Category: Business Daily

When he appeared before Parliament in June, National Treasury Cabinet Secretary John Mbadi lamented the high public debt service costs incurred in January, February, May and July, stating that they were causing cash flow constraints for the exchequer.

January and July have stood out in terms of debt servicing for the last six years due to repayments of about Sh60 billion for the standard gauge railway loan to China.

However, rising debt service costs for February that are now in excess of Sh100 billion have also become a concern for the Treasury, mainly tied to large outstanding stocks of Eurobonds and domestic bonds totalling Sh1.66 trillion.

These debt charges, according to the National Treasury, put the government in a tight fiscal spot, given that it also needs to fund other recurrent costs, such as salaries for public servants amid persistent revenue collection shortfalls.

‘There are some months which are very bad, especially where we are repaying loans. We have challenges in January and February, and May and July because we repay debt, capitation to schools of more than Sh50 billion in January.and remember every month we pay Sh80 billion in salaries, yet revenue collection in a month is averaging about Sh200 billion,’ Mr Mbadi told MPs in June.

‘Constraints would be on cash flow challenges especially where funding is from the government and where we fail to meet revenue targets by Kenya Revenue Authority.’

The February issuances are now emerging as key targets for the Treasury’s early refinancing plans through bond buybacks and switch bonds, in order to spread the service costs to other months.

Last week, the Treasury completed the buyback of a $1 billion (Sh129.23 billion), 10-year Eurobond issued in February 2018. The bond was sold as part of a $2 billion issuance, which also included a 30-year tranche maturing in 2048.

The buyback is being financed using the proceeds from the sale of another $1.5 billion paper sold on Friday at an average rate of 8.7 percent on two tranches.

Overall, the government has $5 billion (Sh646.2 billion) worth of Eurobonds on its books that were issued in February, meaning that their semi-annual coupons are paid out in February and August of every year until maturity.

These papers, which account for two thirds of the country’s total stock of $7.41 billion outstanding Eurobonds, cost the government $221.9 million (Sh28.7 billion) in semi-annual interest charges.

World Bank data shows that other external debt obligations that fell due in February this year totalled $290 million (Sh37.5 billion). They included payments of about Sh21 billion to the Trade and Development Bank (TDB), Sh9.3 billion to the World Bank, Sh2.6 billion to the African Development Bank (AfDB) and Sh2.2 billion to the International Monetary Fund (IMF).

At the same time, the State is spending Sh70.9 billion every February and August in interest payments to holders of Sh1.013 trillion Treasury bonds that were issued in the two months.

The securities include an 8.5-year infrastructure bond (IFB) issued in February 2024 at a rate of 18.46 percent, that has an outstanding value of Sh240.3 billion, a 19-year IFB sold in February 2022 at 12.97 percent with an outstanding value of Sh194 billion, and a Sh103.4 billion 10-year bond that was issued in August 2016 at an interest rate of 15.04 percent.

According to its recently published annual borrowing plan, the Treasury has lined up the 10-year 2016 paper for a switch bond issuance on October 13. If successful, this will transfer the outstanding value to a new bond with a maturity period of between 10 and 15 years, thereby sparing the government from making a bullet payment of Sh103.4 billion in August 2026.

As reported in the Business Daily this week, the Trade ministry has at last acknowledged the devastating impact of the 17.5 percent Export Promotion Levy on clinker and steel billet imports. This policy, in place for over two years, has severely hindered two crucial economic sectors.

Cabinet Secretary Lee Kinyanjui’s appeal to Parliament for its repeal is not merely a policy reversal; it represents a vital lifeline for thousands of jobs, a clear rejection of monopolistic cartels, and a demonstration of decisive leadership. For this, we express our profound appreciation.

Introduced in July 2023 under the guise of boosting local production, the levy was presented as a patriotic measure to foster domestic industries. However, it quickly devolved into a classic case of policy capture, where powerful interests within government and the private sector manipulated public policy to solidify their dominance. Clinker, a crucial raw material for cement, has become prohibitively expensive for cement manufacturers. This led to factories operating at a mere 60 percent capacity, resulting in a staggering 7.9 percent drop in national cement production last year alone-a loss of 763,500 tonnes (over 15 million, 50kg bags equivalent annually).

Exports to key East African markets like Uganda and Tanzania plummeted by nearly 50 percent, eroding Kenya’s competitive edge and inflating building costs.

The same 17.5 percent levy on billets and other imports stifled downstream manufacturing, drove up prices for reinforcement bars and rods, and triggered widespread job losses as mills scaled back operations.

What was touted as an ‘export promotion’ tool benefited only a select few, creating artificial scarcities and unhealthy rivalries that disadvantaged smaller players and betrayed the very industries it claimed to protect. The official statistics, while alarming, only hint at the true extent of the damage. They fail to capture the hundreds of micro, small, and medium enterprises that were utterly destroyed by this levy, particularly in the production of steel wire products like nails, barbed wire, and mesh.

The monopolistic environment it fostered forced these small operators to procure raw materials in extremely large, dollar-denominated minimum order quantities, effectively pricing them out of existence overnight.

Consider the heartbreaking example of a company in Kikuyu Constituency, where the owner had invested Sh300 million from his retirement savings and the sale of properties. Employing 300 people and contributing significantly to local livelihoods, this company was forced to shut its doors after the levy hit, leaving its workers jobless. This is just one of thousands of employees whose dreams were deferred due to misguided policy.

This was no innocent oversight. Previous occupants of the Trade docket, armed with extensive data on the levy’s destructive ripple effects, chose inaction and convenience.

The minister’s forthright admission that the levy has created an unfair market marks a refreshing departure from this pervasive malaise.

For many banks, lending to small businesses is always seen as a risky affair. But Prime Bank, now with three decades of betting on small businesses, explains how it finds the sweet spot in an area where many large banks have struggled.

Prime Bank CEO Rajeev Pant spoke to Business Daily about the power of consistency, specialisation, staying close to customers and avoiding risky bets, and how this has offered a formula to keep loan default rates at below three percent against the banking sector’s over 17 percent.

After Parliament approved the plan to sell 65 percent of the government stake in Kenya Pipeline Company (KPC), the deal now looks like a foregone conclusion. The National Treasury expects to raise approximately Sh100 billion from the transaction.

The language used by officials to frame the policy is telling. This is not ‘privatisation’ in the ideological sense of rolling back the frontiers of the state. Instead, it is described as ‘liability management;-a tool to raise cash, restructure the balance sheet, and contain public debt. The narrative is that Kenya is not selling assets out of conviction but out of necessity.

A group of former Standard Chartered Bank Kenya (SCBK) employees have asked the UK’s financial services regulator to compel the lender’s British parent to act on their claims for past undervalued pensions, citing frustration in their engagement with the Kenyan subsidiary.

The group numbering 325 is seeking pension on the same terms as the 629 former workers who recently won a Supreme Court case affirming a Retirement Benefits Appeals Tribunal (RBAT) award against the lender for their dues estimated at about Sh7 billion.

Eighteen saccos have converted Sh660 million worth of claims in Kuscco Mutual Assurance Limited (KMAL) into an undisclosed stake in the entity ahead of the planned sale of a majority ownership in the Kenya Union of Savings and Credit Co-operatives Ltd (Kuscco)-owned insurer.

Kusccco managing director Arnold Munene said in an interview the sealing of a deal to dispose of a key stake of Kuscco Mutual Assurance to strategic investors is likely to conclude in November and saccos have been supporting this through the claims-to-equity transactions.

The Employment and Labour Relations Court has nullified the sacking of a company manager on allegations of practising witchcraft and failing to respond to text messages from her supervisor, ruling the dismissal violated statutory procedures.

While voiding the termination, the court cited the employer’s failure to produce written termination charges, proof of disciplinary hearing notices, and verification of witchcraft claims.

‘I’ve been happy most, if not all, of my life,’ Ambassador Macharia Kamau says. ‘My dad always slipped a shilling under the pillow when the tooth fairy came. So I grew up believing in a magical world.’

Magical indeed-for few Kenyans have carried their flag into as many global rooms. Over nearly four decades, he has served for 14 years as Kenya’s top diplomat, including nine years as Ambassador to the United Nations and five years as Principal Secretary for Foreign Affairs.

Crown Paints’ long-serving chief executive officer Rakesh Rao has stepped down after 20 years, during which the company recorded major growth in earnings and sales, and expanded into the regional market.

He has been replaced by Mustafa Turra effective October 1, 2025.

The High Court has frozen the newly revised park entry fees by the Kenya Wildlife Service (KWS), dealing a blow to the State agency, which banked on the higher charges to bridge a Sh12 billion annual budget deficit.

Justice John Chigiti issued the conservatory order following a petition by the Kenya Tourist Federation, representing tourism industry stakeholders, arguing that the move would affect the country’s global position as a safari destination.