Kenya's Debt: Taxpayers on the Hook

Howdy! It's Brian from The Kenyan Wall Street. In today's edition, we explain our debt position and what it means to you as a taxpayer.

Also, we break down the financial results for ABSA Bank and Co-op Bank, understand why NTSA has suspended Super Metro, and why family businesses should plan for succession and generational governance.

💰 Kenya's Debt: Taxpayers on the Hook

Kenya's national debt has ballooned to 10.79 trillion KES, meaning each Kenyan theoretically owes 205,000 KES — a debt most can't dream of paying off. With only 8 million registered taxpayers (half of whom file nil returns), the burden per actual taxpayer is a staggering 1.3 million KES — or 1.7 million KES if you factor in the corruption tax. The government is scrambling to expand the tax base, but most small business owners would rather dodge the taxman than hike their own costs. Meanwhile, the debt-to-GDP ratio is a precarious 74% — or a nightmare-inducing 107% when adjusted for inflation. Despite the administration's efforts, it's a classic case of trying to squeeze water from a stone while juggling dynamite. As stricter tax measures loom, Kenyans might start wishing taxes could be paid in good intentions.

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🏦 Banks Thrive as Borrowers Dive: Profits Up, Loans Down!

Both Absa Bank and Co-op Bank have managed to boost their profits despite a rise in non-performing loans — proving that in Kenya, bad debts are just a bump on the road to bigger dividends.

Here is how they both performed :

Absa Bank:

🔶 Net profit rose by 28% to KSh 20.9 billion.

🔶Non-performing loans (NPLs) increased to KSh 42.5 billion from KSh 35.3 billion.

🔶Declared a dividend of KSh 9.5 billion (KSh 1.75 per share).

Co-op Bank:

♦️Net profit increased by 9.8% to KSh 25.5 billion.

♦️Customer deposits climbed to KSh 506.1 billion, with interest income hitting KSh 86.2 billion.

♦️Declared a dividend of KSh 1.50 per share.

While Absa's strategy leans on a strong shilling to soften the blow of defaults, Co-op Bank seems to be riding the wave of interest income and government securities. Ultimately, while Absa toasts to a stronger shilling, Co-op keeps its fingers crossed against inflation, making both banks masters of optimism.

🚌 Super Metro Sees the Red Light!

The NTSA has grounded Super Metro Limited, Nairobi's popular matatu service, for flouting safety regulations. It turns out that a great portion of its fleet lacks safety inspections and it's drivers are ‘incompetent speedfreaks’. The crackdown followed a tragic incident where a conductor allegedly ejected a passenger from a moving vehicle over a KSh 30 fare dispute. Super Metro must now clean up its act, from driver credentials to vehicle inspections, before its wheels can legally hit the road again. Here are the full details»»»»»

For now, Nairobians will have to seek their chaotic options elsewhere. Meanwhile, Super Metro has strongly condemned the suspension—terming it as unfair.

💵 How Lawyers and Real Estate Fuel Kenya's Money-Laundering Machine

Kenya's ambition to be a regional financial hub is at odds with its growing reputation as a money-laundering haven. The country's anti-money laundering efforts are being undermined by lawyers and real estate agents who exploit loopholes like client privilege—despite a 2023 agreement to report suspicious transactions to authorities. Meanwhile, Somali informal financial networks help cash slip through borders untracked—a cultural system that the US Department of State claims aids money laundering. Even as the government promises stricter regulation, criminals stay ahead. Read more»»»»»

Insight : Why Family Businesses Should Prioritize Governance and Succession Planning

Family businesses are responsible for over 70% of global GDP and provide 60% of the world’s employment, according to McKinsey. This shows that they play a substantial role in innovation and economic development. But despite their economic weight, these businesses often struggle with longevity. This is mainly due to the lack of effective governance and succession planning. This article explains how family businesses can tap into tax havens to survive for generations»»»»»

More Stories :

• Tech. Kenyans cut down on online visibility in the last three months of 2024, with the number of personal websites registered under the me.ke subdomain declining by 24.6% during that period.

• Crime. Kenya shut down a meth lab in Namanga in September last year—based on US intelligence—uncovering the first confirmed large-scale operation by Mexican Cartel de Jalisco Nueva Generación (CJNG) in East Africa.

• Audit. The Auditor-General has queried the accuracy of the expenditure of millions of shillings in the Africa Climate Summit hosted in Nairobi two years ago, after the event’s management used donor funds to pay taxes and did not issue a refund after underutilising its budget.