Monthly Archives: February 2025

Understanding Kenya’s Currency Strength: Factors and Risks

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The Kenyan shilling has exhibited impressive resilience, marking a significant appreciation against major international currencies in recent years. In 2024 alone, the shilling surged by 17.4% against the US dollar, climbing from Ksh 160 per dollar in early 2024 to around Ksh 132 by the year’s end. This remarkable turnaround has been driven by improved foreign exchange reserves, which expanded by 28.2% to USD 9.3 billion, providing a 4.7-month import cover. Key drivers include a surge in diaspora remittances—totaling USD 5.2 billion in 2024—a thriving agricultural export sector, and a narrowing current account deficit supported by strategic trade policies. The currency has remained relatively stable in early 2025, with the exchange rate hovering around Ksh 128–130 per dollar, reinforcing investor confidence and bolstering Kenya’s economic standing.

A Report by the Monetary Policy Committee of the Central Bank of Kenya

A crucial factor in the shilling’s performance has been the Central Bank of Kenya’s (CBK) prudent monetary policies. In early 2025, CBK reduced the Central Bank Rate (CBR) by 50 basis points to 10.75%, aiming to stimulate economic activity while maintaining currency stability. Lower interest rates have enhanced market liquidity, making Kenyan assets more attractive to investors. Additionally, declining treasury bill rates—from an average of 17% in late 2024 to around 15.5% in early 2025—have eased pressure on borrowing costs while reinforcing confidence in local debt markets. Analysts attribute the shilling’s strength to these monetary adjustments, coupled with external factors such as reduced global oil prices and expectations of a new Eurobond issuance. However, concerns persist that the shilling’s appreciation could be overvalued, with some experts warning of potential corrections if CBK interventions ease or external economic conditions shift.

Despite the currency’s strength, several risks threaten its stability in the long run. Slowing economic growth, political uncertainty, and external shocks—such as fluctuating global commodity prices—could put pressure on the shilling. Kenya’s high external debt, exceeding USD 70 billion, remains a critical concern, with recent credit rating downgrades by Fitch and Moody’s raising alarms over the country’s fiscal health. Additionally, while forex reserves are currently robust, sustained stability will depend on Kenya’s ability to maintain strong export performance and remittance inflows. To preserve its gains, the government must prioritize fiscal discipline, economic diversification, and prudent debt management. By addressing these structural challenges, Kenya can ensure a resilient and stable currency, reinforcing its position as a key player in regional and global markets.

References:

CNBC Africa Kenyan shilling firms slightly, traders see more gains ahead

CEIC Kenya Exchange Rate against USD

Cytonn Kenya Currency and Interest Rates Review 2025

BNN Bloomberg Kenyan Shilling Strength Masks Underlying Risks to Economy

FRONTIER VIEW The Kenyan shilling will slowly lose value

CNBC Africa What’s behind the resurgence of the Kenyan shilling in 2024?


Transforming Kenya’s Tax System: Path to Sustainable Economic Growth

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Kenya’s economic trajectory has recently demonstrated remarkable resilience, particularly through the strengthening of the Kenyan shilling, a development largely attributed to the country’s evolving fiscal policies. The government’s strategic economic management, guided by a mix of tax reforms and regional trade initiatives, has played a crucial role in stabilizing the currency and bolstering investor confidence. A centerpiece of this approach is the National Tax Policy, designed to create a stable and predictable tax environment. By addressing inefficiencies within the tax system, policymakers aim to widen the tax base and attract more foreign investment, fostering a climate of economic predictability and long-term growth. These reforms align with the broader objectives of the Bottom-Up Economic Transformation Agenda (BETA), which seeks to lower the cost of living, generate employment, and enhance social security, positioning Kenya on a path toward sustainable economic development.

A Citizen Digital Report

Kenya’s tax system has undergone significant transformation since independence, evolving from a narrow and regressive structure into a more sophisticated framework incorporating income tax, excise duties, and customs levies. The landmark 1973 Income Tax Act has continuously been revised to match international best practices, ensuring that the country remains competitive in a globalized economic environment. More recently, the government introduced a Medium-Term Revenue Strategy aimed at broadening the tax base and ensuring fair taxation across various economic sectors. These administrative and policy-driven reforms are expected to enhance revenue collection, reducing reliance on external borrowing and strengthening national financial stability. Such fiscal discipline is essential not only for economic resilience but also for sustaining long-term development goals, as outlined in Kenya Vision 2030’s Fourth Medium-Term Plan (2023-2027).

Beyond domestic fiscal policies, Kenya has increasingly leveraged regional economic integration to bolster its financial standing. As a key player in the East African Community (EAC), Kenya has prioritized strengthening trade and investment ties within the region, reinforcing its role as an economic powerhouse. These regional partnerships have not only expanded market access for Kenyan businesses but also contributed to currency stability, as cross-border trade boosts foreign exchange reserves. By balancing domestic fiscal discipline with a proactive regional economic strategy, Kenya continues to enhance its economic resilience, demonstrating the potential of well-executed policy frameworks in navigating global financial uncertainties.

References:

MTP-IV-2023-2027

NATIONAL TAX POLICY

Center for Strategic & International Studies Kenya’s Economic Initiatives in the Democratic Republic of the Congo

Revitalizing Kenya’s Mining Industry: A Path to Prosperity

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Kenya, a nation famed for its wildlife and tourism, harbors vast untapped mineral wealth that could significantly boost its economy. Despite the presence of valuable resources such as gold, titanium, soda ash, limestone, and various gemstones, the mining sector remains a dormant asset, contributing less than 1% to the national GDP. The failure to capitalize on these resources stems from challenges such as inadequate exploration, limited power supply, insufficient refining infrastructure, and rampant illegal mining, which not only deprives the government of revenue but also raises environmental and security concerns. However, Kenya’s strategic location along the Indian Ocean and its well-developed port infrastructure present a lucrative opportunity to establish itself as a key regional hub for mineral exports, benefiting both the local economy and landlocked neighbors seeking access to global markets.

Citizen Digital Report

Recognizing the urgency of revitalizing the sector, the government has initiated a series of legislative and policy reforms to attract investment and streamline operations. Vision 2030 identifies mining as a crucial driver of economic growth, while the Mining Act of 2016 modernized regulatory frameworks to promote responsible extraction and trade. Recent government actions, including the Mining (Amendment) Bill and the lifting of a moratorium on new exploration licenses in October 2023, signal a renewed focus on investment-friendly policies. The formalization of artisanal and small-scale mining has also gained traction as a means to improve sectoral contributions while ensuring worker safety and sustainability. Despite these efforts, critical obstacles persist, including inefficient regulatory processes, poor infrastructure, an unreliable power supply, and safety hazards that have led to frequent mine collapses, particularly in small-scale operations.

To fully unlock the sector’s potential, Kenya must prioritize investments in geological exploration, renewable energy sources, and local refining capacity to maximize value addition. Infrastructure improvements, including better roads, railways, and ports, will reduce logistical costs and enhance efficiency. Expediting licensing processes and enforcing stricter safety and environmental regulations will foster a more stable and investor-friendly industry. Addressing illegal mining through law enforcement and supporting sustainable practices will not only boost revenue but also safeguard ecosystems from degradation. With strategic interventions and robust policy implementation, Kenya can transform its mining industry into a thriving pillar of economic growth, solidifying its position as a regional leader in mineral trade while fostering sustainable development for future generations.

References:

Kenya News Agency Inside CS Joho’s grand vision of transforming mining sector into Kenya’s economic pillar

INTELLINEWS Kenya’s untapped mineral wealth holds the promise of economic transformation

Bowmans Kenya: Mining outlook 2023 – Current status and future possibilities

Institute for Security Studies Gold and governance provide hope for Kenya’s artisanal miners

EAC Natural Resources

Muhoro & Gitonga Associates Mining in Kenya: Current Status & Future Possibilities

Business Daily Catastrophic mine failures risk small-scale mining sector

Pact The economic contributions of artisanal and small-scale mining in Kenya: Gold and gemstones

AI Revolution in Kenya: Challenges and Opportunities

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Kenya is riding the wave of an AI revolution, with the technology rapidly being adopted across various sectors, including healthcare, agriculture, and finance . The country boasts the highest AI readiness ranking in East Africa and 84th globally, driven by increased internet penetration, a young tech-savvy population, and government support. Initiatives like the National AI Strategy 2025–2030 aim to establish Kenya as a regional AI hub . The recent AI Innovation Summit in Nairobi brought together industry leaders and innovators to discuss the transformative potential of AI in driving efficiency, innovation, and sustainable growth . Speakers emphasized the need for organizations to develop comprehensive AI strategies, invest in infrastructure and talent development, and foster collaboration to remain competitive in a rapidly evolving digital economy .  

A Report by DW

However, this rapid growth also brings significant challenges. A major concern is the exploitation of Kenyan workers on online platforms for data labeling. Reports reveal that these workers, often lured by the promise of stable employment, face low wages, poor working conditions, and a lack of job security. Some are even exposed to harmful content, including graphic violence and sexual abuse, leading to mental health issues. These findings highlight the urgent need for ethical frameworks and regulations to protect AI workers in Kenya and ensure that the benefits of AI are shared equitably.

Furthermore, there are concerns about the potential for AI-driven automation to displace low-skilled workers and exacerbate existing inequalities . The use of AI for disinformation and the government’s efforts to regulate AI-generated content raise concerns about freedom of expression and potential censorship . Addressing these challenges through ethical frameworks, robust regulations, and public awareness campaigns will be crucial to ensuring that AI benefits all of Kenyan society .  

References:

Research Leap The Adoption of Generative AI in Kenya: A Critical Analysis of Opportunities, Challenges, and Strategic Imperatives

CIO Africa AI Innovation Summit Calls For AI Adoption To Drive Business Growth

Citizen Digital AI Innovation Summit urges AI adoption to drive business growth

Vellum Highlights of the Kenya National AI Strategy 2025–2030





Is Lake Nakuru’s Ecosystem at Risk Due to Pollution and Illegal Fishing?

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Lake Nakuru National Park, a renowned Kenyan wildlife sanctuary and UNESCO World Heritage Site, is facing a multifaceted crisis. While celebrated for its breathtaking scenery and diverse wildlife, the park is grappling with encroachment, illegal fishing, and escalating sociopolitical and moral conflicts. These issues are intertwined with the adverse effects of pollution, primarily from untreated sewage and industrial waste discharged into the lake from Nakuru town. This pollution not only contaminates the water and renders the fish unsafe for human consumption but also disrupts the delicate balance of the ecosystem, threatening the survival of various species and the livelihoods of surrounding communities.

A Report by Nakuru Today

The presence of fish in Lake Nakuru, once a predominantly saline lake, adds another layer of complexity to this crisis. The introduction of fish, primarily tilapia, can be traced back to an accidental spill from a fish farm uphill in the 1960s. This incident, coupled with the rising water levels that began in 2010, transformed the lake’s environment, making it more habitable for freshwater fish. The rising waters also submerged riparian land, displacing communities and intensifying human-wildlife conflicts. As a result, many residents turned to fishing as a source of livelihood, leading to a surge in illegal fishing activities despite the ban and health risks associated with consuming contaminated fish.

This situation has given rise to a clash between conservation efforts and the socioeconomic needs of local communities. While the Kenya Wildlife Service (KWS) enforces regulations against fishing and encroachment, impoverished communities view the lake as a vital resource for survival. This tension is further exacerbated by allegations of brutality and abuse of power by KWS officers against individuals caught fishing . Addressing this crisis requires a comprehensive approach that prioritizes pollution control as a means to restore the lake’s ecosystem and ensure the safety of the fish. This would pave the way for regulated fishing activities that benefit local communities while upholding conservation goals. Furthermore, fostering dialogue and collaboration between KWS and the community, ensuring ethical conduct within KWS, and promoting alternative livelihood opportunities are crucial steps towards achieving a sustainable and just solution.

References:

Nation The slow death of Lake Nakuru

Mtaa Wangu Nakuru X Space discussion reveals deeper issues in Lake Nakuru fishing menace

Kenya News Agency Uncertain future for wildlife and native plant species at Lake Nakuru National Park as invasive plant species wipe out grasslands and strangle natural fauna

Radio Baraza The Threat to Nakuru’s Green Belt: Human Encroachment Endangers a Vital Ecosystem

Illegal Charcoal Trade Threatens Kenya’s Environment

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Kenya’s charcoal industry is a critical part of the nation’s economy, employing roughly 700,000 people and generating over US$427 million annually. It stands as the fourth largest source of revenue, following tourism, horticulture, and tea. About 1.4 million Kenyan households depend on charcoal as their primary cooking fuel. The charcoal trade involves a complex network of actors, with wood producers harvesting trees, often illegally, charcoal producers converting the wood to charcoal using kilns, and transporters moving the charcoal to urban centers where it is sold to wholesalers and ultimately to consumers. However, this economic reliance comes at a significant environmental cost. The high demand for charcoal has fueled unsustainable practices, leading to widespread deforestation and the destruction of vital ecosystems.  

A Citizen Digital Report

Despite government efforts to regulate the industry through measures like the Forest (Charcoal) Rules of 2009, which require charcoal producers to obtain licenses and implement reforestation plans, illegal charcoal production continues to thrive. This illicit trade is driven by organized crime, with cartels involving corrupt officials and even terrorist organizations in neighboring Somalia. These cartels operate with impunity, often bribing officials and forging permits to circumvent regulations. The environmental impact is devastating, with large-scale tree felling threatening the survival of numerous tree species, including the Acacia, and leading to the destruction of vital water catchment areas . Deforestation also contributes to climate change by releasing stored carbon into the atmosphere.

The Kajiado wildlife migration corridor, a vital dispersal area for elephants and other wildlife moving between Amboseli and Maasai Mara National Parks, is particularly vulnerable to the destructive impacts of illegal charcoal burning. In Kajiado, a cartel involving local chiefs, Kenya Forestry Service officers, police, and some politicians has been reported to target private and communal land for charcoal production. Combating this challenge requires a multi-pronged approach. Increased patrols and law enforcement are crucial to deter illegal activities and apprehend offenders. Community engagement and education can raise awareness about the importance of protecting biodiversity. Promoting alternative livelihoods, such as ecotourism and sustainable agriculture, can reduce reliance on charcoal production. Supporting sustainable charcoal production practices and promoting alternative energy sources are also essential components of a comprehensive strategy to address this complex issue.

References:

Institute for Security Studies Kenya’s charcoal bans have fuelled a smuggling problem

The East African Illegal logging, charcoal burning destroying East Africa’s forests

IFAW Maasai community commits to protecting last remaining wildlife corridor between Amboseli and the Mara

ENACT Observer Flora / Going deeper underground: why Kenya’s charcoal bans don’t work

Global Initiative The life of a Kenyan charcoal transporter: a crucial role in a vast, vital and criminalized market.



Understanding Marburg Virus: Risks and Prevention Strategies

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Marburg virus disease (MVD) is a severe hemorrhagic fever with a high fatality rate, averaging around 50% in past outbreaks . The virus, first identified in 1967, is transmitted to people from fruit bats and spreads through human-to-human contact with bodily fluids or contaminated materials. Kenya is particularly vulnerable due to its proximity to Tanzania, where an outbreak is currently ongoing. The risk is further heightened by increased cross-border movement and Kenya’s position as a major transit hub in East Africa.

A lesson on MVD by JJ Medicine

The Marburg virus is transmitted to people from fruit bats and spreads through human-to-human contact with bodily fluids or contaminated materials. Symptoms typically begin abruptly with fever, headache, and muscle aches, which can quickly escalate to severe internal bleeding, organ failure, and shock. Early supportive care, including rehydration and symptom management, is crucial for improving survival rates. Kenya, with its position as a major transit hub in East Africa, is particularly vulnerable to the spread of MVD . The country’s healthcare system faces challenges such as underfunding, recurring healthcare worker strikes, and under-resourced primary health facilities, which could hinder effective response efforts. Moreover, the initial symptoms of MVD often mimic common illnesses like malaria, potentially leading to misdiagnosis and further transmission within households and healthcare settings.

A report on Marburg Virus by Ten Health

While no approved vaccines or treatments for MVD exist, Kenya is taking significant steps to enhance surveillance and response mechanisms through its comprehensive Preparedness and Response Plan. This plan not only includes crucial readiness assessments aimed at evaluating the country’s ability to respond effectively to potential outbreaks but also involves extensive training programs for healthcare workers to ensure they are well-equipped to handle cases of MVD safely and efficiently. The Ministry of Health is proactively coordinating with regional partners and neighboring countries to build a united front against the virulent disease, urging the public to remain vigilant and report any suspicious symptoms immediately. Additionally, Kenya is receiving vital support from international organizations, which offer technical expertise, logistical assistance, and resources essential for managing public health crises. Furthermore, Kenya aims to strengthen its healthcare system through infrastructure improvements, enhance surveillance capabilities at all points of entry, and actively engage the local community in awareness campaigns. By fostering collaboration and communication, the country aspires to effectively combat MVD and other infectious diseases, ensuring public health and safety for all its citizens.

References:

CEPI Marburg – What it is, and what it is not

World Health Organisation Marburg Virus Disease–United Republic of Tanzania

World Health Organisation Marburg virus disease

The Guardian Suspected outbreak of deadly Marburg virus disease kills eight in Tanzania

Citizen Digital MoH intensifies border screening for Ebola, Marburg virus

KBC Gov’t steps up border surveillance as Mpox, Marburg and Ebola threats loom

The Star CS Barasa: Kenya remains on high alert over Marburg virus

The Star Marburg Virus Disease: Kenya at high risk







Challenges in the Global Shift to Electric Vehicles

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The global automotive industry is undergoing a significant transformation, with electric vehicles (EVs) at the forefront. However, the transition is proving complex and uneven. Recent events, such as the failed Nissan-Honda merger, highlight the challenges faced by established automakers as they navigate this evolving landscape. Nissan’s search for a new partner, particularly within the U.S. technology sector, underscores the pressure to adapt and compete, especially against the rise of Chinese EV manufacturers. Globally, EV adoption faces hurdles. Surveys reveal significant dissatisfaction among U.S. and Australian EV owners due to inadequate charging infrastructure and high ownership costs, with a considerable percentage expressing a desire to return to gasoline-powered vehicles. This contrasts sharply with Europe, where EV enthusiasm remains much stronger. These discrepancies underscore the critical need for substantial investment in charging infrastructure to keep pace with growing EV demand and address range anxiety, a key concern for potential buyers. Furthermore, the declining resale value of used EVs presents a long-term challenge that requires careful consideration.

The China-Global South Project (CGSP) report

Despite the global uncertainties, Kenya has emerged as a promising market for electric mobility. The country has witnessed a remarkable surge in EV sales, with a significant increase in market share. This growth is attributed to declining EV prices, bringing them closer to parity with traditional internal combustion engine (ICE) vehicles, coupled with government incentives and private sector engagement. Kenya’s burgeoning EV sector, however, faces its own set of challenges. Addressing concerns about charging infrastructure, battery lifespan, and the impact of climate on battery performance is crucial. Exploring secondary uses for EV batteries and investing in research on lithium cell technology tailored to Kenya’s specific conditions could further accelerate adoption. Security concerns, such as vandalism targeting charging stations and batteries, also require immediate attention. The potential of electric and autonomous vehicles to revolutionize Kenya’s transportation sector is significant, offering a pathway to a greener and more efficient future.

The future of electric mobility hinges on strategic initiatives and collaborative efforts. For Kenya to maintain its positive momentum, a concerted approach involving the government, private sector, and research institutions is essential. Stronger policies, tax incentives, and infrastructure development are critical to overcoming existing barriers. Investments in localized battery research and expanding charging networks will further solidify Kenya’s position in the global EV landscape. While global automakers grapple with strategic realignments and consumer hesitancy, Kenya has a unique opportunity to leapfrog traditional automotive models and embrace sustainable transportation. By learning from global successes and addressing the challenges proactively, Kenya can establish itself as a leader in Africa’s electric mobility revolution, driving economic growth and contributing to a cleaner environment.

References:

USA Today Honda, Nissan merger in question amid ‘growing differences’: Reports

Car Expert Nissan looking for new partner as Honda merger falls apart – report

Forbes Honda-Nissan Merger In Serious Trouble After Nissan Rejects Offer

The Star Honda and Nissan in merger talks, reports say

Global Fleet 46% of EV drivers in US likely to return to combustion engines

The Standard The rise of electric and hybrid vehicles in Kenya