News and Analysis
February 18, 2026
Hello and welcome to the Money News Roundup Newsletter, where we cover proposals to increase VAT to 18%. We also cover the intelligence report that has exposed how Kenyans are lured with lucrative job offers in Russia.
The Parliament Budget Office has proposed raising Value Added Tax (VAT) from 16 per cent to 18 per cent to boost domestic revenue and address persistent budget gaps.
As reported by the Star, the office, which is led by Martin Masinde estimates the move could generate about Ksh87 billion in the 2026/27 financial year.
PBO is established under the Public Finance Management Act, 2012, to provide non-partisan and expert advice to the National Assembly and Senate on matters relating to the national budget.
This is the second time that the proposal to increase VAT to 18% has been floated over the past year. In May 2025, the World Bank recommended an 18% VAT rate to help the government raise Ksh50 billion to take care of the vulnerable population.
The team has recommended that all additional revenue be earmarked for development spending, primarily to settle verified pending bills owed to suppliers and contractors, which stood at Ksh475 billion as of September 2025, stalling projects and straining small businesses.
The worst-hit sectors include the State Department for Roads with Ksh130.4 billion in arrears, Higher Education Ksh73.3 billion, and the Energy Department Ksh57 billion.
PBO proposes ring-fencing 10 per cent of annual budgets for 66 MDAs to gradually clear debts within five years, supplemented by a direct Ksh75 billion bailout in 2026-27 for MDAs with arrears exceeding 50 per cent of their budgets.
The team of experts also recommended cutting tax expenditures, which rose to Ksh510 billion in 2023, and reviewing VAT exemptions on non-essential goods. While the Treasury has assured Kenyans that the 2026 Finance Bill will not introduce new taxes, PBO warns that without stronger revenue mobilisation, tighter spending discipline, and efficient project delivery, fiscal pressures will persist, limiting government service provision and economic growth.
Manufacturers have urged the government to remove VAT on fuel levies and cut the Import Declaration Fee (IDF) and Railway Development Levy (RDL) to 1.5 per cent, arguing that high energy and import costs are undermining industrial growth.
As reported by Eastleigh Voice, IDF currently stands at 2.5 per cent while RDL is charged at 2.0 per cent of the customs value.
In its 2026 Manufacturing Priority Agenda, the Kenya Association of Manufacturers says reverting both levies to 1.5 per cent, as provided under the Finance Act 2019, would ease production costs and boost competitiveness.
The lobby also wants reforms to the VAT refund system, improved logistics at Port of Mombasa, and faster completion of key industrial road projects.
A taskforce appointed by Wycliffe Oparanya has recommended extending the moratorium on registering new Saccos until a new legal framework is in place.
As reported by Nation, the Ministry of Co-operatives and MSMEs Development suspended new registrations in mid-2025 pending a sector review.
The committee, chaired by Marlene Shiels of Capital Credit Union, examined regulatory gaps and proposed reforms to strengthen deposit protection, liquidity management, and harmonised oversight.
It found over 5,000 unregulated Saccos, often supervised at county level and facing governance, digitisation, and capital challenges.
The team proposes a phased approach to bring all Saccos under formal supervision, with the National Government setting uniform prudential standards while coordinating with counties, the Sacco Societies Regulatory Authority, and the Commissioner for Co-operative Development.
The Communications Authority of Kenya (CA) is set to roll out a system allowing Kenyans to verify SIM cards registered under their National ID or passport numbers, aiming to curb identity fraud and strengthen consumer protection.
Under the proposed ID-to-SIM checker, users will send their identification number to a dedicated short code, prompting a search across all licensed mobile operators, including Safaricom, Airtel Kenya, and Telkom Kenya.
The cloud-based solution will process up to 5,000 SMS queries per minute, with encryption and data masking to protect personal information, and a web interface for administrators to track usage and generate reports.
As reported by Capital Business, The tool comes amid tighter enforcement of SIM registration rules, addressing gaps in Know-Your-Customer compliance.
With over 65 million active subscriptions in Kenya, it will give individuals visibility of numbers linked to their identity while reinforcing accountability among operators and trust in the digital ecosystem.
The National Treasury has launched a Ksh64.5 billion ($500 million) tender offer to partially retire its 2028 and 2032 Eurobonds, in a bid to smooth external debt repayments and reduce refinancing risks.
As reported by the Kenyan Wall Street, under the liability management plan, the government will buy back up to Ksh54 billion ($350 million) of its 8 per cent amortising notes due 2032 and up to Ksh19 billion ($150 million) of its 7.25 per cent notes due 2028.
The 2032 bonds are priced at 105.5 per cent of par value, while the 2028 notes are at 103.5 per cent, plus accrued interest.
The offer, running from February 18 to 25 with settlement on March 3, is tied to a planned new dollar-denominated issuance. Both bonds are listed on the London Stock Exchange and Euronext Dublin.
The Kenya Bureau of Standards (KEBS) has appointed nine firms to inspect imports before shipment under its Pre-Export Verification of Conformity (PVoC) programme.
The three-year contracts, effective February 19, 2026, were awarded to Quality Inspection Services Inc., China Hansom Inspection and Certificate Co. Ltd, ASTC As Test Certification Tech. (Hangzhou) Co. Ltd, China Certification and Inspection Group Inspection Company Limited, Intertek International Limited, Cotecna Inspection SA, TUV Rheinland Middle East FZE, Bureau Veritas Kenya Limited and Société Générale de Surveillance (SGS) SA.
KEBS said all consignments shipped from March 1, 2026, from countries with appointed agents must have Certificates of Conformity. Goods without the certificate will face destination inspection at a fee of five per cent of customs value.
Imports from other countries will attract a 0.6 per cent inspection fee, subject to minimum and maximum charges. Read more
At least 1,000 Kenyans have reportedly been recruited to fight in the Russia–Ukraine war, according to a National Intelligence Service report presented in Parliament.
As reported by the Star, most of the individuals were allegedly lured by rogue agents promising lucrative security and logistics jobs abroad, with salaries of about Ksh300,000 per month and bonuses between Ksh900,000 and Ksh1.2 million, plus Russian citizenship.
Some recruits travelled via Istanbul, Türkiye, and Abu Dhabi, UAE, often using transit visas, while rogue airport staff and officials from the Directorate of Immigration, DCI, and National Employment Authority reportedly facilitated their escape.
Several have ended up in Russian training camps and on the frontline; 39 are hospitalised, 30 repatriated, 28 missing, 35 in camps, and 89 actively deployed.
The report singled out Global Face Human Resources Limited, for illegal recruitment under the “kazi majuu” initiative.
The government warns job seekers to verify overseas offers to avoid grave risks and calls for urgent action against rogue agencies.
The use of bank cards for payments at retail outlets hit a record Ksh297 billion in 2025, up from Ksh291.9 billion in 2024, as the number of point-of-sale (POS) machines rose to 54,454 from 48,653, according to the Central Bank of Kenya (CBK).
As reported by Business Daily, card transactions also grew 4.1 per cent to 61.7 million.
While mobile money and cash still dominate, card usage is steadily rising, driven by wider merchant acceptance, chip-and-pin and contactless technology, and improved fraud controls. Consumers pay no fees, with charges absorbed by merchants.
POS payments have expanded from Ksh70.7 billion in 2015, reflecting growing adoption across supermarkets, pharmacies, fuel stations, and hotels.
For merchants, cards reduce cash-handling risks, speed up reconciliation, and integrate easily with accounting systems, supporting broader adoption of plastic money in retail transactions.
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