CBK to Slash Mobile Money Charges by Half in New Policy

Hello and welcome to the Money News Roundup Newsletter, where we cover CBK's new proposal to cap mobile money fees, the challenges facing Saccos after Trump cuts donor funding, and two fresh petitions to outlaw the mandatory housing levy.

Mobile Money Cap

The Central Bank of Kenya (CBK) is seeking to cap fees charged by mobile money providers such as Airtel Money in an effort to make the services more affordable to Kenyans.

In its proposal, titled Kenya National Financial Inclusion Strategy 2025-2028, the regulator aims to lower the baseline fee from Ksh23 to a mean of Ksh10.

A report by Business Daily indicated that, if implemented, telcos will see a significant drop in their profit margins by 2028, forcing them to find creative ways to grow their revenue. The report also showed that current transaction fees can be as high as 6.9 per cent.

For instance, transferring Ksh200 attracts a Ksh7 charge and a Ksh29 withdrawal fee, while transferring Ksh1,500 attracts a Ksh23 transfer fee and a Ksh29 withdrawal fee.

“Recent data shows signs of plateauing growth in mobile money access and usage. Most users still rely primarily on basic services like person-to-person transfers, with limited uptake of advanced offerings such as digital credit, insurance, or savings,” CBK reports indicate.

“This is attributed to issues such as interoperability, high transaction costs, low financial literacy, and product designs that do not reflect the realities of underserved groups.”

The regulator says it will work with industry stakeholders to agree on an appropriate cap. [Read more here.]

Saccos Banned From Taking Loans to Pay Dividends

Co-operatives Cabinet Secretary Wycliffe Oparanya has banned Saccos from taking loans to pay dividends to their members. He also suspended new Sacco registrations as part of a crackdown on poorly managed savings and credit co-operatives to curb unhealthy financial competition and protect millions of depositors. According to The Standard, Oparanya directed that any Sacco seeking an external loan must obtain written approval from the Commissioner for Co-operatives.

Meanwhile, Business Daily reports that 16 Kenyan Saccos with Ksh37.41 billion in deposits are facing stability risks after US President Donald Trump cut donor funding. The disruption has affected local firms that relied on donor programmes such as USAID, directly impacting the Saccos they supported.

Fresh Court Petitions Seek to Outlaw Mandatory Housing Levy

Civil rights groups and individual citizens have filed new lawsuits at the High Court in Nairobi to stop the mandatory housing levy. They also want the allocation of housing units to select public service workers and professional groups nullified, accusing President William Ruto of using the project for political favour.

The levy was earlier declared unconstitutional by the High Court in November 2023 due to a lack of a proper legal framework, poor public participation, and discrimination against formally employed workers. The Supreme Court later overturned this decision in October 2024 but urged Parliament to pass a law to guide public participation. The cases add to the growing legal challenges facing key policies of the Kenya Kwanza administration, reports Daily Nation.

Treasury Turns to New Debt Tools Amid Rising Repayment Costs

Kenya’s Treasury is expanding its debt-raising strategies beyond traditional Treasury bills, bonds, and concessional loans to meet growing repayment obligations and budget deficits. New instruments include Samurai bonds from Japan, securitisation of statutory levies, climate- and food-for-debt swaps, and bond buybacks. The government also plans to revive privatisation of State-owned firms, targeting Ksh149 billion from sales such as the planned Kenya Pipeline Company IPO.

Debt repayments are projected at Ksh1.9 trillion this fiscal year, consuming over 44% of the Ksh4.29 trillion budget. While domestic debt accounts for most of the costs, the major challenge comes from expensive foreign loans. Rising debt service expenses have squeezed funding for key public sectors like health, education, and infrastructure, reports Business Daily.

Unga Group Posts Ksh222 Million Profit on Higher Sales, Lower Costs

Unga Group returned to profitability with a Ksh222 million net profit for the year ended June 30, bouncing back from a Ksh669.5 million loss the previous year. The turnaround was driven by a 10.2% rise in revenues to Ksh26.1 billion and lower finance costs due to reduced debt and falling interest rates. Operating profit rose to Ksh704 million from Ksh275.6 million a year earlier, though the board opted not to declare a dividend, Business Daily reports.

The company’s total liabilities fell by Ksh442 million to Ksh5.7 billion, supported by a decline in short-term debt and reduced reliance on overdrafts. Unga also cited stable macroeconomic conditions and a stronger shilling for improving its financial position, even as it grappled with high energy costs due to erratic power supply.

KTDA Tea Bonus Gap Sparks Uproar Among Farmers

A wide disparity in tea bonus payments by the 77 factories managed by the Kenya Tea Development Agency (KTDA) has angered farmers, with most recording lower earnings for the year ended June 30, 2025. An interim report shows farmers in 21 tea-growing constituencies saw drops of between Ksh0.80 and Ksh19.10 per kilogram compared to last year, affecting about 680,000 small-scale growers nationwide.

According to Daily Nation, Farmers in the East of Rift region will receive between Ksh26 and Ksh57 per kilogram in second payments, while those in the West of Rift will earn just Ksh10 to Ksh32 per kilogram. Kiru Tea Factory recorded the steepest fall, dropping to Ksh32 from Ksh51.10 last year, while Rukuriri Tea Factory leads with Ksh57.50 despite a decline from Ksh61.50.

Rising Statutory Deductions Deepen Economic Strain on Kenyan Workers

Kenyan workers are facing mounting economic pressure as statutory deductions such as PAYE, SHIF, NSSF, and the housing levy take up to 35% of gross salaries, sparking criticism from civil society groups. The Kenya Human Rights Commission and other organisations have termed the housing levy illegal and regressive, arguing it worsens poverty while sparing political elites and wealthier groups. Critics say these deductions erode workers’ disposable income, forcing many to cut spending amid high living costs.

Data from the Kenya National Bureau of Statistics shows that despite increased collections, the levies have had minimal impact on economic growth, with the economy shrinking by 0.7% in 2024 due to high input costs, reduced private investment, and weaker household spending. The burden is particularly heavy on salaried workers, with an employee earning Ksh50,000 taking home about Ksh37,000 after statutory deductions. People Daily reports.