Category: Business Daily

The existence of a termination-by-notice clause in an employment contract does not shield an employer from statutory scrutiny under the Employment Act, the Court of Appeal has ruled.

The appellate court said employers must still justify termination and follow fair procedures, even where contracts permit termination by notice.

‘It is incumbent upon the employer to clearly state the reasons for the termination, notwithstanding the existence of a termination clause,’ the court observed.

The ruling arose from a dispute between Middle East Bank Kenya Limited and its former head of operations and information technology, Hellen Waseka.

Ms Waseka was hired on a four-year fixed-term contract starting in November 2009, with responsibility for bank operations, IT systems and regulatory compliance.

In February 2012, she was summoned to a meeting with the bank’s managing director. She later told the court that she was verbally dismissed without a hearing and accused of failing to disclose anomalies to external auditors.

Four days later, the bank issued a termination letter giving three months’ notice. It subsequently summarily dismissed her, alleging absconding duty and unauthorised access to bank premises, claims Ms Waseka disputed.

She filed a case at the Employment and Labour Relations Court, arguing that the termination was both procedurally and substantively unfair.

The bank denied dismissing her at the meeting with the managing director, saying it had only communicated an intention to terminate her contract.

The trial court ruled in her favour, awarding her more than Sh12 million, including compensation for the unexpired contract period.

The bank appealed, arguing that the contract allowed termination by notice and that the damages awarded were excessive and unlawful.

The Court of Appeal partially allowed the appeal, drawing a clear distinction between contractual rights and statutory obligations.

‘The law does not countenance either unfair termination or wrongful dismissal,’ the judges said, adding that termination clauses do not override the Employment Act.

The court found that Ms Waseka’s employment was terminated on February 28, 2012, when the notice letter was issued, and not during the earlier meeting.

However, it ruled that the termination was unfair because the bank failed to give valid reasons in the termination letter and did not conduct a hearing as required under Section 41 of the Employment Act.

The judges noted that allegations of poor performance were undermined by evidence showing Ms Waseka received performance bonuses in 2010 and 2011.

‘If the respondent had indeed been underperforming, it is unlikely that she would have received such financial rewards,’ the court observed.

On remedies, the appellate court faulted the trial judge for awarding salary for the unexpired contract term despite the existence of a valid termination clause.

It ruled that such compensation applies only where no termination clause exists, and reduced the award to three months’ salary as compensation for unfair termination.

The judges stressed that judicial discretion must be exercised judiciously and with clear justification.

The ruling reinforces that while employers may rely on notice clauses, they remain bound by statutory fairness requirements under Kenyan labour law.

When President Donald Trump signed an executive order on January 20, 2025, pulling America out of the World Health Organisation (WHO) membership, the decision sent shockwaves through Kenya’s health system.

Officials in Kenya quickly expressed concern as the country braced itself for potential impacts.

‘We have not yet known the implications of his (US President Donald Trump) decision because we have been partners. It is something we are thinking about now, and we are still waiting to see because he just signed the executive order, but the world is urging him to stay,’ Amos Gathecha, Principal Secretary for Public Service, said on January 28, 2025, adding that Kenya would have to find ways to cope if the US exits.

Days earlier, on January 23, 2025, the Director General for Health, Patrick Amoth, had announced plans to build stronger health partnerships with other countries. The goal is to keep programmes running while mobilising funding from diverse sources and working more closely with neighbouring countries and the African Union.

‘Collaboration with international partners is critical to ensure that our health priorities are not compromised,’ said Dr Amoth. ‘Our plea is that collectively, we are safer together as a whole world, while individual countries are at liberty to make any major decision that suits them. Following lessons learnt from most of these outbreaks, we are only safer together as one global community.’

‘Kenya has made remarkable progress in the fight against HIV/AIDS, with 98 percent of people living with HIV aware of their status and on treatment, and 94 percent achieving viral suppression. The ministry is actively engaging with other development partners and investing in local pharmaceutical manufacturing to prevent treatment disruptions.’

The US formally exited the WHO on Thursday, January 22, 2026, leaving Kenya and other nations reliant on support from the UN agency facing potential setbacks.

In Kenya, the WHO runs multiple programmes, including disease surveillance systems that monitor and track disease outbreaks across the country. These include a network of Emergency Operations Centres (EOCs) for outbreak response and Kenya’s National Influenza Centre, which tracks flu mutations and respiratory pathogens.

In immunisation, the WHO provides technical assistance for Kenya’s National Vaccine and Immunisation Programme, supporting routine childhood immunisations for diseases such as polio, measles, rubella and tetanus.

The WHO also introduced HPV and malaria vaccine programmes and works to improve immunisation data quality through partnerships with Gavi. The recent measles outbreak, which affected more than 2,900 children and killed at least 18, underscores how critical this support is.

WHO’s Neglected Tropical Diseases programmes run mass drug administration campaigns targeting 13 million children. Recently, the organisation provided $1.6 million worth of medicines and trained more than 800 healthcare workers across 20 counties for campaigns addressing lymphatic filariasis, schistosomiasis and soil-transmitted helminths. These programmes use digital health systems to track disease control efforts across affected communities.

Technical backbone

WHO’s technical assistance extends to Kenya’s Universal Health Coverage (UHC) initiatives, supporting health financing reforms, including the transition from the National Health Insurance Fund (NHIF) to the Social Health Authority (SHA). The organisation also helps strengthen primary healthcare and develop the health workforce through capacity-building programmes.

Additionally, WHO supports Kenya’s health data systems, including electronic health information platforms and the Demographic and Health Survey programme, which has already been affected by the American foreign aid freeze, hampering Kenya’s ability to collect crucial information on disease patterns.

While WHO does not directly fund HIV and TB treatment programmes-which rely primarily on PEPFAR and the Global Fund-it provides crucial technical guidance. This includes international treatment guidelines adopted by Kenya, integrated TB-HIV service delivery models, and support for surveillance systems for TB case detection, drug resistance monitoring, and HIV/TB co-infection tracking. The loss of this technical coordination could weaken the quality and standardisation of these life-saving programmes.

Historically, the US has been one of the largest funders of the WHO, with contributions ranging between $163 million and $816 million annually over the past decade.

America’s exit, however, may face a legislative challenge. Although it was the only country that reserved the right to leave the WHO when it joined in 1948, its withdrawal is governed by rules: it must give one year’s notice and settle outstanding obligations. The US has not paid the $260 million (Sh33.5 billion) it owes for 2024-2025.

WHO Director-General Tedros Adhanom Ghebreyesus warned that the US decision creates a situation in which everyone loses, as diseases do not respect borders.

‘It’s a loss for the US, and it’s also a loss for the rest of the world,’ he said. ‘Withdrawal from WHO is a loss for the United States, and it’s also a loss for the rest of the world. When I say loss, I mean it makes the US unsafe. The withdrawal makes the rest of the world unsafe. It’s not really the right decision.’

‘The US cannot be safe without working with the WHO. It’s not about money. I’m not saying money doesn’t matter, but what matters most is solidarity, cooperation, and for the whole world to prepare itself for any eventualities to a common enemy, like a virus like Covid-19,’ he emphasised.

Deal dilemma

While Kenya is yet to fully contextualise the impact of the US decision, the country has entered into a deal with the Trump administration, a move expected to fill the gap left by the withdrawal of USAid funding and cushion the country against the most severe effects of the changes.

In December, the Trump administration signed a Sh207 billion health cooperation framework to support priority health programmes in Kenya, including HIV/AIDS, TB, malaria, child health, polio eradication, disease surveillance, and infectious disease outbreak response and preparedness.

However, this came with a condition that the Kenyan government must increase its domestic health budget by Sh109.7 billion to gradually assume full financing after five years.

‘Kenyan and United States’ commitments in the Framework are thus fully aligned and mutually beneficial,’ said President William Ruto in December last year during the signing of the deal in the US. ‘Kenya welcomes this partnership and the co-investment it represents,’ said Aden Duale, Cabinet Secretary for Health.

‘The engagements that began on August 27, 2025, finally resulted in this signing today. It has been a great honour leading the Kenyan team in the negotiations with the American team. This cooperation framework is quite a departure from the past and will have a lasting impact on health for all,’ said Dr Ouma Oluga, Principal Secretary for Medical Services.

However, the deal now faces legislative challenges, with the High Court stalling its implementation over what the court termed lasting violations of citizens’ rights, stigma, and the potential misuse of personal information.

Kenya’s garment industry is primed for a key slot in a redrawn global apparel supply chain in 2026, propelled by a shift by top brands spooked by sustained US tariffs and political uncertainty across key manufacturing regions.

Analysis by the Washington-based Gold Institute for International Strategy (GIIS) said Kenya stood a strong chance of emerging as an alternative apparel supply source because its future role in US supply chains would rely less on tariff preferences and more on being a reliable, reform-oriented manufacturing partner as American firms diversify away from China.

‘Kenya has emerged as a pivotal production hub in Africa’s expanding supply chain, combining reliability, reform, and innovation to anchor US trade engagement across the continent,’ the Institute said.

‘The country’s advantage lies in a uniquely skilled, English-proficient labour force; strong vocational training systems; and a manufacturing base rooted in culturally distinctive textiles such as the kikoi and kitenge,’ GIIS added in its assessment of the global apparel supply chain.

Kenya is among the major beneficiaries of the African Growth and Opportunity Act (Agoa), which lapsed last September but is being considered by US lawmakers for renewal for three years.

The duty-free access under the preferential trade scheme, which covered more than 1,600 product categories from 32 African countries, underpinned Kenya’s rise as sub-Saharan Africa’s leading apparel exporter to the United States.

The US absorbed roughly 92 percent of those exports, underscoring both Kenya’s deep integration into US supply chains and the risks of market concentration.

Price sensitivity

Kenya has, however, largely concentrated on apparel and garment exports, with limited diversification into products such as macadamia nuts, leaving the sector heavily exposed to changes in US trade policy.

Kenya ranked fifth in utilisation rates for Agoa behind Zambia, Lesotho, the Democratic Republic of Congo and Benin in 2021, according to the latest analysis of the Agoa programme by the US International Trade Commission (USITC).

Without Agoa, the report warns, Kenyan exports would revert to most-favoured-nation tariffs, reaching the mid-teens for cotton garments and exceeding 30 percent for key synthetic products.

Manufacturers said in December that exports to the US have been slapped with full duties ranging from 15 to 42 percent since the lapse of Agoa last September, costs that are higher than earlier projected.

The GIIS report cautions that uncertainty over future access to the American market is already constraining investment decisions in the apparel sector.

While the proposed three-year Agoa extension averts an immediate shock, its temporary nature limits long-term planning by manufacturers and buyers.

This inflection point has pushed Nairobi to pursue a durable, rules-based arrangement with Washington. President William Ruto has made clear that a permanent framework is essential to protect market access and provide long-term stability for investors and workers.

‘This inflection point has pushed Nairobi to pursue a durable, rules-based arrangement with Washington,’ the report says, referencing indications by the Ruto administration that it plans to initiate talks for a long-term bilateral trade pact, following unconcluded Strategic Trade and Investment Partnership talks by the previous regime.

President William Ruto has made it clear that Kenya is seeking to shift from preference dependence towards a permanent trade framework grounded in reciprocity and predictability.

The GIIS report frames Kenya as a test case for the future of US-Africa trade policy as Washington encourages supply-chain diversification away from China.

It highlights Kenya’s key advantage in energy, with the electricity grid more than 92 percent reliant on renewable sources, cutting manufacturing emissions while stabilising power costs.

The report notes that decarbonisation and cost predictability are becoming decisive factors as global brands face pressure to clean up supply chains.

Labour governance

Labour governance is another pillar of Kenya’s post-Agoa positioning, the report adds, citing US State Department assessments showing that Kenyan labour laws largely meet international standards.

‘Workers in EPZs (export processing zones) can form and join unions, collective bargaining is widespread, and anti-union discrimination is prohibited,’ the report states.

‘Kenya’s competitiveness is reinforced by strong logistics performance. With over 105 EPZs nationwide (most privately owned and concentrated in Mombasa and Kilifi), the country’s manufacturing network anchors regional trade connectivity and export diversification.’

The Agoa treaty, initiated under the Bill Clinton administration in 2000 to integrate sub-Saharan Africa into the global economy and wean it off donations, was initially intended to last for 15 years from 2000 before being extended for a further 10 years in June 2015.

Maxwell Okello, the outgoing chief executive of the American Chamber of Commerce in Kenya (AmCham Kenya), argued last year that the programme’s success lay in preparing countries like Kenya to compete beyond preferential access.

In an opinion piece published in the Business Daily on December 14, Mr Okello wrote that trade preferences were designed to build capacity and competitiveness, not to last indefinitely.

‘The purpose of trade preferences was always to build capacity, strengthen competitiveness, and graduate to more sustainable trade models,’ Mr Okello wrote. ‘Kenya has .built world-class manufacturing capacity that can compete anywhere. The question isn’t whether we can survive without AGOA. It’s whether we’re brave enough to thrive beyond it.’

Oil marketer TotalEnergies has suffered a setback after the Environment and Land Court dismissed its case seeking to reclaim a parcel of land in Nairobi’s Makadara area from former Cabinet minister Samuel Kazungu.

The court ruled that while it has jurisdiction to hear land-related disputes, TotalEnergies and Gapco Limited wrongly filed a constitutional petition to challenge ownership of the land instead of instituting an ordinary civil suit.

The two firms had sought cancellation of the title held by Mr Kazungu and compensation for alleged violation of their proprietary rights.

TotalEnergies said it acquired the contested land from Kenya Railways Corporation in 1999 and had occupied it for 25 years, until it received an eviction notice last year.

Mr Kazungu, who is also a director at Riva Oils, said he was allocated the parcel along Jogoo Road in 2010 while serving as Kaloleni MP.

Through his lawyer, the former minister argued that the dispute was not constitutional in nature but a straightforward land ownership matter, and that TotalEnergies had wrongly invoked the court’s constitutional jurisdiction.

The court agreed, stating that although it can hear constitutional petitions relating to land rights, disputes over ownership or title should be resolved through civil suits or statutory adjudication.

‘Consequently, in observance of the principle of constitutional avoidance, the court declines to entertain the instant petition as it ought to have been brought as an ordinary civil suit,’ the judge ruled.

TotalEnergies had argued that its rights under Article 40 of the Constitution were violated, claiming the land was unlawfully created and allocated to Mr Kazungu in 2010 despite being registered in the name of Gapco Ltd.

The firm faulted the Chief Land Registrar and the Director of Survey for alienating private property and converting it into a new land registration regime without due process.

It sought declarations that the land was not available for allotment in April 2010, that the allocation to Mr Kazungu was unlawful and illegal, and payment of damages for alleged illegal possession.

Mr Kazungu asked the court to strike out the case, maintaining that he is the lawful owner of the land and that the dispute did not raise any constitutional question.

In an affidavit, the National Land Commission said records showed the land belonged to Mr Kazungu.

The commission added that it was impossible to ascertain TotalEnergies’ interest from records held by the Lands Office and the Directorate of Survey and Mapping, and said Gapco Ltd would need to substantiate its claim.

It’s the carpentry of bones that intrigued him at the start. How someone could arrive with a broken limb and, through pulling, setting, casting, be walking again months later-the bone healed. The artistry of it is astonishing. The big-bone energy. ‘Orthopaedics felt like carpentry,’ says Dr Leonard Ngunga. ‘This idea of working with your hands.’

So his first love wasn’t the heart. It was bones. The heart came accidentally-sneakily, the way hearts often do. And once it arrived, it was relentless. It wanted what it wanted. And it wanted Ngunga.

Today, after years of training and experience, Dr Ngunga, a Consultant Interventional Cardiologist, serves as Head of Cardiac Care at Aga Khan University Hospital, while also leading nationally as President of the Kenya Cardiac Society.

As the Assistant Professor of Medicine and Cardiology Fellowship Training Programme Director, he’s building one of the country’s strongest cardiology training programmes-so young doctors don’t have to uproot their families for costly training abroad, the way he once did.

He recently turned 50 and marked it by running 50 kilometres to raise Sh50 million for a multi-purpose hall at St Paul’s Kyanga Secondary School in Makueni County, where he hails from. ‘It’s aligned with the spirit of giving,’ he explains, ‘but also with the spirit of doing difficult things-going beyond what you imagine your limits are.’

That, more than anything, is what he wants to be known for-not just as a cardiologist, but as a teacher who pushes people beyond what they think they’re capable of. And so it turns out carpentry, medicine, and teaching all ask for the same thing: steady hands and the courage to try.

First, before we get into it, what happens to the heart during heartbreak for someone to declare that they are heartbroken?

[Laughs] When the body is under a lot of stress, it releases stress hormones-large amounts of them. And sometimes, those hormones have very real physical effects. That’s why, when you’re stressed, the heart can feel heavy. But the problem doesn’t start there. It starts in the brain. The brain releases the hormones, and the heart takes the hit.

In some cases, heartbreak becomes literal. There’s a condition we call Takotsubo syndrome. The name is Japanese-takotsubo is a kind of octopus trap. In this condition, the heart weakens, balloons out, and can fail. Patients can die from it. So yes-people really can die of heartbreak.

What drove you the most in high school?

Local competitions. My high school – Mang’u High – was extremely competitive. You arrive there thinking you’re a bright boy, only to discover there are many other bright boys-some even brighter. So you’re all bright.

When I did my first exam and came out number three, something clicked. I thought, wait-so I can actually do this? I can beat these boys? That was my first real excitement. From then on, I knew I could compete at the top. I found myself constantly in that space. Our culture was simple: good grades, serious reading.

So, there is nobody out there who is surprised you became a cardiologist?

No. [Laughs]. I doubt.

Was there a point in this journey that you questioned the path of medicine?

Yes, during my master’s. By that time, many of my peers were already moving ahead. Banks, NGOs, good money, marriages. Meanwhile, I was a resident-basically an intern-working extremely hard with no income. Money didn’t even feature in my thinking, but it was everywhere around me. And that’s when I start asking myself, what am I really doing here?

Still, I pushed through.

Around the time we finished, Aga Khan Hospital was expanding into cardiology, cancer, and chronic disease-areas that had been neglected as government training focused on infectious diseases and HIV. I moved into that space and got an opportunity to train in Canada. I went with my family. The children were young. It was very cold.

When I returned, I wanted to keep that spirit alive. Instead of doctors having to leave their families late in their careers for expensive training abroad, we decided to build a programme here. Today, our fellows can train locally. They don’t have to uproot their families. We now run one of the best cardiology training programmes in the country-and we’re still expanding.

Why cardiology and not, say, paediatrics?

My first love wasn’t cardiology at all. It was orthopaedics. Bones. In medical school, I’d go to the theatre and watch orthopaedic surgeons at work. Someone would come in with broken bones and we’d sit there-pull, push, fix-until eventually the leg came out straight. Then a few days later you’d see the patient walking around with a cast. I found that very fulfilling. It was very hands-on work. Almost like carpentry. That’s what attracted me.

So I applied for surgery very early-actually before I’d even finished my internship. I went for the interview too soon, and I wasn’t selected. They usually prefer older doctors who’ve had a year or two of experience outside. I failed that first interview.

The following year, instead of going back for orthopaedics, I applied for medicine. I just wanted to get into postgraduate training. Staying too long as a medical officer isn’t a good thing. I was accepted at the University of Nairobi, but at the time I was working for the government. This was around 2003. I was supposed to join the following year. In the same period, I also interviewed here-and I was accepted. So I chose the residency here, in medicine.

What are you currently trying to discover about the heart?

One of the biggest challenges we face is weak hearts. When the heart fails, treatment options are limited, and young patients die.

This isn’t new, but it’s a service we now feel compelled to introduce. As president of the Kenya Cardiac Society, I believe heart transplantation must be part of our care-because it is curative.

Every year, we lose hundreds of healthy hearts, while patients who could be saved die because theirs are failing. These two realities need to meet. A healthy heart can give someone a normal life. A family grieves a loss, yes-but there is meaning in knowing another life was saved. This has to be national.

Organ sharing belongs to everyone. It cannot be an Aga Khan programme; it must be a Kenyan one. That means a donor system, possibly an opt-out model, as used in much of Europe. These things take time and planning. A heart transplant can take someone from 10 medications to two, and return them to work and life-for a decade or more. That is worth pushing for.

What do you want to be known for?

I want to be known as a teacher-someone who pushes people beyond what they think they are capable of. Because that’s what happened to me. Someone once told me I could become a doctor. I hadn’t even thought about it. I worked hard, and here I am. Which brings me to the 50-and-50 idea-people being asked to do hard things.

I was asked to help lead a church school where I grew up, in Makueni County. I didn’t want to. But they said they had no one else, so I agreed. At first, I supported quietly. Over time, the school improved. When I eventually stepped in fully, I saw how far behind it was. It needed direction. And I thought: these children may not all be mathematicians, but they are good at something-art, drama, music. So I said, let’s build a multipurpose hall.

Then came the question of money. And I thought-if I say I’m going to run, people might say, we can help this man. [Laughs]. A year ago I never thought I could run 50 kilometres but the moment I said 50, everything changed. Forty-two stopped being the goal. And that’s what I want to push people to do-to go beyond what they think they can. If I can help more doctors stretch themselves the way I’ve stretched myself-here, with what we have-that would be my joy. We are still trying to meet the Sh50 million target.

When and why did you start running?

When I went to Canada to train, the residency was brutal. We worked day and night. We were poor, and eating became the priority. By 2009, when I joined the cardiology centre, I weighed about 90 kilos-the biggest person there, and also the poorest.

My colleagues were lean, calm, doing very serious work. That’s when I realised you don’t have to be big to do serious things. [Laughs] I joined a subsidised YMCA gym downtown and also started running. I lost 20 kilos; went from 90 to 70, and I’m still there more than 15 years later.

It changed how I saw myself. In Kenya, we were taught that success had to look a certain way-big body, visible comfort. That thinking is changing. Young men don’t carry it anymore. And that’s a good thing.

Do you have any fresh or new reflections now that you’ve got into your fifth floor?

That’s a good question. One of the reflections I’ve come to is this: you are here on your own. If something needs to be done, just do it. You don’t need anyone’s permission. But more importantly, I’ve learned the value of helping people. Whenever you help others, something interesting happens-you often find yourself helping yourself.

As a guy used to excellence, to achieving highly, what failures have you grappled with?

But beyond that, I’ve learned that education is not everything. Sometimes you fail-not at work, not academically-but in other areas of life. You grow up thinking everything works like school: you prepare, and things fall into place. Then you cross over into family life, into relationships, into non-academic spaces-and suddenly things are not that simple. I think that’s where I struggle.

I don’t think I’m very clever when it comes to family issues. I don’t think I do very well. Luckily, my wife cushions me a lot. Though sometimes she also complains that I don’t do enough of the things I should be doing. And I tell her-I honestly don’t know. I try to forgive myself.

I tell myself I’m willing to learn the things I may have missed while I was busy learning other things. But if I’m being honest, that side of life-family dynamics-I’m not very good at it. Even with my children, I’m careful. I don’t like telling them too many things. I’m afraid I may tell them the wrong things, or influence them the wrong way.

My son – Ian Ngunga – by the way, is doing very well. He achieved the highest mark in Kenya for Cambridge International for A level Biology last year. He’s in Toronto, Canada now, studying life sciences but with plans to study medicine. The truth is, I didn’t assist him much. I didn’t help him fill forms. I didn’t guide him closely. My wife did most of that. I deliberately stayed back.

Do you think you’re a good father?

That’s a question I ask myself all the time. [Laughs] Am I a better father when I’m there-or when I’m not? [Pause] And sometimes I’m only partially there. Because you can be present and still make things worse-by telling people how to do things, by interfering. I’m never completely sure about that balance.

I have three children. The firstborn is in university. The middle child is aged 17. The last one is 14. Professionally, the demands are heavy.

When do you have time for yourself?

My idea of time for myself is quiet structure. Sitting at home, planning, learning, organising my thoughts. That’s when my mind settles. Golf came later. A few years into consultancy, I suddenly had free Saturdays and realised I couldn’t just sleep in. So I took up golf. It gave me structure. It quietly disciplined me-where I go, how I drink, how I spend my time.

What do you fear?

My biggest fear is failing myself. Not achieving what I set out to do. Sometimes I look at my own goals and wonder if I was being unrealistic. We plan as if we’re invincible, forgetting how many variables life throws at us. I’m also the sole earner in my family. That responsibility adds weight.

My wife stays at home-we decided that together-because my work is demanding. So the fear is always there: what if I don’t get there?

Has golf made you a better doctor or even a better human?

[Pause] Golf put me in spaces where I met people of a different calibre and that kind of exposure matters. I believe you need to be around people who are better than you. That’s how you realise the gap-how much further you can go, how much more you can achieve.

There’s a saying: if you find yourself the best person in the room, you’re probably in the wrong place. On the course you meet people at different levels, people who are better than you in many ways. And being able to sit with them, talk with them-that’s a good place to be.

Maybe it’s me, but there’s a certain lethargy with which wait staff in some bars in Diani, Watamu, or Malindi regard you. Maybe they can tell you’re an outsider-Nairobian at worst, with their supposed ill manners and snooty attitudes. (I say their because I’m not from here. I just work here.)

Play Video

Take my recent visit to Apero Bar in Diani. I hate to be that guy who notices these things, but I was the only Black male client. The others who looked like me were the typical svelte girls with intense eye contact you find in Diani bars. Everyone else was Caucasian. Most were dining, talking softly, sipping wine.

I had finished a triathlon the day before. My friends had gone back to Nairobi, leaving me with a few days to burn before my children joined me. Most evenings, I’d slip into a different bar after dinner for one drink before retreating to my hotel.

At Apero, I took a seat at the bar, my back to the room. The wait staff treated me like a vase without flowers. Not that I was bored. I sat there thinking about my cats back in the village-one social, the other permanently hiding under bushes and the guinea fowl coop.

After what felt like a long time, a waitress, polishing a glass, asked if I had been served. I had several sarcastic responses queued up, but instead said, ‘No, actually. It would be nice-if it’s no trouble at all.’ She looked nonplussed; bored even. She’d just had a baby-I knew this because a leather-faced white man two seats away had asked her how the baby was doing.

It didn’t help that I ordered sparkling water. I must have dropped down to the bottom of the pecking order. But I suddenly didn’t feel like committing to a whisky. The air was faintly unfriendly. I finished the water quickly. The bill arrived even faster.

Outside, the night air was cool as I walked down to Funky Monkey.

They are nicer.

The Competition Authority of Kenya (CAK) has approved the acquisition of Kenya’s Paramount Bank by Nigeria’s Zenith Bank Plc, on condition that the Lagos-headquartered lender retains current staff for at least a year.

The parties were obligated to disclose the transaction to the competition watchdog, as the impending deal qualifies as a merger under the Competition Act.

In its determination, the CAK stated that the transaction would not prevent competition within the banking industry or result in negative public interest concerns.

‘Premised on the foregoing, the Authority approved the proposed acquisition of 100 percent shareholding of Paramount Bank Limited by Zenith Bank Plc, on condition that the acquirer retains the target’s 78 employees for at least 12 months following the completion of the transaction,’ CAK said in a statement.

Zenith Bank, the second-largest lender by asset base and market capitalisation in Nigeria, sought regulatory approval in November 2025 to acquire a 100 percent stake in the local lender, marking its entry into Kenya and the East Africa region.

The lender is set to become the fourth bank from Nigeria to enter the Kenyan market after United Bank of Africa (UBA), Guaranty Trust Bank (GT) and Access Bank.

The competition regulator said the transaction is expected to strengthen the financial position of the small lender, ensuring its compliance with enhanced core capital requirements.

The lender raised Sh332 million from its existing shareholders in November through a rights issue and pushed its core capital above Sh3 billion, the first hurdle of the enhanced core capital requirements set by the Central Bank of Kenya (CBK).

Paramount’s core capital rose to Sh3.11 billion at the end of September 2025 from Sh2.75 billion in June.

Banks’ core capital requirements were revised upwards from Sh1 billion to Sh3 billion as at the end of December 2025, Sh5 billion by the close of 2026, Sh6 billion by the end of 2027, Sh8 billion in 2028 and Sh10 billion by December 31, 2029.

Paramount Bank was classified as a Tier III bank and ranked 33rd out of 39 banks at the end of 2024, according to an industry analysis by CBK.

In addition to offering banking services, Paramount Bank controls Paramount Bancassurance Intermediary Limited and PB Capital Limited, an investment banking subsidiary.

Kenya Pipeline Company (KPC) has promised investors a dividend payout of 50 percent of net profits as it prepares to list on the Nairobi bourse, signalling an effort to position the State-owned fuel transporter as an income-generating stock.

The dividend commitment is outlined in the company’s disclosures to investors ahead of the initial public offering (IPO) that will see the firm listed on the Nairobi Securities Exchange (NSE), raising Sh106.31 billion for the government, which is selling a 65 percent stake.

KPC says the 50 percent payout will be declared and paid, subject to the availability of distributable reserves and adequate liquidity. The payment will also be in compliance with applicable funding covenants, statutory requirements and regulatory approvals.

‘Subject to these considerations, the company commits to distributing fifty per cent of its net earnings as dividends,’ says KPC in the information memorandum.

The pledge, which will position it among generous dividend payers on NSE, is expected to appeal to yield-seeking investors. However, the payout is lower than the distribution it has been making to the National Treasury as a State corporation.

The firm reckons that retail investors in the Kenyan equities market are predominantly income-driven and place ‘significant’ emphasis on companies with a demonstrated ability to deliver sustainable and growing dividend payouts.

‘Accordingly, a clear, robust and transparent dividend policy is a key management tool in sustaining investor confidence and preserving the viability of equity markets as a long-term source of capital for optimal capital budgeting. The company intends to adopt a sustainable and progressive dividend policy,’ said the firm.

KPC has been making payouts to the government, including in the year ended June 2025, when it paid out Sh5.9 billion or 78.8 percent of its Sh7.49 billion net profit as dividends to the State. In the previous year, the firm paid the State Sh7 billion or 94.5 percent of Sh7.41 billion net earnings.

KPC, which operates the country’s fuel pipeline network, has in recent years emerged as one of the most profitable State corporations, boosted by rising fuel consumption, efficiency gains and stable tariff revenues.

The firm has consistently reported multi-billion-shilling profits, strengthening the case for a public listing. The planned IPO is part of the government’s broader privatisation agenda aimed at raising capital, deepening the NSE and reducing reliance on public borrowing.

Under the proposal, the State is seeking to offload 11.81 billion KPC shares at a price of Sh9 per unit. The IPO opened on Monday and will close on February 19, 2026.

A generous dividend policy is seen as a key selling point for the offering in a market where several recent listings have struggled to deliver immediate returns.

KPC’s business model is anchored on regulated tariffs charged to oil marketers for transporting fuel from the port of Mombasa to inland depots, including Nairobi, Eldoret and Kisumu.

The firm has enjoyed increased demand for its services in line with steady growth in petroleum consumption in the country and regional transit volumes.

However, KPC also faces key capital expenditure requirements as it expands storage capacity, upgrades aging infrastructure and invests in new pipelines. Management has indicated that dividend payments will be balanced against the need to fund long-term investments and sustain operations.

A six-year legal fight between fund manager Cytonn and the Capital Markets Authority (CMA) is set to drag on after the High Court ruled that a 2019 enforcement order still raises live constitutional and commercial questions, despite new market rules.

The High Court rejected an attempt by the CMA to terminate the case on grounds that it had been overtaken by changes in the law governing collective investment schemes.

The dispute dates back to December 2019, when the State regulator directed Cytonn Asset Managers Limited to suspend onboarding new clients and unit holders unless it secured a new trustee by the end of that year. The directive warned that failure to comply would trigger sanctions under the Capital Markets Act.

Cytonn, its chief executive officer Edwin Dande and Cytonn Unit Trust Funds challenged the order in court, accusing the regulator of acting maliciously, unlawfully and on what they described as ‘erroneous or non-existent’ legal provisions.

Central to the petition were provisions in the Capital Markets (Collective Investment Schemes) Regulations, 2001, which limited trusteeship to banks and financial institutions and governed how trustees could resign or be replaced.

Cytonn argued that those rules were discriminatory, created governance gaps, and violated constitutional rights to equality, property, fair administrative action and a fair hearing.

While the case was pending, the regulator repealed the 2001 framework and introduced the Capital Markets (Collective Investment Schemes) Regulations, 2023, expanding eligibility for trustees and setting clearer procedures for their replacement. On that basis, the authority asked the court to strike out the case as moot.

The court partly agreed, holding that prayers seeking declarations on the constitutionality of the repealed regulations had ‘been overtaken by events and are therefore moot.’

However, it distinguished between defunct rules and past regulatory actions.

‘The directive of December 20, 2019, remains a live controversy,’ the judge ruled, adding that repeal of the regulations ‘does not extinguish the alleged violation of rights occasioned by the directive.’

Citing Supreme Court precedent, the judge emphasised that courts should avoid abstract or academic disputes but retain discretion where real consequences persist. A matter is moot only when it has ‘no practical significance or effect on the rights of the parties,’ he said.

In this case, the petitioners continue to seek declarations, compensation and costs arising from the 2019 directive, remedies the court noted can only be granted through a full hearing.

The regulator had also argued that the legality of the directive had already been settled in an earlier 2020 ruling. The court was unpersuaded, finding that constitutional claims flowing from the directive still required determination.

The preliminary objection was dismissed, clearing the way for the case to proceed on its merits.

The decision keeps alive the legal challenge, with potential implications for regulatory accountability and investor protection in Kenya’s capital markets.

Absa Bank Kenya, Citibank N.A. Kenya and Middle East Bank made the largest cuts in borrowing costs in 2025, as most banks extended relief to borrowers.

Absa ended December 2025 with its average lending rate at 13.75 percent, representing a 5.2 percentage points cut from 18.95 percent in December 2024 as per an analysis of data published by the Central Bank of Kenya (CBK).

Citibank and the Middle East, meanwhile, cut their interest rates by 5.16 percentage points and 4.93 percentage points, respectively, to 10.17 percent and 17.07 percent.

Thirty-four out of the 38 banks reduced their loan costs in the review period. Top lenders Equity Bank Kenya and KCB Bank Kenya reduced their average lending rates by 1.11 and 1.62 percentage points each to 14.96 percent and 15.24 percent, respectively.

Citibank closed the year with the lowest overall interest rate at 10.17 percent, ahead of Stanbic Bank Kenya (11.8 percent), Standard Chartered Bank Kenya (12.69 percent), and Ecobank Kenya (12.77 percent).

Raised rates

Four small commercial banks, however, bucked the trend by raising their overall lending rates despite pressure to bring down the cost of borrowing, including successive cuts to the CBK benchmark rate.

The four banks include UBA Kenya and Kingdom Bank, whose average weighted interest rates rose by 1.18 and 2.01 percentage points, respectively.

Consolidated Bank of Kenya and DIB Bank Kenya increased their lending costs by 0.54 and 0.03 percentage points, respectively.

The lending rate at Kingdom Bank rose from 14.11 percent in December 2024 to 16.12 percent in December 2025, while borrowing costs at UBA Kenya, Consolidated Bank, and DIB rose marginally to 15.87 percent, 14 percent, and 16.54 percent, respectively.

The four banks defied the overall direction of interest rates in a year that saw the CBK lower its benchmark rate from 11.25 percent in December 2024 to nine percent currently.

CBR and Kesonia

The regulator also unveiled a revised loan pricing regime beginning on December 1, 2025, where the cost of all new and existing loans is to be based on either the Central Bank Rate (CBR) or the overnight lending rate between banks (interbank rate), which has been renamed as the Kenya Shilling Overnight Interbank Average (Kesonia).

The banks apply a premium, depending on a customer’s creditworthiness, to the base rate to arrive at the effective lending rate.

CBK Governor Kamau Thugge criticised banks in 2025 for failure to cut interest rates in line with the reduced benchmark, but expected the new regime to result in lower borrowing costs from commercial banks.

‘There should be no excuse by banks for whatever reason. There have been quite a number of excuses. This time, there won’t be an excuse. Once we lower the benchmark rate, banks should also lower their rates,’ Dr Thugge said in October last year.

Banks began announcing interest rate cuts in late November ahead of the start of the new pricing regime, with UBA Kenya disclosing that it had cut its base lending rate to 11.78 percent from 14.79 percent on both its new and existing loans.

KCB, Absa, and Diamond Trust Bank (DTB) also issued notices to their customers and the public on their implementation of the new pricing model.

The CBK disclosed in December that most banks adopted the CBR as the new benchmark for loan pricing against earlier protests about the use of the apex bank’s policy rate.

The regulator allowed banks to use the CBR as an alternative to Kesonia in addition to a combination of both benchmarks as deemed necessary.

‘About 48 percent of banks have used the CBR, while another 34 percent are using both the CBR and Kesonia, while the remainder are banks that have chosen to use Kesonia alone,’ Dr Thugge said on December 10.

‘All commercial banks have submitted their risk-based pricing formulas, which they will be implementing, and we expect this to be a transparent process.’

Private sector credit

The lower industry lending rates have revitalised the growth of private sector credit by increasing the demand for loans.

Commercial banks’ lending to the private sector accelerated in November to 6.3 percent, marking the fastest pace in 19 months as improving credit conditions and lower borrowing costs spurred demand.

The last time the pace of growth exceeded this level was in April 2024 at 6.6 percent.

The latest pace of credit growth marks a contrast to the contraction of 2.9 percent in January.

The CBK attributed the growth in private sector credit to the falling interest rates.

‘Growth in credit to key sectors of the economy, particularly manufacturing, building and construction, trade and consumer durables, remained strong in November. This mainly reflects improved demand for credit in line with the declining lending interest rates,’ the CBK said in a statement last month.

Lower commercial bank interest rates have also reduced loan defaults, with the ratio of gross non-performing loans (NPLs) falling to 16.5 percent in November 2025 from 16.7 percent in October and 17.6 percent in August.

‘Decreases in (defaults) were noted in the mining and quarrying, energy and water, personal/household, and transport and communication sectors. Banks have continued to make adequate provisions for the NPLs,’ the CBK added.

The revised risk-based loan pricing model is set to be fully operational by March 2026, with banks applying the regime on new loans from December 1, 2025, and by February 28, 2026, for existing facilities.