How Investors Made Ksh134B Profit From Govt Bonds in 9 Months

Hello and welcome to the Money News Roundup Newsletter, where we are covering the boom in bond sales, the government’s plan to retrain and redeploy retrenched sugar workers, and the IMF’s concerns that the Kenyan shilling is “too stable.”

Investors Make Ksh134 Billion From Bond Sales

Investors in government bonds at the Nairobi bourse are smiling all the way to the bank after cashing in Ksh134 billion in profits between January and September this year.

A report by Business Daily indicated that bond prices rose due to falling interest in the primary market, largely driven by a lowered Central Bank Rate (CBR).

When the CBR drops, the interest rate on new bonds also falls. This makes older bonds with higher interest rates more attractive, pushing up their prices in the secondary market. Investors who bought earlier at lower prices are now selling at a profit, resulting in the Ksh134 billion windfall.

The most profitable bond on the secondary market was the tax-free infrastructure bond issued in February 2024, which carried a coupon rate of 18.46%. On the secondary market, the bond traded at Ksh123.28 per Ksh100 par value, representing a 23.2% gain.

Overall, activity on the secondary market crossed Ksh2 trillion within the nine months. In the first quarter, investors earned Ksh57.6 billion, followed by Ksh43.7 billion in the second quarter and Ksh33.1 billion in the third quarter.

Catch Up Quick: The Central Bank of Kenya has recently lowered the CBR a record eight consecutive times — from over 10% to the current 9.5%. This drop has had a ripple effect across the market, leading to a fall in returns on bank deposits, Treasury bills, and government bonds.

For instance, in August 2024, Treasury bills fetched returns above 15.78%, compared to the current rate of about 9.3%.

Looking Ahead: Analysts estimate that “going forward, we expect yields to continue trending downwards in the near term.” Bond returns have already outperformed other asset classes such as real estate.

IMF Concerned About Kenyan Shilling Being ‘Too Stable’

The International Monetary Fund (IMF) has raised concern that the Kenyan shilling has remained “too stable” against the US dollar, despite global market shifts that were expected to strengthen the local currency. According to Business Daily, IMF officials expressed concern during a staff visit to Kenya that ended on October 10, noting that the shilling’s stability may be interfering with inflation targeting. The local unit has traded within the Sh129 range for nearly a year, a trend some analysts attribute to possible market management by the Central Bank of Kenya (CBK). “The IMF were in town two weeks ago, and one of the things they told us is that the exchange rate is too stable,” said Kenya Revenue Authority chairman Ndiritu Muriithi.

Earlier, the CBK dismissed claims of interference, maintaining that Kenya operates a flexible exchange rate system and only intervenes to smooth volatility. Governor Kamau Thugge has defended the shilling’s stability, saying it is supported by strong foreign exchange inflows from remittances, exports, and improved investor confidence. “The expectation is that the stability will continue,” Dr Thugge said, citing Kenya’s narrowing current account deficit and a recent S&P credit rating upgrade. The IMF’s view comes as Kenya seeks a new loan arrangement with the fund, following the premature end of a multi-year facility earlier this year.

Audit Flags 29 Schools Over Missing Capitation Amid Ghost Learner Probe

At least 29 schools have not received government capitation due to registration queries uncovered in an ongoing Ministry of Education audit aimed at identifying ghost schools and learners across the country. Education Cabinet Secretary Migos Ogamba told MPs that the affected institutions had registered for national exams but were not in the ministry’s system for capitation. “We cannot even establish as of now whether the 29 schools have candidates in the first place,” he said, noting that disbursement could not proceed until the registration issues are resolved.

According to Citizen Digital, CS Ogamba also revealed that over 6,000 other schools failed to meet compliance guidelines for receiving capitation, with some having as few as 45 pupils, while the ministry faces a Ksh3.2 billion deficit to conduct the 2025 national examinations. Education Committee Chair Julius Melly questioned why such schools were allowed to register for exams despite non-compliance, while data showed that 570 of 990 primary schools had not submitted required information even after receiving half of their capitation funds.

Nairobi-Embakasi Train Route Overtakes Ruiru as Most Profitable Line

The Nairobi-Embakasi line is now the most profitable in the Nairobi Commuter Rail network after revenues rose 36.3 percent to Ksh17.94 million in the six months to June, surpassing the Nairobi-Ruiru route’s Ksh16.2 million. Business Daily reports that passenger numbers on the Embakasi route jumped 22 percent to 321,659 as more commuters opt for cheaper train fares capped at Ksh80, compared to over Ksh100 charged by matatus.

Govt to Reskill, Redeploy Workers Affected by Sugar Sector Restructuring

The government has announced plans to reskill and redeploy workers affected by the ongoing restructuring of State-owned sugar companies as part of efforts to revive the struggling sector. Labour CS Alfred Mutua told the Senate that retrenched employees will remain on the payroll for 12 months from May 2025, with lessees expected to absorb up to 80 percent of the current workforce. He said the process, guided by a May 7 Memorandum of Understanding, aims to ensure fairness and compliance with redundancy laws.

According to Kenyans.co.ke, more than 1,700 employees in Kisumu County have been affected by the restructuring of Chemelil, Muhoroni, and Miwani sugar firms. The government has already paid Ksh1.8 billion in salary arrears, with the remaining Ksh3.8 billion and Ksh15 billion in terminal dues to be cleared by June 2026. A transition committee involving national and county officials is overseeing the process to ensure all dues are settled in line with labour laws.

Commercial Building Approvals in Nairobi Drop to 27-Month Low

The value of non-residential building plans in Nairobi fell to a 27-month low of Ksh1.6 billion in August, the lowest level since May 2023, amid an oversupply of office spaces and a growing shift toward mixed-use developments. Data from the Kenya National Bureau of Statistics shows commercial building approvals in the capital dropped by 41.2 percent from Ksh2.7 billion the previous month. In contrast, residential project approvals rose to Ksh9.5 billion, up from Ksh8.4 billion in July 2025, according to Daily Nation.

Real estate experts say the slowdown reflects changing market dynamics, with more demand for residential and mixed-use developments. “More people are looking for residential to buy than commercial because of basic needs like shelter,” said Daniel Ojijo, chairman of Homes Universal. He added that developers are increasingly combining commercial and residential units to balance demand, as the glut of office space in areas like Westlands and Upper Hill persists despite firms adopting hybrid work models.

Court Faults KRA in Ksh1.9 Billion Tax Row with German Firm

The High Court has ruled in favour of German engineering firm HP Gauff Ingenieure GmbH & Co. KG in a Ksh1.9 billion tax dispute with the Kenya Revenue Authority (KRA). According to Business Daily, the court found it unfair for KRA to deny the company a VAT relief of Ksh526 million due to delays in the Treasury’s issuance of a tax exemption certificate, saying the firm should not be punished for government administrative failures. The ruling set aside both KRA’s decision and an earlier Tax Appeals Tribunal judgment that had upheld the taxman’s position.

The case revolved around VAT relief on four donor-funded infrastructure projects, including the Kisumu-Kakamega and Merille-Marsabit roads. KRA had also demanded Ksh1.24 billion in corporate income tax and Ksh189 million in PAYE, arguing the firm failed to provide proof for exemptions and underreported salaries. The court, however, found that the tribunal failed to address key issues such as the tax treatment of South Sudan projects and expatriate pay, sending those matters back for a fresh hearing.

KEBS Proposes New Bill to Curb Unsafe and Counterfeit Goods

The Kenya Bureau of Standards (KEBS) has unveiled the proposed Standards Bill 2025, which seeks to establish a stricter regulatory framework to tackle unsafe and counterfeit products in the market. According to The Standard, the Bill aims to strengthen product licensing, certification, and enforcement while giving KEBS broader powers to oversee market compliance. It also seeks to align Kenya’s standards regime with global manufacturing and trade practices by promoting industrial competitiveness and public safety.

KEBS Managing Director Esther Ngari said the Bill will expand the agency’s mandate to develop standards, regulate certification, and monitor market compliance. It also introduces mandatory compliance for products affecting health, safety, or the environment, and grants KEBS powers to halt production or recall unsafe products. The Bill further proposes the creation of a Standards Tribunal to enhance fairness and accountability in regulatory decisions, with KEBS Standards Council Chairman Dr. Chris Wamalwa urging Parliament to fast-track its passage.

NSE 20-Share Index Climbs 21.8% in Q3, Boosting Investor Confidence

Kenya’s capital markets recorded a strong rebound in the third quarter of 2025, driven by rising investor confidence, regulatory reforms, and new listings, Citizen TV reports. According to the Capital Markets Authority’s (CMA) Third Quarter Soundness Report, the Nairobi Securities Exchange (NSE) 20-Share Index — which tracks top blue-chip firms — surged 21.8% to close the quarter at 2,972.64 points, while the NSE All Share Index rose 15.2% to 176.74 points. This performance pushed the market capitalization of all listed companies to Ksh2.78 trillion, with equity turnover rising by 55.34% to Ksh46.23 billion and traded volumes increasing by 26.09% to 1.8 billion shares.

The report also showed the government raised Ksh405.28 billion through six bond issues, including a reopened savings development bond, as secondary bond market activity strengthened. However, foreign investor participation dropped sharply from 44.47% in the second quarter to 28.01% in September, leading to a Ksh4.96 billion net outflow amid global monetary and geopolitical shifts. Despite these headwinds, the CMA remains optimistic, citing upcoming parastatal listings under the proposed Government-Owned Enterprises Bill 2025 and greater SME participation as key drivers for sustained market growth.