Category: Business Daily

The conversation about money at a small manufacturer’s site in Nairobi’s Industrial Area quickly turns to real business concerns. The company has outstanding orders, but it is facing a serious cash shortage. A single late payment can immediately block the payment of wages, rent, and stock.

The discussion often touches on basic questions. What is forex trading? As fluctuations in the shilling affect the cost of fuel, machinery parts, and imported materials. A new theme has emerged over the past few weeks. Borrowing has become more manageable than before, which benefits firms that need working capital rather than holding large cash reserves.

Kenya’s transition has unfolded gradually rather than through a sudden shift. The Central Bank of Kenya has begun easing monetary policy through modest adjustments aimed at increasing credit availability without triggering inflation pressures.

In October, the Monetary Policy Committee lowered the Central Bank Rate to 9.25 percent. In December, it trimmed the rate again to 9.00 percent. These small moves show how decisions made at the top can meaningfully change operating conditions across the banking sector. A rate cut signals to lenders that the tight-money phase may be easing, allowing them to assess risk with slightly more confidence.

This credit easing matters because private sector credit goes beyond standard personal loans. Businesses need cash to run payrolls, manage inventory and transport, and bridge the gap between sales and payments.

Many Kenyan firms rely on short-term support rather than large, long-term loans. Access to overdrafts, invoice discounting, and short-term facilities allows them to keep operating. When interest rates rise too high, banks become defensive. Loan tenors shorten, collateral demands increase, and risk is priced aggressively. Even solid sales can fail to translate into growth when financing costs wipe out margins.

The inflation environment gives policymakers some room to maneuver. Kenya’s annual inflation rate stood at 4.5 percent in December, remaining within the official target range. This has allowed the central bank to lower rates while keeping price stability intact.

Stable inflation protects depositor confidence and prevents expectations from becoming unanchored. For businesses, predictable prices make planning possible. A shop owner is more likely to borrow for stock when there is less fear that costs will surge before goods are sold.

So how does a lower policy rate reach a boda boda spare-parts trader or a mid-sized distributor? It works through several channels at once. Lower interbank funding costs make liquidity management easier for banks. Yields on government securities slow, reducing the incentive for banks to park funds in treasury bills instead of lending. Credit signals begin to shift.

Committees that had frozen new exposure started to loosen restrictions, albeit cautiously. The process is gradual, but it does change how banks engage with customers.

The numbers also show early signs of improvement. By November, Kenya’s private sector credit stock stood at about Sh4.15 trillion, with year-on-year growth of roughly 6 percent. This is notable after earlier weakness that had pushed growth into negative territory.

The rebound suggests conditions are stabilizing, even if affordable credit is not yet available to everyone. More borrowers are being approved, and banks are accepting slightly higher risk than in recent quarters.

Still, Kenya understands that monetary easing is not a cure-all. Banks lend based on confidence that loans will be repaid. Asset quality remains a concern, with non-performing loans, payment delays, and sector uncertainty weighing on decisions. Even with a lower policy rate, banks will charge higher rates to riskier clients and demand collateral that many small firms lack. Credit recovery usually starts with stronger borrowers, gradually rebuilding confidence across the market.

There is also a broader shift in sentiment. Business conditions are improving as demand picks up and order books fill. When orders grow, firms can borrow with a clearer sense of how loans will be repaid. Credit is far riskier when demand is weak, regardless of price. Monetary easing works best when it supports real activity rather than pushing banks to lend in uncertain conditions.

Overall, the easing measures are beginning to do what they were meant to do. Lower rates reduce pressure on borrowers and help restore confidence, encouraging lenders to resume normal operations. Cuts to 9.25 percent and then 9.00 percent, combined with stable inflation, have created better conditions for borrowing and investment. The outcome will not be a sudden boom, and it should not be.

Kenya needs steady credit growth that allows firms to hire, restock, and expand without taking on excessive debt. A return to normal lending behavior may be the most important result of this shift.

The government’s reliance on emergency borrowing from the Central Bank of Kenya (CBK) eased in mid-January after the Treasury cut its overdraft balance to Sh6.94 billion last week, down from Sh67.36 billion the previous week.

Latest CBK disclosures show the steep drop came as the Treasury moved to replenish short-term liquidity in preparation for upcoming domestic debt obligations.

The overdraft facility is typically used as a stop-gap tool to smooth cash flows when tax receipts and other inflows lag scheduled payments, particularly interest and principal due on Treasury bills and bonds.

‘The level of overdraft is subject to domestic debt obligations and funding of the same, mostly from Treasury bills and Treasury bonds auctions. Yes, in the past two weeks, we have funded the overdraft in anticipation of the heavy obligations coming up,’ said Bernard Ndung’u, Treasury’s director-general of accounting services.

According to a repayment schedule seen by this publication, the Treasury faces domestic debt obligations amounting to Sh378.6 billion by the end of next month, covering interest payments and maturing T-bills and bonds.

Of this, Sh145.2 billion falls due at the end of this month, while next month carries a heavier burden of Sh233.3 billion.

The CBK overdraft window allows the government to bridge short-term financing gaps without immediately turning to the market. Section 46(3) of the CBK Act limits the Treasury’s access to five percent of the most recently audited exchequer revenues.

The overdraft facility is therefore capped at five percent of the most recent audited government revenues, ensuring a legal ceiling to emergency borrowing. The facility currently attracts an annual interest of nine percent, equivalent to the prevailing Central Bank Rate (CBR).

During the first three months of the current financial year, overdraft interest charges stood at Sh697.5 million, down from Sh1.9 billion in the same period the previous fiscal year, according to records from the Controller of Budget (CoB).

‘The decline in overdraft interest payments compared to FY 2024/25 was primarily due to the decrease in CBK’s interest rates, which stood at 9.5 per cent in August 2025 compared to 12.75 per cent in August 2024,’ wrote the COB in her latest report.

Excessive reliance on central bank financing is widely viewed as risky, as it can inject liquidity into the system in ways that complicate inflation control and monetary policy operations.

Economists have warned that heavy use of the overdraft is tantamount to printing money, with attendant inflationary risks.

Former Treasury Cabinet Secretary Prof Njuguna Ndung’u, speaking while he was CBK governor, said borrowing from the government’s fiscal agent was inflationary. ‘Accelerated borrowing from the Central Bank is inflationary as it is equated to the printing of money and therefore leads to macroeconomic instability through inflationary pressures,’ he said at the time.

Cyber threat incidents targeting Kenyan organisations surged more than fivefold in the three months to December 2025, underscoring the growing scale and sophistication of attacks on local critical digital infrastructure.

Data from the Communications Authority of Kenya (CA) shows 4.56 billion cyber threat incidents were detected during the period, a 441.27 percent increase from the 842 million recorded in the previous quarter.

This is among the sharpest quarter-on-quarter rises ever reported by the CA’s national incident response unit, reflecting mounting pressure on public and private systems as attackers exploit vulnerabilities.

‘The cyber threats detected were largely due to inadequate system patching, limited user awareness of phishing and social engineering, and the increasing use of AI-driven and machine-learning tools by malicious actors,’ the CA noted in its latest release.

In response, the Authority issued 21.82 million cyber threat advisories, a 9.34 per cent increase from the previous quarter. ‘As part of its proactive approach, the Authority continued to enhance the dissemination of advisories to critical information infrastructure sectors,’ the report added.

System attacks dominated, with 4.38 billion incidents-a 463.44 percent rise from July-September.

These attacks targeted operating systems, databases, and network infrastructure, particularly systems run by internet service providers (ISPs) and cloud providers.

‘Threat actors exploited outdated vulnerabilities to steal user authentication credentials, while the rapid proliferation of IoT devices lacking proper security controls worsened the problem,’ the CA said.

Other threats included malware (70.9 million), Distributed Denial of Service (DDoS) attacks (58.3 million), brute force attacks (42.8 million), web application attacks (11.6 million), and mobile application attacks (310,009). DDoS attacks recorded the steepest growth, surging 1,116.06 per cent from the previous quarter.

These attacks targeted critical public ICT infrastructure, with perpetrators using reflection and amplification techniques. Mobile devices and Android TVs were particularly affected.

Culinary colleges in Kenya are witnessing a surge in students enrolling for pastry chef courses, driven by growing opportunities abroad and a shortage of skilled professionals locally.

A few years ago, hotels started reporting a shortage of pastry chefs as workers made an exodus for international jobs paying better. Now, students are paying as high as Sh518,000 to be admitted into the few culinary schools in Kenya to learn baking and patisserie.

Benard Amaya, the acting deputy director for admissions at Kenya Utalii College, told the BDLife that rising demand for culinary training has led the college to expand its facilities.

‘We’ve had to build a new stove training kitchen to accommodate 80 students, double the capacity of the old kitchen, which held 40 students. The older kitchen, meanwhile, continues to support 64 students who are solely studying pastry and bakery,’ he said.

Mr Amaya said Utalii College, which churns out a majority of hospitality students, used to teach pastry before but stopped because the demand was low.

‘In 2023, the course wasn’t attracting numbers,’ he said. ‘But in stopping it, we created a shortage.’

Also, pastry was once sidelined in Kenya’s hospitality training, as focus was on food and beverage service and food production.

In 2024, Utalii reintroduced the pastry course.

‘We realised hotels were asking specifically for pastry chefs, and there were very few,’ he said.

Due to the high demand, the college has had to do two intakes. ‘There’s one main intake in October with about 64 students enrolling for the pastry course, followed by a smaller intake of 32 students in April,’ Mr Amaya said.

The high demand for pastry arts or patisserie is also being driven by self-employment opportunities.

Many trained chefs, Mr Amaya observed, are no longer confined to hotel kitchens.

After formal work hours, some run their own confectionery businesses, operate eateries, or take on outside catering over weekends. Others are increasingly working as private chefs, serving homes rather than hotels.

Which gender dominates patisserie courses in these culinary colleges?

Mr Amaya said more women graduate from culinary programmes, but few advance to professional kitchens, particularly at senior levels.

Hotel kitchens remain largely male-dominated due to long working hours and physically demanding shifts, which many women find difficult to sustain alongside family commitments.

‘At the lower levels, the ratios can be equal or even slightly have more women. Women make up 72 percent (of enrolments), compared to 28 percent men but you’ll find more men in the hotel kitchens,’ he says.

Do pastry chefs earn more money? He says salaries vary, but doing a culinary course gives one a better chance of growing into the role of an executive chef, who is the overall manager of the kitchen.

Besides cruise ships and luxury resorts, pastry chefs are also being sought out in diplomatic residences and private homes. With an entry grade of C-, those seeking a short pastry and baking course at Utalii for one month pay Sh65, 000.

The shift is not unique to Utalii College.

At Boma International Hospitality College, Samuel Irungu, the school administrator, said students were increasingly changing careers to enrol in pastry and bakery courses at both diploma and certificate levels.

‘Locally, there is a clear gap in the market,’ Mr Irungu said. ‘Most pastry students are absorbed into the establishments [hotels] where they intern.’

The global outlook is equally compelling. ‘The earnings are very attractive,’ he added. ‘And as professionals grow in the industry, it only gets better.’

The training itself has evolved. Where European, American and Indian cuisines once dominated the curriculum, African cuisine has since been introduced in these schools.

‘When we did that, we realised there is a market that is not fully tapped,’ said Mr Irungu.

Boma College charges between Sh437,000 and Sh518,000, depending on whether students enrol in a certificate or diploma course in baking and patisserie, with admissions done thrice a year.

A powerful truth is revealed when a young global internet personality like IShowSpeed moves through African cities and villages, armed with nothing more than a mobile phone strapped to his wrist, commanding the attention of millions of Gen Alphas, Zoomers and Millennials worldwide.

From this simple act, it becomes clear that influence in the digital age no longer flows primarily through chancelleries, formal diplomatic communiqués or conference halls. It now moves through platforms, personalities, social media algorithms and real-time cultural connection, and global trade increasingly follows the same pattern.

Kenya, to be fair, knows something about digital transformation.

Over the past two decades, the country has built some of the strongest digital foundations on the continent, from world-leading mobile money adoption to digital public services such as eCitizen and the Huduma Centres.

These achievements have earned Kenya a deserved reputation as an African technology pioneer. Yet digital success at home does not automatically translate into influence abroad, and as global attention, power and competition migrate online, a critical dimension of statecraft remains underdeveloped: how Kenya projects, protects and advances its interests in the digital world.

Too often, when we go online, we rush to ‘sell Kenya’ as though it were a piece of real estate, the only thing missing being the price per acre. At best, we market rich Kenyan experiences, which score highly for tourism but far less for trade and industry.

This narrow framing limits our digital presence and fails to position Kenya as a serious player in global value chains driven by technology, data and innovation.

This is where digital diplomacy becomes essential: the deliberate use of diplomatic tools to shape international digital norms, attract strategic technology partnerships, safeguard cyberspace, and project national values and innovation as soft power.

Kenya’s digital future will therefore be shaped not only by fibre cables, innovation hubs and start-ups in counties, constituencies and wards, but also by diplomatic choices made in Brussels, Washington, Beijing, New Delhi, Abuja, Cape Town, Addis Ababa and Geneva.

Global digital governance is being written now, largely by those who show up early, coordinated and prepared.

Digital infrastructure depends on international data regimes, cybersecurity relies on shared norms and cooperation, and digital trade rules are negotiated in bilateral and multilateral arenas.

In this environment, claims of non-alignment or neutrality amount to quiet surrender.

Other countries have grasped this reality. IShowSpeed’s Africa tour may seem an unlikely lens for foreign policy, but it captures the moment perfectly: attention, influence and legitimacy are increasingly earned online, in real time and at cultural scale.

The question is no longer whether Kenya should pursue digital diplomacy, but whether, in a rapidly reordering global system, it can afford not to.

In its rulings, the tribunal examined Del Monte Kenya’s dealings with related overseas entities, including Switzerland-based Del Monte International GmbH, which buys fresh and processed pineapples from Kenya for sale in Europe, and Del Monte Fund BV-the financial arm providing loans.

The tribunal agreed with the KRA that Del Monte International GmbH squeezed the revenues of the Kenya unit after the Swiss firm billed the Thika-based firm for quality control, logistics and sales and marketing, which were done by the Kenyan unit.

The tribunal also backed the taxman’s argument that the loan agreement between Delmonte Kenya and Del Monte Fund BV depressed profits of the Thika-based firm because it was costlier. The tax demand stems from two audits the KRA conducted on the multinational starting in Mid-2024 as the country clamps down on aggressive tax planning by global firms.

The first assessment, dated September 20, 2024, imposed a Sh1.76 billion liability for 2018.

The second, issued on March 17, 2025, demanded Sh4.959 billion for the 2019-2021 period, inclusive of principal tax, penalties, and interest.

In a ruling delivered on January 16, 2026, a five-member Tax Appeals Tribunal chaired by Christine Muga dismissed Del Monte’s appeal and upheld the two audit assessments, finding that most of the key functions were carried out by the Kenyan unit rather than Del Monte International GmbH.

As a result, the tribunal ruled that the bulk of the profits should have been taxed in Kenya.

The KRA had also disallowed interest expenses on a loan advanced by Del Monte Fund BV, noting that the entity was not an independent financier.

‘The upshot of the foregoing is that the tribunal finds and holds that the appeal fails and it proceeds to make the following orders. the appeal be and is hereby dismissed,’ the tribunal said.

Del Monte International GmbH serves as the group’s international trading and distribution hub, coordinating global sales and marketing for Fresh Del Monte Produce, while the Dutch-registered Del Monte Fund BV functions as the group’s financial arm, handling intercompany funding.

At the apex of this global corporate network is Fresh Del Monte Produce Inc., the parent company that is incorporated in the Cayman Islands, a jurisdiction widely regarded as a tax haven.

In its argument, Del Monte Kenya told the tribunal that its Functions Performed, Assets Employed, and Risks Assumed (FAR analysis)-a method for examining how value is created within a global corporate group-showed that DMI GmbH actually carried out most of the high-value functions, such as quality control, logistics, and sales, which reduced the revenue of the Kenyan entity.

The tax authority rejected the FAR analysis due to insufficient evidence that the functions were genuinely performed by the Swiss subsidiary.

The Tax Appeals Tribunal found that the Thika-based fruit processor sold fresh and processed pineapples to a sister company abroad at prices that did not reflect the value created in Kenya and claimed interest deductions from a loan deal that favoured its parent firm.

The Kenya Revenue Authority (KRA) said deals shrank the income for Del Monte Kenya, resulting in reduced income tax collection.

The tribunal agreed with the KRA that Del Monte International GmbH squeezed the revenues of the Kenya unit after the Swiss firm billed the Thika-based firm for quality control, logistics and sales and marketing, which were done by the Kenyan unit.

The tribunal also backed the taxman’s argument that the loan agreement between Delmonte Kenya and Del Monte Fund BV depressed profits of the Thika-based firm because it was costlier. The tax demand stems from two audits the KRA conducted on the multinational starting in Mid-2024 as the country clamps down on aggressive tax planning by global firms.

The first assessment, dated September 20, 2024, imposed a Sh1.76 billion liability for 2018.

The second, issued on March 17, 2025, demanded Sh4.959 billion for the 2019-2021 period, inclusive of principal tax, penalties, and interest.

In a ruling delivered on January 16, 2026, a five-member Tax Appeals Tribunal chaired by Christine Muga dismissed Del Monte’s appeal and upheld the two audit assessments, finding that most of the key functions were carried out by the Kenyan unit rather than Del Monte International GmbH.

As a result, the tribunal ruled that the bulk of the profits should have been taxed in Kenya.

The KRA had also disallowed interest expenses on a loan advanced by Del Monte Fund BV, noting that the entity was not an independent financier.

‘The upshot of the foregoing is that the tribunal finds and holds that the appeal fails and it proceeds to make the following orders. the appeal be and is hereby dismissed,’ the tribunal said.

Del Monte International GmbH serves as the group’s international trading and distribution hub, coordinating global sales and marketing for Fresh Del Monte Produce, while the Dutch-registered Del Monte Fund BV functions as the group’s financial arm, handling intercompany funding.

At the apex of this global corporate network is Fresh Del Monte Produce Inc., the parent company that is incorporated in the Cayman Islands, a jurisdiction widely regarded as a tax haven.

In its argument, Del Monte Kenya told the tribunal that its Functions Performed, Assets Employed, and Risks Assumed (FAR analysis)-a method for examining how value is created within a global corporate group-showed that DMI GmbH actually carried out most of the high-value functions, such as quality control, logistics, and sales, which reduced the revenue of the Kenyan entity.

The tax authority rejected the FAR analysis due to insufficient evidence that the functions were genuinely performed by the Swiss subsidiary.

The KRA insisted that DMF BV was wholly owned by DMI GmbH, which had not paid Del Monte Kenya more money for the supplies of pineapple and fruit juice than the loan it gave to the Kenyan subsidiary.

‘This raised a concern on the rationality of the commercial arrangement,’ said the tribunal.

The tribunal found that Del Monte Kenya suppressed profits by charging only a 4.83 percent mark-up on sales to its Swiss counterpart, Del Monte International GmbH. It noted that the Kenyan subsidiary handled nearly all operations, from farming pineapples and processing juice to managing essential functions like quality control, logistics, sales, and customer relations, siding with the KRA’s assessment.

The decisions come amid a government drive to rein in tax avoidance by multinationals, particularly profit shifting through transfer pricing structures that move income to lower-tax jurisdictions despite the underlying economic activity taking place in Kenya. Transfer pricing is about how much companies charge each other when they are part of the same group.

Multinational companies operate in many countries but want to pay the least tax possible overall. Because they trade with themselves across borders, they can influence where profits appear by adjusting internal prices.

The KRA requires companies to develop transfer pricing policies that price related-party transactions as they would between independent firms, a principle known as arm’s length, and one intended to prevent profits from being shifted out of Kenya to low-tax jurisdictions.

The rulings form part of a broader push by the government to curb tax avoidance by multinational firms, particularly schemes that involve shifting profits out of Kenya through manipulated transfer pricing arrangements, where income is booked in lower-tax jurisdictions despite value being created locally.

The measures are aimed at preventing multinationals from understating profits earned in Kenya by selling goods cheaply to offshore affiliates or loading local entities with inflated costs. By tightening rules around intra-group sales, services and financing, the government is seeking to ensure profits are taxed where real economic activity takes place.

In the Finance Act 2025, the government introduced Advance Pricing Agreement (APA) framework, allowing companies and the KRA to agree in advance on transfer pricing methods for complex related-party transactions.

Kenya has also expanded country-by-country reporting requirements, giving tax authorities visibility into where multinational groups generate profits and pay taxes globally.

In addition, proposals such as the minimum top-up tax-aligned with global anti-BEPS standards-are designed to discourage shifting income to low-tax jurisdictions. Collectively, these measures signal Kenya’s intent to align with international best practice and close loopholes used to erode the domestic tax base.

Walk into many offices in Nairobi, Mombasa or Kisumu today and you are likely to sense a quiet heaviness. Employees are present, chasing targets and sitting through meetings, yet a subtle fatigue hangs in the air.

They are working, but many are struggling. The strain is not loud. It shows up in tired eyes, short tempers, slower creativity and the occasional resignation letter framed as ‘seeking growth opportunities.’

This is a workforce dealing with the rising cost of living while carrying family responsibilities that have grown heavier over the last six years. Food prices, house, rent and transport have risen, taking a larger share of salaries. School fees and medical expenses drain savings.

In a (2023) Cigna Healthcare 360° Global Well-Being Survey Kenya report, Kenya scored 60.6 out of 100 on the well-being index, compared to the global average of 62.9.

Alarmingly, 95 percent of respondents in Kenya reported experiencing at least one symptom of burnout, and 93 percent acknowledged high levels of stress. A separate survey by the Institute of Human Resources (Kenya) found that 62 percent of professionals in Nairobi felt overwhelmed by work.

Amidst these findings the workplace is still expected to run at a set desired pace. A mid-level professional in a local logistics company offered what many feel, ‘the office needs focus and drive. Home needs support and money.

I am doing both, but I am constantly broke.’

Managers may notice reduced enthusiasm, quieter meetings, lower initiative or dips in productivity. The risk is misinterpreting this as disengagement or poor attitude. In reality, many employees are experiencing what psychologists call functional burnout, the ability to keep performing, but without emotional reserves. People don’t break, but simply fade.

Employers risk treating a well-being issue as a performance issue, and in doing so, they risk losing good people.

The leadership challenge is not just financial. Costs of operations are rising, competition is tightening, and organisational survival demands caution. This calls for staff motivation and support beyond the pay, and an organisational culture shift.

How are companies responding? Some are examining how work is structured and how people are led, not how work is managed. Some have reviewed workloads to eliminate duplicated reporting, unnecessary approvals and ‘busy work’ that drains time without adding value.

Others have begun training supervisors in soft and people management, recognising that technical skills alone don’t create a great leaders.

Changing workings hours from a rigid 8 to 5 schedules to staggered reporting hours in selected departments will allow employees to manage commuting time, caregiving and rest. Within months, companies are likely to note a rise in customer service scores, a drop in sick off days, and absenteeism. The organisations will not have solved employees personal problems, but avoided adding to them, because, people do not need the workplace to solve all their problems. They need the workplace not to add to them.

Support can also take the form of re-designing workload and expectations. Many supervisors are technically competent but lack people management skills.

Short, targeted training in emotional intelligence, conflict resolution, feedback and coaching can shift the workplace environment. This matters because a workforce under strain can slowdown company growth.

In a regional study by mHub Africa, over 80 percent of East African employees reported moderate to extreme stress in 2023, with 48 percent saying stress had reduced their productivity and 51.6 percent citing difficulty concentrating.

That kind of decline, if mirrored in Kenya’s major sectors like banking, manufacturing or healthcare, translates into real costs, like lower output, more errors, pilferage, longer delivery times, weakened customer loyalty and higher health-related absenteeism and costs.

And behind these trends are human stories. A nurse working double shifts to make ends meet and pay college fees. A junior accountant planning for rent, school fees and medical bills for ageing parents, or struggling with gambling and alcohol addiction.

A young professional repaying a student loan while supporting younger relatives. A manager outwardly composed but privately struggling to meet family needs, and maintain an ego. These are not isolated cases. They are the lived reality of many Kenyan workers.

Those that overlook the quiet strain may find themselves managing excess staff turnover, low staff productivity, absenteeism, rise in misconduct cases, or pilferage, high court of equipment maintenance.

On a positive note, the workforce is still showing up. The challenge facing leadership today is how to adjust and effectively responds to these changes that affect employee well-being and organisational performance.

Company leadership and HR Managers collaboration with mental health professionals is critical in sensitising employees on mental health, and developing employee assistance programmes at workplaces.

About a quarter of workers in 26 counties could be non-existent, special audits on payrolls have revealed, raising concerns of possible fraud that may have cost taxpayers billions of shillings.

This follows the inability of public auditors to trace 25.3 percent of workers sampled to verify their existence, despite several attempts to reach the 596 employees who were paid Sh978 million over just three years.

In separate audits of counties’ payroll management, Auditor-General Nancy Gathungu sampled 2,354 workers from payrolls and asked county governments to present them for physical verification. Of these, 596 did not turn up.

The failure by more than a quarter of the sampled employees to physically present themselves left auditors unable to verify whether they were genuine staff or ghost workers, sounding the alarm that Sh978 million paid to them as salaries over three years to June 2024 could have been lost.

An extrapolation of the data based on the counties’ overall wage bill shows they could have paid as much as Sh33.5 billion to non-existent staff in the 2024/25 fiscal year alone, if the audit findings cut across their total workforce.

The Controller of Budget (CoB) reported that in the year ending June 2025, the 26 counties spent Sh132.2 billion on salaries.

Machakos ghost workers

Questioning the authenticity of county payrolls, the Auditor-General revealed that Machakos County had the highest number of suspected ghost workers, with more than half of employees summoned by auditors failing to appear.

‘The Special Audit requested 44 employees from the County Executive to present themselves for physical verification. However, 23 employees did not avail themselves for the exercise, despite multiple attempts to reach out to them,’ Ms Gathungu said of the Machakos County audit.

‘During the period under review, the 23 employees collectively received a gross salary amounting to Sh75,765,585. These employees may not exist, presenting the risk of irregular or fraudulent payments.’

Machakos, however, is just one of several counties facing the problem of suspected ghost workers, where employees appear on payrolls and draw salaries but do not report to work.

In Mandera and Kajiado counties, for instance, more than 49 percent of employees sampled from payrolls to verify their authenticity were no-shows.

Auditors sampled 189 workers in the Kajiado County Executive, out of whom 94 did not turn up. The employees who failed to appear pocketed Sh82.7 million in salaries over the three-year period, the public auditor said.

In Mandera County, 49 out of the 99 workers sampled for verification also failed to appear, raising concerns over the prudence of Sh112 million paid to them in salaries over three years.

The Auditor-General made the requests to verify the authenticity of staff on county payrolls between December 2024 and February last year.

She said that 30.3 percent of sampled workers in Nairobi County could not be traced, as was the case for 33.7 percent in Samburu County, 38.2 percent in Nandi County, and 28 percent each in Mombasa and Kakamega counties.

‘The letter requested 89 employees to present themselves for physical verification. However, 27 employees did not present themselves, despite multiple attempts to reach out to them. During the period under review, the 27 officers collectively received a gross salary amounting to Sh47,552,597,’ she said of the Nairobi County audit.

In Kiambu County, the public auditor was unable to trace 21 out of a sample of 106 staff for verification of their existence, although the 21 pocketed Sh67.8 million in salaries over three years.

A total of 596 employees who failed to prove their existence pocketed Sh978 million in salaries between July 2021 and June 2024, representing an average monthly salary of Sh45,582 per worker over the three years.

Higher salaries

Among the unverified workers, those in Baringo County pocketed the highest monthly salaries, averaging Sh130,143 each and totalling Sh23.4 million for the five employees involved.

The 34 workers in Nandi County were also paid an average of Sh109,515 monthly over the three years, while the three untraced workers in Isiolo County pocketed an average of Sh102,303 per month.

The public auditor said the failure by employees to appear for physical verification casts doubt on the authenticity of payroll records, raising the risk of irregular or fraudulent payments, ‘including paying salaries to staff who do not offer services to the County Executive.’

The findings come amid further revelations that 41 counties hired 27,284 workers over the three years, with auditors raising alarm over the lack of recruitment plans and budgets during the hiring spree, exposing counties to the risk of overstaffing.

County governments had a combined workforce of 226,500 employees by 2024, according to the latest Salaries and Remuneration Commission (SRC) data.

The SRC reported that counties’ wage bill hit Sh215.08 billion in the year ending June 2024, after growing by Sh12.88 billion from the previous year.

The public auditor also revealed several instances where employee records held by Chief Officers differed from those in the Integrated Personnel and Payroll Database (IPPD), exposing possible cases of ghost workers.

‘Comparison of the staff lists countersigned by various Chief Officers with staff registers from the IPPD system established that there were 177 employees who appeared in the Chief Officers’ lists but not in the IPPD. Further, 460 employees were in IPPD but not in the lists provided by Chief Officers, and collectively received Sh205,106,394.80 in earnings in 2023/24,’ Ms Gathungu said.

The Auditor-General also faulted the use of manual payrolls across several counties to process salaries, noting that the system is vulnerable to manipulation and fraud, ‘potentially resulting in unauthorised payments and disbursements to unverified personnel.’

Several counties processed salaries worth hundreds of millions of shillings using manual payrolls during the three years under review, the special audit established.

The High Court has rejected an application to suspend contempt of court proceedings against officials of Zakhem International Construction Limited for failing to pay a Sh460 million debt.

The company had argued that it was facing parallel legal proceedings from Azicon Kenya Limited, arising from the same dispute.

According to the Lebanese firm, maintaining the contempt of court case concurrently with the liquidation petition constitutes multiplicity of proceedings aimed at recovering the same debt.

This amounts to gross abuse of the the court proceedings, the firm’s director Ibrahim Zakhem said.

The court, however, noted that the application was made without seeking permission to file the matter during recess as required by vacation rules.

‘In any event, the application for stay of proceedings arising out of liquidation ought to be made in the insolvency court and not the present court,’ said the court.

The court directed that the matter be mentioned on February 24, 2026, for directions.

Azicon Kenya said in the application that there was evidence that Zakhem International was paid by Kenya Pipeline Company (KPC) but had refused to settle its debts even after being served with a court order.

‘The open contempt of court decree herein warrants the arrest and committing the directors of the Defendant to civil jail in the event that they continue to disregard the decree in contempt of court,’ Azicon said in the application.

Zakhen International Construction argued that it was extremely prejudicial to be subjected to the double jeopardy of simultaneous recovery actions in respect of the same debt.

Azicon was among the companies subcontracted by Zakhem International Construction for the replacement of the 450-kilometre Nairobi-Mombasa pipeline in 2018.

Azicon Kenya Ltd said it was subcontracted by Zakhem International for electrical, instrumentation, and telecommunication installation works.

The construction firm said that by commencing the liquidation petition, Azicon had elected the insolvency proceedings as its preferred mechanism for recovering the money.

‘The simultaneous prosecution of the instant execution proceedings alongside the pending insolvency petition gives rise to a multiplicity of proceedings pursuing the same objective or recovery of the same decretal debt from the judgment debtor,’ Ibrahim Zakhem, a director of the company.

The Kenyan firm said the contract was for $10,137,424 (about Sh1.3 billion) and Zakhem only paid about 840 million, leaving a balance of $3,560,857 (about Sh537.3 million).

The Kenyan firm said in the insolvency proceedings that Zakhem International was busy scheming and deliberately avoiding paying the debt by incorporating new companies to hide its money and assets.

Kenya is often celebrated as a regional leader in digital innovation. From mobile money to online tax systems, technology has reshaped how citizens and businesses interact with the state.

However, when it comes to financial reporting and regulatory oversight, much of the system still relies on static documents, spreadsheets and PDFs that are costly to produce, hard to analyse and easy to manipulate.

While policymakers grapple with persistent challenges around tax leakage, weak compliance and limited regulatory capacity, digital technology presents one opportunity they can leverage.

An opportunity lies in combining the eXtensible Business Reporting Language (XBRL) with emerging artificial intelligence (AI) tools.

At its core, XBRL is a standardised, machine-readable way of preparing and submitting financial information. Instead of numbers being buried in lengthy reports, XBRL tags each figure so it can be automatically analysed, compared and verified.

The emergence of AI technology on the other hand presents an opportunity to augment XBRL when paired with AI-driven analytics.

Think of XBRL as the language of financial data, and AI as the intelligence that interprets it at scale. Together, these technologies can allow regulators to move from reactive, manual review of reports to proactive, data-driven supervision.

These technologies can assist with flagging unusual deals quickly, detect inconsistencies across filings and identify emerging risks long before they crystallise into scandals or systemic failures.

If properly implemented, AI-enabled XBRL reporting can help to meet regulatory compliance and significantly cut the cost of financial reporting. It can weed out down repetitive data entry, shorten reporting cycles and eliminate human error.

Over time, companies and organisations would spend less time and money correcting mistakes and responding to regulatory queries, thus freeing up resources for productive activities. This can also be especially helpful for SMEs, which often bear a disproportionate compliance burden.

For regulators and policymakers, such as the Capital Markets Authority and the Central Bank of Kenya, which currently receive large volumes of reports that are difficult to analyse quickly or consistently.

With XBRL-based submissions, these regulators can access clean, comparable data across firms and sectors. AI tools can also be deployed to monitor trends, stress-test institutions and support evidence-based policymaking.

The tax system stands to benefit as well, since emerging evidence shows that when financial data is standardised and machine-readable, tax authorities are better equipped to track liabilities and close compliance gaps.

For the Kenya Revenue Authority, integrating XBRL-aligned financial data with AI analytics could strengthen audit selection, reduce evasion and widen the tax base without increasing tax rates. Rather than relying on blanket enforcement, resources can be targeted where risks are highest.

Globally, regulators in the United States, Europe and India have adopted XBRL and are increasingly layering advanced analytics on top of reported data. Closer home, South Africa’s Companies and Intellectual Property Commission mandated XBRL reporting in 2018.

While firms initially fretted about cost and complexity, many now report lower reporting burdens and smoother regulatory engagement.

For Kenya, implementation of iTax and eTIMS shows that large-scale digital reforms are possible when policy intent is clear and thus the country would not be starting from scratch.

The rollout of iTax and eTIMS shows that large-scale digital reforms are possible when policy intent is clear. The next step is to move beyond digitising forms into building intelligent reporting ecosystems. This could take the form of a phased approach that begins with listed companies and large institutions to refine the infrastructure and slowly expand to other sectors.

Professional bodies such as ICPAK would also have a critical role to play by training accountants and auditors in data-driven reporting and analytics.

In the public sector, the Public Sector Accounting Standards Board can align XBRL templates with IPSAS requirements, particularly for state-owned enterprises, where transparency and accountability concerns are most acute.