How Disputed Credit Rating Downgrade Made Kenya Lose Ksh19.5 Billion

Hello and welcome to the Money News Roundup. Today, we cover how Moody’s 2024 credit downgrade may have cost the country Ksh19.5 billion. We also cover China's donation to Kenya for Ebola.

Moody’s Credit Rating Downgrade After Gen Z Protests Cost Kenya Ksh19.5 Billion - AU Says

Kenya lost an estimated Ksh19.5 billion ($150 million) following Moody’s decision to downgrade the country’s credit rating in 2024, according to the African Union’s Africa Peer Review Mechanism (APRM).

As reported by the Business Daily, APRM disputed the downgrade, arguing that it lacked sufficient information and context. The rating action followed the Gen Z-led protests that forced the government to withdraw the Finance Bill 2024.

The downgrade contributed to the shilling weakening from Ksh124 to Ksh128 against the dollar, while Eurobond yields increased from 7.2% to 9.1%, raising Kenya’s external borrowing costs.

APRM said the higher borrowing costs and currency depreciation accounted for the estimated Ksh19.5 billion loss. It also argued that Moody’s commentary weakened investor confidence, increased financing costs and complicated Kenya’s planned Eurobond buyback.

The Kenyan case has been cited in the push for the Africa Credit Rating Agency (AfCRA), launched to provide alternative assessments of African economies.

The AU says AfCRA will offer investors more context-specific information and potentially improve Africa’s access to capital markets. The agency will rate governments, financial institutions and private companies.

Moody’s and other major global rating agencies have previously rejected claims of bias, saying they apply consistent methodologies globally.

China Gives Kenya Ksh129.5 Million for Ebola Preparedness

China has given Kenya Ksh129.5 million ($1 million) to strengthen Ebola preparedness following confirmation of the country’s first imported case.

As reported by the Business Daily, the funding is part of a Ksh259.5 million ($2 million) cash grant handed to the National Treasury by Chinese Ambassador Guo Haiyan. A similar Ksh129.5 million will support drought response.

Health CS Aden Duale said Kenya is not experiencing widespread transmission, describing the case as isolated and imported. The government has intensified screening, contact tracing and surveillance, with 66 people in quarantine.

By October 6, 652,000 travellers had been screened, 267 samples tested and 4,971 healthcare workers trained.

Travel Agents Protest Abrupt Rollout of Mandatory Visitor Insurance

The Kenya Association of Travel Agents (KATA) has protested the abrupt rollout of mandatory health insurance for foreign visitors, citing uncertainty over implementation.

As reported by the Business Daily, the association wants Immigration to clarify the effective date, affected travellers, approved insurers, premiums, coverage and exclusions. 

The concerns follow a High Court ruling upholding the requirement for non-Kenyans entering Kenya for less than 12 months to have insurance providing at least nKsh6.4 million ($50,000) in cumulative benefits.

The cover includes medical expenses, emergency transport, medicines, mental illness treatment and repatriation. KATA says the eTA platform now offers inbound insurance at a premium of about Ksh5,700 ($44).

Manufacturers Move to Court Over Ksh40 Industrial Sugar Tax

The High Court has certified as urgent a petition by the Kenya Association of Manufacturers (KAM) challenging the increase in excise duty on industrial sugar from Ksh7.50 to Ksh40 per kilogramme.

As reported by Nation, KAM says the 433% increase has raised taxes, levies and port charges to about 90% of the sugar’s CIF value. 

The association argues the tax threatens manufacturers, exports and jobs, estimating Ksh6 billion in annual costs and risks to 3,000 jobs. The case will be mentioned on October 15. KAM wants the court to declare the tax unconstitutional and restore the previous rate.

Equity CEO James Mwangi Appointed to Global Development Commission

Equity Group Holdings CEO James Mwangi has been appointed to the 20-member South-North Commission on Development, a German government-backed initiative seeking to reshape global development cooperation beyond 2030.

As reported by the Kenyan Wall Street, Mwangi is one of two business representatives and the only African business leader on the commission. He joins World Bank President Ajay Banga, WTO Director-General Ngozi Okonjo-Iweala and Nobel laureate Denis Mukwege.

The commission, co-chaired by former German Chancellor Olaf Scholz and former Costa Rican President Laura Chinchilla, will examine development financing, international partnerships and reforms to global institutions.

Govt Says Safaricom, Kenya Pipeline Sale Funds to Finance 1,250 Dams

President William Ruto has said funds raised from the sale of government shares in Safaricom and Kenya Pipeline will finance agriculture reforms, including construction of 1,250 dams.

Citizen Digital reports that Ruto said Ksh320 billion held in the National Infrastructure Fund will support 50 large, 200 medium and 1,000 small dams to reduce reliance on rain-fed farming.

He said the projects aim to strengthen food security amid unpredictable rainfall. Ruto also said his administration had registered farmers, subsidised fertiliser and expanded markets, while promising to clear outstanding debts owed to sugarcane and coffee farmers.

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