Govt Turns to New Lenders After Cancelled JKIA-Adani Deal

Hello and welcome to the Money News Roundup Newsletter. Today, we’re covering the government’s push for new lenders in the JKIA expansion plan and looming job losses at Naivas Supermarket.

Govt Reaches Out to China and Japan After Cancelled JKIA-Adani Deal

As reported in the People Daily, the government has reached out to China and Japan to fund the planned expansion of the Jomo Kenyatta International Airport (JKIA). The government is seeking to raise Ksh258 billion for the project.

According to Transport Cabinet Secretary Davis Chirchir, the government had already written letters to the Japan International Cooperation Agency (JICA), China Exim Bank, KFW Development Bank(German firm), the European Investment Bank (FIB), and the African Development Bank (AfDB).

"We have written to development agencies to basically tell them there's an opportunity to build the airport through the Jomo Kenyatta International Airport, borrowing on its balance sheet," the CS stated.

Plans to expand the international airport stalled after the government cancelled the controversial Adani deal. 

The deal was cancelled after public pressure following the indictment of officials of the Indian company for bribery and fraud.

2,000 Naivas Employees Risk Losing Jobs Over KRA Tax Dispute

2,000 Naivas employees could soon be rendered jobless following a tax dispute between the Kenya Revenue Authority and- a firm that provides HR services to the retail outlet.

As reported by the Business Daily, the taxman is demanding payment of Ksh777 million tax arrears. According to the taxman, the arrears arose from unpaid Value Added Tax (VAT) for the disbursement of employee salaries.

As a result, firm is warning that the supermarket employees could soon be rendered jobless if they are made to meet the demand by KRA.

 Achievo Limited is challenging the decision by the taxman in court.

“The astronomical tax liability of Ksh777,092,137 has no basis in law, and the Appellant/Applicant (Achievo Limited) is apprehensive that unless the application is allowed and a stay is granted, the Respondent will commence execution proceedings.

“This will have far-reaching ramifications that potentially include winding up the Appellant/Applicant’s business and ultimately lead to massive job losses of more than 2,000 employees across the country,” Naivas COO Peter Mukuha stated.

‍Banks Predict an Increase in Personal Loan Defaults 

Commercial banks are expecting a rise in personal loan defaults in August and September.

The CBK’s June 2025 Credit Officer Survey shows that non-performing loans (NPLs) in the personal and household segment are projected to increase more than in any other sector, pointing to growing repayment stress among individuals.

According to the survey, 44% of bank credit officers expect NPLs in this segment to rise in the third quarter, up from 38% in the previous quarter. Only 17% foresee defaults remaining constant, while 39% anticipate a decline.

CBK noted that these expectations come despite banks maintaining their lending criteria across all 11 monitored sectors, including manufacturing, trade, real estate, and agriculture. Read more here.

‍CBK Sets Timeline for New Loan Pricing Model

The Central Bank of Kenya (CBK) has given commercial banks six months to fully implement a new risk-based loan pricing model, signalling a major shift in how lending rates are set.

CBK Governor Kamau Thugge said the framework will combine the Central Bank Rate (CBR) with a borrower-specific premium to reflect risk profiles, aligning Kenya’s credit pricing with global standards.

Banks are expected to have their models approved by their boards within three months, followed by a three-month rollout. The plan comes after months of consultations between CBK and lenders to create a transparent and uniform pricing structure.

A key change will be the adoption of the interbank rate as the common reference rate. Read more on the Business Daily.

‍KRA Limits Tax Relief on Staff Lump Sum Gratuity Payouts

The Kenya Revenue Authority (KRA) has announced that tax relief on employee lump sum gratuity payouts will only apply to new payments. 

As reported in the Business Daily, Gratuity covering periods before July 1, 2025, will be subject to income tax regardless of the payment date.

This means employees receiving delayed payouts for periods served before July will still be taxed, with the amounts treated as part of employment income in the year earned. Payments will be spread over the relevant service period, up to four years, with any balance beyond that taxed in the fifth year.

However, gratuity for periods before July 1, 2025, paid into a registered pension scheme will remain exempt. 

KRA added that lump sum gratuity is taxed at the same rate as employment income, with employers required to deduct applicable tax before releasing the balance to employees.

KCB to Pay Ksh12.85 Billion Half-Year Dividend

KCB Group will pay shareholders Ksh12.85 billion in dividends for the half year to June 2025, with half of the amount coming from a special dividend funded by the sale of National Bank of Kenya to Nigeria’s Access Bank Plc in May.

The lender, which reported an 8.1 percent rise in net profit to Ksh31.5 billion for the period, announced an interim dividend of Ksh2 per share and a special dividend of the same amount.

The combined Kshh4 per share payout is nearly triple the Ksh1.50 per share distributed at the same time last year, which totalled Ksh4.82 billion.

This year’s half-year payout will also surpass the Ksh9.6 billion paid for the entire 2024 financial year, when shareholders received a total of Ksh3 per share. Read more here.