February's Costly Dinner Plate

Hello 👋🏿 It's Brian from The Kenyan Wall Street

In today's newsletter, monthly inflation rate is on the upward trend again — this time, by 3.5% — revealing that some commodities have become more expensive.

Also, reports by the Auditor General show that employees in certain state departments are raking in less salaries than they are legally supposed to.

This and more business stories in this edition…

ECONOMY  

February's Costly Dinner Plate

Food prices are on the rise again, pushing Kenya’s inflation to a five-month high of 3.5% in February. Sugar, cooking oil, and tomatoes became more costly but wheat flour and Irish potatoes tried to keep inflation in check.

Non-core inflation spiked to 8.2%, from 7.1% in January, proving that vegetables are not getting any cheaper. Meanwhile, electricity prices cooled off slightly, but LPG gas and local flight fares climbed higher.

The Central Bank, in an effort to keep things steady, slashed interest rates to 10.75%, hoping to spur growth without fueling further inflation. Despite the uptick, inflation remains below the 5% target, so policymakers can still breathe (for now). If food and fuel prices keep playing their unpredictable game, however, your refrigerator and kitchen cabinets are set to bear more pricey items. More on this story.

What I think :

🔴 Based on CBK forecasts, the inflation rate could rise in the coming months — with basic commodities becoming more expensive. Buckle up!

Today's Poll

Yesterday's Poll Results

Do you think government can reform Hustlers' Fund or should it be abolished entirely?

🟨⬜️⬜️⬜️⬜️⬜️ Reform (19.05%)

🟩🟩🟩🟩🟩🟩 Abolish (80.95%)

AUDITS

The Paycheck Paradox: When Payroll Chiefs Break Their Own Rules

Kenya’s government payroll is in the spotlight — with thousands of employees — including those in State House — taking home less than a third of their salaries; a blatant violation of the law. Even the Salaries and Remuneration Commission, tasked with ensuring fair pay, somehow managed to shortchange its own staff.

Officials in these departments blame the new series of deductions — including the Housing Levy — but the real culprit seems to be a cocktail of poor planning and excessive loan commitments. The Auditor-General has warned that over-docked salaries could tank productivity because it’s hard to focus at work when your paycheck barely makes it past your bank fees. More on this story.

What I think :

🔴 State departments receive billions of shillings every year, bloating our national deficit with eye-watering wage bills. Therefore, it is odd that a massive pile of employees receive diminutive portions of their salaries. Could it be that senior officials are raking in more than they should? In this country, such a reality cannot be dismissed.

Prisons Department: An Avenue for Wastage

The Prisons Department splurged Ksh 3M annually on a house for the ex-Commissioner General, way above his Ksh 100K allowance. The Auditor-General flagged the lease as irregular, with no clear basis or approval from the Salaries and Remuneration Commission.

Prisons also sat on Ksh 5.25 billion in unpaid bills, incomplete projects, and had poor oversight on drug management and firewood procurement. Inmates got their meds via orderlies, but no one signed off—raising questions on whether they ever got them.

Firewood procurement was a mess, with weight loss due to moisture and reliance on weighbridge certificates instead of proper weighing. The department also underpaid 2,535 employees, giving them less than a third of their basic salary. This article delves into the details.

What I think :

🔴 Wastage of public funds is a cancer that will eventually devour this country if not mitigated soon enough. Look at the proportion of pending bills every state department has listed. Insane! Most of these bills, of course, are financing grossly inflated arrears. The Auditor General's reports, sadly, are formalities that our highly-paid representatives in parliament choose to ignore.

CAPITAL MARKETS

Kenya Secures Eurobond, Defies Debt Fears

Kenya successfully raised $1.5 billion through an 11-year Eurobond at a 9.5% coupon rate, attracting $4.9 billion in bids, demonstrating strong investor confidence. The proceeds will refinance a $900 million Eurobond due in 2027 and support general budgetary needs.

The new bond, maturing in 2036, will be amortized in three equal installments starting in 2034, smoothing Kenya’s debt maturity profile. A buyback offer for the 2027 bond is underway, with final results expected by March 3, 2025. This move reduces default risks on Kenya’s US$2 billion external debt, boosting investor sentiment and stabilizing the Kenyan shilling.

The unexpected issuance defied earlier projections that Kenya would rely on foreign reserves or multilateral loans for debt refinancing. More details here…

More News

• Capital Markets. The Business Daily newspaper has been running the same commodity and NSE market graphs for over six months, inaccurately depicting the prices of commodities such as gold and tea and misrepresenting the Nairobi Securities Exchange’s indices. Here is our analysis.

• Companies. The European Investment Bank (EIB) has announced a US$75 million investment in Helios Investors V, L.P. (Helios Fund V).The fund will support the growth of companies that help provide digital infrastructure, tech-enabled business services, and financial services and technology. More in this article.

• Internet. The Technology Service Providers Association of Kenya (TESPOK) has issued a sharp rebuke against the destruction of critical ICT infrastructure by Nairobi County Officials amid its spat with utility firm, Kenya Power. Here's more.

• Energy. Olkaria, a geothermal power hotspot near Naivasha, will become Kenya’s 16th Special Economic Zone (SEZ), positioning it as a regional hub for industrialization driven by renewable energy. Read more. 

Opinion

Read the article here…

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Have a great weekend!