World Bank Asks Govt to Increase Taxes & Warns of Massive Job Losses

Hello and welcome to the Money News Round-Up Newsletter, where we cover the World Bank’s push to increase VAT and excise duty, warnings of potential job losses over AGOA, and how the government borrowed Ksh95 billion in just four months.

Housekeeping: The Money News Round-Up Newsletter will take a break tomorrow (Friday, October 10) to mark Mazingira Day. We will resume on Monday.

Pressure to Increase VAT and Excise Duty

The World Bank has put pressure on the Kenyan government to raise consumption taxes—among them Excise Duty and Value Added Tax (VAT)—following a sharp increase in supplier arrears.

In its Sub-Saharan Africa Economic Outlook report, the Bretton Woods institution noted that the tax increase would help the state settle pending bills, stating, “To clear pending bills, finance their payment with higher consumption taxes.”

Pending bills rose from Ksh421.6 billion in March to Ksh526 billion in June.

If implemented, the increase would add more pressure on Kenyans who have already endured previous tax hikes. Excise Duty collections rose to Ksh296.9 billion in the year ending June, up from Ksh276.7 billion the previous year, while VAT receipts grew to Ksh660.6 billion from Ksh645.4 billion, per Business Daily.

Goods likely to be affected include electricity, fuel, cooking gas, airtime, alcohol, betting, and cigarettes, among others, on which varying VAT rates are charged.

Catch Up Quick: Previous attempts to increase taxes triggered widespread protests in 2024 (which led to the Finance Bill being shelved entirely—it had proposed Ksh346 billion in new taxes) and again in 2025 (when the government opted not to raise taxes).
During the 2024 protests, more than 50 people lost their lives.

Caution on Job Losses

Meanwhile, the World Bank has warned that jobs may be lost and industries could shut down if the United States fails to extend the African Growth and Opportunity Act (AGOA). The international lender noted that exporters of apparel and textiles in Kenya, Lesotho, and Madagascar are likely to face the greatest impact.

According to Business Daily, while the White House agreed to extend the deal for a year, the ongoing U.S. government shutdown has complicated the process, which requires approval by Congress.

“For African exporters, especially those in the apparel and textile industries in Kenya, Lesotho, and Madagascar, this uncertainty can deter investment and trigger order cancellations,” the World Bank said of the deal that ended on September 30. “A tariff hike or suspension could lead to immediate job losses in industries that dominate these countries’ formal employment.”

Earlier, Money254 reported that 1,000 workers have already been laid off, while 65,000 more face an uncertain future.

Kenya Borrows Ksh95.5 Billion in Four Months

The Kenyan government borrowed Ksh95.5 billion in four months through four new loans, according to a report by the Daily Nation. The loans, obtained between May and August 2025 from multilateral, bilateral, and commercial lenders, were meant to finance various national projects. The National Treasury disclosed that this translates to Ksh23.9 billion a month or Ksh32.4 million every hour, with the country’s public debt now standing at Ksh12 trillion. Treasury Cabinet Secretary John Mbadi noted that some loans from the previous reporting period were also reflected in the current report.

Two of the new loans were denominated in US dollars and two in Euros, attracting interest rates between 1.41% and 8.25%, with an additional 0.25% commitment fee. The report also highlighted a Ksh62 billion international sovereign bond issued in April 2025 by CitiGroup Global Markets Europe AG to finance liability management operations and budgetary support for the 2025/26 financial year. The borrowing comes as the government struggles to meet revenue targets, with the Treasury required under the Public Finance Management Act to update Parliament on new external loans every four months.

2 Arraigned in Court for Running a Syndicate That Stole 11 Cars

Two suspected members of a motor vehicle theft syndicate were arraigned at the Winam Chief Magistrates’ Court after being arrested in Kisumu, where detectives recovered 11 stolen vehicles, according to Citizen Digital. The suspects, Michael Erick Mwaga and Peter Andai, were charged with possession of suspected stolen motor vehicles, with the court granting detectives five more days to complete investigations as efforts continue to track down other members of the syndicate.

KRA Border Collections Hit Record High of Ksh85.15 Billion

The Kenya Revenue Authority (KRA) collected a record Ksh85.15 billion at border points in September, surpassing its target by Ksh3.81 billion and breaking the previous high of Ksh82.55 billion set in January. The agency attributed the performance to reforms that sealed loopholes and sped up cargo clearance through a Central Release Operations Office, which centralises verification and reduces face-to-face contact between traders and customs staff. Commissioner Lillian Nyawanda said the move has curbed rent-seeking and improved compliance at key entry points such as Mombasa Port and JKIA.

Trade taxes brought in Ksh51.7 billion, while petroleum revenues reached Ksh33.41 billion, both exceeding targets. Overall, collections grew 18.8 percent year-on-year as KRA pilots AI-enabled scanners at Mombasa and JKIA to enhance cargo surveillance. The scanners use machine learning to flag suspicious consignments, allowing for faster trade facilitation while tightening enforcement against tax cheats. Read the KRA press release here.

Kenya Seeks New IMF Programme to Anchor Fiscal Reforms 

Kenya is expected to continue pushing for a new funded programme from the International Monetary Fund (IMF) during the lender’s annual meetings in Washington next week, Business Daily reports. The Central Bank of Kenya (CBK) remains optimistic about securing fresh financing despite skepticism from market participants following the termination of a previous arrangement in March and the country’s near exhaustion of its IMF borrowing limit. A team from the IMF, led by Mission Chief Haimanot Teferra, concludes its visit to Kenya today after initiating discussions on a possible successor programme that would help unlock financing and support fiscal reforms aimed at ensuring debt sustainability.

CBK Governor Kamau Thugge said discussions would continue in Washington, where Kenya hopes to reach an agreement. However, analysts have expressed doubts about the scope of new IMF funding, noting that Kenya has already accessed most of its available quota, leaving only about Sh64.8 billion in headroom. Still, experts say an IMF programme—funded or not—would help maintain investor confidence and support fiscal discipline. The IMF team, in the country since September 25, has held meetings with key officials, including Treasury Cabinet Secretary John Mbadi and Dr Thugge.

Industrial Use of Cheap Night Power Falls to Four-Year Low

Consumption of discounted electricity by industries under the Time of Use (ToU) tariff dropped to a four-year low in the year ending June 2025, signaling reduced economic activity and the exit of large manufacturers from the programme, according to Business Daily. Data from the Energy and Petroleum Regulatory Authority (Epra) shows that industries and electric vehicles consumed 180.1 Gigawatt-hours (GWh) under the tariff, a 19.9 percent decline from 225 GWh the previous year. The drop comes amid weak demand for goods, high operational costs, and reduced production by manufacturers, with a Central Bank of Kenya survey showing that 41.2 percent of firms reported lower sales while 47.1 percent cut production volumes during the quarter to June.

The ToU tariff, introduced in 2017 to encourage electricity use during off-peak hours and lower costs for manufacturers, offers a 50 percent discount on power used at night, weekends, and public holidays. However, several heavy power users have exited the scheme, with those receiving power at 11,000 volts dropping from 177 to 155 in the year to June 2025, significantly reducing overall consumption. Despite the decline in power use, the number of ToU beneficiaries rose slightly to 2,339 from 2,257 a year earlier, raising questions about the tariff’s effectiveness in boosting industrial output and competitiveness.

Senators Push for Audit of Unauthorised County Bank Accounts

Senators have called for an immediate audit of all commercial bank accounts operated by county governments, citing the growing number of unauthorised accounts holding public funds. According to People Daily, the Senate’s Devolution and Intergovernmental Relations Committee wants the Central Bank of Kenya (CBK), the Controller of Budget (CoB), and the Auditor-General to be granted real-time access to all county-operated bank accounts. The move follows repeated Auditor-General reports flagging financial discrepancies and weak regulation, with lawmakers pushing to close inactive accounts, transfer balances to the County Revenue Fund, and tighten control over donor-funded and operational accounts.

A report by Controller of Budget Dr. Margaret Nyakang’o revealed that counties are operating more than 5,400 bank accounts, raising concerns about possible misuse of funds. The Senate committee found inconsistencies in financial management frameworks and urged the National Treasury to enforce clear rules for managing commercial accounts. Kitui, Bungoma, and Nakuru counties topped the list of unauthorised accounts, while Nandi, Siaya, and Tharaka Nithi had the least. Lawmakers now want tighter oversight and compliance with the Public Finance Management Act to curb risks to public finances.