4 in Court as Search for KUSCCO’s Missing Billions Intensifies

In Summary

• USAID has terminated funding for several Kenyan NGOs, raising concerns over job losses, legal challenges, and disruptions in key services.
• Four ex-KUSCCO officials have been charged in a Ksh82.8 million fraud case as investigations into a larger Ksh13.3 billion scam continue.
• The Parliamentary Budget Office has warned of a Ksh200 billion revenue shortfall in 2025/26, raising concerns over rising debt and government spending.
• The Treasury says lower interest rates and reduced inflation will ease the cost of living, but many Kenyans still feel financial strain.
• NCBA and other top banks have lowered lending rates after CBK enforcement, easing borrowing costs for businesses and individuals.
• The Capital Markets Tribunal has dismissed an appeal against the suspension of Kenya Airways shares, as the suspension period had already ended and trading resumed.

Four former KUSCCO officials have been charged with stealing Ksh82.8 million from the organisation, with authorities still searching for other suspects linked to a larger Ksh13.3 billion fraud. The accused, including ex-chairman George Magutu Mwangi and former finance manager George Ochola Owino, denied charges of theft, money laundering, and conspiracy to defraud. A PwC audit revealed financial irregularities, including falsified accounts and forged auditor signatures, leading to KUSCCO’s insolvency of Ksh12.5 billion. The suspects remain in custody pending a bail ruling, while former managing director George Otieno Ototo has been summoned to appear in court, as reported by The Business Daily. 

In a report by The Standard, the National Treasury has defended its economic policies, saying they have helped put money in Kenyans’ pockets despite public concerns over rising costs. Treasury CS John Mbadi cited measures such as lowering the Central Bank Rate, stabilising the shilling, and easing food and energy prices, which he said reduced inflation to 3.3% in January. He added that reduced borrowing and fiscal discipline have improved liquidity, with banks expected to expand credit after lowering interest rates. However, many Kenyans are yet to feel the impact, with surveys showing cost of living remains a top concern. 

The Parliamentary Budget Office (PBO) has projected a revenue shortfall of Ksh200 billion in the 2025/26 financial year, estimating total collections at Ksh3.3 trillion, lower than the National Treasury’s target of Ksh3.5 trillion. According to The Star, the decline is attributed to slow economic activity, which has already led to a Ksh70 billion revenue deficit in the first half of the current financial year. Meanwhile, government spending is expected to rise from Ksh3.9 trillion to Ksh4.4 trillion, widening the fiscal deficit to 5.7% of GDP, up from 4.3%. The PBO has warned that rising expenditure amid low revenue could push the country further into debt, which currently stands at 71% of GDP. However, Treasury Cabinet Secretary John Mbadi has assured that the government is working to boost revenue collection while managing debt repayment.

In a report by The Business Daily, the US government has started issuing termination notices for contracts and grants under USAID-funded programmes in Kenya, following President Donald Trump’s earlier directive to freeze overseas aid for 90 days. The move affects multiple NGOs involved in healthcare, education, agriculture, and humanitarian work, with some, like the Kenya Primary Literacy Programme, losing funding despite being in their early implementation stages. Legal experts warn that mass job losses and abrupt contract terminations could lead to lawsuits, while the Ministry of Health has requested Ksh4 billion to sustain HIV care services previously supported by USAid. 

NCBA Bank has lowered its base lending rate from 16.91% to 15.34% per annum, effective February 16, 2025, following pressure from the Central Bank of Kenya (CBK) to reduce borrowing costs, as reported by The Standard. This comes after the CBK cut the Central Bank Rate to 10.75% and the Cash Reserve Ratio to 3.25% to boost liquidity and credit access. Other major lenders, including Equity, KCB, Co-operative, and Absa, have also reduced their rates, responding to regulatory pressure and government calls for cheaper credit to support economic recovery. 

The Capital Markets Tribunal has ruled that it will not proceed with hearing an appeal by Mihr Samir Thakar, challenging the Capital Markets Authority's (CMA) decision to extend the suspension of Kenya Airways PLC shares from trading at the Nairobi Securities Exchange (NSE) for 12 months. Thakar filed the appeal on January 16, 2024, against the CMA's decision made on January 4, 2024, citing the need for the airline to complete its restructuring. However, the Tribunal ruled that the suspension period had already lapsed, and since Kenya Airways resumed trading, the appeal was deemed irrelevant. The Tribunal also stated that each party should bear their own costs, as reported by Capital Business.