Category: Business Daily

We all chase high returns, but what about the costs? Investment fees, commissions, and charges can quietly erode your gains. What’s a reasonable cost of investing-and when do the charges start to hurt your portfolio?

Lydia Muriuki, Senior Relationship Manager at Standard Investment Bank (SIB), joins us to pull back the curtain on these costs. She unpacks the different types of investment fees, how they impact your returns, and how to keep them in check.

The 2024 windfall returns from Treasury bills, government bonds, and money market funds appear to have ended. With yields drifting lower, investors are forced to rethink how they position their portfolios.

Naomi Atera, a corporate finance analyst at Rock Advisors, says this means leaning into riskier asset classes, particularly equities listed on the Nairobi Securities Exchange.

Each year, as we develop our annual sustainability report, we take a moment for deep reflection. We analyse key metrics, track progress, and measure our outcomes against established goals.

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This year, as we release the 2024 report, titled A Sustainable World is a Transformed Africa, a clear and urgent theme has emerged, one that challenges core assumptions in the global sustainability conversation.

For too long, this dialogue has focused primarily on tangible assets. When we hear ‘green investments,’ images of vast solar farms, towering wind turbines, and large-scale climate-resilient infrastructure projects often come to mind. These remain crucial elements of a sustainable future.

However, our experience across Africa, a continent both deeply impacted by climate change and rich with nature assets and demographic opportunity, has taught us an essential lesson – technology and infrastructure are vital, but their true value is unlocked only when supported by the most important asset of all, an inspired, trained and empowered youth population that can tackle and address poverty.

A solar farm without trained technicians quickly turns from an asset into a liability. A drought-resistant seed is of little use if the farmer lacks the knowledge to grow it or does not have access to markets to sell its crop (or harvest or yield).

Physical infrastructure depreciates; human capacity grows in value. It is people who innovate, adapt, and build resilience. This shifts social investment from a charitable add-on to the most strategic bet any society can make on its future prosperity.

Yet, investing in people alone is not enough. For impact to be scalable and lasting, it must be anchored in an ecosystem that supports and multiplies human potential.

Investment in people is the starting point, but it only delivers when reinforced by robust processes, governance, risk management, quality assurance, and supported by systems such as digital platforms, franchise models, data aggregation and networks that drive scale.

The results are evident. Removing financial barriers for tens of thousands of bright but disadvantaged students is an investment in people. Embedding that in a community-based selection process and a structured system of mentorship and leadership development transforms students into innovators ready to tackle complex national and global challenges.

This is how a country builds its intellectual infrastructure – the financial engineers, water specialists and software developers are shaping Africa’s tomorrow.

Healthcare offers an even clearer illustration. A nation weighed down by poor health cannot be productive. Here, the investment begins with the medical scholar but extends further.

By adding business and financial training (process) and providing a ready-to-use franchise model (system), we enable young doctors to become entrepreneurs, opening clinics in their own communities.

The result is twofold: millions gain access to affordable healthcare, while local ownership strengthens economic stability. A clinic run by a doctor who speaks the local language and understands the culture will always deliver deeper, more sustainable impact than a project implemented from outside.

The true value of this integrated model is the virtuous cycle it ignites, a human capital flywheel. The investment does not dissipate; it multiplies with compounding social interest.

The student we support studying medicine is the doctor who returns to run and own a community clinic, leveraging our shared systems and processes to serve the families of the next generation of students.

The agricultural training we provide for a smallholder farmer is amplified by a digital platform, a system that delivers market information, and a credit assessment process that unlocks financing. This is the tangible and sustainable mechanism of shared prosperity.

The lesson is clear, while solar panels and other green assets are vital, their real value lies in the ecosystem that sustains them. Success depends on the people who install and maintain them, the processes that enable financing and governance, and the systems that ensure performance is tracked and scaled.

Broadening the definition of green assets is no longer optional; it is essential. The challenge for business, government, and development leaders is to recalibrate our scorecards.

Success should be measured not only in megawatts and carbon credits, but also in skills built, livelihoods secured, and communities empowered.

The hardware of the green transition remains vital, but its true value is only realized when it is anchored in people, enabled by effective processes and scaled through resilient systems.

Africa holds 17 percent of the world’s people yet produces roughly four percent of global carbon dioxide. On a per-capita basis it emits about one tonne a year, the lowest of any continent.

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Africa also contains the world’s largest pocket of energy poverty. The question that matters is not whether to cut carbon, but how much temporary pollution is tolerable on the way to energy prosperity, and under what constraints.

Orthodoxy has split into two camps. One says ‘no fossils, ever’, a moral stance that collides with fragile grids and frequent blackouts. The other says ‘gas or nothing’, tidier for funders, but often impossible where gas infrastructure does not exist.

A better course is lean carbon: a minimal, time-limited overdraft of emissions to buy dependable power now, with covenants that force an early peak and a rapid decline. Think of it as carbon on credit, a capped facility, not a blank cheque.

The Environmental Kuznets Curve describes an upside-down U. Pollution rises at low incomes, then peaks and falls as countries grow richer and regulate more.

Africa can peak lower and earlier than historic industrialisers because renewables are cheaper, technology has improved and coal can be avoided.

The policy aim is to flatten the hump: accept a small bump now to reach the downhill sooner.

Today’s counterfactual is not a continent powered neatly by wind and sun. It is millions of diesel generators humming in courtyards and factories because the grid is unreliable.

Studies suggest self-generation already equals about six percent of installed capacity in sub-Saharan Africa, at a punishing 0.30 to 0.70 dollars per kWh, several times typical grid tariffs.

When utilities falter, governments lease emergency diesel in bulk. In some cases these contracts have cost three to four percent of gross domestic product (GDP). A clean sentence in a strategy does not change the physics of a failing system.

Intermittent renewables alone cannot yet stabilise a weak grid at scale. They need firm capacity, storage, or both. The sensible choice is planned, efficient firm power that complements solar and wind, rather than the messy reality of unplanned, dirtier backup.

If fossil molecules must feature, natural gas is preferable to oil products: fewer local pollutants and roughly half the carbon of coal per kWh.

But gas-only is a mirage in much of Africa because pipes and liquefied natural gas are scarce and markets are small. Outside a few corridors there are only a handful of regional gas arteries, notably the West African Gas Pipeline from Nigeria to Ghana and the line from Mozambique to South Africa. Grand schemes to extend them have moved slowly.

Most countries lack the demand density to finance pipelines or import terminals. Insisting on gas everywhere, now, often means no power at all.

A credible lean-carbon pathway is neither all-renewables tomorrow nor gas for ever. It has three moving parts.

Power plants that can switch fuels: New power stations should be able to start running right away-using heavy fuel oil or diesel if needed-but be built so they can easily switch to natural gas when supplies become available. This avoids blackouts today without locking countries into oil and gas for decades.

Modern reciprocating engines can start and stop quickly, making them ideal substitutes for solar and wind power when the sun isn’t shining or the wind isn’t blowing.

Fossil fuel use that drops over time: Fossil fuels should be relied upon only when necessary, shifting focus to using them for system stability and renewable-scarce periods.

If they are the only means of electricity generation, we should systematically seek to decarbonise them. That way, emissions per unit of GDP fall fast, even before absolute emissions peak. The first target is to displace diesel generators, the dirtiest and costliest kilowatt-hours on the continent.

Covenants that bind: To make sure the ‘carbon overdraft’ stays small and temporary, it needs hard limits.

These include deadlines for switching to cleaner fuels, limits on total emissions, and power purchase agreements that reduce payments to conventional plants as renewables and storage grow.

The focus should be on financing the whole energy system – renewables, backup power, and better transmission lines – not just individual plants.

Africa does not seek permission to pollute. It seeks permission to end energy poverty quickly while peaking emissions early. That is the lean-carbon bargain: a small, declining hump instead of a long, dirty plateau, and a faster route to the sunny side of the Kuznets curve.

The task for partners is to help keep the overdraft small, and to pay it back fast.

Funders are shifting, cautiously

Development financiers are moving from blanket bans to conditional support for transitional projects. A growing chorus argues that gas should form part of Africa’s just energy transition, provided it is integrated into national climate plans and structured to de-risk the shift to cleaner power.

The most useful money crowds in private capital to systems, not stand-alone assets. The priority is hybrids that cut diesel use immediately and accelerate renewables later.

Why the bump is acceptable

Two points matter for the climate ledger. First, Africa’s historical contribution is tiny. Sub-Saharan Africa excluding South Africa has emitted well under 1 percent of cumulative CO2 since the industrial revolution; including South Africa the region is still under 2 percent. Second, the opportunity cost of delay is enormous.

Energy-starved economies grow slower, which makes the clean transition harder to finance. A modest, time-boxed rise to something like a 5 percent share of global CO2 as grids stabilise would still leave Africa’s burden small by world standards, especially if the uptick displaces diesel and comes with a dated plan to fall.

Risks, spelled out and mitigated

The obvious risk is lock-in: today’s bridge becomes tomorrow’s motorway. That is why the contract matters. Write conversion deadlines and decommissioning triggers into PPAs.

Require modular plants whose value survives a fuel switch. Publish transparent emissions dashboards. Include stop-loss clauses if milestones slip.

Another risk is cheap-today myopia, choosing the lowest upfront tariff and ignoring reliability, ramping and integration costs. The remedy is to procure systems and judge bids on whole-system cost and carbon, not just cents per kWh.

One final objection is to wait for cheaper batteries. Storage costs are falling and Africa should adopt them early. But telling a low-income country to wait five years for round-the-clock electrons is not climate policy; it is development deferred. High costs of capital already hobble clean projects.

Suppressing growth makes those costs worse. Better to grow with discipline, shrink diesel immediately, and use rising demand to make gas and storage bankable, then retire the fossils on schedule.

The ask

For energy ministries and regulators: publish peak-and-pivot plans that show when emissions will crest and what will force them down. Bake overdraft covenants into every firm-power tender. Allow dual-fuel where necessary, but mandate gas-ready design, switch-by dates and emissions-intensity floors.

For development financiers and multilaterals: fund hybrids and grids, not single-fuel bets. Reward early conversion and managed retirement. Deploy guarantees to cut the cost of capital for storage and transmission.

For developers and independent power producers: bid least-carbon firm power, not cheap today and stuck tomorrow.

‘When everyone in the world sees beauty, then ugly exists. When everyone sees good, then bad exists. What is and what is not create each other. Difficult and easy complement each other,’ wrote Lao Tzu, more than 2,300 years ago.

Is it a business risk to see the world in black and white? Has the bedrock of thinking about business strategy radically shifted? Why do traditional brick and mortar companies often struggle?

Have the once clearly defined boundaries between industries faded? What business is Safaricom really in – is it financial services, voice and data, retailing, or entertainment ? Is the problem ‘dwindling market fortunes’ or how senior management thinks about the business they are in?

Yin and yang – not black and white

In business, as in life, we tend to think in opposites. One would not exist, without the other. Light or dark, high or low, hot or cold, smart or stupid. That’s how we make sense of the world, trying to understand how things work.

But in making judgements, calling one opposite good and the other bad, perhaps we are missing something. Is there another way of looking at things.

One quality depends and complements the other. In business, even when one element seems obviously better, it’s unwise to neglect the other. Same is true in business strategic thinking. Strategy, and ‘not strategy’ .

Ancient roots

Is strategy a new idea? Strategy can be looked at both on a ‘long view’ going back more than 2,000 years, from ancient and Biblical times to more recent thinking about business strategy from 1920.

Much of business strategy has been influenced by military strategy, dating back to, for instance, Alexander the Great in 333 BC. When a 23 year old Alexander, with an army of 50,000, defeated Darius with his 1 million troops.

What has been the bedrock of thinking about business strategy, from say 1985 onward? Does it still apply in 2025?

Michael Porter’s frameworks – industry five forces, value chain, generic strategies of cost leadership, niche, and differentiation- shaped 20th-century strategic thinking. They are designed for linear, product-based firms in stable industries.

Porter’s training was in industrial economics. For instance, the five forces framework looks at the profitability of industries, say pharmaceuticals versus airlines. Goal of business is to create and capture value.

Taking a flight creates great value, yet airlines ability to capture that value in profits is difficult, even in the best of times due to high fixed costs and fuel price volatility. In contrast, the pharmaceutical industry is significantly more profitable than airlines, with much higher gross and net profit margins, in part due to high barriers to entry.

What industy are you in?

Problem is that today, boundaries between industries are blurring. For instance, what industry is Amazon, Google, Apple, Safaricom or Equity Group in? Boundaries of industry are disappearing. Plus, competition can be asymmetric, tiny smart David can defeat an over-confident Goliath.

Advances in technology created platforms

Business models rule. Today almost 60 percent of the largest companies globally are based on a platform business model. Thanks to technology’s processing speeds and memory, a platform has none of the traditional brick and mortar presence that businesses used to require, plus they don’t have an expensive inventory. A platform simply brings the buyer and seller together, thanks to a digital footprint.

‘Besides huge market capitalisation Alibaba, Alphabet (Google), Amazon, Apple, Facebook, Microsoft, and Tencent all have another thing in common: heavily populated platform business models. Platforms are the favoured operating model for seven of the world’s 12 largest corporations,’ notes McKinsey.

World beating platforms have a number of things in common. They are all software-based digital environments with open infrastructures, matchmakers linking people, organisations, and resources, orchestrators of ecosystems extending across sectors and national borders, reducing marginal costs to near zero, and harnessers of network effects.

Porter’s frameworks assume competition for value capture in a closed value chain. Platform strategy requires orchestration of value creation across open networks.

Competition is not based on features, rather more on the number of people on the platform – network effects.

Once competitive products – services can soon become commodities, that can be given away for almost free, for instance, WhatsApp, or Google Maps, or Khan Academy, providing world class education.

From PR hype to genuine rethink

Imagine Acacia Insurance, on the surface saying all the right things. Lot’s of public relations like hype ‘transforming devasting risk into financial stability’ but in practice the age old insurance company was struggling.

Having lost confidence in the former golf swinging CEO, the board installed yoga practicing, Sarah to inject a dose of imaginative thinking.

Sarah realised that going a step beyond banc assurance, the traditional lines in the provision of financial services had shifted.

Sarah looked out globally, seeing that many of the larger established financial institutions were floundering in this era of disruption as fintechs and nimble startups keep slicing off pieces of the financial services market. While old style thinking industry leaders scramble to adopt the same shiny technologies, Sarah saw they are missing the heart of the problem — the way business is being thought about.

By adapting a blend of the traditional linear business model and platform thinking, Acacia went on the blur the lines of what was possible.

Both in serving its more affluent customer base, it began focussing on financial inclusion, breaking into what was previously thought to be unprofitable markets.

Just as in a novel, in business, context is everything. Charles Dicken’s A Tale of Two Cities set in London and Paris, before and during, the French Revolution is a study in contrasts.

‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us.’

The Central Bank of Kenya (CBK) is seeking to raise Sh40 billion from two reopened bonds as it sticks to issuing papers with pre-determined returns to investors in its bid to prevent a spike in interest rates.

The apex bank has invited investor bids for reopened 15-year and 25-year bonds, which are set to sell at a premium as interest rates continue to move lower.

Investors are paying a premium to the par value of Sh100 to buy into bonds with high coupon rates as interest rates fall and prices increase.

Bond prices are usually on the rise in a low-interest-rate environment as returns on newly issued papers fall, forcing investors to pay more to hold higher-yielding securities.

The CBK has avoided issuing new bonds even as interest rates fall and has instead favoured reopened issues to avoid interest rate shocks.

Both the 15-year and 25-year bonds are trading at a premium in the Nairobi Securities Exchange secondary market, with the former recording a Sh101.71 premium in its last trading session.

Investors buying the two bonds face a further premium to cover accrued interest payments from the last coupon settlement.

The 15-year bond, which has 8.7 years to maturity, attracts an accrued interest of Sh4.2715 per Sh100 while the 25-year paper with 21.9 years to maturity attracts an accrued interest of Sh1.3642 per Sh100.

The premium on the two securities allows CBK to offset the differences in the papers’ price and par value without affecting the instruments’ coupon, which remains set to its primary or first issuance.

The two papers will remain on sale until Wednesday next week, while successful bidders will be notified of their payment key and amount payable on Friday, November 21. Proceeds from the dual-bond sale will be channelled towards budget support.

The government remains on course to meet its domestic borrowing requirement from the sale of Treasury instruments in the 2025/26 fiscal cycle, supported in large part by declining interest rates.

Falling rates have forced investors to pile into government securities in anticipation that future sales of Treasury bills and bonds could result in relatively lower returns.

Cuts to the benchmark interest rates by the CBK have induced the lower interest rates on government securities.

The government’s net domestic borrowing target for the fiscal year running to June 2026 stands at Sh613.5 billion.

The target for domestic borrowing is lower than the estimated Sh854.5 billion which partially covered the budget deficit in the previous fiscal year to June 2025.

When you sit in front of a lie detector machine, you quickly realise how easy it is to tell fact from fiction. The machine, which is pre-loaded with questions from the one seeking the truth from you, confronts you with the gusto of a lawyer cross-examining someone in court.

You barely have time to reply ‘true’ or ‘false’ before another question lands. As your brain struggles to align, you are pummelled with the same question you answered some minutes ago, but the wording is tweaked.

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Many are the instances when employees resign from work out of frustration but without knowing whether they have any legal recourse for the circumstance leading to their resignation.

In fact, many employees are wrongly made to believe that once they have initiated their resignation, all their claims against the employer are null.

On the contrary, the law recognises that there are special circumstances that may push an employee to resign without intending, what it refers to as constructive dismissal or termination.

Simply put, constructive dismissal occurs when an employer makes an employee’s work conditions so intolerable that the employee is left with no choice but to resign.

The employee resigns in response to the employer’s conduct at which point the employee is entitled to treat him or herself as having been ‘dismissed’, and the employer’s conduct is often referred to as a ‘repudiatory breach’.

Unlike the traditional dismissal, where the employer directly terminates the employment, constructive dismissal is initiated by employees who feel they have no choice but to resign due to the employer’s actions.

This circumstance often arise where an employer wishes to terminate an employee but elects not to. The employer then takes actions that make the employee so uncomfortable that he or she eventually quits believing oneself to have been terminated.

These actions may include demotion, stripping the employee of important duties, withholding salaries, assigning an employee duty out of the scope of their competence, unilaterally changing terms of employment or creating a hostile or punishing environment.

To establish constructive discharge, the former employee must show that a reasonable person would have resigned under the similar circumstances. For example, if a reasonable employee working under similar conditions would have tolerated the employer’s conduct, the resignation will be found unreasonable.

Likewise, if a reasonable person would have found the working conditions unendurable and would have resigned, the employee will be found to have been constructively discharged.

But it is not enough to show merely that an employer has behaved unreasonably. There must be a fundamental breach of either an express contractual term, or the implied term of trust and confidence.

Furthermore, an employee must have resigned because of the actual breach- not for some other reason. The employee should also make it clear through the resignation letter, reasons for the resignation which is a direct consequence of the employer’s conduct.

Note, however, that constructive termination does not have to arise from a series of events but may arise from one incident that goes to the root of the contract.

The incident can be interpretated as amounting to a repudiatory breach by the employer. Sometimes there is a continuing pattern of behaviour or incidents which, taken as a whole, amount to a breach even though they may not be in isolation. For example, there may be a history of discrimination and harassment. If there is a continuing pattern of behaviour, however, the last straw which leads an employee to resign should relate to the previous acts, so that added together they all amount to a clear breach of trust and confidence. It doesn’t matter if the final act by the employer is minor, as long as it is enough together with the previous series of incidents to amount to a fundamental breach.

In the case of Kenneth Kimani Mburu and Another v Kibe Muigai Holdings Limited, Nairobi ELRC Cause No. 339 of 2011, the court laid out the finer elements of constructive termination which includes; ‘The employer being in breach of the contract of employment, the breach must be fundamental as to be considered a repudiatory breach, the employee must resign in response to that breach and the employee must not delay in resigning after the breach has taken place, otherwise courts may find the breach waived.’

Employees who intend to lodge a claim for constructive termination must be careful not to appear to have waived any breach by the employer.

The waiver may be construed when an employee takes far too long to make a decision to resign from work once aware of the breach.

A waiver could also arise if an employee does something which signals an acceptance of the breach, for example, by sending an email stating that they are happy with arbitrary changes to their contract or if in the resignation letter an employee indicates that they are grateful and happy to have served the employer and they would be willing to take up future roles should an opening arise.

To prove constructive dismissal, an employee has to show that the employer created working conditions that were so intolerable that a reasonable person would have no option but to quit.

In a constructive termination claim, an employee has to prove that the job conditions were intolerable, repeated, and aggravating enough that there was no option but to quit.

However, bad working conditions are not always enough to prove unfair dismissal. Instead, the employer creates or permits an intolerable working environment.

This generally involves making significant changes to terms of engagement that create a continuing pattern of bad working conditions.

There are various protection that the law affords employees against unfair labour practices or bad working conditions. For instance, both the Constitution and the Employment Act provide that employers cannot discriminate against employees on the basis of a protected ground.

The protected grounds include freedom from discrimination based on age, sex, race, religion, and other types of discrimination that may lead to an employee opting to resign.

Further, employees are also protected against unlawful retaliation. Whistleblower laws protect employees who are constructively dismissed. This includes employees who report illegal activity, sexual harassment, workplace discrimination, or worker safety violations.

SBM Bank Kenya has posted a Sh283.41 million net profit for the nine months ended September 2025, marking a turnaround from a Sh1.34 billion net loss posted by the lender in a corresponding period last year.

SBM’s latest financial disclosures show that net interest income during the period rose 95.5 percent to Sh2.76 billion up from Sh1.41 billion last year, while non-interest income grew 29.8 percent to Sh1.54 billion from Sh1.19 billion.

The income growth elevated the bank’s earnings as it marginally lowered its operating expenses to Sh3.89 billion from Sh3.94 billion in a similar period last year. The lender’s staff costs during the nine-month period remained unchanged at Sh1.75 billion, while provision for bad debts rose 63.6 percent to Sh235.4 million up from Sh143.9 million.

‘Our performance reflects the disciplined execution of our turnaround strategy and the power of customer-led innovation. Through smarter digital platforms, relevant products, and strong partnerships, we are delivering a bold, secure, and modern banking experience,’ said SBM Bank Kenya CEO Bhartesh Shah.

We remain committed to driving inclusive financial growth and becoming Kenya’s preferred payments and savings bank.’

The profit return comes as a boost to a bank that spent the whole of last year in the red, closing with a net loss of Sh1.07 billion in a period its parent company SBM Holdings injected fresh capital worth Sh471 million.

Last year’s loss was mainly driven by a decrease in net interest income to Sh2.15 billion from Sh3.81 billion due to interest expenses rising at a faster pace than interest income.

SBM Holdings entered Kenya in May 2017 through the acquisition of Fidelity Commercial Bank for a $1 (Sh129) consideration and renamed it SBM Bank Kenya before making a $20 million (Sh2.59 billion) capital injection.

The Mauritius-headquartered lender in August 2018 also acquired certain assets and liabilities of the then-under-receivership Chase Bank Kenya for 162,158 Mauritian rupees (about Sh456,000 at current exchange rate) and added them to SBM Bank Kenya. The group made a commitment to inject $60 million (Sh7.74 billion).

The lender has been shifting focus to the affluent and entrepreneurial segments through launch of new products and investing in digital platforms.

In addition, it has entered into several strategic collaborations with fintechs and ecosystem partners to enhance capabilities of its payment solutions.

The lender is carrying in its books an accumulated loss of Sh2.38 billion.