Category: Business Daily

The Employment and Labour Relations Court has upheld NCBA Bank’s decision to dismiss an assistant operations officer linked to suspicious transactions, including unauthorised access to customer accounts, interaction with suspected fraudsters, and receipt of improper benefits.

The court said the banking sector demands strict integrity standards, adding that lenders can rely on digital audit trails such as account access histories, transaction records and CCTV-linked timelines to discipline staff implicated in fraud.

The court found that Simon Kamande’s sacking in 2017 was valid and followed a fair disciplinary process, bringing to a close a dispute that arose after the bank flagged irregular account activity tied to suspected fraud.

The case dates back to investigations at Commercial Bank of Africa, NCBA’s predecessor, where Mr Kamande worked as an operations assistant at the Mama Ngina Street branch.

Fraud trail

The probe was triggered by a suspicious email in December 2016 instructing a transfer of Sh890,000 from a customer’s account.

A bank officer flagged the discrepancy after noting that the email address differed from the customer’s registered contact. The customer denied issuing the instructions, prompting a wider investigation by the bank’s security unit.

The probe uncovered a trail of suspicious transactions involving multiple accounts.

Court records show Mr Kamande accessed customer accounts without instruction and at unusual hours. System logs indicated he viewed account profiles, including balances and signing mandates, using customers’ base numbers even when no customer was present.

In one instance, he accessed an account at about 5:22 pm, after official banking hours, when CCTV footage showed the banking hall lights were off and he was alone at the customer service desk.

His digital activity placed him at the centre of transactions later flagged as fraudulent. Investigators traced multiple irregular transactions involving accounts linked to suspected fraudsters.

The court found he viewed sensitive account details without justification, interacted with suspected fraudsters within bank premises, and received small cash benefits from one of them.

He was also accused of processing a cheque payment without verifying signatures against account mandates, and of sending a threatening WhatsApp message to a teller group.

‘The claimant’s digital prints were found in all the above fraudulent transactions,’ the court said, adding this gave the bank ‘reasonable grounds to believe that the claimant was directly and indirectly involved in aiding and abetting the fraudulent activities.’

Due process

The dispute escalated in January 2017 when Mr Kamande was summoned to the bank’s security department instead of reporting to his branch. He was investigated, suspended and later subjected to a disciplinary hearing.

Mr Kamande denied wrongdoing, claiming he was coerced into providing personal data, including phone logs and messages, during the probe, and that the process was flawed and discriminatory. He sought reinstatement, damages and retention of a subsidised staff loan rate.

The court rejected these claims, finding no evidence of coercion, bias or discrimination. It ruled that the bank conducted fair investigations and accorded him a proper hearing before termination.

‘The claimant was subjected to fair investigations and was fairly treated at a disciplinary process,’ the court said, adding that the misconduct could have justified summary dismissal.

The court stressed that banks operate in a highly sensitive environment and must maintain strict integrity standards. It cited precedent affirming that staff whose conduct points to fraud risk losing their employment.

‘Banks are custodians of their customers’ funds and other valuables of a personal nature and operate in a highly sensitive environment,’ the court said.

‘To maintain customer confidence, banks and their staff are required to uphold a high degree of integrity, prudence and financial probity.’

The ruling affirms the use of digital audit trails in internal probes, with system access records forming key evidence linking employees to suspect transactions.

The court agreed that Mr Kamande’s conduct breached internal policies and eroded trust, justifying his dismissal.

The court also dismissed his claim that the termination was discriminatory, finding no evidence linking the termination to his gender.

It rejected his demand to continue servicing a staff loan at concessional rates after dismissal, upholding the bank’s position that such loans convert to commercial rates once employment ends.

The court noted that preferential terms cannot apply where termination arises from an employee’s own misconduct.

Mr Kamande’s additional claims regarding withheld benefits and the contents of his certificate of service were also dismissed, with the court finding no basis to interfere with the bank’s actions.

Raymond Kageni had always assumed that chamas were women’s affairs and had never imagined joining one. However, his elder brother, John, enrolled him in a group that he chaired.

Mr Kageni’s reluctance stemmed from what he had observed growing up – that chamas were for women and that money was a private matter not suited to group intervention. That was 10 years ago.

Today, he is an active member of a men’s chama dominated by taxi drivers who are not affiliated with cab-hailing apps. He credits the group with helping him develop a strong savings culture.

Mr Kageni is one of a growing number of professional Kenyan men joining chamas to build savings and expand their social networks.

While formal financial instruments can help individuals save regularly, they lack the group accountability that chamas foster.

‘For me, it is the discipline of saving. I use it to save for school fees in Terms One and Two. It’s not so much about the investment return,’ he said.

In his chama, each of the 75 members commits to saving a minimum of Sh2,000 every week for the year. Contributions must be sent by 3 pm every Friday, and a daily penalty of Sh200 is imposed for delays until a member catches up.

Members can apply to adjust their weekly pledge during the year. However, reducing the amount incurs a weekly fine of Sh2,000, while any increase must be backdated to the start of the year.

Every Friday at 3 pm, a rota detailing contributions made and penalties charged is shared on the group’s WhatsApp platform.

‘We have a wide array of members, with some contributing the minimum and others contributing as much as Sh30,000 per week,’ said Raymond.

Discipline edge

Members attribute the strong savings culture in chamas to group accountability, which is often lacking in formal financial institutions, where one can opt out without pressure.

‘Without commitment, a savings culture is very difficult to establish. We have a whip whose role is to encourage us to save,’ said Anthony Wanjama, a lawyer who has been a member of a men’s chama for six years.

He admits that their contribution structure is aggressive and often leads to many members dropping out during the year. The group starts with contributions of Sh5,000 in the first week, increasing by Sh500 each week, accumulating to a total of Sh950,000 annually.

Most men’s chamas prefer to keep their funds in liquid assets, distributing savings at the end of the year to mark the start of a new cycle.

Traditionally, chama proceeds were shared through merry-go-round systems or invested in fixed assets such as land. However, many men’s groups are now opting for money market funds.

‘Fixed assets tie you down, especially in the case of a member defaulting. How do you remove them or refund their investment? It becomes a headache,’ said Mr Wanjama. ‘With cash, it is easier to divide the money based on individual contributions.’

Ownership of physical assets can also present legal and administrative challenges. Many women’s chamas are registered as self-help groups, which are not permitted to own property. As a result, assets are often registered in the names of officials, which can create complications, especially in the event of death.

Mr Wanjama notes that registering as an investment company can also be problematic, particularly when removing an unwilling director.

‘It has become an unwritten policy at the registry that a resigning director must submit a letter or confirm their resignation over the phone. So you can imagine the barriers if someone refuses to leave,’ he said.

Consequently, many groups are turning to money market funds offered by insurance firms, which allow for group investment while recognising individual contributions.

Hybrid models

Samuel Kuria’s chama contributes Sh12,500 weekly, and the group has chosen to invest in a Sacco regulated by Sasra. The Sacco offers a dividend of 20 percent on share capital, making it attractive and providing liquidity in case the chama exits.

Of the Sh12,500 contributed by each member, Sh5,000 is distributed in a merry-go-round format, while Sh7,500 is invested. These distributions begin after three months.

Unlike traditional women’s chamas, which emphasise regular physical meetings, men’s chamas rarely meet, making their relationships more transactional and their social obligations more structured.

Mr Kageni’s group, for example, meets once a year on Jamhuri Day to share a meal and distribute cheques.

‘The contributions are also a way of checking in on members. If someone misses a payment, we follow up,’ he said. The group was initially formed by airport taxi drivers to keep track of one another while working long, irregular hours.

Chamas also set aside funds for social support, particularly in cases of bereavement involving immediate family members.

However, male chamas tend to be cautious about internal lending, which is often cited as a source of conflict when members default. Groups that allow borrowing typically cap loans at a member’s contribution to limit exposure.

Mr Kageni said their group opens borrowing after the third month at an interest rate of 20 percent.

‘If a member borrows more than their contribution, they are charged an additional five percent,’ he said.

Despite their differing structures and bylaws, men’s chamas are steadily gaining traction, particularly among professionals seeking disciplined savings mechanisms in a tough economic climate.

The tent is set up before sunrise, and by 8 am, the queue stretches past the church gate. Nurses in branded scrubs are checking blood pressure. A doctor reviews blood sugar readings at a folding table, and all services are offered free of charge.

By nightfall, the hospital has compiled a database.

Across the country, private hospitals are using free medical camps as one of the most effective and least scrutinised tools for acquiring clients, using them as the first step in a long-term commercial relationship.

Client pipeline

Running a one-day medical camp can cost up to Sh200,000 for smaller hospitals, depending on the location, number of days and target services.

According to Emmanuel Adika, a business development and growth manager at a Nairobi-based hospital group, this covers regulatory licensing, transport, staff overtime, consumables, and branded materials.

For larger operations or more remote deployments, the figure is even higher. However, hospital executives do not measure success by what the camp costs, but by what it generates.

For example, a patient who is newly diagnosed with hypertension and requires quarterly consultations, annual laboratory work, and regular medication reviews generates an estimated Sh80,000 to Sh200,000 in annual revenue. Three such patients recover the full cost of running the camp, and 30 make it a high-margin investment.

‘We look at it the same way a bank looks at a community activation,’ said a marketing director at a Nairobi-based hospital who asked not to be named since he is not allowed to officially speak on behalf of the hospital. ‘You are not selling a product. You are opening an account.’

According to Mr Adika, the real metric is the conversion rate: how many of the people screened on the day go on to become paying patients?

‘These camps are purely strategic. We look at how many people we can convert into long-term patients through bookings, follow-ups, and continued care.’

The account-opening process begins the moment a patient registers. Their name, phone number, physical address, and screening results are entered into a database that is directly linked to the hospital’s customer relationship management system.

This freely collected data becomes the commercial engine of everything that follows.

Within 48 hours, engagement begins. The patient receives a text message or phone call informing them that their results have been flagged and a follow-up assessment is recommended. An appointment is then offered at a discounted rate, which is valid for 30 days.

‘The first visit is the hardest to arrange,’ said the marketing director. ‘Once a patient has walked through your door and trusted you with their health, the relationship is established.’

Hypertension and diabetes tests form the basis of every camp roster because both conditions are chronic and require lifelong management. They also remain severely underdiagnosed across sub-Saharan Africa.

The World Health Organisation estimates that fewer than half of hypertensive adults in the region are aware of their condition. In Kenya, about 24 percent of adults are hypertensive.

A positive screen does not merely identify a sick person. It identifies a patient with a long and monetisable clinical future.

Meanwhile, eye tests and dental checks operate differently: when a person is told they need glasses or have a cavity, they are immediately ready to take action, and the facility that provided the diagnosis has a natural first-mover advantage.

Cancer awareness screenings such as Pap smears, clinical breast examinations, and Prostate-Specific Antigen tests carry a weight that operates on an entirely different level.

‘No one forgets where they were told they might have a problem,’ said a senior oncology nurse at a Nairobi hospital. ‘If we are the ones who found it, the patient wants us to be the ones who manage it.’

Where outreach is scheduled is equally critical for a facility.

Hospital strategy teams study population density, disease burden data, proximity to rival facilities, and the socio-economic signals embedded in physical infrastructure, such as newly tarred roads, recently electrified estates, and rising rental values, which indicate that communities are beginning to transition from public to private healthcare.

A camp pitched five kilometres from a competitor is as deliberate a territorial claim as any billboard.

‘We don’t pick locations randomly,’ said the marketing director. ‘We go where the patients are, before someone else does.’

In underserved and highly competitive urban areas, the outreach serves as brand-building that cannot be replicated by conventional advertising.

For instance, tents carry hospital logos, and patient files are given to patients to take home, with appointment lines and the hospital’s name printed on their covers. Take-home bags contain paracetamol sachets, health leaflets, and branded pens.

Photographs are posted on social media the same afternoon, extending the event’s reach to thousands of people who did not attend.

Ethical concerns

However, the model is not without critics, and the sharpest concerns are structural.

Wanjiru Kamau, a public health physician, says that a camp flagging borderline readings (such as a blood pressure of 130/85 or a fasting glucose level of 6.0) without clearly disclosing that these figures are in a clinical grey zone can generate referrals that benefit the hospital financially more than they benefit the patient’s health.

‘There is a difference between identifying disease and manufacturing anxiety. Some camps are doing the former. Others, quite frankly, are doing the latter,’ she said.

She added that camps frequently operate in communities where the recommended follow-up care is financially inaccessible to many of those screened.

People leave with diagnoses and no affordable route to treatment. They are informed of a condition they cannot afford to manage by a facility they cannot afford to revisit.

‘You cannot tell someone they are ill and then offer them an unaffordable solution. That is not healthcare, ‘ she said. ‘It causes distress.’

Hospitals that have established long-term success through camp strategies, she said, are those that have confronted this tension head-on, running Social Health Authority (SHA) registration desks alongside screening tables, creating sliding-scale consultation pathways, and empowering community health workers to inform patients of normal results, even if it means losing a referral.

Camps go virtual

This model is now spreading beyond the field. Several hospital groups have launched virtual camps, offering free online consultations, digital health questionnaires, and telemedicine triage via WhatsApp and mobile apps for a set period.

These apps lower costs, increase geographic reach, and capture richer data, including symptom profiles, demographics, device usage patterns, and risk scores that cannot be produced by the physical outreaches.

Taxpayers will be spared disruptive tax crackdowns after the Kenya Revenue Authority (KRA) shifted to a new compliance system that flags discrepancies early, allowing businesses sufficient time to address them before they are blocked from the filing system.

KRA acting Commissioner-General Lilian Nyawanda said the new approach aims to reduce disruption to compliant businesses while maintaining pressure on non-compliant ones ahead of the June 30 filing deadline.

The move follows backlash from the controversial ‘special table’ approach that KRA previously used to flag so-called missing traders -firms suspected of participating in fraudulent value-added tax (VAT) claims.

A ‘special table’ is an administrative mechanism designed to restrict VAT-registered taxpayers with poor compliance records, such as non-filers and non-payment cases, from filing returns.

The KRA said that while the system helped bring non-compliant taxpayers into the net, it also swept up thousands of compliant businesses that found themselves locked out of the tax system due to dealings with non-compliant partners.

‘The special table played its role, and we picked key learnings from the process,’ Dr Nyawanda said in an interview with the Business Daily.

‘But we reached a point where we needed to do away with it and allow taxpayers, based on those learnings, to work through the compliance journey.’

In March, KRA, in a rare move, admitted that the ‘special table’, a compliance tool, had been misused by its own compliance officers, and ordered the removal of affected taxpayers.

Early alerts

Initially designed to seal revenue leaks from the notorious ‘missing trader’ schemes – where fictitious invoices are used to claim VAT refunds – the taxman had resorted to the ‘watch list’ as the primary enforcement mechanism.

Businesses flagged under it were effectively locked out of filing VAT returns on the iTax platform, making other firms reluctant to trade with them since they could not claim input VAT.

In its place, KRA said it is deploying a more targeted and less disruptive model built around early visibility of taxpayer data. Individuals and businesses will be able to see transaction records held by the authority before filing returns, putting them under continuous, real-time scrutiny.

The system is already flagging inconsistencies, particularly among taxpayers who file nil returns despite having recorded transactions in KRA’s databases. Instead of triggering automatic penalties or system blocks, the taxman is sending alerts prompting taxpayers to review and correct their filings in advance.

‘We are exposing your details to you and communicating directly where there are areas you need to work on,’ Dr Nyawanda said. ‘So you’re able to check way in advance of filing and not be caught off guard.’

Soft approach

The shift represents a move toward what KRA describes as a more ‘conversational’ approach to tax compliance by engaging taxpayers earlier in the process rather than penalising them after the fact.

While the new model reduces the risk of abrupt disruptions that previously froze operations and strained cash flows for businesses, it also introduces a higher level of scrutiny, which places taxpayers under continuous monitoring through KRA’s data systems, such as the Electronic Tax Invoice Management System (eTIMS).

Dr Nyawanda acknowledged the complexity of the tax system and the need for closer engagement with taxpayers, noting that compliance is not always straightforward because the system may have errors or mismatches.

‘We want to walk the journey with taxpayers,’ she said. ‘Taxes are complex, and not everyone fully understands them. We want Kenyans to do business, make profits, but remain compliant.’

To support the shift, KRA has introduced new digital communication channels, including a WhatsApp-based AI assistant dubbed ‘Shuru’, allowing taxpayers to receive guidance and resolve queries in real time.

Conflicts in two laws have stalled the sale of the government’s 43.77 percent stake in a wines and spirits firm that distributes Amarula and Viceroy, delaying a bidding for shares valued at about Sh3.3 billion.

The freshly amended Privatisation Act, which guides sale of shares, is in conflict with the Public Finance Management (PFM) Act, 2012 on the transaction in companies where the government does not have majority ownership.

Privatisation Act, which was amended last year, exempts firms where the government is a minority owner from following strict steps, including seeking parliamentary and Cabinet approval ahead of stake sales.

But the PFM Act demands the approval of both the Treasury and the Cabinet.

The clash in the two laws has frozen the sale of the government’s 43.77 percent stake Kwal Holdings East Africa Limited (KHEAL), where Dutch brewer Heineken has a 55 percent stake.

The Privatisation Authority had in 2024 invited local as well as foreign investors to bid for the stakes as the State sought to fully exit the wines and spirits firm.

But evaluation of the bids was scuttled by the legal hitch as the authority seeks clarity from the Attorney-General on which law to rely on in the sale of the shares.

The State’s stake in the wines and spirits firm has dropped slightly from Sh4.1 billion to Sh3.3 billion as of the end of June 2023 from a year prior as per disclosures by the Kenya Development Corporation (KDC).

‘We are still consulting to seek advice on whether to continue with the sale or restart it,’ said Jane Rose Omondi, the acting chief executive officer of the Privatisation Authority, while citing the legal hitch.

The sale was opened under the previous Privatisation Act, which did not require the nod of Parliament.

Now, the Cabinet Secretary has the role of identifying a firm for sale and the privatisation plan detailing benefits of the stake auction must be approved by the Cabinet and the National Assembly.

But the valuation of the stake has dipped as the stake sale delays.

KDC owns the shares on behalf of the government.

‘The valuation we did was, for instance, done in 2024 and based on the financial performance of 2023. We have since seen more recent disclosures,’ said Ms Omondi.

KHEAL manufactures and distributes several brands of spirits, wines, ciders and fruit juice. These include Kibao Vodka, Hunter’s Choice, Viceroy, Amarula, Drostdy-Hof, Savanna and Yatta.

The Privatisation Authority sought all sorts of bidders, including high-net-worth individuals who may want to hold the stake as a passive financial investment, in the 2024 sale.

‘Interested bidders must provide information that meets the following eligibility criteria … Evidence that the bidder or, in the case of a consortium, the consortium leader, is legally registered or incorporated,’ the Privatisation Authority said in a notice.

‘In the case of individuals, copies of certified national identification cards or passports for international bidders.’

Heineken Beverages, which has a 55 percent stake in KHEAL, was formed in 2023 following Dutch firm’s buyout of South Africa’s Distell Group.

Heineken has no right to acquire the 43.77 percent stake in the firm, setting up the multinational firm for a bidding war for the shares.

A source familiar with the deal reckons that South Africa’s beverage firm Distell Group failed to insert the pre-emptive clause in a shareholder agreement with the government, after it became a majority shareholder in KHEAL following its acquisition of an extra 26.4 percent stake from Centum Investment.

It acquired the Centum stake in 2017 for Sh1.1 billion, giving it majority control, and its omission of the pre-emptive rights will hurt Heineken if it has ambition to fully acquire the Kenyan and avoid a hostile co-owner.

Majority shareholders often push for the pre-emptive rights to maintain control by avoiding dilution in the event of new shares being issued and avoid aggressive partners from sale of existing stocks.

The pre-emptive rights require that the shares being sold in a firm cannot be offered in the open market until existing shareholders have been given a chance to invest.

Before 2017, Distell was the minority shareholder behind the government and Centum, with its initial 26 percent stake that it had acquired from State for Sh860 million.

The State now seeks to fully exit KHEAL, triggering a bidding war that looks set to attract the interests of private equity firms and high-net-worth investors warm to beer and spirits stocks as a relatively cheap way to benefit from growth in alcohol sales in emerging markets like Kenya.

International brewers are increasingly reviewing their investments amid a drop in global alcohol consumption.

Heineken’s acquisition of South AfricaDistell marked the entry of a major brewer with local production in the Kenyan market that is dominated by East African Breweries Limited (EABL), a subsidiary of Diageo Plc.

London-listed Diageo, maker of Johnnie Walker whisky and Captain Morgan rum, said in December it had agreed to sell its 65 percent stake in EABL to the Japanese brewer Asahi Holdings, as it implements a turnaround strategy to reduce debt and revive growth.

The Diageo stake sale is worth Sh300 billion.

KWAL commenced operations as a 100 percent parastatal owned by KDC before a divestiture process, which began with the 2014 sale of an initial 26 percent stake to Distell Group.

The sale of the government’s stake in the wines and spirits manufacturer is part of plans to raise funds through divestiture in multiple firms where the State has substantial or full ownership.

It has since sold stakes in Kenya Pipeline Company and Safaricom.

Nearly three-quarters of banks have snubbed the use of the new risk-based pricing formula introduced by the Central Bank of Kenya (CBK), denying customers a more transparent reference rate to assess the cost of borrowing.

An analysis of commercial bank lending rates established that 27 out of 37 banks have opted for the Central Bank Rate (CBR) as their key reference rate, with only a minority adopting Kesonia as their benchmark.

The final revised risk-based credit pricing model was to be anchored on the Kenya Shilling Overnight Interbank Average (Kesonia), which is the new base rate for all variable interest loans, designed to increase transparency and lower credit costs.

Banks were, however, allowed to deploy the CBR benchmark as a backup option.

Low uptake

The banking industry lobby says banks had little time to recalibrate loan pricing to Kesonia in time for the transition, hence the fallback to the CBR rate.

‘It was an issue of the timelines that were provided. It was easier to adopt the CBR from the get-go. The timelines were quite tight and the Kesonia system recalibration would have taken time,’ said Dr Samuel Tiriongo, the Head of Research at the Kenya Bankers Association (KBA).

Almost all tier-one banks have adopted the CBR as their benchmark rate for loan pricing, including Equity, KCB, Absa Bank Kenya, Standard Chartered, NCBA and DTB.

The Cooperative Bank of Kenya has been an outlier, opting for Kesonia as its benchmark alongside Habib Bank AG Zurich and ABC Bank.

Two banks – Citibank N.A. Kenya and Stanbic Bank Kenya – have adopted both CBR and Kesonia.

Five – Access Bank Kenya, Development Bank of Kenya (DBK), Kingdom Bank, Premier Bank and SBM Bank Kenya – did not disclose their benchmark rates.

Previously, each commercial bank had its own approved benchmark from which to price loans, an aspect that created chaos in tracking the pricing of loans, as the industry had approximately 37 reference rates.

Banks argued that the different reference rates made it difficult for the lenders to lower borrowing costs as an industry, resulting in rebuke from the CBK, which demanded interest rate cuts to reflect the ease in monetary policy or a lower CBR.

The CBK expects a closer comparison of interest rates across banks as both Kesonia and CBR are tied at the hip following the establishment of an interest rate corridor around the apex bank’s benchmark.

Pricing model

Kesonia can only rise by 0.75 percentage points above the prevailing CBR rate and must not fall below the benchmark by more than 0.75 percentage points. The corridor implies that Kesonia and CBR would only differ slightly.

The CBK has insisted that it does not desire to control bank interest rates but seeks to have commercial banks’ borrowing costs mirror the CBR. Commercial banks began applying the new pricing formulas on all new variable loans on December 1, 2025, while changes on existing variable loans took place between December 1 and February 28, 2026.

Under the new model, the total lending rate will be the interbank rate plus a premium or K, which is believed to align with the policy rate.

The interbank market rate refers to the rate at which commercial banks borrow and lend money among themselves on a short-term basis and is widely relied upon as the gauge of how liquid the market is.

The premium K will be a factor of a bank’s operating costs related to its lending business, the expected return to shareholders, and the borrower’s risk premium.

The interbank rate, however, has limits in terms of volatility because it operates within limits fixed on the CBK benchmark rate to ensure the benefits of monetary policy are transmitted to the real economy.

The limit currently stands at plus or minus 75 basis points of CBR.

This means that the interbank rate cannot rise above 0.75 percentage points of the CBR of 8.75 percent or a maximum of 9.50 percent, and not less than 8.0 percent.

Kenya’s central bank paused its rate-cutting cycle on April 8, keeping its benchmark lending rate at 8.75 percent to monitor second-round effects from a surge in global energy prices triggered by the Iran war.

The decision follows 10 consecutive rate cuts in the push to lower the cost of credit and stimulate lending.

Banks still insist they favour Kesonia over CBR and that they hope to make the transition to the overnight lending rate as the industry benchmark over time.

‘We still desire to transition to Kesonia and we continue to have discussions among ourselves and even with the CBK,’ added Dr Tiriongo.

The Kenya Mortgage Refinance Company (KMRC) is scheduled to float a sustainability bond on April 28, with a target to raise Sh3 billion, in what would mark the second green-debt issuance just four months after Safaricom listed a record Sh40 billion one on December 16, 2025.

KMRC will be going to market with the second tranche of its Sh10.5 billion bond programme, coming four years after its debut issuance in February 2022, during which it raised Sh1.4 billion through its inaugural corporate bond that attracted 480 percent oversubscription.

The mortgage refinancer will be floating an eight-year tenured note with a 5.1-year average weighted life, meaning principal will be repaid gradually as opposed to a bullet payment at maturity.

Pricing plan

Whereas the pricing of the note is yet to be disclosed, KMRC is eyeing a tax exemption status to allow a single-digit interest rate to lower its funding cost.

Proceeds from the sustainability note are expected to provide a boost to KMRC’s loan book, which closed 2025 at Sh19.6 billion, having grown from Sh11.9 billion in 2024.

‘One hundred percent of the net proceeds will be allocated to refinancing eligible green home loans and eligible social home loans as defined in KMRC’s Sustainable Finance Framework dated March 2026. Bond proceeds will be used alongside other concessionary funding at KMRC’s disposal,’ KMRC says in a note to investors.

The offer period of the Sh3 billion note will run between April 28, and May 12, with the issuance of the company courting investors with a minimum investment of Sh100,000.

Results announcement and allotment are slated for May 15, 2026, while listing and commencement of trading at the Nairobi Securities Exchange (NSE) are earmarked for May 25.

The company had planned to return to the capital markets in 2024 but was prohibited by a high-interest-rate environment that would translate into a higher cost of funds and undermine its agenda of pushing affordable mortgages downstream in the market.

Market context

In November 2025, Safaricom Plc raised Sh40 billion through a sustainability-linked bond at a coupon of 10.4 percent, drawing bids worth Sh41.86 billion, which translated to 177 percent oversubscription against the Sh15 billion target.

Still in November 2025, East African Breweries Plc took advantage of the low-interest-rate environment and raised Sh16.76 billion in a five-year non-Sustainability Linked corporate bond issuance with the coupon set at 11.8 percent.

In the year ended December 2025, KMRC net earnings stood at Sh1 billion, having contracted marginally compared to Sh1.3 billion in 2024.

The mortgage refinancer’s performance was impacted by a decline in net interest income from Sh2.2 billion to Sh1.7 billion while its expenses grew to Sh370.9 million from Sh341.2 million in 2024.

The lead arranger and placing agent of KMRC’s Sh3 billion note is NCBA Investment Bank, with Cygnum Capital and C and R Group serving as financial advisor and Registrar, respectively. KCB Kenya Ltd is the designated receiving bank, while Ropat Trust and Mboya Wangong’u and Waiyaki are the Note Trustee and Legal Counsel, respectively.

A Supreme Court award of Sh10 billion for a botched electricity contract is being claimed by three Spanish firms, including one that has been declared bankrupt and dissolved, putting Kenya at risk of paying three times that amount, or Sh30 billion.

The apex court in October 2022 ordered Kenya Electricity Transmission Company (Ketraco) to pay Spanish firm Instalaciones Inabensa pound 37.6 million for breach of contract after cancelling a deal for building a high-voltage transmission line and substations.

However, unknown to the Kenyan lawyers and judges, Inabensa was fighting for its life in the Spanish capital, in a struggle that saw it declared bankrupt a month after the Supreme Court verdict.

In the end, Inabensa was reported dissolved, and some of its assets were tipped for sale to a firm called Cox Energy, with Ernst and Young tapped as the insolvency administrator, said a confidential brief from the Attorney-General’s office.

Court documents show that on July 28, 2023, Inabensa transferred its rights to another Spanish firm, C.A. Infraestructuras T and I SLU, which is also pursuing payment in the decade-long dispute.

Payment risk

Now, the Attorney-General reckons that Ketraco is at a loss on whom to pay the Sh10 billion, with the State law office warning that Kenya could end up paying Sh30 billion to three firms.

In Kenya, Inabensa has frozen part of Ketraco’s billions of shillings in 17 bank accounts in NCBA, Standard Chartered Kenya, Co-operative Bank of Kenya, Citibank N.A. Kenya, and KCB Bank Kenya.

Separately, Infraestructuras T and I SLU is seeking to wind up Ketraco over non-payment of the Sh10 billion award following the Supreme Court verdict.

The Attorney-General has added a fresh twist to the spat after telling the court that the insolvency administrator in Spain, Ernst and Young Abogados, could still assert rights over the money on behalf of creditors.

This echoed a confidential brief that the Attorney-General prepared for Ketraco to help in the court proceedings where both Infraestructuras T and I SLU and Inabensa are seeking the Sh10 billion.

‘The company (Inabensa) was declared dissolved, its directors ceased to hold office and were replaced by the insolvency directors,’ said a brief from the Solicitor-General, Shadrack Mose, seen by the Business Daily.

‘Noting that the directors of the company [Inabensa] ceased to hold office and were replaced by an insolvency administrator… the insolvency administrator acquires the stature of a foreign representative,’ added the brief, while questioning the competence of Inabensa to enter into settlement talks with Ketraco.

The dispute has its origin in two engineering, procurement, and construction contracts awarded in April 2013 for the 400kV Lessos-Tororo transmission line and the extension of the Lessos substation.

Project dispute

The projects were valued at over pound 24.5 million (Sh3.6 billion) and Sh893 million, totalling more than Sh4.5 billion.

The claim for the botched contract has grown to Sh10 billion.

They were meant to facilitate electricity trade between Kenya and neighbouring countries, but were terminated in 2016 following a fallout between Ketraco and Inabensa.

Ketraco terminated the contract on April 25, 2016 after it received a notice from the Spanish firm on April 12, 2016, that it was suspending works after the State agency failed to settle several invoices.

At the centre of the ongoing dispute is a 2019 arbitral award in favour of Spanish contractor Instalaciones Inabensa S.A., which was contracted in 2013 to build the Lessos-Tororo transmission line and extend the Lessos substation.

The tribunal found Ketraco breached the contract by failing to pay invoices and unlawfully terminating the agreement, awarding the contractor more than pound 30.8 million (Sh4.6 billion) plus interest and costs.

That award was adopted as a judgment of the High Court in 2021, making the debt final and enforceable.

But the amount has since ballooned to over pound 62.6 million (about Sh10 billion), including interest and costs.

Ketraco attempted to overturn the arbitral award through a series of legal challenges in the High Court, the Court of Appeal and later the Supreme Court, but all attempts failed, leaving it exposed to enforcement proceedings.

Following the failed appeals, Inabensa obtained garnishee orders from the court against Ketraco’s bank accounts and began execution proceedings to recover the award.

The dispute has now split into two competing claims.

On one hand is Instalaciones Inabensa, the original contractor seeking to recover the debt through garnishee proceedings.

On the other hand is CA Infraestructuras T and I SLU, which claims to have taken over the rights to the award and is now pursuing liquidation of Ketraco – creating confusion over who the utility should legally pay.

Legal dilemma

Court filings show the insolvency petition was presented in May 2024 and is scheduled for a hearing in July 2026, placing the State corporation at risk of liquidation.

This has created a legal dilemma over who is entitled to payment.

Government lawyers warn that under Kenya’s Insolvency Act, foreign insolvency proceedings must first be recognised by Kenyan courts before any enforcement.

‘Until such recognition… neither Inabensa nor its legal agent has the capacity to engage Ketraco,’ the advisory states.

The uncertainty exposes Ketraco to the risk of paying the same debt more than once.

If it pays the Spanish assignee, Infraestructuras, it could still face claims from the insolvency administrator acting on behalf of Inabensa’s creditors.

If it pays the administrator, it could trigger further litigation from Infraestructuras.

This risk has already been flagged in court proceedings, where Ketraco warned that paying one party could result in ‘further legal proceedings being instituted’ by another claimant.

‘Since the first respondent is under liquidation, it cannot be said to be a credit-worthy going concern capable of refunding the sums,’ Ketraco’s lawyers argued, warning that enforcement threatens its operations.

The Court of Appeal proceedings also reveal the scale of financial pressure facing the utility.

Ketraco said freezing its accounts had crippled its ability to operate, pay staff and sustain electricity transmission nationwide.

‘The magnitude of the award… far outstrips the applicant’s financial capacity… and will bring its activities to an abrupt halt,’ the company said.

Government spending on development projects jumped by Sh91.8 billion in the first nine months of the current financial year, signalling a renewed push to stimulate economic activity and support growth.

Data from the National Treasury shows that Ministries, Departments, and Agencies (MDAs) spent Sh262.63 billion on development between July and March 2026, up 53.7 percent from the Sh170.83 billion recorded in a similar period last year.

The increase marks a big shift from the previous financial year, when development expenditure fell to an 11-year low, dragged down by budget cuts and diversion of funds to recurrent obligations.

The rebound comes as the State faces mounting pressure to revive economic momentum, create jobs, and unlock stalled infrastructure projects, which are critical to private sector activity.

The push further coincides with a period when Kenya is seeking to strengthen its economic recovery following shocks linked to drought, high inflation, and global economic uncertainty.

In the fiscal year ended last June, development spending took a hit after the government implemented expenditure rationalisation measures to accommodate emerging needs, including security operations and drought response.

Treasury documents at the time showed additional funding requests for unbudgeted priorities, forcing a reallocation of resources away from capital projects to recurrent expenditure.

The low spending levels saw development expenditure fall below the legal threshold set under the Public Finance Management (PFM) law, raising concerns over the government’s commitment to growth-enhancing investments.

The current rebound signals an effort to correct the trajectory, with the State accelerating disbursements to capital projects in a bid to support economic expansion.

The increase, however, comes against the backdrop of persistent fiscal constraints, including rising public debt obligations that continue to exert pressure on government finances.

During the review period, for instance, Kenya’s debt servicing costs stood at Sh1.36 trillion, accounting for 79.5 percent of the country’s total tax revenues for the period.

The government also continues to grapple with underperformance in revenue collection, complicating efforts to sustain higher development expenditure.

The Kenya Revenue Authority has, in recent years, failed to meet ambitious tax targets, forcing the Treasury to rely on borrowing and expenditure adjustments to bridge financing gaps.

This has, in the past, led to delays in funding development projects, with contractors facing prolonged payment timelines that disrupt project implementation.

The recurring collapse of Kenya’s corporate titans – from the retail ruins of Nakumatt and Tuskys supermarket to the governance-led downfall of Chase Bank – reveals a dangerous systemic fragility.

These are not merely private business failures; they are “public interest” crises. When institutions of this scale falter, or as seen in the current leadership paralysis at The Nairobi Hospital, they jeopardise national health security, financial stability, and the survival of vast supplier ecosystems.

The crisis at The Nairobi Hospital follows a familiar Kenyan script: a multibillion-shilling entity governed by an archaic “association” model that has failed to professionalise.

This creates a governance vacuum in which board seats become battlegrounds for control over procurement and “insider” interests rather than for institutional stewardship. Without entrenched corporate governance, these entities remain stuck in a “founder’s trap,” unable to survive the transition from a private club to a modern corporate giant.

To safeguard such critical entities, we must look at models that prioritise service continuity and financial integrity over boardroom politics.

The UK Special Administration Model ensures that when a critical healthcare or utility provider faces governance failure, the state triggers a “Special Administration.”

An independent professional is appointed to strip the board of its powers and stabilise operations. The priority is not liquidation, but ensuring the public isn’t stranded while the entity is restructured.

This is supported by rigorous independent audit oversight for “Public Interest Entities,” including mandatory audit firm rotation to prevent the “creative accounting” that masked the true state of firms like Chase Bank.

The German Constitutional Model treats large companies as “constitutional associations” with a legal obligation to serve the public interest. This includes mandatory external audits with “soft guidance” from federal regulators.

If mismanagement is detected, the state uses institutional triggers to force restructuring long before the entity reaches insolvency or requires criminal proceedings.

The role of government should thus be that of a referee, not a player.

Currently, Kenyan interventions often feel like firefighting – characterised by protracted litigation and ad hoc executive interventions.

Effective governance requires a shift toward a statutory safety net in which the Registrar of Companies or specialised health regulator can mandate professional “rescue management” and independent forensic audits for public-interest entities without nationalising them or interfering with their private ownership.

Going forward, we must move beyond temporary fixes. If we do not legally mandate board independence, periodic independent audit reviews, and real-time financial transparency for these “too important to fail” pillars, we will continue to watch our national icons crumble from within. The solution is not more politics, but more professionalisation to safeguard critical private investments of national importance.