News and Analysis
May 25, 2026
Hello and welcome to the Money News Roundup Newsletter, where we break down the latest developments on the proposed PAYE tax cuts and KNEC’s plans to phase out paper-based national exams.
President William Ruto will make the final decision on proposed PAYE tax cuts after the Treasury received recommendations from an internal committee on whether to include them in the Finance Bill.
As reported by the Business Daily, Treasury CS John Mbadi said the government must weigh the economic benefits against the potential budget deficit.
The proposal seeks to raise the tax-free income threshold from Ksh24,000 to Ksh30,000 and reduce tax for workers earning between Ksh30,000 and Ksh50,000.
Lobby groups, including the Kenya Bankers Association (KBA) and KEPSA, argue the cuts would boost disposable income and stimulate economic growth.
KBA estimates the proposal could inject Ksh28.1 billion into the economy annually and support 36,000 jobs, while also easing pressure from rising taxes, SHIF, NSSF and Housing Levy deductions.
The proposed PAYE cuts were to be tabled in Parliament in February. However, the government opted to push it to the Finance Bill given that the tabling of the Bill was only two months away at the time.
However, the proposals were missing in the Finance Bill 2026, with Mbadi explaining that the government was still undertaking simulations amid the Middle East conflict.
The Ministry of Education has unveiled plans to gradually phase out paper-based examinations as part of sweeping reforms aimed at cutting the billions spent annually on printing and administering national exams.
As reported in MyGov, KNEC projections show exam administration will cost Ksh14.7 billion in the 2026/2027 financial year, yet only Ksh9.9 billion has been allocated, leaving a Ksh4.82 billion funding gap.
KNEC CEO David Njengere said the shift to digital assessments has been informed by the successful rollout of online examinations in teacher training colleges, where more than 50,000 candidates had sat digital exams by 2025.
The council plans to introduce digital assessments in senior schools starting in 2027.
Uganda is raising Ksh62 billion (€405 million) through a Sukuk bond to fund construction of its Standard Gauge Railway (SGR) line.
As reported by the Business Daily, the funding includes Ksh32 billion from regional investors and Ksh30 billion from international markets.
The move comes as Kenya also plans to extend the SGR project, which remains stalled in Naivasha, to the Ugandan border.
Kenya is currently pursuing a Ksh390 billion securitised bond to finance the Naivasha-Malaba extension, estimated to cost Ksh502.9 billion. The government has already begun land compensation and feasibility studies while reallocating funds from other railway projects to prioritise the extension.
Employees of Co-operative Bank of Kenya have become the lender’s largest shareholders after acquiring an additional 55 million shares worth about Ksh1.77 billion through Co-op Bank Regulated Non-WDT Sacco.
As reported by the Business Daily, the purchase increased the sacco’s stake to 2.58 per cent by December 2025, up from 1.64 per cent in 2024, overtaking Harambee Sacco’s 2.47 per cent shareholding. Kenya National Police Sacco remained the third-largest shareholder with a 2.38 per cent stake.
Analysts said the move signals strong employee confidence in the bank, which posted a 16.8 per cent rise in net profit to Ksh29.75 billion in 2025 and increased its dividend payout by 66.6 per cent to Ksh14.6 billion.
NSE-listed HF Group Plc has officially changed its name to HFCB Group Plc following shareholder approval and regulatory clearance, marking the latest phase of its transformation from a mortgage-focused lender into a Tier II commercial bank.
As reported by the Kenyan Wall Street, the rebrand also affects its banking subsidiary, now renamed HFCB Bank Kenya. The group posted Ksh1.609 billion in profit before tax in FY2025, up 250 per cent from Ksh460 million the previous year.
Total income rose to Ksh6.170 billion, supported by growth in government securities and non-mortgage lending, which now accounts for 35.6 per cent of the loan book.
A petition has been filed at the High Court in Nairobi seeking to stop commercial banks from unilaterally increasing interest rates, penalty fees and other loan-related charges.
As reported by Citizen Digital, petitioner Francis Awino seeks to bar banks from enforcing upward loan repricing based solely on contractual clauses, arguing that the practice violates consumer protection laws and constitutional rights.
Awino is also seeking disclosure of banks’ lending practices between 2024 and 2026, including interest-rate variations, penalty charges and investments in government securities compared to private sector lending.
The Kenya Mortgage Refinance Company (KMRC) has listed its Ksh3 billion green and sustainability-linked bond at the NSE after attracting Ksh9.38 billion in applications, representing a 312.8 per cent subscription rate.
As reported by Capital Business, KMRC said the funds will support refinancing for energy-efficient, climate-resilient and affordable housing projects targeting low-income households and women borrowers.
The bond is part of the institution’s Medium-Term Note Programme aimed at expanding sustainable housing finance.
Equity Group and MicroSave Consulting (MSC) have signed a partnership aimed at expanding financial inclusion, climate resilience and gender equity in Kenya’s fisheries sector.
As reported by Citizen Digital, the collaboration will combine Equity Bank’s financial services, Equity Group Foundation’s capacity-building programs and MSC’s research expertise to support fishers, traders and aquaculture farmers.
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