Category: Economy&Finance

Chief Economic Adviser David Ndii has dismissed concerns about a milk shortage in Kenya, arguing that increased consumption is contributing to stockouts in supermarkets despite rising production.

Ndii said the country was producing more milk than it did when the current administration took office, but changing consumption patterns were putting pressure on supplies available on supermarket shelves.

Speaking during the 2026 NCBA Economic Forum in Nairobi on Tuesday, November 3, 2026, Ndii pointed to the growing number of workers at affordable housing construction sites as an example of how demand for milk was increasing.

He explained that contractors at the sites provide workers with milk alongside other supplies, creating a growing market that consumers and analysts might not immediately associate with the country’s overall milk consumption.

“Then the question becomes who’s consuming this milk? Certainly probably not the people in this room who haven’t increased their consumption a lot. But it means that there are people who aren’t consuming a lot of milk, who are now consuming a lot of milk,” Ndii said.

“And I can tell you where you can find them. If you go to any of our construction sites where we are doing affordable housing, where there are a couple of hundred thousand people working every day or in the construction site, you will find crates of milk sitting there.”

Ndii added that providing milk to construction workers had become part of the supplies offered to employees at some of the sites.

“Because that’s one of the things that construction workers provide to the workers on site as well as other things,” he said.

To support his argument, Ndii cited data from the Kenya National Bureau of Statistics (KNBS), saying annual milk production had increased by 20 per cent since the current administration took office.

He put the country’s production at approximately 5.6 billion litres, arguing that the additional output alone was greater than the annual milk production of 90 per cent of African countries.

“The increase is actually more milk than 90 per cent of the countries in Africa produce, just the increase. It’s more milk than most of the countries in Africa actually produce, more dairy milk,” he stated.

The economist also highlighted growth in milk processing, saying the volume of milk received by processors had increased by 34 per cent.

According to Ndii, processors were receiving approximately 500 million litres annually in 2022 before the figure reached one billion litres last year.

He noted that intake during the first eight months of 2026 had remained close to the corresponding period in 2025, despite concerns about the effects of drought on supply.

Ndii argued that the combination of increased production and processor intake pointed to stronger demand as an explanation for the stockouts.

“So if there is no reduction in supply and there’s actually a very sharp increase in both production and the intake by processors, what can explain the stockouts on the shelf? What explains the stockouts on the shelves? The only thing left to explain that stockout on the shelves is demand,” he said.

Beyond supermarket supplies, Ndii highlighted the financial importance of the dairy sector, estimating that Kenya’s annual milk production was worth nearly Ksh400 billion at current farm-gate prices.

He also pointed to the rising value of quality dairy cattle, saying good dairy heifers were selling for approximately Ksh300,000 to Ksh350,000.

The economist said the high prices reflected growing demand for productive dairy animals, adding that Kenya was importing cattle from countries including South Africa and the Netherlands while also exporting dairy animals to other African markets.

He further argued that some of the economic activity taking place in the dairy sector was not adequately reflected in official economic statistics.

Ndii said rapid structural changes in the economy could leave statistical sampling methods outdated, making it difficult for official figures to capture emerging activities.

He said he had discussed the issue with KNBS, arguing that the bureau could be relying on information from established parts of the economy while missing developments taking place in newer or rapidly expanding sectors.

National Treasury Cabinet Secretary John Mbadi has urged commercial banks to lower interest rates and increase lending to businesses, farmers and micro, small and medium enterprises (MSMEs), saying borrowers should benefit more from recent monetary policy easing.

Speaking during the 2026 NCBA Economic Forum in Nairobi on Tuesday, November 3, Mbadi said the Central Bank of Kenya (CBK) had reduced its benchmark lending rate by more than four percentage points since mid-2024, but commercial banks had yet to fully reflect the cuts in their lending rates.

He noted that the Central Bank Rate (CBR) had fallen from 13 per cent in mid-2024 to 8.75 per cent, while the average commercial bank lending rate stood at 14.4 per cent.

“First, pass on the rate cuts. The Central Bank rate has come down by more than four percentage points since mid-2024. Yet the average lending rate is still at 14.4 per cent. Borrowers should feel more of that cut,” Mbadi said.

The Treasury CS also challenged banks to channel more funds towards productive economic activities, arguing that reduced government borrowing from commercial banks had created additional room for private-sector lending.

“Government is now borrowing less from the banks, and that frees room on your balance sheets. We expect that room to go to the businesses in this room and to farmers, manufacturers and MSMEs,” he added.

Mbadi said the strength of the banking sector should not only be measured through profits but also by the economic activities financed through lending.

“In the end, the truest of a strong banking sector is not in its profits alone, but the productive activity its strength makes possible,” he said.

The Cabinet Secretary said the government was working with the CBK to strengthen the banking sector and improve access to affordable credit.

He highlighted the risk-based credit pricing model, which he said was designed to ensure that changes in the policy rate were reflected more quickly in loan prices.

Mbadi also disclosed that frameworks for emergency liquidity assistance and a financial stability facility were at an advanced stage.

He said the proposed National Payments System Bill 2026 would modernise the legal framework governing digital payments.

On access to credit for smaller businesses, Mbadi said the government’s Credit Guarantee Scheme had helped unlock additional bank lending by sharing the risks associated with financing MSMEs.

He explained that every shilling committed by the government to the scheme had unlocked approximately Ksh2.50 in bank credit.

The government was also working to transform the scheme into the Kenya Credit Guarantee Company, which would be open to private capital.

Mbadi praised the banking sector for supporting Kenya’s economic resilience, citing an increase in assets and profitability.

He said banking sector assets grew by 13.1 per cent to Ksh8.9 trillion in the year to June 2026, while profits increased by 19.2 per cent to Ksh88.9 billion.

The CS also congratulated NCBA on its partnership with South Africa’s Nedbank, which he said was being finalised at the time of the forum.

He described the partnership as a vote of confidence in Kenya’s financial system.

The Treasury CS also used his address to defend the government’s economic management since 2022, saying fiscal discipline, tax reforms and structural changes had helped stabilise the economy.

He recalled that inflation stood at 9.2 per cent during the difficult economic period in 2022 and 2023, while the shilling weakened to Ksh160.8 against the US dollar in January 2024.

Foreign exchange reserves at the time covered only three to four months of imports, as Kenya faced a US$2 billion Eurobond repayment due in June 2024.

Mbadi said the government had opted for fiscal discipline and structural reforms under the Bottom-Up Economic Transformation Agenda (BETA) rather than allowing the country to slide into a debt crisis.

He reported that Kenya’s economy grew by an average of 5 per cent annually between 2022 and 2025, compared with the global average of 3.5 per cent and Sub-Saharan Africa’s 4.1 per cent.

He added that the economy expanded by 5.1 per cent in each of the first two quarters of 2026.

On inflation, Mbadi said the rate had fallen to 2.7 per cent in October 2024 before rising to 7.3 per cent in October 2026, which he said remained within the government’s target range of 2.5 to 7.5 per cent.

He also reported that the shilling had strengthened to an average of Ksh129.9 against the dollar in October, while foreign exchange reserves had increased to US$14.9 billion, equivalent to 6.1 months of import cover.

The CS further said Kenya had reduced its exposure to Eurobond repayment risks through refinancing and buybacks, extending the external debt maturity profile to 2039.

He added that credit rating agencies Moody’s and Standard & Poor’s had upgraded Kenya’s credit rating, while Eurobond yields had fallen by more than 200 basis points.

Mbadi said foreign direct investment had doubled from US$1.6 billion in 2022 to a record US$3.2 billion in 2025.

He attributed the growth partly to the gazettement of 17 special economic zones and 23 export processing zones.

He also said the Nairobi Securities Exchange’s market capitalisation had crossed KSh4 trillion for the first time in nearly a decade, while the market was the fourth-best performing stock market globally in the first half of 2026.

In agriculture, Mbadi said the cost of a 50-kilogramme bag of subsidised fertiliser had dropped from approximately Ksh7,000 to Ksh2,000.

He estimated that the intervention had saved farmers Ksh105 billion and contributed to an increase in maize production from 34 million bags to 46 million bags.

He added that maize imports had fallen to a third of their previous levels.

The CS also cited the Hustler Fund, which he said had disbursed Ksh90.4 billion to 28.1 million Kenyans, while the Social Health Authority had registered 31.6 million people.

He further highlighted progress in the affordable housing programme, land ownership and electricity access, saying more than 1.14 million title deeds had been issued and over 10.4 million new homes and businesses connected to electricity.

Looking ahead, Mbadi said the government would focus on protecting the economic gains as Kenya approaches the 2027 General Election.

He said the progress had come at a cost, acknowledging that Kenyans had paid more taxes during difficult economic years and that many households continued to experience financial pressure.

“This progress was not free. Kenyans paid more in taxes during difficult years, and many households still feel that life is hard. Having paid the price for stability, it would be unforgivable to lose it,” he said.

Mbadi said the government would also explain the public finance management reforms behind the economic recovery and outline preparations for Kenya’s development beyond Vision 2030.

He described the reforms as deliberate interventions, many involving changes to public finance management, which he said had helped create the conditions for economic stability.

Kenya is projected to record slower economic growth than Tanzania and Uganda over the next two years, despite remaining East Africa’s largest economy by nominal gross domestic product (GDP).

Data from the International Monetary Fund’s (IMF) October 2026 World Economic Outlook show that Kenya’s economy is forecast to grow by 4.5 per cent in 2026, before improving slightly to 4.7 per cent in 2027.

The projections place Kenya behind Tanzania, whose economy is expected to expand by 6.0 per cent in 2026 and 5.9 per cent in 2027.

Uganda is also projected to outperform Kenya, with its real GDP growth forecast at 6.2 per cent in 2026 before accelerating to 9.9 per cent in 2027.

The figures highlight the different growth trajectories of the three neighbouring economies, with Uganda expected to record the strongest expansion, particularly in 2027.

The IMF cautioned that the regional growth figures concealed significant differences in individual countries’ economic performance.

“But steady regional growth masks different country experiences with slowing growth in non-resource-intensive economies and continued resilience in resource-intensive ones,” the Fund stated.

The IMF’s estimates show that Kenya’s growth rate has remained relatively stable, moving from 4.6 per cent in 2025 to a projected 4.5 per cent in 2026.

The Fund expects a modest recovery in 2027, when the economy is forecast to expand by 4.7 per cent.

However, Tanzania is projected to maintain growth above 5 per cent throughout the period, while Uganda is expected to experience a significant acceleration in 2027.

The projections also show that Kenya is broadly in line with the wider regional outlook.

The IMF expects sub-Saharan Africa to record economic growth of 4.5 per cent in both 2026 and 2027, meaning Kenya matches the regional average in 2026 and exceeds it slightly the following year.

IMF Managing Director Kristalina Georgieva said sub-Saharan Africa’s economic growth remained resilient but warned of risks to the region’s outlook.

“Sub-Saharan Africa’s growth remains resilient, with output projected at 4.5% in both 2026 & 2027. But the outlook is clouded by rising inflation, thin buffers, & downside risks. Policies should rebuild buffers, support growth, and protect the vulnerable,” she stated.

Uganda’s projected 9.9 per cent growth in 2027 is particularly notable because it represents a substantial increase from the 6.2 per cent forecast for 2026.

The country’s expected transition into commercial oil production is among the factors underpinning its stronger medium-term economic outlook.

In its July 2026 assessment, the IMF said Uganda’s economic outlook would strengthen with the expected start of oil production in late 2026.

The Fund noted that oil production could improve the country’s fiscal and external balances over the medium term, although delays in the start of production remained a downside risk.

Uganda’s government has also identified oil and gas production, alongside agriculture, tourism and mineral development, as important drivers of its economic expansion.

Tanzania, meanwhile, has maintained a relatively strong growth outlook, supported by mining, agriculture and tourism.

In its July 2026 assessment, the IMF projected Tanzania’s medium-term real GDP growth at approximately 6.2 per cent, citing the favourable outlook for the three sectors.

Although Kenya’s economy remains larger than those of its two neighbours in nominal US dollar terms, its growth outlook faces several constraints.

The World Bank’s October 2026 assessment projected that Kenya’s economy would expand by 4.6 per cent in 2026, with modest growth expected over 2026–2027.

The institution noted that the conflict in the Middle East and unpredictable El Niño rainfall could weigh on economic activity.

It also identified elevated public debt, risks of fiscal slippage and corruption as challenges affecting economic growth and job creation.

The World Bank further observed that interest payments absorb about one-third of government revenue, limiting the resources available for development spending and investment.

Household consumption is also expected to face pressure from higher energy and transport costs, although recovering credit and stronger foreign investment could support investment activity.

The slower growth projection does not mean Kenya has lost its position as the region’s largest economy.

According to the IMF’s October 2026 estimates, Kenya’s nominal GDP stood at approximately $151.15 billion (Ksh19.6 trillion), compared with Tanzania’s $96 billion (Ksh12.4 trillion) and Uganda’s $72 billion (Ksh9.3 trillion).

This means Kenya still has a substantially larger economic base, even though its neighbours are projected to grow faster.

GDP growth measures how quickly an economy expands after adjusting for inflation, while nominal GDP measures the overall value of economic output at current prices.

Consequently, a country with a smaller economy can record a higher growth rate without immediately overtaking a larger economy.

The IMF expects sub-Saharan Africa’s economy to grow by 4.5 per cent in both 2026 and 2027, although individual countries face different economic conditions and risks.

Kenya Electricity Generating Company (KenGen) has elected John Kipngetich Mosonik as its new Board Chairman, taking over leadership of the state-owned power producer.

The company announced his election following a board meeting held on Monday, November 2, 2026, in accordance with the Government Owned Enterprises (GOE) Act, 2025.

Mosonik previously served as a non-executive director of KenGen, where he chaired the strategy committee. His election comes as the company implements its G2G 2034 strategy, which focuses on expanding electricity generation capacity and strengthening its position as an energy solutions provider.

Mosonik has more than 35 years of executive experience across the public and private sectors, covering telecommunications engineering, infrastructure development, energy and strategic governance.

“Prof. Eng. Mosonik is an accomplished technocrat and distinguished leader with over 35 years of executive experience spanning the public and private sectors, particularly in telecommunications engineering, infrastructure, energy and strategic governance,” the post read in part.

He is a Fellow of the Institution of Engineers of Kenya and a registered engineer with the Engineers Board of Kenya.

His academic qualifications include a Doctorate in Business Administration in Strategic Leadership from Northcentral University in the United States and a PhD in Strategic Management from Moi University.

He has also undertaken postgraduate studies in digital transformation, finance and project management at universities in Spain and the United Kingdom. He holds a Bachelor of Science degree in Electrical Engineering (Telecommunications) from the University of Nairobi.

During his public service career, Mosonik served as Principal Secretary for Infrastructure, where he spearheaded the development of approximately 6,000 kilometres of rural roads across all 47 counties.

He has also worked on major telecommunications and oil and gas projects and contributed to the formulation of national industrialisation policy.

Mosonik currently serves as an Associate Professor of Business Strategy and Digital Transformation at Kenya Highlands University and also a Chancellor at Rongo University .

Rongo University has congratulated its Chancellor, Prof. Eng. John Mosonik, CBS, EBS, following his appointment as Chairman of the Board of Directors of Kenya Electricity Generating Company (KenGen). In a message issued on behalf of the university fraternity, Vice Chancellor Prof. Samuel Gudu said the appointment reflected Mosonik’s leadership experience, public service and contribution to institutional governance and national development.

“Rongo University Congratulates Proff. Eng. JohnMosonik,CBS, EBS On His Appointment As Chairman Of The Board Of Directors Of Kenya Electricity Generating Company PLC,” read the post in part.

Gudu said the university was proud of Mosonik’s appointment and expressed confidence that his knowledge, strategic insight and leadership experience would contribute to the board’s mandate and the growth of Kenya’s energy sector. He wished him success as he takes up the new responsibility and steers the company’s strategic direction and sustainable energy agenda.

His previous role on the KenGen board involved overseeing strategy through the committee he chaired, including matters relating to the company’s sustainable energy agenda and geothermal ambitions.

In a statement issued following his election, the Board said Mosonik’s experience in engineering, infrastructure development and corporate governance would support his leadership of the company.

“His wealth of experience in engineering, strategic leadership, infrastructure development and corporate governance provides a strong foundation for his leadership of the KenGen Board,” the notice read.

The directors also expressed confidence in his leadership as the company pursues its energy plans.

“We look forward to his visionary leadership and guidance as KenGen continues to deliver sustainable energy solutions and power Kenya’s development.”

Mosonik is expected to assume the chairmanship immediately.

The new chairman takes over as KenGen works towards its G2G 2034 targets, including expanding generation capacity and advancing its geothermal and renewable energy projects.