Nairobi on the Scandal watch!

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

I hope you're having a great start of the week…

In today's newsletter, we tackle some of the concerns raised by the country's Auditor General — pinpointing the financial mismanagement in the capital city, Nairobi.

This and more business stories in today's edition…

PUBLIC FINANCE  

Ghost payments, Shoddy Projects 

Nairobi County is bleeding billions due to ghost workers, stalled projects, and shady deals, as revealed by a scathing Auditor-General’s report. The county overspent its budget by KSh 12.3 billion but funneled less than 10% into development, ignoring regulations. A school feeding program saw the county overpay for meals, leaving taxpayers to pick up the extra tab. Pending bills have ballooned to KSh 118.8 billion, with legal fees alone gulping down KSh 21.37 billion, thanks to mismanaged contracts and endless court battles. Stadiums meant to boost community engagement now sit half-baked and deserted, draining millions with little to show. Meanwhile, the Mutuini Hospital’s stalled OPD project stands as a concrete monument to cost overruns and abandoned promises.

In this article, we dissect some of the concerns raised by the Auditor General >>>>>

The Ambitious School Feeding Programme

An audit of Nairobi County’s ‘Dishi na County’ school feeding program exposed financial blunders, with the county overpaying Food for Education by failing to deduct student contributions, leading to millions in excess payments. Despite learners paying KSh 5 per meal, the county still footed the full KSh 25 bill, effectively handing the non-profit KSh 30 per plate. Things got messier with a €1,005,000 French donation—meant to feed 25,000 vulnerable kids—whose spending remains a mystery due to lax oversight. The audit also flagged shoddy procurement practices, including a KSh 32.5 million kitchen project riddled with irregularities and substandard construction at Toi Primary. The Central Kitchen at Mutuini Primary even charged high schoolers KSh 30 per plate, pushing the profit margins higher. Food for Education, despite its noble mission, now finds itself in hot soup, with no official comment yet on the scandal.

More details on this story »»»»»

Today's Poll

Last Friday's Poll Results 

Do you think Kenya should be part of the mediation process in the Congolese crisis?

🟨🟨⬜️⬜️⬜️⬜️ Yes (28.57%)

🟩🟩🟩🟩🟩🟩 No (71.43%)

COMPANIES  

An Acquisition, An Employee Dispute, and a Profit reduction

• CFAO Healthcare, a Toyota Tsusho affiliate, plans to fully acquire GoodLife Pharmacy by buying out Africa Chemist & Beauty Care Inc. from LeapFrog Investments, pending COMESA’s approval. This move will boost CFAO’s stake from 30.1% to 100%, expanding its healthcare footprint across Kenya and Uganda. The acquisition aims to integrate GoodLife’s retail network with CFAO’s broader pharmaceutical distribution, strengthening its regional market dominance. Full story here »»»»»

• The Court of Appeal in Nairobi upheld a lower court's ruling requiring ABSA Bank to extend benefits from a backdated collective bargaining agreement (CBA) to employees who exited under a voluntary retirement scheme in March 2013. The court ruled that since the CBA, signed in August 2013, was effective from March 1, 2013, it covered employees on the payroll during that period, including those who left on March 31. This landmark decision sets a precedent for applying backdated CBAs, emphasizing that administrative delays in signing agreements should not disadvantage employees. Here is the full story »»»»»

• BAT Kenya reported a 19.5% drop in after-tax profits to KSh 4.5 billion in 2024, mainly due to higher operating costs and reduced export revenues caused by a stronger shilling. Despite the decline, the company maintained its dividend at KSh 50 per share, resulting in a 13% dividend yield, while sales saw a marginal 1% increase to KSh 25.7 billion. Finance costs surged by 955% due to currency fluctuations, but cash from operations rose by 23%, supported by the sale of dormant oral nicotine machinery. More on the company's result here »»»»»

FEATURE

Conflicts Threaten Africa’s Food Security Future

Conflicts across Africa, particularly in regions like the Sahel, Sudan, and the Democratic Republic of Congo, are worsening food insecurity by disrupting the adoption of smart farming technologies, which are crucial for adapting to shifting weather patterns. William Mulehi of Intellecap Advisory Services highlights that while countries like Kenya, Ethiopia, Rwanda, and parts of West Africa are embracing smart farming, conflicts hinder expert mobility and large-scale implementation. He urges entrepreneurs to attract foreign investment to scale these solutions, ahead of the 12th Sankalp Africa Summit in Nairobi, which aims to boost funding for African startups.

More on this story here »»»»»

▶️ On your watchlist 

Have a blessed week ahead!