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In the wake of tough economic times, many employers have been forced to restructure their businesses, reduce their workforce, or shut down entire operations.

For many people, appearance of a redundancy notice can truly turn their world upside down as it suddenly takes away your job.

While a severance cheque may come with short-term financial relief, redundancy often signals a major career disruption and financial uncertainty. The Employment Act, 2007 defines redundancy as a situation where an employee loses a job involuntarily, typically due to the employee’s role or services becoming unnecessary, often as a result of structural, technological, or other changes within the organisation.

Understanding the legal and tax obligations involved in the redundancy is crucial for both employers and employees.

Compliance with the law ensures that rights and responsibilities of parties involved are upheld and help mitigate potential intervention from the courts or other authorities, if due process is not observed.

Before an employer can lawfully declare redundancy, they must follow a specific procedure outlined in the Employment Act.

Failing to observe any of the specified steps could render the entire process illegal and expose the company to lawsuits or compensation claims.

First, if the employee is a member of a trade union, the employer must inform both the union and the labour officer in charge of the area of the reasons for, and the extent of, the intended redundancy at least one month before termination.

If the employee is not in a union, the employer must notify the employee directly in writing and also inform the labour officer.

When deciding which employees will be affected by the redundancy, the employer must use fair and objective criteria. These include the employees’ tenure, their skills, their performance, and their reliability. Courts require employers to document and justify the selection criteria used. Importantly, employees must not be treated unfairly because of their union membership status. Whether or not an employee belongs to a union should not affect the terms of separation.

The employer must pay for pending leave days, give at least one month’s notice or one month’s salary in lieu, and severance pay of at least 15 days’ wages for every full year worked. More generous packages may be offered under contracts or internal policies.

While the Employment Act does not explicitly require consultation, Kenyan courts have emphasised the importance of genuine consultation with affected employees or their representatives. Failure to consult may render the redundancy process procedurally unfair.

While severance pay is intended to alleviate the impact of the sudden loss of income and provide a financial buffer while the employee seeks new employment opportunities or undergoes retraining, the compensation is not tax-exempt in Kenya.

Under the current tax laws, pay received by an employee upon termination is taxable, unless the individual qualifies for specific tax privileges granted by applicable laws.

The methodology for calculating tax on severance pay is determined based on the provisions of the employment contract and follows the procedures set forth in the Income Tax Act.

Employers are required by law to withhold the appropriate taxes and deductions from severance pay prior to issuing the final cheque to the employee.

Inaccurate or incomplete compliance with these requirements may result in penalties from the authorities and potential legal action from employees or their unions.

In a period of rising job losses and corporate restructuring, it is essential for employers and employees to have a clear understanding of the legal and tax consequences associated with redundancy.

For employers, strict adherence to the law is not only a statutory requirement but also fundamental to maintaining trust and fairness during transitions.

Employees should also familiarise themselves with the provisions of the law and consult with qualified legal or tax professionals as appropriate.

So, don’t wait until the cheque clears to ask questions. Whether you’re an HR professional or an employee, understanding your rights and responsibilities is paramount.

The economy expanded by five percent in the second quarter of 2025, compared to 4.6 percent in the same period last year, driven by a rebound in construction activity and strong performance in the agriculture and financial sectors.

A new report by the Kenya National Bureau of Statistics (KNBS) on the country’s total economic output, or gross domestic product (GDP), shows that growth in construction helped stimulate the economy, which also benefited from lower interest and exchange rates.

The construction and mining sectors rose by 5.7 percent and 15.3 percent, respectively, after contracting in the second quarter of 2024.

Although agriculture registered slower growth in the review period compared to the second quarter of 2024, it remained a major driver of the economy, expanding by 4.4 percent. Agriculture contributes about a fifth of GDP. The slowdown in crop production was attributed to reduced output of tea and sugar.

‘In the second quarter of 2025, the Gross Value Added (GVA) for agricultural activities recorded a slight deceleration compared to the corresponding quarter of 2024,’ said KNBS in its Quarterly Gross Domestic Product Report.

‘Nonetheless, favourable weather conditions continued to support both crop and animal production during the review period,’ it added in the report released on Tuesday.

The growth, however, was slower than in the same period in 2023, when the economy expanded by 5.5 percent on the back of strong agricultural performance.

KNBS also attributed the second-quarter growth to an increase in transportation and storage (5.4 percent) and financial and insurance (6.6 percent), though these sectors grew at a slower pace compared to 2024.

The turnaround in construction stood out. The sector’s improved performance was partly due to increased spending on affordable housing projects across the country, alongside President William Ruto’s focus on road maintenance.

‘The sector’s performance was manifest in cement consumption and import of construction materials,’ said KNBS, noting that cement consumption increased by 23.9 percent to 2,424,400 tonnes, up from 1,957,100 tonnes in the corresponding period of 2024.

Imports of bitumen-a sticky, waterproof binder mainly used in road and runway construction-rose to 22,659,300 tonnes from 15,566,200 tonnes in the same quarter of 2024, reflecting increased government investment in road projects.

Last year, the construction sector contracted for two consecutive quarters-the second and third-due to significant budget cuts to mega infrastructure projects under the Kenya Kwanza government, coupled with the high cost of building materials, including cement and bitumen.

The economic rebound, which comes amid lower interest and exchange rates as well as renewed activity at the Nairobi Securities Exchange (NSE), remains weaker than in the second quarter of 2023, when GDP grew by 5.5 percent.

Last year, growth was constrained by high interest rates after the Central Bank of Kenya (CBK) raised its benchmark lending rate to curb inflationary pressures. Since then, the CBK has been easing the Central Bank Rate, signalling commercial and microfinance banks to lower borrowing costs and stimulate the economy.

The CBK has also introduced regulations for credit guarantee firms to give lenders confidence when extending loans to high-risk borrowers, including micro, small, and medium enterprises (MSMEs), which are considered the engines of the economy but remain underserved by banks.

Credit guarantee firms will be required to raise a minimum capital of Sh1 billion and stand ready to absorb a percentage of potential loan losses, in return charging banks for this loan insurance service.

Hotelier William Osewe Guda has denied blocking his estranged wife-Stella Mutheu from the management of Ranalo Foods. The two co-own the city restaurant business.

In a responding affidavit to Ms Mutheu’s case, Mr Osewe told the High Court that his former wife is still listed as a shareholder of Ranalo Foods, refuting claims that he has blocked her from the day-to-day operations of the restaurant.

A push for alternative systems to dollar-based payments has intensified with regional platforms prepping to drive continental trade, amid concerns over time and cost involved in trading using the US currencies

Last week, a payment system backed by the African Export-Import (Afrexim) Bank was rolled out in Nairobi, targeting to connect Kenyan traders with their counterparts across borders, through the Africa Trade Gateway (ATG).

MPs have approved a sessional paper on the privatisation of Kenya Pipeline Company (KPC), where the government will retain a 35 percent ownership in the company.

This, even as opposition MPs vowed to move to the High Court to block the privatisation, claiming an ambush by the Executive.

Rwanda’s national carrier, RwandAir, has launched a new Zanzibar-Mombasa route, hoping to tap the coastal tourism boom to grow its fortunes.

The airline will operate the new route four times weekly, linking its Kigali hub with two of East Africa’s most sought-after leisure destinations. The flights will be served by a Boeing 737 aircraft, marking RwandAir’s return to Mombasa after a six-year pause.

The expansion is part of RwandAir’s strategy to establish Kigali as a competitive regional hub that rivals Nairobi, Dar es Salaam, and Addis Ababa in connecting East Africa to global travel and trade corridors. ‘Returning to Mombasa and introducing Zanzibar is another step forward in our ambitious growth journey,’ said Yvonne Makolo, RwandAir’s CEO.

She added that the route will expand opportunities for both leisure travellers and regional commerce.

Zanzibar and Mombasa are among the region’s most popular coastal destinations, which draw in international visitors annually. Zanzibar, in particular, has seen a tourism recovery that has attracted investors in high-end hospitality, luxury villas, and beach resorts that cater for European, Middle East, and intra-African travellers.

Additionally, Mombasa has historically been Kenya’s gateway to the Indian Ocean as a tourist hotspot and a logistics hub through the port of Mombasa. However, it has been forced to reinvent itself amid rising competition from Zanzibar’s more aggressively marketed resort economy.

The airline’s new route will face competition from Kenya Airways (KQ) and Jambojet, which already have a strong presence on the coastal routes.

KQ currently flies daily between Nairobi and Zanzibar, with frequencies reaching 13 flights per week, including some days that have double services. Jambojet, KQ’s low-cost subsidiary, launched the Mombasa-Zanzibar route in July 2024. It began with four flights per week and has since expanded to as many as six per week, with the airline targeting daily flights during peak holiday seasons.

Other airlines include Precision Air and Air Tanzania, which have dominated the local Tanzania routes, while Ethiopian Airlines has also used Addis Ababa as a connecting hub for Zanzibar-bound travellers.

The coastal leisure market is proving resilient even amid global economic headwinds, with Zanzibar recording a steady rise in arrivals from Europe and the Gulf states. Airlines are banking on the sustained demand for short-haul regional tourism that has been fuelled by a rising African middle class and intra-African travel spurred by the African Continental Free Trade Area (AfCFTA).

The windfall returns of 2024 from Treasury bills, government bonds, and money market funds appears to have ended. With yields drifting lower, investors are being forced to rethink how they position their portfolios.

Naomi Atera, a corporate finance analyst at Rock Advisors, says this means leaning into riskier asset classes, particularly equities listed on the Nairobi Securities Exchange.

Make Money, a podcast series, hosted by Kepha Muiruri, from Business Daily Africa unravels ways to be financially savvy. Get practical tips and advice on how to increase your income, build wealth, and achieve financial freedom in Kenya. Whether you’re just starting out or a seasoned investor, we’ve got something for everyone.

‘Every artist was first an amateur.’ – Ralph Waldo Emerson

We love to celebrate creativity when it shines on a stage or hangs in a gallery, but rarely do we speak of the nights when it had to pay the rent.

The government plans to double the maximum compensation to policyholders of collapsed insurance companies to Sh500,000 per claim in a move to shield customers from losses.

The National Financial Inclusion Strategy (NFIS) for 2025-28, which has been prepared by key State players in the financial sector, including the Insurance Regulatory Authority (IRA) and Central Bank of Kenya, says raising the ceiling from the current Sh250,000 will help promote stability.

“In the beginner’s mind there are many possibilities, but in the expert’s mind there are few,” said Shunryu Suzuki.

Don’t read this if –you are expert in luxuriating in a warm comfortable bubble bath of sameness.

Why is it that managers are taught to differentiate, yet they don’t? Are you running stuck in the same spot? Can a blue ocean approach capture customers you never knew existed? Is it naïve to think that one just push a button and, AI — part fad, part trend — can replace the hard work of critical thinking? Paradox is, the more companies compete, the more they look the same. When one scratches below the surface of Kenya’s crowded banking, insurance, hotel and hospitality, and professional services sectors, it’s very hard to tell one organisation from another.

With over abundant consumer choices and superfluous apps, upgrades and add-ons and features, brands and product offerings have become nearly identical as the efforts to outdo each other have pushed them into a dizzying herd of indistinct options.

Stuck in the soap opera of season 1, episode 1

Imagine watching a captivating popular drama series, talking about a season 1 episode, when the rest of the world is in season 7.

Why are we continually playing a game of catch up? Can one shift from playing the part of the dumb ‘wanna be’ all knowing make believe expert? Helps to avoid preconceptions when addressing a business issue, similar to how a true beginner would approach things.

Having a beginners mindset allows for more possibilities, creativity, and a deeper understanding — by letting go of what one already knows, being open to new blue ocean perspectives and experiences.

Blue ocean strategy

Want to launch a successful business? Is it possible to avoid wasting time on competing for market share? Ideal is to focus on creating new value, expanding the current market space.

If you can create new value, you will find yourself in a highly profitable ‘Blue Ocean’ where the competition is irrelevant. This is the thinking of W. Chan Kim and Renee Mauborgne, first published in their 2005 book: Blue Ocean Strategy.

If two people are sitting by the side of the road selling tomatoes, do you join them as the third tomato seller? That’s the temptation. Competing — thinking that one can be just a little bit different, drop the price slightly, give one away free, offer juicy ripe tomatoes, or sit closer to the matatu stop. That’s the easy conventional thinking, the default programming on how to do business.

Blue ocean strategy asks: How can you create value by addressing the needs, problems that customers face? And, go after ‘non-customers’ that others have not thought of. Market leaders like, for example, Tesla, South West Airlines, Ikea, and Cirque du Soleil all followed a blue ocean approach, attracting customers who the competition could not reach.

Even the money transfer platform, M-Pesa, the financial backbone of the Kenyan economy is an example of a blue ocean style approach. In 2024, 59 percent of the Kenya’s gross domestic product flowed through the phone app in your pocket, that has a 90 percent market share.

Four steps to value innovation

Value innovation is at the core of blue ocean strategy. Aim is to create an innovative new product at a remarkably low price. First step in value innovation is selecting your target audience.

Instead of focusing on ‘regular’ customers within your desired market – the existing customers everyone else is competing for — focus on the customers on the edge of your market. These are the infrequent buyers and customers in adjacent market spaces, who either avoid your shop, or who have never heard of your market.

First step is to have a beginner’s mind and see differently. Focus on the needs, the problems faced by your potential consumers.

Next step in value innovation is to look at the typical business model in your market and ask four questions: 1) What processes can we eliminate? In other words, what adds cost, but really isn’t required? 2) What standards can we reduce? 3) In contrast, what quality benchmarks can be raised? 4) What ways of doing things, in systems and processes, can we incorporate from adjacent sectors – industries to create a new experience? Here one takes best practices that ‘Wow’ customers from outside of the conventional ‘business as usual’ space.

Coming up with a blue ocean strategy is tough. It requires solid facts and figures analysis, and big injection of ‘out of the box’ creative thinking. But the rewards are considerable, if you can create your own market, no one else is in.

The law of hype

Perhaps one should pray your competitors stick with the hype — all the meaningless fluff — with words like: transformation, future ready, AI- enabled and high stakes leadership. Notice that when things are going well, a company doesn’t need the hype. When you need the hype, it usually means you’re in trouble.

‘No one can predict the future, not even a sophisticated reporter for the Wall Street Journal. The only revolutions you can predict are the ones that have already started.

Over the years, the greatest hype has been for those developments that promise to single-handedly change an entire industry. Real revolutions arrive unannounced in the middle of the night and kind of sneak up on you,’ advised Al Ries and Jack Trout.

Avoid the path well trodden, have a beginner’s mind and break some rules.

Harvard Business School professor, Youngme Moon talks about those to watch out for: ‘In field after field, past experiences have taught us, that the ones to pay attention to, are the ones who understand the rules so well that they understand the urgency to break them.’