Category: Business Daily

The Treasury has increased its borrowing target for the financial year starting in July by Sh104.1 billion to Sh1.170 trillion, signalling mounting spending pressures amid political calls to ease taxation ahead of the 2027 General Election.

Kenya’s borrowing gap, as outlined in the final Budget Policy Statement (BPS) 2026 tabled in the National Assembly on Thursday, has widened from Sh1.066 trillion, which the Treasury had projected in a separate Budget Review and Outlook Paper (BROP) published earlier in October 2025.

The BPS is the document that anchors the government’s fiscal policy for the year and the medium term.

Compared to projections in the 2025 BROP, another critical document in the budget-making process, Treasury increased its borrowing target while lowering its tax-raising goal by Sh97 billion. In the fiscal year ending June next year, the government expects to collect taxes amounting to Sh2.998 trillion, up from Sh2.902 trillion projected in BROP 2025.

‘Looking ahead, the government’s fiscal policy for the financial year 2026/27 and the medium term remains anchored on a growth-supportive fiscal consolidation strategy,’ Treasury Principal Secretary Chris Kiptoo said.

Treasury says the budget deficit for the financial year ending June next year will be financed through net external borrowing of Sh225.5 billion and net domestic financing of Sh890.4 billion.

In the supplementary budget for the current financial year ending June this year, the government had a fiscal deficit of Sh1.18 trillion, up from Sh948 billion, which had been projected at the start of the fiscal year.

The need for increased borrowing is due to spending pressure, with President William Ruto’s government keen on achieving most of its campaign promises as the country nears the general elections.

The government’s total spending for the upcoming financial year is projected at Sh4.7 trillion compared to Sh4.5 trillion projected for the current year ending June 2026.

Recurrent expenditure, which includes non-capital generating expenses such as payment of salary and operation and maintenance, has been projected at Sh3.456 trillion, while development expenditure is projected at Sh749.5 billion.

Read: Treasury expands domestic borrowing to fund budget

The 47 counties will receive a total of Sh495.5 billion as shareable revenue from the National Treasury, while the Contingency Fund will get Sh2.0 billion.

The government expects to mobilise revenue amounting to Sh3.533 trillion in the review period, with a big chunk of it- Sh2.9 trillion, being ordinary revenue, or largely taxes. This leaves the government’s spending budget with a deficit of Sh1.115 trillion.

With one year to the election, President Ruto will be keen to complete some of his flagship projects under the Bottom-Up Transformation Agenda, which targets ordinary Kenyans, popularly known as the hustlers.

The Cabinet Secretary for National Treasury, John Mbadi, has also indicated that Kenya is uncertain about returning to the Eurobond market despite signs of improved conditions, including falling interest rates that have lured African peers such as Benin back into the international bond market.

‘As far as the plan and timing for Kenya to return to the market is concerned, that will be determined by the prevailing market conditions and the status of other expected financing options,’ said Mr Mbadi.

‘Whereas the redemption profile currently looks smooth, there is still room for additional liability management operations, particularly to address other expensive commercial debt instruments in the public debt portfolio.’

Kenya is keen to reduce its fiscal deficit to 5.3 percent of GDP by the financial year ending June 2027. It has thus been undertaking fiscal consolidation, which includes austerity measures such as trimming non-critical expensesand implementing tax measures focused on improving compliance and expanding the tax base.

In the first half of the current financial year, the country borrowed a total of Sh518.1 billion against a target of Sh442.4 billion, with a big chunk of the money, Sh509.2 billion, coming from domestic investors. Foreign loans amounted to Sh7.8 billion.

Through the fiscal consolidation plan, the Treasury expects the overall fiscal deficit to gradually decline from 5.3 percent of GDP in the financial year 2026-27 to 3.6 percent of GDP in the following period to 3.3 percent of GDP in the period ending June 2029.

‘This will boost the country’s debt position and ensure the country’s development agenda is sustainably funded,’ said the Treasury.

Kenya’s imports of manufacturing supplies crossed a record Sh1 trillion mark in 2025, underscoring rising demand for production inputs even as the country’s overall trade deficit widened, provisional official data shows.

Fresh provisional data from the Kenya National Bureau of Statistics (KNBS) indicate that the value of imports of non-food industrial supplies climbed to Sh1.017 trillion in the year to December 2025, up from Sh934.3 billion recorded in the prior year.

This reflects increased purchases of raw materials and intermediate goods used by firms, highlighting renewed activity in sectors reliant on imported inputs, including construction, processing, and light manufacturing.

The rise in orders, however, piles pressure on Kenya’s import bill, which continued to outpace export growth during the period under review.

Total goods imports rose to Sh2.795 trillion in 2025, compared with Sh2.699 trillion the previous year.

Exports, on the other hand, grew marginally to Sh1.112 trillion from Sh1.108 trillion, reflecting slower expansion in external earnings.

The result is that Kenya’s goods trade deficit widened to Sh1.68 trillion in 2025 from Sh1.59 trillion in 2024, underlining persistent imbalances in the country’s external trade position despite steady export performance in select categories.

Central Bank of Kenya Governor Kamau Thugge, while addressing a press conference on Wednesday, said the rise in import bill last year reflected ‘largely increased imports of intermediate goods and also capital goods targeted at domestic production’.

Industrial supplies accounted for the largest share of Kenya’s imports, outpacing fuel, machinery, food, and consumer goods, signaling that domestic production and business operations remained dependent on foreign-sourced materials.

The rise came as the fuel and lubricants import bill declined to Sh570.4 billion in 2025 from Sh618.0 billion a year earlier, largely pointing to relief from international oil price movements. The lower petroleum import bill could also, to a small degree, signal shifts in domestic energy consumption patterns, including electric vehicle industry.

At the same time, imports of machinery and other capital equipment jumped to Sh424.6 billion from Sh353.8 billion, indicating increased investment in productive capacity, technology upgrades, and infrastructure-linked purchases.

Transport equipment imports also expanded to Sh260.5 billion from Sh238.6 billion on more demand for vehicles and logistics assets, while food and beverages imports edged up to Sh288.1 billion from Sh283.3 billion.

In contrast, imports of consumer goods not elsewhere specified fell to Sh210.8 billion from Sh225.4 billion, hinting at softer household demand or substitution toward locally produced alternatives.

On the export side, food and beverages remained Kenya’s leading category, generating Sh429.1 billion in earnings in 2025 compared with Sh408.3 billion the previous year.

Exports of non-food industrial supplies rose slightly to Sh238.8 billion from Sh236.9 billion, while consumer goods exports reached Sh246.9 billion.

Kenya’s exports have, over the years, posted incremental gains but have not created sufficient momentum to counterbalance rising imports.

This means the country has struggled to sustainably narrow its goods trade deficit, partly due to reliance on traditional farm produce exports such as tea, horticulture, and coffee, which are largely sold raw, fetching relatively lower earnings.

Investments, Trade and Industry Cabinet Secretary Lee Kinyanjui said lowering production costs was central to boosting exports and reducing the trade imbalance through increased value addition.

‘Just to note, sometimes the difference in price between selling one kilogramme of tea and the same one kilogramme after processing and packaging can go as high as five times,’ Mr Kinyanjui said on the Fixing the Nation show on February 4.

Most Kenyan traders export raw produce because of higher taxes slapped on semi-processed or processed products in destination markets such as Europe, fearing that value-added goods will attract tariffs and make the consignments less competitive in the global markets.

Among key agricultural exports, earnings from coffee climbed to Sh52.1 billion in 2025 from Sh38.4 billion in 2024, while tea exports dipped marginally to Sh186.9 billion from Sh189 billion.

The Trade, Investments and Industry Ministry has defended a new standards levy imposed on manufacturers from August 2025, denying that it was executed non-procedurally.

The ministry, through the Kenya Bureau of Standards (Kebs), gazetted the Standards (Standards Levy) Order, 2025, in August 2025-triggering a legal fight that saw the High Court suspend the levy following an application by the Green Thinking Action Party (GTAP), which challenged the new levy, arguing that the new payments would cripple the operations of manufacturers.

The political party further argued that the increase in the levy was implemented in violation of the Constitution and in a discriminatory, unreasonable, and unfair manner.

However, in a submission to the High Court, Attorney General Dorcas Oduor said the Trade Cabinet Secretary Lee Kinyanjui is lawfully empowered to amend and vary the Standards Levy Order, and the variations effected in Legal Notice 136 of 2025 were a valid exercise of that power.

The ministry said the Standards Levy Order 2025 aims to fulfil the statutory objectives of the levy, including funding the development and promotion of standardisation, quality control of goods and services, research and training, and ensuring that the objectives of the levy are achieved.

The Attorney General added that the inclusion of sectors such as energy generation, software development, computer engineering services, and dry cleaning as manufacturers is fully consistent with the Standards Act, which defines a manufacturer broadly and places it within the government’s statutory responsibility to bring such industries under the ambit of the Act.

‘The legal notice gives effect to the parent Act. Standards Act defines manufacture in broad and purposive terms to include producing, processing, installing, testing, operating, and using activities that are intrinsic to the sectors,’ the AG submitted.

Ms Oduor opposed the suspension of the collection or charging of the new levy, saying the move would materially impair the operations of the industry and Kebs, frustrating the objectives of the Standards Act and the purpose of the levy.

‘Conversely, in the unlikely event that the petition succeeds, any sums collected under the new legal notice are recoverable and compensable, given that the levy is administered by a statutory body, rendering the requested interim suspension unnecessary and disproportionate,’ the AG said.

Under the new rules, manufacturers must pay a levy of 0.2 percent of their monthly turnover in respect of manufacturing activities.

The levy is recoverable at source, with payments to be made through the KRA iTax system on or before the 20th day of the following month.

While the levy is still calculated at 0.2 percent of the monthly turnover, excluding value-added tax, excise duty, and discounts, the revised order adjusts the annual levy cap from Sh400,000 to Sh4 million for the first five years.

The Attorney General asked the court to dismiss the suit, stating that the matter should have been first referred to the Standards Tribunal, which has powers to determine disputes relating to the imposition, calculation, applicability, and enforcement of the Standards Levy.

Furthermore, the court heard that, before the enactment, the levy was subject to adequate and lawful public participation. There were public forums in Nairobi, Nakuru, Mombasa, Nyeri, Garissa, Eldoret, and Kisumu, as well as virtual sessions.

Ms Oduor said the 2025 order has enhanced the scope of industries and scaling up reasonably and progressively, considering current conditions and realities, thereby fulfilling the objectives of the original order (Standards Levy Order 1990).

The party in response said that the High Court has jurisdiction to hear and determine matters seeking redress of a denial, violation, or infringement of fundamental freedoms.

James Oketch submitted on behalf of the party that the public participation was contrary to the Constitution, as public bodies are required to comply with the principles of fairness and accountability in the administration of fees and levies and ensure there is a reasonable degree of predictability with respect to the level of charging levies and fee increments.

‘Simply put, there is no room for levy increments in the manner that has been done herein,’ Mr Oketch submitted.

He said their position is that businesses operate in a competitive market, and given the absence of a legal basis to control and enforce pass-through costs resulting from the imposition of the Standards Levy, it similarly means the businesses are free to pass through the added levy cost to consumers, for them to maintain their margins.

On allegations that the suspension would cripple the operations of Kebs, Mr Oketch said the regulator has eleven other sources of revenue from rendering of services, which contribute the largest proportion to its total revenue, and the Standards Levy is not a major source of its revenue.

Kenya’s battle against corruption is entering a troubling phase, with new international data indicating that graft is not only persistent but increasingly entrenched.

Findings from the 2025 Corruption Perceptions Index (CPI) reveal a country caught in a cycle of reforms without tangible results, where institutions tasked with enforcing accountability remain weak, and public confidence continues to erode.

Compiled annually by Transparency International (TI), the CPI is widely regarded as the world’s leading indicator of public sector corruption. It ranks countries on a scale from 0 to 100, where zero represents highly corrupt systems, and 100 indicates very clean governance.

The index aggregates expert assessments and business surveys from multiple independent institutions, standardises them, and calculates an average score for each country, allowing comparisons across nations and over time.

In the 2025 edition, Kenya scored 30 out of 100, down from 32 in 2024 and 31 in 2023.

Over the past 13 years, the score has fluctuated between 25 and 33, showing little real progress despite repeated anti-corruption drives.

Such stagnation signals structural problems rather than isolated scandals, suggesting reforms have not fundamentally changed how power and public resources are managed.

‘This year, the score dropped by two points. The country’s score has largely oscillated between 25 and 33 over the last 13 years, indicating high levels of corruption and stagnation in the fight against corruption despite several legislative and institutional reforms,’ said Transparency International-Kenya (TI-Kenya).

TI-Kenya Executive Director Sheila Masinde attributed the stagnation to systemic weaknesses embedded across governance structures, adding that corruption has become normalised within procurement, budgeting, licensing and regulatory processes.

‘Kenya’s latest score indicates that corruption is no longer a series of isolated incidents; it has evolved into a sophisticated, resilient system that permeates all levels of society and government, undermining democracy, the rule of law, transparency, and accountability,’ she said.

Impunity remains a major driver. TI-Kenya noted that major corruption cases rarely result in convictions, with some collapsing or being withdrawn before conclusion.

Weak prosecution and stalled investigations allow influential suspects to escape accountability, reinforcing the perception that political influence can override justice.

Legal safeguards exist, including constitutional leadership and integrity provisions intended to bar individuals implicated in wrongdoing from public office. However, gaps in enforcement have undermined these protections, lowering standards and eroding trust in oversight bodies.

‘To decisively deal with corruption, anti-corruption laws, particularly the leadership and integrity provisions, must be fully enforced to ensure that only individuals who meet the constitutional bar for leadership occupy public office,’ Ms Masinde said.

The CPI findings place Kenya within a broader regional challenge.

Sub-Saharan Africa recorded an average score of 32, the lowest-performing region globally, with only four countries above 50. While regional conditions partly explain Kenya’s position, comparisons show improvement is possible: Rwanda scored 58 and Tanzania 40, outperforming Kenya, whereas Uganda (25) and Burundi (17) scored worse.

Globally, Denmark leads with 89 points, followed by Finland (88), Singapore (84), New Zealand and Norway (81), and Sweden and Switzerland (80).

At the bottom are South Sudan and Somalia (9), followed by Venezuela (10), Yemen, Libya, Eritrea (13), and Sudan and Nicaragua (14). The worldwide average stands at 42, the lowest in more than a decade, with over two-thirds of countries below 50. Declining scores often coincide with shrinking civic space and restricted freedoms of expression and association.

Francois Valerian, Chair of Transparency International, called for national and multilateral cooperation to protect the public interest and tackle shared challenges like corruption.

‘We need to protect a rules-based global order grounded in transparency, accountability to citizens, and respect for human rights,’ he said.

Although the CPI measures perception rather than verified incidents, perception carries real-world consequences. Investors, development partners, and diplomatic allies rely on such indices to assess governance risk. A declining score can reduce foreign investment, raise borrowing costs, and diminish global credibility.

The High Court has ordered Mayfair CIB Bank to provide one of its customers, Akshar Industries, with a full and accurate statement of accounts following allegations of predatory lending practices on a Sh260 million loan dispute.

The court stopped the planned auction of Akshar’s assets, demanded a full accounting of loan repayments, and criticised the lender’s ‘improper banking practices’ for harming the borrower’s business.

Among cited irregularities were the dishonouring of cheques, unauthorised loan approvals, refusal to permit the sale of securities, and poor communication.

Under the ruling, the bank must submit a detailed statement of account within 30 days, outlining all loan facilities, payments, the allocation of a Sh140 million lump sum, and a clear breakdown of principal, interest, penalties, and charges.

Additionally, the bank is barred from selling Akshar’s pledged assets-four land parcels and seven motor vehicles-for 90 days after submitting the required documents.

The court also mandated strict adherence to statutory notice and valuation procedures before any future sale.

The dispute draws from a lending relationship between the firm and the bank that began in 2019 and involved multiple facilities such as overdrafts, working capital loans, revolving credit, term loans, and asset financing, secured by land, movable assets, and deposits.

Akshar claimed it repaid significant amounts but was driven into financial distress due to the bank’s actions.

The company accused Mayfair of dishonouring cheques despite sufficient funds, processing unauthorised transactions, approving loans without consent, and delaying approvals for asset sales intended to reduce debt.

Akshar sought the bank’s permission to sell its motor vehicles, land parcels, and liquidate a fixed deposit account tied to the loan securities, intending to use the proceeds to settle arrears. However, the bank refused the request.

Mayfair denied any wrongdoing, arguing that Akshar defaulted, justifying lawful recovery efforts.

The court framed the case around the fiduciary duty between banks and customers, emphasising that lenders must exercise ‘reasonable care and skill’ and act in ‘utmost good faith.’

‘A bank has a duty under its contract with its customer to exercise reasonable care and skill,’ said the court, adding that the relationship is grounded in ‘utmost good faith.’

While the court declined to rule the bank’s actions as fraud, it found that Mayfair’s conduct fell below acceptable banking standards.

The judgment highlighted repeated instances where cheques were dishonored despite available funds, severely damaging Akshar’s supplier relationships and its ability to generate income for repayments.

‘The evidence shows that the bank contributed significantly to the Plaintiff’s inability to service the loan through its improper conduct. The dishonoring of cheques destroyed the Plaintiff’s supplier relationships, which were essential to generating the income needed to repay the loan,’ said the court.

The court also questioned a Sh15.5 million facility issued in September 2022 without Akshar’s application, which was used to cover interest arrears.

A bank representative admitted that some facilities were approved without customer consent-a violation of contractual principles requiring mutual agreement.

‘A bank cannot unilaterally create loan facilities for a customer without their knowledge or consent and then charge interest on those facilities. Such conduct violates the fundamental principle that a contract requires mutual consent,’ the court ruled.

Although Akshar acknowledged an outstanding debt exceeding Sh260 million as of January 2023, the court ruled that penalty interest resulting from the bank’s misconduct should be waived.

The Sh140 million from Akshar’s land sale must first be applied to the principal and standard interest before penalties.

Furthermore, no asset sale may proceed until full disclosure is made, the 90-day period elapses, and statutory requirements are met.

The court dismissed Akshar’s claim for compensation over business losses due to insufficient evidence and rejected its request for a fraud declaration.

Stima DT-Sacco has restructured its insurance subsidiary from an insurance agent into a fully fledged broker to negotiate offers for its members.

Mpawa Insurance Brokerage was formerly Mpawa Insurance Agency. It will now negotiate life and health insurance, general insurance, SME covers, agricultural insurance, digital micro-covers, credit life, motor, domestic and specialised group products for members.

A commercial insurance broker acts as an intermediary between insurance providers and customers, helping clients find the most suitable insurance coverage that meets their specific needs and requirements at the most affordable premium.

An agent, while also an intermediary, works for the insurance company to sell its products.

‘Unlike an agency, a brokerage exists solely to represent the client. This independence is the foundation of trust, and it allows Mpawa to source, compare and negotiate across the entire insurance market for the benefit of members,’ said Stima Sacco Chief Executive Gamaliel Hassan during the launch on Wednesday.

Mpawa Insurance Brokerage draws more than 90 percent of its business from sacco members, he said. The subsidiary is also pursuing a technology-enabled operating model to have digital onboarding, integrated binder systems, automated reconciliations, real-time dashboards across underwriting and claims, and multi-channel customer journey mapping by the end of 2026.

Stima Sacco was established in 1974, initially serving employees of the utility firm now called Kenya Power. It has since expanded to open membership to all sectors and is one of Kenya’s largest deposit-taking Saccos.

Stima Sacco’s total deposits grew by eight percent to Sh46.69 billion in 2024, up from Sh43.13 billion in 2023. Its loan book grew by 11 percent to Sh50.24 billion, rising from Sh45.15 billion in the same period.

Mpawa was formed in 2018 as a special-purpose entity to cater to Stima Sacco’s insurance needs of members. At the end of 2025, its gross written premium portfolio had grown to over Sh600 million, according to sacco’s national chairman Joseph Siror.

‘Within its first three years, Mpawa’s gross written premium portfolio grew from Sh148 million to over Sh600 million by 2025, clearly demonstrating both latent demand and significant operational potential,’ Dr Siror said.

The Sacco’s shareholders approved the insurance brokerage move last year as part of a revenue diversification strategy. The strategy has also seen the firm invest in Treasury bills and bonds, as well as in unquoted equities not listed on the Nairobi Securities Exchange.

Mpawa is betting on its branches and networks across the country under Stima Sacco’s infrastructure to scale faster than many new entrants in the insurance brokerage market.

Kenya Pipeline Company (KPC), a 52-year success story, is set to further support national development through the Government of Kenya’s divestiture programme. The Government is offering 65 percent of its stake in the Company through the ongoing Initial Public Offering (IPO) of 1,812,644,350 ordinary shares, at a price of Ksh9 per share, with a par value of Ksh0.02.

In a letter contained in the IPO Information Memorandum, Cabinet Secretary for the National Treasury and Economic Planning, Mr John Mbadi, explains that a key objective of the privatisation programme is ‘to broaden the shareholding of state-owned corporations among Kenyans, deepen the capital markets, and raise resources for infrastructure development.’

Mr Mbadi further points out that KPC, a leading oil and gas infrastructure company in Kenya, has experienced significant growth in recent years. ‘As a result, KPC is one of the most profitable companies wholly owned by the Government of Kenya, and has contributed substantially to the national budget,’ he says.

Last year, President William Ruto articulated his ambition to steer Kenya towards a development trajectory comparable to Singapore, one of Asia’s ‘Tiger Economies’ and a globally recognised model of economic transformation. The proceeds from the sale of the Government’s shares in KPC will therefore be applied primarily to funding infrastructure development, positioning Kenya firmly on course to realise this national aspiration.

The IPO is expected to generate gross proceeds of approximately Ksh106.31 billion, assuming full subscription. These funds will form part of the Government’s approved financing plan for the 2025/26 financial year and will be deployed in line with the national budget framework and fiscal policy priorities. Allocation will focus on commercially viable infrastructure investments, particularly in energy, roads, water and irrigation, and airports.

At the same time, Kenyans who participate in the IPO will have the opportunity to share in KPC’s strong financial performance. Investors stand to benefit from dividends supported by the company’s robust profitability and sound financial position.

For the financial year ended June 30, 2025, KPC recorded revenues of Ksh38.59 billion and profit after tax of Ksh7.49 billion, underscoring its solid earnings capacity and resilient balance sheet. The IPO is structured across five investor pools:

Kenyan Investors

East African Community (EAC) Investors

Oil Marketing Companies

KPC Employees

International Investors.

The Offer Price was determined using earnings multiples. This approach reflects KPC’s ability to generate sustainable earnings and dividends. It also aligns with investor decision-making on the Nairobi Securities Exchange, which is strongly driven by earnings and dividend considerations, and ensures transparency and comparability with regional and global infrastructure peers.

Download this PDF for more information about recent developments at KPC.

Revenue collections on the standard gauge railway (SGR) rose 18.6 percent to Sh21.4 billion in 2025, lifted by steady growth in cargo haulage and a rebound in passenger traffic.

Latest data from the Kenya National Bureau of Statistics (KNBS) show total SGR revenue increased from Sh18.1 billion in 2024, extending gains recorded in the early months of last year.

Passenger traffic rose 11.6 percent to 2.7 million travellers in 2025, up from 2.4 million the previous year, as more commuters returned to the Madaraka Express despite elevated fares imposed at the start of 2024.

The rise in passenger numbers pushed ticket revenue up 17 percent to Sh4.8 billion from Sh4.1 billion a year earlier.

Cargo remained the dominant revenue driver, with freight volumes rising 14.6 percent to 7.5 million tonnes from 6.5 million tonnes in 2024.

Cargo freight revenue grew 19.1 percent to Sh16.6 billion from Sh14 billion the previous year, underscoring the central role of containerised cargo in the railway’s commercial performance.

Importers have increasingly shifted to rail haulage, citing predictable transit times, reduced cargo losses and tighter enforcement of cargo evacuation rules at the Port of Mombasa.

The growth in freight volumes reflects sustained demand for rail transport between the port and inland container depots, particularly along the Mombasa-Naivasha corridor.

Cargo trains have remained the backbone of the SGR’s revenue stream since operations began in 2017, consistently accounting for more than half of annual earnings.

Kenya Railways has pursued a strategy of deepening cargo volumes on the SGR while improving connectivity between the standard gauge and the metre-gauge networks.

SGR loans

The improved revenue performance offers some relief to a system that has historically relied on Treasury support to meet operating costs.

Since its launch, the railway has struggled to generate sufficient cash flow to fully cover operating expenses and debt obligations tied to its construction.

Kenya borrowed $5.08 billion (Sh655.3 billion at current conversion rates) from China Exim Bank in 2014 and 2015 to finance the Mombasa-Naivasha line.

The loans were extended on a mix of concessional and commercial terms, with repayments beginning in January 2020 after a five-year grace period.

Debt servicing has continued to exert pressure on the country’s external financing obligations, particularly when SGR revenues fall short of repayment requirements.

The rebound in passenger traffic has helped narrow operating gaps created after fare increases triggered a temporary shift to road transport in early 2024.

Passenger fares were revised upwards in January 2024, with first-class tickets on the Nairobi-Mombasa route rising to Sh4,500 from Sh3,000 and economy fares increasing to Sh1,500 from Sh1,000.

The fare adjustment was attributed to higher operating costs, including fuel prices and rising maintenance expenses for rolling stock and track infrastructure.

Although the fare increases initially dampened demand, passenger numbers stabilised over time as travellers prioritised convenience and reliability.

The SGR remains central to Kenya’s long-term transport and logistics strategy, particularly in easing congestion along the Northern Corridor.

The government is pursuing an extension of the line from Naivasha to the Malaba border to link Kenya’s network with Uganda’s SGR line.

The proposed extension, estimated to cost about $5 billion (Sh645 billion), is expected to rely largely on external financing, with negotiations ongoing.

The project is viewed as critical to improving regional cargo flows and strengthening the railway’s long-term commercial viability.

The National Treasury remains uncertain about Kenya’s return to the Eurobond market despite signs of improved conditions, including falling interest rates in the international capital markets.

Treasury Cabinet Secretary John Mbadi says Kenya is still weighing market conditions and its financing requirements even as it favours a return to the market to retire expensive commercial debt.

Kenya tapped the Eurobond market twice last year to ease pressure from the near-term maturity of similar instruments.

Falling interest rates in the international capital markets have emboldened countries in emerging and frontier economies, including Benin, to issue new Eurobonds at relatively lower costs.

‘As far as the plan and timing for Kenya to return to the market is concerned, that will be determined by the prevailing market conditions and the status of other expected financing options,’ he said.

‘Whereas the redemption profile currently looks smooth, there is still room for additional liability management operations, particularly to address other expensive commercial debt instruments in the public debt portfolio.’

In 2025, the Treasury successfully issued two new Eurobonds to refinance similar maturities due in 2027 and 2028, respectively, improving the maturity profile of Kenya’s Eurobonds and pushing the first sizable repayment back to 2031.

Kenya faces maturities of at least Sh129 billion ($1 billion) from Eurobonds in 2031, 2032, 2034, 2036, and 2048, presenting the opportunity to break up the maturities through new issuances, a process dubbed liability management operations.

Last month, the National Treasury’s Public Debt Management Office said Kenya would use proceeds from a Sh129 billion ($1 billion) debt-for-food security swap to make early repayments on outstanding Eurobonds with the view to easing the heavy debt burden.

Kenya has a guarantee from the United States International Development Finance Corporation to support the debt-for-food swap deal.

Kenya’s current stock of Eurobonds stands at Sh1.1 trillion ($8.78 billion).

External debt, including Eurobonds, is expected to cost taxpayers Sh597 billion as debt service costs in the current financial year, compared to Sh773 billion a year earlier.

The 2025 liability management operations supported the repayment of Sh116.1 billion ($900 million) and Sh129 billion ($1 billion) Eurobonds, which were set to mature in 2027 and 2028. The partial repayments have brought down balances on the two sovereign bonds to Sh27.5 billion ($213.4 million) and Sh47.9 billion ($371.56million), respectively.

The balances, deemed as modest by the Treasury, are expected to be settled from government revenues, including the Central Bank of Kenya’s official reserves.

The Treasury is prioritising liability management operations in tapping international capital markets as it avoids new net commercial financing from foreign sources.

The government is instead seeking to deepen concessional funding to meet its new foreign financing needs, including tapping from the World Bank’s development policy operations-a cheap funding facility that supports countries in implementing key policy and institutional reforms.

Kenya can still tap cheap financing from the International Monetary Fund through a new funded programme, but the National Treasury has not budgeted for the fund’s resources for the fiscal year to June 2026.

There is a phrase that surfaces often in Kenya’s arid counties these days: ‘The rains failed again.’ It is said quietly, not in complaint, but in recognition of a reality no spreadsheet can negotiate.

As I write this, reports confirm that over three million Kenyans face acute food insecurity, with drought conditions worsening since the short rains faltered last year. Mandera, Wajir, Kilifi, Kwale: places where livelihoods depend on patterns that climate no longer honours.

The government has released billions of shillings for relief, yet stocks remain thin and malnutrition is rising. This is not distant news for founders. It is infrastructure.

Supply chains tighten. Consumer spending contracts in affected regions. Talent migrates or depletes. Costs rise on essentials while revenues soften.

For those building in agritech, healthtech, fintech serving the informal economy, or logistics bridging rural and urban divides, these are not macroeconomic footnotes. They are daily variables that rewrite business models overnight.

Yet the same week brings other signals.

Kenya’s economy is projected to grow around 5.3 percent in 2026, buoyed by services, an agricultural rebound where rains permit, and continued reforms.

The Africa Tech Summit opened in Nairobi, convening founders, investors and innovators under themes of AI, localisation and scalable impact. Across the continent, conversations turn to health sovereignty and resilient systems, as seen in recent scientific convenings at Kemri.

There is movement, investment, and ambition. The tension between these two realities; drought’s quiet erosion and growth’s tentative promise, is the terrain African founders navigate now.

I recall a conversation years ago with a founder in the livestock space. When the 2022 drought hit hard, he watched herds thin and suppliers vanish. His instinct was to pause expansion, conserve cash and wait for normalcy. But normalcy did not return on schedule.

Competitors who adapted by diversifying feed sources, leveraging digital marketplaces and building community buffers survived.

This is where the African Founders Operating System returns as a compass, not comfort. When external chaos intensifies, internal states reveal themselves most clearly. Strategically, the question becomes timing: pivot now or preserve resources?

In drought-affected value chains, delay often compounds loss. Founders who reframe scarcity as constraint engineering, redesigning models around resilience rather than abundance, create optionality others miss.

Socially, the load multiplies. Black tax does not pause during lean seasons. Family and community expectations rise when hardship spreads. Networks become lifelines. The founder who isolates risks fracture. The one who communicates honestly, shares burden without shame, and invites support often finds unexpected strength from peers and teams.

Emotionally, endurance is tested hardest here. Anxiety about payroll, supplier defaults or delayed relief payments migrates into sleepless nights. The temptation is suppression: push harder, perform optimism.

But unprocessed pressure leaks. It shows up as irritability in meetings, burnout disguised as discipline, or quiet resentment toward the very mission once embraced. Founders who name the strain early, seek safe spaces through trusted peers, therapy, mentorship, or spiritual practice, preserve bandwidth longer.

Mindset determines interpretation. Is this drought a full stop or a redirection? Scarcity narratives whisper ‘protect what remains.’

Abundance mindsets, even in lean times, ask ‘what can be built from what is left?’ The latter turns survival into iteration, and iteration into innovation that fits the continent’s realities.

Spiritually, meaning and purpose feel most fragile. When external systems fail predictably, founders ask: Is this still aligned? Does the mission hold when the environment punishes it?

Purpose is not abstract here. It is fuel. When conviction erodes, even promising growth feels hollow. But when purpose is renewed, hardship becomes a refining fire rather than a dead end. What ties these states together is alignment, or its absence. A founder can be strategically agile yet emotionally depleted. Socially connected yet spiritually adrift, building scale without grounding.

The invitation in this season is not to ignore the drought or over-celebrate projected GDP. It is to act with eyes open to both. Test small pivots. Strengthen community buffers.

Protect mental and spiritual reserves as fiercely as cash flow. Move before full clarity arrives, because clarity rarely precedes action in our context.

This week’s tech summit will showcase founders doing exactly that: building AI tools for climate prediction, health platforms for remote diagnostics, fintech for drought-resilient savings, and supply systems that anticipate disruption rather than merely react to it. They are not waiting for perfect conditions. They are shaping them.

As African founders, we do not get neutral ground. We get friction, cycles of strain and opportunity, and the constant choice: retreat into survival or lean into agency. Legacy is not built in fair weather alone. It is forged when the ground shifts, and the founder chooses to move anyway.

Sometimes the most strategic decision is the quiet one: checking on a team member in a hard-hit county, reallocating resources to buffer the vulnerable, or naming the tension honestly in a board meeting.

These are not distractions from business. They are the business.