Safaricom HY Results, Tax Reforms, and US Trade Deal Uncertainty- Kenya's Economy

𝐖𝐞𝐥𝐜𝐨𝐦𝐞 𝐭𝐨 T𝐨𝐝𝐚𝐲’𝐬 M𝐨𝐧𝐞𝐲 N𝐞𝐰𝐬 R𝐨𝐮𝐧𝐝 U𝐩: Thursday, 𝐍𝐨𝐯𝐞𝐦𝐛𝐞𝐫 7, 𝟐𝟎𝟐𝟒‍

Safaricom’s half-year financial results for 2025 reveal impressive growth, with group service revenue rising by 12.9% to Ksh177.5 billion. M-Pesa continues to lead the way, with revenue growing 16.6% to Ksh77.2 billion, and the M-Pesa app seeing a 41.9% increase in downloads, reaching 12.1 million. During the launch, which was covered by Money254, the giant telco reported a 20.2% growth in mobile data revenue, totaling Ksh35.6 billion. This is largely driven by the rise of smartphones and its bundled data packages which meet client demand. Safaricom CEO Peter Ndegwa highlighted that the company’s success is built on the trust of its customers, ensuring their data and money are safe. Safaricom announced it has received a licence to set up an insurance unit, which will roll out services in the second half of the financial year. Looking forward, Safaricom is committed to its 2030 strategy to become Africa’s leading purpose-led technology company.

As reported by The Standard, Treasury Cabinet Secretary John Mbadi outlined his economic plan to revitalise Kenya’s economy, emphasising anti-corruption measures, tax reforms, and a push for fiscal discipline. He aims to increase Kenya Revenue Authority’s tax collection from 14.5% to 22% of GDP to reduce reliance on external loans, enhance economic growth, and fund development projects. Mbadi also addressed the importance of stimulating the manufacturing sector, easing credit access, and implementing Public-Private Partnerships (PPPs) for large infrastructure projects, despite public resistance. With a current economic growth rate of 5.6%, Mbadi highlighted the need for sustained 8% growth to support rising employment demands.

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Kenya's plan for free university education seems unlikely because it would cost the government Sh990 billion a year, Capital Business reported. George Monari, CEO of the University Fund, told lawmakers that this high cost is why they moved to a new funding model that tries to make education more affordable based on students' needs. However, this new model is facing legal issues and has been paused by the court, leaving over 250,000 students unsure about their funding. Lawmakers want to return to the old funding model, but Monari argued that it led to big debts for universities, reaching Sh74 billion.

Also, according to the Business Daily, Treasury Cabinet Secretary John Mbadi’s proposed tax changes, outlined in the Tax Laws (Amendment) Bill, 2024, aim to raise government revenue without burdening essential goods like milk, bread, and maize flour. The new measures include applying 16% VAT on airline services and aircraft parts, which were previously tax-exempt, while moving fertilisers and agricultural pest control products to an exempt status, potentially increasing their costs. The plan also proposes raising excise duties on cigarettes and phone services, as well as implementing a minimum 15% corporate tax for multinationals. Despite earlier plans to move basic goods to VAT exempt, Mbadi focused on reviewing luxury and high-consumption items as a new pathway to raise Ksh140 billion and address tax loopholes.

Read Also: Kenya's Financial Landscape: Data Sharing, Tax Reforms, and IMF Adjustments - News Round-Up

Kenya Revenue Authority (KRA) surpassed its October revenue target, collecting Sh210 billion against a Ksh203.5 billion goal, reports The Standard. Domestic taxes exceeded targets by Ksh5.93 billion, while Customs and Border Control surpassed its target by Ksh941 million. Taxes from oil outperformed expectations, boosted by a 30.7% increase in oil volumes and a higher fuel levy. Withholding tax saw growth due to increased contributions from private and public sectors. However, domestic VAT and private sector PAYE missed targets, reflecting restructuring efforts and reduced employee pay. Despite challenges, KRA recorded a strong overall performance with a 103.3% target achievement rate.

Read Also: Treasury's Rain of Taxes & Mergers in Kenya's Banking Sector - News Round-Up‍

Kenya's trade and investment deal with the United States, which was expected to conclude by the end of the year, now faces uncertainty after Donald Trump's return to the presidency as reported by the Business Daily . This follows a series of negotiations that began in 2018 but were disrupted by leadership changes in the US. The Trump administration had pushed for a full free trade agreement (FTA) with Kenya, aimed at reducing tariffs, while the Biden administration shifted focus to a non-tariff partnership through the US-Kenya Strategic Trade and Investment Partnership (STIP). However, with Trump's return, it is unclear whether the new administration will revive the FTA talks, especially with the expiration of the Africa Growth and Opportunity Act (AGOA) in 2025. Kenya had hoped the Biden-era STIP would complement AGOA, but doubts are now rising about Kenya’s ability to secure a better deal outside of the AGOA framework. The shift in leadership could reshape the future of US-Kenya trade relations, which have grown significantly in recent years.