Treasury Paid Extra Ksh1.1B to French Firms for Cancelled Mau Summit Deal

Hello and welcome to the Money News Roundup Newsletter, where we cover the Treasury and Controller of Budget’s differing figures on compensation to a French firm, how much the new Mau Summit contractors will earn, and the court’s removal of taxes on salvage cars.

French Firm’s Compensation: Contrasting Figures

As the government moves forward with a new Chinese contractor for the Mau Summit Highway, a puzzle has emerged over the cancelled contract with a French consortium.

According to Business Daily, disclosures by the Treasury on compensation to the consortium differ from those approved by the Controller of Budget.

The Treasury’s Public Private Partnership (PPP) Directorate reports that Kenya paid Ksh7.315 billion to the consortium, which included Vinci Highways SAS, Meridian Infrastructure Africa Fund, and Vinci Concessions SAS. However, a separate Parliamentary document showed that only Ksh6.2 billion was paid out.

When questioned, the Director-General of the PPP Directorate, Kefa Seda, explained that the difference was due to the exchange rate and tax equalisation.

“KeNHA (Kenya National Highways Authority) paid Ksh6.8 billion, which was inclusive of tax equalisation. The number we have, when converted to Kenya shillings as of the date of settlement, is Ksh6.8 billion,” he said.

Catch Up Quick: The French consortium had been awarded the Ksh190 billion deal, but Kenya terminated the contract citing high toll fees, among other factors. Subsequently, the state pursued an out-of-court settlement with the consortium, which had threatened to file a suit in a London court that could have delayed the project’s handover to the Chinese firm.

Chinese Firm to Pocket Ksh339.8 Billion Profit

Meanwhile, the consortium led by China Road and Bridge Corporation (CRBC), in partnership with the National Social Security Fund (NSSF), is projected to make Ksh339.8 billion ($2.63 billion) over the 30 years it will manage the Mau Summit Highway.

The consortium took over the project from the French contractor and is expected to charge Ksh8 per kilometre along the 175-kilometre Nairobi–Nakuru–Mau Summit route.
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Insurers Hit by Rising Fake Claims

Insurance companies are reeling from an increase in fake claims. According to The Star, insurers rejected Ksh658.9 million in claims in the first quarter of 2025 — a 77.6% increase compared to the same period last year.

Meanwhile, Daily Nation reports that the National Treasury has proposed new regulations to limit how long auditors can serve insurance companies.

In the Insurance (External and Appointed Actuaries) Regulations, 2025, the state plans to introduce strict rotation rules — capping the tenure of audit partners, managers, and staff to four consecutive years, and audit firms to eight years. The move aims to enhance transparency and accountability across the sector.

MPs Push Back on KRA’s Aggressive Tactics

The Kenya Revenue Authority (KRA) has found itself at odds with Members of Parliament over its tough approach to tax collection. Lawmakers recently rejected a proposal to rebrand the agency to the Kenya Revenue Service (KRS), saying a change in culture — not just name — was needed to make the taxman friendlier to taxpayers. KRA’s enhanced powers under the Tax Procedures Act have enabled it to freeze accounts and issue demand notices, measures that MPs argue have made it overly punitive.

According to Business Daily, KRA says it is now working to become more customer-focused by improving how it communicates and resolves taxpayer issues. The agency remains under pressure to boost revenue by sealing loopholes and expanding the tax base, after collecting Ksh2.42 trillion in the year ended June 2025 — a 5.7% increase from the previous year.

High Court Exempts Salvage Car Sales from VAT

The High Court in Nairobi has ruled that the sale of salvaged motor vehicles by insurance companies is exempt from Value Added Tax (VAT), marking a major win for insurers in a long-running battle with the Kenya Revenue Authority (KRA). The court upheld a Tax Appeals Tribunal decision in favour of ICEA Lion General Insurance, blocking a KRA demand of Ksh88.8 million in VAT for salvage car sales between 2015 and 2018. The judges found that selling salvaged vehicles is part of insurance loss recovery and not a commercial transaction, since the insurer acquires the wreck as part of compensating the policyholder.

According to Business Daily, the court ruled that the sale of salvaged vehicles is incidental to insurance services, which are VAT-exempt under the First Schedule of the VAT Act. It ruled that such disposals are “a recovery mechanism, not a trade,” rejecting KRA’s argument that they constitute taxable income. The judgment sets an important precedent for the insurance sector and provides clarity on VAT treatment for salvage disposals — shielding insurers from higher costs that could have been passed on to policyholders.

Kenya Imports 5 Billion Eggs Annually, CS Kagwe Calls for Science-Driven Farming

Kenya imports about 5 billion eggs every year to bridge a massive production deficit, with local farmers supplying only 4 billion against a national demand of 9 billion. Agriculture Cabinet Secretary Mutahi Kagwe termed the situation unsustainable, noting that the country spends roughly Ksh500 billion annually on food imports, including rice, wheat, and eggs. Speaking at the Kenya Agricultural and Livestock Research Organization (KALRO) Msabaha Centre in Kilifi, Kagwe said the government aims to cut dependence on imports through science-led farming and improved productivity.

According to Citizen Digital, Kagwe called for stronger collaboration between scientists, policymakers, and farmers to promote innovation and research-based agriculture. He emphasized that the future of food security depends on data-driven decisions such as soil testing, precision farming, and better animal breeds. The CS also urged young people to take up farming, noting that the average age of Kenyan farmers is over 60 — a trend that threatens the sustainability of the sector if not reversed.

IMF Delays New Funding Deal with Kenya Amid Debt Concerns

The International Monetary Fund (IMF) has delayed finalizing a new funding deal with Kenya, raising fresh worries about the country’s debt management and currency stability. The delay, which comes just weeks after an IMF mission left Nairobi without an agreement, poses a challenge for President William Ruto’s administration as it faces growing debt pressures. “We just had a team in Nairobi for an initial round of discussions. More discussions are continuing here,” said IMF African Department Director Abebe Aemro Selassie, adding that talks are aimed at helping Kenya clarify its reform plans and fiscal strategy.

According to The Standard, IMF officials have reportedly voiced concern about the stability of the shilling, with some suggesting that Kenya’s exchange rate policy might be interfering with monetary targeting. The Central Bank has, however, defended its stance, saying the shilling’s prolonged hold near Ksh129 to the dollar is backed by strong fundamentals. Meanwhile, Treasury officials say Kenya is converting more of its debt from dollars to other currencies to mitigate foreign exchange risk, having already switched Ksh451 billion of Chinese railway loans into yuan.