Ruto’s Night Gazette Notice, CBK Ends 10-Year Bank Licensing Freeze

‍Hello Moneymakers, Emily here. In today’s newsletter, we unpack a shift in Kenya’s banking sector after a decade-long freeze, a budget rescue mission with help from the World Bank and AfDB, and looming auction threats for affordable housing defaulters. Plus: What RBA is saying about early pension access, and why Parliament paused VAT reforms for manufacturers.

We also break down Ruto’s night appointments.

In Summary:

• CBK lifts the bank licensing freeze after 10 years, starting July 2025, but raises the minimum capital requirement tenfold from Ksh1B to Ksh10B.
  
  
• Parliament pauses VAT Bill 2025 to scrutinize Ksh15B in exemptions granted to 14 manufacturers before legal approval. Lawmakers are investigating if these tax breaks—linked to Ksh93.5B in promised investments—are justified.
  
  
• New bill proposes stricter auction timelines for affordable housing defaulters, halving the grace period from 90 to 45 days. Critics warn the move could harm low-income earners .
  
  
• RBA softens stance on early pension access, dropping a total restriction plan. Workers under 50 can now tap up to 40% of savings (down from 50%) when changing jobs.
  
  
• Kenya expects Ksh112.2B in loans from the World Bank and AfDB by June to plug a Ksh887.2B budget hole. This follows the cancellation of a Ksh99B IMF disbursement and comes amid ongoing debt refinancing via Eurobond and CBK auctions.

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Ruto Makes Night Appointments

Despite widespread uproar, President William Ruto gazetted the appointments of Public Service nominee Geoffrey Ruku and Gender nominee Hanna Wendot Cheptumo to the Cabinet, on Wednesday night nonetheless. He also appointed the 14 new Principal Secretary nominees that were approved by the National Assembly.

Why This Matters: After a problematic vetting of Wendot on Monday, who insinuated that some girls killed under femicide were looking for money, the public admonished her remarks accusing her of victim shaming.

Ruto had appointed the two, Ruku to replace Justin Muturi, whose political differences with the administration forced him out, and Wendot selected to fill the Gender docket, which had remained vacant since the anti-Finance Bill 2024 protests forced the Head of State to overhaul the entire Cabinet.

In her interview, Wendot had argued that women lacked economic empowerment or the education required to gain skills to make their own money. She, however, later issued an apology for the remarks.

Catch Up Quick: The president had nominated 14 PSs who underwent vetting by the National Assembly. They included Regina Akoth Ombam, Cyrell Odede Wagunda, Caroline Wanjiru Karugu, Fredrick Ouma Olaga, Ahmed Abdisalan Ibrahim, and Judith Nayiai Ramaita-Pareno among others.

Swift Update: Early on Wednesday morning, Ruto swore into office the two new CSs alongside the 14 PSs. They assume office effective immediately.

CBK Lifts 10-Year Freeze on Bank Licensing, Raises Capital Requirement

Starting July 1, 2025, the Central Bank of Kenya (CBK) will resume issuing new commercial banking licenses, ending a decade-long moratorium as reported by the People Daily. The freeze was introduced in 2015 to stabilize the sector after several bank failures.

CBK says the sector is now more resilient and ready for new players—but with tougher conditions. New applicants must meet a minimum capital requirement of Ksh10 billion, up from Ksh1 billion previously.

Why This Matters:

• Kenya currently has 46 licensed banks.
• 24 existing banks are also required to raise their core capital to Ksh10 billion by 2029, starting with a Ksh3B threshold this year.
• While this could enhance banking stability, analysts warn it may tighten lending in the short term as banks adjust.
  
  

RBA Eases Proposal to Ban Early Pension Withdrawals

The Retirement Benefits Authority has reversed course on its plan to block workers under 50 from accessing retirement savings. Instead, the revised proposal allows access of up to 40%, down from 50%, for workers switching jobs as reported by the Business Daily.

Why This Matters:

• RBA had faced backlash from younger savers who use the funds for home buying or emergencies.
• Kenya struggles with low pension coverage—70% of retirees lack adequate savings.
• Public participation will guide final changes as RBA aims to balance flexibility with long-term security.
  
  

Kenya to Receive Ksh112.2B in Loans Amid IMF Pullback

Kenya expects Ksh112.2 billion from the World Bank and African Development Bank by June to cover part of its Ksh887.2 billion budget deficit for FY2024/25.

The disbursements follow Parliament’s passage of the Conflict of Interest Bill—a World Bank precondition—and come after the IMF cancelled a Ksh99B final payout, with discussions now shifting to a new programme as reported by the Business Daily.

Why It Matters:

• Ksh34.4B from AfDB is expected within days; Ksh77.9B from the World Bank will follow.
• The CBK had already raised Ksh653B by mid-March via domestic borrowing.
• Earlier this year, Kenya secured Ksh194.7B through a Eurobond—used for refinancing, not budget spending.
  
  

Parliament Suspends VAT Bill Over Ksh15B Tax Exemptions

The National Assembly has paused the VAT (Amendment) Bill 2025 to investigate Ksh15 billion in tax exemptions granted to 14 manufacturers. The exemptions were awarded before Parliament passed the legal framework to back them.

According to the People Daily, Lawmakers are now questioning whether the exemptions—tied to Ksh93.5 billion in promised investments—delivered real value. Companies involved include Devki Steel Mills and National Cement Company.

Why This Matters:

• MPs raised concerns about backdating the law to January 2024.
• The Finance Committee is reviewing whether the exemptions were justified amid revenue pressure.
• The move signals growing scrutiny of corporate tax deals.
  
  

Auction Timeline for Affordable Housing Defaulters Could Be Halved

According to a report by the BusinessDaily, a new bill proposes cutting the grace period for defaulting on affordable housing loans from 90 to 45 days, and halving the auction notice window from 40 to 20 days.

Why It Matters:

• Critics argue the change risks pushing out informal-sector and low-income homeowners who face income volatility.
• The bill affects borrowers under the Affordable Housing Programme (AHP), funded by a 1.5% housing levy.
• Lenders like KMRC and KMGT are backing the programme with partial guarantees—but faster auctions could dampen its social goal.
  
  

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