Category: Business Daily

Auditors have expressed doubt over the long-term survival of the State-owned Kenya Meat Commission (KMC) due to sustained losses that are straining its ability to continue as a going concern.

The meat supplier’s net loss in the year to June 2025 more than doubled to Sh410 million from Sh168 million a year earlier, after sliding back to the red following a brief profit run in 2022.

KMC’s management attributed the increased loss making in the review period to cash flow challenges resulting from unpaid bills by several State agencies, which comprise the bulk of its clientele.

An audit of its book by the Auditor-General’s office revealed that the firm is also operating far below capacity due to worn-out machines, huge unpaid debt from suppliers, and is struggling to sustain its operations.

‘In the circumstances, the continued accumulation of losses signifies persistent financial underperformance and sustainability challenges, casting doubt on the Commission’s ability to operate profitably and achieve its financial objectives,’ said Auditor-General Nancy Gathungu in the audit report.

During the period, KMC’s sales declined by Sh67 million to Sh1.6 billion from Sh1.71 billion in 2024, driven by low livestock supply due to a huge debt owed to farmers, some of which has been pending for years.

Its financial statements reveal that its debt to farmers and other creditors, including unremitted statutory deductions, increased to Sh488 million from Sh337 million, a rise of over Sh150 million.

The debt included Sh83 million unremitted staff pension funds and Sh115 million unpaid corporate income tax owed to the Kenya Revenue Authority.

At the same time, the amount it is owed by different debtors increased by Sh1.8 million to ShSh694 million from Sh692.2 million, most of which it is owed by several government agencies.

The audit found that State agencies owed KMC Sh552 million, accounting for 80 percent of the firm’s receivables, and had been pending for over three months.

It was also owed Sh19 million in rental income, and had another Sh126 million outstanding receivables that was unsupported, disputed, or untraceable, raising doubts over their recovery.

Amid the mounting debt and losses, KMC has been unable to service many of its equipment, which have since become obsolete and unserviceable, reducing its production capacity.

‘The absence of timely repair, replacement, and modernization of obsolete machinery has compromised production efficiency, increased operational costs, and limited the Commission’s ability to meet the demand for its products,’ said the Auditor-General.

KMC’s fortunes began to improve after President Uhuru Kenyatta’s administration replaced its management with military leadership, as part of a larger operation to revitalize loss-making State entities.

The year ended June 2022, the first full year one under military leadership, marked the firm’s best performance in decades, with a profit of Sh242 million, overturning a loss of Sh34 million the year before.

However, in January 2023, President William Ruto reversed the military’s takeover, moving KMC from the control of the Ministry of Defence back to the Ministry of Agriculture under the State Department of Livestock Development.

Records at the National Treasury show that, although the firm had been in the red for over a decade, its financial position began to improve in 2019, leading to a cut in its losses from Sh117 million in 2019 to Sh96 million by June 2020.

The trend continued into 2021, when the meat supplier’s losses decreased further to Sh34 million, before it turned a profit of Sh242 million in 2022.

However, the upturn was short-lived, with profits dwindling to Sh180 million in 2023 before reversing to a loss in the year to June 2024, which more than doubled in the year to June 2025.

KMC has yet to disclose its results for the year ending June 2026 and audit reports are often delayed before publication. The financial performance could jeopardise plans to privatise the State corporation, which are intended to improve its long-term efficiency and viability.

Businessman Yagnesh Devani’s bid to end his prosecution over the Triton oil scandal has taken a new turn after the High Court rejected his constitutional petition seeking to quash four criminal cases against him.

Justice Roselyne Aburili ruled that Mr Devani’s petition raised issues that should be determined by the criminal trial court rather than constitutional litigation.

She reckoned that the trial over the alleged irregular loss of Sh7.6 billion from Kenya Pipeline Company (KPC) that was started by the Director of Public Prosecutions (DPP) should continue to a conclusion.

The verdict comes 20 months after a Nairobi magistrate’s court permitted the DPP to withdraw corruption-related charges against Mr Devani and Triton Petroleum amid objections from his co-accused who had not been freed from the suit.

Mr Devani was charged in 2024 after his forcible return to Kenya, having remained at large since 2008 when authorities accused the KPC of releasing petroleum products worth nearly Sh7.6 billion to his company, Triton Petroleum.

The oil products were being held at KPC as collateral for bank loans and were released without the knowledge of several financiers, including KCB, Glencore and Fortis Bank, which had funded the imports for Triton and were the legal owners of the reserves.

The judge found that Mr Devani had failed to demonstrate that the DPP acted unlawfully, abused prosecutorial powers or violated his constitutional rights in pursuing the charges.

“This court sitting as a constitutional court or a judicial review, may only interfere where it is shown that criminal proceedings have been instituted for reasons other than enforcement of criminal law or otherwise abuse of the court process,” said Justice Aburili in a July 3 judgment.

She added: “The proceedings initiated by the DPP… to continue until conclusion.”

In October 2024, the magistrate allowed the prosecution to withdraw the charges against Mr Devani and Triton as the DPP prepared fresh charges against the businessman and the oil firm.

The fresh prosecution was also short-lived.

The DPP later applied to withdraw the Devani criminal case, citing the death of some witnesses and the unwillingness of others to testify.

The magistrate allowed the withdrawal on October 28, 2024, triggering confusion over the effect of the July 3 verdict by the High Court.

In his heyday, Mr Devani courted high profile political links, including cabinet secretaries. He lived a lavish lifestyle of fast cars, sharp suits and big parties.

The petition, dated July 13, 2023, stemmed from four criminal cases filed in 2009 and 2011 following the collapse of Triton Petroleum, then one of Kenya’s largest oil marketing companies.

Mr Devani, the company’s founder and chairman, faced more than 20 counts, including conspiracy to defraud, theft, obtaining by false pretences and fraudulent disposal of mortgaged goods.

Court records show Triton collapsed in 2008 and was placed under receivership before liquidation.

Investigators later opened criminal investigations into Triton’s financing and petroleum storage transactions involving KPC and foreign financiers.

Mr Devani remained in the United Kingdom for about 16 years before his extradition to Kenya in January 2024 under a long-standing warrant of arrest.

While in the United Kingdom, he filed the July 2023 High Court petition seeking declarations that the prosecutions were unlawful and sought orders quashing all four criminal cases and an injunction restraining the DPP from pursuing them.

He argued that the charges arose from commercial agreements signed in 2004 involving Triton, KPC, KCB, Emirates National Oil Corporation and Fortis Bank (Nederland) N.V.

The businessman maintained that those disputes belonged before civil courts rather than criminal courts.

Mr Devani also argued that KCB had recovered its debt under a March 2009 deed of settlement after he surrendered assets to satisfy outstanding liabilities.

According to the petition, Triton had annual turnover exceeding Sh70 billion, employed about 3,000 people, controlled 39 percent of Kenya’s oil import market and paid taxes worth Sh800 million annually since 2005.

He argued that continuing the related criminal charges after that settlement amounted to an abuse of the criminal process.

Before withdrawing the criminal suit, the DPP opposed the petition, saying investigators from the Ethics and Anti-Corruption Commission and the Directorate of Criminal Investigations had gathered sufficient evidence to support prosecution.

The High Court has upheld Kenya Power’s decision to terminate a Sh410.6 million electricity poles supply contract after finding the supplier repeatedly failed to meet delivery deadlines.

The court dismissed Inter Tropical Timber Trading’s Sh284.9 million breach-of-contract claim, ruling that an expired commercial contract cannot be revived through later emails, negotiations or continued engagement between the parties.

“The email of May 4, 2016 therefore affords the Plaintiff (Inter Tropical Timber Trading Ltd) no legal foundation upon which to anchor its claim,” the court said in a decision that strengthens strict enforcement of contractual deadlines.

The dispute stemmed from a June 2012 contract under which Inter Tropical was to supply 29,500 treated poles to Kenya Power for Sh410.6 million. The poles were initially to be delivered to the utility’s stores in Ukunda, Malindi and Voi over an 18-month period ending in February 2014.

Inter Tropical sued after Kenya Power terminated the contract in January 2017. It told the court it invested heavily to perform the contract by establishing wood treatment plants in Mwea and Eldoret, buying transport trucks, sourcing timber and hiring staff.

It said the investments were financed through bank loans secured by directors’ personal guarantees and matrimonial property.

The company sued in July 2018 arguing that Kenya Power frustrated the contract by changing delivery locations, suspending deliveries and delaying purchase orders before eventually declaring the contract expired in January 2017.

It sought a declaration that Kenya Power had unlawfully breached the supply contract, alongside Sh284.9 million in special damages, general damages, interest and costs, arguing that the utility’s actions caused it substantial financial losses after it invested heavily to perform the contract.

It maintained that the utility’s conduct created a legitimate expectation that deliveries would resume and that Kenya Power was therefore barred from relying on the contractual deadlines.

Its witness in court was the company’s director, Geoffrey Nganga Kariuki, who tabled documentary evidence to support the company’s claim.

But Kenya Power denied breaching the agreement. It said the delivery point was moved to Nyeri in July 2013 after discussions with the supplier and with its written approval because the new location was closer to the supplier’s operations.

The utility also argued that it granted numerous extensions after the supplier failed to meet agreed delivery schedules but the outstanding poles were never supplied.

The court held that Kenya Power lawfully terminated the contract after it expired. The court found Inter Tropical Timber Trading Ltd repeatedly failed to deliver treated wooden electricity distribution poles despite receiving several extensions of time.

The extensions of time granted by Kenya Power were each explicitly time-bound, the court said.

“I cannot therefore blame the defendant for choosing to terminate the contract due to the plaintiffs inability to perform its obligations under it,” said the judge.

The court noted that by the time Kenya Power issued the termination/expiry notice in January 2017, the contract had long expired by effluxion of time due to the supplier’s failure to deliver the 12,865 poles by November 1, 2015.

Further, the court agreed that the relocation of deliveries was a valid contractual variation because both parties accepted it in writing.

The court found that Inter Tropical remained in material breach because it failed to deliver the outstanding 12,865 poles despite repeated extensions.

“Having carefully considered the evidence on record, I do find that it was the Plaintiff who was in material breach of the Contract,” the court said. “The termination of the contract was a direct consequence of the Plaintiff’s own persistent failure to fulfil its contractual obligations.”

The court also rejected the company’s claim for payment for undelivered poles, holding that the contract required payment only after delivery.

It further dismissed claims for losses arising from idle machinery, storage costs, depreciation and staff expenses after finding they had not been strictly proved.

Kenyans are living longer than before. Advances in healthcare, better nutrition and healthier lifestyles mean more people can look forward to reaching retirement and enjoy many fulfilling years.

While this is an achievement, it also presents one of our country’s greatest financial challenges. Longer lives require larger retirement savings, greater financial discipline and a rethink of what retirement looks like.

The question is no longer simply whether you will retire. It is if you can afford to live well throughout what could be another 30 years after leaving formal employment.

According to the Retirement Benefits Authority, Kenya’s pension industry continues to make progress.

As of December 2025, retirement benefits assets had grown to approximately Sh2.8 trillion, while formal pension scheme membership exceeded 7.5 million. This reflects stronger regulation, improved governance and the higher mandatory contributions introduced under the NSSF Act, 2013.

These milestones, however, should not create a false sense of security. For many Kenyans, NSSF is viewed as the ultimate retirement plan. In reality, it should be the foundation of one.

While enhanced NSSF contributions represent a step towards improving retirement outcomes, they are unlikely, on their own, to provide sufficient income for most middle-income earners to maintain their lifestyle in retirement.

Because inflation continues to erode purchasing power, a retirement that lasts two or three decades demands a serious look at daily costs. Housing, food, transport, utilities and lifestyle expenses will continue in retirement.

This creates a “retirement funding gap” – the difference between the income people will need and what compulsory retirement savings are likely to provide.

Closing that gap requires additional savings through occupational pension schemes, individual retirement benefits and voluntary contributions made throughout one’s working life.

Healthcare is an equally key challenge. While medical advances are helping us live longer, they also mean more years managing chronic illnesses and age-related conditions. Healthcare costs are rising by around 11 percent annually.

Despite these realities, many Kenyans delay retirement planning. Younger workers believe retirement is too far to deserve attention.

Others wait until they receive a promotion or higher pay before they begin saving. Worse still, many withdraw their pension benefits whenever they change jobs.

Money invested early earns returns, and those returns generate further returns through compound growth. Someone who starts saving in their 20s or 30s can contribute considerably less over their lifetime than someone who waits until their 40s.

Providing access to a pension scheme is only the start. Companies should promote financial literacy, helping staff understand the importance of starting early, increasing contributions over time and preserving retirement savings.

The financial services industry must continue to innovate. The earlier Kenyans start saving, the more time their money has to grow, the smaller the retirement funding gap becomes and the greater our confidence that our later years will be lived with financial security, independence and dignity.

Lawmakers have revived a push to compel big power producers to lower the wholesale prices at which they sell electricity to Kenya Power in a bid to ease the pressure on consumers. This comes amid questions over the viability of the quest.

The Energy Committee of the National Assembly directed the Cabinet Secretary for Energy and Petroleum, Opiyo Wandayi, to develop a policy to guide the government’s plan to renegotiate with major power producers.

A reduction in the wholesale prices is key to affording Kenya Power legroom to lower the cost of electricity on consumers, without sinking into losses in its electricity sales.

“The Cabinet Secretary for Energy and Petroleum shall, within twelve (12) months of the adoption of this Report, revise the Policy to provide a clear framework for least-cost power procurement, periodic review of Power Purchase Agreements, and competitive procurement of electricity generation,” the committee says in the report tabled on June 2.

“The framework shall promote transparency, affordability, and value for money, while supporting the Government’s ongoing efforts to reduce the cost of electricity through the renegotiation of legacy PPAs, without compromising security of supply, contractual obligations, or investor confidence.”

However, there are questions on the viability of the directive from lawmakers, given that the existing Power Purchase Agreements (PPAs) are legally binding and any forced review could trigger lawsuits against the government.

Electricity prices have dropped in the past 12 months, a momentum that the government is keen to sustain and ease public outrage over the cost of living, ahead of the General Elections next year.

For example, 200 kilowatt-hours (kWh) cost an average of Sh5,476.34 last month compared to Sh5,738.52 a year ago, according to official data.

In the past, big independent power producers (IPPs) have rejected the government’s push to unilaterally lower the wholesale tariffs, saying any review would hit their books.

The government had in 2022 attempted to unilaterally force the IPPs to lower their wholesale tariffs in a bid to allow Kenya Power to reduce electricity prices by 15 percent. However, IPPs rejected the attempts.

Major IPPs like Lake Turkana Wind Power (LTWP) ruled out renegotiation of the wholesale prices, saying this would significantly hit their earnings.

Early this year, the American-owned Ormat Technologies echoed LTWP’s sentiments, highlighting the herculean task facing the government in its quest to lower the wholesale tariffs of electricity.

“In addition, KPLC recently requested more favourable rates on its existing PPAs with it. Any change in KPLC’s financial condition or the terms of our agreement with KPLC, may adversely affect us,” Ormat said early this year when it released its latest financial report.

LTWP is the third biggest supplier of electricity to the national grid, accounting for 10 percent of the total electricity that Kenya Power buys annually while Ormat is the second biggest source of geothermal electricity.

Parliament’s move to lower the wholesale prices of electricity comes less than a month after the government froze a proposed review of retail tariffs amid fears that the review could have triggered a public backlash and further driven up the cost of living.

The government cited the need to contain the soaring cost of living as key in the decision to halt the plan to review electricity prices. The new tariffs were to come into force from the start of this month.

The Nairobi Securities Exchange (NSE) has a new chairperson. Tom Mulwa, the chief executive officer of Liaison Group, has taken over from Kiprono Kittony, who is now chairing Kenya Airways. In his first interview with the Business Daily, Mr Mulwa speaks about the future of the bourse, why the chairman’s role is far from ceremonial, the quest to attract more listings and retail investors, and how technology can democratise wealth creation in Kenya.

Some people think the position of NSE chairperson is largely ceremonial. What exactly does the office do?

Mulwa: The NSE is far more than a trading floor. It is a public company and an institution that provides investors with confidence that they can enter and exit investments. Before anyone invests in a country, they first look at the strength of its securities exchange because it determines whether they can realise value from their investments in the future.

The board provides the strategic direction of the exchange and appoints the chief executive.

The chairperson works with the board to ensure the institution remains strong. An organisation is only as good as its board. Good leadership is rarely noticed when everything is working well, just as people rarely think about the pilot until something goes wrong.

The NSE has received international recognition, including being ranked among Africa’s top-performing exchanges by Morgan Stanley and earning positive ratings from FTSE Russell. Those achievements reflect effective leadership and sound governance.

The NSE has often announced ambitious listing targets but struggled to achieve them. Has that changed?

Mulwa: We have taken that feedback seriously. Since Covid-19, the exchange has become much more active. In the past two years, we have facilitated more than 10 capital markets transactions, including the Linzi Sukuk, the Talanta Stadium bond, Kenya Mortgage Refinance Company issuances, Safaricom’s additional share capital issue, East African Breweries’ capital raising, and Family Bank’s listing by introduction.

The next major transaction we are looking forward to is the listing of Kenya Pipeline Company. We are determined to sustain this momentum. Raising capital is not limited to initial public offerings. Additional share issuances and bond listings are equally important because they help companies access financing.

We are also working to demystify the stock market. Through technology, products such as Ziidi by Safaricom have already attracted more than 65,000 subscribers. Today, an investor can buy as little as a single share. Our ambition is to have nine million Kenyans participating in the securities market. We want the NSE to belong to ordinary wananchi, not just large corporations. Our mission is to democratise wealth.

Technology is reducing reliance on intermediaries. Does that threaten investment bankers?

Mulwa: We live in the information age. Before visiting a doctor today, many people first search online. The same applies to investing. Investors now have access to information that was once available only to professionals.

That does not eliminate the need for investment bankers. Investing remains complex, and many people still require professional guidance on risk, asset allocation and investment decisions. Those who are comfortable investing independently can do so through a CDS account, while others will continue to rely on professionals for advice. There is room for both approaches

Most recent listings have been bonds rather than IPOs. How do you attract more companies to list?

Mulwa: Family Bank’s listing by introduction is a good example of how businesses should evolve. Entrepreneurs build companies, create value and eventually share that wealth with the public through listing.

IPOs will come, particularly as the government prepares to list more state-owned enterprises such as Kenya Pipeline Company. But listing is like preparing for a wedding-you must ensure the company is ready. We want firms that come to market to meet the required governance and regulatory standards before they list.

Young people appear more interested in gambling than investing in shares. How can the NSE attract them?

Mulwa: Technology is the answer. Gambling has become popular because it is fast and entirely mobile. Investing must offer the same convenience.

Today, our settlement cycle is T+1, meaning investors can buy shares and have their transactions settled by the following day. We have also seen strong uptake of digital money market products, which now hold around Sh260 billion, much of it belonging to young investors.

The perception that investing in shares is outdated is changing. Shares are no longer treated like title deeds that must be stored away. Technology and increasing financial literacy are making the stock market much more accessible to younger Kenyans.

Kenyan investors are often quick to exit the market when prices fall. How can confidence be strengthened?

Mulwa: Investor confidence depends largely on the economy. A stable economy with consistent GDP growth creates confidence that markets will remain resilient.

Strong corporate earnings and reliable dividend payments also encourage investors to stay invested. Many listed companies have maintained attractive dividend records, giving shareholders confidence to hold their investments. Those who prefer less risk can always shift to different counters without leaving the market altogether.

Ultimately, the stock market competes for the same disposable income that households use for food, entertainment and other needs. When the economy performs well and people have more disposable income, they are more likely to save and invest.

Many investors remain scarred by the collapse of companies such as Mumias Sugar. How will the NSE rebuild trust?

Mulwa: Rebuilding confidence is one of our key strategic objectives. We recognise that many investors still carry painful memories of previous market failures.

That is why our strategy focuses on revitalising the NSE. Confidence cannot be restored through words alone; it must be earned through action. Our responsibility is to strengthen the market, improve governance and demonstrate that the exchange remains a trusted platform for wealth creation.

How can the NSE reduce its reliance on foreign investors?

Mulwa: We started by talking about looking inward, and that remains one of our priorities. It is important to have an internationally competitive securities exchange that attracts global investors because that enhances our standing, provides benchmarks and helps mobilise capital. However, heavy reliance on foreign investors also exposes us to capital flight whenever there are global shocks. The more we localise and democratise investing by growing the domestic investor base, the better we will cushion the market against such risks and reduce our vulnerability to external events.

The NSE is described as an indicator of the economy, yet agriculture, which takes about 25 percent of GDP, is not well represented. Why this paradox?

I couldn’t agree more. In our revitalisation journey, we have mapped out the various segments of the economy where we must take deliberate steps to encourage listings, including agriculture, commerce, logistics and others.

That said, Kenya is predominantly a services economy. So, even when you talk about banks, who do they lend to? They finance the very sectors we are talking about. In that sense, banks indirectly provide exposure to those sectors through their listings.

For decades, Savings and Credit Co-operative Organisations (Saccos) have invested in managing risk, liquidity and governance risks. Our regulatory frameworks have been developed around these threats.

However, sacco leaders and regulators must now recognise misinformation as a financial risk. They must act before rumours become runs.

A misleading message circulating through social media platforms can potentially reach more members in a single afternoon than a quarterly financial report reaches in several months.

The challenge facing the sector is, therefore, no longer entirely financial. It is also informational. As the Sacco movement continues to grow, so too must its capacity to communicate quickly, transparently and credibly. Financial literacy must extend beyond understanding savings and loans to grasping balance sheets, assets, deposits and liquidity.

The controversy that followed this year’s Ushirika Day celebrations offers a timely lesson on how misinformation works. It rarely begins with an outright lie. More often, it starts with a real number, strips away the context, and then builds a false conclusion around it.

That is what happened earlier this week after a claim that the government intends to tap into the over Sh1 trillion “held” by saccos to finance the new State-backed National Infrastructure Fund.

The claim rapidly spread online, gaining temporal credibility after sections of the mainstream media reported it. Public concern became intense. The government clarified its position.

Later, media houses that had amplified the narrative issued a correction and apologised.

Yet the episode should not be dismissed merely as another social media rumour. It revealed that misinformation is a risk to the sacco movement and in deed the financial sector.

Members who understand the sacco model are less vulnerable to misleading narratives about their institutions. Misinformation does its greatest damage not when it deceives institutions, but when it unsettles ordinary people.

Sacco members can all be left wondering whether their hard-earned savings are safe. Once that doubt takes root, facts struggle to catch up. But why do false or misleading narratives gain extraordinary traction? Behavioural economics attempts to offer an explanation.

About 50 years ago, psychologists Daniel Kahneman and Amos Tversky developed what is now known as the Prospect Theory. This theory rests on a simple concept: people feel the pain of possible losses much more intensely than the pleasure of similar gains.

In short, people are more likely to react more strongly to the possibility of losing Sh100,000 than to the opportunity of gaining Sh100,000. This helps explain why rumours concerning savings spread very fast. When it bleeds, it leads.

A statement about public financing structures attracts limited public interest. A suggestion that savings may be at risk triggers immediate attention. The prospect of loss commands attention. It generates anxiety and encourages sharing. Before facts catch up, the narrative has already spread. Information that provokes fear enjoys a natural advantage over information that merely explains. The digital age has mediated these advantages.

Going back to the Ushirika Day controversy, the irony is that the viral narrative was built around a statistic that is broadly accurate. Kenya’s sacco sector has indeed grown into a trillion-shilling financial ecosystem. This makes the sacco movement a large segment of our financial sector.

But assets are not cash. When many Kenyans heard that saccos had accumulated more than Sh1 trillion, they understandably interpreted this as a trillion-shilling pool of money sitting in accounts and available for deployment elsewhere.

In reality, that is not how saccos operate. A sacco’s balance sheet is not a warehouse of cash. It is a record of how members’ savings have been transformed into productive economic assets.

Saccos’ most valuable asset is trust. Their loan portfolio and other assets are secondary. Without trust from its members, a sacco easily collapses. In the digital economy, information has become a financial variable. And for institutions built on trust, misinformation has become a balance-sheet risk.

Saccos are built on shared ownership. Members are depositors, borrowers and owners. Confidence, therefore, occupies a central place in the cooperative model.

The sacco movement has spent decades mobilising trust alongside savings. Protecting that confidence will require vigilance against misinformation that can travel faster than facts and inflict damage long before correction measures arrive.

Safaricom plans to bar the use of retained earnings for share buybacks under proposed changes to its articles of association that will be tabled at its upcoming Annual General Meeting (AGM).

The telco, in a notice to shareholders ahead of the July 31 AGM, has proposed an amendment to Article 134 of its internal rules to redefine how directors can allocate company reserves. The proposal is part of the special business to be considered alongside routine agenda items.

Under the proposed changes, Safaricom’s directors will retain the discretion to set aside portions of profits as reserves before recommending dividends. However, the proposed amendment seeks to restrict the application of these reserves by barring their use in acquiring the company’s own shares.

‘The directors may, before recommending any dividend… set aside out of the profits of the company such sums as they think proper as a reserve… applicable for any purpose to which the profits of the company may be properly applied… either be employed in the business of the company or be invested in the business of the company or be invested in such investments (other than shares of the company) as the directors may… think fit,’ reads the AGM agenda.

Latest disclosures show Safaricom held Sh165.74 billion in retained earnings at the group level at the end of March 2026, compared with Sh256.74 billion at the company level. The retained earnings offer a rich buffer despite years of distributing about 80 percent of net profit to shareholders.

The company has never implemented a share buyback since it listed on the Nairobi Securities Exchange (NSE) in June 2008.

Kenya first introduced share buybacks through the Companies Act, 2015 but the Capital Markets Authority introduced regulations to guide the process in November 2021.

The effecting of buyback rules in late 2021 means Safaricom would not have used such a programme to support its share price when it traded below its Sh5 listing level for about five years after joining the Nairobi bourse in 2008.

SAFARICOM BY PATRICK ALUSHULA

Subsequently, Safaricom’s share price rallied and has traded at a major premium, leading the NSE in terms of market value.

The proposed amendments show that the reserves may only be deployed in the business or invested in instruments other than Safaricom’s own stock.

Directors will also continue to have the option of carrying forward undistributed profits where deemed prudent.

Share buybacks, which involve a company purchasing its own shares from the market, are typically used to return excess cash to shareholders in a tax-efficient process or to support share prices.

Stock repurchases have the effect of raising the stakes and earnings for continuing shareholders.

By reducing the volume of outstanding shares in the market, they are also likely to lift a company’s value, especially if the business remains profitable and continues to grow.

When a company buys part of its shares, remaining investors benefit through a higher claim on earnings and dividends without incurring any tax expense.

When they receive a dividend, however, they pay withholding taxes of between five percent and 15 percent (depending on residency status), unless they qualify for exemption.

Critics of share buybacks say this use of capital faces various major risks, including consuming a company’s cash when it may need funds for investment in operations.

A company may also buy back its shares when they are not cheap -as measured by the firm’s fundamentals. In this case, winners are shareholders offloading their stakes to the entity.

Use of stock repurchases is more widespread in developed markets where companies also pay dividends.

Safaricom buys shares from the open market to award senior executives, including the CEO, as part of their performance-based compensation package. The practice differs from share buyback, which is aimed at returning value to shareholders or supporting the stock price.

In Kenya, listed firms such as Nation Media Group and Centum Investment Company have executed share buybacks in recent years, while unlisted players such as Synergy Industrial Credit have also adopted the strategy.

Other companies, including Jubilee Holdings and Absa Bank Kenya, have amended their articles of association to create room for buybacks, signaling its widening appeal in the market.

However, Safaricom’s proposed restriction suggests a preference for more traditional capital allocation strategies, including reinvestment in the business and dividend distribution.

Formalisation of the restriction on use of retained earnings for share buybacks looks set to reinforce Safaricom’s dividend policy by ensuring the money is primarily directed towards business growth and shareholder payouts rather than share repurchase programmes.

Safaricom’s proposed resolution requires approval by shareholders at the AGM, where it will be considered as a special resolution. If adopted, the changes will guide future decisions on profit retention and reserve utilisation.

Kenya Airways (KQ) has secured a second landing slot at Dubai International Airport, the world’s busiest airport for international passenger traffic, allowing it to launch a second daily flight to the city, days after its arch-rival Emirates added a third Nairobi-Dubai service.

The national flag carrier is set to more than double its capacity on the Nairobi-Dubai route, with an additional daily flight set to commence on September 1, as competition intensifies on the lucrative route.

This comes just days after Emirates, one of the few carriers that operates direct flights between Nairobi and Dubai, added a third daily flight, highlighting growing demand on the route.

KQ’s chief commercial and customer officer Julius Thairu told Business Daily the decision to add a second flight on the route followed receipt of regulatory approvals, and was driven by demand.

‘We are currently operating 7 weekly (daily) flights and growing to 14 weekly (double daily) flights from September 1. Frequency increases are subject to demand, aircraft availability, operational readiness, slot allocation, and the required regulatory approvals,’ Mr Thairu said in an email response.

Sources familiar with the issue had told Business Daily that KQ has unsuccessfully sought an additional landing slot in Dubai for years, despite Emirates and three other airlines from the United Arab Emirates having multiple landing slots in Nairobi and Mombasa.

Other UAE-based airlines flying to Nairobi and Mombasa are Etihad, which operates direct flights to and from Abu Dhabi; flyDubai, which flies to Nairobi and Mombasa from Dubai; and Air Arabia, which flies directly to and from Sharjah.

KQ had protested the unfair treatment in Dubai, which violated the Bilateral Air Service Agreement (BASA) between Kenya and the UAE and gave Emirates an unfair competitive advantage on the route, sources said.

The Kenya Civil Aviation Authority and the State Department for Aviation and Aerospace Development did not respond to requests for comment on the unfairness allegations.

With the addition of a third daily flight, served with a 350-seater Boeing 777, Emirates increased its daily capacity on the Nairobi-Dubai service to over 900 passengers, dwarfing KQ’s 147 by far.

Currently, KQ uses a Boeing 737-8, with a 147 passengers capacity for the daily Dubai flights. Mr Thairu did not disclose which equipment will be used on the second flight, but it is suspected it could deploy the recently returned 400-seater Boeing 777 or a second Boeing 737-8.

‘Any decision to add frequencies is made after a full commercial and operational assessment, including aircraft availability, crew planning, airport slots, passenger demand, and network connectivity,’ Mr Thairu said.

Dubai is among the most lucrative destinations to fly to from Nairobi, making it an important route for KQ. Despite the disruptions due to the Iran war, Dubai was among the best performing destinations from Nairobi, with a total capacity of 248,802 passengers flying out of Nairobi between January and June 2026, according to data by AeroTrail.

In June, Dubai was the second best performing route, with a total capacity of 51,149 flying out of Nairobi, second only to Nairobi-Mombasa, which is Kenya’s busiest domestic route, served by over 5 airlines.

In 2025, KQ earned Sh9.7 billion from its Dubai flights, accounting for 6 percent of its total turnover, highlighting how important the market is to the flag carrier.

The World Bank Group deems gains arising from creation of Kenya’s National Infrastructure Fund (NIF) short-term, stressing the need for deeper reforms to achieve a lower budget deficit and ease debt pressures.

Kenya has bet on the new infrastructure fund to move some of its development financing needs from the budget (off-balance sheet) and create fiscal space to cater for other spending requirements such as expenditures on social services and health.

The National Infrastructure Fund is expected to mobilise up to Sh5 trillion by crowding in private capital, raising Sh10 for every Sh1 invested in the vehicle.

The World Bank, while crediting creation of the fund as positive, however, calls for sustained structural and governance reforms to ensure strong growth and employment creation.

The multilateral lender has recommended key reforms to anchor fiscal consolidation and debt sustainability including increasing productivity by ending market distortions and the promotion of a more equitable and redistributive fiscal policy.

‘Privatisation efforts and asset sales are expected to fund commercially viable infrastructure projects through a new National Infrastructure Fund. However, this would not address the underlying structural weaknesses in revenue mobilisation and spending efficiency, underscoring the need for sustained fiscal consolidation and reforms,’ the World Bank said in a new Kenya Economic Outlook report.

‘The Government of Kenya intends to use the proceeds of privatisation through the fund. Even if these efforts and prospective proceeds offer short-term relief, sustained structural and governance reforms will be critical to ensure strong growth and job creation that is led by the private sector.’

Despite the proposed off-balance sheet funding for major infrastructure projects to relieve budget pressures, spending for the budget starting July 1, 2026, is projected to rise to Sh4.8 trillion from Sh4.6 trillion in the previous cycle. Spending on development is estimated to be slightly lower at Sh749 billion in the period, from Sh758.4 billion previously.

The projected fiscal deficit is only estimated to narrow slightly to Sh1.11 trillion for the cycle to June 30, 2027, from Sh1.19 trillion previously.

The government has initiated privatisation of select State-owned enterprises (SOEs) to reduce fiscal pressures and contingent liabilities.

The government has partially privatised Kenya Pipeline Company by selling 65 percent of its shares through an initial public offering (IPO), retaining a 35 percent stake and raising Sh106.3 billion in the transaction.

The government has also recently completed its partial divestment from Safaricom, selling a 15 percent stake to South Africa’s Vodacom Group Limited for Sh34 per share and generating an estimated Sh244.5 billion including an upfront dividend payment from its remaining 20 percent stake in the business.

Proceeds from KPC and Safaricom transactions are set to provide seed capital for the National Infrastructure Fund.

On Thursday, National Treasury Cabinet Secretary John Mbadi appointed Centum Investment Company chief executive officer James Mworia, Fahima Ali, Christopher Kibui and Latoya Ouma to be members of the fund’s board for a period of three years as the government moves to fully constitute the vehicle.

WORLD BANK BY KEPHA MUIRURI

Lawrence Kibet and Mohammed Abdirahman have also been appointed to the fund’s board.

The World Bank has further cut its growth projection for Kenya this year to 4.3 percent from the previous 4.4 percent, reflecting the impact of the Middle East conflict on Kenya’s macroeconomic outlook.

The World Bank recently disbursed Sh97 billion ($750 million) to Kenya from its second development policy operations (DPO) to support key fiscal reforms and provide key resources for the country’s budget.

The institution expects Kenya’s fiscal deficit to remain elevated and average 5.6 percent in the 2026-2028 period, keeping debt levels high and limiting fiscal space.

‘Without stronger policy action, fiscal vulnerabilities are likely to persist, as debt service obligations remain high, and expenditure pressures continue,’ the World Bank added.

‘Planned privatisation of select State-owned enterprises is expected to provide only limited direct fiscal relief, as most proceeds are expected to finance infrastructure investment.’