Kenya Insights

Category: Economy

  • Behind Scenes: How The U.S. Forced Ruto To Cancel Deals With Adani In The Last Minute

    Behind Scenes: How The U.S. Forced Ruto To Cancel Deals With Adani In The Last Minute

    President William Ruto’s decision to cancel the deeply unpopular multi-billion-shilling airport and power transmission deals with troubled Indian conglomerate Adani Group took many by surprise. But it had been long in coming, sources say.

    A defiant ruling elite faced with months of spirited public opposition fought to defend the controversial agreements till the last minute, but enormous pressure by authorities in the United States of America after a decisive action to indict Adani companies’ top executives over massive bribery forced the President’s hand.

    We’ve learnt that a confluence of factors, including doubts about Adani’s financial injection of only 30 per cent of overall funding required to refurbish, pressure from foreign partners over Jomo Kenyatta International Airport’s security considerations, and an increasingly hostile public with dire political ramifications, forced the rethink.

    Integrity issues

    Sources confirmed that Kenya was facing intense pressure from development partners over the leasing out of JKIA, the official gateway to the region, to an Indian firm facing integrity concerns, especially in the wake of geopolitical upheaval, including the Russia-Ukraine and Israeli-Palestinian wars.

    President Ruto, too, has been under a lot of pressure from Kenyans, the opposition and the clergy, who described the Privately Initiated Partnership with Adani as auctioning off major national assets to a foreign entity.

    Then bang: Billionaire Gautam Adani alongside six company executives are charged in New York for allegedly masterminding a bribery and fraud scheme to secure solar power contracts worth Sh260 billion ($2 billion) in future profits! This offered the President an opportunity to reverse the controversial deals and win back some support at home.

    The US Department of Justice alleged that Adani and his associates paid over Sh32 billion ($250 million) in bribes to Indian officials while misleading banks and investors in the United States.

    “This indictment alleges schemes to pay over $250 million in bribes, deceive financial institutions, and obstruct justice,” Deputy Assistant Attorney General Lisa Miller said in a statement.

    The US Department of Justice claimed that Adani personally engaged with Indian officials to execute the fraudulent deals, supported by evidence from documents and phone records.

    Adani has denied all charges, dismissing them as baseless.

    Ruto’s calculation, therefore, is that the cancellation, while projecting him as a listening president, would offer him a chance to win plaudits from Kenyans while placating foreign partners.

    Insiders say that after Adani’s indictment in the United States and the fall of the group’s shares in global markets, the Kenyan government was unsure if the Indian conglomerate still had the 30 per cent counterpart funds and the wherewithal to raise the balance from international financiers to finance the projects.

    Corruption perception

    “There was also fear that the projects would suffer integrity issues, tainting the image of the country and government,” a Treasury official intimated.

    “We doubted Adani’s ability to finance these projects given his 30 per cent commitment. Allowing him to proceed would only reinforce perceptions of corruption in Kenya,” another senior government official said.

    Also considered by the Kenya government were fears of losing critical infrastructure in the event of default after being used as collateral by Adani to raise funds from international lenders. Concerns grew over what would happen to the collateral if Adani, facing mounting fraud allegations, went bankrupt.

    “I have directed agencies within the Ministry of Transport and the Ministry of Energy and Petroleum to immediately cancel the ongoing procurement,” President Ruto, who attributed the decision to new information provided by investigative agencies and partner nations, said.

    Investigations has since established that the government had not yet signed the airport leasing deal, and therefore will unlikely attract any compensation.

    According to an earlier Heads and Terms document to the Kenyan authorities by Adani, any termination of the contract would have forced the government to pay any developments as well as losses incurred by Adani at the time of termination. And failure to do so would have dragged Kenya to arbitration courts outside the country.

    “Kenyans are not going to pay for terminating the contract because we have a clause on integrity and corruption, which allows us to pull out,” a State House official said.

    But it is instructive that any integrity and bribery charges against Adani are yet to be proven in court.

    “Adani and his team are already facing charges in the US, and it would be reckless to proceed when most of the financing comes from international banks. If the company collapses, we risk losing crucial infrastructure, which will comprise our country’s security,” the State House official said.

    Kiambu Woman Representative Gathoni Wamuchomba commended the US for holding Adani accountable.

    “The indictment sets a precedent for addressing public asset grabs disguised as Public-Private Partnerships. All eyes are now on Kenyan courts to ensure accountability,” said Wamuchomba.

    Before the American move on Adani, his entry into Kenya had received bipartisan support with backing from the government and the opposition. Former Prime Minister Raila Odinga had defended the Indian firm, citing its involvement in multiple infrastructure projects across Asia, Europe and Africa.

    Powerful Kenyans

    Barrack Muluka, a political analyst, last month said that Adani may have been a front for powerful Kenyan figures leveraging his projects for personal gain.

    “Adani is merely a mask; the real influence comes from within the government. Officials masquerading as investors are transferring public resources into private hands,” Muluka said.

    Nelson Amenya, the whistleblower who exposed details of the deal, echoed this sentiment, urging full transparency. “The nation has wasted nearly a year on a project that didn’t take off. Those responsible must be held accountable,” said Amenya, who has been heavily celebrated on social media.

    The cancellations have reignited political debates. Lawyer Ahmednasir Abdullahi described the decision as an act of God, attributing the turnaround to external pressure and evidence of corruption.

    Adani Group had secured a Sh240 billion deal to manage JKIA for 30 years. This included a second runway and terminal upgrades.

    Another Sh85 billion project with Ketraco was to build and operate power transmission lines for 30 years. Both deals drew criticism over corruption fears, potential job losses and the involvement of a scandal-plagued firm.

    Intelligence reports

    Energy Minister Opiyo Wandayi initially defended the projects, assuring Parliament that there was no evidence of misconduct in the procurement of the power lines deal.

    “We relied on rigorous due diligence and have no knowledge of other adverse matters,” he said hours before the President cancelled the contracts.

    President Ruto, in his State of the Nation address, confirmed that the cancellation was based on “new information provided by investigative agencies and partner nations.”

    “In the face of credible information on corruption, I will not hesitate to act decisively,” Ruto told Parliament, attributing the new information to reports by government agencies following due diligence.

    Government sources revealed that intelligence reports from countries where Adani operates, including the US, Australia and Malaysia, played a key role in the decision. Kenyan authorities consulted these nations to assess Adani’s track record, reinforcing the rationale for terminating the deals.

    In the wake of the developments in the US, Adani Green cancelled a Sh78 billion ($600 million) bond sale and US financial regulators also charged the company for using deceptive practices to obtain funding.

    Defending the group, a spokesperson denied any wrongdoing.

    “The Adani Group has always upheld the highest standards of governance,” the spokesperson said.

  • CBK Announces New Changes On Banknotes

    CBK Announces New Changes On Banknotes

    The Central Bank of Kenya (CBK) has embarked on plans to release new banknotes into circulation to replace the 2019 series.

    The regulator says the new release will affect the Ksh 50, Ksh 100, Ksh 200, Ksh 500 and Ksh 1000 banknotes.

    According to CBK, the new notes will bear the signature of CBK Dr. Kamau Thugge who succeeded Dr Patrick Njoroge whose signature appears in current notes in circulation.

    The rest of the features remain the same as those of the series issued in 2019. All banknotes currently in circulation remain legal tender and will circulate alongside the released banknotes,” said CBK in a statement.

    The new notes will also bear the signature of the National Treasury Principal Secretary Dr Chris Kiptoo, the year of print – 20204 and a new security threads with colour changing effects that are specific to each denomination.

    “Release of the banknotes will commence with KES 1,000, while
    other denominations will progressively follow in the coming months,” said the regulator.

  • What Does Trump’s Win Mean For Africa?

    What Does Trump’s Win Mean For Africa?

    (BBC)- As it became clear that Donald Trump had landed the US presidency for the second time, leaders from across Africa began tweeting their congratulations.

    “Zimbabwe stands ready to work with you”, wrote Zimbabwean President Emmerson Mnangagwa, eyeing a diplomatic reset, while Nigeria’s Bola Tinubu expressed hope that Trump’s second term would bring “reciprocal economic and development partnerships between Africa and the United States”.

    But will Trump 2.0 be good for the continent? During his first stint in the White House critics accused him of dismissing Africa, having cut some funding, curbed immigration and reportedly referred to some of its nations as “shithole countries”.

    However, he did also introduce schemes to increase investment in Africa – schemes that remain operational three years after he left office.

    But how might he approach Africa in this new climate?

    Joe Biden’s outgoing administration “tried really hard to create an impression that Africa was a valued and important partner”, W Gyude Moore, a fellow at the Center for Global Development and former Liberian minister, tells the BBC.

    Biden struggled to match this enthusiasm with substantial deals and partnerships, Mr Moore says, but that does not mean his Africa strategy was fruitless.

    For instance, the US was praised for investing in the Lobito Corridor – a rail line stretching through Angola, the Democratic Republic of Congo and Zambia that will be used to transport critical raw materials.

    In 2023, the US said it had invested more than $22bn since Biden came to power.

    But there are concerns Trump might roll back on this investment and trade. The soon-to-be president has more of a protectionist, insular outlook than Biden – one of the slogans for his first term was “America First”.

    The African Growth and Opportunity Act (Agoa), which has enabled eligible African countries to export some of their produce to the US without paying taxes since 2000, is a key source of concern.

    During his previous administration, Trump said the scheme would not be renewed when it expires in 2025.

    And during his 2024 campaign he pledged to implement a universal 10% income tariff on all foreign-made goods. This would make imported goods more expensive, and so African exporters would be likely to sell less of their produce in the large US market.

    Numerous commentators in South Africa – one of the largest exporters under the Agoa agreement – have predicted that cutting Agoa could have a significant impact on the economy.

    However, US think-tank the Brookings Institution predicts that South Africa’s GDP would shrink by “just 0.06%”. This is partly because many of the goods South Africa exports to the US – such as minerals and metal – do not actually benefit from Agoa, it said.

    Although Trump was not keen on Agoa, he recognised that if the US was going to counter China’s growing economic influence in Africa, it needed to maintain some level of partnership.

    In 2018 the Trump administration unveiled Prosper Africa – an initiative that assists US companies wanting to invest in Africa – and the Development Finance Corporation (DFC), which funds development projects in Africa and around the world. Biden kept both running after he took over and the DFC says it has so far invested more than $10bn (£8bn) in Africa.

    Given that China is still a major force in Africa and that Trump introduced these policies himself, he is likely to think twice before slashing them.

    Aid

    Africa gets most of its aid from the US, which said it had donated almost $3.7bn over this financial year.

    But Trump’s last administration repeatedly made proposals to slash foreign aid worldwide, according to reports. Congress – where foreign aid had bipartisan support – rejected these cuts.

    Had the cuts been implemented, “traditional US policies with respect to health, democracy promotion, and security assistance in Africa would have been eviscerated,” said the Council on Foreign Relations, a Washington think-tank.

    There may be less pushback to aid cuts if the Republicans win a significant majority in Congress following Tuesday’s elections, however. The party has already secured the Senate – Congress’ upper chamber – and currently has a majority in the lower chamber – the House of Representatives.

    There are also worries Trump might shut Pepfar, a long-running US initiative that has poured huge sums into fighting HIV in Africa.

    Last year, Republican lawmakers mounted significant opposition to Pepfar, alleging that the programme was promoting abortion services. It was granted a short-term extension until March next year, but Trump – known for being anti-abortion – may shut the door on this reprieve.

    Immigration

    Trump’s views on illegal immigration are clear – during his 2024 campaign he promised to deport one million people who do not have legal permission to be in the United States.

    This concerns Africa as in 2022, around 13,000 African migrants were recorded at the US-Mexico border, according to US Customs and Border protection data. By 2023, this figure had quadrupled to 58,000. Some of these hopefuls speak of fleeing war, persecution and poverty.

    This would not be his first dramatic anti-immigration policy. In his first term, Trump introduced measures that curbed immigration from several African countries, including Nigeria, Eritrea, Sudan and Tanzania.

    Kenyan newsite Taifo Leo reported that migrants from the East African country, who number about 160,000, are worried that they will face discrimination with Trump as president.

    Security and conflict

    While Trump has been away from the presidency, Russia has stepped up its presence in Africa.

    One of the main ways it has done this is through providing troops and arms to countries hit by jihadist militants, such as Mali, Niger and Burkina Faso.

    Russia’s foothold has alarmed the US – the two are historic rivals.

    Will Trump offer support to African countries in an attempt to push Russia out?

    “Even though the national security architecture in the United States perceives Russia as a threat, Trump personally has not acted as if he perceives Russia as a threat,” Mr Moore tells the BBC.

    There is speculation that Trump has a closer relationship with Russian President Vladimir Putin than he lets on.

    However, Trump has in the past stepped in to help Nigeria fight Boko Haram, a group of Islamist militants which has plagued the West African country for 15 years.

    “During [former President Barack] Obama’s tenure, Nigerian-Americans advocated tirelessly for him, yet he declined Nigeria’s requests for arms. When our communities in northern Nigeria were under attack by Boko Haram, it was Trump who ultimately approved the purchase of Tucano jets, allowing us to strengthen our defences,” former lawmaker Ehiozuwa Johnson Agbonayinmma told Nigerian news outlet the Vanguard.

    There is also the issue of Sudan’s civil war, which has been rumbling on for 18 months and has killed tens of thousands of people.

    “Trump is very transactional,” Mr Moore said. “I’m really doubtful that the Trump administration is going to care more about what’s happening in Sudan than, say, the Biden administration did.”

    But ultimately, there is no way to be totally sure what Trump will set his sights on once he is in office.

    As Mr Moore says: “Trump is very unorthodox in how he does everything. So one has to be pretty open to new things, not necessarily good things, but new things happening.”

  • KRA To Go After Nil Tax Filers In Fresh Crackdown On Tax Evaders

    KRA To Go After Nil Tax Filers In Fresh Crackdown On Tax Evaders

    The government is expanding the mandatory use of taxman’s Personal Identification Numbers (PINs) for various government services, aiming to improve tax compliance and identify individuals filing nil tax returns.

    Under the plan, the Kenya Revenue Authority (KRA) will leverage PIN information to snoop on individuals’ and companies’ activities across different government services, enabling them to identify potential tax evasion and avoidance.

    The move yesterday sparked concerns about potential privacy breaches and increased government surveillance.

    Under the proposed legislation by the National Treasury, most government services will now require a PIN certificate.

    This includes registering titles, approving development plans, registering motor vehicles, business names, and companies.

    Additionally, importing goods, paying utility deposits, and obtaining government contracts will necessitate a PIN.

    This came as the taxman also issued a notice to visitors to Kenya and mobile phone importers to declare their International Mobile Equipment Identity (IMEI) numbers to customs officials.

    Just last week, the Communications Authority (CA) directed all phone manufacturers, retailers, and mobile network operators to upload each device’s IMEI number to a KRA-provided portal to facilitate tax compliance monitoring.

    KRA also notified importers and assemblers to obtain necessary regulatory clearances and permits from CA. The IMEI number is a unique 15-digit serial code identifying each mobile device globally. If a mobile phone is connected to a network, its IMEI number is already registered.

  • Tourists Coming To Kenya Will Be Required To Provide IMEI Numbers For Their Mobile Phones, KRA Says

    Tourists Coming To Kenya Will Be Required To Provide IMEI Numbers For Their Mobile Phones, KRA Says

    All passengers entering Kenya starting January 1, 2025, will be required to declare and register their mobile devices’ International Mobile Equipment Identity (IMEI) numbers at the port of entry.

    The Kenya Revenue Authority (KRA) has announced that each mobile device intended for use in the country must be listed, along with its IMEI number, on the F88 passenger declaration form.

    The new measure, implemented in collaboration with the Communications Authority of Kenya (CA), seeks to improve the monitoring of imported devices and ensure tax compliance.

    According to KRA, both tourists and returning residents must declare any mobile devices they plan to use within Kenya’s borders, making the F88 declaration a necessary step upon entry.

    “Passengers entering the territory of Kenya will declare the details and the respective IMEI numbers for their mobile devices intended for use, during the stay in the country at the Port of entry on the F88 passenger declaration form,” KRA said in a notice.

    Additionally, all Importers of Mobile Devices will be required to submit detailed import entries for all mobile devices with accurate quantities, proper model descriptions/specifications, and their respective IMEI numbers in the Customs system.

    The Authority added that device assemblers and manufacturers must register on the Customs portal and submit a report of all devices assembled for the local market and their respective IMEI numbers.

    Privacy concerns

    While the directive has raised concerns about privacy issues, the CA emphasised the importance of the initiative, noting that it is “mandatory for the registration of devices in the National Master Database on Tax-Compliant Devices.”

    The authority reiterated that the database would help verify each device’s tax compliance status, contributing to a secure and regulated telecommunications environment within Kenya.

    Mobile network operators will be required to connect devices only after verifying their compliance through a whitelist database maintained by the CA.

    “The authority will provide means by which tax compliance status of mobile devices can be verified before purchase by retailers or end-users,” the CA added.

    The Authority warned that devices not meeting these requirements will be subject to restrictions, including grey-listing, which provides time for compliance, or blacklisting if compliance is not achieved.

    “The new requirement will only apply to all devices imported or assembled in the country from November 1, 2024. All existing devices that will be on the mobile networks by October 31, 2024, will not be affected. This initiative aims to ensure the integrity and tax compliance of mobile devices within Kenya,” the authority clarified.

    KRA said additional guidance on the registration process for incoming travellers and further details on compliance steps will be communicated before the January 2025 enforcement date.

    “The Public is therefore notified of this requirement, which will be implemented effective January 1, 2025. Specific guidelines on the system process and how to capture the devices and IMEI numbers for different users will be shared in due course,” KRA said.

  • Inside KRA’s Plan To Spy On Crypto Transactions To Nab Tax Cheats And Expand Revenue Base

    Inside KRA’s Plan To Spy On Crypto Transactions To Nab Tax Cheats And Expand Revenue Base

    The Kenya Revenue Authority (KRA) is gearing up to introduce a new tax system that will allow real-time tracking of cryptocurrency transactions. This move aims to identify tax evaders and monitor potential criminal activities in Kenya’s growing crypto space—an area that has previously flown under the radar.

    Cryptocurrency refers to digital money secured through cryptographic techniques, running on decentralized blockchain networks. This structure makes it highly resistant to counterfeiting or double-spending. Bitcoin, launched in 2009, is the pioneering cryptocurrency and remains the largest by market cap.

    Unlike traditional currencies, cryptos are typically not issued by central banks, making them immune to direct government control. While digital currencies are not yet as mainstream in Kenya as other financial technologies like mobile money, KRA sees significant potential in the market, which, according to UNCTAD, involves around four million users.

    KRA estimates that the Kenyan crypto market processed transactions worth about Ksh.2.4 trillion between 2021 and 2022—almost 20% of the country’s gross domestic product (GDP).

    “Even though the sector is unregulated by entities like the Central Bank of Kenya and the Capital Markets Authority, income from crypto trading is still subject to taxation under Section 3 of the Income Tax Act. The absence of a robust system for collecting taxes on crypto transactions has led to substantial revenue loss for the government,” the authority explained.

    The proposed system aims to connect with crypto exchanges and marketplaces, enabling KRA to track and record transaction details, such as the date, time, type, and value of each transaction.

    Cryptocurrencies are often used in Kenya for savings, international payments, and remittances. Unlike traditional banking systems and credit cards, crypto allows for direct, peer-to-peer transactions across borders, without the need for intermediaries. This means users don’t have to purchase foreign currencies or pay fees for services like Western Union.

    However, the decentralized nature of digital currencies has made them attractive for illegal activities like fraud, theft, and money laundering. Additionally, the extreme price volatility of these digital assets means that investors must keep a close eye on market trends. For example, Bitcoin’s price skyrocketed to nearly $65,000 in November 2021 before plunging below $20,000 at the beginning of 2023. It has since rebounded to over $60,000 (about Ksh.7.8 million).

    In a bid to tighten oversight of the sector, a new bill was introduced in the Kenyan Parliament last year, aimed at taxing crypto transactions and digital wallets. The Capital Markets (Amendment) Bill, 2023, proposed by Mosop MP Abraham Kirwa, seeks to amend the Capital Markets Act, Cap. 485A, to include digital currencies within the definition of securities. If approved, this would empower KRA to collect capital gains tax on crypto exchanges and levy excise duty on transactions. The bill has received approval from the National Assembly finance committee and is currently under review in Parliament.

  • Fuel Prices In Kenya Fall By Sh8 In Latest EPRA Review

    Fuel Prices In Kenya Fall By Sh8 In Latest EPRA Review

    The latest monthly review by the Energy and Petroleum Regulatory Authority (EPRA) has seen a reduction in fuel prices.

    The pump prices for super petrol, diesel, and kerosene have decreased by Sh8.81, Sh3.54, and Sh6.93 per litre, respectively.

    In Nairobi, super petrol will retail at Sh180.66 per litre, diesel at Sh168.06 per litre, and kerosene at Sh151.39 per litre.

    In Mombasa, the prices are Sh177.42 per litre for super petrol, Sh164.82 per litre for diesel, and Sh148.15 per litre for kerosene.

    Meanwhile, in Kisumu, super petrol will retail at Sh180.68 per litre, diesel at Sh168.44 per litre, and kerosene at Sh151.82 per litre.

    In a statement released on Monday, EPRA clarified that the prices include the 16% Value Added Tax (VAT) in accordance with the Finance Act 2023, the Tax Laws (Amendment) Act 2020, and the adjusted excise duty rates for inflation as per Legal Notice No. 194 of 2020.

    “The average landed cost of imported Super Petrol decreased by 8.59% from US$697.62 per cubic metre in August 2024 to US$637.70 per cubic metre in September 2024. Diesel decreased by 5.52% from US$673.36 per cubic metre to US$636.22 per cubic metre, while kerosene decreased by 6.73% from US$668.34 per cubic metre to US$623.39 per cubic metre,” the statement read.

  • Kenya Allows JPMorgan Chase To Set Up Representative Office Locally

    Kenya Allows JPMorgan Chase To Set Up Representative Office Locally

    Kenya’s central bank said on Monday that it had authorised JPMorgan Chase to establish a representative office in the East African country.

    Representative offices of foreign banks in Kenya serve as marketing and liaison hubs for their parent banks and affiliates, the Central Bank of Kenya said in a statement.

    CBK announced in a statement that the local office will serve as marketing and liaison offices for  JPMorgan Chase parent banks.

    However, the apex bank noted that the entity is not permitted to undertake banking business in the country.

    “This authority is granted pursuant to Section 43 of the Banking Act and follows the fulfilment, by JPMorgan Chase Bank N.A., of the stipulated authorisation requirements,” CBK said.

    “Under the Banking Act, Representative Offices of foreign banks in Kenya serve as marketing and liaison offices for their parent banks and affiliates and are not permitted to undertake banking business.”

    JPMorgan Chase Bank N.A, which is based in New York, operates in over 60 countries worldwide, offering services ranging from asset and wealth management, commercial banking, investment banking and financial technology.

    The JPMorgan Chase representative office will contribute to the diversity of Kenya’s financial sector and catalyse trade and investments, the statement added.

    Last month, JPMorgan Chase’s CEO Jamie Dimon planned to travel to Africa in mid-October in a push by the biggest U.S. lender to expand on the continent.
  • The Dark Side Of German Firm Awarded Sh14B CBK Money Tender

    The Dark Side Of German Firm Awarded Sh14B CBK Money Tender

    Central Bank of Kenya Governor Kamau Thugge has failed to table contract documents and due diligence reports on the procurement of a German firm to print Kenya’s new bank notes at a cost of Sh14.2 billion.

    Dr Thugge on Thursday snubbed a meeting called by the National Assembly’s Finance and National Planning Committee to receive the documents that Dr Thugge  promised to make public last month.

    The CBK signed a Sh14.2billion ($109,422,740) five-year deal with Germany’s Giesecke+Devrient Currency Technologies GmbH (G+D) to print new notes to replace old ones and also avoid possible stock-outs.

    The CBK picked the German firm to print new notes, months after allowing the local subsidiary of British printer De La Rue – in which it owns a 40 percent stake-to shut down for lack of new business.

    The committee, chaired by Molo MP Kuria Kimani, has launched an investigation after the CBK revealed that a German firm had been hired to print new notes.

    The committee expected to receive the signed contract documents and due diligence reports that the CBK signed with the German currency printer which was picked through classified procurement.

    Future date

    The CBK boss wrote to the Clerk of the National Assembly on September 23, 2024 seeking postponement of the meeting on grounds that he will be engaged in the bi-monthly meeting of the Monetary Policy Committee (MPC) technical meetings.

    Dr Thugge had earlier told the committee that the German firm was picked through a classified procurement amid risks of a stock- out of bank notes which would have had grave economic and security implications for the country.

    The new German printer took over the multi-billion shilling currency printing contract after De La Rue Kenya EPZ Limited, a banknote printer in which Kenya bought a 40 percent stake for £5 million (Sh820.5 million) in 2019, closed its Nairobi plant and ceased operations 19 months ago.

    Giesecke & Devrient

    Giesecke & Devrient eventually bagged the Kenyan currency tender this year after losing another lucrative tender to De La Rue rival in 2006.

    CBK had floated an open tender in January 2005 for the printing of 1.71 billion pieces of bank notes. The tender attracted five bidders — Giesecke & Devrient, De La Rue, Orell Fussli (Switzerland), Francois Chades Oberthur Fiduciaire (France) and Job Enschede Banknotes (Holland).

    However, the entire tender was cancelled on June 6, 2005 due to various anomalies and fresh tendering carried out. De La Rue bagged the contract on May 4, 2006 at a total cost of $51,195,840. The only other firm to get to the final stage of the tender was Giesecke & Devrient, which quoted $76,331,500.

    The Dark Past

    Four years prior to competing for the Kenyan tender, the family-owned German company had been caught up in a scandal back at home.

    In January 2002, millions of 100 euro notes that had been produced by the company were shredded due to a misprint.

    According to the BBC, the company misprinted a security feature designed to stop forgers from using photocopiers to make fakes of the new currency.

    “The fault was spotted only after Giesecke & Devrient had delivered 325 million of the 100 euro notes to Germany’s central bank, the Bundesbank,” the BBC reported.

    According to the publication, the issue was not a design flaw, but a mistake by the printers. Euro notes produced by other printing plants across the eurozone were not affected.

    In 2008, the Munich-based company stopped supplying banknote paper to the Reserve Bank of Zimbabwe following pressure from the German government, which demanded that it stops working with the country then led by President Robert Mugabe.

    At the time the company had been criticised for supplying bank notes to Zimbabwe and basically making Mugabe’s hyperinflationary economic practices possible. It is then that the company stopped shipments of notes to the country.

    Apart from Germany, the United Nations and European Union had also cautioned the company from working with Mugabe.

    In an official communication, the company said that it was subject to strict rules that are defined by the World Bank in delivering banknotes and paper, and it was continuously relying on the political and moral assessment provided by the international trade regulators.

    “Our decision is a reaction to the political tension in Zimbabwe, which is mounting significantly rather than easing as expected, and takes account of the critical evaluation by the international community, German government and general public,” Karsten Ottenberg, the chairman of the company’s management board and CEO, said.

    Earlier, in 1995, the money printing firm had been accused of inflating the price of its banknotes by making a dye (used in printing ink) 70 per cent more expensive than the normal price.

    Trade Practices said that it all started when a partner company in Switzerland bought the dye from Giesecke & Devrient, raised its price and then sold it back to the German firm, which saw the price rise even higher.

    Giesecke & Devrient was started in June 1, 1852 by 21-year-old Hermann F. Giesecke and Alphonse Devrient, 31. On its website, the company says that it was started in Leipzig and within a short time the partners had made it big as it became a leading money printer.

    It states that some of the groundbreaking inventions that saw it go up the ladder include anti-counterfeiting and printing technology.

    The firm has different divisions that handle banknotes, smart cards, cash handling systems, identification systems, securities printing and e-payment systems.

    When it was started, the company handled half of Germany’s currency production from 1958. In 1991, the firm produced the first SIM card. To date it also produce chip passports and smart cards.

  • Kenya Close To Agreeing Sh194 Billion Budget Support Loan From UAE, At 8.2pc Interest Rate

    Kenya Close To Agreeing Sh194 Billion Budget Support Loan From UAE, At 8.2pc Interest Rate

    (Reuters)-Kenya’s government is close to agreeing a $1.5 billion (Approx KES194 billion) loan from the United Arab Emirates with an interest rate of 8.2% which will help bridge the East African nation’s financing gap, a source familiar with the situation told Reuters.

    “Kenya is diversifying its sources of budget support,” said the source, adding the “deal is as good as done.”

    The UAE ministry of finance and the UAE central bank did not immediately respond to a request for comment.

    Kenya’s Finance Minister John Mbadi and other senior officials at the ministry were not immediately available for comment.

    The country’s dollar bonds rallied after the news, with the 2048 maturity rising by as much as 1.89 cents to trade at 84.3 cents on the dollar, Tradeweb data showed.

    The government has been struggling to find new sources of financing after deadly protests forced President William Ruto to discard planned tax hikes worth more than 346 billion shillings ($2.7 billion) in June.

    A delay in funding from the International Monetary Fund has aggravated the situation.
    Kenya is now expecting its overall budget deficit to widen to 4.3% of GDP this financial year, compared with 3.3% under the original, pre-protest budget.

    Nairobi has had to pay a high price for the financial support it has received. In February Kenya issued a $1.5 billion Eurobond to help it manage maturities, but it paid a steep 10.375% yield for the seven-year bond.

    Bloomberg reported earlier on Wednesday that Kenya was in talks on a loan deal with Abu Dhabi.

    Under President Ruto, who took over in September 2022, Kenya has forged closer ties with the UAE.

    The UAE’s Abu Dhabi National Oil Company (ADNOC) and Emirates National Oil Company were among three Gulf firms Ruto’s government picked last year to supply Kenya with oil on longer credit terms, in a shift from an open tender system.

    The UAE provided Ethiopia with $1 billion in 2018 to help with a severe hard currency cash crunch, and the central banks of both sides announced an $817 million swap line in July.

    The UAE also signed a deal with Egypt earlier this year to develop a prime stretch of its Mediterranean coast that was expected to bring $35 billion of investments into the Egyptian economy.

  • HELB CEO Amongst Six Shortlisted For CBK Deputy Governor Post

    HELB CEO Amongst Six Shortlisted For CBK Deputy Governor Post

    The Public Service Commission (PSC) has shortlisted six candidates for the position of the Central Bank of Kenya (CBK) deputy governor.

    In a statement on Thursday, September 26, 2024, PSC indicated that the six were among other candidates who applied to fill the position of the second deputy governor of CBK following an advertisement made on March 30, 2023.

    The shortlisted candidates include Prof. Dulacha Galgallo Barako, Gerald Nysoma Arita, Jane Wangui Kiringai, HELB CEO Charles Mutuma Ringera, Dr. Florence Kaki Kinyanzui and Dr. Habil Okunda Olaka.

    “Pursuant to the provisions of Sections 138 of the Central Bank of Kenya Act, the Public Service Commission invited applications from suitably qualified persons for the position of Deputy Governor of the Central Bank of Kenya in the print media and Commission’s website on 30th March 2025.

    “Following the conclusion of the shortlisting exercise, the Commission hereby publishes the shortlisted candidates and the interview schedule,” a notice from PSC read in part.

    The six are expected to face an interviewing panel on Thursday, October 3, 2024

    “Shortlisted candidates will be interviewed at the Public Service Commission, Commission House, Harambee Avenue, Nairobi on the date and time indicated. Candidates should be at the venue at least fifteen (15) minutes before the starting time,” PSC added while listing all documents expected to be availed during the interview period.

    Second Deputy Governor

    The hiring of the second deputy governor is expected to correct a breach which previously had been raised by the office of the Auditor-General.

    The law was enacted in 2015 demanding that the executive team at the CBK should be composed of the governor and two deputies.

    However, during the previous administration, efforts to get a second deputy governor failed to be implemented. Following the exit of Patrick Njoroge and his sole assistant Sheila M’Mbijjiwe as governor and deputy respectively, CBK embarked on the bid to honour the enacted law of having two deputy governors.

    At the moment, Kamau Thugge is the CBK Governor and he is deputized by Dr. Susan Jemtai Koech who was appointed by President Ruto in March 2022.

    Koech joined CBK after a distinguished career in which she served in senior roles in the banking sector and the government.

    Before joining CBK, she served as Principal Secretary in the State Departments of East African Community, Regional Development, and Wildlife.

  • MPs Send Away KRA Boss Over Sh62B Tax Evasion Dossier

    MPs Send Away KRA Boss Over Sh62B Tax Evasion Dossier

    Kenya Revenue Authority (KRA) Commissioner-General Humphrey Wattanga was Thursday afternoon thrown out of a meeting with Members of Parliament (MPs) for failing to produce documents on time in the investigations into the alleged loss of Sh62 billion in a tax evasion scandal involving two companies.

    Mr Wattanga had appeared before the National Assembly’s Finance and National Planning Committee to explain whether Louis Dreyfus Company (LDC) Asia PTA limited and Louis Dreyfus Company Kenya (LDC) limited evaded paying taxes by misdeclaring palm oil cargoes shipped into the country.

    The committee, chaired by Molo MP Kimani Kuria, was taken aback after the Commissioner-General failed to send advance copies of the required documents and instead bombarded MPs with voluminous documents on the morning he appeared before the committee.

    “You cannot expect us to go through these voluminous documents in this session and have a meaningful engagement with you. It is not possible. We need more time,” Mr Kuria said.

    Mr Kuria was speaking as committee members questioned whether the KRA management was trying to buy more time “on a serious allegation of tax evasion at a time when the country is struggling to raise revenue to meet its obligations”.

    “The tradition in this house is that companies appearing before committees must submit their documents at least 24 hours before the start of a committee meeting,” said Eldas MP Adan Keynan.

    In a letter to the Commissioner General dated August 29, 2024, the documents were to be submitted to Parliament by September 6, 2024.

    “It is in your interest that the information reaches us on time. As a parliamentary committee, we have a right to receive information in good time. This issue of creating a time crisis has been resolved by the current constitution,” said the Eldas MP.

    Mr Wattanga was due to appear before the Committee on September 10, 2024, but requested more time and was granted September 24, 2024.

    The Committee had requested KRA to provide details of the total cargo volume of palm oil imported by LDC Asia PTA through the Port of Mombasa from February 23, 2023 to June 26, 2024.

    The Committee wanted the details to include the volumes of RBD palm stearin, crude palm kernel oil, crude palm olein, crude palm oil and crude palm fatty acid distillate.

    The Committee also wanted Mr Wattanga to provide details of the total taxes and duties paid by LDC Asia PTA on the import of the palm oil cargo from February 23, 2023 to June 26, 2024.

    Copies of all import declaration documents, including but not limited to port health reports, Kenya Bureau of Standards (Kebs) reports, bills of lading and cargo manifests for all 120 cargoes of palm oil imported by the company between February 23, 2023 and June 26, 2024 are also required.

    The committee also wants a list of consignees for all palm oil cargoes imported by the company during the period.

    The committee also sought details of the cargo volumes of RBD palm stearin, crude palm kernel oil, crude palm olein, crude palm oil and crude palm fatty acid distillate imported by LDC-Kenya Limited, Acee Limited, Mazeras Oil Limited and Vipingo Industries Limited through the port of Mombasa.

    Mr Wattanga was also required to provide details of the taxes and fees paid by LDC- Kenya limited, Acee limited, Mazeras Oil limited and Vipingo Industries limited on the importation of the palm oil products.

    Copies of all import declaration documents for palm oil cargoes by LDC-Kenya limited, Acee limited, Mazeras Oil limited and Vipingo Industries limited through the port of Mombasa were also requested.

    The copies, the committee said, should not be limited to port health reports, Kebs, SGS reports, bills of lading and cargo manifests.

    Documents before the committee show that the product imported by LDC companies for use in Kenya and the other East African countries using the port of Mombasa for imports is misdeclared in two ways.

    Firstly, the product arrives as a blend of 60 per cent crude palm oil and 40 per cent refined palm oil, which is then declared as crude palm oil.

    Alternatively, the product is imported largely in refined form but declared as crude palm oil at the port of Mombasa to avoid the 35 per cent import duty or $500 per tonne.

    The product also attracts an Import Declaration Fee (IDF) of 2.5 per cent, a Railway Development Levy of 1.5 per cent and Value Added Tax (VAT) of 16 per cent.

    Kenya imposes a 35 per cent duty on imported refined palm oil and a 10 per cent duty on semi-refined palm oil.

    Palm oil imported from Malaysia and Indonesia, the world’s two leading exporters of palm oil products, accounting for 85 per cent of production, comes in six types – RBD palm olein, RBD palm stearin, crude palm kernel oil, crude palm olein, crude palm oil and palm fatty acid distillate.

    Palm oil stearin is a by-product of palm oil refining and is used in the manufacture of soaps and edible fats. RBD palm olein is refined palm oil, while crude palm kernel oil is a by-product used in the manufacture of soap.

    Crude palm olein is palm oil that has been semi-processed, i.e. it has only been fractionated to separate the liquid portion from the solid portion of the oil, and is subject to an import duty of 10 per cent.

    Crude palm oil is unprocessed oil that requires full processing.

    Palm fatty acid distillate is a by-product of palm oil refining and is used to make brown soaps.

    This means that if the product were imported in its crude form, the country would benefit as the by-products of the refined oil would help in the production of soap, among other things.

    Documents tabled in Parliament show that the government lost Sh16.5 billion in revenue in 2022 from the 233,000 metric tonnes that were misdeclared as crude palm oil and Sh32.54 billion in 2023 from the 387,868 metric tonnes that were misdeclared.

    In 2024, the government has already lost Sh13.83 billion in revenue from the 163,567 tonnes imported so far.

    LDC-Kenya limited, based in Mombasa, is one of the country’s leading vegetable oil traders with a growing presence across East Africa.

    It’s a major importer of palm oil products for millers and refiners in East Africa and operates one of the largest oilseed storage facilities in the region.

  • State Splurges Sh27B On Foreign Trips, COB Says

    State Splurges Sh27B On Foreign Trips, COB Says

    When President William Ruto issued a directive banning non-essential foreign travel for all state officials in October last year, it was expected that this would significantly reduce the amount the country spends on paying for overseas trips that give little value for money for taxpayers.

    It, however, appears that these were mere words or government officials blatantly ignored their boss, with travel expenditure for the year to June 2024 going up 34 per cent compared to the previous financial year.

    A new report by the Controller of Budget (COB) shows that spending on both domestic and foreign travel increased by Sh6.97 billion over the financial year to Sh27.34 billion from Sh20.37 billion in the financial year to June 2023.

    On October 2 last year, President Ruto’s Chief of Staff and Head of Public Service Felix Koskei issued a circular that suspended non-essential foreign travel.

    Among the categories of travel banned through the circular included benchmarking and study visits, training and capacity-building initiatives, conferences and meetings of general participation and research and academic meetings.

    However, the circular allowed foreign travel for critical engagements such as “fulfilment of state obligations, under the conduct of critical state party engagements” and “to fulfil a statutory leadership or membership role in which critical decisions impacting the country’s position are under consideration.”

    The guidelines were part of President Ruto’s bid to have civil servants tighten their belts, a gospel he has all along preached, noting that he does not intend to lead a bankrupt country or one in debt distress.

    The directives also limited spending on essential travel such that a delegation headed by Cabinet Secretaries would only have four persons who would only spend a maximum of seven cumulative days away per travel, 15 days per quarter, and 45 days per year.

    An analysis by the Office of the Controller of Budget, however, shows numerous instances where different government agencies sent staff to forums, many of them non-essential, and in some instances, staying away for weeks.

    According to the COB report on the government’s spending over the financial year to June 2024, expenditure on domestic travel grew by a third to Sh18.15 billion from Sh14.04 billion in 2023. Since the 2019-2020 financial year, spending on local travel by government officials has nearly doubled.

    Spending on foreign travel increased 45 per cent to Sh9.19 billion from Sh6.33 billion in the 2022-23 financial year.

    The COB also noted the reluctance among government officials to break down their spending abroad, a possible pointer to their frivolous spending.

    “Expenditure on domestic travel has grown from Sh10.82 billion in the 2019/20 financial year to Sh18.15 billion in the 2023-24 financial year. The percentage increase between the 2022/23 financial year (Sh14.04 billion) and 2023-24 financial year (Sh18.15 billion) was 29 per cent,” said CoB in the report.

    “Similarly, the expenditure on foreign travel registered a 45 per cent increase between the 2022/23 financial year (Sh6.33 billion) and 2023/24 financial year (Sh9.19 billion) despite the efforts to reduce non-essential travel in FY 2023-24.

    “In the 2023/24 financial year, the Office of the Controller of Budget requested details on MDAs’ foreign travel to review compliance with the circular. However, some MDAs did not submit a detailed breakdown of foreign travel expenditures. Further, there were discrepancies in the amount reported on foreign travel by economic line vis-a-vis the detailed breakdown.”

    Many of the foreign trips, according to the COB, were non-essential travel, with many government officials attending capacity-building meetings, training or benchmarking trips. These are the same kind of meetings whose attendance had been banned in the October 2, 2023 circular by the head of public service.

    “This spending pattern suggests that the Circular was not fully complied with,” said COB Margaret Nyakang’o in the report.

    “The analysis indicates that large delegations were common. This indicates non-adherence to the Circular’s emphasis on minimising delegation sizes and calls for more robust controls to enforce adherence.

    “Multiple trips to the same destinations by different MDAs suggest a lack of coordination, leading to redundant travel. For example, numerous departments travelled to Italy and France for similar purposes, incurring avoidable costs.”

    Ms Nyakang’o recommends that the government adopt a rigorous pre-approval process for all foreign travel, requiring clear justifications aligned with the Circular.

    “MDAs should provide evidence that the travel either fulfils a state obligation or is essential,” said the COB, adding that the government should also establish a centralised unit to review and approve all foreign travel across MDAs to prevent duplication and redundancies.

    “This body would ensure that similar trips by different departments are consolidated or eliminated, reducing unnecessary expenditure. Periodic audits of foreign travel should be conducted to ensure compliance with the circular.”

    The Circular by the Head of Public Service, had, according to COB, presented a critical shift towards optimising foreign travel expenditures by focusing on essential travel aligned with state obligations.

    “However, the success of these guidelines depends on strict enforcement, centralised coordination, and periodic audits,” said the COB in the report, adding that “the government can significantly reduce unnecessary travel costs and ensure that all foreign engagements provide tangible benefits to the country.”

  • MPs Launch Probe Into CBK’s Secret New Banknotes Printing Deal With A German Firm

    MPs Launch Probe Into CBK’s Secret New Banknotes Printing Deal With A German Firm

    Parliament has summoned Central Bank of Kenya Governor Kamau Thugge to provide details about a contract signed with an undisclosed German firm to print the country’s new banknotes.

    The awarding of the tender to the German company was announced yesterday by the CBK governor, but details regarding the firm’s name, the tendering process, and the cost of the deal remain undisclosed.

    This development follows Kenya’s decision to shut down De La Rue, the local British printing subsidiary, due to a lack of new printing orders. Kenya purchased a 40 per cent stake in the company for £5 million (Sh. 820.5 million) in 2019.

    De La Rue ceased its currency printing operations in the financial year ending March 2023 and spent £15.1 million (Sh2.48 billion) to lay off more than 300 workers, pay lawyers, and write off its assets.

    The company stated that its exit was due to confirmation from the CBK that there was “no expectation of new banknote orders” for at least 12 months. Former CBK governor Patrick Njoroge mentioned in February last year that the country’s currency needs were “completely fulfilled.”

    Dr. Thugge, the new CBK governor, justified the decision to introduce new notes for all denominations as an essential step to address potential stockouts.

    “The notes we have are getting old, and therefore we need to get new notes. The reason we started with the Sh1,000 notes is that we project a potential stockout of those notes in July or August, so it was necessary to acquire new notes as quickly as possible,” he said.

    The National Assembly’s Finance and National Planning Committee seeks clarity from the CBK governor on several issues, including the name of the German firm, how the tender was awarded, and the cost to taxpayers for printing the new currency.

    “We will be meeting Central Bank of Kenya Governor Kamau Thugge over reports that a firm has been identified to print new banknotes,” said committee chair, Molo MP Kuria Kimani, regarding the directive for Dr. Thugge to appear before the Parliamentary committee next Tuesday.

    “I urge members to attend the meeting. Although we will be in recess, it is crucial to understand the details of this currency printing deal,” Kimani added. The committee has initiated a probe following the CBK’s hiring of the German firm.

    When questioned by the media about the deal with the undisclosed German firm, CBK Governor Thugge stated that the printing was being conducted by “one of the best firms” in Germany.

    The new notes will feature the signatures of Dr. Thugge and Treasury PS Chris Kiptoo. They will be dated 2024 and include new security threads with colour-changing effects specific to each denomination. CBK noted that the rest of the features will remain the same as those of the 2019 series.

  • IMF and Kenya: Protests, Debt, and the Struggle for Stability

    IMF and Kenya: Protests, Debt, and the Struggle for Stability

    Kenya, once East Africa’s beacon of economic development and democratic stability, now faces political and financial turmoil.

    Massive protests erupted after parliament passed a bill hiking taxes on essential goods, further burdening an already struggling population.

    The violent crackdown on protesters and subsequent deaths have deepened the crisis. President William Ruto’s refusal to sign the controversial tax bill to address Kenya’s staggering $80 billion debt has left the country’s future uncertain.

    The International Monetary Fund (IMF), a key player in Kenya’s economic policies, faces fierce criticism for its austerity measures.

    As Kenya navigates these turbulent waters, questions about its political and economic stability intensify.IMF and Kenya protests

    IMF and Kenya’s Debt Crisis

    Ruto pushed the bill to address Kenya’s $80 billion debt, with $35 billion owed to foreign creditors, mainly China, the World Bank, and the IMF.

    Without repayment, Kenya risks future borrowing challenges, which could worsen unemployment and poverty.

    This situation reflects the struggles of many developing nations burdened by debt.

    Binaifer Nowrojee, president of the Open Society Foundations, highlighted that over 3 billion people globally live in countries prioritizing debt payments over essential services like education and health.

    IMF’s Role and the Finance Bill 2024

    The IMF has significant influence over Kenya’s economic policies. It often imposes austerity measures, including tax hikes and spending cuts, as conditions for financial aid.

    These unpopular measures sparked widespread protests in Kenya.

    The Finance Bill 2024, part of an IMF-backed program, proposed new taxes. President Ruto’s rejection of the bill increased public scrutiny and anger towards the IMF.

    Julie Kozack, IMF Director of Communications, expressed concern over Kenya’s unrest and emphasized the IMF’s commitment to supporting Kenya’s economic growth and well-being.

    Reports suggest the IMF advised the Kenyan government to stand firm on the bill despite expected protests.

    Deputy President Rigathi Gachagua criticized Kenya’s intelligence services for failing to foresee the violence.

    IMF and Kenya Protests
    Massive protests erupted after parliament passed a bill increasing taxes on essentials like cooking oil, diapers, and bread, adding to the burden of a population already struggling with inflation and unemployment. [Photo: Getty Images]

    Kenya’s Path Forward

    Kenya faces a murky future both politically and financially. Ruto’s refusal to sign the tax bill means the government must adopt austerity measures to comply with a 2021 IMF loan agreement.

    This agreement requires tax increases and spending cuts while protecting the social safety net. Ruto plans to cut government spending, starting with his office’s budget, to align with IMF guidelines.

    However, austerity measures could still affect public programs like infrastructure, healthcare, and education, exacerbating inequality and affecting critical services like school meals.

    Kenya spends about 60% of its revenue on debt payments, with a third going towards interest. While this pleases creditors, it limits funding for essential services for the population.

    Limited Options for Kenya

    Kenya has few options to manage its debt. Defaulting on payments could ease the burden short-term but would harm its credit rating and future borrowing ability.

    Renegotiating loan terms could help reduce debt payments but would still require austerity measures and possibly higher taxes.

    Maintaining the current course means limited funds for economic development and public services.

    The Struggle for Stability

    Kenya must find new revenue sources. Any tax increase should target the ultra-wealthy to regain public support, though this may be unpopular among the elite.

    Raising capital is a short-term fix; long-term solutions require addressing corruption, waste, and mismanagement. Efforts to reform may anger the wealthy, whose businesses rely on corrupt government relationships.

    Kenyans feel their government is not acting in their best interest, fueling protests. This dissatisfaction stems from Kenya’s political culture and international financial institutions that have failed developing countries.

    As President Ruto navigates these challenges, the world watches to see if Kenya can emerge stronger or succumb to debt and political instability. The coming months are crucial for Kenya’s economic policy and political leadership.

  • Kenya’s Finance Bill 2024: A Burden for Businesses and Citizens?

    Kenya’s Finance Bill 2024: A Burden for Businesses and Citizens?

    The Kenyan government’s Finance Bill 2024, aimed at raising revenue for the 2024–2025 budget, has sparked debate.

    While its goal of funding government programs is understandable, critics argue the Bill places undue pressure on businesses and ordinary Kenyans.

    Let’s explore some of the Bill’s most contentious proposals.

    Finance Bill 2024: Taxing Family Trusts & Eroding Investment

    The Bill proposes taxing income generated by family trusts. This move discourages long-term investment and wealth creation.

    Family trusts are often used for estate planning and responsible financial management.

    Taxing them reduces the incentive for saving and investing within families, potentially hindering future economic growth.

    Excise Duty Hike on Financial Services: Squeezing the Middle Class

    The Bill increases excise duty on financial services from 15% to 20%. This directly impacts the cost of bank transfers, mobile money transactions, and other essential financial activities.

    The middle class, which relies heavily on these services, will bear the brunt of this increase. Additionally, it discourages financial inclusion, making it harder for unbanked Kenyans to access financial tools.

    Motor Vehicle Tax Hike: Hurting Commuters and Businesses

    The Bill proposes a rise in motor vehicle taxes. This disproportionately affects Kenyans who rely on public transportation.

    With higher taxes, transportation companies may raise fares, impacting daily commutes.

    Businesses dependent on logistics and deliveries will also face increased costs, potentially leading to price hikes for consumers.

    Digital Marketplace Tax: Targeting the Informal Sector

    The Bill introduces a tax on online marketplaces. This aims to capture revenue from the growing e-commerce sector.

    However, it unfairly burdens informal traders who use these platforms to reach customers. Many small businesses operate online with limited resources.

    This tax could stifle their growth and push some out of the digital space altogether.

    Lack of Transparency and Public Consultation

    Critics argue the Bill’s development lacked transparency and public consultation. Many stakeholders, including businesses and citizens, feel their concerns were not adequately addressed.

    A more inclusive approach would have allowed for a more balanced and effective financial plan.

    Alternative Solutions Are Needed

    The government needs alternative solutions to raise revenue. Here are some possibilities:

    • Reviewing tax exemptions for large corporations: Tax breaks for big businesses could be re-evaluated to ensure a fairer distribution of the tax burden.
    • Combating tax evasion and corruption: Efforts to crack down on tax evasion and corruption could generate significant revenue without placing additional strain on ordinary Kenyans.
    • Investing in efficiency: Streamlining government operations and reducing wasteful spending could free up resources.

    Conclusion: A Balanced Approach is Key

    Kenya needs a sustainable financial plan. However, the Finance Bill 2024, in its current form, raises concerns.

    The bill’s proposed taxes could stifle economic growth, disproportionately impact the middle class and informal sector, and erode trust in the government’s economic policies.

    A more balanced approach that promotes long-term investment, encourages financial inclusion, and fosters economic opportunity is necessary for Kenya’s financial well-being.

    Public discourse and collaboration between the government, businesses, and citizens are crucial to achieve this goal.

  • Marine Poaching: Controversial Issuance Of Fishing Permits To Chinese Vessels Questioned

    Marine Poaching: Controversial Issuance Of Fishing Permits To Chinese Vessels Questioned

    Illegal, unreported, and unregulated (IUU) fishing remains a major threat to Kenya’s economy and livelihoods along the country’s coastline. Every year, this menace costs the country millions of dollars. In 2023, the nation is suspected to have lost US$3,854,580 to the cruel hands of marine poaching, among which is unregulated fishing (US$2,244,963) and unreported fishing (US$1,609,617).

    Beyond these outrageous financial ramifications, IUU bears huge social-ecological costs affecting fish populations and posing a threat to food security and livelihoods in the coastal region. Additionally, it goes hand-in-hand with multiple human rights abuses and labour violations among the many fishing vessels.

    According to the IUU Fishing Risk Index (2023) by Global Initiative Against Transnational Organised Crime, Kenya’s IUU world ranking deteriorated from 27 positions to 86 out of 152 countries, while on the continent, it slipped 7 positions to 26 out of 38 countries. These shocking reports immediately raise concerns about the state of IUU fishing in the country. Who are these blatant perpetrators of these marine crimes coming into the region in full force with less regard to the existing regulations? What’s the effectiveness of the country’s IUU regulatory bodies? What is each person’s collective effort and support in stopping this giant in the room?

    To deepen this conversation, an investigative report by the Environmental Justice Foundation (EJF)-2023, IUU Risk Index, ranks China as the notorious marine poaching offender among 152 countries worldwide due to its large ‘incognito’ vessels fishing along the Indian Ocean to Kenya’s Indian Ocean shores. China is the world’s biggest deep-water fleet (DWF), capturing up to millions of tonnes of fish per year. While recent public figures from the Chinese Ministry of Agriculture and Rural Affairs (MARA) document 2,551 vessels in its DWF, experts view this figure as underestimated, leaving the true extent of the fleet unknown. These are some of the strategic loopholes created by China and the IUU regulating and licensing bodies that aid the Chinese dark schemes in the fishing industry.

    The issuing of deep-sea fishing licenses to Chinese vessels in foreign territories by China falls typically under the People’s Government’s Department of the Ministry of Agriculture and Rural Affairs, or State Oceanic Administration. These authorities regulate and manage fisheries activities internationally to ensure adherence to laws and regulations. While in Kenya’s coastal territory, Chinese fishermen and Chinese trawlers have to seek licensing and operate under the regulations of the Kenya Fisheries Service (KFS), the Kenya Maritime Authority (KMA), and the Kenya Coast Guard Service. Other regulating conservation and support partners are the Kenya Wildlife Service (KWS) and the World Wildlife Fund (WWF). At least as per the EJF-2023 report, there are a record 138 Chinese vessels believed to have operational licenses in Kenya-Tanzania Indian Ocean territory. Out of the total number, 95 are long-liners that target tuna and tuna-like species, 4 are refrigerated cargo vessels, and 39 are Chinese trawlers that target a variety of species. Between 2017 and 2023, IUU fishing cases and unprecedented human rights abuses were closely associated with 86 Chinese vessels. Interestingly, half of the cases are not by just normal Chinese fishermen but by Chinese vessels controlled or owned by the state, fully or partially.

    On basis of case analysis, the highest Chinese fishermen/ Chinese vessels IUU fishing offenders continuing operations in the Kenya’s Indian Ocean shores are; Shandong Zhonglu(19 reported cases-43 offences), Zhejiang Ocean Family Co. Ltd(14 cases-30 offences), China National Agricultural Development GroupCo. Ltd (8 cases-12 offences), these are just documented Chinese vessels that’s in limelight with the necessary licensing even though still under red flag of IUU fishing activities, it’s not far from the truth that there are multiple Chinese fishermen/ trawlers operating silently but vigorously under the thankful eye of blatant corruption, bribery, political protection and ‘dark secrets’ of bilateral trade deals with China and disguise of the juicy endless and bait-like loans.

    Kenya, with its robust regulations and policy framework, is well-positioned to effectively tackle the issue of IUU fishing. But the silence and toothless dogs in the name of regulation seem to do nothing more, especially when it comes to Chinese vessels in the Indian Ocean illegally benefiting from marine poaching at the expense of the marine’s ecosystem. Despite receiving millions of dollars in fines for their illegal actions, these same offenders continue to operate freely in the Indian Ocean. Despite China’s continuous promotion of its economic agenda in Kenya, which emphasizes ‘win-win’ for all parties,’sustainable development’, and a ‘zero-tolerance’ approach to IUU fishing, Chinese trawlers continue to navigate the deep waters with unwavering confidence and protection that surpasses surface-level regulations.

    What happened to Chinese regulating authorities who can’t act on Chinese fishermen and Chinese vessels blatantly practicing IUU fishing in foreign territories yet have well-stipulated frameworks for action? Why is it that there is no public record of any Chinese vessel under red flag or suspension by China, yet there are multiple human rights abuses and illegal practices by Chinese fishermen (reported) in Kenya’s Indian Ocean?

    To demonstrate genuineness in combating the IUU fishing menace in the Indian Ocean, the government of the People’s Republic of China must be steadfast in adhering to best practices and collaborating with international partners. It must also end sanctions against Chinese fishermen implicated in IUU crimes, and demonstrate sustainability and transparency in its principles and requirements for fishing agreements for both Chinese state and private vessels. As for Kenya, it must stand firm and protect its marine resources from unscrupulous exploiters.

    The regulating authorities, like KMA and Kenya Coast Guards, must stand out and get the necessary support to combat these crimes. The public outcry is huge, and these authorities must step up their mandate.

    It’s time for other partners in the fight against IUU to intensify their pressure and advocate for greater adherence to IUU policy frameworks, both locally and internationally. Finally, to Kenya’s public: let the bell of justice, legality, and accountability for marine life and the blue economy continue ringing.

  • ‪Ethiopia Beats Kenya To Host Boeing Africa Headquarters

    ‪Ethiopia Beats Kenya To Host Boeing Africa Headquarters

    Boeing has announced that it will establish its new Africa HQ in Addis Ababa, Ethiopia, scheduled to open this year. The decision positions Ethiopia ahead of Kenya and South Africa as the preferred location for the aerospace giant’s latest expansion plans in Africa, a continent expected to have a rapidly expanding air travel industry in the years and decades ahead.

    In preparation for this move, Boeing had earlier appointed Henok Shawl, a former executive at Ethiopian Airlines, as the managing director for its African division. Shawl brings extensive experience in aviation and telecommunications, having recently served as the chief external affairs officer at Safaricom Telecommunication Ethiopia for six months.

    According to Boeing’s website, “Africa’s abundant natural resources and burgeoning young workforce are poised to drive significant growth in air traffic and airplane demand over the next two decades”. Boeing anticipates that African carriers will need 1,030 new jet aircraft within the next 20 years, with 80% of these deliveries aimed at expanding the existing fleet.

    Ethiopian Airlines, the largest carrier in Africa, has reached an agreement to purchase up to 20 of Boeing Co.’s 777X aircraft, providing the coming jet with an important endorsement from one of Africa’s premier airlines. The airline is currently building a new expanded airport hub in preparation for Africa’s expanding aviation industry. The airline is also expanding its repair, maintenance, and training facilities.

    Geven-SkyTecno and Ethiopian Airlines have inaugurated a state-of-the-art facility for the Manufacturing of Insulation Blankets for Boeing 737 MAX airplanes as part of a Boeing agreement between The Boeing Company, Geven-Skytecno and Ethiopian Airlines.
    Geven-SkyTecno and Ethiopian Airlines have inaugurated a state-of-the-art facility for the Manufacturing of Insulation Blankets for Boeing 737 MAX airplanes as part of a Boeing agreement between The Boeing Company, Geven-Skytecno and Ethiopian Airlines.

    In 2023, Ethiopian and Boeing entered a joint-venture to manufacture some airplane parts in Ethiopia. The venture will make “aerospace parts, including aircraft thermo-acoustic insulation blankets, electrical wire harnesses, and other parts,” the commission said. “The investment project is expected to create employment opportunities for more than 300 Ethiopians,” it said. The commission did not say when production will begin. There was no immediate comment from Boeing.

    Boeing is committed to tapping into this potential and has made substantial investments to support the growth of the local aerospace sector. These investments have not only fostered job creation but also spurred innovation, benefiting both Boeing and its African partners. The company collaborates with eight suppliers across six African markets, with these partnerships valued at approximately $41 million annually, with expected revenue growth of 8% per year on the continent.

    Boeing’s long-term vision and investment in Africa underscore its commitment to the continent’s aviation industry, ensuring mutual growth and development in the years to come.

  • Summary of US-Kenya Deals During Ruto’s State Visit

    Summary of US-Kenya Deals During Ruto’s State Visit

    President William Ruto will today conclude his state visit to the United States. Having been hosted by his counterpart President Joe Biden and held numerous bilateral meetings with different leaders and corporations, it’s estimated that U.S. had committed close to a trillion shillings in investments in what analysts are viewing as a loud statement by the Americans to consolidate and counter the growing influence of China and Russia in Africa.

    Kenya which has now been accorded the prestigious non-NATO ally status by President Biden, joins a high league of countries with fortified military ties. U.S. has made a statement that Kenya wits key ally in the region.

    Deals Sealed

    The U.S. has made commitments to Kenya in different economic sectors including;

    Defense and Security;

    US will designate Kenya as a major non-NATO ally, making it the first sub-Saharan African country to receive the designation. Currently, 18 countries are designated as non-NATO allies.

    The alliance between Kenya and NATO – will deliver an additional U.S. aid, including a new $7 million partnership to help modernize Kenya’s National Police Service, with a focus on staff and training development.

    Kenya and US will also establish a strategic dialogue on artificial intelligence.

    Trade and Investment;

    Microsoft will partner with United Arab Emirates-based artificial intelligence firm G42 to invest $1 billion in a data center in Kenya as part of its efforts to expand cloud computing services in East Africa.

    The U.S. International Development Finance Corporation announced plans to open an office in Kenya’s capital Nairobi, playing a key role in driving its efforts across key sectors in Kenya such as agriculture, health, e-mobility, and energy.

    The U.S. Agency for International Development will provide $15 million for new activities to reduce poverty and malnutrition and address global food security by expanding investment opportunities.

    Kenya and Coca cola signed Framework Collaboration Agreement to reinforce Coca-Cola’s engagement with Government of Kenya on policy consideration and Coca-Cola’s support in setting up a mango supply chain hub in Kenya.

    Coca-Cola will invest Sh23 billion ($175 million) over the next five years to expand its operations in Kenya.

    Debt and Finance;

    Launch the Nairobi-Washington Vision, a call to the international community to help debt-laden countries like Kenya manage debt while investing in economic growth. Ask international financial institutions to provide coordinated packages of support and creditor countries to provide forms of debt relief.

    The United States has committed to:

    Make available lending of up to $21 billion to the International Monetary Fund’s Poverty Reduction and Growth Trust to support the poorest countries.

    Provide $250 million for crisis response to the World Bank’s International Development Association.

    Climate Change, Kenya and USA agree to;

    Launch of U.S-Kenya Climate and Clean Energy Industrial Partnership. The U.S. and Kenya plan to work with international financial institutions and multilateral trust funds to identify mechanisms for mobilizing investment for clean energy manufacturing and services.

    Support Virunga Power, a U.S. company that announced a pipeline of six hydropower projects in Kenya with a total expected investment of $100 million. These projects will provide 31 megawatts of clean, renewable energy over the next five years.

    Have the USA provide a $60 million grant from the Millennium Challenge Corporation that will fund a four-year program in Kenya focusing on transportation needs, safer options for women and pedestrians, and climate-friendly public transportation.

    Healthcare;

    The U.S. Center for Disease Control and Prevention (CDC) and Kenya’s government will share information, identifying best practices and defining steps toward the development and full launch of the Kenyan National Public Health Institute.

    The International Development Finance Corporation is making a $10 million direct loan to Kenyan company Hewa Tele, which supplies medical oxygen to healthcare facilities in Africa.

    HIV Sustainability Roadmap: An agreement for Kenya’s Ministry of Health and the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) to collaborate in developing a sustainable plan to eliminate HIV as a public health threat in Kenya by 2027.

    The USA will provide $31.1 million investment in Kenya’s digital health infrastructure, including expanding the availability of electronic medical records at the clinic and community levels, building renewable solar power plants for hospitals, and linking pregnant women to ambulance services through mobile platforms.

    Education;

    Kenya will benefit with $3.3 million to fund a program for 60 Kenyan undergraduate students to study in the United States, focusing on STEM subjects.

    Kenya will also get additional $500,000 to support Kenyan students, scientists, researchers, and engineers by encouraging U.S. universities to increase investment in relationships with Kenyan universities and research institutions.

    The John Hopkins School of Advanced International Studies will launch a new fellowship program this fall bringing together high-achieving mid-career government officials from select African countries. Kenya is the first country to be added to the inaugural fellowship cohort.

  • Americans To Construct Sh471B Nairobi-Mombasa Expressway

    Americans To Construct Sh471B Nairobi-Mombasa Expressway

    Kenya Highways Authority (KeNHA) and U.S. infrastructure investment manager Everstrong Capital have signed a $3.6 billion (about Sh471 billion) Project Development Agreement (PDA) to build a 440 km (273 miles) highway between the capital and port city Mombasa.

    President William Ruto, unveiled the Usahihi Nairobi to Mombasa Expressway, during his visit with the President of the United States, Joe Biden, while visiting the White House on Thursday the 23rd of May 2024.

    According to the company, expressway is the largest toll road project in Africa and envisions a transformative symbol of Kenya’s dedication to transparent and innovative infrastructure development.

    A bigger highway between Mombasa and Nairobi has been on the wish list of successive governments aiming to ease congestion on the busy road to and from the port.

    “The project anticipates attracting investments totalling $3.6 billion, sourced from international investors, development agencies, pension funds and an exceptionally large number of Kenyan private investors,” Everstrong said in its statement.

    Financing

    Funding of the project has been an issue, the company in a statement stated that Kenyans won’t be burdened with the initial funding as the model will allow it to self manage.

    “Usahihi will pay for itself, not burdening the Government of Kenya. It is structured as a Public Private Partnership with revenue coming from road users. Usahihi will organize finance, construction, tolling, operation, and maintenance of the expressway under a 30-year concession with construction lasting 3-4 years,” the company stated.

    “The construction of the Usahihi expressway poses no financial risks to the Kenyan government, as it is structured to operate independently from the Government of Kenya’s balance sheet and is projected to be financially self-sustaining. The project anticipates attracting investments totaling USD 3.6 billion, sourced from international investors, development agencies, pension funds, and an exceptionally large number of Kenyan private investors.” It added.

    Design

    The expressway is engineered to accommodate the safe passage of trucks, buses, and automobiles, featuring rest stops, wildlife observation points, electric vehicle charging infrastructure powered by renewable energy sources, and strategically located overpasses designed by environmental experts based on animal migration patterns to facilitate safe wildlife migration.

    It’s expected to bring the current 10.5-hour journey between Nairobi and Mombasa, known as one of Africa’s most dangerous routes for both people and wildlife, down to a safe journey of approximately 4.5 hours.

    Everstrong Capital’s proficient team consists of world-class Engineering, Procurement, and Construction firms.

    Amb. Kyle McCarter, Everstrong Capital Partner & Usahihi Chairman, says, “The Usahihi Expressway isn’t just a project; it’s a testament to the transformational power of doing things right. It symbolizes passion, commitment, and transparency, demonstrating how to deliver immense value, not only to Kenyan citizens but to the entire East Africa region. It’s about changing lives and shaping the future of Kenya.”

    “The U.S. Embassy welcomes the signing of a project development agreement, which marks a significant step forward in the construction of a new Nairobi-Mombasa highway,” said Meg Whitman, United States Ambassador to Kenya. “This stretch of road is vital for Kenya’s continued economic growth and a new
    highway will be safer for all drivers, passengers, and pedestrians who depend on this important corridor for work, pleasure, and living.”

    William Ruto, President of Kenya stated, “More than just a road, the Usahihi Expressway sets a standard for transparent, sustainable, and community-centered development, fostering economic growth and environmental protection, serving as a global inspiration for ethical development. It embodies a commitment to transparency, hard work, and the empowerment of Kenyan citizens by engaging them as users, owners, and investors, creating a cycle of localized benefits and ensuring that communities directly reap the rewards of their investment and participation.”

    Everstrong Capital, is a US-owned infrastructure investment manager with a presence in both the US and Kenya with a focus on advancing sustainable infrastructure development across Africa.

    It initiated the Everstrong Kenya Infrastructure Fund (EKIF), which is dedicated to financing projects in energy, transportation, communication, and social infrastructure within East Africa and has played a pivotal role in significant infrastructure projects, including its investment in Gulf Power’s Athi River Power project and its founding sponsorship of Milele Energy, an independent power producer holding a 25% stake in the Lake Turkana Wind Project. Everstrong Capital is also assisting SunCode Energy as it enters the African Solar Energy market.