Bank Rate (CBR) by a cumulative 375 basis points (bp) to 9.25 percent, including by 200bp in 2025.

‘A stable macroeconomic environment and lower interest rates will improve borrowers’ debt servicing capacity, given that most loans are issued at floating rates. It will also support accelerating loan growth in the banking sector, which we forecast in the mid-single digits in second half of 2025, increasing to double digits in 2026,’ says Fitch.

‘These themes will support a continued modest decline in the banking sector’s impaired loan ratio in 2026.’