Ruto Responds After US Starts Reviewing Kenya's Non-NATO Ally Status

Hello and welcome to the Money News Roundup Newsletter. Today, we’re covering President Ruto’s defence of Kenya’s alliance with China, as well as government agencies investing in T-Bills.

Kenya–US Non-NATO Ally Debate

A day after US Senator Jim Risch initiated a review of Kenya’s non-NATO ally status, President William Ruto says he has no apologies to offer.

While addressing an investment roundtable, the Head of State noted that Kenya’s alliances and foreign policies are guided by economic interests, and his government has made headway with China. Several other countries are also in the pipeline.

“Some of our friends are complaining that we are doing too much trade with China. Honestly, I mean, when I sat with President Xi Jinping (China’s Head of State), I had a very candid conversation and I told him Kenya is importing Ksh600 billion worth of products from China, yet we are only exporting Ksh5 billion. That trade imbalance is serious,” the Head of State explained.

“We are progressing our conversations with India, but we haven’t quite had a breakthrough yet. We are very good where we are with Turkey and Canada.”

Since his visit to China in April, Ruto’s administration reached an agreement that includes the removal of tariffs on all of Kenya’s agricultural exports, including tea, coffee, and avocado. Previously, Kenya’s goods faced tariffs of up to 10%. Read more on Business Daily

Catch Up Quick: On Tuesday, Senator Risch moved an amendment in the US Congress pushing for a review of Kenya’s non-NATO ally status, citing concerns over Kenya’s growing ties with China and Russia. Kenya was granted the designation during Ruto’s state visit to the US in 2024. Read more on Money254.

Govt Agencies Now Stash Billions in T-Bills 

Government agencies are increasingly investing surplus funds in Treasury bills instead of deploying them to critical public programs. The State Department for Housing and Development recently revealed it had earned Ksh4.2 billion in interest from housing levy collections invested in T-bills, despite holding Ksh30.3 billion in unspent funds meant for affordable housing. The low absorption of these funds raises concerns about delays in delivering homes for low- and middle-income Kenyans.

The same pattern is now emerging in other sectors. Just last week, the government announced plans to invest idle collections from the reintroduced Sugar Development Levy (SDL) into T-bills, bonds, and call deposit accounts. As reported by Business Daily, this move signals low expectations for the timely rollout of projects such as sugar factory upgrades and infrastructure maintenance, prompting questions on whether returns are now being prioritised over service delivery.

Why Kenyan Businesses Are Struggling to Tap Regional Markets

Despite Kenya signing multiple regional trade agreements in recent months, local businesses are still struggling to access wider markets. According to People Daily, manufacturers cite high production costs, delays in VAT refunds, and limited export incentives as the main barriers. Tobias Alando, CEO of the Kenya Association of Manufacturers (KAM), noted that although opportunities like the African Continental Free Trade Area (AfCFTA) exist, poor government facilitation and punitive taxes continue to limit competitiveness. He added that cumbersome levies, expensive logistics, and delayed tax refunds weaken businesses at a time when the sector is still recovering from years of underperformance.

On cost and infrastructure challenges, Alando emphasized that delays in VAT refunds are more about convenience than systems, leaving many businesses with constrained cash flow. Additionally, non-tariff barriers, poor road networks, and insecurity across borders further discourage exports, especially among SMEs. Despite this, there’s some optimism for recovery as the government allocates funds to de-risk manufacturing and modernize logistics. However, recent data shows a contraction in the manufacturing sector, with enterprise credit shrinking and overall growth in the sector remaining sluggish.

Government Eyes Ksh100 Billion from Kenya Pipeline IPO

The National Treasury plans to raise about Ksh100 billion from the privatisation of Kenya Pipeline Company (KPC) through an initial public offering (IPO) at the Nairobi Securities Exchange. According to a report by Daily Nation, the proceeds from the sale will go toward funding key public services and infrastructure projects.

A sessional paper tabled in the National Assembly indicates that the IPO will play a crucial role in supporting the government’s 2025/26 budget. The funds are expected to help implement both economic and social programmes, as the state looks to unlock value from strategic assets while addressing fiscal constraints.

CS Ruku Calls for Mass Arrest of Government Workers

Public Service Cabinet Secretary Geoffrey Ruku has urged the Ethics and Anti-Corruption Commission (EACC) to arrest all civil servants implicated in recent corruption reports. Speaking during a visit to Kwale County on August 6, Ruku stated that the government would no longer tolerate the looting of public resources and warned that all officials, regardless of rank, would be held accountable. He emphasised the President’s stance on integrity, insisting that the era of impunity in public service must come to an end.

As reported by Kenyans.co.ke, Ruku's remarks came just a day after the EACC released a report ranking the Ministry of Interior and National Administration as the most corruption-prone, with a 47.8% prevalence rate. The Ministry of Health and the pensions department at the National Treasury followed at 19.7% and 5.8% respectively, highlighting widespread graft concerns across top government institutions.