News and Analysis
December 18, 2025
Hello and welcome to the Money News Roundup Newsletter, where we are covering China’s agreement to increase Kenya’s repayment period for SGR loans. We also cover why CMA is questioning EABL over Diageo’s exit from the Kenyan market.
China has agreed to extend the repayment period for three Chinese loans used to build the Standard Gauge Railway (SGR) to 2040, easing quarterly repayment pressure for Kenya.
The National Treasury stated that it has renegotiated the loans into a 15-year facility, effective this year, which includes a new five-year grace period during which Kenya will not pay the principal.
As reported by the Business Daily, the loans were also converted from dollars to yuan, a move expected to save about Ksh27.7 billion (USD215 million) annually.
Originally, the loans from China Exim Bank were due by 2035, with Kenya servicing both interest and principal.
Treasury Cabinet Secretary John Mbadi said the revised terms allow repayment over 11 years after a four-year grace period. Kenya borrowed Ksh655 billion ($5.08 billion) for the SGR line from Mombasa to Nairobi and later to Naivasha, with maturities previously running between 2029 and 2035.
Treasury estimates annual servicing costs will fall from Ksh50 billion to Ksh37 billion, offering relief as debt servicing consumes over half of government revenue.
Officials also cited reduced exposure to dollar risk, noting that 52% of Kenya’s external debt is dollar-denominated, compared to 27.9% in euros, 12.3% in yuan, 5.2% in yen and 2.5% in pounds.
Kenya’s public debt stands near 70% of GDP, about Ksh12 trillion. Treasury data shows debt owed to China has fallen 18.8% over five years to Ksh620.3 billion, as multilateral lending rises and China issues no new loans beyond the SGR facilities.
The Capital Markets Authority (CMA) has questioned East African Breweries Limited (EABL) over the timing of its Ksh16.8 billion bond issue and the subsequent announcement by its parent company, Diageo, to exit the firm within 35 days.
EABL closed the five-year bond on November 12 before Diageo revealed it would sell its 65% stake to Japan’s Asahi Holdings for Ksh303.5 billion ($2.354 billion).
The proximity of the two transactions sparked speculation that EABL may have had prior knowledge of the sale. CMA directed EABL to clarify whether the board was aware of Diageo’s plans at the time of the bond issue.
Business Daily reports that EABL said it was unaware of the transaction, stating the bond and share sale were conducted independently.
The bond, issued under a Ksh20 billion programme, was oversubscribed by 52.4% and priced at 10.8%, refinancing older, costlier debt. Diageo’s exit will be completed next year, pending regulatory approvals.
Kenyan banks have proposed changes to Pay As You Earn (PAYE) tax bands, arguing that easing pressure on salaried workers would boost consumption and stabilise the economy.
In submissions to the Treasury ahead of the Finance Bill 2026, the Kenya Bankers Association (KBA) wants the minimum taxable income raised from Ksh24,000 to Ksh30,000 and the top PAYE rate capped at 30%.
Under the proposal, income below Ksh30,000 would be tax-free, with rates ranging from 15% to 30% for higher brackets.
KBA says rising taxes and deductions have cut real wages by 10.7%, weakening household demand and hurting small businesses. Banks argue that PAYE relief would inject liquidity into the economy, support consumption-led growth, and ultimately widen the tax base, offsetting short-term revenue losses. Read more.
Motorists have been cautioned against a new scam involving fake SMS messages demanding payment for alleged traffic violations.
NTSA on December 18 warned that the so-called instant fines are fraudulent and not linked to the authority. The messages direct recipients to a fake website resembling the official NTSA portal and threaten court action if payment is not made.
As reported by Kenyans.co.ke, Red flags include requests for vehicle registration details, information NTSA already holds, and unusually short payment deadlines.
Several drivers have reported receiving the messages despite having no traffic offences.
NTSA advised motorists not to click the links, respond to the messages, or make payments through unsolicited SMS. Victims who have already paid were urged to contact their banks immediately.
Drivers aged 60 and above may soon be required to renew their driving licences annually instead of every three years, with mandatory medical assessments included.
According to NTSA Road Safety Programmes Manager Samuel Musumba, the proposal aims to improve road safety by ensuring older motorists remain fit to drive, not to intrude on personal health matters.
As reported by Eastleigh Voice, the changes are part of NTSA’s new driver curriculum, but are yet to be submitted to Parliament and will require legislation and public participation.
Currently, all drivers renew their licences every three years without medical checks. The announcement comes amid reforms to the smart driving licence programme, now set to be managed under a public-private partnership after years of delays and missed targets by NTSA.
About Ksh96.7 billion (USD750 million) in World Bank funding to Kenya remains on hold as the government works to meet key policy and legislative conditions for its release.
Treasury Cabinet Secretary John Mbadi said the funds, meant to support national reforms, were delayed after Kenya failed to meet 11 prior requirements under the World Bank’s Development Policy Operation (DPO 7).
Although the lender has indicated a possible March 2026 disbursement, Kenya is pushing for an earlier release. Conditions include amending the Competition Act, implementing e-procurement, issuing a sovereign sustainability bond policy, easing urban traffic congestion, and fully operationalising the Treasury Single Account.
Talks continue as Kenya also negotiates a new IMF programme, which Treasury says is not critical to its funding plans. Read more.
Kenya increased its domestic borrowing in the first three months of the 2025/26 financial year, raising about Ksh412 billion from local banks and pension funds—an average of Ksh4.58 billion daily.
As reported by the Star, new data by the Controller of Budget shows domestic borrowing surged by 178%, despite government assurances of reduced borrowing.
Although Consolidated Fund receipts rose to Ksh1.03 trillion between July and September, the increase was driven largely by Treasury bills and bonds rather than stronger tax revenue.
Domestic borrowing accounted for over 40% total inflows, while tax revenue grew modestly. During the quarter, Ksh1.02 trillion was spent, mostly on recurrent costs. Development spending lagged, receiving just 11% of its annual allocation, while external funding contributed only 3% of receipts.
Salaried workers contributed Ksh47 billion to the Social Health Authority (SHA) in the year to June, accounting for 62% of total funding despite representing only about 20% of contributors, exposing a skewed financing model.
As reported by the Business Daily, a Parliamentary Budget Office (PBO) analysis shows that although SHA has more members than the former NHIF, it relies heavily on a small pool of formal workers.
Of 27 million registered members, about 5.4 million are formal workers, but only 4.3 million contributed, averaging Ksh10,930 each. In the informal sector, just 860,000 people contributed Ksh23 billion, averaging Ksh26,744 per person, while over 20 million contributed nothing.
Total SHA funding stood at Ksh75.5 billion, including Ksh5 billion from the government. The funding gap has slowed claim settlements, with only 62% paid.
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