Govt to Track Mobile Money Use, Car Ownership Records in New Bid to Increase SHIF Contributions

In Summary:

• The National Treasury has lowered Kenya’s 2024/25 revenue target to Ksh2.58 trillion due to shortfalls linked to civic unrest. Total expenditure has risen to Ksh1.986 trillion, widening the fiscal deficit to Ksh391.3 billion. New tax reforms face public resistance amid rising living costs.
  
  
• Kenyan banks have rejected KRA’s attempt to access their systems, citing concerns over unauthorized data access and legal risks. The move, backed by a December legal amendment, is meant to curb tax evasion but has sparked privacy debates.
  
  
• The Treasury has faulted counties for prioritizing wages over development, with county wage bills hitting Ksh209.8 billion—47.6% of total county revenue. Some counties exceeded the 35% wage cap, further straining service delivery.
  
  
• The government has allocated an extra Ksh5 billion to State House and top offices despite an ongoing austerity push. This is part of an Ksh85.8 billion supplementary budget aimed at covering revenue shortfalls and emergencies.
  
  
• The Treasury has proposed Ksh405.1 billion for counties in the 2025 Division of Revenue Bill, lower than the Ksh417 billion recommended by CRA. The reduction may trigger another standoff between senators and the national government.
  
  
• The government is planning changes to the Social Health Authority (SHA) after public backlash over implementation challenges. One proposal includes allowing informal workers to use Hustler Fund loans to pay for health insurance contributions.
  
  
• Kenya has secured $50 million from the Green Climate Fund to support climate adaptation projects in the Lake Region. The initiative, led by FAO, will train over 143,000 farmers in climate-smart practices.
  
  
• Kenya Power has warned that rising electricity consumption is approaching capacity limits, with peak demand hitting a record 2,316MW. The firm urges increased power generation to prevent potential shortages.
  
  

The Ministry of Health on Tuesday, February 18, announced major reforms to the Social Health Authority (SHA) following public outcry over implementation challenges. Among the proposed changes is a targeted campaign to increase Social Insurance Fund (SHIF) contributions by self-employed and unemployed Kenyans. The Ministry announced it would now track mobile money transactions, electricity bill payments, vehicle ownership records, tax returns, among others to better assess SHIF contributions from the unemployed and the self employed class. The data will be incorporated in the means testing tool being developed with the ministry saying it had already requested for relevant data from institutions such as National Transport and Safety Authority (NTSA), KRA, Communications Authority, among others. The reforms will also allow Kenyans with irregular incomes to use loans from the Hustlers Fund to pay for The initiative aims to support the informal sector through Insurance Premium Financing (IPF). Additionally, ICU funding is set to increase from Ksh4,448 to Ksh28,000 per day, while cancer treatment coverage may rise from Ksh400,000 to Ksh550,000 per household per year. However, the reforms appear to be driven by State House, with SHA officials claiming they were not consulted as reported in The People Daily and The Star.

In a report by The People Daily, the National Treasury has lowered Kenya’s 2024/25 revenue target to Ksh2.58 trillion, with total revenue, including Appropriations in Aid (AiA), now projected at Ksh3.1 trillion. Revenue collection fell short due to civic unrest, with KRA collecting Ksh1.59 trillion in nine months—60% of its target. Meanwhile, total expenditure rose to Ksh1.986 trillion, driven by high recurrent costs and debt servicing, widening the fiscal deficit to Ksh391.3 billion (2.2% of GDP). To boost revenue, the government is implementing tax reforms under the Medium Term Revenue Strategy (MTRS), but new levies, such as those targeted at motorists face public resistance amid rising living costs.

The Business Daily reports that Kenyan banks have blocked a system integration that will allow  the Kenya Revenue Authority (KRA) to access to customer data. The KRA, empowered by a December legal amendment, wants access to 38 banks’ systems to curb tax evasion, but bankers argue the move lacks legal safeguards and could violate data protection laws. The Treasury’s previous attempt to grant KRA unfettered access to financial records through the Finance Bill 2024 was abandoned after mass protests. Despite resistance, the KRA continues leveraging various databases, including bank statements, car ownership records, and utility bills, to track tax compliance. 

In a report by The People Daily the National Treasury has criticized county governments for overspending on recurrent expenditures while neglecting development projects in the 2023/24 financial year. Nairobi, Kisii, Mombasa, Kisumu, and Taita Taveta ranked among the worst performers, spending less than the required 30% of their budgets on development. Instead, these counties allocated a significant portion of their revenue to wages and benefits, with some exceeding the 35% limit set by the Public Finance Management Act. Total county wage expenditures hit Ksh209.8 billion, accounting for 47.6% of the total Ksh440.7 billion revenue. 

The government has allocated an additional Ksh5 billion to State House and the offices of Deputy President Kithure Kindiki and Prime Cabinet Secretary Musalia Mudavadi for salaries, travel, and entertainment, despite an ongoing austerity push. State House will receive Ksh3.8 billion, including Ksh1.5 billion marked as unexplained expenditure. According to the Business Daily the allocations are part of a broader Ksh85.8 billion supplementary budget aimed at covering revenue shortfalls and emergency priorities. Treasury CS John Mbadi cited a Ksh62.8 billion revenue gap due to weak economic activity following protests against the Finance Bill. Meanwhile, budget allocations to sectors like education and security have increased, while spending on water, housing, and energy has been cut. The overall national budget for the 2024/2025 financial year now stands at Ksh3.56 trillion, up from Ksh3.47 trillion. 

The National Treasury has proposed allocating Ksh405.1 billion to counties in the 2025 Division of Revenue Bill—falling short of the Ksh417 billion recommended by the Commission on Revenue Allocation (CRA). Treasury CS John Mbadi cites financial constraints and revenue shortfalls, arguing the national government absorbs budget cuts while counties receive full allocations. Senators have clashed over previous county budget proposals, and the latest reduction could spark another standoff. According to The People Daily the bill also accounts for Ksh1.6 trillion in public debt-related costs and proposes Ksh26.3 billion for NG-CDF, further fueling budget tensions.

According to the Capital Business the Green Climate Fund (GCF) has approved a $50 million investment to help Kenya strengthen climate resilience and promote sustainable development. Led by the UN’s Food and Agriculture Organization (FAO), the initiative will benefit 2.7 million people in the Lake Region Economic Bloc, where agriculture is highly vulnerable to climate change. The program will focus on six key value chains—dairy, poultry, coffee, tea, fruit trees, and African leafy vegetables—by training over 143,000 farmers in climate-smart practices. Kenya’s Treasury CS John Mbadi reaffirmed the government’s commitment to climate adaptation, emphasizing the importance of FAO’s support in achieving national climate goals. 

In a report by The Star Kenya Power has raised concerns over rising electricity consumption, warning that demand is approaching firm capacity limits. Last week, peak demand hit 2,316MW, surpassing the previous record of 2,304MW set in January, against a firm capacity of 2,344MW. The utility firm now urges a focus on increasing power generation to maintain grid stability and avoid potential shortages. Investments in transmission infrastructure and new customer connections have driven demand growth, with over 198,535 new connections in the last six months. However, Kenya Power has resorted to load shedding as a short-term measure and is pushing for the lifting of a moratorium on new Power Purchase Agreements (PPAs) to boost supply. 

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