Kenya has lauded the United States for exempting it from new sweeping tariff hikes announced by President Donald Trump, with Trade Cabinet Secretary Lee Kinyanjui reaffirming Nairobi’s commitment to strengthening bilateral trade ties.
In a press release issued on Friday, August 1, 2025, the Ministry of Investments, Trade and Industry confirmed that Kenyan exports to the U.S. will continue to enjoy a favourable 10 per cent tariff—the lowest rate among nations with similar export profiles.
“Kenyan exports to the U.S. continue to enjoy the 10 per cent tariff, the lowest rate among nations with comparable export interests,” Trade Cabinet Secretary Lee Kinyanjui stated.
The statement followed Trump’s signing of an executive order on Thursday, July 31, 2025, introducing reciprocal import tariffs ranging from 10 per cent to 41 per cent on goods from 70 countries.
The tariffs are set to take effect in seven days and will impact key trading nations including the United Kingdom, Brazil, Japan, India, Israel, and several African countries.
However, Kenya was spared, alongside a few others, maintaining its current preferential tariff treatment under U.S. trade frameworks.
Kinyanjui welcomed the exemption and noted the importance of continued engagement between Nairobi and Washington.
“Kenya remains committed to deepening its longstanding trade and investment relationship with the U.S.,” he said. “The United States continues to be a key strategic partner for Kenya across various sectors, including commodity exports, digital trade, tourism, and regional security cooperation.”
He added that Kenya would work closely with U.S. authorities to preserve and enhance the existing trade framework.
“We will continue to engage constructively with U.S. authorities to safeguard and grow the historical trade ties that have benefited both our countries.”
Kenya spared tariff hikes
According to the executive order, countries not explicitly listed, such as Kenya, will be subject to the baseline 10 per cent import duty, consistent with the terms of Executive Order 14257.
“Goods of any foreign trading partner that is not listed in this order will be subject to a rate of duty of 10 per cent according to the terms of Executive Order 14257, as amended, unless otherwise expressly provided,” the order reads.
Other African nations were not as fortunate. South Africa and Algeria were hit with 30 per cent tariffs, while Ghana, Côte d’Ivoire, Botswana, Angola, and others saw 15 per cent duties imposed. Uganda was the only East African country affected in the new round, also facing a 15 per cent tariff on exports to the U.S.
The Ministry expressed optimism that Kenya’s trade relations with the U.S. would continue to flourish amid shifting global dynamics, underlining the country’s strategic value in the region and its consistent trade cooperation with Washington.
Kenya’s cost of servicing its debts is expected to remain stubbornly high, ratings agency Moody’s said on Wednesday, as the government leans on the domestic debt market to fund its budget shortfalls.
The East African nation has one of the highest debt interest costs to revenue ratio in the world, Moody’s said, and spends a third of government revenue on settling interest payments.
“Kenya will rely predominantly on the domestic market to meet its fiscal financing needs with approximately two-thirds of its financing, or just under 4% of GDP per year, from domestic sources,” the agency said in an issuer report.
“This reliance will continue to weigh on debt affordability, a key constraint in Kenya’s credit profile.”
Finance Minister John Mbadi set the government’s fiscal deficit for the financial year starting this month at 4.8% of economic output, narrower than the 2024/25 deficit of 5.7%, when he presented the budget to parliament last month.
But Moody’s said that target could slip as the government confronts acute fiscal pressures.
The government needs to secure a new financing programme with the International Monetary Fund, the ratings agency said, to help it deal with annual external debt repayments that stand at $3.5 billion on average.
The government will hold another round of talks with IMF officials in September in a bid to clinch the programme, the central bank chief Kamau Thugge said last month.
“A successful IMF programme could anchor investor confidence and reduce external borrowing costs,” Moody’s said.
Treasury CS warns of unprecedented overhaul as public universities face mounting debts exceeding Ksh 4 billion
Kenya’s public university system stands at the precipice of collapse as Treasury Cabinet Secretary John Mbadi delivered a stark warning that could reshape higher education forever.
In an unprecedented admission of financial defeat, Mbadi announced sweeping reforms that will see mass layoffs, campus closures, and the effective end of free university education across the country.
The Treasury chief’s blunt assessment cut through years of political rhetoric as he declared that the government can no longer sustain its promise of free higher education. “For a long time, we have been living a lie in the sense that we give our children to the universities to educate for free without funding,” Mbadi said, his words carrying the weight of a system pushed beyond its breaking point.
Behind these stark pronouncements lies a financial crisis of staggering proportions. Some universities are owed over Ksh 4 billion, money that was spent educating students for free since 2016, with Mbadi admitting there is little prospect of the government clearing this mounting debt. The numbers paint a picture of institutions gasping for breath under the weight of promises the state cannot keep.
The proposed solution reads like a manual for institutional downsizing. Universities will be forced to undergo what Mbadi euphemistically termed “staff right-sizing,” while satellite campuses face closure and disposal to offset the crushing financial obligations. Non-core services will be outsourced, and administrative structures will be gutted in pursuit of what officials call financial sustainability.
“The Ministry of Education, in collaboration with universities, is expected to develop a comprehensive reform strategy that will ensure financial sustainability within public universities,” Mbadi explained, though his clinical language cannot mask the human cost of these sweeping changes. Entire campuses that once buzzed with academic activity may soon stand empty, their assets sold to pay off debts accumulated through years of unfunded mandates.
The crisis has been years in the making, transforming Kenya’s once-prestigious public universities from engines of intellectual growth into what stakeholders now describe as shells of their former glory. These institutions, which once stood as beacons of opportunity for students from all backgrounds, now find themselves caught between unpaid salaries, ballooning debts, and the impossible task of educating large student populations without adequate resources.
Into this chaos, the government is pushing forward with a controversial new funding model that shifts the financial burden directly onto parents and students. Despite fierce resistance from various quarters, Mbadi defended this approach as the only viable path forward. “This new model that was being resisted so furiously needs to be supported to succeed,” he insisted, arguing that university administrators themselves acknowledge its necessity.
The Cabinet Secretary’s message was uncompromising in its finality. “Let us not cheat ourselves as a country that we can finance fully and make university education free,” he declared, effectively drawing a line under decades of policy that treated higher education as a public good accessible to all qualified students regardless of their economic background.
This shift has sparked fierce criticism from education stakeholders who view the reforms as a fundamental abandonment of the government’s constitutional obligations. Critics argue that the new funding model will create insurmountable barriers for thousands of brilliant students from poor families, potentially reversing decades of progress in educational equity and social mobility.
The announcement has sent shockwaves through university communities across the country, where staff members now face an uncertain future. The proposed restructuring represents one of the most significant employment challenges in Kenya’s education sector, with academic and non-academic staff alike wondering whether their positions will survive the coming purge.
As Kenya’s public universities brace for this fundamental transformation, the broader implications extend far beyond campus boundaries. The government’s admission that it cannot sustain current funding levels marks a watershed moment that could redefine educational opportunity for generations of Kenyan students. What emerges from this crisis will determine not only the survival of the public university system but also the country’s capacity to develop the human capital necessary for economic growth and social progress.
The path ahead remains uncertain, but one thing is clear: the era of free public university education in Kenya is drawing to a close, replaced by a model that places the burden of higher learning squarely on the shoulders of students and their families. Whether this transition will strengthen or weaken Kenya’s educational foundation remains to be seen, but the stakes could not be higher for a nation whose future depends on the knowledge and skills of its people.
Treasury CS John Mbadi and Education CS Migos Ogamba deliver crushing blow to millions of Kenyan families
In a bombshell revelation that has sent shockwaves across the country, the Kenyan government has admitted it can no longer sustain free primary and secondary education due to severe financial constraints. Treasury Cabinet Secretary John Mbadi, appearing before the National Assembly Committee on Education alongside his Education counterpart Migos Ogamba, delivered the devastating news that has effectively marked the end of an era for Kenya’s education sector.
“The truth of the matter is we don’t have the capacity to finance Free Primary Education and Free Day Secondary education. Let us not live a lie,” Mbadi told stunned lawmakers on Thursday, his words cutting through years of political promises and dashing the hopes of millions of Kenyan families who have relied on government support to educate their children.
The Treasury boss revealed the harsh arithmetic behind the crisis. While the government requires Sh22,244 per secondary school learner, it has only been disbursing Sh16,900 for the past seven years. The situation is equally dire for junior secondary schools, where the shortfall sees learners receiving only Sh10,000 against the required Sh15,042. Only primary schools have been receiving their full capitation of Sh1,420 per learner, creating a false sense of security that has now been shattered.
Mbadi attributed the crisis to Kenya’s constrained fiscal environment, painting a picture of a government stretched thin by competing demands. High debt repayment obligations have created a stranglehold on public finances, while critical security interventions and emergency responses continue to drain the national coffers. “The government is failing to do this because of other competing needs such as debt repayments which we have been making as they are too high compared to before,” he explained, his tone reflecting the weight of a financial burden that has finally become unbearable.
The implications extend far beyond school fees. In another crushing blow to parents already struggling with the rising cost of living, Mbadi announced that the government will no longer cover examination fees amounting to Sh5.9 billion. While fees will be settled for the current financial year, he was categorical that continuing this support is “not tenable.” A proposal has been submitted to Cabinet to limit fee waivers to only needy learners going forward, effectively creating a two-tier system that could lock out thousands of students from sitting their national examinations.
Higher education institutions face an even more existential crisis. The government announced drastic measures including staff layoffs, closure of satellite campuses, and outsourcing of non-core services to prevent university collapse. These institutions, already reeling from years of underfunding, now face the prospect of fundamental restructuring that could alter the landscape of higher education in Kenya permanently.
The funding crisis has been compounded by revelations of massive corruption that have made the situation even more tragic. MPs cited instances where Sh50 million each was disbursed to non-existent schools, with Luanda MP Dick Maungu specifically naming Kamuret and Bomet secondary schools as phantom institutions that received funding while real schools struggled for basic resources. The ghost schools scandal has added insult to injury, revealing how scarce education funds have been systematically looted while genuine institutions faced closure.
Parliamentary reaction was swift and furious. Lawmakers expressed outrage at the admissions, with many demanding immediate policy changes. Teso South MP Mary Emase called for rewriting education policy to match actual funding levels, while Kibra MP Peter Orero urged allowing schools to charge additional fees. “It is regrettable that schools have no money,” Orero stated, his words reflecting the desperation facing educational institutions across the country.
The government’s admission signals a seismic shift in Kenya’s education landscape that will be felt most acutely by low-income families. Parents must now prepare for additional school fees to bridge funding gaps, potential payment of examination fees, and reduced government support for educational programs. The promise of free education, once a cornerstone of Kenya’s development agenda, has crumbled under the weight of fiscal reality.
As Kenya grapples with this education funding crisis, the government’s proposal to consolidate scattered funds, including those from the National Government Constituency Development Fund, represents one potential solution. However, for millions of Kenyan families who have relied on free education as a pathway to better opportunities, this development marks not just the end of a policy, but the end of a dream that education could be the great equalizer in Kenyan society.
The full ramifications of this policy shift will unfold in the coming months, but one thing is certain: the landscape of Kenyan education has been forever altered, and the burden of financing children’s futures has shifted decisively from the state back to families already struggling to make ends meet.
The World Bank has suspended the disbursement of a crucial KES 97 billion loan to Kenya following the government’s failure to implement key governance reforms as agreed under the lending facility.
The frozen funds, equivalent to $750 million, were scheduled for release this month through a Development Policy Operations loan that requires Kenya to institute comprehensive reforms aimed at creating fiscal space and strengthening governance structures.
Central to the impasse is Kenya’s delayed passage of the Conflict of Interest Bill, which seeks to establish stringent accountability measures for politicians and public officials.
The legislation is designed to prevent government officials from influencing lucrative tender awards to companies they own or are linked to their associates.
President William Ruto initially rejected the bill in June, citing 12 problematic clauses that he argued had weakened the proposed law.
While the National Assembly accommodated his concerns, the Senate subsequently blocked key provisions, including those prohibiting government officials from seeking public tenders and requiring regular wealth declarations.
Beyond the conflict of interest legislation, Kenya has also failed to implement other critical reforms including the adoption of a single bank account for public finances and the automation of government procurement processes to eliminate collusion and contract manipulation.
World Bank Division Director Qimiao Fan confirmed that the release of funds remains conditional on Kenya completing all agreed prior actions and maintaining an adequate macroeconomic policy framework.
The bank had previously disbursed KES 155 billion as the first tranche of this facility last year.
The funding freeze creates a significant budget hole for Treasury Cabinet Secretary John Mbadi, who had not anticipated this delay in his fiscal planning.
The government now faces the choice of increasing borrowing amid Kenya’s already substantial public debt burden or implementing spending cuts to balance the budget.
Kenya’s reliance on World Bank financing is set to deepen, with the Treasury projecting loan requirements of KES 170.5 billion annually over the next four budget cycles, up from KES 129 billion in the recently concluded fiscal year.
This increased dependence comes as the country has effectively ended its relationship with the International Monetary Fund after failing to meet 11 key conditions, resulting in the loss of KES 63.3 billion in potential IMF funding.
The World Bank’s decision underscores the increasing pressure on developing nations to demonstrate concrete progress on governance reforms before accessing international financing, particularly as global lenders become more selective amid tightening fiscal conditions worldwide.
In July alone, the International Monetary Fund (IMF) has reportedly been reviewing loan disbursements to Egypt and Ethiopia, sparking renewed concerns over Africa’s increasing dependence on IMF support.
Though often described as essential for struggling economies, the long-term impact of rising IMF debt is becoming a growing issue across the continent.
Egypt received $1.2 billion after completing the fourth review of its $8 billion loan programme, bringing its total disbursement to $3.5 billion. However, the IMF warned that Egypt faces “high sovereign stress,” with its external debt projected to rise from $162.7 billion in 2024/25 to over $202 billion by 2030.
Ethiopia, on the other hand, secured $262 million following the third review of its programme, though its financial situation remains delicate.
The country is currently in talks to restructure $8.4 billion in debt with official creditors under the G20’s Common Framework and is also preparing to repay a $1 billion Eurobond.
The dual weight of IMF loans and commercial debt continues to stretch national budgets, slowing down growth-focused projects.
On July 8, the IMF released a new analytical note titled “How to Stabilise Africa’s Debt”, which stressed that debt stabilisation depends largely on “stronger institutions, growth-friendly fiscal reforms, and IMF-supported macro stability.”
Senegal presents a cautionary example. Disbursements were halted after officials admitted to underreporting debt, revising the debt-to-GDP ratio from 74% to over 100%. As a result, S&P downgraded the country, and IMF support remains on hold until a credible recovery plan is in place.
These examples underline a broader issue: although IMF loans can avert economic collapse, they often come with strict conditions, austerity demands, and limited space for domestic priorities.
Without effective debt management, countries risk falling into a repetitive cycle of borrowing and repayment, undermining both economic stability and public confidence.
As of July 2025, the IMF’s database lists the African countries with the highest debt burdens to the institution. Compared to last month, credit levels have increased for Egypt, Côte d’Ivoire, Ghana, the Democratic Republic of Congo, Ethiopia, and Tanzania, while other countries have seen reductions.
Top 10 African countries with the highest IMF debt in July 2025.
The Central Bank of Kenya finds itself under intense scrutiny after the Auditor-General revealed that the institution flouted procurement regulations in awarding a massive Sh14.5 billion currency printing contract to German company Giesecke+Devrient Currency Technologies GmbH, deliberately keeping the Public Procurement Regulatory Authority in the dark about the deal.
The controversial five-year contract, signed in April last year, marks a significant shift from Kenya’s decades-long relationship with British printer De La Rue, which previously held the lucrative currency printing monopoly.
Under the secretive arrangement, the German firm will produce 2.04 billion bank notes over the contract period to replace worn-out currency, serving a market where approximately 330 billion notes currently circulate.
Auditor-General Nancy Gathungu’s findings paint a damning picture of regulatory circumvention, revealing that CBK Governor Kamau Thugge’s institution failed to follow established internal processes before initiating the procurement.
The bank bypassed critical requirements including the identification and assessment of suitable currency suppliers, the appointment of a special committee to handle classified procurement, and most significantly, mandatory monitoring by the PPRA Director-General.
The procurement law is unambiguous in its requirements for classified tenders.
Regulation 84 of the Public Procurement and Asset Disposal Regulations 2020, anchored in section nine of the main Act, explicitly empowers the PPRA to monitor all classified procurement information and provide recommendations to the Treasury Cabinet Secretary before any contract award.
This oversight mechanism exists specifically to prevent collusion, insider dealings, and inflated pricing that often accompanies non-competitive bidding processes.
The regulatory framework demands a comprehensive paper trail for classified procurements.
Accounting officers must submit detailed lists of classified items to the Cabinet Secretary by July 30th each financial year, complete with justifications for using classified procurement methods and estimated costs for each category.
These submissions must include reports detailing supplier selection processes and require Cabinet approval before implementation.
CBK justified its secretive approach by citing risks of a potential stockout of bank notes, arguing that such a scenario would have created grave economic and security implications for the country.
However, critics question whether this emergency rationale warranted completely bypassing established oversight mechanisms designed to protect public resources and ensure competitive pricing.
The deal’s details only emerged after the National Assembly’s Finance and National Planning Committee compelled Governor Thugge to reveal the German firm’s identity and the contract’s cost to taxpayers.
This parliamentary intervention highlights the excessive secrecy surrounding a transaction involving substantial public funds and critical national infrastructure.
The new currency notes will bear the signatures of Dr. Thugge and Treasury Principal Secretary Chris Kiptoo, featuring 2024 as the year of print.
While maintaining most features from the 2019 series, the notes will incorporate new security threads with color-changing effects specific to each denomination, representing technological advances in anti-counterfeiting measures.
The contract’s backdrop includes the closure of De La Rue’s Kenyan operations in March 2023, where the government held a 40 percent stake.
The British company’s departure involved significant costs, including £15.1 million spent on laying off over 300 workers, legal fees, and asset write-offs, effectively ending a long-standing partnership that had served Kenya’s currency needs for decades.
Current circulation data from December 2023 reveals the scale of Kenya’s currency ecosystem, with over 657 million notes in circulation valued at Sh340.28 billion.
The denomination breakdown shows 1,000-shilling notes comprising the largest portion at 290.98 million pieces, followed by 100-shilling notes at 155.62 million pieces.
The PPRA’s exclusion from this process represents a significant regulatory failure that undermines transparency in public procurement.
The Authority’s mandate extends beyond mere oversight to ensuring that classified procurements deliver optimal value for taxpayers while maintaining competitive standards even within secretive frameworks.
As the controversy unfolds, questions persist about whether CBK’s actions constitute a deliberate attempt to avoid scrutiny or reflect systemic weaknesses in implementing procurement regulations for classified items.
The Auditor-General’s findings suggest the former, indicating a calculated decision to bypass established oversight mechanisms.
The Treasury and CBK’s silence on requests for additional comments further compounds concerns about transparency in this significant public expenditure.
With taxpayers ultimately bearing the Sh14.5 billion cost, the lack of proper oversight mechanisms raises fundamental questions about accountability in managing critical national contracts.
The halls of Parliament echoed with sharp questions and mounting frustration on Tuesday as lawmakers summoned Treasury Principal Secretary Chris Kiptoo to explain a financial scandal that has shaken the foundations of Kenya’s digital payment system.
The Public Accounts Committee, led by Tindi Mwale from Butere, demanded answers after discovering that billions of shillings collected through the government’s flagship eCitizen platform are not reaching Treasury accounts at the Central Bank of Kenya.
The controversy has its roots in a damning audit report by Auditor-General Nancy Gathungu, whose findings have exposed systemic failures in the country’s most widely used government payment platform.
At the heart of the scandal lies a staggering figure that has sent shockwaves through government circles: approximately 44.8 billion shillings in eCitizen collections remain completely unaccounted for, raising serious questions about financial transparency and accountability in President William Ruto’s administration.
The summoning of Kiptoo represents a culmination of years of mounting concerns that have been largely ignored by successive administrations.
As Mwale emphasized during the committee session, “The PS must come and shed more light on this matter because it’s an issue that affects government departments.”
His words carried the weight of parliamentary authority, but also reflected the exasperation of legislators who have watched recommendations gather dust while public funds continue to disappear into what appears to be a financial black hole.
The scope of the problem became clearer when MPs Joseph Namwar from Turkana, Marianne Kitany from Aldai, and Otiende Amollo from Rarieda took turns expressing their concerns.
Their questions painted a picture of a system operating with alarming opacity, where money flows in but accountability flows out. Namwar’s statement struck at the core of the issue: “It is not clear whether the money collected through the eCitizen platform ends at the exchequer accounts.”
This uncertainty about the ultimate destination of public funds represents a fundamental breakdown in financial governance.
Kitany’s observations added another layer to the unfolding scandal, highlighting that “there are cases of billions of public funds being at the eCitizen,” while noting that “its reporting mechanism is wanting.”
Her words revealed not just missing money, but missing systems of oversight that should have prevented such a crisis from developing.
Vanishing cash
The platform, designed to streamline government services and improve efficiency, appears to have instead created new avenues for funds to vanish without trace.
The urgency of the situation was perhaps best captured by Amollo, who noted that issues with the eCitizen platform have been raised consistently since 2017, yet remain unaddressed.
His frustration was palpable as he spoke of “so many queries on this eCitizen platform,” expressing the committee’s intention to issue a special letter to the National Treasury demanding explanations for years of inaction on PAC recommendations.
The parliamentary inquiry took an even more troubling turn when Solicitor-General Shadrack Mose appeared before the committee, unable to explain how revenue was being collected by the State Law Office through eCitizen.
His admission that “E-citizen does not give us a report” laid bare the extent to which government departments have been operating blind, collecting money through a system they cannot properly monitor or control.
Gathungu’s audit findings provide the most comprehensive picture yet of the eCitizen debacle.
Her examination of marriage centers alone revealed that while 116.83 million shillings was recorded from 15 centers, collections from 19 other centers went completely unrecorded due to missing periodic reports.
This pattern of incomplete record-keeping appears to be systemic rather than isolated, suggesting that the problems run far deeper than initially understood.
Treasury PS Chris Kiptoo.
The Auditor-General’s report pulled no punches in its assessment of the government’s control over the eCitizen system.
Her finding that the government “lacks full system control, relying heavily on vendors for critical functions” exposes a dangerous dependency that has left public finances vulnerable.
As she warned, “Lack of full control of the system exposes the government to the risk of revenue leakages, lack of full accountability, system unavailability or downtime, security vulnerabilities and business continuity threats.”
This vendor dependency has created what appears to be an accountability vacuum.
The private companies managing critical eCitizen functions wield significant control over system configurations and growth support, including the onboarding of new government services.
This arrangement has effectively placed public financial systems in private hands, with inadequate government oversight to ensure transparency and accountability.
The scale of the problem becomes more apparent when considering that the eCitizen platform processes hundreds of millions of shillings daily from various government services.
Citizens use the platform to pay for everything from passport applications to business permits, trusting that their payments are properly channeled to government coffers.
The audit revelations suggest that this trust may have been misplaced, with significant portions of these payments failing to reach their intended destination.
The implications extend far beyond mere accounting errors.
The missing funds represent resources that should have been available for public services, infrastructure development, and social programs.
In a country grappling with budget constraints and development challenges, the loss of billions in public revenue represents not just financial mismanagement, but a betrayal of public trust.
The parliamentary investigation has also highlighted the broader governance challenges facing Kenya’s digital transformation agenda.
While the eCitizen platform was meant to modernize government service delivery and reduce corruption through digitization, it appears to have instead created new opportunities for financial irregularities.
The promise of transparency through technology has been undermined by inadequate oversight and control mechanisms.
As the controversy unfolds, questions are being raised about the selection and management of the vendors responsible for the eCitizen platform.
The extent of their control over critical government systems, combined with the apparent lack of proper oversight, has created conditions conducive to the current crisis.
The fact that key government officials, including the Solicitor-General, cannot access basic reports from the system they rely on for revenue collection illustrates the depth of the institutional failure.
The timing of these revelations is particularly significant as the Ruto administration has placed digital transformation at the center of its governance agenda.
The eCitizen platform was supposed to exemplify the benefits of embracing technology for public service delivery, but the audit findings suggest that insufficient attention was paid to establishing proper controls and accountability mechanisms alongside the technological infrastructure.
The current crisis demonstrates that technology alone cannot solve governance problems; it must be accompanied by robust institutional frameworks and accountability mechanisms.
For the millions of Kenyans who use the eCitizen platform daily, the audit revelations raise fundamental questions about the security and reliability of the system they have come to depend on.
The knowledge that billions in payments may have gone astray will likely undermine public confidence in digital government services, potentially setting back Kenya’s digital transformation agenda by years.
As Parliament prepares to scrutinize Kiptoo’s responses and demand concrete action to address the identified irregularities, the eCitizen scandal has already achieved one significant outcome: it has forced a long-overdue reckoning with the governance challenges posed by Kenya’s rush to digitize public services. The question now is whether this crisis will catalyze meaningful reforms or simply join the long list of government scandals that generate headlines but produce little lasting change.
The National Treasury has unveiled a major recruitment drive, announcing 244 permanent and pensionable positions for Senior Economist/Statistician roles, offering competitive compensation packages that could attract top talent to Kenya’s economic planning sector.
The positions, classified under Civil Service Group 8 (Job Group ‘N’), come with a monthly basic salary ranging from Ksh52,330 to Ksh96,130, supplemented by substantial allowances including a Ksh35,000 house allowance, Ksh8,000 commuter allowance, and an annual leave allowance of Ksh6,000.
Applicants face stringent entry requirements that underscore the technical nature of these roles.
Candidates must have completed at least three years of service in the grade of Economist I/Statistician I, demonstrating proven experience in the field before advancement.
Educational prerequisites include a bachelor’s degree in Economics, Statistics, Economics and Mathematics, Economics and Finance, or Economics and Statistics from a recognized institution.
Additionally, membership in relevant professional bodies and certification in computer application skills are mandatory.
Successful candidates will shoulder significant responsibilities in Kenya’s economic planning framework.
Their duties will encompass preparing sectoral policy briefs and reports, drafting Medium Term progress reports, and implementing regional economic integration decisions.
The roles also involve critical analytical work, including economic modeling and forecasting, conducting Programme Performance Reviews, and compiling sub-sector reports for the Medium Term Expenditure Framework—a cornerstone of Kenya’s budgeting process.
Data management responsibilities include maintaining crucial national databases such as census data and key surveys, while also supporting capacity building initiatives for government agencies, civil society organizations, and private sector stakeholders.
Interested candidates must complete Employment Form PSC 2 (Revised 2016), available on the Public Service Commission website.
Applications can be submitted in person to the State Department for Economic Planning at Treasury Building, Room 324, or via post to P.O. Box 30005-00100, Nairobi, or email to [email protected].
The application deadline is set for July 30, 2025, at 5:00 p.m., with authorities emphasizing that only shortlisted candidates will be contacted for interviews.
The Treasury has issued stern warnings against document falsification and canvassing, stating that presentation of fake certificates constitutes a criminal offense and will result in automatic disqualification.
This recruitment drive represents a significant investment in Kenya’s economic planning capacity, potentially injecting over Ksh12.8 million monthly into the economy through salaries alone, while strengthening the technical expertise available for national development planning.
The permanent and pensionable nature of these positions suggests the government’s commitment to building long-term institutional capacity in economic planning and statistical analysis—critical components for informed policy-making and sustainable development.
Kenya Railways faces double crisis as passengers exploit weak controls while Chinese debt obligations spiral out of control
Kenya Railways Corporation is grappling with a devastating financial crisis as a damning audit report exposes widespread fraud in the Standard Gauge Railway (SGR) ticketing system while loan penalties from China continue to balloon to an astronomical Sh34.1 billion.
Auditor General Nancy Gathungu’s latest report for the financial year ending June 2024 has laid bare a system riddled with loopholes that passengers are systematically exploiting to travel without paying, while the corporation simultaneously buckles under the weight of unpaid Chinese loans and mounting legal battles.
Passengers gaming the system
The audit reveals shocking weaknesses in SGR’s revenue collection mechanisms that have created a paradise for fare dodgers.
Despite employing revenue inspectors, overcrowded commuter trains make it nearly impossible to verify that all passengers have valid tickets.
“Commuter service trains are usually congested, making it difficult for inspectors to confirm that all passengers were receipted,” the report states, highlighting how the chaos of packed carriages has become a cover for systematic fare evasion.
The fraud extends beyond simple overcrowding. Passengers have discovered multiple ways to manipulate the ticketing system:
Receipt Recycling Scheme: Used tickets are being dropped into open trays at stations, where unscrupulous passengers retrieve them for reuse during evening services or the following day. The corporation’s failure to properly safeguard or destroy used receipts has created an underground economy of recycled tickets.
Mobile Money Manipulation: The audit exposes critical flaws in mobile payment processing. Cashiers prioritize cash-paying customers, leaving mobile money users to wait – a delay that many exploit by alighting at their destinations before being receipted. Even more alarming, passengers are gaming the system by showing fake M-Pesa messages to cashiers who simply record reference numbers read aloud by customers.
“Considering that there are instances where dishonest people tamper with M-Pesa messages, chances of the cashier recording doctored messages could not be ruled out,” Gathungu warns in her report.
The audit identifies a perfect storm of internal control failures that have enabled this fraud to flourish.
The same cashiers who issue tickets are responsible for checking them, creating opportunities for collusion.
Meanwhile, supervisors and inspectors are frequently absent from trains, leaving the system essentially unmonitored.
These control weaknesses have resulted in confirmed revenue losses of Sh133.8 million from the Meter Gauge Railway alone, with the SGR losses likely far higher given the scale of the fraud described.
China debt crisis deepens
While passengers exploit ticketing loopholes, Kenya Railways faces an even more existential threat from its Chinese creditors.
The corporation’s failure to service its massive Sh646.16 billion loan from China Exim Bank has triggered punishing penalties and interest charges now totaling Sh34.1 billion.
The breakdown is staggering: Sh5.3 billion in penalties and Sh28.85 billion in accumulated interest – costs that Gathungu emphasizes “could have otherwise been avoided” if the loans had been paid on schedule.
“These penalties expose the public to avoidable expenditures that could otherwise have been avoided. This expenditure is not a proper charge to public funds,” the Auditor General states bluntly.
The financial crisis extends beyond Chinese loans. Kenya Railways faces pending lawsuits worth Sh27.97 billion and has provided guarantees on behalf of the corporation amounting to Sh166.8 million.
Combined with the Chinese debt penalties, the corporation’s total contingent liabilities present an existential threat.
“The Corporation is at risk of operations interruption should the contingent liabilities crystallize,” Gathungu warns, painting a picture of a railway system on the brink of collapse.
Operational mismanagement
The audit also reveals broader operational failures, including Sh1 billion in long-outstanding prepayments to suppliers such as Kenya Power, Nairobi City Government, and other state agencies that have remained unpaid for over a year without satisfactory explanation.
The convergence of systematic passenger fraud and mounting Chinese debt obligations presents Kenya Railways with a crisis that threatens the viability of the entire SGR project.
While passengers exploit weak controls to travel for free, the corporation hemorrhages money through avoidable penalties and interest charges that now exceed Sh34 billion.
The audit findings raise fundamental questions about the sustainability of Kenya’s flagship infrastructure project and the competence of its management.
With operations at risk of interruption and public funds exposed to massive liabilities, urgent reforms are needed to salvage what remains of the SGR’s financial viability.
The irony is stark: as ordinary Kenyans find increasingly creative ways to avoid paying train fares, their government faces the crushing reality of unpaid billions to Chinese creditors – a financial double blow that could ultimately derail the entire railway project.
A litre of petrol is now retailing at Sh186.31 in Nairobi, diesel (Sh171.58,) while kerosene is going for Sh156.14, up from Sh177.32, Sh162.91 and Sh146.93, respectively.
EPRA has pegged the increase on the landed cost, which went up in June (whose current pump prices are based on), even as crude prices dropped to $67.73 per barrel.
The government has defended the sharp rise in fuel pump prices even as it avoided using the Petroleum Development Levy to cushion consumers in the wake of an increase in taxes, dealers’ margins and landed cost.
On Monday, the Energy and Petroleum Regulatory Authority (EPRA) announced the July-August cycle, which saw pump prices for Super Petrol, Diesel and Kerosene increase by Sh8.99 per litre, Sh8.67 per litre and Sh9.65 per litre, respectively.
A litre of petrol is now retailing at Sh186.31 in Nairobi, diesel (Sh171.58,) while kerosene is going for Sh156.14, up from Sh177.32, Sh162.91 and Sh146.93, respectively.
EPRA has pegged the increase on the landed cost, which went up in June (whose current pump prices are based on), even as crude prices dropped to $67.73 per barrel, from an average $72.63 in May, and the recent Israel-Iran attacks that affected the global oil market.
In the latest released prices for July 15- August 24, EPRA considered two cargoes of super petrol, two cargoes of diesel and one cargo of JetA1 fuel.
All these cargoes were delivered into the country between June 10 and July 9, meaning some cargoes arrived in the country before June 13 when the “Twelve-Day War” started, with minimal impact of crude prices.
According to EPRA, the average landed cost of imported super petrol increased by 6.45 per cent from $590.24 to $628.30 per cubic metre between May and June 2025.
That of diesel went up by 6.27 per cent from $580.23 to $616.59 while Kerosene had the highest percentage increase at 6.95 per cent, with its average landed cost going $569 to $608.54 per cubic metre.
“This really is the reason why we have seen an increase in the pump price on Monday,” EPRA director general Daniel Kiptoo said during the release of the state of the oil industry briefing(Q2 2025) by the Petroleum Institute of East Africa.
However, a major adjustment in Oil Marketing Companies’ margins and distribution in addition to tax adjustments, have contributed to the jump in pump prices, EPRA’s latest pricing shows.
OMCs have been awarded a Sh2.15 per litre across the three products, while storage and distribution costs have gone up by Sh0.33 per litre to an average of Sh4.70 per litre.
This means OMCs are now getting Sh15.24 on a litre of petrol, Sh15.16 on diesel and Sh15.09 on every litre of kerosene sold at the pump.
There has also been an upward adjustment on Railway Development Levy which has gone up to Sh1.56 per litre on petrol from Sh1.46, that on diesel has increased to Sh1.53 per litre from Sh1.44 while kerose is being charged Sh1.52 up from Sh1.42.
The Finance Act 2025 has also seen Import Declaration Fee increased to Sh1.94 on a litre of petrol and Sh1.91 on diesel and kerosene from Sh1.80 and Sh1.78, respectively, with taxes and levies forming the bigger component of pump prices of up to Sh82.74 per litre.
This, as the government continues to squeeze taxpayers to meet its budgetary obligations with nine different taxes being levied on fuel, the highest being the Road Maintenance Levy, which was increased to Sh25 per litre from Sh18.
Consumers also pay excise duty, VAT, Petroleum Development Levy, Petroleum Regulatory Levy, anti-adulteration levy and merchant shipping levy.
While there has been concerns that securitisation of the road levy has affected fuel prices, Energy and Petroleum CS Opiyo Wandayi yesterday said otherwise.
“The only changes as seen in the tables is due to the changes in ad valorem taxes Railway Development Levy and Import Declaration Fee which depend on the Cost Insurance Freight (CIF) of the products,” he said in a statement.
Treasury CS John Mbadi said there was no urgency in utilising the Petroleum Development Levy, projected to be Sh110 billion in the 2024-25 financial year, to cushion consumers as prices remain relatively fair compared to last two years when they went above the Sh200 mark.
“PDL is not just about price stabilisation. It is for price stabilisation and in developing the petroleum industry. The government chooses when to intervene and EPRA, my understanding, felt that for now, we don’t have to intervene. Because if you intervene too early, you can deplete that fund,” Mbadi said.
Meanwhile, EPRA has defended the move to increase OMCs and sector investors’ margins which is part of a five-year cycle to ensure they get returns.
“For us as a regulator, our mandate is to balance the interests, ensure that consumers are not being exploited and industry obtains a reasonable return on the investments that they do make,” Kiptoo said.
The Institute of Economic Affairs has since has poked holes on the EPRA formular saying it is getting more expensive.
“Over the past two years, Kenya’s fuel pricing structure has undergone a series of notable shifts, with each one quietly adding weight to the final pump price,” IEA’s Fiona Okadia says.
Motorists and households face fresh financial strain as petroleum products jump by up to Ksh9.65 per litre
Kenyans are bracing for another wave of economic pressure as the Energy and Petroleum Regulatory Authority (EPRA) announced substantial increases in fuel prices effective Monday, July 15, 2025, through August 14, 2025.
The latest pricing review delivers a harsh blow to consumers already grappling with elevated living costs, with super petrol climbing by Ksh8.99 to retail at Ksh186.31 per litre in Nairobi.
Diesel prices have increased by Ksh8.67 to Ksh171.58 per litre, while kerosene has recorded the steepest jump of Ksh9.65, now retailing at Ksh156.58 per litre.
The price surge reflects the reality of Kenya’s heavy dependence on imported refined petroleum products, with EPRA citing elevated average landed costs between May and June 2025 as the primary driver.
Super petrol’s landed cost jumped 6.45 percent from US$590.24 to US$628.30 per cubic metre, while diesel rose 6.27 percent and kerosene spiked 6.95 percent during the same period.
“The higher landed costs mirror the sustained global oil rally over the past two months, driven by geopolitical uncertainty and production cuts by major oil-exporting countries,” EPRA stated in its announcement on Monday.
The regulator emphasized that Kenya’s local fuel prices remain heavily influenced by international market dynamics, with the country’s reliance on imported refined fuel leaving consumers vulnerable to global price volatility.
The fuel price increases are expected to trigger a cascade of economic consequences across multiple sectors.
Transportation costs will inevitably rise, potentially pushing up the prices of essential goods and services as businesses pass on increased operational expenses to consumers.
The timing of the increases is particularly challenging for households already dealing with inflationary pressures.
With Kenya’s inflation rate standing at 3.80 percent in June, the fuel price hikes threaten to add further strain to family budgets and could potentially drive inflation higher in the coming months.
Food prices, in particular, are likely to feel the impact as fuel costs represent a significant component of transportation and production expenses for agricultural products.
Historical data shows that fuel price increases in Kenya typically translate to higher costs for essential commodities within weeks of implementation.
The fuel price increases will affect different regions across Kenya, with variations based on transportation costs to different distribution centers.
In Mombasa, super petrol, diesel, and kerosene will retail at Ksh174.01, Ksh159.62 and Ksh143.64 per litre respectively, while in Kisumu, prices were set at Ksh177.28, Ksh163.23 and Ksh147.30 per litre.
EPRA maintains that it operates within a legally defined pricing formula designed to protect consumers while ensuring industry sustainability.
The regulator has directed consumers to review detailed retail and wholesale prices for various towns and depots through annexes available on its official website and communication channels.
The fuel price increases come at a time when the government is under pressure to address the rising cost of living, which has become a significant concern for ordinary Kenyans.
The latest hikes are likely to intensify public discourse around fuel subsidies and the need for alternative energy solutions to reduce the country’s dependence on imported petroleum products.
As Kenya continues to grapple with global economic uncertainties, the fuel price increases underscore the interconnected nature of international markets and local economic conditions.
The full impact of these price changes will become clearer in the coming weeks as businesses and consumers adjust to the new cost structure.
For motorists and households, the immediate focus will be on budget adjustments and potentially seeking more fuel-efficient alternatives as the country navigates another period of increased energy costs.
The fuel price increases take effect from Monday, July 15, 2025, and will remain in place until August 14, 2025, when EPRA will conduct its next monthly review.
The Kenya Revenue Authority (KRA) has announced it collected Ksh 2.571 trillion in taxes from Kenyans in the 2024/2025 financial year.
Despite the economic challenges in the 2024/25 financial year, the KRA recorded a 6.8 per cent growth in its revenue. This figure surpasses the set target of Sh2.55 trillion.
“Kenyans paid Ksh2.571 trillion in taxes for FY 2024/2025. This is a remarkable 6.8% growth despite economic challenges! For three decades, you’ve been our partners in nation-building. Every contribution has shaped Kenya’s growth story,” read part of a statement released by KRA on July 10.
The authority also highlighted the prevailing economic indicators, especially the Gross Domestic Product (GDP) growth of 4.7 per cent and growth recorded in key sectors, including agriculture, forestry and fishing, financial and insurance activities, transportation and storage, and real estate.
KRA reported that domestic revenue collection grew by 4.8%, reaching Ksh 1.688 trillion against a target of Ksh 1.721 trillion, representing a performance rate of 98.1%. The authority collected Ksh 879.329 billion against a target of Ksh 830.368 billion in customs revenue.
“Pay As You Earn (P.A.Y.E) remained a strong pillar of revenue performance, collecting KSh. 560.963 billion and achieving a remarkable 99.0% performance rate. This 3.3% growth reflects continued employer compliance and resilience despite policy shifts and relief adjustments,” KRA stated.
Corporation tax, on the other hand, grew by 9.9% compared to 4.9% in the last financial year.
Furthermore, KRA announced that 3,512,835 taxpayers benefited from the Tax Amnesty Programme, with Ksh 95.645 billion in penalties and interest waived. The programme also resulted in the collection of Ksh29 billion, with 116,144 taxpayers voluntarily declaring and paying their taxes.
Despite several policy and economic hurdles, the authority maintained a strong performance across most tax categories, signalling continued resilience in revenue collection and administration.
NAIROBI, Kenya Jun 19 – Kenyans can breathe a sigh of relief as the National Assembly passed the Finance Bill 2025 after stripping the proposal allowing the Kenya Revenue Authority (KRA) unfettered access to customer records.
The bill which is expected to raise Sh24 billion now awaits assent by President William Ruto.
The house approved the amendments by the Finance and Planning committee chaired by Molo Member of Parliament Kimani Kuria which rejected KRA’s proposal for unrestricted access to personal data for tax compliance, arguing that it violates Article 31(c) and (d) of the Constitution, which guarantees the rights to privacy.
The committee had argued that Section 60 of the Tax Procedures Act already provides sufficient authority for data access through judicial warrants.
The lawmakers also rejected the expansion of the PAYE tax bands to 10 per cent, 17.5 per cent, 25 per cent, 27.5 per cent and 30 per cent, which would have empowered the Treasury Cabinet Secretary to adjust rates by up to 10 per cent every three years for inflation.
The House also rejected Treasury’s proposal to reclassify certain commodities from zero-rated to exempt status, instead maintaining zero-rated status for locally assembled mobile phones, motorcycles, electric bicycles, solar batteries, electric buses, animal feed inputs, and bioethanol vapor stoves.
For the cooperative incentives, the MPs rejected the elimination of the 15 per cent corporate tax rate for companies engaged in local motor vehicle assembly and construction of at least 100 residential housing units.
MPs retained the Sh500 excise duty per litre on Extra Neutral Alcohol (ENA) for licensed spirituous beverage manufacturers, providing relief to manufacturers already facing increased duties.
Legislators also supported full tax exemption for all pension payments, whether received as lump sums or instalments, creating clarity by repealing redundant provisions.
In the amendements, the house supported expanding the Significant Economic Presence Tax (SEPT) definition to include websites and electronic networks beyond digital marketplaces.
However, they opposed the Sh5 million threshold, arguing it creates revenue leakage loopholes and hinders KRA enforcement.
Treasury CS John Mbadi unveils Sh464.9 billion security package as government prioritizes safety amid economic recovery efforts
The Kenyan government has significantly increased its commitment to national security, allocating Sh464.9 billion in the 2025-2026 budget—a substantial jump of Sh87.4 billion from the previous year’s Sh377.5 billion allocation.
Treasury Cabinet Secretary John Mbadi announced the enhanced security funding while presenting the national budget to Parliament on Thursday, emphasizing the government’s recognition that security forms the foundation of economic prosperity.
“A stable and secure environment fosters investment, trade and overall economic growth,” Mbadi stated during his budget presentation, underlining the administration’s strategic approach to linking security investments with economic development.
The National Police Service emerges as the primary beneficiary, receiving Sh125.7 billion—a significant increase from the previous year’s Sh110.6 billion. This allocation reflects the government’s focus on strengthening law enforcement capabilities across the country.
The National Intelligence Service has been allocated Sh51.4 billion, up from Sh46.3 billion in the previous budget, while Prison Services will receive Sh38.1 billion compared to the previous Sh32.7 billion allocation.
Internal Security and National Administration has been allocated Sh32.5 billion as the government seeks to enhance coordination and administrative efficiency in security matters.
Beyond personnel funding, the government has earmarked specific amounts for modernizing security infrastructure. A notable Sh10 billion has been allocated for leasing police motor vehicles, addressing long-standing mobility challenges within the force.
The police modernization programme will receive Sh3.6 billion, demonstrating the government’s commitment to equipping officers with contemporary tools and technology to combat evolving security threats.
In a move to strengthen the administration of justice, Sh1.2 billion has been allocated for the construction and modernization of National Forensic Facilities. This investment aims to enhance the country’s capacity to investigate crimes scientifically and support court proceedings with reliable evidence.
The increased security allocation comes under this year’s budget theme: “Stimulating Sustainable Economic Recovery for Improved Livelihoods, Job Creation, Business and Industrial Prosperity in line with BETA.”
The Controller of Budget has rejected Sh6.6 billion in emergency spending requests from various government agencies, including significant cuts to funding for Raila Odinga’s failed African Union Commission chairmanship campaign and President William Ruto’s local travels.
Controller of Budget Margaret Nyakang’o revealed that 16 Ministries, Departments and Agencies (MDAs) requested additional funding of Sh48.8 billion, but she only approved Sh42.22 billion, according to the third quarterly National Government Budget Implementation Review Report for the financial year 2024/25.
The most significant rejections included funding for the Ministry of Foreign Affairs, which requested Sh523.8 million to facilitate campaigns for Raila Odinga’s AU bid, but only received approval for Sh216.3 million.
The dramatic cut came despite Kenya mounting an extensive campaign that saw President Ruto and over 100 MPs attend the AUC meeting in Addis Ababa in January 2025. Raila ultimately lost the race to Djibouti’s Foreign Affairs Minister, Mahamoud Ali Youssouf.
State House also faced budget constraints, with its request for Sh1.5 billion to cater for utilities, rent, local presidential visits, hospitality services, fuel expenses and maintenance of motor vehicles being reduced to Sh1.15 billion.
The Controller of Budget’s actions represent a significant pushback against what her office views as irregular use of emergency spending provisions.
The COB declined to approve Sh6.6 billion for spending under the emergency clause between July 2024 and March 2025, citing concerns over the misuse of Article 223 of the Constitution.
High spending by State House under the emergency clause occurred as President William Ruto hosted over 130 delegations and other events at the State House, while making more than 160 local tours across different counties between July 2024 and March 2025.
Other agencies affected by the budget cuts include the National Police Service, which received only Sh1 billion of its requested Sh2.3 billion for the Multi-Agency Security support mission in Haiti.
The State Department for Broadcasting & Telecommunication’s request for Sh627.6 million to settle pending bills was reduced to Sh354.3 million.
However, some requests were approved in full, including the State Department for Public Health and Professional Standards’ Sh1.75 billion for medical doctors’ salary arrears, and Sh19.6 billion for Kenya Airways debt service payments.
Nyakang’o raised concerns over the irregular reliance on Article 223 of the Constitution to fund existing government programmes and settle predictable obligations, indicating weaknesses in the budget implementation process.
The Controller of Budget has called for improved fiscal planning and enhanced revenue collection, urging government agencies to reduce reliance on emergency funding by ensuring better upfront budgeting for known expenditures.
The budget cuts highlight ongoing tensions between fiscal responsibility and political priorities, as the government grapples with mounting debt obligations while attempting to fund high-profile initiatives like international diplomatic campaigns and extensive presidential travel.
After months of public outcry over shrinking take-home pay and relentless fuel costs, Treasury Cabinet Secretary John Mbadi has finally hinted at sweeping changes in the upcoming Finance Bill 2025.
While addressing Senators on Tuesday, Mbadi admitted the government had missed an opportunity to adjust Pay As You Earn (PAYE) rates in the current budget cycle due to poor performance by the Kenya Revenue Authority (KRA).
However, he promised that Kenyans can expect significant tax relief measures—including revised PAYE, fuel price adjustments, and a corporate tax cut—in the next finance proposal.
These changes could signal a long-overdue shift in the country’s taxation policy and bring much-needed relief to a population fatigued by high living costs and economic stagnation.
Mbadi Opens Door to PAYE and Fuel Tax Reforms in Finance Bill 2025
Treasury CS John Mbadi’s remarks before the Senate offer a glimpse into the upcoming Finance Bill 2025, which he says will prioritize restoring Kenyans’ purchasing power. The government, he explained, had planned to revise PAYE taxes in the current bill but was forced to delay due to KRA’s failure to meet collection targets.
“We made promises to address this,” Mbadi said, “but that was not possible. However, where we have reached, we cannot reduce disposable income.”
Instead, the reforms will be pushed into the 2025 finance cycle—provisions that Mbadi claims will directly address the decline in net incomes among Kenyan workers. PAYE, the tax deducted directly from employee salaries, has been a major burden, with middle- and low-income earners squeezed the hardest.
The upcoming changes could increase disposable income, providing some cushion for households struggling to keep up with inflation and the rising cost of essential goods. Beyond PAYE, Mbadi said the Treasury is reviewing the Road Maintenance Levy (RMF), currently charged at Ksh18 per litre at the pump, a significant contributor to fuel costs.
If lowered, this could have a direct impact on transport fares and commodity prices, offering relief to millions of Kenyans. He also mentioned ongoing discussions around the Housing Levy, indicating that the government may revisit the controversial deductions imposed on salaried workers.
Corporate Tax Cuts to Stimulate Investment and Growth
Another bold move in the upcoming Finance Bill 2025 is the proposal to cut corporate tax from 30 to 28 percent. Mbadi believes this will boost investor confidence, enabling businesses to retain more earnings for reinvestment, growth, and job creation.
While this could attract foreign and local firms to expand operations in Kenya, it also comes with a warning. Lowering corporate taxes may lead to immediate revenue shortfalls, which could undermine funding for critical public services like healthcare, education, and infrastructure. To balance this, the government plans to pair the tax cuts with broader economic reforms and improved compliance measures.
“The idea is not to overload the system,” Mbadi explained. “We are reforming the KRA and need to be strategic in rolling out these changes. There must be a balance between tax relief and sustained revenue collection.”
Still, many economic experts remain skeptical. Without a robust strategy to expand the tax base or seal revenue leaks, the reduction in corporate tax may benefit large corporations while limiting state resources meant for public welfare.
Adjustments to Housing Levy and Fuel Taxes Under Review
Mbadi also acknowledged growing dissatisfaction with the Housing Levy, a mandatory payroll deduction introduced by the Kenya Kwanza administration to fund affordable housing. While the government insists the program has long-term benefits, it has been met with resistance from workers who see it as yet another strain on already tight salaries.
“There are discussions on how to make readjustments,” Mbadi said. “Despite it having serious benefits, the individual employees with payslips have complaints about it.”
Revisiting the Housing Levy and Road Maintenance Levy signals that the Treasury may finally be responding to widespread frustrations. Kenyans have decried what they see as excessive taxes on income and consumption, eroding their ability to save, invest, or even meet basic needs.
Any adjustment to fuel-related levies could have a ripple effect across the economy. Transport, agriculture, and manufacturing sectors all hinge on fuel affordability. Reducing RMF, for instance, could ease operational costs, curb inflation, and increase consumer spending—goals aligned with the government’s economic recovery agenda.
The Road Ahead
The Finance Bill 2025 will be a critical test of the Ruto administration’s ability to walk the tightrope between fiscal responsibility and economic justice. Mbadi’s proposed reforms offer hope for a more balanced tax regime, but their success hinges on improved KRA performance, transparency in implementation, and sustained political will.
For the millions of Kenyans currently living paycheck to paycheck, these changes could mean the difference between survival and despair. But without clear accountability mechanisms and a strong economic stimulus plan, even the most well-intentioned reforms risk becoming just another broken promise.
Nairobi – The World Bank has recommended that Kenya exempt low-income workers earning below Sh32,333 monthly from the controversial housing levy and Social Health Insurance Fund (SHIF) contributions, citing concerns over reduced disposable incomes and employment formalization barriers.
In its 2025 Public Finance Review report, the multilateral lender argues that these “unpopular” levies are creating significant financial strain on Kenya’s most vulnerable workers while potentially discouraging formal sector employment.
The recommendation comes as thousands of Kenyan workers have seen their take-home pay drastically reduced since the introduction of these mandatory deductions.
Workers now face a combined burden of 1.5% housing levy (matched by employers) and 2.75% SHIF contributions, resulting in some employees taking home less than the legally mandated one-third of their gross salary.
For a worker earning Sh30,000 monthly, the World Bank’s proposed exemption would increase net pay by Sh956.25, bringing take-home earnings to Sh27,150 from the current Sh26,193.75.
The exemption would directly benefit approximately 312,018 formal sector workers earning below Sh30,000 monthly – representing 10% of Kenya’s 3.1 million formal sector workforce.
Economic rationale
The World Bank’s recommendation is grounded in broader economic concerns about Kenya’s labor market dynamics.
The institution argues that the current payroll tax structure creates a “structural contradiction” – SHIF depends on employment formalization for sustainability, yet the levy itself discourages businesses from formalizing low-wage positions.
“The payroll tax design discourages formalization, particularly for low-wage workers and small employers who face higher costs when joining the formal sector,” the report states.
This creates particular challenges in Kenya’s predominantly informal economy, where most workers in the informal sector are mandated to contribute to SHIF but largely fail to comply.
Employers are facing mounting compliance pressures under Kenya’s Employment Act of 2007, which prohibits deductions exceeding two-thirds of a worker’s basic pay.
The Federation of Kenya Employers has repeatedly sought government guidance on managing multiple deductions while remaining within legal limits, particularly when existing loan obligations are factored in.
The situation has created what employers describe as a “compliance headache,” with companies potentially facing legal action for violating statutory take-home pay requirements.
The World Bank’s recommendations emerge against a backdrop of declining real wages for five consecutive years, reflecting the ongoing squeeze from rising living costs on Kenyan workers.
The housing levy, implemented in June 2023, and SHIF, which replaced the National Health Insurance Fund in October 2024, represent significant policy shifts toward funding affordable housing and universal healthcare.
However, the multilateral lender suggests these goals could be better achieved through alternative funding mechanisms, including increased budget support for health services and targeted assistance for informal workers.
Government position
President William Ruto has consistently defended both levies as essential for delivering affordable housing and universal health coverage.
The administration views these deductions as critical components of its development agenda, despite widespread public resistance.
The World Bank’s recommendations now present the government with a policy dilemma: maintaining revenue streams for key social programs while addressing legitimate concerns about worker welfare and employment formalization.
If implemented, the World Bank’s recommendations would require significant policy adjustments, including alternative funding mechanisms for housing and health programs currently dependent on payroll deductions.
The proposals also align with broader discussions about tax policy reform and the balance between revenue generation and economic growth incentives.
For Kenya’s low-income workers, who have borne the brunt of multiple economic pressures, the World Bank’s intervention represents a potential lifeline in an increasingly challenging economic environment.
However, the ultimate decision rests with policymakers balancing competing priorities of social service delivery and worker welfare.
The recommendation underscores the complex challenge facing many developing economies: funding essential social services while maintaining competitive labor markets and protecting vulnerable workers from excessive financial burdens.
Senior Kenyan government officials attended a crucial East African Community trade meeting in Arusha, Tanzania, on Friday, as the two neighboring countries work to mend diplomatic relations strained by recent activist deportations.
The high-level delegation, led by Cabinet Secretary for East African Community Affairs, ASALs, and Regional Development Beatrice Askul, participated in the ministerial session of the 46th EAC Sectoral Council on Trade, Industry, Finance, and Investment.
Trade Cabinet Secretary Lee Kinyanjui accompanied Askul, alongside Principal Secretary for EAC Affairs Caroline Karugu and Trade Principal Secretary Regina Ombam.
The Arusha session, which brought together ministers and senior officials from across the EAC member states, centered on strengthening regional trade ties and deepening economic cooperation.
CS Askul, who joined President William Ruto’s cabinet following mass dismissals during the anti-Finance Bill 2024 protests, chaired the proceedings.
Officials from Kenya and other countries during a meeting in Tanzania on Friday, May 30, 2025.
Principal Secretary Caroline Karugu presented outcomes and recommendations focusing on elimination of Non-Tariff Barriers (NTBs) to facilitate trade, infrastructure development, improvement of customs systems, advancement of trade through regional integration initiatives and negotiations of Free Trade Agreements (FTAs) with third parties.
“The East African Community remains a key engine of economic growth, not just for individual member states, but for the entire region,” stated CS Kinyanjui. “With trade and investment at the heart of the EAC agenda, aligning our national goals is essential to unlocking shared prosperity for all East Africans.”
Diplomatic tensions
The meeting comes at a sensitive time for Kenya-Tanzania relations, following a diplomatic crisis triggered by the deportation of Kenyan and Ugandan human rights activists from Tanzania in mid-May.
Kenyan activist Boniface Mwangi and Ugandan Agather Atuhaire were arrested, reportedly tortured, and forcibly deported after traveling to observe the trial of Tanzanian opposition leader Tundu Lissu.
The deportations led to widespread social media criticism and diplomatic friction between the two countries, with Tanzanian parliamentarians expressing outrage over what they described as interference by Kenyan activists.
The incident escalated regional tensions, prompting the United States to express deep concern over reports of mistreatment of the activists, while human rights groups condemned the alleged torture and incommunicado detention.
Repair efforts
Recent days have seen efforts to repair the diplomatic rift, with President William Ruto issuing apologies to Tanzania and Uganda amid the tensions.
Interior Cabinet Secretary Kithure Kindiki has also called for calm as both nations work to restore normal relations.
Political analysts had warned that Tanzania’s actions could hinder cross-border cooperation on democracy and governance issues, potentially alienating key regional partners.
Despite the diplomatic challenges, the Arusha meeting demonstrates both countries’ commitment to maintaining economic cooperation through the EAC framework.
The session’s focus on eliminating trade barriers and improving customs systems reflects ongoing efforts to deepen regional integration despite political tensions.
The timing of this high-level meeting suggests that economic imperatives are helping to stabilize relations between the two East African neighbors, even as they navigate sensitive political issues around civil society engagement and cross-border activism.
The EAC, established to promote economic, social and political integration among its member states, continues to serve as a crucial platform for diplomatic dialogue and economic cooperation in the region, with its headquarters appropriately located in Arusha, Tanzania.
NAIROBI – The World Bank has delivered a stark warning to Kenya’s government over its “wasteful spending” on public servants’ travel allowances, revealing that civil servants pocket a staggering $513 (Sh66,317) daily when traveling to the United States – nearly double what international standards recommend.
The revelation comes as Kenya’s economy teeters on the brink of a debt crisis, with the international lender expressing deep concern over the government’s financial management priorities.
In a damning assessment, the World Bank found that travel allowances consumed a massive 14% of total government spending in the 2022/23 fiscal year, with Daily Subsistence Allowance (DSA) alone accounting for Sh6.2 billion of the Sh19.6 billion spent on travel-related expenses.
“This undermines productivity as staff are frequently absent from their duty stations since the system creates incentives to seek per diems,” the World Bank stated in its report, highlighting how the generous allowance system has created perverse incentives within the civil service.
The Bank’s analysis reveals shocking potential savings if Kenya standardized its travel rates.
Using Ministry rates across all job groups would slash daily costs to $326 (Sh42,162) – a saving of $187 (Sh24,187) per official per day. Even adopting UN Development Programme rates would save $53 daily per traveler.
The allowance crisis extends beyond international travel.
The World Bank identified a fundamental flaw in Kenya’s remuneration system where market adjustment components are leading to “double compensation” – with civil servants receiving the same benefit through both their basic salary and additional allowances.
Of particular concern is how facilitative allowances have morphed from performance incentives into salary supplements, creating what the Auditor General’s office described as “widespread overuse” that fails to provide value for money.
The World Bank’s intervention comes at a critical time for Kenya’s economy, which faces mounting debt pressures and fiscal constraints.
The lender has recommended immediate reforms including budget caps on travel and conferences, standardized DSA rates across job levels, and better regulation of workshop locations and frequency.
With civil servants currently receiving 60% of wage-related expenses as salaries, 30% as remunerative allowances, and 10% as facilitative allowances, the World Bank warns that weak enforcement of Salaries and Remuneration Commission guidelines has allowed the system to spiral out of control.
The report’s findings raise serious questions about Kenya’s spending priorities as ordinary citizens grapple with economic hardship while public servants enjoy luxury travel perks that far exceed international benchmarks.
