Debt Defaults Hits Government Agencies as KRA Goes After Chinese Firm

‍Thursday, 𝐍𝐨𝐯𝐞𝐦𝐛𝐞𝐫 14, 𝟐𝟎𝟐𝟒

In today’s money news, public institutions in Kenya have defaulted on Ksh266.5 billion in Treasury-backed loans, potentially placing taxpayers on the hook for a total of Ksh946 billion. According to the Nation, the National Treasury will take on these obligations, adding them to the public debt. Leading defaulters include Kenya Railways (Ksh737.5 billion), Kenya Airways (Ksh99.9 billion), Coast Water Works Development Agency (Ksh20.6 billion), and the Rural Electrification Authority (Ksh13.6 billion), with these defaults increasing fiscal pressures on the Treasury.

Meanwhile, Capital Business reports that over half of patients under the Social Health Insurance Fund (SHIF) are opting for out-of-pocket (OOP) payments due to registration challenges with the Social Health Authority (SHA). A survey found that 94% of facilities have patients using OOP, mainly because of verification issues and limited portal reliability. Higher-level hospitals report SHA’s limited reimbursements and rising ICU, HDU, and service costs are further driving OOP payments, while SHA-insured patients often have to cover essential medications due to shortages at primary healthcare facilities.

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Additionally, Business Daily reports that the Kenya Revenue Authority (KRA) has raided local agents of China Tobacco, the world’s largest cigarette producer, over suspected tax fraud. Investigators targeted Yulees Blooms Company Ltd and Shapo Trading Ltd, distributors of brands like Septwolves and Harmonization, following a whistleblower report alleging undervalued import declarations to reduce duty payments. Although KRA’s preliminary investigation has not led to criminal charges, the probe underscores KRA’s focus on high-stakes tax compliance issues.

The Standard reports that mobile money usage is highest in Kenya’s construction sector, with 66.7% of businesses preferring it for transactions due to the industry’s capital-intensive, cash-based nature. According to the Kenya Economic Report 2024, while mobile money and mobile phones are widely used for business, overall digital adoption remains low across informal sectors due to high costs, limited infrastructure, and lack of digital skills. Programs like Ajira Digital and Fundis are linking skilled workers to jobs, but only 3.6% of informal businesses own active websites, highlighting the need for more accessible digital infrastructure to enhance productivity.

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Also in the Standard, Kenya’s blue economy is facing delays in critical projects, notably the Shimoni Port in Kwale County, now slated to launch in June 2025. This Ksh2.6 billion project aims to increase the fishing industry’s capacity by handling 50,000 metric tonnes of fish annually, with a multi-purpose berth and cold storage. Further investments include Ksh2.7 billion for fish landing sites, Ksh600 million for deep-sea fishing vessels, and Ksh1.7 billion in grants for local cooperatives. The partially completed Liwatoni tuna hub, expected to create 3,000 jobs, also signals more progress in fish processing and economic development in the coastal region.

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