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Banking lobby chief on scaling private sector credit, rates outlook and recent sector reforms

The Kenya Bankers Association (KBA) Chief Executive Officer Raimond Molenje sat down with the Business Daily and discussed a range of topics, including pushing more credit to the private sector amid evolving macroeconomic risks, the lobby’s outlook on the Central Bank Rate (CBR) and recent sector reforms, including the lobby’s reservations on prudential guidelines on systemically important banks.

The President asked that banks scale lending to micro, small and medium enterprises; have you met his request?

We hosted the President in 2024 and began that conversation when total lending to MSMEs was at Sh75 billion, which was not the desired impact.

We made a commitment to double that number to Sh150 billion in 2025. We doubled on our commitment and lent Sh326 billion to the sector last year. Our focus on MSMEs is because the economy is generally run by small, micro, and medium enterprises, and banks have taken a step back in supporting that ecosystem.

Banks need to know their customers better and support them in a way that they even become consultants.

With technology, customers have moved away from the physical bank, and so lenders must look for the customer.

What’s the target for MSME lending in 2026?

Initially, we had set ourselves to lend Sh350 billion at the beginning of the year, but we have already surpassed that by financing Sh246 billion as at the end of June. We think we can lend close to Sh500 billion by the end of the year.

CBK spent a lot of time last year calling out lenders over failure to pass on lower borrowing costs. Do you believe that the industry’s interest rates now align with the regulator’s expectations?

The CBR has been unchanged since February, and I would say what we’ve seen in the last eight months is continued policy transmission. If you look at the average lending rate now and compare it to February, you can see borrowing costs have progressively come down.

This means that even without adjustments by the central bank, commercial banks have continued to adjust their rates. The market reality is that there is usually a lag to policy transmission.

The intention of the central bank was to continue lowering the CBR before the Middle East crisis occurred. I estimate average lending rates would be around 12 percent if that happened from the 14 percent today. This would have more impact on affordability, as a lot more customers would be able to service loans at 12 percent.

Are you worried that a further jump in inflation could trigger rate increases by CBK?

We see the CBK mostly sustaining the current benchmark until next year. However, there is a new challenge presented by the expected heavy rainfall, and we are yet to know the scale and impact that it would have.

The CBK has posed questions on how we are prepared to support our customers through the shock, but our hope is that the benchmark rate can remain unchanged. A hold in the CBR will moreover give banks more time to fully transmit policy and implement the risk-based credit pricing model which came to full effect in March this year.

What has been your view on the draft CBK guidelines on systemically important banks?

I think it’s too early to have this conversation, as banks are currently expected to raise their core capital bases, a matter yet to be fully implemented.

This poses a challenge because we need tier I banks to have enough capital to be able to support and come to the aid of smaller banks if required as we saw a few years back when Cooperative Bank took over Jamii Bora Bank.

The systemic approach is going to be counterproductive to the support required to smaller banks. For me, the timing is not appropriate as it will create more shocks in the market, creating constraints. A shareholder may not earn a return while lending to MSMEs could also be impacted as every extra shilling goes towards building capital.

We need bigger banks to be flexible enough to not only support smaller banks but also lend in the economy. Our brief to the CBK is that the proposal is good, but the timing is wrong.

What’s your industry outlook for the remainder of 2026?

We will still be sustaining our conversation on MSME lending and are looking at the impact we are having, especially on jobs. We also want to revisit our conversation about revising pay-as-you-earn (Paye) rates downwards to give a stimulus and create economic vibrancy.

On the payments side, we are scaling Pesalink to create more affordability with the next phase set on improving user experience. We have also established that not so many customers are aware of Pesalink, which informs our plan for more awareness campaigns, jointly as banks.

The payment systems will require further integration to ensure customers are not concerned whether they are in the Pesalink ecosystem, M-Pesa or Airtel Money.

The experience should be seamless, and only we should worry about what happens on the backend.

CBK fines record 33 banks for loan rate breaches

The Central Bank of Kenya (CBK) fined a record 33 commercial banks for defying the regulator’s calls to cut their loan rates in line with the reduced benchmark rate, denying borrowers cheaper credit.

The penalties followed on-site inspections of all 38 commercial banks, after which the CBK cracked the whip to force lenders to match their lending rates to the reduced Central Bank Rate (CBR).

The CBK did not disclose the identity of the banks in breach of the Banking Act provisions or the fines slapped on the 33 lenders, which represent 86.8 percent of the industry.

The apex bank said it took unspecified administrative actions on two other banks, while only three were fully compliant with the risk-based credit pricing model (RBCPM).

Between August 2024 and August 2025, the CBK cut the benchmark rate or CBR seven times by 3.5 percentage points to 9.5 percent from a 22-year high of 13 percent that lasted for about seven months.

Only six lenders — Citibank N.A Kenya, Absa Bank Kenya, Credit Bank, Standard Chartered Bank Kenya, Stanbic Bank Kenya and Victoria Commercial Bank — cut their overall lending rates to match or exceed the benchmark.

The banking regulator last year repeatedly put pressure on banks to lower borrowing costs and match cuts in the benchmark rate while threatening daily fines.

‘CBK conducted target inspections in 2025 on the implementation of the RBCPM rolled out in 2019 by all commercial banks. Following the inspections, penalties were levied on 33 banks, and administrative actions were taken on two banks,’ the CBK said in its latest annual banking supervision report.

‘Three banks were fully compliant with the RBCPM.’

The penalties on credit pricing breaches raised the number of commercial banks in violation of the Banking Act and CBK Prudential Guidelines in the year ended December 31, 2025 to 35, compared to 11 previously.

CBK Governor Kamau Thugge accused banks of failing to cut loan rates even after the CBR was trimmed from 13 percent in August 2024 to 10.75 percent in February 2026.

This triggered on-site inspections of banks up to June 2025 by the CBK to review the movement of lending rates.

Banks faced fines of Sh20 million or three times the monetary gain made from ‘overcharging’ borrowers, with the regulator leaning on the punitive penalty.

The banks also risked additional daily penalties of up to Sh100,000 for every case or implication for each loan account, with the executives liable for a Sh1 million

The banking sector regulator hinged its actions on Section 55 of the CBK Act.

‘The (Monetary Policy) Committee observed that the CBR had been lowered substantially since August 2024, yet lending rates have only declined marginally,’ Dr Thugge said in February last year.

‘Under the amendments to the Banking Act, any bank that has not passed on the benefits of reduced cost funds to reduce lending rates will be penalised in accordance with the law.’

Bank profits surged as they passed the higher interest rates on to borrowers far more quickly than to savers.

Another 24 banks cut interest rates in the year to August last year, but did not match the benchmark rate after trimming their borrowing costs by between 0.09 percentage points and 2.82 percentage points, CBK data shows.

Some banks reckoned they had locked in deposits used for loans at higher rates, arguing that the costly savings had slowed efforts to lower borrowing costs.

The high cost of borrowing at the time was deemed to have discouraged borrowers from taking out loans in a setting where the demand for products had become sluggish, prompting firms to freeze hiring and expansion plans.

Banks initially challenged the risk-based pricing model, arguing that it had left the industry unable to match the CBK’s rate without a standard benchmark from which to price loans.

The back-and-forth exchange between banks and the CBK culminated in the overhaul of the RBCPM, introducing a single industry benchmark underpinned by either the CBR or the overnight interbank rate, which was renamed the Kenya shilling overnight interbank average (Kesonia).

Commercial banks began implementing the revised framework on new loans from December 2025, while existing loans were fully transitioned to the revamped model at the end of February 2026.

Improvements in the monetary policy framework have seen the reunification of both the CBR and Kesonia at 8.75 percent presently, resulting in a single rate from which banks price their loans.

Banks add a risk premium, fees, and charges to the benchmark.

The average lending rate by commercial banks has fallen at a relatively faster pace since the overhaul of the RBCPM to 14.3 percent in July 2026 from 14.4 percent in June and 17.2 percent in November 2025, even after the CBK paused rate cuts in February this year.

Private sector credit growth has also recovered to reach double digits in June and July this year for the first time since February 2024.

The CBK, however, says it has been unable to fully implement the new risk-based credit pricing framework following the fallout from the Middle East conflict, which has forced pauses to additional CBR cuts.

The revised model came to full effect in March this year, matching the CBK’s wait-and-see policy stance, which has left the CBR unchanged at 8.75 percent.

‘Unfortunately, we did not get to use this framework when we were easing because the crisis in the Middle East intervened. We are now in a wait-and-see situation,’ Dr Thugge said last week.

When grief becomes art: The painter who puts raw feelings on canvas

A single piece can take him 200 hours or more to finish, sometimes stretching into a full month once he counts all the time spent simply brainstorming ideas. His studio is just a corner of his home.

Canvases stand on wooden stands around the room, some bare, some half painted, some finished and leaning quietly against the wall. Paint sits open on a small shelf, and older pieces hang on the walls. He does not force ideas to come.

‘I don’t have specific processes. I feel inspired,’ he says. Only once the feeling is clear does he move to the canvas, working, as he puts it, purely from instinct.

Leonard Amimo is 38 years old and signs his work as Lee Amimo. He calls his style ethereal wheels.

‘Ethereal basically means out of this world,’ he says, and the wheels are the small spiralling circles he paints, moving in threes. ‘The wheels symbolise flow of energy, vibration, what lies underneath. I just paint feelings,’ he says.

Narrowing a feeling

Lee believes his years as a writer shaped the way he now builds a painting, narrowing a feeling the same way he once narrowed a topic on the page. Once the feeling is clear in his head, the rest of the work just follows it wherever it leads.

That is exactly how one of his best-known pieces came to be. It is called ‘Nairobi’, and it shows a tall building on Kimathi Street, the kind that has stood in the city for years. It came from his own journey from Kisumu into Nairobi, the first time he saw buildings that tall.

The woman in the piece wears green, and a butterfly is drawn toward her. Around her are rippling circles repeating in threes.

‘It’s like a ripple. Rippling out,’ he says, tying the pattern back to something larger. ‘Vibration is all energy,’ he adds, describing how nothing in nature ever truly sits still.

Look closely at any of his paintings and you will notice that almost every figure he paints is a woman. ‘They are the doorway to this world. We come through a woman,’ he says, comparing women to flowers, since ‘flowers make everything beautiful.’

He enjoys dressing his painted women well, since, ‘I like to see beauty in things.’

None of this is decoration for its own sake. When someone stands in front of his work, he wants them to feel specific things.

‘Calm. Hope. Desire to keep moving,’ he says, along with a quiet reminder that the past and the future are tied together, even as daily life pulls people toward money and comparison.

Lee’s paintings seem to arrive in people’s lives at the right moment. One piece, called ‘Zahara’ was bought by someone who had just moved to Malindi to start a business in the aquamarine industry and had settled into a building carrying the same name. He had no idea about any of that when he painted it.

Another piece, called ‘Ada’ was bought by a woman who had just lost her mother, also named Ada, and the painted face reminded her of her mother when she was young.

He likens these moments to strangers who somehow understand each other instantly, even joking about the science behind it.

‘Are you aware of quantum entanglement?’ he asks before explaining that some people simply arrive already connected. ‘I print and make works of art from instinct. This is not something you can be taught.’

Pricing the art

Work like this does not come quickly. A single piece can take him between one week and one month to finish. That shapes how he prices his work.

‘I price it based on my experience, rarity, time I take, and, yeah, you know, my instincts. For art, there’s no fixed price point.’ His first painting sold for Sh15,500. Since then, he has sold work for as much as Sh450,000, and he expects further growth.

‘I can sell a piece for over Sh1 million, why not?’ Lee sometimes lets a piece go for less than its worth if the story moves him enough, believing that, ‘what you’re giving is what you get out.’

Long before any of that, before the studio and the stands and the finished canvases, there was a much smaller room, and a boy who did not yet know that art would be the only thing left of his family. His father died when he was only four years old, and the only thing he left behind was art.

His mother, who worked in medicine but was creative in her own way, died when he was eight. Art became the one thread tying him to his parents. ‘I feel like, for lack of a better term, I’m continuing my father’s legacy,’ he says.

That thread carried him through school, earning him scholarships and awards, and pulled him toward painters, sculptors, carpenters, and musicians who shaped how he saw the world.

Nairobi City Hopper, an artwork by artist Leonard Amimo, created using acrylics and permanent pen on canvas, photographed at his home in Ruaka on September 17, 2026.

Wilfred Nyangaresi | Nation Media Group

He studied art and design at the University of Nairobi, graduating in 2011 with a focus on illustration. It should have been a straight road from there into painting, but after school, he ran into the same wall many young Kenyans face.

‘The first thing they ask you is the experience you have. And then, the starting salary can’t sustain.’

So he turned to writing instead, a path he followed for about 10 years. Writing, he says, lets him travel the world in his mind and understand ‘the philosophies of life, religion,’ seeing existence through other people’s eyes.

Then, in 2022, art pulled him back. He began managing an artist named Steve Nyaga and spent long hours in the studio watching him work. The arrangement reminded him of what he could still do himself. He picked paper back up and began doodling again.

‘I was at a really deep place, and the style just came to me.’

By 2024, he had returned to practice seriously, refining what he calls a fresh approach.

Lee refuses to give up on people who claim they do not care about art. ‘It is my mission to make them appreciate art,’ he says, adding that we are ourselves artworks since we were created in a unique way.

None of this journey has been easy.

‘I started painting on a piece of paper. I couldn’t afford canvas,’ he says. There is no fund or organisation to turn to for support, and no separate studio either. He works from home, where family life often competes with his art for time and space.

His advice to anyone with ambitions to become a painter? ‘Start where you are. Plant the seed, give it time and watch it grow. Just believe.’

Art, for him, has never simply been a career. ‘For me it is a vacation, and I’m just on this river flowing where it needs to take me.’

Lee has tried other paths before and none of them ever felt whole the way this does. He believes there is always something waiting on the other side of hardship.

‘As long as you do it from an honest place,’ he says, ‘You will never sleep hungry.’

Vision 2060 must be about delivery, not just ambition

There is something profoundly humbling about sitting around a table to discuss the Kenya we want to leave for generations we may never meet. As a member of the Steering Committee guiding the development of Vision 2060, I have found the experience both exciting and grounding.

It is exciting because of the opportunity to contribute to a conversation about Kenya’s long-term future; grounding because a vision that stretches to 2060 will ultimately be judged not by the quality of its words, but by what the everyday Kenyan will experience in their daily lives.

This is exactly where the project management profession enters the conversation. Kenya has never lacked ambition. We have produced development plans, flagship projects and transformative programmes across infrastructure, health, education, housing, energy, agriculture and technology. The recurring challenge has always been converting ambition into tangible results and lasting impact.

As we look beyond Vision 2030, we must ask ourselves if we are sufficiently equipped to deliver the Kenya we envision.

A national vision is the beginning of a very large project. It has objectives to define, stakeholders to align, dependencies to manage, resources to mobilise, milestones to track, risks to mitigate and benefits to realise. The difference is that its scale is national, its complexity is immense, and its timeline spans generations.

Project management can no longer remain a back-office technical function. It must be recognised and treated as a strategic national capability.

The first lesson for Vision 2060 should be to strengthen the link between national priorities and implementation. Priorities such as infrastructure expansion, universal healthcare, quality education, affordable housing, food security, clean energy, climate resilience and digital transformation must be translated into coherent portfolios of programmes and projects, each with clear outcomes, ownership, resources, timelines, risks and accountability.

We also need greater discipline in deciding which projects Kenya should undertake. A project may be attractive, technically feasible and even financeable, yet still fail to represent the best use of scarce resources.

Project selection should be guided by strategic alignment, value for money, affordability, sustainability, implementation capacity and the value realisation it will deliver to citizens.

Equally important is how we define success. Completing a project on time and within budget matters, but it is not enough.

Success must also be measured by public value: better services, lower costs, greater efficiency, improved livelihoods, resilience, inclusion, sustainability and citizen satisfaction. A project that fails to deliver its intended economic or social benefits cannot be considered truly successful.

Vision 2060 should therefore entrench accountability for outcomes. We should ask not only whether we built the road, hospital, school, water system or digital platform, but whether it improved connectivity, healthcare, learning, productivity, livelihoods and access to essential services.

Sustained commitment is another critical issue. A 34-year vision will inevitably span several political administrations, and nationally significant projects cannot be repeatedly disrupted by political transitions. Kenya needs governance systems that preserve institutional memory and ensure decisions to continue, modify, or terminate projects that are based on evidence, performance, and national interest.

This is why Kenya must deliberately invest in project management talent. Tomorrow’s projects will be far more complex, spanning artificial intelligence, advanced infrastructure, climate adaptation, digital transformation, smart cities and public-private partnerships. We will require professionals who can manage not only schedules and budgets, but also uncertainty, stakeholders, technology, contracts, change and risk.

PMI Kenya’s invitation to serve on the Vision 2060 Steering Committee has reinforced my belief that Kenya has extraordinary expertise and ideas. What we must strengthen is the bridge between ideas and execution. Serving on the committee is more than an honour; it is a responsibility. It reminds me that project professionals have a role beyond individual organizations and projects: contributing to the systems through which our country plans, invests, and delivers.

And perhaps one of the most important conversations as we move toward Vision 2060 is the willingness to learn from Vision 2030. We should honestly examine what worked, what did not, and why – not to assign blame, but to strengthen institutional learning. Every successful project should teach us what to repeat, while every delayed, over-budget, or unsuccessful project should teach us what to improve.

If we get this right, Vision 2060 can be more than a statement of national aspiration. It can become a disciplined framework for delivery.

The Kenya of 2060 will not be created by a document alone. It will be created through thousands of programmes and projects, planned carefully, financed responsibly, implemented professionally, monitored transparently, and measured by the real change

Quickmart brings back dividends to NSE’s commercial services

The imminent listing of supermarket chain Quickmart is set to bring back dividends to the commercial and services segment of the Nairobi Securities Exchange (NSE), diversifying the options for dividend-chasing investors at the bourse.

Quickmart said in a notice that it will maintain a policy of paying at least 80 percent of its net profit as dividends to investors post-listing, joining a select list of firms that distribute more than three-quarters of net earnings to their owners.

Latest full-year dividend statistics show that Safaricom, Standard Chartered Bank Kenya, BAT Kenya, NSE, TotalEnergies Marketing Kenya, Williamson Tea Kenya, Kapchorua Tea and Kakuzi are the most generous listed firms by dividend policy at ratios of between 81 percent and 453 percent in the most recent financial year.

‘Following the listing, the company intends to adopt a dividend policy targeting a payout ratio of at least 80 percent of annual profit after tax, to be declared and paid semi-annually, subject to the availability of distributable reserves, the capital requirements of the company (including its growth and investment plans) and other relevant considerations,’ said Quickmart in a notice of its intention to list.

‘The company expects to distribute approximately Sh2 billion and Sh2.5 billion in dividends in the 2026 and 2027 financial years respectively, representing dividend payout ratios of 95.1 percent and 90 percent.’

Quickmart is expected to launch its public offer by the end of this month when its current owners will offload two billion shares, representing 50 percent of its four billion issued shares.

The sellers have also included a green shoe sale option of an additional 7.5 percent stake in case of an oversubscription, which if exercised fully would result in the sale of a 57.5 percent stake.

The entry of the retailer with its policy of paying dividends will go some way towards reinvigorating the commercial and services segment, in which TPS Eastern Africa was the only company to pay a dividend last year out of 13 listings.

Commercial and services is the largest NSE market segment by number of listed companies, ahead of banking at 12 firms and nine on the manufacturing and allied segment.

It has however lagged in returns to investors in dividends due to difficult operating conditions affecting its constituent stocks, seven of which made net losses in the latest financial year, and which also include suspended Deacons East Africa.

In the other segments, 11 out of the 12 listed banks paid a dividend last year, as did four manufacturing firms. Four out of six listed insurers also made a distribution, while half of the six listed agriculture firms also made payments. Dividend payments by listed companies have also emerged as an important source of liquidity for individuals and businesses in an economy that is still grappling with costly credit and flat payslips.

In the NSE, 33 companies paid Sh245.9 billion in dividends in their latest financial years but banks and Safaricom collectively accounted for 80 percent or Sh197.2 billion of the total amount distributed to investors.

The other 21 companies that paid out dividends for the year distributed a combined Sh48.7 billion, which is just over half of the Sh80 billion that was paid out by Safaricom alone. This indicates limited diversification beyond banks and the telecommunications firm for investors seeking dividends.

Besides the concentration on a few firms, expanded ownership of large banks and Safaricom by foreign investors means that a larger proportion of dividends is being shipped out of the local economy.

In June, South African company Vodacom Group tightened its grip on Safaricom by purchasing an additional 20 percent stake from the Kenya government and the UK’s Vodafone Group for Sh272 billion, attaining a controlling stake of 55 percent.

South Africa’s Nedbank is buying a 66 percent stake in NCBA for about Sh110 billion in a deal that is expected to close early in the fourth quarter of the year.

Fellow South African lender Absa Group has also recently increased its stake in Absa Bank Kenya from 68.5 percent to 72 percent at a cost of Sh6.5 billion through a tender offer that was priced at Sh34.50 per share.

Kenyan marketer claims Sh450m on fallout with South African wine maker

The High Court has rejected an application by Kenyan beverage marketing company, Wow Beverages, to block a South African wine maker, Namaqua Wines, from terminating their five-year distributorship deal amid a row over Sh450 million in claimed investments and goodwill.

The court found that the alleged exclusive distributorship was never formalised in a written contract. It declined to compel Namaqua Wines Distribution (PTY) Ltd to continue supplying wine to Wow pending determination of the main suit.

The court held that Wow’s claimed losses could be quantified and pursued as damages at trial.

In addition, the court dismissed Wow’s contempt application over Namaqua’s alleged failure to fulfil purchase orders and discharged the interim orders that had barred termination of the relationship.

‘The plaintiff is the author of its own misfortune having presented to the court an ambiguously worded prayer, which the court obliged by granting as prayed, but which, as it were, turned out to be uncertain,’ said the court, in a ruling that exposed the risks of unwritten distribution deals.

Wow, a local alcoholic-beverage business, sued Namaqua in October 2025 after the South African company gave notice that the relationship would end from November 1, 2025, citing product range, stock and payment concerns.

The dispute arose from a trading relationship that began in 2020 after Namaqua ended its arrangement with a previous Kenyan distributor and said it would deal directly with Wow.

Wow said that letter, dated September 11, 2020, created an exclusive arrangement through the parties’ conduct, although no formal agreement was signed.

It told the court that it had invested more than Sh150 million in staff, distribution infrastructure, marketing and warehousing while building goodwill it valued at more than Sh300 million.

It pleaded for payment of that amount, compensation for its efforts and investment, and upholding of its exclusive distributorship rights in Kenya.

The company’s General Manager, Anthony Kairu, insisted that it had a ‘legitimate and reasonable expectation that the distributorship relationship would last well over 10 years to justify this heavy investment’.

Namaqua disputed that position, saying each shipment was governed by separate purchase orders that it could accept or reject.

Its sales manager for Africa and the Middle East, Morné Koen, said consignments were supplied on 90-day credit terms, regardless of whether Wow had sold the wine or collected payment from customers.

He said Wow had repeatedly fallen behind those terms, forcing Namaqua to place its account on hold, and that the company was also dissatisfied with how the wine was being sold.

Namaqua further said it had never represented that Wow should make the investments claimed in the suit and denied that the relationship was exclusive.

Namaqua said the absence of a written agreement was because the relationship was not an exclusive distributorship, noting that Wow also sold liquor from other international manufacturers.

It said it terminated the deal because it was dissatisfied with how Wow sold its wines and also repeatedly failed to pay within the agreed 90-day credit period. Namaqua also denied requiring or encouraging Wow to make the investments it claimed.

In the ruling, the court said the evidence showed a trading relationship lasting about five years, but the documents pointed in different directions on exclusivity.

‘Whether those facts, taken together, disclose an implied exclusive distributorship of the kind the plaintiff asserts, or no more than a just discretionary trading arrangement terminable at will as the defendant asserts, is a matter of conflicting facts,’ the judge said.

The court also noted that Wow’s last reported arrears of ZAR225,360 (Sh1.7 million) had been paid on October 8, 2025, before Namaqua issued its termination letter.

The court nevertheless said Namaqua had repeatedly exercised discretion to accept or decline purchase orders, making it inappropriate to compel continued supplies under disputed terms.

‘Compelling the defendant, by injunction, to continue extending product supply and credit to the plaintiff pending trial would, in my view, curtail that apparent freedom,’ the court said.

It also rejected a mandatory order requiring Namaqua to continue the distributorship, saying the court could not compel supplies under terms whose precise content remained disputed.

The contempt application arose after Wow complained that Namaqua had failed to fulfil purchase orders submitted on July 28, 2025, despite the interim orders.

The judge found that Namaqua knew about the orders, but said the order requiring compliance with the distributorship terms did not clearly require every purchase order to be fulfilled.

‘Contempt requires proof of a wilful and deliberate violation of a clear and unambiguous command,’ the judge said.

The court also found that the purchase-order dispute and Namaqua’s explanations came before the October 30, 2025 court order, and therefore did not amount to defiance of the order.

Local contractors sue State over tax breaks for Chinese firms

Local contractors and truck owners have moved to court seeking orders to compel the government to publish tax and duty concessions to Chinese contractors undertaking infrastructure projects in Kenya.

They claim unpublished exemptions have given foreign firms an unfair competitive advantage, creating a 25-35 percent cost difference in their favour and pushing local businesses into financial distress.

They want the court to declare unconstitutional continued use of contract-embedded tax and duty concessions on Chinese-financed projects without published legal authority.

The petitioners include the African Centre for Corrective and Preventive Action (ACCPA), Swan Movers Lifters Limited, Association of Micro and Small Enterprises Association of Kenya and Universal Lifters Limited.

Contractors say some of their members are facing insolvency and statutory winding-up demands after losing contracts and defaulting on loans used to finance trucks and heavy machinery.

‘While such exemptions are lawful in principle, their implementation has been fundamentally flawed due to the absence of re-exportation requirements, the absence of tracking and audit mechanisms, and the absence of usage restrictions post-project completion,’ ACCPA executive director John Maingi Macharia said.

Mr Macharia said foreign contractors import large fleets of trucks and heavy machinery duty-free for specific infrastructure projects but, after completion, retain the equipment and deploy it in the local market.

He said the machines were neither re-exported nor subjected to adequate audits by relevant authorities.

Petitioners say they have been providing haulage and lifting services in the construction sector but are disadvantaged by the tax and duty exemptions granted to foreigners.

They claim local firms buying similar equipment must pay import duty, import declaration fee and railway development levy, as well as bearing the full bank-financing costs.

According to the petitioners, the cumulative cost of acquiring a truck for a local operator is at least 51 percent higher than that of a foreign competitor benefiting from duty-free importation.

They say the cost disparity has enabled foreign contractors to consistently underbid Kenyan firms, resulting in loss of contracts, loan defaults and distressed auction of locally owned fleets.

The organisations say they filed the case after receiving complaints from local contractors, truck owners, transporters and suppliers since 2016.

They claimed many affected businesses had been reluctant to seek legal redress for fear of being blacklisted from government tenders, commercial retaliation and ongoing insolvency proceedings.

The petitioners say the government had facilitated infrastructure projects through bilateral agreements that allowed foreign contractors to import project equipment duty-free and enjoy other tax and procurement exemptions.

They cite Auditor-General reports which they say showed that revenue foregone through tax exemptions stood at Sh38.6 billion in the 2022/2023 financial year and Sh41.2 billion in 2023/2024.

Mr Macharia said Japanese contractors had been granted exemptions through a Gazette notice issued in 2021, unlike Chinese contractors involved in projects such as the standard gauge railway, Nairobi Expressway, Thika Superhighway and Lamu Port.

The petitioners want the court to compel the government to publish the legal notices, Gazette notices, administrative directives or executive instruments through which tax exemptions, customs duty remissions or other fiscal concessions have been granted to such projects since January 2008.

The Attorney-General has opposed the petition, arguing that it raises no constitutional issue and was filed in the wrong forum.

‘The matter is purely commercial in nature and should be entertained in another forum other than the Constitutional and Human Rights Court,’ the A-G said.

The case will be mentioned on October 6.

Mauritius bank wins lengthy Sh841m loan fight with Kenyan oil marketer

The High Court has allowed Mauritius Commercial Bank (MCB) to recover a $6.5 million (Sh841.7 million) debt from a Kenyan petroleum company after a decade-long financing dispute tied to the collapse of Imperial Bank.

The court ordered Jade Petroleum Limited to pay the debt after finding that MCB had paid the money to South Africa’s FirstRand Bank, trading as Rand Merchant Bank (RMB), when it called guarantees issued to secure debt by the petroleum firm.

The court declined a claim by the petroleum company that the collapse of its banker, Imperial Bank, had frustrated the repayment obligations under the loan facility by MCB.

The judge said that the bank’s receivership did not extinguish its debt. Imperial Bank collapsed into receivership on October 13, 2015, after the bank’s board alerted regulators to suspected fraud, with subsequent investigations finding substantial fraudulent activities and misrepresented financial statements.

‘Imperial Bank was an intermediary through which the facility was administered. The supervening event therefore affected the means by which the first defendant (Jade) ordinarily dealt with RMB, but did not transform the obligation to repay into something radically different or extinguish it,’ said the court.

At the same time, the MCB’s claim against Pankaj Vrajlal Vallabh Somaia, Amar Mahendra Chandra Pandya and Raj Harikrishna Mohanlal Devani, who were sued as guarantors of Jade Petroleum’s loan, was dismissed.

FirstRand Bank financed Jade Petroleum, while Imperial Bank acted as Jade’s banker and intermediary, and Mauritius Commercial Bank issued the standby letters of credit that secured part of Jade’s borrowing.

The court found that Jade had defaulted on its loan and that MCB became entitled to recover the $6.5 million after honouring the standby letters of credit issued on Jade’s behalf.

The September 17, 2026 judgment traces a chain involving Jade, Imperial Bank, FirstRand’s Rand Merchant Bank and MCB, with the dispute turning on liability after the guarantees were called.

The financing began in June 2007, when FirstRand (trading through Rand Merchant Bank – RMB) extended Jade facilities worth $10 million (Sh1.29billion), later increased to $14 million (Sh1.81billion).

Jade’s banker was Imperial Bank, while FirstRand required additional security in 2009. At Imperial Bank’s request, MCB issued five standby letters of credit worth $6.5 million for Jade’s obligations to FirstRand.

In November 2015, FirstRand told Jade that the guarantees were approaching expiry and demanded either their extension or repayment of the outstanding amount, which it put at $7.5 million (Sh971.10 million).

Jade replied that Imperial Bank had been placed under receivership and could not extend the guarantees or repay the debt. It asked for more time and said it was experiencing a liquidity constraint.

‘We shall unfortunately not be in a position to repay these sums as we are currently experiencing a liquidity constraint,’ Jade said in the letter signed by Mr Pandya.

FirstRand declared an event of default on November 18, 2015, and demanded immediate repayment. Jade did not pay, prompting FirstRand to call the MCB guarantees.

MCB paid FirstRand $6.5 million between December 4 and 31, 2015, with SWIFT confirmations identifying Jade Petroleum. FirstRand and MCB later signed a Subrogation and Transfer Agreement transferring FirstRand’s rights, securities and interests to MCB to the extent of the amount paid.

MCB then sued Jade and the three guarantors -Somaia, Pandya and Devani – in June 2016, seeking $6.5 million, interest and costs. Default judgment was entered, but set aside in October 2018, allowing the defendants to defend the claim.

At trial, Jade argued that Imperial Bank’s receivership had frustrated the financing arrangement and that a 2010 amendment had materially changed the facility. The guarantors also argued that the amendment discharged their obligations.

However, the court found Imperial Bank’s collapse affected how Jade dealt with FirstRand but did not remove its repayment duty.

‘Imperial Bank’s receivership did not render the first defendant’s obligation to repay RMB impossible or radically different,’ the High Court said. The court noted that the bank was only an intermediary through which the facility was administered.

‘Although Imperial Bank’s receivership was external to the parties, it did not make Jade Petroleum’s performance impossible or radically different. The frustration defence therefore fails,’ said the judge.

The court also rejected Jade’s claim that the 2010 amendment was obtained under duress. Security requirements rose from 20 per cent to 100 per cent, but Jade continued using the facility.

The court held that MCB became entitled to recover from Jade when it paid FirstRand. It rejected Jade’s argument that MCB could not sue because it had not been a party to the original facility agreement.

‘Upon paying $6.5 million to RMB under the Standby Letters of Credit (SBLC), the plaintiff (Jade Petroleum) became subrogated in equity to RMB’s rights to the extent of that payment,’ the court said.

It also found that the 2010 second amendment of the facility was not proved to be unconscionable or void for duress. This is because Jade continued to utilise the facility on the amended terms for several years.

‘Against that evidence, the fact that the amended terms were onerous is not enough, by itself, to establish unconscionability or duress. The 1st defendant continued to take the benefit of the facility for years after the amendment. I therefore find that the Second Amendment was not shown to be unconscionable or void for duress,’ said the judge.

The three guarantors faced a different outcome. Their guarantee remained valid, but required a formal demand before liability arose.

MCB produced demand letters dated April 21, 2016, but its witness admitted he had no proof showing that the letters had been dispatched or served.

‘I do not have evidence of service of the letter, or the certificate of posting of the demand,’ the witness told the court.

The court said the bank had failed to prove the contractual step needed to make the guarantors liable.

The court entered judgment against Jade alone for $6.5 million. Interest was awarded at LIBOR plus 3.5 per cent until filing, then 14 per cent until payment.

How Kenya teetered on the brink of widespread power rationing

Kenya’s electricity reserve margin-the extra power generation capacity available above peak demand-was wiped out in the year to June 2026, heightening risks of widespread power rationing and blackouts.

Kenya Power revealed that electricity reserve margins shrunk to negative 1.5 percent in the 12 months to June, a development that could mean inconvenience and extra operating costs for businesses seeking alternative power sources.

‘As a result of growing energy demand, the system peak increased by 8.6 percent, from 2,316 MW (megawatts) to 2,514 MW, which tightened the system’s reserve margin to approximately negative 1.5 percent,’ Kenya Power says.

‘The margin is below the level required to absorb an unexpected plant outage, hydrology shock or demand surge.’

Whether this situation has changed between June 2026 and now is unclear. Kenya Power Managing Director Joseph Siror did not respond to a request by Business Daily for an update on the matter.

The utility has attributed the dismal reserves to lack of fresh electricity generation on the national grid despite fast-growing consumption. Kenya Power did not reveal the reserve margins for the year ended June 2025.

The negative reserve margin is significantly low when compared to the recommended range of 20-35 percent. This situation puts Kenya on the edge of a potential crisis in the event that major disruptions occurred at the hydro plants of Ethiopia, which is now the country’s biggest source of power imports.

Reserve margins are critical to a country’s ability to withstand any sudden surge in electricity demand or outage from a major generation plant.

Kenya Power has on several occasions been forced to ration supplies to some regions when demand peaks in the evening, a scenario that could worsen if there are not significant increments in the reserve margins.

‘I can confirm that there are many instances when we have been forced to load-shed the country when the wind generation is low, and this is because when you sum all other generation sources without wind, they cannot serve the peak demand,’ Dr Siror said recently.

Kenya Power was in 2018 barred from signing new Power Purchase Agreements (PPAs) with the government, saying the freeze would allow for scrutiny of the existing PPAs amid concerns over costly power burdening homes and businesses.

The freeze was lifted in December 2024, but the utility is yet to ink any new PPAs, further derailing efforts to boost local generation of electricity.

Local generation of electricity rose six percent to 13,779.15Gigawatt-hours (GWh) in the year to June 2026 compared to 13,021.49GWh a year earlier, but Kenya Power was forced to import more electricity to meet the rising demand and avert outages.

Kenya Power has stepped up electricity imports from Ethiopia and Uganda to help boost supplies and meet rising consumption that saw Kenya record four peak demands since July last year.

Kenya Power will take on an extra 200 MW of power in December 2026 under a power purchase agreement (PPA) with Ethiopia to plug a supply gap.

Kenya Power currently has a 20-year PPA with the Ethiopian Electric Power (EEP), signed in 2022, allowing the supply of 200MW of electricity priced at $0.65 per kilowatt-hour (kWh), or approximately sh84.03 per kWh.

This means that Kenya Power will, from December 2026, tap a total of 400MW of electricity under the PPA with EEP. Under the deal, Kenya will, from December, take up 400MW at peak times but cut uptake to 150MW during off-peak times. In the present PPA, Kenya Power takes up 200MW at peak times and 65MW off-peak.

The increased power shipments have made Ethiopia the third biggest source of electricity to Kenya Power with a share of 9.88 percent last year, behind Lake Turkana Wind Power at 9.97 percent and KenGen at 57.49 percent.

Cheap hydro power from Ethiopia has helped Kenya meet the fast-growing demand, without burdening consumers with steep bills in the past three years. Central to that transformation is the Grand Ethiopian Renaissance Dam, which has more than doubled the country’s installed electricity generation capacity over the past seven years, from 4,462MW to 9,752MW.

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