Category: Business Daily

Some weeks ago, I watched a problem die inside a bank. It was a critical issue, and solving it would have cost the bank almost nothing. No millions.

Instead, it moved from desk to desk collecting refusals, each one perfectly defensible. A phone call was then made to the chief executive, the kind of call that spends years of banked social capital, and the matter was resolved in a day. Everybody won.

Which leaves the question this column exists to ask: why could nobody inside the system see it, and why could nobody act?

Once you notice this pattern, you meet it everywhere. I have sat in a tax dispute that swelled through objections, judgments and costs for five years, until alternative dispute resolution finally placed the problem on the table.

What process could not untangle in five years, ADR resolved in eight weeks because someone applied a founder’s view. The same script runs through hospitals, where decisions climb from the ward floor to the chief executive’s desk, sometimes too late for the patient. Institutions full of intelligent people keep producing unintelligent outcomes.

Call it the orphaned institution. Every organisation was once a startup. Someone once held the whole of it in one mind: customer, cost, risk, purpose and trade-offs.

Then it grew and was orphaned of its founder’s reasoning. The people remained capable; judgment stopped circulating. The structural proof is simple: put your team on the other side of the counter and they will instantly see the better decision. The eyes work; the seat forbids.

Why? Because institutions convert judgment into procedure, and procedure cannot see. An employee is rarely punished for a blocked solution but always exposed by an unauthorised one, so the rational clerk optimises for defensibility rather than outcomes. Founder reasoning is the opposite wiring: whole-problem sight, ownership of the result, and permission to weigh trade-offs. Remove any of the three and judgment dies quietly at the desk.

This is why founders struggle to let go. We are lectured about delegation. But the founder who grips too long is often not an ego case but a judgment-scarcity case: he has tested the structure and learned that his reasoning does not survive his absence. Last week, I argued that a creed carries values beyond the founder. This week’s harder question is what carries thinking.

The world is wrestling with the same question. Silicon Valley calls it founder mode. Critics call Elon Musk a micromanager, and sometimes he is.

But underneath the insult sits the unresolved problem: nobody has scaled founder judgment without the founder. Haier in China went furthest, dissolving itself into micro-enterprises so every employee faces the market like a founder. Yet orphanhood persists in the largest banks, telcos and ministries. Perhaps scale itself thins the blood.

Widen the lens and the pattern turns civilisational. Africa itself can read as an orphaned institution.

Our forefathers ran sophisticated leadership pipelines: age-sets that formed judgment in cohorts, councils of elders that transmitted it deliberately, and succession earned through initiation.

Colonialism severed the pipeline, and independence handed us the coloniser’s institutions, stripped of our own founding logic. So the continent keeps returning to the house that orphaned it, expecting it to supply the judgment we once formed at home.

Then comes this era’s provocation. If the founder’s reasoning cannot be transmitted through training manuals, could it be transmitted through machines? It is now possible to build a founder’s digital twin: an AI trained on the founder’s decisions and corrections, answering: what would the founder do here, and why?

I find the idea promising, and I do not trust it. A twin can carry logic. It cannot carry liability. My reasoning worked because I bore the consequence of being wrong.

Judgment without ownership is a suggestion box with better grammar. So the answer is probably a stack: the creed to carry the values, the twin to circulate the reasoning, and shared ownership to give the person at the desk a reason to use both.

Intelligence spreads fast. Skin in the game must still be distributed the old way.

Until then, the test of every institution remains embarrassingly simple. It is the day the clerk solves the founder-sized problem without anyone needing the chief executive’s number. It becomes an heir. So, one day, might a continent.

Kenya’s export earnings dipped to a five-year low in 2025, analysis shows. It was hurt by a biting drought across main producing areas, the strengthening of the dollar in key export markets, and human-wildlife conflicts that led to the destruction of sizeable volumes of the crop.

Kenya is among the world’s biggest sisal producers and ranks third after Brazil and Tanzania. The sisal fibre produced in Kenya is mainly for export, with an estimated 96 percent of the produce shipped abroad.

Locally, sisal is used for making ropes, bags, carpets, baskets, and furniture. Internationally, it is used to produce paper, ceiling boards, car bodies, clothes, and even paper currency.

Fresh data by the Agriculture and Food Authority (AFA) showed that Kenya earned Sh4.7 billion from sisal exports in 2025, down from Sh5.7 billion the previous year. The 2025 sisal export earnings are the lowest for Kenya since 2021 and mark a third successive year of drops.

The dip in export earnings coincided with a drop in both the output and the volume of crop shipped to markets abroad. Total production fell by 19.4 per cent to 24,899.46 tonnes in 2025 from 30,893.4 tonnes in 2024.

‘The reduction in output was attributed to lower productivity, likely driven by drought conditions that affected major sisal-producing estates and curtailed the harvesting of sisal leaves. In addition, outbreaks of diseases such as Korogwe leaf spot and early pole formation further diminished output,’ the regulator said.

‘Production was also negatively impacted by human-wildlife conflicts in some estates, which led to wildfires that destroyed sisal plantations and further suppressed overall yields’

Kenya suffered a severe drought in 2025, especially towards the end of the year where the country suffered the near-total failure of the October-December short rains,

In the 2025 crop season, Kenya exported its sisal fibre to 30 destinations overseas, shipping 23,323.1 tonnes to international markets and earning Sh4.7 billion compared to 26,168 tonnes exported in 2024, valued at Sh5.7 billion.

Nigeria remained the principal destination of Kenyan sisal fibre shipments in 2025, accounting for the largest share of both export volume and value, with 8,497.40 tonnes valued at Sh1.72 billion. The West African country has consistently been the top market for Kenyan sisal fibre, largely due to its extensive use in the construction industry. Saudi Arabia was the second-biggest buyer of Kenyan sisal in 2025, importing 2,717 tonnes worth Sh610 million.

‘Beyond its traditional markets, Kenya continued to diversify its export base across Africa, Asia and Europe. Shipments reached countries such as Morocco (2,098 tonnes), China (2,295tonnes), Spain (836 tonnes) and the Philippines (528 tonnes), reflecting sustained demand in industries that rely on natural fibres,’ AFA said.

Emerging markets, including Japan (25 tonnes), Sri Lanka (14 tonnes) and Slovenia (10.2tonnes), also imported smaller quantities, signalling growing global interest in sustainable and biodegradable raw materials.

‘Overall, this performance demonstrates the resilience and adaptability of Kenya’s export strategy and highlights the strategic role of sisal as a key cash crop, particularly in arid and semi-arid regions where it is well suited,’ the regulator said.

‘With the global shift toward environmentally friendly alternatives, sisal presents Kenya with significant opportunities to enhance its green economy profile while generating rural employment and foreign exchange earnings’

Sisal farming is largely carried out on a large scale in counties such as Taita Taveta, which is the largest producer by county ranking. Others are Kilifi, Baringo, Makueni, Kwale, Nakuru, and Migori counties.

In 2025, Taita Taveta posted a slight decline in output, decreasing to 8,226.57 tonnes, from 9,462.90 tonnes in 2024. Makueni registered the steepest drop in fibre production, with output falling by 33.5 per cent to 4,979.9 tonnes in 2025, with the value significantly decreasing to Sh910.4 million.

‘Overall, all counties experienced reductions in fibre production and the value of sisal fibre exports, despite an expansion in the area under cultivation,’ AFA said.

Kenya’s weather experts have now put a number on what many had treated as speculation. The Kenya Meteorological Department estimates an 81 percent probability of a very strong El Niño this year, bringing above-normal rainfall during the October to December short rains, and a 97 percent chance that the event extends into early 2027. For finance leaders, that is not just a forecast but a planning assumption.

A telecommunications network is a large consumer of electricity, with thousands of base stations operating around the clock. When storms bring down power lines, sites switch to batteries and then diesel generators – the most expensive electricity an operator buys.

Those generators must be refuelled by trucks travelling on roads damaged by the same rain.

Extended cloud cover creates another challenge. At Safaricom, we have converted 2,002 sites to solar power, with green energy now powering 35 percent of our network. Heavy cloud reduces solar output when the national grid is least reliable, forcing deeper battery cycles and accelerating replacement schedules.

The story does not end with higher costs. Full dams can increase hydropower generation and moderate electricity prices. Stronger harvests raise rural incomes, increasing economic activity and digital transactions. The risks lie in local infrastructure reliability; the opportunities lie in stronger national supply and demand. The objective is to model the forecast.

Both risks and opportunities eventually appear in the accounts as higher fuel bills, more expensive logistics, earlier maintenance cycles and insurance costs. By then, the cheapest opportunity to respond has passed.

This was the message I shared with finance leaders at the third annual CFO East Africa Sustainability Summit. The CFO’s responsibility today goes beyond protecting shareholder value and allocating capital. It includes recognising climate risk while it is still weather, rather than waiting until it becomes an accounting entry.

Climate-related investments should compete for capital on the same merits as any acquisition or major expansion. Does the investment reduce material risk? Does it lower costs or improve efficiency? Does it strengthen resilience to future shocks? Where the answer is yes, it belongs in the capital allocation process.

Capital markets have already moved in this direction. Late last year, Safaricom raised Sh20 billion through green notes to finance eligible environmental projects. The issue was oversubscribed by 175.7 percent, showing that investors increasingly recognise environmental resilience as a financial proposition.

Ultimately, this is a balance sheet issue. Climate exposure represents future costs, while investment in people, communities and sound governance strengthens reputation, customer loyalty and talent – assets that may not appear explicitly on the balance sheet but influence enterprise value.

October is roughly 90 days away. The forecast is public. The financial consequences of this rainy season will be determined not when the first storms arrive, but by decisions being made today.

Caroline Wambugu is the Head of Group Finance Controls, Performance and Investor relations, Safaricom PLC

The High Court has declined to lift the suspension of Tata Chemicals Magadi Limited’s mining operations over a licensing and compliance dispute with the government.

The court said the suspension imposed by Mining Cabinet Secretary Hassan Joho on July 28, 2026 had already taken effect when the company moved to court.

‘I note that the decision of July 28, 2026 had become effective by the time the applicant moved the court on July 30, 2026. I also note that implementation of the decision had begun in earnest, and that the parties had reached a consensus, from the meeting of July 29, 2026, on the suspension remaining in force, even if the applicant takes steps to bring itself into compliance,’ said the judge in the ruling dated August 7, 2026.

The suspension followed a dispute over alleged royalty obligations and compliance requirements covering licensing, export reporting, community agreements, local employment and environmental rules.

Tata Chemicals challenged the government’s decision through judicial review proceedings, arguing that the suspension was issued without proper notice or adequate time to respond.

It disputed owing royalties and told the court outstanding royalties had been settled.

The government opposed the request for a temporary order. An affidavit sworn by Thomas Mutwiwa stated that several notices had been issued to Tata Chemicals, with the most recent being dated May 14, 2026, claiming arrears of accrued royalty payments.

The government also told the court that Tata Chemicals did not hold a current mining licence because its application was still being processed.

The Kenya Gazette published in February 2026 a notice confirming receipt of Tata Chemicals’ application for a mining licence covering 63.584 square kilometres in Kajiado County for soda ash.

A separate Gazette notice in October 2025 recorded another application covering 63.4555 square kilometres in Kajiado County, also for soda ash.

The government said the parties met on July 29, a day after the suspension letter. It said they agreed operations would remain suspended while Tata Chemicals took steps towards compliance.

Tata Chemicals said the meeting did not resolve the legality of the suspension. It said discussions concerned royalty calculations and that the minutes should have been shared with it.

In its ruling, the court said it was not required at this stage to decide the merits of the wider dispute.

‘At this stage, the court is not required to engage with arguments on the merits of the substantive suit, but to balance the interests and rights of both sides,’ it said.

Tata had argued that continuing the suspension would cause huge losses. The court said Tata had not shown the nature or extent of those losses.

‘I note too that the commodity, at the centre of it all, from the mining operations, has not been shown to be perishable,’ the court stated, declining to issue the interim prohibition order.

The case is expected to be called again in court on October 6, 2026.

The dispute comes as the company is embroiled in a separate case at the Supreme Court with the Kajiado County Government over land rates and royalties. The county had demanded Sh17.45 billion for alleged arrears between 2013 and 2018.

Co-operative Bank of Kenya has posted a 28 percent growth in net profit to Sh18.02 billion in the first half of the year ended June 2026, driven by increased interest and non-interest income.

The group’s net earnings grew from Sh14.08 billion posted in a similar period last year, coming on the back of net interest income rising 13 percent to Sh33.19 billion and non-interest income jumping11.6 percent to Sh15.75 billion.

The review period saw Co-op Bank’s operating expenses rise by 9.2 percent to Sh26.26 billion from Sh24.07 billion, with staff costs rising 13.4 percent to Sh11.22 billion.

The rise in staff costs was attributed to the hiring of additional employees as the lender expanded its branch network. The bank said its headcount grew by 741 over the review period to 6,591, amid an increase in physical branches by 11 to 223.

Co-op’s provision for loan defaults eased by 17.5 percent to Sh3.73 billion as the stock of gross non-performing loans (NPLs) fell to Sh72.56 billion from Sh76.28 billion.

The lender’s NPL ratio improved to 13.9 percent at the end of June this year from 17.2 percent in a similar period last year. ‘We continued to strengthen asset quality through proactive credit management, customer engagement and portfolio monitoring,’ Gideon Muriuki, managing director at Co-op Bank, said on Wednesday.

Subsidiaries continued to support growth in the group’s profit. Kingdom Bank, which is 90 percent owned by Co-op Bank Group, saw its net profit rise 80.1 percent to Sh574.45 million from Sh318.93 million, supported by continued expansion in its retail and business banking segments.

‘The group’s subsidiaries continued to make a positive contribution to performance, reinforcing the strength of the universal banking model,’ said Mr Muriuki.

Co-op Bancassurance Intermediary’s pre-tax profit rose to Sh812.7 million from Sh790.8 million, supported by increased insurance penetration across the customer base. The lender said its fund management business, Co-optrust Investment Services, grew its gross profit by 77.5 percent to Sh640.5 million from Sh360.8 million, as funds under management hit Sh505.2 billion from Sh461.7 billion.

Co-op Bank of South Sudan, in which Co-op holds a 51 percent stake, nearly quadrupled its pre-tax profit to Sh224 million from Sh56.9 million, reflecting an improved operating environment in the country.

The review period saw Kingdom Securities return to a pre-tax profit of Sh77.9 million, marking a 23.3 percent rise from Sh63.2 million, driven by increased activity in the capital markets.

Co-op Bank Group’s asset base grew to Sh869.47 billion from Sh811.91 billion, while deposits increased by 13.4 percent to Sh621.27 billion.

President William Ruto’s Special National Address of July 30, which initiated nationwide consultations on a successor framework, comes at a defining moment when artificial intelligence, climate change, demographic pressures and geopolitical competition are reshaping the foundations of national prosperity.

The central challenge is no longer whether Kenya requires a new development strategy, but whether it can forge a durable national model capable of transforming economic potential into sustained competitiveness, institutional resilience and inclusive growth.

Beyond the scale of investments undertaken by Kenya, its sustainable success should be pegged on the ability to create high-value employment, develop technological capabilities, strengthen State institutions and withstand emerging global disruptions.

The global environment that shaped Vision 2030 has fundamentally changed.

When the blueprint was introduced, infrastructure expansion, economic liberalisation and integration into global markets were considered the primary pathways to transformation. Today, national competitiveness is increasingly determined by innovation capacity, technological capability, institutional quality, skilled human capital and resilience against complex shocks.

Artificial intelligence is transforming production systems, labour markets and public service delivery, while climate change is altering agricultural productivity, investment patterns and human security.

Competition over digital infrastructure, critical minerals, emerging technologies and resilient supply chains is redefining geopolitical influence.

Countries that develop the ability to innovate, adapt and strategically position themselves within these changing systems will determine the future distribution of global economic power.

Kenya’s domestic realities reinforce the urgency of this transition. Vision 2030 delivered significant progress in infrastructure development, renewable energy expansion, digital transformation and regional connectivity, positioning Kenya as Eastern Africa’s economic gateway.

The country’s globally recognised mobile financial ecosystem, digital public infrastructure and growing innovation sector demonstrate its ability to leverage technology for economic and social transformation.

However, these achievements coexist with persistent structural challenges. High public debt has reduced fiscal flexibility, youth unemployment remains a major economic concern, productivity growth has not kept pace with demographic expansion, and climate-related shocks continue to threaten livelihoods and economic stability. While Kenya has successfully developed infrastructure platforms, converting these assets into higher productivity, industrial capacity and inclusive prosperity remains a critical policy challenge.

Beyond Vision 2030 should become a new national development model that redefines Kenya’s growth trajectory by shifting from an investment-driven approach towards one founded on productivity, human capital, technological capability, institutional excellence and resilience.

Success of the next national vision will depend on whether it transcends political cycles and becomes a shared commitment among citizens, institutions and stakeholders.

If anchored in strong governance, fiscal responsibility, innovation and disciplined implementation, the long-term vision can provide the strategic foundation required for Kenya to navigate global uncertainty, achieve inclusive prosperity and strengthen its position as one of Africa’s most competitive economies.

It offers an chance to redefine Kenya’s growth journey in tandem with emerging realities and provide the strategic basis required to navigate global uncertainty, achieve inclusive prosperity and strengthen its position as one of Africa’s most competitive economies.

Vision 2030 was organised around three interconnected pillars, including economic transformation, social development and political governance.

The Economic Pillar focused on accelerating growth through productive sectors, infrastructure and investment, while the Social Pillar prioritized improvements in education, healthcare, housing and social protection. The Political Pillar sought to strengthen democratic institutions, accountability and governance.

Successive administrations adapted Vision 2030 according to their priorities and policy approaches. The late President Mwai Kibaki’s administration focused on foundational investments in infrastructure, education, energy and institutional reforms, including constitutional reforms that culminated in the 2010 Constitution and establishment of devolved governance.

Consequently, President Uhuru Kenyatta’s regime between 2013-2022 advanced the Big Four Agenda, prioritizing manufacturing, affordable housing, universal healthcare and food security while accelerating flagship infrastructure projects.

Currently, President William Ruto’s Bottom-Up Economic Transformation Agenda (BETA) has shifted attention towards agriculture, micro and small enterprises, digital transformation and economic empowerment at the grassroots level. These different phases demonstrate Kenya’s ability to articulate ambitious development agendas.

However, they also reveal a central lesson that national transformation depends not only on identifying priorities but on building institutions capable of implementing them effectively.

The defining challenge for Beyond Vision 2030 will therefore be strengthening state capability. Kenya has repeatedly demonstrated capacity for policy formulation and large-scale investment mobilization.

However, effective implementation has often been constrained by fragmented mandates, weak coordination, inconsistent accountability and limited continuity across political cycles. The next development model should place institutional excellence at its centre by strengthening public sector performance, evidence-based policymaking and mechanisms that protect long-term priorities from short-term political pressures.

A successful Beyond Vision 2030 framework should be built around five strategic capabilities that collectively define Kenya’s future competitiveness and resilience.

First, Kenya must develop a competitive and productive economy. Future economic growth must increasingly be driven by productivity improvements, innovation and value creation beyond relying primarily on public investment expansion.

Existing infrastructure should serve as a foundation for industrial upgrading, agricultural transformation, advanced manufacturing, digital industries and high-value services. Kenya’s participation in the African Continental Free Trade Area provides an opportunity to expand exports, integrate into regional value chains and strengthen its position as a production, logistics and investment hub.

However, achieving this ambition requires addressing constraints affecting business competitiveness, including regulatory inefficiencies, limited access to finance, low industrial productivity and weak linkages between research institutions and industry.

Second, Kenya must prioritize world-class human capital development. With approximately three-quarters of the population below the age of 35, Kenya’s demographic profile represents both a significant opportunity and a major policy challenge.

A youthful population can become a powerful driver of economic transformation only if supported by relevant skills, quality education and productive employment opportunities.

Beyond Vision 2030 should therefore move away from expanding access towards improving learning outcomes, technical skills, digital literacy, entrepreneurship and research capacity. Universities must evolve from primarily teaching institutions into innovation ecosystems that collaborate with industry, commercialize research and prepare citizens for an economy increasingly shaped by artificial intelligence and automation.

Third, Kenya must pursue technological sovereignty while accelerating digital transformation. Kenya has established itself as a continental digital leader through mobile financial innovation, digital public infrastructure and a vibrant technology ecosystem.

Building on the National Artificial Intelligence Strategy (2025-2030), the country should position emerging technologies as drivers of productivity across agriculture, healthcare, education, manufacturing and public administration. However, digital transformation must be accompanied by strategic autonomy.

Dependence on imported technologies, foreign cloud infrastructure and externally developed artificial intelligence systems creates vulnerabilities related to cybersecurity, data governance and national resilience. Kenya must therefore invest in local datasets, advanced computing infrastructure, cybersecurity capabilities, research and development, and responsible AI governance frameworks that protect privacy, transparency and public trust.

Fourth, Kenya must strengthen institutional excellence and accountability. Long-term development requires institutions capable of coordinating priorities, allocating resources efficiently and delivering results consistently.

Beyond Vision 2030 should establish stronger monitoring frameworks, clearer institutional responsibilities and measurable national indicators covering productivity, employment, innovation, digital adoption and resilience. Implementation should involve national and county governments, Parliament, academia, private sector actors and civil society through a coordinated framework focused on shared outcomes rather than isolated projects.

Independent evaluation and transparent public reporting will be essential to sustaining accountability and public confidence.

Fifth, there is a need to strengthen national resilience and regional strategic influence. Future prosperity will depend on managing interconnected risks, including climate change, fiscal pressures, food insecurity, cybersecurity threats and geopolitical uncertainty.

Kenya’s renewable energy leadership provides a foundation for expanding green industrialization, climate-smart agriculture, circular economy approaches and sustainable blue economy development.

Beyond domestic transformation, Kenya should leverage its diplomatic influence within the East African Community, African Union and AfCFTA frameworks to shape regional approaches to trade, technology governance, climate finance and economic integration. Strategic partnerships should support technology transfer, investment mobilization and Kenya’s ambition to become a leading innovation and investment hub in Africa.

Implementation and financing will ultimately determine whether Beyond Vision 2030 becomes transformative or remains another ambitious policy statement.

Sustainable financing requires improved public expenditure efficiency, stronger domestic resource mobilization, private sector investment and innovative financing mechanisms while maintaining debt sustainability. Development priorities must be matched with realistic implementation pathways, institutional accountability and measurable outcomes.

Tax collections from workers’ earnings have surpassed the National Treasury’s target for the first time since the 2021/22 financial year, ending three consecutive years of underperformance.

Pay-As- You- Earn (PAYE) receipts rose 7.01 percent to Sh599.8 billion in the year ended June 2026, the Treasury says in a fresh report, exceeding the government’s Sh592.1 billion target by Sh7.7 billion.

The performance marks a turnaround after PAYE collections fell short of target by Sh16.2 billion in the 2022/23 financial year, Sh25.8 billion in 2023/24, and Sh6.1 billion in the year ended June 2025.

The latest performance also reflects a shift by the Treasury toward more conservative revenue forecasts after repeated failures to meet ambitious PAYE targets.

For the year ended June, Treasury raised its PAYE target by a relatively modest 4.5 percent, compared with the 7.01 percent growth eventually recorded by collections.

KRA Commissioner-General Adan Mohammed said the improvement was encouraging, although PAYE growth remained below the average 8.5 percent recorded in 2022/23 and 2023/24.

‘While this [growth in PAYE] is an improvement compared to a growth recorded in the financial year 2024/25, it is still lower than average growth of 8.5 percent recorded in the financial 2022/23-2023/24,’ Mr Mohammed said in the latest annual statement on revenue performance, citing data from the 2026 Economic Survey.

‘This performance is affected by the shrinking contribution of formal sector employment to overall employment.’

The share of formal-sector employment fell from 15.7 percent of total employment in 2022 to 15.5 percent in 2024 and 15.3 percent last year.

The decline limits the government’s ability to generate large increases in PAYE because most new jobs are being created outside the formal wage economy.

Formal wage employment nevertheless increased by 101,200 jobs in 2025 to 3.315 million workers, up from 3.214 million a year earlier, the Kenya National Bureau of Statistics wrote in the 2026 Economic Survey.

The increase was stronger than the 75,500 formal jobs created in 2024, pointing to some recovery in formal hiring after a period of weaker employment growth.

Formal employment had expanded by 122,900 jobs in 2023 and 109,300 in 2022, before growth slowed to 75,500 new positions in 2024.

Analysis of the official data shows the formal sector has yet to fully recover the jobs lost during the pandemic, when the economy shed 185,800 formal positions in 2020.

The latest PAYE increase, therefore, reflects more than new formal jobs, with higher taxable earnings and improved compliance likely contributing to stronger collections.

The informal economy remains the dominant source of new employment, limiting the expansion of the PAYE tax base.

KNBS data shows the informal sector created 716,800 jobs in 2025, more than seven times the 101,200 posts added through formal wage employment.

The data suggests that most Kenyans entering employment do not automatically join the pool of workers whose salaries are directly taxed through PAYE.

PAYE collections jumped 27.3 percent in 2021/22 to Sh462.4 billion before growth slowed to seven percent in 2022/23 and 12.1 percent in 2023/24.

Growth then almost stalled in 2024/25, increasing by a measly 1.05 percent to Sh560.5 billion before recovering to seven percent in the latest financial year to June.

The latest increase generated an additional Sh39.3 billion in PAYE revenue, giving Treasury a larger contribution from workers as it faces pressure to raise domestic collections.

Treasury raised its PAYE target by 26.1 percent in 2021/22, followed by increases of 12.3 percent and 13.6 percent in the next two financial years.

Those targets proved difficult to achieve, culminating in the Sh25.8 billion shortfall in 2023/24, the largest during the period.

Treasury then cut its PAYE target by 2.4 percent in 2024/25 to Sh566.6 billion, but collections still fell short despite the lower expectation.

For 2025/26, the government increased the target by only 4.5 percent to Sh592.1 billion, well below the seven percent growth eventually achieved.

The turnaround against target represents a Sh33.5 billion improvement from 2023/24, when PAYE collections were Sh25.8 billion below the government’s forecast.

The Central Bank of Kenya (CBK) expects inflation to peak lower than previously projected, amid anticipation that the US-Israel war against Iran will be resolved soon.

The CBK projects inflation will peak at 6.8 percent in January 2027 before easing in subsequent months, compared with its June projection of 7.2 per cent in February 2027.

‘Overall inflation is expected to remain within the target range in the near term, assuming a de-escalation of the conflict in the Middle East,’ CBK Governor Kamau Thugge said on Wednesday.

Kenya’s inflation edged up to 6.5 percent in July from 6.4 percent in June, driven by higher transport costs.

The CBK expects inflation to remain within its target band of 2.5 to 7.5 percent, assuming a near-term de-escalation of the Middle East conflict, which has pushed up domestic petroleum prices.

The bank has modelled a worst-case scenario in which prolonged conflict pushes crude prices above $110 (Sh14,232) per barrel, sending inflation beyond the upper ceiling. At that price, Thugge said inflation could reach eight percent.

Conversely, inflation would cool faster if crude prices fell to $70 (Sh9,057) per barrel, while the baseline scenario assumes $90 (Sh11,644).

The CBK noted that international oil prices fell sharply after the first ceasefire deal between Iran and the US, suggesting a similar outcome if another agreement is reached.

Higher oil prices have also widened Kenya’s import bill and current account deficit, which reached three per cent of GDP in the 12 months to June 2026, from 1.9 per cent in a similar period last year. The increase was attributed to a wider trade deficit, lower remittances and reduced export receipts.

The deficit is expected to be fully financed by inflows into financial and capital accounts, including foreign direct and portfolio investments, resulting in an overall balance of payments surplus.

The CBK on Tuesday retained its Central Bank Rate at 8.75 per cent for the third consecutive Monetary Policy Committee meeting, saying the current stance remains appropriate to anchor inflation expectations and maintain exchange-rate stability.

KCB Group has increased its interim dividend by 50 percent to Sh3 per share after reporting a 14.2 percent growth in net profit in the half-year ended June.

The regional lender reported a net profit of Sh36 billion, up from Sh31.5 billion posted in a similar period last year.

Last year, KCB paid an interim dividend of Sh2 per share, which was, however, accompanied by an additional Sh2 per share special payout from the gains realised from the sale of National Bank of Kenya (NBK) to Nigeria’s Access Bank.

KCB management said it will comply with its dividend policy of distributing between 35 percent and 50 percent of the bank’s annual profit even in the absence of one-off gains such as the NBK sale.

‘We did about 32 percent payout last year, but that included a special dividend of the distribution of Sh3 from the sale of NBK. Now we are saying we want to get to a minimum 35 percent in 2026 out of pure profits from underlying business, not one-offs,’ said KCB Group CEO, Paul Russo.

The group had been retaining the bulk of its earnings in the last four years as it funded regional expansion, and its Kenyan unit, which is the group’s main contributor, recorded mixed performance.

The Kenyan operations outpaced the profitability of its regional subsidiaries in the half-year to June 2026, with a 16 percent growth in net profit to Sh26.5 billion, up from Sh22.8 billion in the period under review.

Its subsidiaries, which include Rwanda, the DRC, Uganda, Tanzania, Burundi, and South Sudan, saw their contribution to the group’s net profit grow by 10.3 percent to Sh9.52 billion.

The group’s profit growth was attributable to a cheaper cost of funds and lower loan loss provisions following improved quality of its loan book.

Its non-performing loans (NPLs) reduced by 17.3 billion in the 12 months to June to close at Sh203.8 billion, being 15.1 percent of its total loan book down from 18.7 percent.

This is the lowest NPL ratio posted by the lender in more than four years. KCB attributes this to court decisions in its favour after some defaulters sued it for pursuing loans extended to them.

The group grew its deposit base by 15.1 percent to Sh1.71 trillion, but the interest paid out to savers declined by 4.6 percent as the price of deposits declined across the region. Its loan book expanded 13.2 percent to Sh1.24 trillion, leading to a 4.2 percent expansion in interest income.

‘There was a five percent decline in interest expense on customer deposits driven by strategic re-pricing of high-cost deposits and further supported by a reduction in the cost of funds from 3.9 percent in June 2025 to 3.4 percent this year,’ said Mr Russo.

KCB Investment Bank recorded 226.6 percent growth in profit before tax to Sh503.2 million, driven by increased advisory mandates and capital markets transactions. The investment bank’s second half of the year results are expected to be boosted by its role in the government sale of its Sh204.3 billion stake in Safaricom.

Its Corporate Trustee Services posted a 79.8 percent increase to Sh142.5 million, supported by growth in trustee and fiduciary services, while KCB Bancassurance Intermediary delivered Sh335.4 million before tax earnings, which was a 47 percent drop compared to the previous year.

Management attributed the drop in bancassurance business to changes in insurance policy regulations in Kenya, necessitating a change in how commissions are paid.

In 2013, Mr Nyabuto turned to farming, trying his hand at quail, wheat, tomatoes, chicken and capsicum. But the same problem persisted: he was attempting to run a hands-on business remotely from Nairobi, and it just didn’t work.

‘Farming is a hands-on business, and doing it from afar ended up being financially draining,’ he says.

The failures eventually pushed him towards technology, a sector where his training and professional experience gave him a stronger foundation.

He resigned from employment in 2014 to become a full-time entrepreneur, thinking he had done enough planning. He had savings in the bank, rented an office in Nairobi’s Westlands area, furnished it, hired six staff and launched a technology consulting firm called Tally International.

But eight months into 2014, the firm collapsed. ‘I had no real business experience. I made a mistake by resigning and moving directly to entrepreneurship without growing skills like business development and networking.’

Mr Nyabuto had spent about Sh5 million of his savings on the tech firm.

‘The business could not sustain itself. We couldn’t afford the cost of marketing and the engineering perspective of the technologies.’

Additionally, his lack of sales skills compounded the problem.

‘As an entrepreneur, the first salesperson for your business is yourself,’ he says. ‘I didn’t have the right sales and business development skills, which were very important when you are a single entrepreneur.’

Looking back, he says he had though about entrepreneurship to transition from the NGO world, where he had spent years managing donor-funded UNDP and UNEP projects.

‘In an NGO, you are used to spending the money rather than looking for the money,’ Mr Nyabuto says.

Networking was also another blind spot. ‘You might not be able to have the right networks, but you need to learn how to make the right networks.’

His existing network was largely built around the NGO sector, yet Tally was targeting corporate customers.

The failure taught him that entrepreneurs should start from areas they understand. ‘Your opportunities first start from what is known and where you think you have a bit of understanding of the sector.’

So he shut down Tally after burning his savings and returned to formal employment at the end of 2014. But instead of abandoning entrepreneurship altogether, Mr Nyabuto says he decided to treat the failure as business school.

He joined IT and business consulting firm Eurotech Africa as general manager, where he spent about two years learning how to build relationships with corporate clients, negotiate contracts and understand how businesses buy technology.

The experience would prove crucial when he returned to entrepreneurship. Together with co-founder Michael Karume, he launched a technology startup called M-Zawadi in 2015.

The opportunity emerged from an observation about customer loyalty. At the time, loyalty programmes were largely the preserve of large retail chains with sophisticated IT systems.

‘M-Zawadi started with a question of why only supermarkets have reward programmes for their customers?’ says Mr Nyabuto. ‘The mama mboga or kiosk owner didn’t have a mechanism of rewarding buyers or creating incentives for them.’

The founders built an Android-based platform that allowed small businesses to create customer loyalty programmes on a mobile phone.

Customers buying groceries could earn points through SMS notifications, while traders could keep customer records, run promotions and encourage repeat purchases.

But while it was an elegant idea, it proved commercially difficult. ‘The engineering cost was very high,’ he says.

Mr Nyabuto estimates he spent about Sh3 million on the technology infrastructure, including cloud services, software developers and other requirements needed to build the platform.

‘Customer-to-customer businesses also require huge advertising and marketing budgets, which self-funded startups like ours simply cannot afford,’ he says.

A conservative monthly advertising budget for a consumer-facing startup could reach about Sh500,000, an amount the young company could not comfortably sustain.

About two years after launch, M-Zawadi abandoned the consumer market and reinvented itself as an enterprise software business.

Instead of selling loyalty programmes to retailers, the company began building them for manufacturers, banks and insurance companies.

M-Zawadi designed an incentive programme that links distributors, wholesalers and retailers and rewards performance throughout the supply chain.

Insurance companies presented another opportunity. The startup developed what it calls an experiential loyalty programme.

A telematics device installed in a customer’s vehicle monitors driving habits such as acceleration, braking and cornering. Drivers who maintain safe habits accumulate points that can later be redeemed for rewards such as a coffee voucher.

‘The loyalty programme becomes a behaviour change tool,’ Mr Nyabuto says.

Banks adopted similar concepts, rewarding customers for using credit cards more frequently, conducting more transactions or referring new clients.

M-Zawadi continued expanding its product portfolio and in 2020, it introduced eZawadi, initially through partnerships with international gifting companies. The platform converted loyalty points into digital gift vouchers redeemable at more than 70,000 outlets across Europe and the US, including brands such as Starbucks, Amazon and Zara.

M-Zawadi Group Chief Executive Officer (CEO) Naftal Nyabuto poses for a photo during an interview in Nairobi on August 3, 2026.

Dennis Oonsongo | Nation Media Group

Locally, M-Zawadi partnered with Safaricom allowing gift vouchers to be redeemed at more than 700,000 paybill and till number outlets across Kenya.

Recipients can buy groceries, pay school fees, purchase medicine or spend it at virtually any business accepting M-Pesa.

The platform has since evolved further through a partnership with Visa and Absa Bank that allows vouchers to be redeemed anywhere Visa is accepted.

The platform is free for companies to join, with M-Zawadi charging a 3.5 percent transaction fee on the value of vouchers issued.

More than 110 corporates, including Heritage Insurance, Jubilee, Absa Bank, British American Tobacco and Kenafric, now use the platform.

M-Zawadi processes transactions worth between $3 million (Sh388 million) and $4 million (Sh517 million) annually.

While gifting became one growth engine, cloud computing became another. Many Kenyan SMEs are priced out of international cloud providers such as Amazon Web Services and Microsoft Azure, so the company built its own locally hosted cloud platform called Cloud9.

Hosted at PAIX’s Nairobi data centre, the service offers IT students cloud hosting for Sh500 a month and MSMEs from Sh1,000 monthly.

‘We’ve been focusing on solutions for MSMEs that simply cannot afford many of these technologies,’ he says.

Two years ago, M-Zawadi launched Shoshin, an innovation arm targeting agriculture, climate and the blue economy sectors. Its first project focused on fish cage farmers in Lake Victoria.

A single cage can cost about Sh1.5 million to establish, yet an entire harvest can be wiped out overnight by deteriorating water quality.

Mr Nyabuto’s team partnered with the Kenya Fisheries Research Institute to deploy floating Internet-of-Things sensors that continuously monitor oxygen levels, pH, chlorophyll levels and water temperature.

Artificial intelligence analyses the readings in real time and automatically sends warning text messages to farmers whenever dangerous conditions emerge.

For independent cage farmers in Kisumu’s Dunga Beach, the system is being commercialised through dashboards costing about Sh3,000 per month.

More recently, the startup studio ventured into the creator economy through UrbanTok, a platform Mr Nyabuto describes as a blend of YouTube and TikTok.

Unlike conventional video-sharing platforms, UrbanTok allows creators to earn directly through premium content, pay-per-view videos, digital gifting, merchandise sales and advertising revenue hosted on their own pages.

Mr Nyabuto says the platform already has about 5,000 creators.

The growing portfolio reflects his philosophy of building a startup studio rather than a single-product technology company.

To date, he has founded 12 startups, seven of which remain operational and profitable under the M-Zawadi fold.

‘There is this perception that you need to specialise. I don’t buy into that concept,’ he says. ‘We are not in markets where one specialised solution automatically becomes a big business. Different industries perform differently at different times, and developing different innovations has been our survival.’

‘For us, it is better risk mitigation. The risk is usually in terms of spreading yourself thin.’

For someone who has tried his hand in over five sectors, how does he identify new opportunities?

‘It’s all based on the market trends,’ Mr Nyabuto says, ‘The more you meet, interact with people, interact with organisations, then you find the problem where it is, and that is what informs exactly what the opportunities are.’

His approach to financing has also been unconventional. Kenya is one of Africa’s top startup funding destinations, attracting $984 million (Sh127.3 billion) from venture capitalists and angel investors last year alone.

Yet Mr Nyabuto deliberately chose not to spend years pitching venture capital investors when starting M-Zawadi. ‘We have never even looked for investors,’ he says, arguing that fundraising can become a distraction.

‘It becomes a full-time job, and you stop focusing on building the company and start focusing on the investment.’ Instead, he kept costs painfully low.

‘There was no fancy office. I worked from home. I didn’t recruit full-time engineers in the beginning. We started with just two staffers, and they were salespeople.’

Winning customers, not investors, became the company’s growth strategy. M-Zawadi turned profitable five years after launching. Its valuation has since risen to about $4.5 million (Sh582 million), from about $500,000 (Sh64.7 million) in 2018.

The company now employs 35 people and has expanded into Uganda, Tanzania and Zambia, powering services ranging from MTN Uganda’s loyalty programmes to Tanzania’s standard-gauge railway and Bus Rapid Transit smart cards, as well as value-added services for the Zambian telco Zamtel.

The business growth has also changed Mr Nyabuto’s attitude towards outside capital.

‘Now that our business is profitable, we are in a state where I can negotiate confidently with external investors,’ he says.

The self-funded approach proved particularly valuable during the Covid-19 pandemic, when many firms were forced to scale down operations and lay off staff.

M-Zawadi had grown to about 10 employees by then. It avoided layoffs, instead developing digital products such as online cashback and coupon platforms as companies shifted their marketing online.

For Mr Nyabuto, however, the biggest lesson from 14 years in entrepreneurship has been the value of collaboration.

‘When you are small, you have to collaborate with the big boys in the market,’ he says. ‘You end up looking small if you don’t collaborate more.’

Partnerships, he says, can give a young company access to markets, technology and networks that would otherwise take years and significant amounts of capital to build.

Today, if forced to start again with no money, Mr Nyabuto says he would still choose technology and focus on artificial intelligence, Internet of Things and cybersecurity.

‘The scalability of it is faster,’ he says. ‘You can basically scale to any country without needing a lot of capital investment.’