Kenya Begins Negotiating Fresh IMF Loans After Cancelling Ksh466B Deal

Hello and welcome to the Money News Roundup Newsletter, where we are covering fresh rounds of IMF loan negotiations, teachers facing the sack, and a car theft syndicate run by police officers.

IMF Loan Talks

The cash-strapped Kenyan government is once again turning to the International Monetary Fund (IMF) in hopes of unlocking a new programme funded by the international lender.

IMF staff are expected to jet into the country today for negotiations with the current regime, which will run until October 9.

“An IMF staff team will begin initial discussions in the coming days on a possible Fund-supported programme,” Haimanot Teferra, the IMF’s mission chief for Kenya, said in a statement carried by Reuters.

The staff is expected to meet key Kenyan officials including Treasury CS John Mbadi and Central Bank Governor Kamau Thugge, who has been a strong advocate for a new IMF-backed programme with a lending component.

Catch Up Quick: The latest negotiation attempts come five months after similar talks at the end of April, with the Bretton Woods institution failed to bear fruit. Earlier this year, President William Ruto’s administration cancelled a 4-year agreement with the IMF (valued at Ksh466 billion) and announced that it would renegotiate its engagement terms in light of new tariffs announced by US President Donald Trump, as well as Gen Z and millennial-led protests that forced him to shelve the 2024 Finance Bill.

The cancelled programme was valued at Ksh466 billion, but after Kenya exited in March, the country forfeited Ksh110 billion ($850 million).

Teachers Face the Sack Over Ghost Students

Education CS Julius Ogamba has warned that teachers risk being fired or transferred if found guilty of inflating school enrolment numbers. The verification exercise, which has been ongoing and was scheduled to end today, has already flagged 50,000 ghost students — a burden to taxpayers.

A report by the Daily Nation indicated that some schools falsified student data to benefit from education funds.

“This is the very first time we are taking the data of our children. Once we conclude the verification exercise, any officer found culpable will not be spared. We will subject them to the full public disciplinary procedures because this is not just a case of errors — it is a betrayal of public trust,” Ogamba said.

KCB Takes Over Firms Over Ksh1.93Bn Loan Defaults

KCB Bank Kenya has placed two companies under administration and receivership after they defaulted on loans worth Ksh1.93 billion, extending its aggressive loan recovery push amid rising non-performing loans, Business Daily reports. Korara Highlands Tea Factory Limited, owing Ksh1.155 billion, has been placed under joint administrators PVR Rao and Swaroop Rao Ponangipalli, while Elson Plastics of Kenya Limited, indebted to the tune of Ksh775 million, is now under the management of receiver Joy Vipinchandra Bhatt. The bank also recently moved against Labh Singh Harnam Singh Limited, a truck and bus body builder, for defaulting on Ksh1.1 billion.

The seizures come against a backdrop of elevated credit risk in the banking sector, with KCB’s NPL ratio at 17.9 percent in the first half of 2025, slightly above the sector average. Financial institutions have increasingly resorted to auctions, receiverships, and liquidations to stem losses, with banks slashing loan write-offs from Ksh33.3 billion in 2023 to Ksh7 billion last year. KCB had previously offered moratoriums and restructuring options to struggling firms like Korara and Elson Plastics, but continued defaults forced the lender to enforce recovery measures.

KRA Eases Certificate of Origin Rule Ahead of October 1 Rollout

The Kenya Revenue Authority (KRA) has relaxed a new rule requiring all imports to be accompanied by a Certificate of Origin (COO), Money254 reports. The taxman exempted some items from the regulation, which takes effect on October 1, 2025, and opened a transition window following protests from importers of secondhand vehicles and other goods who argued the COO requirement was duplicative and costly.

In cases where a COO is not available, KRA said it will accept alternative documents such as an origin declaration, export permit, customs export declaration, or a pre-verification of conformity certificate. The move is expected to ease compliance as the authority implements Section 44A of the Tax Procedures Act.

Treasury Denies Loss of Ksh317Bn in Cancelled High Grand Falls Dam Project

The National Treasury has dismissed claims that taxpayers lost Ksh317 billion following the cancellation of the High Grand Falls Dam project between Kitui and Tharaka Nithi counties, Kenyans.co.ke reports. Treasury CS John Mbadi said no losses were incurred since the project had not advanced to the stage where government liabilities could arise. He clarified that under the Public Private Partnership (PPP) framework, financial obligations only begin once a binding agreement is signed, which had not happened.

According to Treasury, the consortium behind the project was granted preliminary approval in 2023 to conduct detailed studies but its final report failed to meet statutory requirements. The PPP Committee approved termination of the project in July 2025, a move Mbadi said was lawful and transparent. He further dismissed claims of foreign interference, stressing that the committee acted independently. The High Grand Falls Dam was intended to enhance power generation and irrigation capacity.

Banks Widen Profit Margins by Cutting Depositor Returns Faster Than Loan Rates

Kenyan banks have boosted their profit margins by lowering interest paid on term deposits faster than they have reduced lending rates, Business Daily reports. Central Bank of Kenya (CBK) data shows the industry’s lending margin rose to 7.17 percent in July 2025 from 5.56 percent a year earlier. While deposit rates dropped by 3.41 percentage points after peaking at 11.48 percent in June 2024, lending rates only fell by 1.98 percentage points from a high of 17.22 percent. This allowed banks to trim interest expenses while maintaining relatively high loan charges, leaving both depositors and borrowers disadvantaged.

The shift comes as CBK continues easing monetary policy, cutting the benchmark rate from 13 percent in August 2024 to 9.5 percent in August 2025, which has sharply lowered yields on Treasury bills and bonds. With reduced competition from government paper, banks have slashed returns on deposits without fear of losing funds, sustaining wider margins. The CBK is now reviewing its risk-based pricing framework by introducing Kesonia—the Kenya Shilling Overnight Interbank Average—as a common base lending rate to bring borrowing costs closer to the policy rate.

Eight Police Officers Arrested in Kisumu Over Car Theft Syndicate

Eight police officers in Kisumu County have been arrested by the Directorate of Criminal Investigations (DCI) in connection with the attack on Elvis Musyoka and the disappearance of his green Toyota Land Cruiser from Maseno Police Station, Daily Nation reports. Investigators suspect three of the officers were involved in at least three robberies in Joska, Machakos County, while the others allegedly helped smuggle the stolen vehicle out of the police station to cover up the crime. Firearms from the station have also been submitted for ballistic tests.

Mr. Musyoka was attacked on September 7 while driving home to Matungulu, Machakos, when a motorcycle hit his car in what appeared to be a staged accident. The attackers beat him, forced him to transfer money from his phone, and stole his vehicle. He later spent two weeks in intensive care fighting for his life, an ordeal that has now led to the unmasking of a suspected car theft ring involving the very officers sworn to protect citizens.