Category: Business Daily

A majority of shops and businesses remained closed yesterday in Nairobi and major towns in the country following protests and a nationwide public transport strike over fuel price hikes, triggering billions of shillings in losses.

Key roads in Nairobi remained largely empty, forcing some commuters to walk to work, with other parts of the country like Nakuru, Mombasa and Eldoret also affected by the transport crisis.

Businesses in parts of Nairobi remained shut, and schools asked students to stay at home, leading to revenue losses for enterprises and county governments.

In Nairobi and elsewhere across the country, police clashed with protesters, using tear gas to disperse them.

This came amid reports of demonstrators stopping and harassing some motorists.

Kenya’s fuel prices hit a record high on Friday, with the diesel price increasing by 23.5 percent to Sh242.92 a litre in Nairobi and petrol by 8.0 percent to Sh214.25, ushering in pain to businesses and households from record inflation.

Policy pressure

President William Ruto, who has been out of the country, is yet to comment on the new prices, and is expected to make a call to increase subsidies or make further tax cuts to ease the burden on households and businesses and curb protests in the months to the elections.

Kenya has hinged part of its response on a Sh75 billion in emergency funding from the World Bank, it has sought to help it manage the economic shocks triggered by the Iran war.

‘I am sure as a government we will sit again when the President comes back and convenes the Executive. He will have to look at what else we can do about the fuel prices,’ Treasury Cabinet Secretary Mbadi said on Monday morning.

But Mr Mbadi fell short of disclosing whether the intervention will include a cut in taxes, an increase in subsidies or both.The high cost of fuel is being blamed for increases in the price of food and other basic goods and services, with public service vehicle operators already raising commuter fares.

Last month, the government cut value-added tax (VAT) on fuel from 16 percent to 8.0 percent until July, but there have been calls for it to do more.

It has also offered subsidies to curb sharp increases, especially of petrol and diesel, but the fund it has used to offer below-market-price fuel is facing depletion.

This has increased calls for the State to unleash more public money to help businesses with fuel bills.

Many governments, from Europe to Africa and Asia, have already introduced a ?raft of funding measures, including fuel price caps and tax cuts, to try to contain the Iran war’s economic fallout.

The proposed changes are viewed as temporary, introduced specifically to ?address the energy outcome of the Iran war.

Regional response

South Africa cut fuel levy on petrol and diesel from April, while Zambia temporarily suspended excise duty on fuel and lowered VAT on the commodity to zero in order to shield citizens from the skyrocketing fuel prices.

Namibia reduced fuel taxes by half while Comoros suspended new fuel levies that were introduced last week.

Industry lobby Kenya Association of Manufacturers (KAM) on Monday sought urgent State intervention targeting a string of taxes and levies loaded on fuel prices.

‘The government should consider reviewing various fuel-related taxes and levies to ease pressure on the economy and protect the competitiveness and productivity of local manufacturers,’ KAM said in a statement.

‘Such measures would play a critical role in lowering the cost of commodities, stabilising supply chains, and supporting broader economic recovery.’

Subsidy strain

An analysis shows that taxes and levies account for 34.5 percent in every litre of petrol and 28 percent of a litre of diesel, compared to 40 percent and 36 percent respectively last month, following the halving of VAT to 8.0 percent.

The Roads Maintenance Levy (RML) is the single biggest duty on fuel at Sh25 per litre of petrol and diesel, followed by VAT, excise duty, Petroleum Development Levy (PDL), Railway Development Levy and the Import Declaration Fee.

Mr Mbadi said that the government had lost an estimated Sh24 billion in fuel taxes due to the halving of VAT to eight percent from April 15.

He reckoned that only Sh5 billion is remaining in the Petroleum Development Levy, which is used for fuel subsidies and is collected from motorists at the rate of Sh5.40 per litre of petrol and diesel.

The government announced that Sh6.2 billion was used to subsidise fuel prices in the monthly cycle ending April 14, and a further Sh5 billion in the current round ending May 14.

Kenya, like many other African countries, relies heavily on fuel imports from the Gulf, a supply route disrupted by the US-Israel conflict with Iran that began on February 28.

Even though a ceasefire has been declared, fuel prices have remained high as the Strait of Hormuz, where a fifth of the world’s oil passes, is still blocked.

Kenya imports nearly all of its fuel products from the Middle East via government-to-government deals with Gulf suppliers, including Saudi Aramco Trading Fujairah, Abu Dhabi’s ADNOC Global Trading Ltd, and Emirates National ?Oil Company Singapore Ltd.

Former Deputy President Rigathi Gachagua, who joined the opposition after his impeachment in October 2024, has blamed the sharp rise on corrupt businesspeople who want to increase their profit margins.

He compared the fuel prices to those in neighbouring landlocked countries that rely on Kenyan ports for the importation of fuel, such as Uganda, where prices are lower.

Kenya serves as a major transport hub for businesspeople importing goods through the port of Mombasa to be ferried by road.

Aramco Trading Fujairah (ATF) has written to Kenya, stating that its sourcing of petroleum products from ‘other locations’ has come at higher costs, which it would pass on to Kenya, a pointer that the prices would rise further without State intervention.

Inflation rose to 5.6 percent ?year-on-year in April from 4.4 percent a month earlier on costly fuel, making it the fastest rise in seven years.

Update: EPRA, on Monday night, reduced diesel prices by Sh10.06 to Sh232.86 per litre, kerosene rose by Sh38.60 to retail at Sh191.38 per litre in Nairobi, while the cost of petrol remained unchanged.

The Court of Appeal has set aside an undertaking directing Imperial Bank of Kenya (IBL) to pay Mombasa tycoons Ashok Doshi and Amit A. Doshi about Sh1 billion, as they seek to recover deposits from the collapsed lender.

A three-judge bench faulted the High Court judge for ruling that a consent recorded in July 2016 bound IBL and Central Bank of Kenya (CBK) to pay the depositors if they succeeded in their case.

The appellate court said that from the moment IBL was placed under receivership, a moratorium on all payments to, or preferential treatment of, depositors and other creditors outside the framework of the law took effect and remained in force.

‘It is also not lost on us that section 56(3) of the Act is emphatic that no attachment, garnishment, execution or other method of enforcement of a judgment or order against an institution placed under liquidation, or its assets, may take place or continue,’ the court stated.

The court emphasized that sections 33 and 57 of the Act clearly define the framework for payment of claims by the liquidation agent. The provisions do not classify debts owed to depositors who have filed claims in court, or those with secured judgments, as eligible for priority over other creditors.

‘Those principles apply in equal measure to the winding up and liquidation of banking institutions as was the case here. In our considered view, the learned Judge erred in granting the impugned orders with the aim of breathing new life into the terms of the consent agreement entered into when the 2nd appellant (IBL) was still in receivership,’ the court said.

The court added that any undertaking by IBL after being placed under liquidation would violate section 56(3) of the Act.

In November 2022, the High Court had allowed the Doshi brothers’ application that IBL should not be placed under liquidation until CBK and IBL deposited $7,277,314 in a joint interest-earning account in the names of their advocates as security.

Alternatively, the court ruled that CBK should undertake to pay the depositors if they won the case.

Mr Andrew Rutto, a liquidation agent at the Kenya Deposit Insurance Corporation (KDIC), stated in an affidavit that the High Court’s orders amounted to granting preferential treatment to Mr Doshi. He said depositors are required by law to lodge and prove their claims with the liquidator, as provided under section 33 of the KDIC Act.

Mr Doshi opposed this, arguing that CBK was avoiding giving the undertaking to allow IBL’s liquidation to proceed, leaving only a shell incapable of paying them if they prevailed.

‘In our considered view, the learned Judge erred in granting leave to the 1st and 2nd (Doshi) applicants to have subsequent applications and the main suit heard when Imperial Bank was still in liquidation,’ the appellate court said.

The payment of Sh244.5 billion to the Treasury for the sale of a 15 percent stake in Safaricom Plc to the parent firm, Vodacom Group, will take longer after the High Court extended a freeze on the transaction.

A bench of three judges of the High Court ruled that plans for the sale of the Safaricom stake should await the determination of the petitions filed by four Kenyans.

The court dismissed claims by the government that stopping the transaction would affect investor confidence.

‘Consequently, we do not buy into the argument that a constitutional adjudication automatically results in loss of confidence by investors,’ the judges said.

‘Such an argument, if accepted by this court, would lead to immunity from judicial review for public dealings because those dealings are economically motivated. That argument would run the supremacy of the Constitution afoul,’ the judges added.

Court setback

Vodacom had indicated readiness to wire the billions of shillings to Kenya in anticipation that the High Court would lift the freeze on the deal.

This means that the deal will drag on, putting the State in line to receive a Sh16 billion dividend from the 15 percent stake if Kenya remains with full ownership of 35 percent into August.

The pause on the transaction has delayed the payment of Sh244.5 billion to the Treasury, including Sh40.2 billion in advanced dividends from what would be the government’s residual 20 percent stake in the Nairobi Securities Exchange-listed firm.

‘We expect an update on this ruling on May 18, 2026. Pending this outcome, we’ll be able to finalise the deal very quickly,’ said Vodacom chief executive officer Shameel Joosub in a May 11 earnings call.

‘If the conservatory orders are not lifted, the court case will continue, and it could take a few more months. So, we are a little bit in the court’s hands, and we will see what the court decides,’ he added.

The transaction was frozen when petitioners Tony Gachoka and Fredrick Ogola sued several State agencies, Safaricom and Vodacom, questioning the legality of the government’s plan to reduce its stake in the telecoms giant.

The government defended the process, saying the proceeds of sales would be invested in an infrastructure fund and utilised prudently for public goods, and reduce the country’s debt burden.

It reckoned that the petitioners sought to stop a statutory-mandated process under Section 87A of the Public Finance Management Act and that the sale had already gone through a parliamentary process and public participation.

The judges, however, said that while they appreciated the importance of economic stability and investor certainty, constitutional compliance cannot be subordinated to commercial convenience.

‘A quick reminder is that investor confidence in a constitutional democracy like ours is not founded upon the unchecked exercise of public power, but upon the assurance that the government acts within the confines of the Constitution and the law,’ said the court.

The court case was filed as analysts and politicians debated the merits of the government’s partial divestment from Safaricom, with a major issue being whether the State will get full value from the sale price of Sh34 per share.

Some argue that the deal is good for Kenya, while others have been sceptical about the benefits of the transaction, seeing Vodacom as the winner after getting majority control of the profitable telecoms operator.

A joint parliamentary committee had approved the sale, paving the way for the conclusion of the transaction before the litigants struck.

Deal economics

Under the deal, the Treasury is to receive Sh204.3 billion for the 15 percent stake, representing a price of Sh34 per share.

The exchequer is also to receive a Sh40.2 billion dividend top-up, representing a loan backed by what will be Kenya’s remaining 20 percent stake in Safaricom.

The delayed sale, which had been expected to close before March, will see the Treasury collect Sh16.1 billion, representing its share of final dividends from its current 35 percent stake when book closure happens on August 4, if the transaction remains on pause.

Vodacom has insisted that the completion of the stake purchase fully rests on the court decision.

Concurrent to the purchase of the 15 percent stake from the government, Vodacom is also buying a five percent stake in Safaricom that is held by its parent firm, Vodafone Group, at the same price of Sh34 per share.

Once the twin deals are sealed, Vodacom will raise its ownership in the telecoms operator to 55 percent, attaining majority control.

Funding limbo

Earlier in May, Safaricom raised its per share final dividend to Sh1.15 from Sh0.65 previously after its net profit rose 67 percent to Sh95.6 billion.

The government’s share of dividends from Safaricom for the period to the end of March, including an interim dividend of Sh0.85 per share, is Sh28.04 billion.

Proceeds from the transaction are expected to flow to the National Infrastructure Fund (NIF), a vehicle designed to finance large-scale infrastructure expansion, including roads, railways, energy and water systems.

The Treasury indicated that there was no pressure to rush the deal as the funding is not a pressing budget issue.

The recent debate surrounding French President Emmanuel Macron asking attendees at an Africa-France summit to maintain silence while speakers addressed the room, sparked a deeper conversation far beyond conference etiquette.

To some, it symbolised colonial arrogance; to others, it was a call for order and professionalism. But perhaps the real issue is not Mr Macron.

May be the issue is Africa’s growing difficulty in balancing historical awareness with present-day accountability.

History undeniably matters. Great African leaders such as Kwame Nkrumah, Thomas Sankara and Nelson Mandela existed within complex geopolitical realities shaped by foreign interests, ideological battles, economic competition and global power structures.

To deny this entirely would be intellectually dishonest. But there is another danger emerging across parts of the continent: the temptation to explain every present dysfunction exclusively through external interference. At some point, a society must ask itself difficult internal questions.

Not every challenge is colonialism. Not every criticism is oppression.

Not every disorder is externally orchestrated. Sometimes accountability is necessary. Even conversations around xenophobia reveal this tension. Increasingly, there are narratives suggesting that Africans are merely being manipulated into hating one another by hidden external powers.

While external influence can exist in global politics, reducing all internal conflict to outside manipulation risks removing personal and collective responsibility entirely.

Nations are not only destroyed by oppression. They are also weakened by corruption, tribalism, institutional fragility, emotional reactionism, poor leadership culture, and the inability to self-correct. True liberation, therefore, cannot remain purely political rhetoric.

It must also become: mental, structural, economic, institutional, and spiritual.

A continent cannot rise globally while rejecting discipline, professionalism, emotional maturity and accountability in public spaces.

The future of Africa will not be built merely by identifying who hurt us, it will be built by deciding who we are becoming.

Kenya suffered widespread transport and business disruptions on Monday after public service vehicle operators withdrew services over soaring fuel prices and mounting operating costs.

Thousands of commuters in Nairobi, Mombasa, Kisumu, Nakuru and Eldoret and towns were left stranded as matatu operators, truckers, boda boda riders and taxi associations joined the nationwide protests, triggering long walks and severe traffic disruption.

The protests were triggered by sharp increases in pump prices, which pushed petrol in Nairobi above Sh214 per litre, while diesel, critical for transport and logistics, surged past Sh242.

The latest price increases have deepened pressure on businesses and households already struggling with elevated taxes, rising electricity costs and stubbornly high prices of essential commodities.

Gridlock pain

On Monday, major roads leading into Nairobi city centre were barricaded with bonfires and stones, forcing private motorists to turn back while businesses delayed opening due to low customer and employee turnout.

Roads such as Thika Road, Mombasa Road, Jogoo Road and Waiyaki Way experienced intermittent disruption as protesters blocked sections of carriageways, forcing many to abandon travel plans altogether amid fears of escalating unrest.

Businesses operating in Nairobi’s central business district reported lower customer traffic and reduced operations as transport challenges disrupted supply chains and employee movement.

Several schools and colleges also experienced disruption after parents struggled to secure transport for learners, forcing some institutions to temporarily shut down.

Inflation risk

The demonstrations followed last week’s fuel price review by the Energy and Petroleum Regulatory Authority, which raised petrol prices by Sh16.65 per litre and diesel by Sh46.29 per litre.

Diesel prices have now risen by over Sh80 a litre in the past two review cycles, significantly increasing costs for transport operators, manufacturers, retailers and logistics firms heavily dependent on road transport networks.

Higher transport costs are expected to feed directly into inflation through increased prices of food, manufactured products, farm inputs and retail goods over the coming weeks.

Transport operators have accused the government of overburdening businesses and consumers through taxes and levies embedded in fuel prices despite worsening economic conditions and stagnant household incomes.

Political heat

The heightened pressure on the government comes as Kenya pursues aggressive revenue mobilisation targets aimed at narrowing fiscal deficits and supporting ballooning debt repayment obligations.

The unrest also comes as Kenya prepares for another politically sensitive budget cycle, rekindling memories of the 2024 anti-Finance Bill demonstrations, where economic grievances escalated into a broader national debate around taxation and governance.

Treasury officials have defended the latest fuel pricing adjustments, arguing that the government has already cushioned consumers from more severe international oil market volatility and currency pressures.

The latest wave of demonstrations comes at a delicate moment for President William Ruto’s administration, which continues to face scrutiny over taxation policies and the broader management of the economy.

The High Court in Nairobi has stopped the Kenya Revenue Authority (KRA) in its efforts to widen taxation of cross-border consultancy and management fees paid by multinational firms operating in Kenya.

The setback follows a court decision blocking the collection of Sh179.9 million in withholding tax from global advisory firm McKinsey over payments made to its South African affiliate.

In a ruling with potential implications for multinational companies operating in Kenya, the court upheld a 2021 Tax Appeals Tribunal decision that exempted the payments from withholding tax under the Kenya-South Africa Double Tax Agreement (DTA).

The court ruled that the consultancy fees paid by McKinsey’s Kenyan branch to a related South African entity constituted ‘business profits’ under the treaty.

It said the fees could only be taxed in Kenya if the South African company had a permanent establishment in the country.

The court found that the South African entity had no permanent establishment in Kenya, effectively shielding the payments from local taxation.

‘The Commissioner’s approach in the interpretation of the DTA is overly formalistic and ignores principles of international tax law,’ the court said, dismissing the KRA’s appeal.

According to the court, Kenya could not impose taxes that were not expressly provided for in the Kenya-South Africa Double Tax Agreement, stressing that the government was bound by the terms it negotiated and signed with South Africa.

The Kenya-South Africa Double Tax Agreement was signed in November 2010 and became effective from January 1, 2016. This was after years of negotiations aimed at eliminating double taxation and reducing tax barriers for companies and investors operating between the two countries.

The treaty allocates taxing rights between Kenya and South Africa on income earned through cross-border trade, investment and professional services, such as business profits, dividends, royalties and management fees, while also seeking to prevent fiscal evasion and provide certainty for cross-border trade and investment.

The dispute pitted the KRA’s Commissioner of Legal Services and Board Coordination against McKinsey and Company Inc Africa Proprietary Limited, the African arm of the global consulting giant.

KRA had demanded Sh179,956,998 in withholding tax arising from payments made in 2016 and 2017 for professional and management services rendered by McKinsey South Africa.

The tax authority argued that the fees did not qualify as business profits under Article 7 of the treaty and instead fell under the treaty’s ‘other income’ provisions, making them taxable in Kenya.

KRA also argued that the Tribunal had failed to distinguish between ‘income’ and ‘business profits’ and wrongly relied on the bilateral treaty to invalidate the tax demand.

But the court rejected those arguments and affirmed the Tribunal’s findings in full.

‘The Tribunal correctly applied the primary rule under Article 7 instead of the default residual rule of Article 22,’ the judge ruled.

The court said professional and management fees generated through business activity fall within the meaning of business profits under the treaty.

It further held that Kenya could not seek taxing rights that were not expressly negotiated into the treaty.

‘The court cannot rewrite the treaty to give Kenya a right it bargained away,’ the judge said, adding that Kenya deliberately omitted provisions allowing taxation of management and technical service fees when negotiating the Kenya-South Africa tax treaty.

The court noted that while Kenya has included clauses allowing taxation of management and technical service fees in some other tax treaties, it failed to secure similar provisions in this agreement.

Hence, it could not later ask the courts to expand its taxing powers beyond the treaty’s wording.

McKinsey and Company is among the world’s largest management consulting firms, advising governments, banks, telecoms firms, manufacturers and multinational corporations on strategy, digital transformation, operations and public-sector reforms.

In its defence, the company cited the treaty and said the payments constituted business profits under the Kenya-South Africa Double Tax Agreement and were therefore not taxable in Kenya because the South African service provider had no permanent establishment locally.

McKinsey also argued that Kenya deliberately excluded provisions allowing taxation of management and technical service fees when negotiating the treaty and could not later seek rights outside the agreement.

The firm established its Nairobi office more than a decade ago and has expanded its East African advisory business across sectors including financial services, energy, agriculture, healthcare and infrastructure.

Court records showed that the Kenyan branch involved in the dispute was part of a South African holding structure.

However, the consulting services were provided by a separate South African entity that the court found had no taxable presence in Kenya.

The court noted that McKinsey had previously paid withholding tax for the 2014 and 2015 financial years before the Kenya-South Africa treaty took effect.

The dispute only arose after the treaty became operational. The court said the absence of specific treaty clauses allowing Kenya to tax management fees reflected a deliberate policy choice during treaty negotiations.

It observed that Kenya had included such provisions in some other double taxation agreements but failed to do so in the South African treaty.

The court also faulted KRA for attempting to rely on broad interpretations that could undermine the purpose of bilateral tax agreements.

‘Before taxing such income, the Commissioner should not be asking whether there is a specific Article for professional or management fees but rather whether that income is from a business activity,’ the court said.

Nairobi Securities Exchange (NSE)-listed banks wrote off Sh75.06 billion in loans last year, highlighting the strain on households and businesses amid a softer economy that grew at the slowest pace in five years.

The write-offs, down from Sh87.87 billion in the previous year, signal a modest improvement in asset quality even as borrowers continued to grapple with high living costs and subdued demand for goods and services.

Banks typically write off loans once the likelihood of recovery through conventional channels such as asset auctions or restructuring is deemed minimal. The lenders make 100 percent loan loss provisions on written off loans.

Equity Group topped with write-offs rising to Sh27.44 billion last year from Sh22.29 billion in the previous year, followed by KCB Group whose write-offs fell to Sh14.22 billion from Sh25.52 billion. Their position as the largest lenders leaves them most exposed to shifts in asset quality.

Households have faced shrinking disposable incomes due to inflationary pressures and new or enhanced compulsory deductions towards social healthcare, affordable housing and retirement savings.

At the same time, businesses, especially small and medium enterprises, have been squeezed by weakening consumer demand and rising operating costs, including higher energy, financing and input prices.

The write-offs came in the period the Kenyan economy expanded at a slower rate of 4.6 percent in 2025, down from 4.7 percent the previous year, as growth in key sectors, including agriculture and manufacturing, moderated.

Last year’s economic growth was the slowest pace since 2020 when there was a 0.3 percent contraction due to Covid-19 disruptions.

The agriculture sector, which remains the largest segment of the economy, grew at a slower pace of 2.8 percent, down from 4.3 percent, driven by weaker output amid disrupted rainfall patterns. The manufacturing sector also slowed, expanding by 2.1 percent compared with 3.2 percent in 2024.

Equity Group notes that loan write-offs occur after ‘all practical recovery efforts’ have been exhausted and recovery is deemed unlikely. The lender says key warning signs include a sharp weakening in the borrower’s financial position and a decline in collateral value below the loan exposure.

‘The group writes off a loan balance when the credit department determines that the loans are uncollectible,’ states Equity in its latest annual report.

‘This determination is reached after considering information such as the occurrence of significant changes in the borrower’s financial position such that the borrower can no longer pay the obligation or that proceeds from collateral have failed to cover the entire facility outstanding.’

KCB says it writes off loans when it determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off.

Last year saw NCBA Group write off Sh11.81 billion loans, up from Sh11.61 billion in 2024 while that of Absa Bank Kenya rose to Sh10.79 billion from Sh9.35 billion. lenders do not give up on written off loans but instead pursue them, mostly through third parties, and booked as impairment gains.

‘Although the group may write-off financial assets that are still subject to enforcement activity, it still seeks to recover amounts it is legally owed in full, but which have been partially written off due to no reasonable expectation of recovering in full,’ NCBA states in its annual report.

Another tier I lender, DTB Group, wrote off Sh4.09 billion, marking an improvement from Sh9.71 billion in the previous year, while Stanbic Holdings more than halved its write-offs to Sh2.53 billion from Sh5.51 billion.

Over the same period, Co-operative Bank of Kenya write-offs rose to Sh2.48 billion from Sh2.29 billion as that of Standard Chartered Bank Kenya increased to Sh1.65 billion from Sh1.58 billion. HF Group’s write-offs more than doubled to Sh49.28 million from Sh17.7 million.

The softer economic environment and elevated loan defaults prompted lenders to adopt a more cautious approach to credit growth, with a shift towards lower-risk segments and increased scrutiny of borrowers’ repayment capacity.

In addition, many banks have intensified collection efforts to cut slippage of loans into write-offs and restructured other loans to cushion distressed customers.

Lenders, through their lobby, Kenya Bankers Association (KBA), are pushing for a five percent reduction in Pay-As-You-Earn (PAYE) across all income bands as a targeted measure to boost households’ purchasing power and stimulate economic growth.

The lenders argue that real incomes in Kenya have declined by between 10.7 percent and 12 percent over the past five years, squeezed by rising living costs and an expanding burden of statutory deductions.

The statutory deductions include PAYE, the 1.5 percent Affordable Housing Levy, a 2.75 percent contribution to the Social Health Insurance Fund (SHIF), and higher National Social Security Fund (NSSF) contributions, which now top Sh6,480 per month for higher earners.

‘The banking industry believes that targeted measures to strengthen household purchasing power are essential for driving economic recovery, supporting businesses, creating jobs, and improving long-term fiscal sustainability,’ said KBA last Thursday.

Investors have demonstrated a strong appetite for Kenya’s corporate bonds, expanding a funding option for firms seeking new cash for their existing and new projects.

I and M Bank Limited is the latest to successfully raise debt from the capital market, receiving bids that were multiple times what it was seeking.

The lender was in the market for Sh10 billion through a 5.5-year bond paying 12.2 percent per annum. The company however took Sh13 billion after receiving bids of Sh23.2 billion, underlining the high appetite for corporate bonds.

The corporate debt market -which was jolted by defaults and scandals engulfing issuers between 2015 and 2018- started picking up from last year.

East African Breweries Plc (EABL) and Safaricom last year raised Sh16.7 billion and Sh19.9 billion respectively, with the transactions encouraging more debt sales.

Kenya Mortgage Refinance Company (KMRC) last week raised Sh3 billion from an 8-year bond paying an interest of 12.2 percent per annum and whose principal will be repaid over time.

KMRC received bids of Sh9.3 billion or more than thrice its target. Investors are rushing for the corporate bonds despite the instruments offering a little premium to government bonds.

The attractiveness of the corporate bonds has been aided by lower interest rates on bank deposits and treasury bills besides a dearth of new auctions of medium-term bonds by the Central Bank of Kenya (CBK) in recent months.

Returns of short-term fixed income instruments are in the single digits while the CBK has preferred to sell longer term bonds maturing in more than 10 years.

These conditions, coupled with the weeding out of shakier firms, have seen a revival in corporate bond sales.

Real People, Chase Bank, Imperial Bank, ARM Cement and Nakumatt Holdings were among the companies that defaulted on more than Sh10 billion worth of corporate bonds and commercial paper between 2015 and 2018.

In the wake of the defaults, most of the remaining corporate bonds were repaid and few borrowers returned to the market for refinancing.

Those that settled their bonds on maturity included HF Group and CIC Insurance Group, leaving a shrunken debt market that started recovering last year.

In the interim, most companies relied heavily on a mix of retained earnings, loans from foreign lenders and equity sales to fund their growth.

Raising debt in the local market at current fixed rates is seen as attractive, with one major advantage being the avoidance of currency risk.

Loans denominated in hard currencies such as the US dollar and euro have floating rates and can saddle borrowers with a heavy repayment burden when the shilling weakens substantially.

I and M Bank, for instance, has said it will use part of the proceeds from its recent bond sale to retire dollar denominated debt to the tune of $50 million (Sh6.5 billion).

‘We’ve got about $50 million of Tier II debt that we have on our books with varying dates of maturity, some being as early as 2027 and we felt that we needed to be able to replace that,” I and M Holdings regional CEO Kihara Maina told the Business Daily.

“This was the right time to go to market because it allows us to front-load our planned local currency debt raise as well as anticipate the maturities that are coming as well as build up a lending pipeline.’

Besides holding the veto to hire and fire of the Kenya Pipeline Company (KPC) chief executive officer, Uganda secured further concessions in operations of the company, including approval of tariff increases, dividend policy, employee restructuring and rights issues.

KPC shareholder rights or Articles of Association were amended after Uganda bought a Sh20 billion stake in the firm following its initial public offering (IPO), which ran from January 19 to February 24.

Under the revised Articles, Kenya gave Uganda concessions, including two board seats in the firm, after the neighbouring country threatened to walk away from the IPO because of a lack of authority in the running of the firm.

While on the board, Uganda will have to approve the hiring and firing of the CEO, KPC fuel transport tariffs, part of the board changes and changes to the firm’s dividend policy ‘So long as the National Treasury Cabinet Secretary and the government of Uganda are eligible to nominate directors, the following matters shall require the approval of a National Treasury and a Government of Uganda Director…the periodic review of the pipeline transportation and secondary storage tariff for purposes of submission for relevant regulatory approvals,’ reads part of KPC’s amended Articles of association, seen by the Business Daily.

‘…any employee restructuring of a redundancy programme implemented within three years following the initial public offering.’

Uganda also got a say on other reserved matters, including the issue of new shares in the company, an alteration of Articles, and the removal of Kenyan or Ugandan government directors from the company’s board.

KPC’s revenues are significantly influenced by tariffs, periodically set by the Energy and Petroleum Regulatory Authority (Epra), mostly covering three-year cycles. Epra’s last review approved a tariff of Sh5.44 per cubic meter per kilometre, while the regulator currently sits on a proposal to increase the tariff by 2.4 percent for the upcoming three-year period from July 2025 to June 2028.

KPC counts its tariff as a regulatory risk and highlights the implications of delays or restrictions in securing tariff revisions.

‘Delays or restrictions in securing tariff adjustments, whether due to public opposition or political pressure, could limit KPC’s ability to recover rising costs or fund infrastructure investments,’ KPC said in its IPO information memorandum.

‘Historical resistance from stakeholders such as oil marketing companies and consumer groups to significant tariff increases underscores the risk that tariffs may not fully reflect inflationary pressures or currency depreciation, potentially compressing margins and reducing earnings.’

KPC booked revenues of Sh38.5 billion in the financial year ended June 2025 against Sh14.7 billion costs of services. The mid-stream company in the oil and gas sector saw its net profit for the period rise slightly to Sh7.49 billion from a flat Sh7.4 billion previously.

As of December 2025, KPC and the Kenya Petroleum Refineries Limited (KPRL), a subsidiary of the pipeline company, had a total workforce of 1,549 employees, 87.2 percent or 1,351 of whom are permanent.

KPC highlighted previously that it had made significant progress in achieving key human resources strategic objectives, including alignment to strategy execution, performance and integrity.

The employees of KPC bought shares worth Sh99.1 million in the concluded IPO despite having a greater share allocation worth Sh5.3 billion. The government of Uganda (GOU) swooped in to anchor the IPO by buying shares worth Sh34.7 billion, beating their initial allocation of Sh21.1 billion worth of shares.

Uganda leveraged its acquired 20 percent ownership in KPC to get a guarantee of two board seats in the company and the right over the future hiring and firing of the chief executive officer.

KPC’s IPO successfully met its target of raising Sh106.3 billion from the government’s 65 percent stake in the company, even as the offer was largely dominated by local and regional institutional investors, as individuals, foreigners and oil marketing companies (OMCs) largely kept off.

An estimated 465 local institutional investors led by the National Social Security Fund, the Public Service Superannuation Fund and Uganda’s State-owned oil company, the Uganda National Oil Company (UNOC), snapped up shares that

other investor categories had left on the table.

Without the strong showing from the institutions, Uganda and other high-net-worth investors, the IPO would have collapsed and hurt the government’s drive to diversify its sources of revenues from taxes and public debt. The IPO needed to raise at least Sh53.1 billion from more than 250 investors for it to proceed.

Uganda was handed a chance to determine the next KPC chief executive after the resignation of Joe Sang, who quit last month amid a fuel scandal that saw three senior public officers step down.

KPC’s board cannot hire or fire the chief executive officer without concurrence from Uganda directors, which effectively gives Kampala some sway over who will steer the petroleum logistics firm post-IPO.

The board said it was looking for a highly experienced person who would guide the company through the ‘post listing phase, including heightened governance, disclosure, investor relations, and regulatory obligations.

Cracks have emerged in the boardroom of KPC over whether the firm should have initiated the recruitment of a new managing director without a fully reconstituted board that includes Uganda’s representatives, as required under the newly listed company’s charter.

The candidate must have 15 years of experience, with at least 10 years in senior management.

‘The Kenya Pipeline Company Plc seeks applications from suitable and highly qualified professionals to fill the position of managing director.

This position serves as the company’s chief executive officer, accountable to the board of directors,’ read a vacancy announcement published earlier in May.

Despite its certainty like childbirth, retirement appears to always arrive too early, hitting most employees unawares like the arrival of a pre-term baby.

Retirement parties often sound and feel like commiseration sessions for the retiree who supposedly needs reassurance that despite the clock having ticked 60, they are still useful and can ‘retyre’ and do other amazing things for the remainder of their lives.

The prospect of retirement has been known to cause serious mental health issues to some employees upon receipt of the dreaded letter from the employer bearing the unwelcome tidings.

In response to this phenomenon, sophisticated employers have developed well structured programmes to prepare their employees for retirement.

The curriculum, usually delivered by experts, covers a wide range of topics such as psychosocial preparedness, estate planning and succession, investment advice and what to expect out there in the wider world after retirement including how to avoid being conned and, in the case of men, the temptation of marrying an additional wife using the retirement package which at the time appears inexhaustible.

For ladies, the common temptation is to travel and overstay abroad under the pretext of visiting the grandchildren, while the real purpose is to engage in binge shopping and spend quality time in massage parlours in the name of ‘kujirudishia

asante’ or ‘kuambia mwili pole’ for a lifetime of toil and travail.

Retirement candidates are also advised on the risks of starting businesses that they have never done before or investing in brick and mortar in the village shopping centre without any idea of the cost involved or the expected returns.

Many end up converting the entire retirement package into incomplete concrete structures which become eternal monuments of their folly and regret and only serve to hasten their steps to the grave.

With declining birth rates and increasing life expectancy in most parts of the world, a new demographic is emerging where the work place is dominated by an ageing population. People are also attaining retirement age while still in perfect health

of body and mind and at the peak of their professional prowess.

While the retirement age in the Kenyan public service is 60, there is no prescribed retirement age in the private sector.

This is left to each employer to determine, should they wish to do so, either by policy or contractual terms of employment. In practice, however, employers have tended to adopt the public sector benchmark of 60 years.

For certain cadres of employees such as professionals, researchers and academics who spend a considerably longer period pursuing education and acquiring complex skills, retiring them at the age of 60 robs the economy of a much-needed resource.

No wonder judges and university professors retire at 70 which, based on international best practice, is still

considered too young for retirement given the depth of knowledge and expertise they possess.

Until recently, judges used to retire at the age of 74. Kenyan employers are increasingly finding it undesirable to let go

of productive, highly experienced managers with clean discipline records and persons who add substantial value to the organisation, purely on account of age.

The most common method of addressing this issue is to allow such employees to retire as per the policy, then rehire them immediately on fixed term contracts for such duration as the parties may agree.

This approach serves the useful purpose of ensuring consistency in policy application and avoiding claims of discrimination. The post-retirement contract is considered a separate engagement on different terms rather than a continuation of the previous employment contract.

Having a predetermined retirement age is good practice for various reasons. There will always be deadwood whom the employer wishes to get rid of but due to legal constraints, is unable to. In such cases, the policy provides a perfect solution.

A retirement policy also fosters certainty and enables prudent employees to prepare early enough for the inevitability of retirement through savings and investment.

Employers may also adopt a hybrid model where the highly skilled cadres retire at a more advanced age than

their junior counterparts performing commoditised tasks who are easier to replace owing to the abundance

of their skills in the market.

The argument that raising the retirement age denies young people employment opportunities is fallacious

and not evidence-based. Jobs that require grey hair cannot be performed by persons who have not earned the

stripes in the battlefield.

While AI is gobbling up entry level jobs with the appetite of a famished wolf, it poses no significant risk to

the jobs held by eligible retirees. Besides, according to the Kenya National Bureau of Statistics, the number

of Kenyans aged 60 and above is no more than 6 percent of the total population.

As Kenya’s last cohort of the baby boomer generation enters the retirement age-bracket, employers should rethink whether it is economically beneficial to lose productive managers purely on account of age.