Category: Business Daily

Transactional advisers and other professionals facilitating the listing of Family Bank shares are in line for a Sh77.2 million payday, making them the latest beneficiaries of renewed deal-making activity in Kenya’s capital markets.

Providers of marketing and advertising services will take the bulk of the budget, with the bank setting aside Sh50 million to publicise its listing by introduction.

The transaction adviser, Standard Investment Bank Limited, is set to earn Sh8.5 million.

The reporting accountant, PricewaterhouseCoopers, will receive Sh7 million, while legal adviser Mboya Wangong’u and Waiyaki Advocates will be paid Sh5.25 million.

Listing cost

The professional fees amount to 0.258 percent of the transaction, which will see 1.66 billion Family Bank shares begin trading on the Nairobi Securities Exchange (NSE) on Tuesday.

The Capital Markets Authority (CMA) received the maximum Sh5 million issuance approval fee.

Companies pay the regulator a fee equivalent to 0.25 percent of the transaction value, subject to a cap of Sh5 million. Without the cap, CMA would have received Sh74.8 million.

A listing by introduction means the bank is not raising new capital. Instead, the listing will provide liquidity for existing shareholders and allow new investors to acquire shares in the lender.

Family Bank shares have traded on the less liquid and less transparent over-the-counter (OTC) market since 2006.

Trading over the counter offers limited liquidity because shareholders must work through brokers to identify matching buyers and negotiate transaction prices.

Listing on the NSE will earn the bourse Sh1.5 million in fees, which are charged at 0.06 percent of a company’s market capitalisation and capped at Sh1.5 million. The minimum fee is Sh200,000.

Deal bonanza

Stockbrokers, lawyers, accountants and public relations firms involved in arranging corporate transactions typically earn substantial fees for their services.

Recent months have been particularly lucrative as Kenya’s capital market, which had remained subdued for more than a decade, recorded its first initial public offering (IPO) in years, a resurgence in corporate bond issuances and new listings.

The Kenya Pipeline Company IPO in March proved the most lucrative transaction, with advisers and intermediaries sharing Sh2.99 billion in professional fees and expenses.

Faida Investment Bank, for instance, earned a Sh1.06 billion bonus following the full subscription of the IPO.

These advisory and placement costs were deducted from the government’s gross proceeds of Sh106.3 billion.

Professional firms engaged in the restricted public offer of the Talanta Sports City Stadium-backed infrastructure bond also shared Sh646 million in fees.

Liaison Financial Services Limited, which acted as the bond arranger, received the largest share at Sh259.8 million.

Other capital-raising transactions that generated sizeable professional fees include bond issues by Safaricom, East African Breweries Limited and I and M Bank Limited.

The Kenya Electricity Generating Company (KenGen) and Kenya Ports Authority (KPA) have paid a combined Sh11.76 billion of their State-guaranteed loans even as Kenya Airways (KQ) struggles to clear a similar facility.

A budget review by the Controller of Budget for the nine months to March 2026, shows that KPA paid Sh6.77 billion while KenGen settled Sh4.99 billion, reducing their guaranteed loans to Sh39.39 billion and Sh22.39 billion, respectively.

But Kenya Airways was unable to make any part payment of its guaranteed loan, with the portfolio rising by Sh52 million to Sh9.74 billion as at March.

The loan repayments by KenGen and KPA come in a year when Treasury did not allocate cash to pay guaranteed debt, exposing Kenya Airways, which has in the past relied on the State’s support to pay the loans.

‘There was no budget allocation for settling guaranteed loans in the financial year 2025/26,’ Dr Margaret Nyakang’o, the Controller of Budget, said.

A guarantee is an absolute or conditional promise, commitment or undertaking by the National Government to partially or completely repay any loan on behalf of a State entity.

Guaranteed debt is part of the overall public debt and is subject to the public debt limits set under the law, underscoring why these loans must be closely monitored as part of the fiscal risk management and debt transparency.

Dr Nyakang’o added that shilling’s fluctuations against the dollar were instrumental in increasing the stock of KQ’s guaranteed debt from Sh9.68 billion as at June last year.

‘Notably, the increase in guaranteed debt for Kenya Airways was as a result of movements in the exchange rate of Kenya Shillings to the US dollar that varied from Sh129.23 in June 2025 to Sh129.93.’

The part payment of KPA’s and KenGen’s debt helped lower the total stock of guaranteed loans to Sh71.53 billion in March from Sh83.24 billion in June last year.

Treasury guaranteed four loans worth Sh46.16 billion to KPA between 2007 and 2021 and a further seven loans to KenGen valued at Sh27.39 billion between 1997 and 2021.

The one for KQ was tapped in 2017 as a guarantee for loans taken from local banks. The debt is owed to MTC Trust and Corporate Services Limited.

KenGen tapped the loans to upgrade its geothermal plants in Olkaria and the Sondu Miriu Hydro plants, while those for KPA financed development of the port of Mombasa.

Treasury has in the past paid part of KQ’s debt, mainly due to the financial struggles that rendered the national carrier unable to service this facility.

For example, in the year ended June 2023, Treasury serviced Sh12.326 billion worth of guaranteed debt for KQ.

The payment comprised a principal of Sh10.64 billion and interest of Sh1.683 billion.

Kenya plans to include antiretrovirals (ARVs), HIV test kits and prevention supplies in the government’s mainstream procurement system, marking a major policy shift intended to reduce the country’s long-standing dependence on external donors for essential HIV supplies.

The Kenya Aids Integration Strategic Framework 2025-30, by the National Syndemic Diseases Control Council (NSDCC), aims to integrate 100 percent of HIV commodities into the Kenya Essential Medicines List (KEML) and county procurement plans by 2030.

To manage the transition, the framework proposes a phased integration approach, whereby 20 percent of HIV commodities will be incorporated into KEML and county procurement plans in the first year, increasing to 40 percent, 60 percent and 80 percent in subsequent years, with full integration expected by 2030.

‘Mainstream commodities for HIV and related diseases into the Kenya Essential Medicines List and county essential lists and include them in the annual budgeting and procurement cycles of the general health system managed by Kemsa and county governments to ensure uninterrupted availability of essential HIV and related disease commodities,’ said NSDCC in the framework.

Currently, more than 80 percent of these commodities are financed by donor support organisations such as the Global Fund.

Antiretrovirals, pre-exposure prophylaxis (PrEP), condoms, viral load testing reagents, and other such supplies are procured, forecast, and distributed through systems funded by donors that largely operate outside of routine government procurement structures.

Once listed, HIV commodities will be eligible for government budgeting, national quantification and pooled procurement through Kemsa in the same way as vaccines and other essential health products.

The urgency of the transition was highlighted last year when a United States stop-work order disrupted several Pepfar-supported programmes across Kenyan counties, exposing vulnerabilities within donor-dependent supply chains.

According to the framework’s national quantification estimates, Kenya’s HIV commodity requirements between 2025 and 2030 are projected to exceed Sh150 billion.

The strategy also requires counties to maintain a buffer stock of at least three months’ worth of critical HIV commodities and calls for HIV forecasting and quantification to be incorporated into the Ministry of Health’s broader commodity planning systems.

Beyond procurement reform, the framework seeks to boost local production of HIV-related commodities.

Kenya aims to manufacture at least 50 percent of its HIV commodities locally by 2030, through public-private partnerships, investment incentives, and industrial policy measures designed to reduce dependence on imported supplies.

The procurement reforms are part of a wider plan to increase the amount of domestic funding for the HIV response. Currently, Kenya finances less than 40 percent of its HIV programme from domestic resources.

‘Under the KAISF, the country aims to achieve full domestic financing of the HIV response by 2030. This will require both the national and county governments to gradually take on the costs that donors have covered for decades,’ the framework stated.

Claims of a potential slowdown in bank lending to households and businesses this year saw the National Treasury extend the Sh10 billion core-capital requirement, setting a one-off hard deadline of December 2032.

Cabinet Secretary to the National Treasury John Mbadi held engagements with banks ahead of the 2026/27 budget speech and agreed to the request for the removal of annual milestones on meeting the broader Sh10 billion core capital requirement.

Banks were initially expected to have at least Sh3 billion in core capital by the end of December last year and raise this limit further to Sh5 billion this year before meeting 2027 and 2028 annual milestones of Sh6 billion and Sh8 billion, respectively, and finally reach Sh10 billion in December 2029.

The lenders, however, informed Mr Mbadi that banks short of the capital targets were likely to hold back on lending to households and businesses as they sought to preserve funds to meet the higher regulatory requirements.

‘Allowing a longer timeline facilitates banks to serve customers better and uninterrupted, deploying more capital into lending to the private sector,’ said Raimond Molenje, the chief executive officer of the Kenya Bankers Association (KBA).

‘Our goal as KBA is to have growth in private sector lending in double digits at over 14 percent, and this policy accommodation will go a long way in realising this double-digit growth.’

Banks claimed that, without the alteration by Mr Mbadi, private sector lending would have slowed down this year as smaller banks pushed to meet the Sh5 billion minimum core capital requirement.

Private sector lending has been on the recovery path over the past 12 months, supported by an easing of the Central Bank of Kenya (CBK) monetary policy, which has supported increased credit flows to key sectors of the economy.

Monthly credit growth to the private sector reached a high of 9.3 percent in May 2026, rebounding from a growth rate of 4.5 percent at the same time last year and bordering on touching double-digits for the first time since the opening quarter of 2024.

The recovery has been anchored on a steady decline in average commercial bank lending rates, which fell to 14.5 percent in May from 14.7 percent in February 2026.

‘Short-term interest rates and commercial banks’ lending rates have declined in line with the recent reductions in the Central Bank Rate (CBR),’ CBK said last week.

The ease in commercial bank lending rates and the recovery of private sector credit has also coincided with the adoption of the revised risk-based credit pricing model, which seeks to have the loan rates quickly mirror changes to CBK’s monetary policy.

CBK noted that the cost of borrowing has continued to come down while credit growth has improved despite holding its benchmark rate unchanged in two consecutive policy meetings.

‘We have seen commercial bank lending rates decline from 17.2 percent to 14.5 percent at present. The intention of lowering the CBR was to stimulate credit to the private sector, and indeed, we have also seen that lending by banks to the private sector has grown from a contraction of 2.9 percent in January of 2025 to 9.3 percent in May 2026,’ said CBK Governor Kamau Thugge.

The extension of the capital raising deadline will come as a reprieve to at least four lenders who were yet to meet the December 2025 minimum core capital requirement of Sh3 billion, risking the revocation of their banking licenses and reclassification as microfinance banks.

The four banks included Credit Bank, Consolidated Bank of Kenya, Development Bank of Kenya (DBK) and Access Bank Kenya.

Credit Bank had been racing to meet the higher capital requirement through a rights issue seeking Sh4.5 billion, while the State-owned DBK and Consolidated Bank had been seeking support from their primary shareholder-the National Treasury.

Access Bank Kenya had been counting on its merger with the National Bank of Kenya (NBK), its most recent acquisition, to achieve compliance with the regulatory requirement.

Banks say they now have adequate time to engage with potential investors without compromising on the industry’s role in the economy.

‘This will allow banks ample time to engage with potential investors and strategic partners while preserving the value of banks,’ Mr Molenje added.

Kenya’s higher capital threshold mirrors similar moves in neighboring Uganda and Tanzania, but the East African Community peers have given their lenders a shorter window to meet the enhanced capital requirements.

The Bank of Uganda, for instance, announced a six-fold increase in the minimum absolute paid-up capital requirement for tier I credit institutions licenses in November 2022 to UGX150 billion (Sh5.23 billion), to be reached by mid-2024.

The adjustment to Kenyan banks’ core capital increase by the National Treasury comes a year after its first pronouncement at the 2025 budget statement. The change will require further amendments to the Central Bank of Kenya Act. In announcing the changes, the Treasury said the longer compliance period would instill investor confidence and maintain shareholder value.

‘While the government firmly upholds the strategic necessity of raising the minimum core capital, it is prudent that this transition has been managed in a manner that is least disruptive to credit access and financial services delivery, particularly to the Micro, Small and Medium Enterprise segment and other niche markets currently served by the banking industry,’ said Mr Mbadi last Thursday.

‘This will provide the flexibility necessary for institutions to pursue measured, commercially sound, and market-sensitive capital-raising strategies in a manner that preserves shareholder value and sustains investor confidence.’

The International Monetary Fund (IMF) has urged the Central Bank of Kenya (CBK) to cut its policy setting meetings to four from the current six in a year to align the regulator with data releases which will allow it to conduct elaborate forecasts on inflation.

The multilateral lender, which helped CBK improve its forecasting and policy analysis system (FPAS) through a technical assistance mission, noted that current forecasts are not synchronised with the release of quarterly national accounts data published four times a year.

CBK currently holds its policy setting meetings on a bimonthly basis, reaching up to six meetings a year but has the leeway to hold more meetings on a need/emergency basis.

The IMF, however, advises that CBK can subsequently increase its policy meetings to eight in a year after the initial slash to factor in updated data.

‘The mission recommended that CBK consider initially reducing the number of MPC meetings to four per year and later increased to eight,’ the IMF said in its technical report.

‘The four MPC meetings can align with quarterly national accounts releases and include fully-fledged forecasts. Subsequently, CBK could add four interim meetings between the main meetings based on updated data, including nowcasts and near-term projections.’

Real-time picture

Nowcasting refers to the use of high-frequency data such as retail sales to model a real-time picture of the economy without waiting for official quarterly reports.

The IMF observed that the CBK holds six meetings per year while the Kenya National Bureau of Statistics (KNBS) quarterly economic data is only published on four occasions –with a one quarter lag.

The release of the first quarter national accounts data for 2026 is for instance only expected at the end of June while fourth quarter economic data for 2025 was only available at the end of April.

Inflation targeting central banks like the CBK that implement the forecasting and policy analysis system typically initiate forecasting rounds shortly after the availability of quarterly economic data and conclude shortly before the policy setting meetings.

‘Given the misalignment between data publication and MPC meetings, some CBK forecast rounds have been compressed and relatively short, while others may begin several weeks after new data becomes available. If new CPI (inflation) is published between the analytical and main MPC meetings, staff may need to re-run the model within a very short time frame, with limited time for thorough analysis of the new data and forecast revisions,’ the IMF added.

In 2014, IMF helped Kenya develop its quarterly projection model (QPM) which underpins the current medium-term headline inflation target of five percent, with a tolerance band of 2.5 percentage points in either direction.

The fund has worked alongside CBK staff to improve Kenya’s inflation targeting including the most recent missions in 2024 and 2025.

The latest mission which ran from April 10 to April 17, 2025, undertook a comprehensive update of the core quarterly projection model (QPM) and added a new fiscal dynamic modelled around government spending and revenue to enhance the assessment of macroeconomic and policy implications of fiscal developments.

A model extension was also introduced to incorporate weather stocks, leveraging the World Bank climate risk data for Kenya, to better capture the impact of weather-related shocks on supply-side inflation pressures.

In addition to tweaking the MPC calendar, the IMF has advised CBK to have a more forward-looking monetary policy communication with the goal of anchoring medium-term inflation expectations.

Monetary policy consists of decisions and actions taken by the Central Bank to ensure that the supply of money in the economy is consistent with growth and price objectives set by the government.

The objective of the policy is to maintain price stability in the economy which translates to low and stable inflation.

CBK’s monetary policy is guided by a monetary programme, anchored on economic growth and inflation targets provided by the National Treasury.

Monetary policy decisions are made by the Monetary Policy Committee (MPC), which meets at least once every two months and reviews data and analysis from various sources enabling it to decide on any action to maintain or vary its stance.

At its recently concluded meeting this month, the MPC voted to retain the policy rate/benchmark rate at 8.75 percent for a second consecutive time noting the need to adopt a wait and see stance on the evolution of inflation amid the US-Israel war on Iran which has escalated fuel prices.

Kenya’s inflation raced to 6.7 percent in May from 5.6 percent in April due to higher prices arising from the elevated global oil prices but held below the upper target of 7.5 percent.

‘Having considered these developments, including the potentially transitory nature of the conflict, the Committee concluded that the current monetary policy stance, with the Central Bank Rate unchanged at 8.75 percent, remains appropriate to ensure that inflation expectations remain anchored within the target range, and the exchange rate remains stable,’ said CBK Governor Kamau Thugge who is also the Chairman of the MPC.

South African companies are betting Sh413 billion on acquisitions in Kenyan blue-chip firms, seeing them as a platform for a bigger foothold in the fast-growing East and Central African market.

Absa Group is the latest to commit billions of shillings on a Kenyan acquisition in the span of seven months, following in the footsteps of Vodacom Group, which is buying an additional 20 percent stake in Safaricom, and Nedbank Group’s ongoing acquisition of a 66 percent stake in NCBA Group.

The firms have been attracted by the faster pace of economic growth in the East African economy compared to their home market.

As a regional hub, Kenya offers easy access to cross-border business in countries such as Uganda, Tanzania, Rwanda, South Sudan, Ethiopia and the Democratic Republic of Congo. It also provides a primary trade corridor that links Africa with the Middle East, India and Asia.

Absa said on Thursday last week that it is bidding to raise its stake in its Kenyan subsidiary from 68.5 percent to 85 percent in a deal valued at Sh30.9 billion. The lender plans to purchase an additional 895.9 million shares in Absa Bank Kenya for Sh34.50 each, taking its ultimate holding to 4.61 billion shares.

In raising its stake, the South African lender is eyeing a larger slice of Absa Kenya’s growing dividend payouts, in addition to pushing its broad strategy of deepening its presence in high-potential markets in Africa.

Since the split and rebrand of the Kenyan unit from Barclays Plc in 2020, net earnings have grown from Sh7.4 billion (in 2019) to Sh22.9 billion last year, allowing the unit to raise its annual dividend from Sh6 billion to Sh11.1 billion in the period.

‘Absa Group regards East Africa as a cornerstone of its Pan-African growth ambitions,’ the Johannesburg-based multinational said.

‘Growth in East African markets is expected to continue to outperform, driven by infrastructure investment, with Kenya, Tanzania and Uganda’s GDP expected to grow by at least five percent per annum over the coming years.’

This is the playbook that both Vodacom and Nedbank are following in making their new Kenyan investments.

Vodacom is purchasing a 15 percent stake in Safaricom from the Kenyan government for Sh204.3 billion, and a five percent stake from its British parent Vodafone Group Plc for Sh68.1 billion. The deal was first disclosed in December 2025, with its conclusion currently held up by a High Court order.

Upon completion of the Sh272.4 billion transaction, Vodacom will raise its stake in Safaricom to 55 percent from the current 35 percent. This will hand it a larger slice of Safaricom’s annual dividends, which in the year to March 2026 totalled Sh80 billion.

The purchase also comes at a time when Safaricom is deepening its position in the Ethiopian market, where it is targeting to break even in 2027. The Kenyan telco holds a 54.17 percent stake in Safaricom Ethiopia, with Vodacom holding direct ownership of 6.02 percent in the unit.

Nedbank is meanwhile spending Sh110 billion to buy a 66 percent stake in NCBA, Kenya’s fifth largest lender by assets, in a cash-and-stock deal that was announced in January 2026.

NCBA will help Nedbank diversify its business, which currently comprises operations in six southern African markets. The Kenyan bank is a strong player in the East African market, where its digital credit services reach millions of customers.

Nedbank also cited regulatory certainty as a key consideration in choosing to enter the East African market.

Barely two months before announcing the NCBA acquisition, Nedbank had sold its entire 21 percent stake in West Africa-headquartered Ecobank Transnational, citing regulatory uncertainty, the deterioration of the Nigerian economy and potential increases in capital requirements.

When quitting West Africa, the bank said it would set a clear focus on the Southern and Eastern Africa regions.

‘Kenya’s role as a regional financial hub, supported by strong institutions, sophisticated markets and a dynamic technology sector, makes it a natural anchor for Nedbank’s East African ambitions,’ Nedbank chief executive officer Jason Quinn said in January when announcing the transaction.

Standard Bank of South Africa -which trades locally as Stanbic Bank- is also said to be in the market for an East African acquisition, having explored a bid for NCBA before Nedbank swooped in with its offer.

The lender’s strategy is to be a top-three player in its African markets, but in Kenya it is ranked seventh with an asset base of Sh551.71 billion as at March 2026.

The top six lenders by asset base are KCB Group (Sh2.25 trillion), Equity Group (Sh2.04 trillion), Co-operative Bank of Kenya (Sh884.57 billion), I and M Group (Sh742.5 billion), NCBA (Sh741.1 billion) and Absa Bank Kenya (Sh569.35 billion).

Between 2018 and 2022, Standard Bank progressively raised its stake in Stanbic Holdings -the parent firm of Stanbic Bank- from 60 percent to 74.92 percent through share purchases in the open market, underlining its confidence about the subsidiary’s long-term prospects.

Fellow Johannesburg-listed lender FirstRand Bank has, in the meantime, held a longstanding interest in establishing a full presence in Kenya since 2012, but is yet to identify a suitable acquisition opportunity.

The bank said last August that Kenya’s enhanced minimum capital rule to Sh10 billion for banks has opened a new opportunity for its entry into the market through an acquisition of a smaller bank.

FirstRand has meanwhile maintained a representative office in Kenya since November 2011, operated by its corporate and investment arm Rand Merchant Bank.

Absa Bank Kenya’s share price jumped 4.59 percent on Friday, representing a gain of Sh7.33 billion as investors reacted to Absa Group Limited’s bid to raise its stake in the Kenyan subsidiary at a premium price of Sh34.5.

The Nairobi Securities Exchange-listed firm’s stock touched a high of Sh33 and closed trading at an average price of Sh30.75, giving it a market value of Sh167 billion.

The lender’s stock rose from Sh29.4 on Thursday when its market capitalisation stood at Sh159.6 billion.

The price jump has slightly narrowed the gap with Absa Group’s offer which is seen as a bullish signal on the target firm’s future prospects.

A total of 3.49 million shares changed hands on Friday, valuing the deals at Sh107.5 million. Those who bought the shares will be in a position to profit from selling the units to the multinational.

Baloobhai Patel is among the beneficiaries of the bank’s share price growth, with the billionaire investor recording a gain of Sh135.1 million on the day.

Mr Patel’s holdings of 100 million shares -based on Absa Bank’s latest annual report- were valued Sh3.07 billion on Friday. Their value had risen from Sh2.94 billion on Thursday.

Absa Bank becomes the latest lender to stage major share price gains catalysed by mergers and acquisitions announcements.

NCBA Group’s stock also surged from Sh75 in mid-October 2025 -when news broke that South Africa’s Standard Bank Group was keen to acquire the company- to highs of Sh100 after the lender was later confirmed to be the buyout target of Nedbank Group.

NCBA’s share price subsequently lost some ground and closed at Sh90 on Friday, leaving it still higher compared to the pre-deal level.

Absa Group has offered Sh30.9 billion or Sh34.5 per share to buy an additional 16.5 percent stake in the Kenyan subsidiary.

This will lift its ownership to 85 percent from the current 68.5 percent.

The multinational says it intends to retain the Kenyan unit’s listing on the Nairobi bourse on completion of the deal and has sought an exemption from the Capital Markets Authority (CMA) from making a full buyout offer to all minority shareholders.

This means it will buy a maximum of 895.9 million shares in the proposed tender offer, giving it a larger share of the subsidiary’s earnings.

The Kenyan business has significantly raised its profits and dividend payouts while improving returns on shareholders’ funds since it separated from its former ultimate parent firm Barclays Plc in 2020.

The company’s return on equity (RoE), the metric that determines a company’s profitability by measuring how much profit it generates from shareholders’ capital, has risen steadily from 16.4 percent in 2019 -the year before it completed its separation from Barclays.

That metric rose to peak at 24.5 percent in 2024 before moderating to 22.8 percent in 2025.

Net earnings meanwhile surged from Sh7.4 billion in 2019 to Sh22.9 billion last year while dividends increased from Sh6 billion to Sh11.1 billion over the same period.

Barclays previously set the risk appetite for the South African multinational (then trading as Barclays Africa Group Limited) which in turn cascaded the policies to different subsidiaries including the Kenyan unit.

After the split, the reporting line for the Kenyan business stopped at the South African firm which is keen to grow in the African continent.

Absa Group says the proposed increase in its stake in the Kenyan subsidiary aligns with its broader strategy around Africa expansion and presenting its clients with strong regional and global opportunities.

‘The proposed acquisition through this tender offer is a natural extension of the group’s commitment to build a diversified pan-African franchise,’ the multinational said.

‘Absa Group regards East Africa as a cornerstone of its pan-African growth ambitions.

‘Absa Group’s strategy is to deepen presence in high potential markets, improve returns through scale and enhance corridor capabilities connecting clients to regional and global opportunities.’

The South African firm has been on a regional expansion drive ever since Kenny Fihla assumed leadership on June 17, 2025.

In early June 2026, Absa Group received the green light from Bank of Uganda to acquire Standard Chartered Bank’s Wealth and Retail business unit, paving way for consummation of a deal whose process started in October 2025.

South African companies are betting Sh413 billion on acquisitions in Kenyan blue-chip firms, seeing them as a platform for a bigger foothold in the fast-growing East and Central African market.

Absa Group is the latest to commit billions of shillings on a Kenyan acquisition in the span of seven months, following in the footsteps of Vodacom Group, which is buying an additional 20 percent stake in Safaricom, and Nedbank Group’s ongoing acquisition of a 66 percent stake in NCBA Group.

The firms have been attracted by the faster pace of economic growth in the East African economy compared to their home market.

As a regional hub, Kenya offers easy access to cross-border business in countries such as Uganda, Tanzania, Rwanda, South Sudan, Ethiopia and the Democratic Republic of Congo. It also provides a primary trade corridor that links Africa with the Middle East, India and Asia.

Absa said on Thursday last week that it is bidding to raise its stake in its Kenyan subsidiary from 68.5 percent to 85 percent in a deal valued at Sh30.9 billion. The lender plans to purchase an additional 895.9 million shares in Absa Bank Kenya for Sh34.50 each, taking its ultimate holding to 4.61 billion shares.

In raising its stake, the South African lender is eyeing a larger slice of Absa Kenya’s growing dividend payouts, in addition to pushing its broad strategy of deepening its presence in high-potential markets in Africa.

Since the split and rebrand of the Kenyan unit from Barclays Plc in 2020, net earnings have grown from Sh7.4 billion (in 2019) to Sh22.9 billion last year, allowing the unit to raise its annual dividend from Sh6 billion to Sh11.1 billion in the period.

‘Absa Group regards East Africa as a cornerstone of its Pan-African growth ambitions,’ the Johannesburg-based multinational said.

‘Growth in East African markets is expected to continue to outperform, driven by infrastructure investment, with Kenya, Tanzania and Uganda’s GDP expected to grow by at least five percent per annum over the coming years.’

This is the playbook that both Vodacom and Nedbank are following in making their new Kenyan investments.

Vodacom is purchasing a 15 percent stake in Safaricom from the Kenyan government for Sh204.3 billion, and a five percent stake from its British parent Vodafone Group Plc for Sh68.1 billion. The deal was first disclosed in December 2025, with its conclusion currently held up by a High Court order.

Upon completion of the Sh272.4 billion transaction, Vodacom will raise its stake in Safaricom to 55 percent from the current 35 percent. This will hand it a larger slice of Safaricom’s annual dividends, which in the year to March 2026 totalled Sh80 billion.

The purchase also comes at a time when Safaricom is deepening its position in the Ethiopian market, where it is targeting to break even in 2027. The Kenyan telco holds a 54.17 percent stake in Safaricom Ethiopia, with Vodacom holding direct ownership of 6.02 percent in the unit.

Nedbank is meanwhile spending Sh110 billion to buy a 66 percent stake in NCBA, Kenya’s fifth largest lender by assets, in a cash-and-stock deal that was announced in January 2026.

NCBA will help Nedbank diversify its business, which currently comprises operations in six southern African markets. The Kenyan bank is a strong player in the East African market, where its digital credit services reach millions of customers.

Nedbank also cited regulatory certainty as a key consideration in choosing to enter the East African market.

Barely two months before announcing the NCBA acquisition, Nedbank had sold its entire 21 percent stake in West Africa-headquartered Ecobank Transnational, citing regulatory uncertainty, the deterioration of the Nigerian economy and potential increases in capital requirements.

When quitting West Africa, the bank said it would set a clear focus on the Southern and Eastern Africa regions.

‘Kenya’s role as a regional financial hub, supported by strong institutions, sophisticated markets and a dynamic technology sector, makes it a natural anchor for Nedbank’s East African ambitions,’ Nedbank chief executive officer Jason Quinn said in January when announcing the transaction.

Standard Bank of South Africa -which trades locally as Stanbic Bank- is also said to be in the market for an East African acquisition, having explored a bid for NCBA before Nedbank swooped in with its offer.

The lender’s strategy is to be a top-three player in its African markets, but in Kenya it is ranked seventh with an asset base of Sh551.71 billion as at March 2026.

The top six lenders by asset base are KCB Group (Sh2.25 trillion), Equity Group (Sh2.04 trillion), Co-operative Bank of Kenya (Sh884.57 billion), I and M Group (Sh742.5 billion), NCBA (Sh741.1 billion) and Absa Bank Kenya (Sh569.35 billion).

Between 2018 and 2022, Standard Bank progressively raised its stake in Stanbic Holdings -the parent firm of Stanbic Bank- from 60 percent to 74.92 percent through share purchases in the open market, underlining its confidence about the subsidiary’s long-term prospects.

Fellow Johannesburg-listed lender FirstRand Bank has, in the meantime, held a longstanding interest in establishing a full presence in Kenya since 2012, but is yet to identify a suitable acquisition opportunity.

The bank said last August that Kenya’s enhanced minimum capital rule to Sh10 billion for banks has opened a new opportunity for its entry into the market through an acquisition of a smaller bank.

FirstRand has meanwhile maintained a representative office in Kenya since November 2011, operated by its corporate and investment arm Rand Merchant Bank.

The International Monetary Fund (IMF) has urged the Central Bank of Kenya (CBK) to cut its policy setting meetings to four from the current six in a year to align the regulator with data releases which will allow it to conduct elaborate forecasts on inflation.

The multilateral lender, which helped CBK improve its forecasting and policy analysis system (FPAS) through a technical assistance mission, noted that current forecasts are not synchronised with the release of quarterly national accounts data published four times a year.

CBK currently holds its policy setting meetings on a bimonthly basis, reaching up to six meetings a year but has the leeway to hold more meetings on a need/emergency basis.

The IMF, however, advises that CBK can subsequently increase its policy meetings to eight in a year after the initial slash to factor in updated data.

‘The mission recommended that CBK consider initially reducing the number of MPC meetings to four per year and later increased to eight,’ the IMF said in its technical report.

‘The four MPC meetings can align with quarterly national accounts releases and include fully-fledged forecasts. Subsequently, CBK could add four interim meetings between the main meetings based on updated data, including nowcasts and near-term projections.’

Real-time picture

Nowcasting refers to the use of high-frequency data such as retail sales to model a real-time picture of the economy without waiting for official quarterly reports.

The IMF observed that the CBK holds six meetings per year while the Kenya National Bureau of Statistics (KNBS) quarterly economic data is only published on four occasions –with a one quarter lag.

The release of the first quarter national accounts data for 2026 is for instance only expected at the end of June while fourth quarter economic data for 2025 was only available at the end of April.

Inflation targeting central banks like the CBK that implement the forecasting and policy analysis system typically initiate forecasting rounds shortly after the availability of quarterly economic data and conclude shortly before the policy setting meetings.

‘Given the misalignment between data publication and MPC meetings, some CBK forecast rounds have been compressed and relatively short, while others may begin several weeks after new data becomes available. If new CPI (inflation) is published between the analytical and main MPC meetings, staff may need to re-run the model within a very short time frame, with limited time for thorough analysis of the new data and forecast revisions,’ the IMF added.

In 2014, IMF helped Kenya develop its quarterly projection model (QPM) which underpins the current medium-term headline inflation target of five percent, with a tolerance band of 2.5 percentage points in either direction.

The fund has worked alongside CBK staff to improve Kenya’s inflation targeting including the most recent missions in 2024 and 2025.

The latest mission which ran from April 10 to April 17, 2025, undertook a comprehensive update of the core quarterly projection model (QPM) and added a new fiscal dynamic modelled around government spending and revenue to enhance the assessment of macroeconomic and policy implications of fiscal developments.

A model extension was also introduced to incorporate weather stocks, leveraging the World Bank climate risk data for Kenya, to better capture the impact of weather-related shocks on supply-side inflation pressures.

In addition to tweaking the MPC calendar, the IMF has advised CBK to have a more forward-looking monetary policy communication with the goal of anchoring medium-term inflation expectations.

Monetary policy consists of decisions and actions taken by the Central Bank to ensure that the supply of money in the economy is consistent with growth and price objectives set by the government.

The objective of the policy is to maintain price stability in the economy which translates to low and stable inflation.

CBK’s monetary policy is guided by a monetary programme, anchored on economic growth and inflation targets provided by the National Treasury.

Monetary policy decisions are made by the Monetary Policy Committee (MPC), which meets at least once every two months and reviews data and analysis from various sources enabling it to decide on any action to maintain or vary its stance.

At its recently concluded meeting this month, the MPC voted to retain the policy rate/benchmark rate at 8.75 percent for a second consecutive time noting the need to adopt a wait and see stance on the evolution of inflation amid the US-Israel war on Iran which has escalated fuel prices.

Kenya’s inflation raced to 6.7 percent in May from 5.6 percent in April due to higher prices arising from the elevated global oil prices but held below the upper target of 7.5 percent.

‘Having considered these developments, including the potentially transitory nature of the conflict, the Committee concluded that the current monetary policy stance, with the Central Bank Rate unchanged at 8.75 percent, remains appropriate to ensure that inflation expectations remain anchored within the target range, and the exchange rate remains stable,’ said CBK Governor Kamau Thugge who is also the Chairman of the MPC.

A quarter of a century ago, I was a rookie relationship manager at Citibank Kenya. Together with my colleauges, we successfully convinced the finance team of Kenya Ports Authority to outsource the weekly cash payment to thousands of labour casuals to the bank.

This would take the headache away from the finance department for sourcing and holding cash weekly, hiring cashiers in the ‘payment hall’ as well as reconciling payments made to the labour roll.

On the very first day of the pilot, a riot ensued at the port. ‘Menejment wameleta ma-foreina, wameuzia wazungu porti yetu!’ Chaos, anarchy and fear fanned the port.

Turns out, our new system would surface a number of ‘ghost workers’ and it was their malevolent spirits that weaved gracefully amongst the legitimate casual workers, spreading rumours and formenting hate. We prevailed, after much management angst. And the spirits of the ghost workers disappeared.

A video recently went viral on various social media platforms, where the speaker waxed not-so-lyrical about how Kenyan parastatals had been privatised via the Government Owned Enterprises (GOE) Act 2025.

The speaker went further to allege that 63 parastatals had already been privatised and some sold to foreigners and local companies who would later list the shares at the Nairobi Securities Exchange and reap the profits thereafter.

As a wise CEO once told me, never counter an emotional argument with facts. I’m not one to follow conventional wisdom, so here come the facts with which I hope those who are spreading that video will at the very least familiarise themselves with.

It bears noting that the current parastatal reform can be traced back to the Kibaki administration with the tabling of the September 2013 report by the Presidential Task Force on Parastatal Reform.

The document commonly known as the Abdikadir Report on Parastatal Reforms, and named for one of the two joint chairmen of the Task Force, Abdikadir Mohamed and Isaac Awuondo, laid out a thorough framework for how government owned entities could be managed commercially and professionally to meet Kenya’s strategic Vision 2030 goals.

The report introduced a new legal framework, the Government Owned Enterprises Bill 2013, to replace the State Corporations Act.

Sadly, the report was placed deep in the back corner of a building on Harambee Avenue by ‘the then owners of power’ whose deeply entrenched noses would have been put out of joint if their board appointing power wings were clipped.

But somewhere deep in the annals of the State Corporations Advisory Committee and within the Office of the President, some people continued to work hard at the thankless task of bringing much needed reform to State agencies. Which work has now culminated into an Act of Parliament that is in full force as we speak.

The purpose of the GOE Act 2025 is to overhaul how Kenya owns, governs, manages, and holds commercially oriented public entities accountable. In practical terms, it is intended to move public ownership away from a fragmented parastatal model and toward a more disciplined, transparent and commercially driven ownership framework.

The core purpose of the Act is to: Establish a clear legal and ownership framework for Government Owned Enterprises;

ensure GOEs operate commercially, profitably, and with greater financial discipline;

reduce reliance on the Exchequer by making GOEs self-financing where possible; improve governance through professional boards, independent directors and clearer accountability; separate the government’s role as owner/shareholder from its role as policy-maker or regulator; require stronger performance management, reporting, disclosure and audit obligations, and

clarify how non-commercial public service obligations are assigned, costed, funded, and monitored.

The Act can fundamentally change public ownership by treating state-owned commercial entities more like accountable investment assets rather than administrative extensions of ministries.

This means firstly moving from political control to shareholder discipline: the National Treasury becomes the central ownership authority, reducing fragmented ministerial control and helping the government act more consistently as a shareholder.

Secondly, it means moving from subsidies to commercial sustainability: GOEs are expected to finance themselves, operate profitably, and justify any public funding through clearly defined public service obligations.

Thirdly, the Act envisages a move from weak politically motivated boards to professional governance: Independent directors, fit-and-proper criteria, competitive appointments and board accountability should reduce patronage and improve strategic oversight.

Fourthly, the GOE Act moves from scattered entities to rationalised ownership. The Act supports mergers, dissolutions, restructuring, and transition into Companies Act structures, enabling government to reduce duplication and focus ownership where there is strategic or economic value.

Finally, the Act gets the Kenyan government to shift its focus from passive State ownership to active portfolio management which means that Kenya can manage GOEs as a public investment portfolio thereby deciding which entities to retain, merge, list, partially privatise, or wind down based on performance, fiscal impact and public interest.

Over the next couple of weeks, I’ll go into the second schedule to the Act which defines which parastatals are to be converted into companies as well as the notorious kettle of fish that is the framework around appointment of board directors.