CBK Offers Investors 2 Tax-Free Bonds as Kenya Explores a Back Up After Trump’s WHO Exit

In Summary:

• Anti-Terror Financing Regulations: The Interior Ministry proposed stricter anti-terror financing laws, empowering the Financial Reporting Centre to penalize violators, aligning with UN resolutions.
  
  
• CBK Infrastructure Bonds: CBK seeks to raise Ksh70 billion through reopened 14-year and 17-year tax-free bonds, with attractive coupon rates, closing February 12.
  
  
• Kenya's Fintech Growth: The FinTech Alliance has been formed to promote Kenya as a global fintech leader and drive financial inclusion through industry collaboration.
  
  
• Policyholders Compensation Bill, 2025: The bill proposes the Insurance Protection Fund to replace the PCF, aiming to enhance trust in the insurance sector through contributions from insurers and policyholders.
  
  
• Government's Office Property Shift: The government plans to reduce office lease reliance by constructing and purchasing properties, impacting commercial landlords.
  
  
• KenInvest and KEPSA Partnership: KenInvest and KEPSA have partnered to streamline investment processes and foster sustainable economic growth in Kenya.
  
  
• Property Price Trends: Property prices in Nairobi rose 5.2% in 2024, with detached houses leading the growth, while rental yields stagnated at 7.2%. 
• The U.S. withdrawal leaves a budget gap of over $1.2 billion, threatening the continuity of vital health programs. Kenya, in response, is seeking alternative partnerships, advocating for multilateral support, and focusing on strengthening domestic health financing to mitigate the impact.
  
  

The Interior Ministry has proposed stricter anti-terror financing regulations under the Prevention of Terrorism Act, empowering the Financial Reporting Centre (FRC) to suspend or remove financial institution executives, directors, and managers found in violation. The amendments include penalties such as a Sh3 million fine, up to seven years' imprisonment, suspension, or revocation of licenses, and freezing of funds linked to terrorism. According to the Business Daily, these measures aim to align Kenya with United Nations Security Council Resolutions on combating terror financing and proliferation.

In a report by Nation, the United States' decision to withdraw from the World Health Organization (WHO) marks a significant setback for global health security, especially in Africa, where WHO's technical assistance, disease surveillance, and health system strengthening efforts are crucial. The U.S. withdrawal leaves a budget gap of over $1.2 billion, threatening the continuity of vital health programs such as the fight against HIV/AIDS, malaria, and neglected tropical diseases. Kenya, in response, is seeking alternative partnerships, advocating for multilateral support, and focusing on strengthening domestic health financing to mitigate the impact. This global shift underscores the need for continued international cooperation to safeguard public health and ensure equitable access to essential health services.

The Central Bank of Kenya (CBK) aims to raise Ksh70 billion through reopened 14-year and 17-year tax-free infrastructure bonds with attractive coupon rates of 13.938% and 14.399%, respectively. The Business Daily reports that these bonds, which feature amortized redemption, have drawn strong investor interest due to their tax exemption and high returns, with previous issues heavily oversubscribed. Investors have until February 12 to participate, supporting the government’s domestic borrowing goals for the 2024/25 fiscal year.

In a report by Capital Business, Kenya's fintech sector has advanced with the formation of The FinTech Alliance (TFA), bringing together five key industry associations: AFIK, FINTAK, DFSAK, DCPAK, and BAK. This coalition aims to establish a unified voice to promote Kenya as a global fintech leader, prioritize scaling firms, collaborate on policy, and enhance financial inclusion. TFA's efforts will leverage innovation and global partnerships to solidify Kenya's position as a fintech hub, unlocking opportunities for businesses and consumers while driving economic growth.

The Policyholders Compensation Bill, 2025, proposes creating the Insurance Protection Fund to manage compensation funds for insurance claimants, replacing the current Policyholders Compensation Fund (PCF). The Business Daily reports that this new fund will still operate under the PCF and be funded by insurer contributions, parliamentary appropriations, grants, and donations, with contributions set at 0.5% of premiums shared equally by insurers and policyholders. The fund will be administered by the PCF board, with investments allowed in Treasury bills, bonds, and other approved instruments, aiming to enhance public trust in the insurance sector.

In a report by the Business Daily, the Kenyan government plans to reduce reliance on leasing office spaces by constructing and purchasing its own properties, a move expected to significantly impact commercial landlords. Currently spending over Ksh5 billion annually on office leases, the government aims to address public concerns over high rental costs in prime locations like Nairobi's CBD and Upper Hill. However, this shift raises concerns about potential cost overruns and delays, as seen in previous projects like the Bunge Towers. With office spaces already struggling with low occupancy rates—34.4% remained vacant in 2023—the planned transition adds pressure to the commercial real estate sector.

KenInvest and KEPSA have announced a strategic partnership to enhance Kenya's business environment by streamlining investment processes and advocating for business-friendly policies as reported by Citizen Business. The initiative seeks to strengthen public-private collaboration, unlock the private sector's potential, and position Kenya as a leading investment destination. With key stakeholders like TRIFIC CEO Brenda Mbathi and KEPSA leadership involved, the partnership aims to foster sustainable economic growth and job creation through a unified approach to development.

Property prices in Nairobi and surrounding areas rose by 5.2% in 2024, double the growth rate of 2023, driven by increased demand for standalone houses, according to HassConsult. Detached houses saw a price increase of 7.5%, outpacing semi-detached units (0.8%) and apartments (1.6%), reflecting their lower market share of 7.2% compared to apartments at 69.9%. Juja, Ridgesway, and Loresho led with price growth of 12.9%, 12.5%, and 11.6%, respectively. According to the Business Daily, despite positive property trends, rental yields stagnated at 7.2%, below returns from Treasury bills and equities, due to landlords' limited ability to raise rents amid economic challenges.