Category: Business Daily

The High Court has cleared Stanbic Bank Kenya to auction a Sh3.17 billion edible oil plant that was under construction in Athi River after dismissing financier Fredwoods Traders Company’s attempt to block the sale.

The court lifted the temporary orders stopping the auction, dealing a major setback to Fredwoods’ claim to priority over the asset.

Fredwoods had argued that it deserved first claim on the Export Processing Zone (EPZ) plant, having advanced Sh1.25 billion to Convex Commodity Merchants Ltd in March 2023 to construct the manufacturing plant. The project did not fully materialise due to financial constraints.

The financier claimed it had funded the construction and that a premature auction would render its investment unrecoverable.

However, Stanbic successfully countered that Fredwoods’ financing agreement lacked execution, registration, and proof of funds disbursement.

The bank also revealed that Convex had previously lost identical injunction bids at the High Court and Court of Appeal, accusing Fredwoods of ‘forum shopping’ by concealing this history.

‘The plaintiff’s purported lien, being unregistered and unsupported by any registrable instrument, cannot override the bank’s statutory power of sale,’ the court ruled, citing land laws.

Stanbic’s manager for non-performing loans testified that Convex had defaulted on loans secured by registered charges over the EPZ land, an all-assets debenture, and directors’ guarantees.

The arrears totalled Sh3.17 billion and $21,904 (Sh2.8 million), triggering statutory sale notices.

The court dismissed Fredwoods’ claim that the property was undervalued at Sh2.2 billion against an independent valuation of Sh7.2 billion, noting that valuation disputes cannot halt a lender’s recovery rights in the absence of proof of bad faith.

‘A chargee’s right to realise security cannot be lightly curtailed,’ the court emphasised, adding that Fredwoods’ alleged losses -being monetary- could be remedied via damages if its case succeeded.

The court upheld the bank’s precedence in enforcing registered securities over unperfected creditor claims.

While declining to strike out the case entirely, the court allowed Stanbic to proceed with the auction, marking a decisive win for lenders amid rising non-performing loans in Kenya’s manufacturing sector.

The dispute stems from Stanbic’s Sh1.5 billion loan to Convex in December 2020 to construct the EPZ processing plant. The owner, James Waithaka, blamed Covid-19 pandemic disruptions for construction delays and financial troubles that saw Convex divert trading funds to sustain the project.

Stanbic moved to recover its debt through Garam Investments Auctioneers in June 2023 after Convex failed to secure repayment moratoriums from both the High Court and Court of Appeal.

Safaricom’s overdraft service, Fuliza, saw the number of active users rising 22.2 percent to 9.1 million in the six months to November 2025, up from 7.5 million in a similar period last year.

According to Safaricom’s half-year financial results released on Thursday, Kenyans borrowed a total of Sh629.2 billion through Fuliza, an increase of 39.8 percent from Sh450 billion last year.

The average loan size also grew by 7.8 percent, from Sh236.20 to Sh254.60, amid consumer reliance on short-term digital credit.

Launched in 2019, Fuliza allows Safaricom customers to complete transactions even when they have insufficient funds in their M-Pesa mobile money wallets, provided it is within one’s assigned limit, which is determined by their M-Pesa activity and history.

The optional service is run in partnership with NCBA and KCB Bank, who act as underwriters, and covers the shortfall for services like person-to-person cash transfer, withdrawal at M-Pesa agents, making payments, or purchasing airtime.

Funds received in the account are then automatically used to repay the outstanding Fuliza amount with interest and fees.

Safaricom charges a one-off one-percent access fee and a daily maintenance fee from Sh5 for loans between Sh101 and Sh500, up to Sh30 for amounts between Sh2,501 and Sh70,000.

However, a majority of Safaricom’s customers have still not opted into the service, as the latest figures represent 17.8 percent of the company’s 51.12 million 90-day total active customers.

Safaricom’s mobile savings and lending platform, M-Shwari, recorded strong customer growth but weaker loan performance.

The number of monthly active M-Shwari users rose 17.6 percent to 7.9 million, up from 6.7 million last year.

However, the average loan size declined 9.7 percent from Sh10,170 to Sh9,186, while total disbursements dipped 1.8 percent to Sh48 billion, down from Sh48.9 billion a year earlier.

Overall, revenue from M-Pesa rose 14 percent to Sh88.1 from Sh77.2 billion last year.

An injustice against a Kenyan soul-funk band more than 50 years ago is being remedied through the digital release of the two groundbreaking albums recorded by the group.

The Mighty Cavaliers released two classic albums, Fisherman in 1976 and Mapendo a year later but the musicians were never acknowledged by the record company.

In 2022, African music collector Dennis Krailing, owner of the German label Want Some Records, bought a collection of albums from Kenya that included a copy of Mapendo. ‘Naturally, the cover artwork immediately caught my eye,’ Krailing told BDLife.

‘When I listened to it for the first time, I thought, ‘I have never heard anything quite like this from Kenya before.’ There was no question that I would keep the record instead of selling it – but the thought remained, ‘How can I share this incredible music with others?’

With his friend Samy Ben Redjeb’s encouragement, founder of the Frankfurt-based label Analog Africa, Krailing undertook to release not just Mapendo, but also its predecessor, Fisherman.

Bassist Bonny Wanda, one of three surviving members of the band, says the reissue of the albums is about honouring a group of musicians who were then in their early 20s and were purely motivated by their passion for the music.

‘As most of my fellow musicians were young and gullible, we could easily be fooled by them,’ explains Bonny, who lives in London, UK. ‘We were focused on making new and innovative music, and paid too little attention to the business side of things.’

At the time, musicians in Kenya, were offered the choice of receiving a one-off payment for their studio recording sessions or waiting for royalties, for which they had to be registered with the Music Copyright Society of Kenya.

Krailing discovered that the copyright for both albums was registered under the name of Daudi Kabaka, and therefore, he had to obtain a licence from his son, heir to the legendary Kenyan musician.

Apparently, two years after the original release of Fisherman, it was reissued by a French label with a picture of Kabaka on the sleeve, who was named as the writer of all the songs. Worse was to come for the Mighty Cavaliers on their next project.

The recording of Mapendo was financed by Englishman Siegfried Aron, who owned the Zambezi Motel (the building that later became the PCEA Training School, Kikuyu), where the Mighty Cavaliers played occasionally when they were not at their regular haunt, the iconic Starlight Club. When the album was released, to the horror of the band, their names were missing from the record.

Disillusioned, the Mighty Cavaliers disbanded, with each member pursuing other interests.

Five decades later, Want Some Records has remastered and re-released these two discs, giving due credit to all the rightful musicians.

Besides Bonny, the other members of the Mighty Cavaliers were vocalists Rashid Salim and Juma ‘Bazwaley’ Njuguna, guitarists George ‘Fox’ Otieno, Athmani ‘Guitar Boy’, and Elijah Tallian, and keyboardist Eddie Rimber. The saxophonists were Albert Tsuma and Vuli Yeni, and the drummer Mohamed Mdowe.

The group’s inspiration came from the original Cavaliers, a band that was fronted by musician and actor Joe Omari. Incidentally, Omari was manager of the Starlight Club when the Mighty Cavaliers were engaged as the resident band when it was located where the Ethics and Anti-Corruption Commission headquarters sits today.

They were among the bands that benefited from the patronage of the late politician J.M. Kariuki, a regular at the Starlight Club, who offered financial support to some musicians of that generation.

Incidentally, Bonny wrote the soulful Fisherman, a cryptic reference to politicians who failed to deliver on their promises, a pretty bold statement to make at a time when any murmuring of dissent was crashed.

The album’s standout track is Dunia Ina Mambo, a funky groove full of catchy horns and irresistible guitar riffs, which is still widely played and was even given an electro-hip-hop makeover by the group Just a Band in 2012.

Also noteworthy is the title track of the album, Mapendo, written by lead singer Rashid, an infectious fusion of soul with elements of rumba, a sparkling guitar arrangement, and, the signature horn section and Mambo Bado, a distinct Fela Kuti-inspired arrangement

The songs are also a reflection of the socio-political era in which they were recorded, such as Bonny’s Barua Ya Soweto, a protest against the apartheid regime in South Africa, inspired by saxophonist Vuli Yeni, a refugee from South Africa who had grown up in Tanzania.

Vuli himself wrote the bluesy Mama Come Home – about longing to see his mother again in a liberated South Africa. (In the 1990s, Vuli spent five years as a member of Lucky Dube’s band (The Slaves). Lead vocalist Rashid penned Africa Tuungane, a call on Kenyan youth to rally with all the forces fighting for the liberation of all African countries.

The two albums by the Mighty Cavaliers will have pride of place during the Mega Record and CD Fair in Hertogenbosch, the Netherlands, from November 14 to 16, 2025, an event celebrating African records, reissued classics, and new releases.

A credit rating firm wants the Central Bank of Kenya (CBK) to compel commercial banks to publicly disclose the average risk premiums on their loans under a new credit pricing model.

Augusto and Co, one of four local rating agencies, wants Kenyan banks to publish the average of their risk premium – labelled as ‘K’ – in addition to the base lending rate recently unveiled by the CBK.

Under the new model, the total lending rate will be the interbank rate plus a premium, or K, which will be different for each borrower.

The interbank market rate refers to the rate at which commercial banks borrow and lend money to each other on a short-term basis and is widely relied upon as a gauge of the market’s liquidity.

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.

While the risk premium is tailored to each customer, Augusto wants banks to calculate and publish their average premiums so customers can compare the cost of lending across banks.

‘If you look at the United Kingdom, one of the things that is required is that banks must publish the weighted average premium for customer comparison,’ said Yinka Adelekan, the managing director Augusto and Co, in a press briefing on Thursday.

‘So customers with lower risk must have a lower interest rate compared to customers with higher risks. In the UK, they have to disclose this.’

The interbank rate 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 current 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 Central Bank Rate (CBR) of 9.5 percent or a maximum of 10.25 percent, and not less than 8.75 percent.

CBK has renamed the interbank to Overnight Interbank Rate to Kenya Shilling Overnight Interbank Average (Kesonia), which now stands at 9.2476 percent.

CBK officials note that disclosures based on Kesonia will start being published next month as the country transitions into the new lending framework.

Kenya Bankers Association Head of Research Samuel Tiriongo said all banks will be ready to roll out the new pricing regime anchored on Kesonia at the end of this month. The total cost of the credit portal will be revamped to cover more facilities beyond mortgages and personal loans.

‘By November 30, all banks should have their models ready and approved. The beauty is that this time, only the board is approving the framework. Once the board approves, each bank can proceed to implementation,’ Dr Tiriongo said.

‘All banks have to publish the average premiums for all products that they have within their books.’

The financial regulator replaced the CBR with Kesonia after it emerged that commercial banks were not passing on the benefits of lower policy rates to borrowers.

Each commercial bank must design a risk-based credit-pricing model and related policies and procedures within three months of CBK issuing the final revised framework and obtain board approval.

Banks must submit their board-approved model, policies and procedures to CBK within 15 days of board sign-off and no later than 15 days after the three-month deadline.

Although banks have begun publishing average lending rates, analysts fear many may withhold the weighted-average premium (‘K’), hiding the true cost of credit and possibly masking negative premiums.

Ms Adelekan noted that in Sub-Saharan Africa – in Morocco and South Africa – banks publish the weighted risk premium.

‘The (Kenyan) banks have to be transparent. They have to move from collateral-based lending to now look at entities based on their creditworthiness and their capacity to meet obligations,’ she said.

She added that banks should have an internal scoring model to assess counterparties.

Besides Augusto, other rating agencies licensed by the Capital Markets Authority (CMA) include Metropol Corporation Limited, Global Credit Rating Company, A.M. Best Rating Services Limited, and CARE Ratings.

Kenya Reinsurance Corporation (Kenya Re) has reinstated managing director Hillary Wachinga after two months of suspension over allegations that he had unprocedurally dismissed two employees.

The reinsurer’s board said on Thursday in a notice that Dr Wachinga has been restored to his position. The board did not disclose the findings of the ‘preliminary review of internal matters’ that had prompted his suspension.

‘The board has lifted the suspension of Dr Hillary Wachinga and restored him to his position as the managing director of the corporation,’ said the board in a notice.

‘The board of directors remains focused on overseeing the execution of the corporation’s long-term strategy and furthering the interests of all its shareholders and stakeholders.’

Dr Wachinga’s reinstatement comes barely a month after he withdrew the case in which he had sued Kenya Re board for unprocedural suspension and invitation for a disciplinary hearing.

The law suit revealed that Dr Wachinga had been suspended over what the board termed as ‘not complying with instructions’ in the handling of a disciplinary matter involving two of the reinsurer’s staff.

Dr Wachinga was first suspended on September 3 for 21 days before the board extended this for a further 21 days that ran from October 2.

Kenya Re’s share price at the Nairobi Securities Exchange dropped 8.38 percent on the day Dr Wachinga was first suspended, closing as the day’s top loser at Sh3.17.

On Thursday, the stock opened at Sh3.13, which was 8.6 percent below the Sh3.62 level it traded at before the suspension.

Dr Wachinga had moved to court on September 22, 2025, accusing Kenya Re of violating his constitutional rights through a disciplinary process that he said was ‘in bad faith’ and risked violating his rights to ‘fair hearing, fair labour practices and fair administrative action.’

In his court filings, Dr Wachinga argued that he had received two letters -a suspension letter dated September 2, 2025 and a show-cause letter dated September 3, 2025- which he described as contradictory.

He had been invited to a disciplinary hearing on September 23, 2025. However, the session did not proceed after the court issued a temporary freeze following Dr Wachinga’s application.

Court records show that both parties filed submissions -Dr Wachinga on September 24 and the reinsurer on October 6.

The case was scheduled for a ruling on October 23 after a mention hearing on October 7. However, before the court could pronounce itself on whether the disciplinary process should proceed, Dr Wachinga filed a notice to withdraw the entire case.

As governments worldwide race to modernise their tax systems, the Kenya Revenue Authority (KRA) is emerging as a regional leader in digital transformation.

From manual filing to auto-populated returns, and ultimately, real-time tax compliance and reporting, the future of tax compliance is being shaped by technology and businesses must adapt or risk falling behind.

In developed economies, revenue authorities are pushing the boundaries of digital transformation.

According to the Organisation for Economic Co-operation and Development, over 80 percent of tax administrations have developed Application Programming Interfaces (APIs) to integrate tax systems with third-party platforms.

Around 60 percent offer full prefilling of personal income tax returns, and nearly 40 percent can prefill Value Added Tax (VAT) returns. Estonia, for example, enables near real-time tax refunds, while the United Kingdom uses digital IDs (Digital Identification) for secure access to tax services.

Artificial intelligence (AI) is being deployed to enhance compliance management, detect fraud in real time and improve taxpayer services.

Exemplifying this is Italy’s revenue authority which has developed an algorithm known as VeRa; a tool tasked with cross-referencing tax filings, property records and bank data to identify discrepancies and flag high-risk taxpayers.

Big data analytics tools are being deployed by tax authorities to forecast revenue, identify trends and personalise taxpayer engagement.

Poland’s STIR (System Teleinformatyczny Izby Rozliczeniowej – Teleinformatic System of the Clearing House in English) analyses daily banking and clearinghouse data to detect potential carousel frauds in near real time, enabling swift enforcement by the National Revenue Administration.

Blockchain is being explored for tamper-proof audit trails. In China, blockchain-based electronic invoicing uses smart contracts and encrypted algorithms to ensure secure issuance, storage and transmission of documents. The system offers complete traceability and tamper resistance, making post-fact data manipulation virtually impossible.

Natural Language Processing is also gaining traction, helping tax authorities and businesses monitor legislative changes and automate compliance workflows.

While Kenya may not currently match these capabilities, it is rapidly narrowing the gap. Prior to migration to the iTax platform back in August 2015, tax compliance in Kenya was a paper-heavy, time-consuming process.

Today, KRA has embraced digital innovation, collecting Sh2.57 trillion in the 2024/25 fiscal year and targets Sh2.75 trillion in ordinary revenue for the 2025/26 fiscal year.

With new tax law changes introduced by the Finance Act, 2025 forecast to yield only about Sh25 billion to Sh30 billion in additional revenue, KRA is expected to rely heavily on technology-driven tax administration efforts to meet its ambitious growth and compliance objectives. This means tightening enforcement through digital means to raise the budgeted revenue without imposing significant new taxes.

The rollout of platforms like GavaConnect-an API-driven solution that integrates tax compliance into everyday business operations, and eTIMS (Electronic Tax Invoice Management System), which has revolutionised VAT reporting, reflects a broader shift toward proactive enforcement. These tools not only improve efficiency but also enhance transparency and taxpayer trust.

Kenya’s digital tax transformation is part of a wider East African trend. Neighbouring countries are implementing similar tech-driven initiatives to modernise tax administration and improve compliance within their jurisdictions.

For example, Tanzania’s excise revenue jumped over 80 percent since introducing the Electronic Tax Stamp System (ETS), while Uganda saw a 30 percent rise in collections following its rollout of e-invoicing and ETS.

Rwanda’s flexible e-invoicing system, tailored to businesses of all sizes, has achieved near-total VAT invoice capture and is considered a regional model.

As KRA intensifies its digital oversight, businesses in Kenya are increasingly recognising the need for a dedicated tax technology function as a strategic capability that blends tax expertise with digital innovation.

In Kenya’s fast-digitising economy, the KRA is setting the pace for revenue authorities across Africa, driven by a bold vision to emulate the best practices of advanced economies. Through the adoption of cutting-edge technologies ranging from real-time data integration and AI-driven risk analytics to tamper-proof systems, KRA is redefining tax administration.

In this new era, tax technology is no longer a back-office function, it is a strategic enabler.

Companies that invest in robust tax tech capabilities are better positioned to navigate regulatory changes, leverage tax optimisation as a growth catalyst, avoid penalties and unlock new operational efficiencies.

Kenya has good economic strength and is strategically located as a gateway to African trade. Nevertheless, to maximise its export potential and increase global edge, Kenya needs to take a holistic approach to the matter that will incorporate fiscal reforms, industrial policy, and international benchmarking.

One of the reasons why it is important to strengthen exports is that they will enhance production, employment rates and long-term economic stability in the domestic market, not only by enhancing the balance of trade and payments but also by boosting production.

The foundation of export growth lies in diversification and industrial upgrading. Kenya’s manufacturing contribution to gross domestic product remains below eight percent, significantly lower than the 15 percent target envisioned in Vision 2030.

Expanding industrial capacity, especially in agro-processing, textiles, automotive assembly, and ICT services, will enable the country to increase its export basket’s complexity and value.

Establishing specialised export processing zones and industrial parks closer to raw material sources can cut logistics costs and enhance production efficiency. Increasing the level of quality, investing in the logistics infrastructure, and local industries to comply with global standards will play one of the key roles in gaining the privileges to high-value markets.

The effect of government policy is definitive in determining competitiveness in exports. President William Ruto’s administration has identified a set of ambitious proposals to make Kenya an export-driven economy with the Bottom-Up Economic Transformation Agenda.

The focus of this plan is on industrial parks, export processing zones, and enhancement of reach to the market via trade agreements like the African Continental Free Trade Area and bilateral agreements with the United States and the European Union.

The Kenya Export Promotion and Branding Agency and the Kenya Investment Authority should be empowered to coordinate aggressively in market intelligence, export promotion, and investment attraction.

This will have to be effected with good implementation, which will involve lean bureaucracy, transparency and policy implementation uniformly to earn investor confidence.

An expanding tax regime can be used as a boost to exports. Kenya needs to diversify and streamline tax concessions to firms involved in export business by making sure that they promote innovation and local value addition instead of just providing relief.

Reduction of export taxes imposed on intermediate goods, tax holidays in the strategic industries, and alignment of county levies will reduce the cost of production and increase competitiveness.

Simultaneously, the Kenya Revenue Authority should streamline compliance procedures and capitalise on the digital solutions to make compliance efficient and not to undercut revenue collection.

Japan offers a compelling model for Kenya’s export transformation.

Post-war Japan’s economic miracle was built on three pillars: government-industry collaboration, technology-driven innovation, and a disciplined export strategy anchored in quality.

By combining the efforts of the government and industry, Japan fostered individual competitiveness sectors through investments in research, technology transfer and developing their skills.

Kenya can replicate this template by establishing special export promotion agencies that would integrate the academia, the government, and the private sector, with the end goal of spurring innovation.

A growing and long-term vision that focuses on productivity, quality control, and exportation of the brand will allow the Kenyan products to compete in the world not on prices alone, but on merit.

An enhanced export base will generate a profound multiplier effect across the economy. More production to supply the world will directly employ people in manufacturing, logistics, and agribusiness and increase demand in local service provision through transport, banking, and information and communications technology.

An increasing export base makes the shilling strong, cuts the current account deficit, and improves Kenya’s credit position in world markets.

Kenya’s journey toward global export competitiveness demands coordinated action, anchored on government facilitation, tax reforms, industrial diversification, and sustainable production.

By adopting strategic lessons from global exemplars like Japan, implementing predictable fiscal incentives, and accelerating infrastructure development, Kenya can transition from an export-dependent to an export-driven economy.

President Ruto’s export-oriented agenda provides a timely blueprint. What remains is steadfast execution; transforming policy intent into measurable outcomes that elevate Kenya as a formidable player in global trade.

The share of electricity that Kenya Power loses shrank to 21.2 percent in the year to June 2025 -the lowest in seven years- as the firm reaps the benefits of the smart meter rollout and revamping of the ageing lines.

This is a drop from the 23.16 percent for the previous year. The last time that the system losses were lower was 21 percent in the year ended June 2018.

Kenya Power last year started installing smart meters, targeting large consumers and small businesses to track consumption more accurately and in turn cut commercial losses due to theft and billing errors.

Electricity theft and an aging network are the biggest components of system losses to Kenya Power, highlighting why the firm is keen to spend billions of shillings to revamp the system.

Reduced system losses are a boost to Kenya Power given that the firm can only transfer the losses to customers up to a given limit and then absorb the rest in its books.

‘Total system losses reduced from 23.16 percent to 21.21 percent driven by smart meter roll-out, network reinforcements and system upgrades and enhanced energy accounting,’ Joseph Siror, the managing director of Kenya Power noted in a statement.

Installation of the smart meters is part of the project where the firm invested Sh29 billion in the year under review. The firm also revamped aging lines and upgraded substations in areas with high customer growth.

At 21.2 percent, the system losses for the year to June 2025 are still higher than the cap of 17.5 percent set by the energy regulator for the period under review.

System losses refer to the electricity that a distribution firm buys but loses it to theft in illegal connections and energy dissipation in the course of transmission.

The drop in the amount of power lost came at a time when electricity sales grew by 887 Gigawatt-hours (GWh) to 11,403 GWh but net profit fell 18.6 percent to Sh24.47 billion due to reduced electricity prices.

System losses can either be technical or commercial. The technical losses are caused by resistance of the conductors along the transmission network while the commercial ones are tied to illegal connections or metering errors.

A growing customer base and increased transmission network directly leads to higher system losses. This is made worse if most of the transmission lines are low voltage.

Kenya Power’s customer base currently stands at 10.06 million compared to 9.6 million a year ago. The increased numbers have forced Kenya Power to extend the low-voltage network and thus higher rates of energy dissipation.

The firm has over the years struggled to cut the amount of electricity lost to illegal connections especially in the informal settings

Kenya Power has set an ambitious target of cutting system losses to 15.5 percent by 2028. The firm is banking on grid digitisation and increased revamp of the system to achieve this target.

Powerful Western lenders led by the World Bank and the International Monetary Fund (IMF) forced Kenya to convert dollar-denominated standard gauge railway (SGR) debt into yuan after concerns that the creditors’ cash was being channelled to China.

President William Ruto’s top economic advisor, David Ndii, said the multilateral lenders were disturbed over the use of their dollar loans to pay China instead of supporting the country’s budget and infrastructure projects.

Kenya last month completed converting three dollar-denominated loans from China into yuan, with the Treasury saying it would save the country about $215 million a year on interest payments.

The swap, which allows the floating, dollar-based interest rates across the three loans from China Exim Bank to drop into their lower, yuan-based rates.

The US dollar attracted interest of more than 6.0 percent compared to 3.0 percent for the yuan facility, said the Treasury.

But Dr Ndii has revealed a hidden hand behind the swap.

‘The Western lenders queried why they should be supporting us while other lenders are taking out the money,’ Dr Ndii told the Business Daily in an interview.

‘That’s why they put pressure on countries to restructure debts so that the money they put in stays in the country and does not go to pay other lenders.’

Kenya borrowed $5.08 billion (Sh656.54 billion) from China Export-Import Bank (Exim) for the construction of two phases of the SGR.

The first phase of the modern railway from the port city of Mombasa to Nairobi received two facilities of $1.6 billion (Sh206.78 billion) and $2 billion (Sh258.94 billion), while the second, connecting the capital city to Naivasha, took up $1.48 billion (Sh191.63 billion).

The loans were dollar-denominated and had floating interest rates reportedly set at 3.6 percent or 3.0 percent above the average London Interbank Offered Rate (Libor) -a global benchmark retired in June 2023 and replaced by SOFR and other alternative reference rates.

Treasury Cabinet Secretary John Mbadi said that in US dollars, the interest cost comes to more than 6.0 percent (about 4.6 percent SOFR plus 2.0 percent). ‘But with renminbi it is about 3.0 percent,’ he said.

The country pays interest on the SGR loans every six months in January and July.

The Treasury has a budget of Sh129.90 billion towards repayment of loans contracted from China this financial year ending June 2026, comprising Sh95.64 billion in principal and Sh34.26 billion in interest costs. A large share of these repayments is for the SGR debt.

China has not lent additional funds to Kenya beyond the SGR facilities, easing the Beijing debt.

Multilateral lenders, including the World Bank and the IMF, have meanwhile intensified lending to Kenya in recent years, strengthening their hands in influencing Kenya’s policies.

Treasury data through September 2025 shows outstanding loans due to China have fallen by 18.8 percent over the past five years to Sh620.3 billion from Sh764.2 billion in September 2021.

Borrowings from the IMF have risen at the fastest rate of 164.2 percent from Sh180.6 billion in September 2021 to Sh477.2 billion in September 2025.

Outstanding balances due to the World Bank (IDA) and sovereign (Eurobonds) have grown by 51.8 percent and 30.3 percent respectively to Sh1.66 trillion and Sh1.022 trillion respectively.

‘If you look at the net position of external lenders, the World Bank position is positive, so is the IMF, but China’s position is negative in that they are putting in less money than they are getting out,’ Dr Ndii added.

‘The lenders say that our money is going to pay China. Multilaterals and other Western lenders, over the last couple of years, have been putting in money but the markets and China have been taking out money.’

Kenya-classified by the IMF as at high risk of debt distress-has been taking steps to tackle its loans since State finances came under severe pressure in 2024, when anti-government protests forced the administration to withdraw the Finance Bill with Sh345 billion in new taxes.

President Ruto’s government has been trying to cut its overall debt, which stands close to 70 percent of gross domestic product, to make repayments more manageable.

The government has revamped its debt management strategy to smooth out its maturity curve and lighten the pressure on public coffers.

It has also been turning to securitisation of revenue to raise funds for key projects like the extension of the railway from Naivasha to the Ugandan border, and the upgrading of the main airport in Nairobi.

The currency swap on the SGR loans forms part of the country’s debt management, which seeks to diversify Kenya’s debt-currency mix, currently concentrated in dollars.

The proportion of external debt denominated in US dollars at the end of September was 52 percent, 27.9 percent for the euro, 12.3 percent for yuan, 5.2 percent for the yen and 2.5 percent for the British Pound.

A negligible 0.2 percent of Kenya’s debt was denominated in other currencies, including the Danish kroner, Kuwait dinar, Korean won, Indian rupee, Canadian dollar, Saudi riyal, Swedish kroner and the Emirati dirham.

Kenya has stepped up its debt management operations in 2025 by further undertaking early repayments due in 2027 and 2028 Eurobonds, pushing out expected sizeable maturities on external debt to at least 2031.

Domestically, the Exchequer has targeted similar early buybacks alongside switch bonds to ease pressure on maturities.

The country is expected to deploy multiple strategies to acquire yuan to pay for the SGR loans, including seeking currency swaps with China using Kenyan shilling.

China’s ruling party, the Communist Party of China, recently charted the country’s path forward through its 15th Five-Year Plan (2026-2030).

The plan sets out a framework for China’s continued development over the next five years, focusing on key areas such as technological innovation, economic reform, environmental sustainability, and social welfare. The resolutions are a reflection of both the nation’s ambitions and the complexities of the global landscape in which it operates.

With this latest long-term plan, the world’s second-largest economy is once again demonstrating the power of disciplined, forward-looking governance.

Few policy instruments have shaped modern nations as effectively as China’s planning framework, which has since its inception in 1953, guided the country’s economic and social transformation from an agrarian society to a global superpower.

China’s Five-Year Plans (FYPs) were inspired by Soviet-style centralised planning but have evolved to reflect China’s unique political and economic context.

The First Five-Year Plan (1953-1957) focused on heavy industrialisation, laying the foundation for a modern industrial base. Subsequent plans navigated periods of turbulence, including the Great Leap Forward and the Cultural Revolution, but the planning tradition endured – adapting to new realities.

The turning point came with the 6th Five-Year Plan (1981-1985), when China began shifting from a centrally planned economy to a ‘socialist market economy.’ From then on, the plans have become strategic blueprints – setting long-term goals, identifying key priorities, and mobilising resources and institutions toward their achievement.

The significance of China’s Five-Year Plans lies in their discipline, continuity, and focus. Each plan articulates clear national priorities – from industrial restructuring to technological innovation and environmental protection – backed by measurable targets. They align central and local governments, private enterprises, state-owned firms, and civil society behind a common vision.

Importantly, the plans are not static; they undergo rigorous consultation, research, and revision, reflecting a mix of top-down direction and bottom-up feedback. This ensures that China remains nimble in responding to internal and external changes while keeping its long-term objectives intact.

China’s achievements over the past seven decades are, in many ways, the story of its Five-Year Plans. Poverty alleviation to technological advancement, infrastructure development to environmental goals.

African countries, including Kenya, can draw powerful lessons from China’s planning model. First is the centrality of strategic discipline. China’s plans are not political slogans that change with each administration; they are national compacts that transcend political cycles.

Second is institutional alignment. China ensures that ministries, local governments, and economic actors are working toward shared goals. In Kenya, by contrast, national plans often clash with county priorities or are derailed by political contestation.

Third is forward-looking vision. China plans for decades, not just electoral cycles. It identifies strategic sectors, invests heavily in research and development, and prepares its workforce accordingly.

Kenya’s Vision 2030 was a bold step in this direction, but its execution has been uneven, often derailed by leadership transitions and resource leakages.

Perhaps the most critical lesson is discipline and commitment. The success of China’s plans hinges on rigorous implementation and accountability.

In Kenya, while policy documents abound – from development blueprints to sectoral strategies – the gap between policy formulation and execution remains wide.

None other than the Cabinet secretary for the Treasury and Economic planning John Mbadi has admitted to this misalignment.

Mbadi agrees that planning over the years has been treated as a mere ritual with little or no serious attempts being made to follow through on the agreed areas of focus, something he is promising to change.

China’s unwavering commitment to planning is partly driven by necessity. With a population exceeding 1.4 billion and regions that experience harsh winters, droughts, and floods, failure to plan would mean not just inefficiency but national catastrophe. In China, as the saying goes, ‘failing to plan is planning to die.’

This sense of existential urgency is largely absent in many African states, where planning is often treated as a bureaucratic ritual rather than a matter of survival and national destiny.

For Kenya, embracing a disciplined planning culture would require several shifts: Depoliticising national development plans, ensuring they are owned by the State, not just the government of the day; strengthening monitoring and evaluation mechanisms to ensure plans are not just written but executed with precision.

Focus should also be on building a culture of long-term thinking in political leadership, civil service, and the citizenry; investing in research and data, as China does, to base planning on evidence, not guesswork.

Ultimately, Kenya’s developmental aspirations – from industrialisation to universal health coverage – will only be realised if planning moves from paper to practice.