Category: Business Daily

The European Union’s Deforestation Regulation (EUDR) aims to curb deforestation and forest degradation linked to the production of certain goods.

Although the regulation may appear unrelated to Kenya’s primary exports, its coffee industry, a major contributor to the economy, could still be affected.

During the 2023/24 period, Kenya exported 95 percent of its coffee, some 49,199.09 metric tons, valued at $229.55 million (Sh31.31 billion).

A substantial proportion of this – 55 percent – was shipped to the EU, with 122,699 metric tons worth $695.7 million (Sh114.09 billion) going to Belgium, Germany, Sweden and Finland.

Coffee is a major source of income for over 800,000 smallholder farmers in 33 coffee-growing counties. Compliance with the EUDR is therefore critical in supporting these farmers and ensuring the continued growth of the sector.

Kenya’s premium and speciality coffee commands high prices in the global market, and adherence to the EUDR will be crucial in maintaining the country’s market reputation and ensuring a consistent supply of high-quality coffee.

The government’s Bottom-Up Economic Transformation Agenda is committed to revitalising the sub-sector by increasing productivity and exports. Continued market access for Kenyan coffee with traditional trading partners such as the EU is essential for export growth.

Therefore, Kenyan stakeholders must comply with the EUDR to remain competitive in the EU market.

To achieve this, Kenyan businesses should develop a compliance framework that establishes a comprehensive traceability system tracking raw materials back to their origin.

They should conduct risk assessments to identify potential risks associated with sourcing products and provide training to help suppliers enhance their compliance capabilities.

Regular reviews and updates of compliance procedures and documentation will ensure adherence to EUDR standards. In conclusion, while EUDR might not have a major direct impact on the local economy, the coffee industry’s importance to Kenya’s exports and livelihoods means the country shouldn’t rest easy.

Kenyan businesses need to be proactive in complying with the regulations to maintain their competitiveness in the EU market and ensure the continued growth of the coffee sector.

National carrier, Kenya Airways (KQ), has announced a profit warning for its full year earnings for the period ending December 2025, attributing it to a drop in passenger numbers following grounding of some of its large aircrafts.

The cautionary statement means the airline’s net profit for the period will be lower by at least 25 percent or Sh1.35 billion compared to the Sh5.4 billion net profit posted in the year to December 2024.

KQ reported a half year net loss of Sh12.15 billion, compared to a Sh513 million profit after tax reported in the same period in 2024 citing grounding of 33 percent of its wide-bodied aircraft as the main cause. ‘The board brings to the attention of the public that the earnings for the current financial year 2025 are expected to be lower by at least 25 percent than the earnings reported for the same period in full year 2024,’ said KQ in a public statement.

The airline blamed the grounding of its three Boeing 787-8 Dreamliner aircrafts to constrained supply of spare part supply in the global market as well as aircraft shortages.

KQ management said the grounding of the Dreamliners, which constitutes 33 percent of its wide body fleet, had impacted its performance due to reduction in capacity and drop in passenger numbers.

Last year the company carried 5.2 million passengers and hauled 70,776 cargo tonnes. KQ had been in the red for 11 years which had seen its accumulated losses rise to Sh189.7 billion and left it with a substantial working capital deficit. Last year saw it break the trend to turnaround a Sh22.7 billion net loss in 2023 to record a profit on the back of reduced debt service costs.

KQ’s management opened the window for another round of capital raising in an effort to pull up from loss territory.

‘The board and management remain committed to recovery efforts, including returning grounded aircraft to service, cost reduction and executing partnerships and capital raising initiatives aimed at stabilizing operations and improving the company’s financial performance,’ said the company.

KQ has been in the search for a new equity investor to provide a significant cash injection to stabilize its performance and ensure the long term stability of the carrier. However the search for a strategic investor has stalled as the majority shareholder – the government of Kenya – weighs options to calm the turbulence that the national carrier faces.

KQ joins a growing list of listed companies that have issued profit warnings signaling a difficult economic period.

Companies that have issued profit warnings include Standard Chartered Bank of Kenya, recently listed packaging materials manufacturer Shri Krishana Overseas Limited (SKL), and TPS Eastern Africa which manages Serena Hotels.

Stanchart’s expected profit drop is due to a one-off settlement of a claim on a pension fund by 629 former employees of the bank which will cost the lender Sh7.2 billion to settle.

SKL had cited a spike in financing cost following an uptake of new loans for the change of fortune while service provider TPS Eastern Africa noted last year it had benefited from unrealized forex gains which it did not expect this year.

The authorities’ immediate answer is an inflation targeting regime with an independent central bank including a Monetary Policy Committee whose target is set by the Treasury annually and which is presently 5 per cent +/- 2 .5 per cent.

But actions are speaking louder than words.

Compare the daily percentage change in the exchange rates of four bona-fide inflation targeting central banks- Euro, Japan, UK, and Australia-vis-a-vis the US$ over the past 18 months or so, to those of the Kenya shilling. See Chart.

Daily Percentage Change in Exchange Rates to the US$: 2024-2025.

The typical daily percentage change of the bona-fide inflation targeting banks exchange rates is around 1 per cent, and that number has not changed over the entire period.

The Kenya shilling-in black in the chart above-also followed that pattern through till August 2024. Thereafter, it broke away, exhibiting almost no daily change vis-a-vis the US$, apart from occasional minor bumps-apparently as the Central Bank of Kenya mastered its new operational procedures.

None of this is the organic effect of improved policies or confidence, as often inferred by the authorities’ references to having secured ‘exchange rate stability’. Instead, it reflects their direct engineering via foreign exchange intervention, overt and covert.

The motivation in August 2024 for this change is unclear, but we speculate that the instruction came from the Executive Office and not the Central Bank of Kenya. And after the Shilling slide to early 2024, we infer that the intent was to head off even the remotest chance of a repeat of that in the context of the Gen-Z protests.

Even so, the authorities might deny that this represents any substantive shift away from inflation targeting and merely codifies the bilateral peg as a prominent intermediate target.

But the entire intellectual foundation of inflation targeting is that there are no successful individual intermediate targets. Even the celebrated ‘inflation is always a monetary phenomenon’ turned out to be repeatedly rejected by the data worldwide causing abandonment of all monetary targets in favour of the entire suite of data, including monetary and exchange rates.

And when the de facto peg appeared, it could have been just temporary and so have passed as a mere footnote. But a year is a long time in macroeconomics. So, the paraphernalia of inflation targeting has become just that; Kenya is maintaining an unannounced peg to the US dollar.

This gives rise to a number of puzzles and concerns.

Most notable, when the change was made in August 2024, there was no announcement or official explanation. Though the stabilisation of the Shilling then was obvious, the authority’s policy and intentions were not clear at all. This lack of a framework of transparency directly compromises effectiveness and stability.

Then, a number of design issues arise, all indicative of hasty assembly of the new arrangement:

Why 129 to the US dollar-a rate we consider to be significantly overvalued relative to that consistent with Kenya’s full growth potential.

How did that decision get made?

Even so, why such an odd number and not 130 to the dollar?

Why peg to the US dollar, with which Kenya has limited engagement, and not a currency or basket with which engagement is significant?

Why is it (evidently) a fixed peg and not a crawl? Given the US inflation target of 2 and Kenya’s of 5, a crawl of 3 percent annually would at least render it fundamentally consistent with Kenya’s official inflation target and support claims that has some numerical congruency with the official inflation targeting regime.

And given that this actual fundamental inconsistency between the two will recur, how does it get resolved? This last point returns us to the lack of official announcement or explanation for the framework.

And this fundamental inconsistency is already evident in Kenya’s macro-to its detriment.

Underlying inflation-which we primarily measure from the series of one month seasonally adjusted annualized rates of inflation of non-food prices-from even somewhat before the period of the de facto dollar peg, has consistently been running at the low end of and mostly below the inflation target band.

The jump in October 2025 we read as predominantly one-off. But even the 12-month rate of growth in non-food prices has fluctuated between only 2 and 2.5 percent throughout, well below the target of 5 per cent and frequently below the target band.

Alongside, official core prices are signalling similarly. This persistent undershoot of underlying inflation has been masked only by the sharp ongoing rise in the relative price of food.

So, Kenya consumer prices, trying to adjust to the overvalued currency latterly coded into the de facto fixed dollar peg, have been trending significantly below the inflation target.

And the Monetary Policy Committee, rather than act decisively to get ahead of this and drive underlying inflation back up to target, has tip-toed with quarter-point policy rate cuts lest the de facto peg give way.

In this way, with the peg being maintained to a tee and the inflation target being consistently undershot for underlying and core inflation, the relative standing of the two in the monetary framework is revealed, with the inflation target taking second place very much-all at the expense of demand, output, and jobs.

The authorities dismiss any such concerns with bombast: interest rates and inflation are down, real growth is around trend, international reserves in US dollar are at record levels, and markets are happy.

But this looks like pride before the fall. Indeed, nominal interest rates have fallen, but with underlying inflation down too, real interest rates have fallen much less and insufficiently so; inflation is down, but far too far; real growth remains far below Kenya’s full potential;

international reserves are up, but as our colleagues argue separately, still insufficient for full defence of the peg, and at unknown cost in terms of covert intervention; in a propitious global environment with interest rates and the US dollar easing, Kenya has regained a modicum of market access but still at eye-watering yields; and as Adam Smith cautioned long ago, market happiness is a qualified measure of anything as they are solely interested in their own yields, and if that’s at others’ expense, too bad.

And at some point, the underlying inconsistencies in the de facto peg framework have to resolve and may be forced to do so if the recent benign global market environment turns perhaps alongside any number of potential domestic and regional strains materialising.

At that point, if not well before, we would strongly urge the authorities to abandon their experiment with undeclared pegging and return inflation targeting centred on 5 percent to unqualified pride of place in Kenya’s monetary framework.

Kwame Owino is the chief executive officer of the Institute of Economic Affairs (IEA) and Peter Doyle is American Economist, former IMF and Bank of England

The number of locally assembled motor vehicles rose 11.4 percent in the nine months to September, with increased production expected to increase in the coming years as more models are introduced in the market.

Data from the Kenya National Bureau of Statistics (KNBS) shows that firms such as CFAO Mobility Kenya, Simba Corp, Isuzu East Africa and Transafrica Motors assembled 10,075 vehicles in the review period.

This was an increase from 9,040 units produced in the same period last year.

More dealers have announced plans to assemble more models locally to take advantage of tax incentives offered by the government, a trend that is expected to lead to increased output at the assembly plants.

The government exempts assemblers from the import duty of 35 percent levied on fully built vehicles.

Completely knocked down (CKD) parts headed to assembly plants are also exempt from 20 percent to 35 percent excise duty levied on imports of fully built vehicles, depending on the engine capacity and fuel type.

Assemblers also pay a lower import declaration fee of 2.5 percent compared to the standard 3.5 percent.

The two percent Railway Development Levy (RDL) is also reduced to 1.5 percent for assemblers.

The government offers the tax benefits in a bid to create more jobs and attract more investment in the local automotive industry.

South Africa, which produces vehicles for many markets in Africa, has one of the biggest basket of incentives for investors in the motor vehicle industry in the continent.

Dealers have also moved to assemble more passenger cars locally over the past few years, seeking to gain competitive pricing in a market where used imports remain the most popular due to their relatively cheaper prices.

Some new cars led by models from markets such as China, Malaysia and India have however become more competitive in terms of pricing compared to used models imported into the country.

Global Motors Centre, the distributor appointed to sell Jetour brand of cars in the Kenyan market, is investing Sh1.4 billion to start assembling the Chinese models in Mombasa from the first quarter of 2026.

Electric vehicle (EV) company Tad Motors has also unveiled its first five locally assembled sedan and SUV models in Kenya.

Most of the assembled vehicles are sold in Kenya, with some exported to Uganda and other regional markets. The major assembly plants include Associated Vehicle Assemblers (owned by Simba Corp), Isuzu and Kenya Vehicle Manufacturers (KVM) which has contracts with multiple dealers including Urysia Limited.

November is synonymous with deep discounts, but the savings aren’t just limited to electronics, appliances and groceries. For savvy investors, the ‘Black November’ season offers an opportunity to hunt for bargain investments

In this episode, Wesley Manambo, a Senior Research Associate at Standard Investment Bank (SIB), walks us through the essential process of identifying an undervalued asset (a bargain) from a simply cheap one (a trap). Discover how to effectively bargain hunt in your investment portfolio.

Make Money, a podcast series, hosted by Kepha Muiruri, from Business Daily Africa unravels ways to be financially savvy. Get practical tips and advice on how to increase your income, build wealth, and achieve financial freedom in Kenya. Whether you’re just starting out or a seasoned investor, we’ve got something for everyone.

The US Department of State has flagged lengthy bureaucracy as one of the major hurdles hurting the entry of foreign investors into Kenya.

The lengthy approval process for visas and work permits is linked to the expansion of requirements needed to qualify for work permits and special passes in the last 10 years.

Entry hitches for foreign investors hampers Kenya’s efforts to address the unemployment crisis given the critical role that foreign firms have in creating jobs locally.

Foreign investors must get work permits to operate in Kenya if they intend to work and manage their business in the country.

The department added that the clearance process is also exposed to corruption, bringing to the fore one of the biggest problems hurting the entry of foreign investors into Kenya.

Multinationals are a key part of the country’s economy with notable presence in the energy, manufacturing and agricultural sectors.

Kenya hosts over 200 multinationals that have employed more than 200,000 Kenyans, underscoring their importance in providing in an economy struggling to create formal jobs to absorb thousands of new university and college graduates every year.

Besides a lengthy clearance process, foreign investors also grapple with a tough operating environment characterised by heavy taxation and costly electricity. Kenya’s electricity prices are some of the highest in Africa, which damages the country’s ability to attract and keep manufacturing companies that have the option of shifting to competing economies such as Egypt and Ethiopia.

American firms are one of the most critical pillars underpinning Kenya’s development agenda, with deep focus on healthcare and water services.

But the influence was hit last year following the decision by the administration of Donald Trump to discontinue high -value projects in the country.

The US government early this year issued notices terminating more than Sh108.34 billion worth of contracts and grants to programmes it funds through the United States Agency for International Development.

‘I still haven’t written my best song I’m pursuing that all the time. If my music can uplift someone to make them want to live a better life and not give up, that is a big success for me.’ Jimmy Cliff

For 60 years, Jamaican singer-songwriter and actor Jimmy Cliff stood head and shoulders above other musicians from the Caribbean Island.

His death at the age of 81, announced by his family on Monday this week, closes the chapter on one of the most enduring musicians, not just of Jamaica’s trademark ska/reggae genres, but the wider world of pop music.

His signature anthems, You Can Get It If You Really Want, Wonderful World Beautiful People, The Harder They Come, Many Rivers to Cross and Hard Road to Travel, were fundamentally reggae but enriched with influences of pop, rock, and soul.

That distinctive, sweet, soaring voice delivered lyrics that resonated with social, political and economic realities, from the human cost of the Vietnam War to championing the anti- apartheid movement in the 1980s.

‘His music holds immense appeal to audiences all over the world because he spoke to the everyday struggles of the people,’ says David Katz, author of Jimmy Cliff: An Unauthorized Biography in an email response to the BDLife this week.

‘Drawing on his own experience he sang songs of hardship, struggle and determination in a way that everyone could identify with. He had a readily identifiable voice that once heard could never be forgotten,’ adds Katz, an American author/filmmaker who is a leading world authority on reggae.

Even though he was a torch bearer for reggae, Cliff collaborated with a host of artistes outside his genre, notably the Rolling Stones, Annie Lennox, Willie Nelson, Cher, and Kool and the Gang.

While on a visit to Kinshasa in 1986, he made a foray into rumba by recording Shout for Freedom with the iconic Congolese band, T.P. OK Jazz for his album War a Africa. He paired with South African vocalist Lebo M for a rendition of Hakuna Matata featured in 1994’s blockbuster film, The Lion King.

In 2010, Cliff became only the second reggae musician, after Bob Marley, to be inducted into the Rock and Roll Hall of Fame. ‘When we saw Jimmy Cliff, we saw ourselves,’ said Wyclef Jean during the induction ceremony of the man who inspired millions throughout Africa and its diaspora.

James Chambers was born July 30, 1944 and grew up in the village of Somerton, St. James, Jamaica. Just like the character he played in the classic film The Harder They Come, he left the countryside for Kingston as a teenager in 1962 and started recording songs with producer Leslie Kong. At the urging of Kong, he took on the name Cliff to signify the heights he aimed to attain in his career.

He relocated to London, UK and when his career failed to take off there, he returned to Jamaica. In 1969 Jimmy Cliff scored his first international hit with Wonderful World Beautiful People and Many Rivers to Cross. The latter, a gospel-imbued vocal and organ arrangement has since been widely covered by many artistes, from John Lennon to UB40.

In 1969 Jamaican film director-writer Perry Henzell offered Cliff his big screen debut in The Harder They Come, though the movie was not released, due to funding challenges, until 1972.

Cliff played the role of Ivan Martin, an aspiring young singer who leaves his rural village to pursue his dream of becoming a star in Kingston but in the process gets caught up in a world of crime and violence.

The soundtrack of the film, which contains songs by Cliff and host of other Jamaican stars like Desmond Dekker and Toots and the Maytals, is acknowledged as the first major introduction of Jamaican music culture to a global audience.

‘His naturalistic appearance as Ivan in the film was entirely believable in part because he again worked his own experiences into the story through improvised dialogue,’ says his biographer, Katz.

Jimmy Cliff released albums prolifically throughout the 1970s and 80s but his output slowed down in the 1990s even though he enjoyed some major hits such as his 1993 version of Johnny Nash’s I Can See Clearly Now. In 2022, his first album in a decade, Refugee, raised awareness on the plight of millions displaced from their homes around the world

Cliff’s legacy, according to his biographer, is a catalogue of music built up over more than 60 years and the individual vision that governed his life and work. David Katz recalls that Cliff faced criticism when he performed in South Africa in 1980 in defiance of the cultural boycott against the apartheid regime. In a rare show of unity, 55, 000 people of all races packed the Orlando Stadium, Soweto for the concert.

‘Jimmy Cliff did things on his own terms and his great conviction in using music for the betterment of mankind is another component of his legacy,’ says Katz. ‘He regularly refreshed his band with top musicians, known and unknown, to keep his music perpetually fresh. He was a humanitarian at heart, and that shone through in his music. Add to that an undeniable charisma and you have the essence of Jimmy Cliff.’

The Central Bank of Kenya (CBK) is set to test investor appetite for long-term government securities with a Sh40 billion reopening of two papers with 15 and 20 years to maturity for its December bond sale.

The sale, which runs between November 27 and December 3, sees the CBK reopening a 25-year bond that was first sold in May 2021, giving it 20.4 years to maturity, and a 30-year bond first sold in February 2011 that now has 15.2 years to maturity.

In the last two bond sales carried out earlier this month, investors signalled to the government that they are willing to lend long-term if they get favourable coupon rates in a period of falling interest rates. The November bond sales involved two separate issuances in which the CBK reopened four papers, comprising a pair of 15-year bonds that had 8.7 years and 11.4 years to maturity, a 20-year bond with seven years to maturity and a 25-year bond that had 21.9 years until it falls due.

These bonds pay investors interest at rates of between 12 and 14.2 percent, which is well above the rates of between 7.8 percent and 9.4 percent that are available on short term Treasury bills.

Investors offered the government a cumulative Sh208.75 billion in the two issuances, with the CBK taking up just over half of this amount at Sh107.6 billion.

The maturity profile of these bonds, according to analysts, would have appealed to buyers who normally have a long investment profile such as pension funds, but retail investors have also bought in as returns from other assets such as unit trusts and fixed bank deposits trend lower. The general decline in interest rates has tracked the easing actions of the CBK’s monetary policy committee, which has cut rates in its last eight meetings held since August 2024.

The Central Bank Rate (CBR) currently stands at 9.25 percent, having been cut by 0.25 percentage points in the latest meeting on October 7. The CBR stood at 13 percent before the current easing cycle started in August 2024.

Now, the CBK is hoping for a repeat of the demand in its December issuance, which is also being floated amid relatively high shilling liquidity in the money market.

The 25-year bond, which has a coupon of 13.92 percent, has an outstanding amount of Sh90.5 billion. It has been reopened on four other occasions since its issuance in May 2021, the most recent of which was in May 2022.

The 30-year bond, which was dubbed a Savings Development Bond (SDB) when it was floated in 2011, has a coupon of 12 percent. It was most recently reopened in September, when it raised a modest Sh2.4 billion against a target of Sh20 billion.

It was also reopened in June this year alongside a 15-year bond from 2020 that carried a coupon of 12.75 percent.

The SDB netted Sh13.8 billion from bids worth Sh16.6 billion in this sale, where it was outperformed significantly by the 15-year paper which raised Sh57.9 billion from bids of Sh84.7 billion. This points to a possible preference by investors for the 25-year bond in the December sale, on account of the superior coupon compared to that of the SDB.

One particularly warm Friday night, I found myself at Cock and Barrel in Nairobi’s Westlands, carried there by the currents of the evening. I’d just wrapped up a masterclass on authorship at a nearby bookshop, my head still spinning with ideas, and needed a drink before the commute home.

The place hummed with energy, mostly a lively Indian crowd whose laughter and conversation wove into the bar’s low rumble. My friend Ali and I claimed two seats at the counter, giving us prime real estate: raised stage dead ahead, bar at our backs, and the beautiful chaos of a Friday night unfolding in between.

On stage, what appeared to be a professional dance troupe, maybe a dozen or so dancers, moved through an energetic routine. The music pounded with relentless joy.

Ali leaned over and launched into the story of how they nearly amputated his foot, all because of a thorn he’d picked up in his village up north. It was a wild thorn story, the wildest I have heard.

“The doctor in Isiolo said they might have to amputate my foot,” Ali recalled, eyes wide with the memory, “before some blood infection reached my heart and… well, exploded it.” I shook my head, smiling. “That should’ve been your first clue he was a quack,” I said. Ali had caught the next flight to Nairobi to save his leg. “At one point, I actually started picturing life with one leg,” he admitted, “thinking at least I’d finally have a legitimate claim to those disabled parking spots.”

By my second whisky, more dancers had spilled from the floor onto the stage, transforming it into something closer to a block party. People swiveled in their seats to take in the spectacle, all that energy and skill on display.

The dancers moved with impossible fluidity; I couldn’t even track their waists, just a whirl of limbs and joy. Ali sighed theatrically. “Sometimes I practice hopping up the stairs on one leg, just to see what it would’ve been like.”

“You must have excellent knees,” I said, lifting my glass, and we both cracked up. Around us, the bar thrummed-music bleeding into stories bleeding into motion. Cock and Barrel had become more than a Friday pit stop. It was the full hang, as the older folks would say.

November is synonymous with deep discounts, but the savings aren’t just limited to electronics, appliances and groceries. For savvy investors, the ‘Black November’ season offers an opportunity to hunt for bargain investments

In this episode, Wesley Manambo, a Senior Research Associate at Standard Investment Bank (SIB), walks us through the essential process of identifying an undervalued asset (a bargain) from a simply cheap one (a trap). Discover how to effectively bargain hunt in your investment portfolio.

Make Money, a podcast series, hosted by Kepha Muiruri, from Business Daily Africa unravels ways to be financially savvy. Get practical tips and advice on how to increase your income, build wealth, and achieve financial freedom in Kenya. Whether you’re just starting out or a seasoned investor, we’ve got something for everyone.