Treasury Announces Plan to Slash PAYE in 2026

Hello and welcome to the Money News Roundup Newsletter. Today, we’re covering Treasury CS John Mbadi’s announcement on the PAYE review and his PS Chris Kiptoo’s defence of the securitisation of HELB and the Road Maintenance Levy. Also, find out about an MP’s personal assistant at the center of a land scam.

PAYE Review Deferred

Treasury CS John Mbadi revealed that his Ministry had intended to revise Pay As You Earn (PAYE) downward in the 2025/2026 financial year to prevent overtaxation of Kenyan payslips, but the plan has been postponed to the following financial year.

The Bottleneck: While appearing before the Senate on Tuesday, Mbadi explained that the review, which could have seen PAYE reduced from 30% to 28%, was not feasible because the Kenya Revenue Authority (KRA) had failed to meet its revenue targets.

Yes, But: The CS assured that the reduction will be effected in the next financial year, noting that high taxes were reducing taxpayers’ disposable income.

What Mbadi Said: “We have not made major adjustments to taxes, which will disadvantage the taxpayers in terms of reducing their disposable income. We made promises to address this; however, that was not possible. However, where we have reached, we cannot reduce disposable income.

“When we were preparing the Finance Bill, we made some simulations on how to reduce PAYE; however, what stopped us from implementing it with this bill was the failure by KRA to meet its targets. We will consider it in the next Finance Bill alongside the reduction of corporate tax from 30% to 28%.”

Catch Up Quick: Late last month, the World Bank proposed changes to Kenya’s Personal Income Tax (PIT) by adjusting tax bands that determine how much PAYE is paid. It recommended reducing PAYE for low earners and increasing it for high earners to “make the tax system more progressive.”

Securitisation of HELB & Road Maintenance Levy

Treasury PS Chris Kiptoo confirmed that the government is considering securitising the Road Maintenance Levy (RML) and Higher Education Loans Board (HELB) payments to ensure stable government funding.

He explained that 50% of the collections from RML will be channelled toward securitisation to ensure that road construction projects are not disrupted.

Other programmes that will be securitised—an arrangement where the government sells future revenue streams to investors to raise money—include Hustler Fund repayments and the Youth and Women Enterprise Fund.

What Kiptoo Said: “For the government of Kenya to reduce its debt burden and realise its development agenda, given the constraints, it will need to have solutions that will help it raise capital. The National Treasury, the Central Bank of Kenya, and the Capital Markets Authority are expected to innovate some market-based mechanisms and create instruments that will see it borrow from the diaspora community by securitising future cash inflows.” (Read more on Citizen Digital)

MP’s PA Accused of Land Fraud

A personal assistant of a Member of Parliament from the Coast region has been arraigned at the Shanzu Law Courts after he was accused of malicious damage to property and conspiracy to commit a felony. He is accused of grabbing a disputed 3-acre parcel of land in Kilifi South and destroying a perimeter wall erected by the original owner.

The case, which dates back to June 2024, was investigated by Kilifi South detectives who found the PA culpable. Their findings were later approved by the Office of the Director of Public Prosecutions (ODPP), leading to his arrest and formal charges.

The suspect pleaded not guilty before the Chief Magistrate’s Court and was remanded at Shimo la Tewa Prison pending a pre-bail report. The case will be mentioned on June 11, 2025.

Kenyan Banks Warm Up to Crypto as CBK Survey Reveals Growing Interest

Nearly a third of Kenyan banks are preparing to facilitate cryptocurrency transactions, signaling a shift in the local financial sector as the government works toward regulating virtual assets, according to Business Daily.

According to the Central Bank of Kenya's (CBK) 2024 innovation survey, 31 percent of the country's lenders expressed a high likelihood of venturing into virtual asset-related activities. These include cryptocurrencies such as Bitcoin and Ethereum, non-fungible tokens (NFTs), and other forms of digital tokens.

The findings reflect increasing adoption of virtual assets in Kenya and a growing readiness among financial institutions to adapt to the evolving digital economy.

Brazilian Senator in Kenya for Investment Talks

Brazilian Senator José Gonçalves Oliveira is in Kenya to explore investment opportunities in health technology and agriculture. He was received at JKIA by Tana River Senator Danson Mungatana.

According to the Standard, Oliveira will meet with business leaders and KNCCI President Eric Ruto to strengthen Brazil–East Africa trade ties. His visit was facilitated by KNCCI director James Njoroge. The senator will also travel to Uganda next week to expand regional investment discussions.

Kenya Misses Out on Ksh96 Billion World Bank Loan Over Unsigned Bill

The World Bank has delayed releasing Ksh96.9 billion ($750 million) to Kenya after the country failed to pass the Conflict of Interest Bill, 2023, one of the key conditions for the funding. President William Ruto declined to sign the Bill, citing 12 watered-down clauses, including those on gift disclosures and conflict of interest.

A report by Business Daily indicated that Treasury CS John Mbadi confirmed the funds, initially expected this month, may only be disbursed in July, leaving a Ksh97 billion budget hole. This has forced the Treasury into a third supplementary budget as several departments have already overspent their allocations.

Kenya now heavily relies on budget support from the World Bank and African Development Bank, especially after the IMF pulled back. Treasury projections show World Bank funding will remain crucial through 2029, with Ksh170.5 billion expected in the next financial year starting July.