Pressure Mounts on Banks to Lower Loan Interest Rates

In Summary

• Parliament will question CBK and CMA officials over high loan costs and NSSF bond dealings.
• A report by the Controller of Budget questions how Ksh1.34 billion was spent with no completed projects to show for it.
• KCB Group is acquiring a 75% stake in fintech firm Riverbank Solutions for Ksh2 billion to expand its digital payment and non-banking solutions.
• The High Court has stopped the Social Health Authority's recruitment process following a petition by the Kenya Union of Clinical Officers.
• Super Metro has resumed operations after the Transport Licensing Appeal Board temporarily lifted NTSA's suspension, citing compliance with the law.
• The Treasury will use leftover Eurobond cash to settle costly syndicated loans falling due this year.
• A report by PSC revealed that there are 17,000 ghost workers in the government payroll minting billions. A bill by the Cabinet Secretary of Public Service aims to enhance payroll accountability.
• The World Bank has launched an audit as delays persist in the implementation of the education project.
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CBK Governor Kamau Thugge will appear before Parliament today to explain why commercial bank loans remain expensive despite the regulator lowering the benchmark interest rate, as reported by The Business Daily. The Finance and National Planning Committee, chaired by Molo MP Kimani Kuria, will also question Capital Markets Authority (CMA) CEO Wycliffe Shamiah over NSSF’s involvement in questionable bond transactions that may have led to public funds losses. The CBK had lowered the Central Bank Rate (CBR) to 10.75% in February to spur credit growth, but MPs want clarity on why banks have not adjusted their lending rates.

Controller of Budget (CoB) Margaret Nyakang’o has raised concerns over the State Department for Public Works spending Ksh1.34 billion in the first half of the 2024/25 financial year without evidence of any completed projects. The Daily Nation reports that despite an allocation to fund government buildings, pedestrian paths, and construction regulation, no outputs were recorded, including unfulfilled targets such as setting up footbridges and inspecting 500 buildings. The CoB report revealed that only Ksh16 million was allocated for the Ololunga-Olepolos B Bridge, with just Ksh200,000 spent, leaving the use of the remaining funds in question. 

The Standard reports that Super Metro has resumed operations after the Transport Licensing Appeal Board temporarily lifted the suspension imposed by the National Transport and Safety Authority (NTSA). The board, chaired by Adrian Kamotho, issued an interim order allowing the transport company to continue its services immediately, stating that Super Metro had complied with the law. The ruling, made on March 25, 2025, also directed that the decision be served to the Inspector General of Police. Super Metro had been suspended on March 20, 2025, following an NTSA directive citing non-compliance with road safety measures.

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KCB Group has signed a deal to acquire a 75% stake in Riverbank Solutions, a fintech firm associated with former Football Kenya Federation President Nick Mwendwa. The acquisition, valued at approximately Ksh2 billion, aligns with KCB’s strategy to expand beyond traditional banking into digital payments and non-banking solutions, as reported by The Business Daily. Founded in 2010, Riverbank Solutions specializes in revenue collection and payment solutions across banking, retail, manufacturing, and government sectors. KCB sees this acquisition as a way to strengthen its agent banking and digital payment services.

The High Court has issued a conservatory order stopping the recruitment of key positions at the Social Health Authority (SHA) following a petition by the Kenya Union of Clinical Officers (KUCO), which challenged the legality of the process. Justice Lawrence N. Mugambi directed that the petition and supporting documents be served by March 24, 2025, with responses due within three days. In a report by Citizen Digital, the court order bars SHA from proceeding with the hiring of roles such as Assistant Director County Coordination and Director Benefits Management until the case is determined. KUCO, through its Secretary-General George Gibore, argued that the recruitment process was unlawful and needed court intervention. The case will be heard on April 10, 2025, for further directions.

As reported by The Star, the Public Service Commission (PSC) revealed that there are 17,000 ghost workers on the government's payroll who are costing the country billions. Due to this, Public Service Cabinet Secretary Justin Muturi has introduced the Public Service Human Resource Management and Development Bill, 2024, which seeks to strengthen the Head of Public Service's role and improve civil servant management. The Bill proposes creating a central posting committee for deploying senior officers, standardising human resource policies, and placing the Public Service Ministry in charge of a payroll system aimed at eliminating ghost workers. The Eastleigh voice reports that it also requires ministries to conduct quarterly payroll audits, regulate salary structures in consultation with the Salaries and Remuneration Commission, and ensure smooth pension and medical insurance management for government employees.

Kenya is facing delays in completing the World Bank-funded Secondary Education Quality Improvement Project (SEQIP), meant to support the Competency-Based Curriculum (CBC) and improve school infrastructure. Despite an extension of the completion deadline and reallocation of funds, the project remains unfinished, with a standoff between the government and contractors over payments for work yet to be completed. The World Bank has begun auditing the project, while eight contractors have obtained a court order blocking the Education ministry from cancelling their contracts, citing unfair treatment, as reported by The Daily Nation.

In a report by The Business Daily, the Treasury plans to use Ksh113.9 billion from last month’s Ksh194.05 billion Eurobond buyback to settle syndicated loans due in September and October, aiming to cut high-interest debt. Treasury CS John Mbadi said the funds would be used to retire Ksh123.2 billion in syndicated loans, which carry interest rates of 12-13%, helping stabilise Kenya’s debt portfolio. The move comes after the Eurobond buyback left a larger-than-expected balance of Ksh119.1 billion, now held in CBK reserves.