Category: Business

Kenya’s tax authority is revolutionizing cargo inspection at the Port of Mombasa through artificial intelligence technology, marking a significant shift from decades-old manual inspection methods that have long frustrated traders while creating opportunities for smugglers and tax evaders.

The Kenya Revenue Authority (KRA) has begun deploying AI-enabled scanners that can analyze cargo images in seconds, automatically flagging suspicious consignments for detailed inspection.

This represents a dramatic improvement over traditional methods where customs officers would spend up to two minutes scrutinizing each container’s contents on ordinary scanners.

The new technology uses sophisticated image analysis to detect irregularities in cargo shipments.

When goods pass through the scanners, the system generates detailed images that highlight anything unusual or suspicious.

For instance, if an importer attempts to conceal additional items by bundling them together, the resulting darker image patterns are automatically flagged for further investigation.

According to a customs officer familiar with the system, who requested anonymity, the AI technology is part of a broader risk-based profiling approach that eliminates the need to open every container.

Instead, only flagged consignments undergo complete verification, significantly boosting efficiency while reducing clearance times at Kenya’s busiest port.

“We no longer open every container. Instead, those flagged are subjected to 100 percent verification, where the entire cargo is inspected. This not only boosts efficiency but also cuts clearance times at the port,” the officer explained.

Commissioner-General Humphrey Wattanga told a local newspaper that the initiative aims to seal revenue leakages that cost the Exchequer millions annually while balancing faster trade facilitation with stronger enforcement against tax cheats.

The scanners, currently on pilot since early 2025, are scheduled for full rollout by June 2026.

“At the moment, we largely use our own staff or the naked eye to read cargo images, but with machine learning and AI, we can improve and enhance that capability,” Wattanga said during an August interview.

The technology promises to address long-standing challenges at Kenya’s ports, where shrewd importers have historically exploited human-led inspections by concealing goods, under-declaring volumes, or misclassifying items to dodge taxes.

Tax experts welcome the innovation while urging careful implementation.

Hadijah Nannyomo, a Nairobi-based partner for international trade and indirect taxes at EY, highlighted the technology’s potential to reduce human discretion and bias in cargo clearance. However, she cautioned against over-reliance on AI without human oversight.

“The biggest advantage is to limit human bias and discretion, as well as the avoidance of concealment of cargo. The risk is hallucination by AI, which may misinform if there is no human intervention and checks,” Nannyomo warned.

Beyond customs operations, KRA is integrating AI technology into broader administrative functions, including flagging risky transactions, identifying discrepancies between financial statements and tax returns, and detecting fraud patterns.

This forms part of a comprehensive five-year digital transformation strategy running through June 2029.

The authority is also establishing a data analytics center of excellence that will consolidate information from various sources, including Business Registration Services and private sector databases, to build detailed taxpayer profiles.

This initiative draws inspiration from advanced tax jurisdictions, including the UK’s HMRC, Swedish Tax Agency, and Norwegian Tax Administration.

The technological upgrade comes amid heightened scrutiny of KRA’s operations following youth-led protests against new tax measures in the Finance Act 2024.

The agency has already expanded its use of various databases, from bank statements and import records to utility connections and luxury car registrations, to identify tax evaders.

As Kenya positions itself as a regional trade hub, the success of these AI-powered systems could serve as a model for other East African countries grappling with similar challenges in customs enforcement and revenue collection.

The technology’s ability to process thousands of daily container arrivals efficiently while maintaining security standards will be crucial for sustaining Mombasa’s role as the region’s primary gateway port.

The pilot program’s results will determine whether this technological leap can finally close the revenue gaps that have long plagued Kenya’s customs operations while maintaining the delicate balance between trade facilitation and tax compliance.​​​​​​​​​​​​​​​​

A Nairobi businessman is facing potential legal action from the Royal Thai Embassy after pursuing a Sh2.4 million claim for what the diplomatic mission describes as an unauthorized travel arrangement that has raised questions of fraud.

Nasurdin Abdi Yussuf, owner of Campfire Chronicles Travel Tours and Safaris based in Kilimani, found himself at the center of a diplomatic dispute following what he believed was a legitimate business deal with the Thai Embassy in July 2025.

The controversy began on July 24 when Yussuf received a phone call from someone identifying herself as Joan Wanjiku Ngari, allegedly representing the Royal Thai Embassy.

The caller invited him to discuss a dealership arrangement that would see his company finance travel for eight individuals to Bangkok for a forum organized by Thailand’s Ministry of Commerce and the Department of International Trade Promotion.

During a three-hour meeting at the embassy from 2 pm to 5 pm, Yussuf was presented with what appeared to be a lucrative opportunity.

The arrangement involved his company purchasing airline tickets for the eight travelers, with reimbursement promised within 21 days.

Eager to secure favorable terms, Yussuf negotiated the payment window down to 14 days before agreeing to the deal.

The travelers included both Kenyan and Congolese nationals, among them Emily Jerop Silah, Josephine Ngina Masai, Martha Muthoni Migui, and Congolese citizens Bwira Ntabala Flavier, Banga Alain, and Peterson Luliba.

Despite facing challenges with Thai-language booking details, Yussuf proceeded to purchase the tickets on July 25, drawing funds from his company accounts.

However, the promised reimbursement never materialized.

When Yussuf attempted to follow up on the payment in August, he encountered a series of obstacles.

His visits to the embassy on August 11, 12, and 13 were met with refusals at the gate, with security personnel citing various reasons including meetings, public holidays, and general unavailability of embassy staff.

The situation took a dramatic turn when the Thai Embassy revealed that Joan Wanjiku Ngari had resigned on July 25, 2025, with her departure effective August 1.

Minister Counsellor (Commercial) Natthapong Senanarong issued a categorical denial of any authorized arrangement with Yussuf’s company.

“Any contract allegedly executed by her was done without our knowledge or authorization and does not create a binding obligation on the Embassy,” Senanarong stated, indicating that the matter had been referred to both the Directorate of Criminal Investigations and the Diplomatic Police Unit for further investigation.

Frustrated by the turn of events and mounting financial losses, Yussuf enlisted legal representation.

On August 15, his lawyers formally demanded the Sh2.4 million reimbursement along with additional damages for breach of contract from the embassy.

The embassy’s response was swift and uncompromising.

Through their legal counsel, Olukaka Derrick, the diplomatic mission rejected Yussuf’s claim as entirely baseless and warned of serious consequences for what they characterized as an attempt to improperly extract funds from a foreign mission.

“Your client’s claim is entirely without merit and constitutes an attempt to improperly extract funds from a foreign mission,” the embassy’s legal response read, with a stern warning that continued pursuit of the claim could be deemed fraudulent behavior.

For Yussuf, what began as what he described as a “mouth-watering deal” has evolved into a potential legal nightmare with serious implications for both his business and personal reputation.

The involvement of criminal investigation authorities suggests this case may extend beyond a simple contractual dispute, potentially examining whether fraudulent activity occurred and, if so, determining which party may be responsible for the deception that has left a Nairobi businessman out of pocket by Sh2.4 million.​​​​​​​​​​​​​​​​

Standard Chartered Bank Kenya has commenced processing payments to 629 former employees following a Supreme Court decision that ended a 16-year legal battle over pension miscalculations worth an estimated Sh7 billion.

On Friday, the lender began collecting information from the petitioners in order to make payments totalling an estimated Sh7 billion, marking a significant victory for the retired staff who successfully challenged the bank’s pension calculations.

The Supreme Court has declined a request by the Standard Chartered Bank and its Pension Fund to stop a Sh7 billion payout to 629 former employees, effectively ending the bank’s final legal attempts to avoid the massive settlement.

The dispute stems from the bank’s transition from a defined benefit to a defined contribution pension scheme. The 629 staff successfully petitioned the court, arguing that their pension savings had been undervalued when the bank’s pension scheme changed from a defined benefit to a defined contribution scheme.

It directed the bank to refund KSh 1.1 billion to the Standard Chartered Kenya Pension Fund, with interest accruing from February 2000. It had also ordered the recalculation of lump sum and monthly pension benefits to include cost-of-living adjustments, housing allowance, and future increases.

The Claims Process

The bank has outlined a structured verification process for affected pensioners:

When: The process will commence from Monday 22, September 2025

Where: Claims will be verified at the Almary Green Business Park in Nairobi, where pensioners or their successors will present the necessary documents, including pension statements

What to Bring: Pensioners or their legal successors must present necessary documentation, including pension statements and other verification materials.

“We have initiated a structured process to execute the judgement in accordance with the legal requirements and are committed to maintaining open communication with affected pensioners,” Standard Chartered said.

The bank has assured stakeholders of its financial readiness: “We would like to assure our clients and stakeholders that we are adequately capitalised to meet the anticipated obligations”.

The bank will fund the payments, though it has indicated that final amounts may be lower than the initial Sh7 billion estimate.

Standard Chartered and its pension fund took the case to the Supreme Court after the Court of Appeal dismissed an appeal in March this year, upholding a 2023 High Court ruling in favour of the pensioners’ payout.

Standard Chartered Bank Kenya’s final attempt to block a Sh30 billion pension payout to its former employees has collapsed after the Supreme Court struck out the its appeal, citing lack of jurisdiction.

The ruling establishes an important precedent for pension fund governance in Kenya, affirming the oversight powers of regulatory bodies over pension scheme management.

This landmark case represents one of Kenya’s largest pension settlements and highlights the importance of proper pension fund management.

For the 629 affected former employees, it marks the end of a lengthy legal battle and the beginning of receiving their rightfully calculated pension benefits.

A Nairobi businessman has detailed in court how his former director allegedly orchestrated a sophisticated fraud scheme, stealing over Sh356 million from their trading company to establish a competing business.

Deepak Rajoria, a key witness in the high-profile case, testified before Milimani Law Courts about how Honey Khatwani, a director at OKI General Trading Limited, was charged with stealing $2,786,174.40 (approximately Ksh.356,711,174.40) between January 1, 2020, and June 30, 2024.

The alleged theft occurred at the company’s premises in Baba Dogo, Nairobi County.

Rajoria painted a picture of systematic financial manipulation, describing how Khatwani allegedly used his position of trust to siphon company funds through multiple channels. According to the testimony, the former director would steal company cheques and deposit the proceeds directly into his personal bank accounts, exploiting his access to the firm’s financial operations.

The fraud allegedly extended beyond simple theft, with Khatwani reportedly creating fraudulent invoices that understated the actual amounts received from clients. This sophisticated scheme allowed him to pocket the difference while maintaining the appearance of legitimate business operations. The businessman further alleged that company employees were unwittingly recruited to deposit stolen cash into Khatwani’s personal accounts.

The elaborate fraud only came to light during an internal audit of Oki General Trading Limited’s financial records. The discovery prompted immediate legal action and revealed the full extent of the alleged financial misconduct.

According to court documents, the stolen funds were allegedly used to establish Galaxy Middle East & Africa, a competing business trading under the name Smart Pro. Company registration records show the rival firm was incorporated on September 23, 2022, with Khatwani and his wife Jayesh Soni listed as the primary shareholders.

The legal consequences have been swift and severe. A Nairobi businessman, Honey Khatwani, accused in a KSh 356m fraud case, lost his multi-million property in Babadogo after a court-ordered auction . The High Court had earlier ordered Khatwani and his wife to pay Sh362 million for breach of contract after they failed to mount a defense in the civil case.

The criminal prosecution has faced some procedural challenges, with the court asking the ODPP for evidence in the ongoing case. However, the matter continues to proceed through the judicial system.

This case highlights the growing concern over internal fraud within Kenyan businesses, particularly involving company directors who abuse their positions of trust. The alleged theft represents one of the largest cases of its kind in recent years, involving substantial sums that were allegedly diverted over a four-and-a-half-year period.

The testimony provided by Rajoria offers a rare glimpse into how sophisticated corporate fraud can be perpetrated from within, using legitimate business processes as cover for criminal activity. The case serves as a stark reminder of the importance of robust internal controls and regular auditing in protecting business assets.

As the legal proceedings continue, the case is being closely watched by the business community, particularly given its implications for corporate governance and fiduciary responsibility among company directors in Kenya.

Equity Bank Kenya has moved to place Nairobi’s Eastland Hotel under receivership following the property’s failure to service an undisclosed debt, marking another significant enforcement action by the lender as it intensifies efforts to recover funds from struggling borrowers in Kenya’s hospitality sector.

The bank announced the appointment of Kamal Anantroy Bhatt and Jai Kamal Bhatt of Anant Bhatt LLP as joint receivers and managers of Eastland Hotel Limited, effective September 9, 2025. The receivership notice, published in local dailies, transfers all operational control of the four-star Kilimani property to the appointed receivers, stripping the hotel’s directors of their powers over business operations and assets.

This latest action underscores Equity Bank’s increasingly aggressive stance toward debt recovery amid rising credit risks across Kenya’s banking sector. The move adds Eastland Hotel to a growing list of businesses that have fallen under court-supervised control in 2025, following the bank’s earlier placement of TransCentury Plc under receivership and East African Cables into administration after court protections expired in June.

The hospitality industry has been particularly vulnerable to financial distress in recent years, grappling with elevated financing costs and an uneven recovery from the pandemic’s impact on business travel. Mid-tier properties like Eastland Hotel have faced mounting pressure from the proliferation of short-term rental platforms such as Airbnb, which have disrupted traditional hotel pricing models by offering flexible accommodation options that appeal to both leisure and corporate travelers.

The sector’s challenges have been compounded by aggressive expansion across various hotel categories, intensifying competition in an already strained market. This oversupply has coincided with a broader economic environment that has squeezed consumer spending and reduced corporate travel budgets.

Equity Bank’s financial results reveal the broader context of its enforcement actions, with the group’s non-performing loan ratio climbing to 13.7 percent in the six months ending June 2025, up from 12.9 percent in the corresponding period the previous year. This deterioration in asset quality has prompted the bank, along with other major lenders, to pursue more assertive recovery strategies through legal mechanisms like receivership and administration.

The appointment of receivers typically signals either a significant covenant breach or extended payment defaults, giving the secured creditor legal authority to take control of pledged assets to recover outstanding loans. Under Kenyan law, receivership applies to debts contracted before September 2015, when the Insolvency Act introduced administration procedures that prioritize business rescue before considering liquidation.

While Equity Bank has not disclosed the specific amount owed by Eastland Hotel, the receivership represents another example of how Kenya’s financial institutions are adapting to challenging economic conditions by moving quickly to protect their interests when borrowers default. The trend reflects a broader shift in the banking sector’s approach to credit risk management as institutions seek to maintain asset quality amid economic uncertainties.

The fate of Eastland Hotel now rests in the hands of its receivers, who will determine whether the business can be restructured and returned to viability or whether its assets will need to be liquidated to satisfy creditor claims.​​​​​​​​​​​​​​​​

Kenya’s Bureau of Standards has delivered another blow to Tanzanian cooking gas importer Lake Gas Limited, rejecting yet another cargo of liquefied petroleum gas after declaring it unsafe for public consumption.

The latest rejection, formalized on September 10, marks the second time in three months that Kebs has turned away Lake Gas shipments, raising serious questions about the company’s quality control systems and highlighting persistent safety concerns in Kenya’s LPG import sector.

Laboratory tests conducted on samples from Tank 2 at Lake Gas Terminal in Vipingo, Kilifi County, revealed dangerous compositional imbalances that could pose significant risks to consumers. The rejected cargo, sourced through a Sudanese trader, failed critical safety standards with butane levels registering at 75.53 percent against the mandatory minimum of 80 percent, while propane content exceeded acceptable limits at 24.22 percent.

Hassan Abdikadir, representing Kebs’ Coast region inspection manager, explained that the excess propane creates elevated vapor pressure, dramatically increasing the likelihood of gas leaks or cylinder ruptures during transportation and storage. This risk becomes particularly acute in Kenya’s hot climate conditions, where high temperatures can exacerbate pressure buildup in gas containers.

The insufficient butane content presents equally serious concerns, as it reduces combustion stability and leads to incomplete burning. This deficiency not only affects cooking efficiency but also increases carbon monoxide exposure in households, creating potential health hazards for millions of Kenyan families who rely on LPG for daily cooking needs.

The rejection follows a troubling pattern established earlier this year when Lake Gas faced similar scrutiny in June. That earlier incident involved over 12 million kilograms of LPG delivered via the vessel BarumK Gas, which was rejected due to inadequate levels of ethyl mercaptan, an odorant essential for detecting gas leaks.

Kebs officials note that the June rejection was particularly concerning as it involved the equivalent of two million six-kilogram cylinders, sufficient to supply 10 million households. Despite the official rejection, reports emerged of trucks being loaded with the unsafe gas, with at least one vehicle departing for Nairobi amid allegations of political interference.

The recurring safety failures at Lake Gas operations have prompted Kebs to issue stern warnings about the broader implications for Kenya’s clean energy objectives. The standards body expressed concern that repeated rejections of unsafe imports could undermine consumer confidence in LPG safety, potentially slowing household adoption of clean cooking solutions.

The rejected cargo poses risks extending far beyond domestic kitchens. With over 20 LPG fueling stations operating in Nairobi alone and thousands of Uber taxis running on LPG, substandard gas could create widespread safety hazards across the transport sector. Industrial users, including factories and processing plants that rely on LPG for operations, also face potential safety risks from compromised gas supplies.

Lake Gas now faces a critical seven-day window to request a review of the rejection decision. Should the company fail to challenge the ruling, it must re-export the entire consignment under Kebs supervision within 30 days, or face the prospect of having the cargo destroyed at its own expense.

The safety concerns extend beyond the gas composition to the terminal infrastructure itself. Kebs has previously flagged the Lake Gas Vipingo Terminal as unsuitable for handling such operations, citing the absence of a permanent jetty, protective breakwater, and proper offshore discharge zones.

For Lake Gas, the repeated rejections represent not just immediate financial losses but a growing credibility crisis that could affect its long-term operations in the East African market. The company’s ability to address these systemic quality control issues will likely determine its future role in Kenya’s expanding LPG sector.

As Kenya continues to promote clean cooking solutions to reduce reliance on traditional biomass fuels, the Lake Gas incidents serve as a stark reminder that safety standards cannot be compromised in the pursuit of energy accessibility goals.​​​​​​​​​​​​​​​​

Nairobi, Kenya – September 11, 2025 – The Kenya Revenue Authority (KRA) has announced fresh changes in its top leadership, appointing seasoned tax expert Nancy Ngetich as Commissioner for the Shared Services Department.

Ms. Ngetich, who has been serving in an acting capacity since February 2023, officially takes over the position following her confirmation by the KRA Board.

During her tenure as acting commissioner, she spearheaded major organisational reforms, aligned human resource functions with KRA’s 9th Corporate Plan, and promoted the adoption of technology to strengthen revenue mobilisation.

Before joining Shared Services, Ms. Ngetich was Deputy Commissioner for Policy & International Affairs in the Customs and Border Control Department. She also previously worked as Senior Manager for Customs and Tax Advisory at Ernst & Young LLP.

Her career has seen her play a central role in customs reforms, trade facilitation, and regional policy negotiations, including the African Continental Free Trade Area (AfCFTA) and East African Community (EAC) frameworks.

A lawyer by training, Ms. Ngetich is an Advocate of the High Court of Kenya and a member of the Law Society of Kenya, the Institute of Certified Public Secretaries of Kenya, and the Kenya Institute of Management.

In the latest shake-up, KRA also confirmed that Commissioner General Rispah Simiyu has been seconded to the National Treasury and Economic Planning.

To fill the gap, Ms. Doreen Mbingi, currently Deputy Commissioner for Compliance East and South of Nairobi, will take over leadership of the Large & Medium Taxpayers Department in an acting capacity until a substantive appointment is made.

The tax authority said the appointments are part of efforts to strengthen institutional capacity, improve service delivery, and enhance accountability.

“KRA congratulates Ms. Ngetich and Ms. Mbingi on their appointments and urges all taxpayers and stakeholders to continue extending their support and collaboration,” the Authority said in a statement, reaffirming its commitment to efficient, fair and transparent revenue administration.

Kenya’s electricity consumers are on the verge of receiving financial compensation for extended power outages and erratic supply under new draft regulations that could fundamentally change how the utility giant Kenya Power operates.

The Draft Energy (Electricity Reliability, Quality of Supply and Service) Regulations, 2025, published by the Energy and Petroleum Regulatory Authority (Epra), propose that consumers receive compensation equivalent to 75 percent of their average daily consumption when hit by prolonged blackouts. This marks a significant shift from the current system where Kenya Power only compensates for equipment damage but not for financial losses from power cuts.

Under the proposed framework, compensation will be tiered based on consumption levels, with small domestic users consuming less than 30 units monthly receiving up to Sh2.92, while large industrial consumers accessing power at 66 kilovolts could receive up to Sh550,559.85. Households consuming between 30 and 100 units would be entitled to a maximum of Sh37.50 in compensation.

The regulations also address delays in restoring power after scheduled maintenance, with consumers set to receive 1.5 times their average daily consumption, capped at Sh734,079.80. Prepaid customers would receive free tokens from Kenya Power, while postpaid customers would see their bills adjusted accordingly.

This development comes after years of complaints from Kenyan businesses about the competitive disadvantage caused by frequent power outages linked to an aging grid and unreliable supply. The utility has attributed most blackouts to vandalism of transmission networks and aging infrastructure unable to handle sudden electricity load surges.

Kenya Power’s financial position has improved dramatically, with the company reporting a 30-fold increase in net profit to Sh9.97 billion in the six months to December 2024, up from Sh319 million in the same period the previous year. The utility now serves 10.06 million customers as of June 2025, benefiting from a stronger shilling and increased electricity sales.

The compensation model mirrors systems used in European countries where utilities are mandated to compensate consumers for extended outages. However, consumers will not receive compensation if blackouts result from force majeure events, third-party interference such as road works, vandalism, or electrical faults on the consumer’s side beyond the metering point.

This represents a reversal from 2015 when Parliament rejected similar compensation legislation, primarily to protect Kenya Power during a period when the company faced significant financial challenges from vandalism and high default rates among prepaid customers.

The current push for compensation comes as high electricity costs drive major consumers toward alternative energy sources. Companies like East African Breweries have announced plans for biomass plants to completely disconnect from Kenya Power by 2030, while wealthy households increasingly invest in solar power systems.

Claims for compensation must be filed within one year of the incidents, with settlements required within 90 days after Epra approval. Consumers seeking compensation for property damage must provide invoices or valuation reports, while those claiming for bodily harm must present valid medical reports.

The regulations are currently under public participation, with no specific timeframe indicated for when blackout duration triggers compensation eligibility. If implemented, this system could significantly impact Kenya Power’s operational costs while potentially improving service reliability as the utility faces direct financial consequences for poor performance.​​​​​​​​​​​​​​​​

Kenyan Banks Lose Record Sh1.59 Billion to Cybercriminals in Devastating Digital Heist

Kenyan banks suffered their worst cybersecurity breach on record last year, with hackers successfully stealing Sh1.59 billion from customer accounts, according to a Central Bank of Kenya report that exposes the dark side of the country’s digital banking revolution.

The massive theft represents a fourfold increase from the Sh412 million stolen in 2023, signaling an alarming escalation in cybercrime as Kenya’s financial sector becomes increasingly dependent on digital platforms.

The losses highlight a troubling paradox: while Kenya built its reputation as a pioneer of financial inclusion through mobile money innovation, this same digital infrastructure has become a playground for sophisticated criminals.

Mobile banking bore the brunt of the assault, with fraudsters siphoning off Sh810.68 million – a staggering 344 percent jump from Sh182.41 million the previous year.

This single category accounted for more than half of all losses, underscoring the vulnerability of platforms that millions of Kenyans now rely on for daily transactions.

The attacks follow a disturbing pattern that targets the country’s social culture.

Most fraud occurs during weekend nights, particularly on Fridays and Saturdays, when unsuspecting revelers at social venues become easy prey for criminals employing social engineering tactics.

Millennials, born between 1981 and 1996, emerged as the primary victims of these carefully orchestrated schemes.

The criminals’ methods have evolved beyond simple scams to sophisticated operations involving SIM swap fraud, malware deployment, phishing schemes, and identity cloning.

They often pose as bank employees, calling victims to extract passwords and personal information that grants access to accounts.

The timing is deliberate targeting customers when they are most vulnerable and least likely to think clearly about security protocols.

The scale of attempted fraud paints an even more alarming picture.

The total amount exposed to fraud – money targeted before banks’ recovery efforts nearly tripled from Sh680.9 million in 2023 to Sh1.96 billion in 2024.

While banks managed to recover Sh368.8 million, the unsuccessful attempts demonstrate the relentless pressure the sector faces from cybercriminals.

Card fraud emerged as another major concern, costing customers Sh263.29 million nearly 17 times the Sh15.59 million lost the previous year. Computer fraud resulted in Sh203.39 million in losses, while identity theft cost bank customers Sh199.08 million, representing a sixfold increase from the prior year.

The financial toll extends beyond direct losses to customers and banks. Insurance premiums have nearly doubled as insurers grapple with the surge in claims.

Large banks now pay an average of Sh80 million annually for Electronic Computer Crime Policy coverage, with premiums reaching between Sh200 million and Sh400 million for institutions seeking comprehensive protection against losses of up to Sh10 billion.

Leonard Chirchir, acting chief operating officer at Britam General, revealed that even the smallest microfinance banks cannot secure cybercrime coverage for less than Sh5 million annually.

The insurance market itself is contracting, with many providers withdrawing from cybercrime coverage due to mounting losses, further driving up premium costs.

The Central Bank’s cyber risk stress test conducted in May provides a sobering glimpse of potential future losses.

Assuming just five percent of cyber-attacks succeed, the banking sector could face losses between Sh2.1 billion and Sh2.9 billion under moderate and severe scenarios respectively.

The crisis reflects a broader national cybersecurity challenge. Communication Authority of Kenya data shows cyberattacks on internet users more than doubled to 7.96 billion in the year ending June 2025, from 3.52 billion the previous year.

System attacks account for 97 percent of these threats, creating a hostile digital environment for financial institutions.

Banks find themselves caught in an expensive arms race, investing billions in technology upgrades while criminals rapidly adapt to exploit new vulnerabilities.

The situation is complicated by underreporting, as many institutions quietly reimburse affected customers rather than report breaches that could damage their reputation and trigger depositor panic.

Stanbic Bank Kenya has taken a proactive approach, publicly warning customers about the weekend fraud epidemic and educating them about social engineering tactics.

The bank’s data confirms that millennials remain the most targeted demographic, falling victim to sophisticated schemes that exploit their comfort with digital platforms.

As Kenya’s financial sector continues its digital transformation, the Sh1.59 billion theft serves as a stark reminder that technological advancement must be matched with robust cybersecurity measures.

The country that once led Africa in mobile money innovation now faces the challenge of protecting that same innovation from increasingly sophisticated criminal exploitation.

The Central Bank has acknowledged cybersecurity as “perhaps the most significant and emerging operational risk facing the financial sector,” but turning the tide against cybercriminals will require coordinated action from banks, regulators, and customers alike.

The cost of inaction, as last year’s losses demonstrate, is measured not just in billions of shillings, but in the erosion of trust that underpins Kenya’s digital financial revolution.​​​​​​​​​​​​​​​​

A Nairobi couple is battling to save their matrimonial home and two other properties from auction after claiming they overpaid their Stanbic Bank loan by more than Sh463 million, yet the lender now demands an additional Sh163 million.

Nasser Abdulhamid Baksh and Makarim Ahmed Omar have moved to the High Court seeking to block Garam Investments Auctioneers from selling their three properties, including their Kitisuru residence, after what they describe as a decade-long ordeal of altered loan terms and unexplained conversions.

The couple’s troubles began with loans totaling Sh101.2 million borrowed between 2011 and 2014. To secure the facilities, they charged five properties across Mombasa, Kitisuru, and Nairobi. What started as straightforward Kenya shilling loans has since morphed into a complex dispute involving unauthorized currency conversions and escalating demands.

Central to their complaint is Stanbic Bank’s alleged unilateral conversion of their Kenya shilling loans to US dollars without proper notification or consent. The couple maintains they operated both dollar and shilling accounts through which they faithfully remitted loan repayments from 2011 to May 2025, believing they were servicing their original obligations.

The banking relationship deteriorated significantly when, despite regular payments that the couple claims exceeded Sh466 million, they discovered in 2022 that their loans had been converted to US dollars. This conversion, they argue, dramatically altered their repayment obligations without their knowledge or proper legal procedures.

“The said illegal conversions were procured in contravention of the Constitution of Kenya, Articles 35 and 46, and various applicable provisions of the Banking Act, the Consumer Protection Act, and the Central Bank of Kenya Prudential Guidelines,” Baksh stated in his court filing.

The situation became more perplexing when, in February 2025, the bank indicated the outstanding balance was merely Sh5 million, suggesting one property could settle the debt. However, by the time auction proceedings commenced, this figure had mysteriously ballooned to over Sh163 million, an amount the couple vehemently disputes.

Adding to their frustration, the couple alleges they were denied access to bank statements and loan account statements throughout their banking relationship until June 2025, despite multiple demands. This lack of transparency, they argue, prevented them from monitoring their true financial position and identifying discrepancies earlier.

The couple’s legal team argues that under the Duplum Rule, which prevents interest from exceeding the principal amount, their payments of Sh466 million against an original loan of Sh101.2 million should have more than settled their obligations. They contend that Stanbic’s currency conversion tactics circumvented this consumer protection.

High Court Judge Aleem Visram has directed the parties to appear for directions on September 22, 2025, as the legal battle unfolds. Beyond the court proceedings, the couple has also lodged complaints with the Competition Authority of Kenya, suggesting broader concerns about banking practices.

For the couple, what began as a standard home loan arrangement has evolved into a fight to retain their properties against what they describe as manufactured debt.

As auction deadlines loom, Baksh and Omar’s struggle represents a cautionary tale about the importance of loan documentation transparency and the potential consequences when borrowers and lenders operate with different understandings of contractual obligations.

For now, the couple awaits their day in court, hoping to prove that their decade of diligent payments should protect, not jeopardize, their family home.​​​​​​​​​​​​​​​​

Credit Bank Plc finds itself in a precarious position as the December 2025 deadline for enhanced capital requirements rapidly approaches, with the lender facing the real possibility of being downgraded to microfinance status unless it can bridge a significant capital shortfall.

According to the latest Central Bank of Kenya (CBK) stress test disclosures, Credit Bank is among 11 commercial banks that collectively need to raise Sh14.7 billion to meet the revised minimum core capital threshold of Sh3 billion by year-end.

For Credit Bank specifically, the gap is substantial – the institution currently holds core capital of Sh1.28 billion, leaving it Sh1.72 billion short of the regulatory requirement.

The looming deadline represents more than just a regulatory milestone; it marks a potential transformation of Kenya’s banking landscape.

Under the Business Laws (Amendment) Act 2024, signed into law last December, commercial banks must progressively increase their minimum core capital from the previous Sh1 billion to an eventual Sh10 billion by 2029.

The first hurdle – Sh3 billion by December 2025 – is proving challenging for several mid-tier lenders.

CBK’s latest banking sector stress test reveals the regulator’s readiness to implement one of three options for non-compliant banks.

The most dramatic is downgrading such institutions to microfinance bank status, where they would operate under significantly different regulatory parameters until they can mobilize the required capital.

Currently, microfinance banks need only Sh20 million in core capital for community operations and Sh60 million for nationwide business – a stark contrast to the Sh3 billion commercial banking requirement.

The stress test paints an even grimmer picture under severe economic scenarios.

Should non-performing loans surge to 27.4 percent, the number of at-risk banks could increase to 12, requiring a collective Sh19.8 billion in additional capital.

This scenario underscores the vulnerability of smaller commercial banks in Kenya’s increasingly competitive financial sector.

Credit Bank’s predicament reflects broader challenges facing mid-tier lenders in Kenya.

While larger banks like Equity, KCB, and Cooperative Bank have comfortably exceeded the new requirements, smaller institutions are struggling to attract the significant capital injections needed.

The bank has submitted its capital-raising plan to CBK, outlining strategies that could include fresh capital injections, rights issues, strategic partnerships, or even mergers.

The regulatory pressure comes at a time when Kenya’s banking sector is undergoing significant consolidation.

The enhanced capital requirements are designed to strengthen the sector’s stability and attract foreign investment, but they’re also forcing smaller banks to reconsider their business models.

Some industry observers view this as a necessary evolution that will create stronger, more resilient financial institutions capable of supporting Kenya’s economic growth ambitions.

For Credit Bank’s shareholders and customers, the coming months will be critical.

A downgrade to microfinance status would fundamentally alter the institution’s operational scope, potentially limiting its ability to offer certain commercial banking services and affecting its competitive position in the market.

The bank would need to restructure its operations, possibly leading to branch closures, staff reductions, and a narrowed service offering focused on microfinance activities.

CBK has indicated it’s prepared to extend the deadline for compliant banks or push for legal amendments to allow tiered capital requirements, similar to practices in other mature jurisdictions.

However, these alternatives remain uncertain, leaving banks like Credit Bank with little choice but to pursue immediate capital-raising initiatives.

Other institutions sharing Credit Bank’s predicament include Consolidated Bank of Kenya, which faces the largest gap at Sh3.7 billion, Access Bank Kenya (Sh3.4 billion shortfall), and UBA Kenya Bank (Sh1.51 billion gap).

The collective challenge facing these institutions suggests that Kenya’s banking sector could look markedly different by early 2026.

As December approaches, Credit Bank’s management faces intense pressure to execute their capital-raising strategy successfully.

Failure to meet the deadline wouldn’t just result in regulatory sanctions – it would represent a fundamental shift in the bank’s identity and market position, transforming it from a commercial bank serving diverse corporate and retail clients to a microfinance institution with a much narrower operational mandate.

The outcome will serve as a litmus test for CBK’s resolve in implementing the new capital requirements and could signal whether other struggling banks will face similar consequences in the years ahead as the requirements progressively increase toward the ultimate Sh10 billion target in 2029.

Nairobi, Kenya, Sept 10, 2025 – A fraud scandal is unraveling at Family Bank after detectives exposed a scheme in which employees conspired with outsiders to steal Sh2.7 million from an insurance payout account belonging to the family of a deceased police officer.

The case has once again raised alarm over the growing wave of insider-driven fraud plaguing Kenya’s banking sector.

The Banking Fraud Investigations Unit told a Milimani court that two Family Bank accountants, Victor Moses Wainaina Kinyua and Dennis Mwangi Machina, worked hand in glove with external accomplices to divert compensation money released by Jubilee Allianz General Insurance to the kin of the late officer, Ephantus.

Together with Caroline Muthoni Kiarie, who posed as a representative of one of the beneficiaries, they allegedly formed part of a wider syndicate targeting insurance payouts through fraudulent accounts.

Court documents reveal that the scheme began on August 30, when Family Bank’s security unit received intelligence that suspicious accounts had been opened at the Githunguri branch in the names of beneficiaries Sharon Sawe and Annah Kwamboka Mongumbu.

One of the accounts quickly received Sh2.7 million, money that investigators later traced back to Jubilee Allianz.

When the supposed account holder failed to provide proof of the funds’ origin, the account was flagged.

On September 5, the account was manipulated when its mobile banking PIN and IMEI were reset without the customer’s consent.

CCTV footage showed that the real account holder was never at the banking hall at the time, confirming that the transaction was an inside job.

Investigators discovered that one of the accused authorized the reset after receiving instructions from an intermediary, George Gitahi Njoroge, who had been introduced by Machina. Kinyua pocketed Sh120,000 via M-Pesa as a facilitation fee, while Machina expected Sh80,000 for his role.

The conspiracy extended further when Kiarie appeared at Family Bank’s KDTA branch, purporting to deliver documents on behalf of the beneficiary.

Detectives later established she was in contact with another bank employee, Joseph Githala, believed to have helped create the fraudulent accounts.

Investigators now describe the scam as part of a structured criminal network that recruits insiders in financial institutions, plants proxy account holders, and diverts funds meant for vulnerable beneficiaries — in this case, the grieving family of a police officer.

Diamond Trust Bank, which had disbursed the Sh2.7 million from Jubilee Allianz, confirmed to investigators that the money was legitimate compensation for the officer’s next of kin.

This case shines a harsh light on the ease with which rogue bank employees can bypass internal controls, manipulate customer accounts, and exploit system loopholes.

Despite multiple reforms in Kenya’s financial sector aimed at tightening oversight, insider fraud remains one of the most stubborn challenges.

Family Bank, already rocked in recent years by money laundering allegations, now finds itself under scrutiny once again for weak internal checks that allowed employees to collude in siphoning off customer funds.

The three suspects remain in custody as detectives seek to unravel the full extent of the syndicate.

But beyond the courtroom, the revelations underscore a deeper crisis in Kenya’s financial system: banks meant to safeguard deposits and disbursements are increasingly being compromised from within, leaving customers vulnerable to fraud orchestrated by the very people entrusted to protect their money.

Family dispute emerges over Sh604 million Britam shareholding amid ongoing debt recovery battle

Billionaire businessman Peter Munga’s financial woes have taken a new twist after his wife moved to court seeking to prevent ABC Bank from auctioning his 75 million Britam shares, even as the High Court rejected the tycoon’s own bid to block the sale.

The development comes just days after Justice Alfred Mabeya dismissed Munga’s application for a permanent injunction, clearing the way for ABC Bank to proceed with the auction of shares valued at Sh604 million to recover a Sh433.76 million defaulted loan.

According to court documents, Munga’s wife has filed a separate legal challenge against ABC Bank, ABC Capital, and Equatorial Nut Processors, arguing that the proposed share sale would adversely affect family property rights and seeking orders to protect her interests in the matrimonial assets.

The wife’s legal intervention adds another layer of complexity to what has become one of Kenya’s most closely watched debt recovery cases involving a prominent businessman.

Her application reportedly seeks to permanently bar ABC Bank from transferring, pledging, charging, or otherwise dealing with the 75 million ordinary shares in Britam Kenya Plc without her explicit consent as a matrimonial property stakeholder.

Legal sources familiar with the matter indicate that the wife’s case centers on several key arguments.

First, she contends that the use of the shares as security was done without her consent as required under matrimonial property law.

Second, she argues that any disposal, charge, or lien registered against the shares after [a specific date] constitutes a breach of statutory provisions governing matrimonial rights.

The wife also seeks damages for breach of statutory duty and constitutional rights, claiming that ABC Bank’s actions threaten to deprive the family of valuable assets without following due process.

The case has drawn attention from Kenya’s banking sector, with industry observers noting that it could set important precedents for how lenders handle security interests where matrimonial property is involved.

“This case highlights the complex intersection between banking law and family law in Kenya,” said a senior banking lawyer who requested anonymity.

“Banks will be watching closely to see how courts balance lender rights against matrimonial property protections.”

ABC Bank, through its legal team, is expected to oppose the wife’s application, likely arguing that proper procedures were followed when the shares were pledged as security, and that the bank acted within its rights as a secured creditor.

The Equity Bank co-founder has faced increasing financial pressures in recent years. In 2023, three properties linked to him were set for auction to recover unpaid debts.

He previously averted the auction of five Nairobi houses worth Sh400 million in 2017 through a last-minute payment to what was then Jamii Bora Bank.

Despite these challenges, Munga remains a significant player in Kenya’s business landscape, with direct and indirect holdings in Britam worth over Sh3.26 billion through various investment vehicles including EH Venture Capital and EHL 2022.

The wife’s case is expected to be heard in the coming weeks, potentially creating further delays in ABC Bank’s efforts to recover the outstanding loan.

The bank may need to navigate both the original debt recovery proceedings and the new matrimonial property challenge.

Meanwhile, Equatorial Nut Processors, the company at the center of the original loan default, continues to operate from its base near Maragua town, processing macadamia nuts, peanuts, and cashews for both local and international markets.

The outcome of these intertwined legal battles will likely have significant implications for how secured lending is conducted in Kenya, particularly where high-value assets and matrimonial property rights intersect.