Category: News

Climate finance lies at the intersection of two critical global challenges – climate change and sustainable development. While the urgency for climate action continues to grow, the financial systems meant to support this transition are evolving but remain far from adequate.

The Nationally Determined Contributions (NDCs) under the Paris Agreement, climate risk assessments, and national development plans have increasingly become a priority to States and entities. As such, they are now driving sustainable and green infrastructure finance to meet national climate objectives. That notwithstanding, this approach faces its fair share of challenges.

This gap highlights not only inadequate capital allocation to climate finance, but also the institutional and structural barriers, such as regulatory shortcomings, limited project readiness, insufficient data and the general perception of high risk by investors. For private investors and lenders, recognising these constraints is imperative to mitigating risks and exploring innovative financing structures that can unlock value in green projects.

For instance, blended finance, which combines public, philanthropic, or concessional capital with private investment, has shown promise in reducing risk and attracting commercial investors. Instruments such as green bonds, sustainability-linked loans, and carbon credit mechanisms are increasingly being deployed to mobilise capital toward climate-related initiatives.

 

Evolving Landscape of Green Finance

Green finance has advanced significantly in recent years, moving from a fringe interest to a core element of global financial markets.

Institutional investors are increasingly integrating environmental, social, and governance (ESG) factors into their investment decisions to meet the sustainability and regulatory quota.

Key instruments, including green bonds, which finance projects with clear environmental benefits; sustainability-linked loans, where interest rates are tied to achieving sustainability performance targets; blue finance, which targets marine conservation and sustainable use of ocean resources; and resilience bonds, designed to fund climate adaptation and disaster risk reduction, have introduced new facets to green finance.

Technological innovations such as blockchain and fintech platforms are also beginning to revolutionise the accessibility, traceability, and transparency of green finance, especially for small-scale or community-led projects.

Additionally, taxonomies and verification frameworks have increasingly become standard practice, with frameworks such as the EU Green Taxonomy, the International Capital Market Association (ICMA) principles, and, closer home, the Kenya Green Finance Taxonomy are growing investor confidence and mainstreaming green finance.

 

Policy Frameworks and the Role of Climate Finance

Various factors impact the success of a climate finance project. However, one of the key hallmarks of an effective climate finance structure rests on the foundation of clear and comprehensive legal, regulatory, and policy frameworks. Kenya has established fundamental regulatory frameworks and policies to support climate project finance. These include:

1. i) The Constitution of Kenya, 2010, which guarantees every citizen the right to a clean and healthy environment, the foundation for environmental sustainability and climate action. Furthermore, it enshrines key principles such as transparency, accountability, prudent use, and equitable distribution of resources, which are essential for participatory resource management, financing of green projects, and sustainable infrastructure.
2. ii) The Public Private Partnerships Act, CAP 430, Laws of Kenya, which provides the framework for the financing, construction, development, operation, and maintenance of infrastructure or development projects where projects require the structured collaboration of government and private investors. It also establishes a structured process for risk allocation and financing mechanisms, all of which are crucial for infrastructure and green projects.

iii) The Movable Property Security Rights Act, CAP 499A, Laws of Kenya (the MPSRA), which establishes the legal framework for securing financing through movable assets, offering an alternative to immovable property-backed financing. The MPSRA also prescribes a comprehensive mechanism for the enforcement of security rights in favour of a creditor, thereby strengthening access to finance; and

1. iv) The Insolvency Act, CAP 53, Laws of Kenya, which outlines processes for efficient and equitable administration of entities or natural persons in financial distress, aiming to secure better outcomes for lenders and investors. In the context of climate finance, investors and stakeholders in sustainable finance ventures are more confident about their long-term commitments, noting that risks and losses can be mitigated through insolvency procedures.

Collectively, these statutes create a solid foundation for secure and transparent project financing in Kenya.

 

Regional and Continental Trends in Climate Finance

Regionally, the African Continental Free Trade Area (AfCFTA), together with Africa’s broader climate objectives, is promoting cross-border climate investment and facilitating new opportunities. However, this development has also introduced multi-jurisdictional regulatory complexities that require particular expertise to navigate disparate national policies effectively.

Within sub-Saharan Africa, and particularly in Kenya, climate finance is evolving in response to localised needs and emerging regional frameworks. Kenya has made significant strides, with strong legal and political commitment embodied in legislation such as the Climate Change Act, CAP 387A, Laws of Kenya, which has provided an overarching statutory framework for the development, regulation, and implementation of mechanisms geared towards enhancing the country’s climate resilience and carbon market development.

To complement this, Kenya also developed the Kenya National Adaptation Plan (2015-2030) and the broader strategic frameworks aligned with the Vision 2030 blueprint. Collectively, these frameworks have embedded climate change mitigation and adaptation within the national development agenda, fostering an enabling environment to mobilise climate finance resources targeting Kenya’s unique vulnerabilities and enhancing climate resilience for sustainable economic growth.

Further, the launch of the Kenya Green Finance Taxonomy (KGFT) and climate risk disclosure frameworks marks a major milestone in Kenya’s green finance architecture. The KGFT has provided a comprehensive classification system designed to standardise and define the financial activities in alignment with Kenya’s environmental and development objectives. It classifies environmentally sustainable economic activities to guide investment decisions, combat greenwashing by ensuring transparency and accountability, and align the financial flows with Kenya’s NDCs. In doing so, it boosts investor confidence and attracts both domestic and international capital towards the achievement of a climate-resilient economy.

In many developing countries, including Kenya, challenges such as underdeveloped capital markets and limited institutional capacity can hinder the flow of private capital. However, through the ongoing alignment of legislation and policy, Kenya is creating an environment that supports both conventional and green project finance, which will unlock funding streams that advance sustainable priorities.

The KGFT has exemplified the efforts to standardise definitions and reporting, thereby enhancing transparency and boosting investor confidence; trends we believe shall influence risk profiles and structuring considerations in future green deals.

 

Strategic Imperatives to Navigate Climate Finance

Stakeholders engaged in climate finance transactions must adopt a holistic approach to mitigate the risks commonly associated with such investments. First, rigorous due diligence must be undertaken at the outset to identify potential regulatory, environmental and technical risks. These may include issues such as uncertain land tenure, weak institutional governance, or technological feasibility.

Contracts and supporting documentation must be precisely structured to account for the allocation of risk and liability among stakeholders, especially in cases of project failure, cost overruns, or force majeure events. Moreover, the covenants, obligations of the respective parties, and remedies available in the event of default should be clearly highlighted. The incorporation of binding ESG performance covenants relating to the project should also be carefully considered and critically outlined.

Parties seeking to engage local or international actors in financing and implementation of green projects should effectively negotiate and evaluate co-investment strategies, including guarantees, to mitigate risk perception and enhance project bankability.

Overall, embedding integrated strategic measures and regulatory parameters into green project financing will safeguard investor confidence, unlock climate capital, and create long-term value for communities and stakeholders.

 

Conclusion

The challenge of climate finance is multidimensional, involving regulatory gaps, capital markets, policy design, institutional capacity, and social equity concerns. Yet, in the midst of these challenges lies a profound opportunity to reimagine development in a way that is sustainable, inclusive, and resilient.

In many developing countries, including Kenya, challenges such as underdeveloped capital markets and limited institutional capacity can hinder the flow of private capital. However, through the ongoing alignment of legislation and policy, Kenya is creating an environment that supports both conventional and green project finance, which will unlock funding streams that advance sustainable priorities.

Addressing these challenges requires coherence across institutions, innovation in financial structures, and trust among stakeholders. A robust ecosystem – comprising national governments, development finance institutions (DFIs), financial institutions, public benefit organisations, and academia – is essential to designing, funding, and implementing impactful climate projects.

With the right strategies, tools, and partnerships in place, climate finance can become a powerful engine for transformation – driving the world not only toward net-zero emissions but also toward a future that is just, prosperous, and resilient for all.

On 4^th December 2025, the COMESA Council of Ministers approved and adopted the COMESA Competition and Consumer Protection Regulations, 2025 (the “Regulations”) and the COMESA Competition and Consumer Protection Rules, 2025 (the “Rules”). The Regulations and the Rules took effect on 5^th December 2025, repealing and replacing the previous COMESA Competition Regulations and the Rules from 2004. The Regulations and the Rules introduce significant reforms to the competition regime, including updated procedures and substantive provisions governing competition enforcement and merger control within COMESA.

Revised Jurisdiction and Filing Requirements

The Regulations and the Rules have introduced much-needed clarity to the merger notification process. Regulation 42 provides that all notifications to the COMESA Competition Commission (the “Commission”) shall be made in the form and manner determined by the Commission. Rule 21 builds on the foregoing Regulation by providing that merger notifications must be submitted jointly by the parties, or, in the case of acquiring a controlling interest, by the acquiring party alone.

The Regulations and the Rules also expand the information required in filings. Parties must now provide their annual turnover in the common market, details of their activities, including the number of active users or subscribers and the type of data collected and processed, a summary of the merger and its rationale, and a list of the member states affected. These enhancements reflect the Commission’s stronger focus on evaluating the competitive and regional impact of mergers, including transactions in digital and data-driven markets.

 

Merger Notification Fees

Rule 22 introduces a revised and differentiated approach to merger notification fees, marking a clear departure from the previous framework.

Under the amended regime, the notification of a merger must now be accompanied by a fee calculated at 0.1% of the combined annual turnover or the combined value of assets in the common market, whichever is higher, subject to a maximum cap of COMESA Dollar Three Hundred Thousand (COM$300,000). This represents a material increase from the former flat fee structure.

In addition, and for the first time, the Regulations expressly provide for digital market transactions, requiring that the notification of a digital market merger be accompanied by a fee calculated at 0.05% of the transaction value, also subject to a cap of COM$300,000. This development reflects a further evolution of the Commission’s regulatory approach by expressly bringing high-value, structured digital transactions within its merger control framework.

 

Notification Threshold

Regulation 41, as read together with Rule 23, sets out the new notification threshold for a merger. According to the Regulations and the Rules, a merger is notifiable only where the combined annual turnover or combined value of assets of all parties in the common market, whichever is higher, equals or exceeds COMESA Dollar Sixty Million (COM$60 million) and where the annual turnover or value of assets of at least two of the merging parties in the Common Market, whichever is higher, equals or exceeds COMESA Dollar Ten Million (COM$10 million). For the digital market mergers, however, the merger is notifiable where the transaction value equals or exceeds COMESA Dollar Two Hundred and Fifty Million (COM$ 250 million).

From the above, it is arguable that the spirit behind this new provision is to not only target transactions that are economically significant at a regional level but also to strengthen oversight on digital and innovation-driven markets.

 

Decision on application made to the Commission

While the Regulations and the Rules have retained the prescribed timeframe within which the Commission must make a determination on merger applications, namely 120 days, they introduce important clarity as to when the period commences. Specifically, the review period begins to run only from the date on which the Commission receives a complete application. Where an application is incomplete, the review period is effectively suspended. In this regard, Regulation 44, as read together with Rule 21, clarifies that the statutory clock begins to run only once a complete notification has been submitted.

This clarification is significant. From an administrative and procedural standpoint, it ensures that merger applications are assessed on the basis of complete and accurate information, thereby reducing the risk of decisions being made on incomplete records. However, it is also important to consider the potential practical drawbacks of this approach. For example, where an application is submitted, and the Commission takes an extended period to notify the applicant that the filing is incomplete, the review process may be prolonged beyond what is reasonably necessary. In such circumstances, the absence of clear timelines for the Commission to confirm completeness could introduce uncertainty for parties and undermine transactional certainty, particularly in time-sensitive transactions.

 

Advisory Opinions

The Regulations expressly empower the Commission to issue advisory opinions, including in relation to mergers. In particular, Regulation 9(4)(e) empowers the Commission to provide advisory opinions, including opinions on whether a proposed transaction meets the applicable notification thresholds and is therefore notifiable.

 

Conclusion

The Regulations and the Rules, amongst other things, represent a significant evolution in the COMESA merger control framework. It achieves this by clarifying jurisdiction, expanding filing requirements, introducing differentiated fee structures for both traditional and digital market transactions, and establishing clear thresholds and review timelines. Because of the foregoing developments, the Regulations have provided a greater predictability for businesses and enhanced oversight for the Commission. Notably, the inclusion of digital market transactions reflects a modernised approach that captures mergers and acquisitions in the digital and data-driven economy.

These reforms enhance procedural certainty, promote transparency, and equip the Commission with the necessary tools to assess and regulate mergers effectively across the Common Market. Businesses undertaking mergers and acquisitions under COMESA jurisdiction must therefore ensure strict compliance with the Regulations to avoid potential penalties, including failure to notify, submission of inaccurate information, or premature implementation of transactions.

The landscape of global trade is undergoing profound transformation, and Africa is steadily positioning itself as a decisive player in shaping the future of economic integration. Central to this shift is the African Continental Free Trade Area (AfCFTA), an unprecedented project to forge a unified market of 55 member states. By as piring to dismantle tariff and non-tariff barriers, harmonise customs procedures, and establish a rules-based trading system, the AfCFTA promises to catalyse industrialisation, boost intra-African trade, and build critical resilience against global economic shocks. However, this pursuit of pan-African integration does not begin on a blank slate. It is layered upon a complex mosaic of pre-existing regional blocs, among which the East African Community (EAC) stands as a particularly advanced and relevant example, boasting a functional Customs Union and a Common Market Protocol.

The parallel existence of these two frameworks, the continental ambition of the AfCFTA and the deeply integrated regional regime of the EAC, creates a critical juncture in trade governance. While founded on similar aspirations, they are not always perfectly congruent. For nations like Kenya and Tanzania, which are members of both agreements, this duality generates a complex web of overlap ping and sometimes contradictory obligations. This article examines the specific tensions that arise from this interplay, analysing the legal and practical dissonance between the two systems and the challenges these conflicts pose.

The EAC Customs Union versus AfCFTA Tariff Liberalisation

The EAC Customs Union Protocol of 2005 established the cornerstone of regional trade by creating a regime of duty-free movement for originating goods among partner states and instituting a Common External Tariff (CET) applied uniformly to imports from outside the bloc. This is not a voluntary guideline but a firm legal obligation; as Article 2(4)(c) of the Protocol expressly states, within member states, “a common external tariff in respect of all goods imported into the Partner States from foreign countries shall be established and maintained.” This commitment is further reinforced by Article 12, which obliges partner states to implement this common tariff on goods from third parties. The current CET, revised in 2022, operationalises this through a structured system of four tariff bands: 0%, 10%, 25%, and 35% on sensitive items.

The AfCFTA Agreement, in contrast, creates a fundamentally different framework. Under Article 2 of the Protocol on Trade in Goods, it mandates the “progressive elimination of tariffs and non-tariff barriers” among all state parties, with a commitment to progressively liberalise at least 90% of tariff lines. The contradiction is that the EAC requires its members to apply a uniform CET to all non-EAC imports, whereas the AfCFTA promotes the elimination of such tariffs between African nations. This creates an impossible compliance dilemma for a member state. If Kenya agrees under an AfCFTA arrangement to reduce tariffs on certain textile imports from West Africa, it simultaneously violates the EAC mandate. In practice, this leaves traders in a state of profound uncertainty.

Rules of Origin: Complementarity in Principle, Contradiction in Practice

Rules of Origin are the critical laws, regulations, and administrative procedures that determine a product’s country of origin, thereby governing its eligibility for preferential trade terms. The East African Rules of Origin (EARoO), which are detailed in Annex III of the Protocol, function as the gatekeeper for the customs union, with their strict nature designed to prevent trade deflection. This is clearly articulated in Rule 4, which provides that “Goods shall be accepted as originating in a Partner State where the goods are- (a) wholly produced in the Partner State as provided for in Rule 5; or (b) produced in the Partner State incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in the Partner State as provided for in Rule 6.”

In contrast, the AfCFTA Annex ii on Rules of Origin permits full continental cumulation. This allows inputs sourced from any state party to be combined with value added in another member state to qualify the final good as “African”. This creates a direct contradiction for EAC members. For instance, cotton imported into Tanzania from Egypt and spun into fabric in Kenya qualifies under AfCFTA. However, under the stricter EAC RoO, that same product might fail to meet the originating criteria. This divergence may force businesses into a significant compliance dilemma.

Non-Tariff Barriers (NTB): Parallel Mechanisms, Uneven Enforcement

While both frameworks explicitly recognise Non-Tariff Barriers (NTBs) as a critical impediment to trade and have established sophisticated mechanisms to address them, a closer analysis reveals a system plagued by institutional duplication and a critical deficit in enforcement, ultimately rendering both frameworks susceptible to political intransigence. The EAC’s approach, as codified in Article 13 of its Customs Union Protocol, obliges partner states to “remove, with immediate effect, all the existing non-tariff barriers to the importation into their respective territories of goods originating in the other Partner States and, thereafter, not to impose any new non-tariff barriers”.

Theoretical alignment, however, gives way to practical contradiction. Rather than creating a cohesive, multi-level governance structure, the coexistence of these two frameworks fosters institutional redundancy. This parallelism does not enhance efficacy but instead creates a risk of forum shopping, where member states can strategically choose, or ignore, the mechanism that best suits their political or economic interests at a given time, thereby undermining the authority of both.

The persistent trade disputes between Kenya and Tanzania demonstrate that the core challenge is not a lack of legal instruments but a profound absence of political will to comply. The existence of a second mechanism under the AfCFTA does not resolve this enforcement gap; it merely provides an alternate venue for the same disputes to languish.

Customs and Trade Facilitation: The problem of Double Commitments

The EAC has pioneered innovations such as the Single Customs Territory (SCT), the use of electronic cargo tracking systems, and One-Stop Border Posts (OSBPs). These measures, grounded in the EAC Customs Management Act, 2004, streamline clearance procedures and reduce costs. AfCFTA introduces similar commitments under its Annexes on Customs Cooperation and Mutual Administrative Assistance and Trade Facilitation.

The contradiction is that AfCFTA obliges member states to adopt reforms many EAC states have already operationalised. For Kenya and Tanzania, the result is dual reporting obligations, new administrative structures, and uncertainty as to which framework takes precedence. Without explicit harmonisation, customs officials may apply conflicting procedures, increasing transaction costs rather than lowering them.

Dispute Settlement: Judicial Authority versus Political Practice

The EAC Treaty vests judicial authority in the East African Court of Justice (EACJ). However, in practice, most disputes are settled politically at the ministerial level. AfCFTA introduces a more robust Dispute Settlement Body (DSB) modelled on the WTO system. This overlap creates jurisdictional uncertainty: should a dispute between Kenya and Tanzania be heard before the EACJ or the AfCFTA DSB? Conflicting rulings from different bodies could undermine predictability and the rule of law. Until African states clarify the hierarchy between REC courts and AfCFTA institutions, legal fragmentation will persist.

Way Forward

Resolving these contradictions requires deliberate legal, institutional, and policy alignment. First, EAC partner states should invoke Article 19(2) of the AfCFTA Agreement to clarify the hierarchy of obligations. This requires harmonisation of the EAC CET with AfCFTA schedules. Second, the Rules of Origin must be reconciled to allow for continental cumulation without undermining the customs union. Third, duplication in NTB monitoring should be eliminated through integration of the EAC platform into the AfCFTA system. Fourth, dispute resolution frameworks must be clarified by establishing rules on jurisdictional priority. Finally, political will is indispensable. States must refrain from arbitrary trade restrictions and respect binding decisions. If implemented, these measures would transform contradiction into complementarity, enabling East Africa to act as a leader in realising the AfCFTA’s vision.

Conclusion

The AfCFTA and the EAC are designed to be complementary. The EAC’s innovations provide a foundation on which AfCFTA can build, while AfCFTA offers businesses opportunities to integrate into continental value chains. Yet complementarity should not be assumed. Overlapping commitments and recurring NTBs risk turning synergy into confusion. The task for policymakers is to ensure that alignment is deliberate through legal harmonisation, administrative coordination, and political will to respect rules. If effectively managed, the coexistence of the EAC and AfCFTA can unlock unprecedented opportunities for East Africa. But, if mismanaged, the dual systems may entrench the very fragmentation AfCFTA was created to overcome.

The protections afforded to data subjects under the Data Protection Act (Cap. 411C) Laws of Kenya (the Act) empower them to dictate and control how their personal data is processed. To promote the right to privacy, the Act dictates how personal data is used for direct marketing. Despite extensive provisions under the Act, Determinations from the Office of the Data Protection (ODPC), reveal compliance gaps where a data controller or processor (collectively data handlers) opts to market directly to data subjects.

Under section 37(3) of the Act, the Cabinet Secretary together with the ODPC are to issue guidelines on the commercial use of personal data including direct marketing. Given that the ODPC is yet to publish these guidelines and in addition to the Act, this article proposes safeguards that a data handler can employ when marketing directly to their customers.

 

Commercial Use of Personal Data

For starters, data handlers have to be cognisant of the provisions governing this commercial use of personal data.

Under section 37(1) of the Act, a data handler can only use personal data for commercial purposes where – a) it obtains consent from the data subject; or b) authorised under a written law and the data subject is informed of such use during collection. Section 37 (2) of the Act requires data handlers to, where possible, anonymise personal data to ensure that the data subject cannot be identified. Under regulation 14(2) of the Data Protection (General) Regulations (the General Regulations), direct marketing is identified as a commercial use of personal data where – a) a catalogue is ad- dressed to a data subject; b) an advertisement is displayed on an online site where a data subject’s personal data has been captured; or c) an electronic message is sent to a data subject using their personal data. Per regulation 14(3) of the General Regulations, marketing is only direct when personal data is used to identify an individual.

Regulations 8(4) and (5) of the General Regulations recognises a data subject’s absolute right to object to processing in direct marketing. The Information Commissioner’s Office (ICO) – the data protection authority in the United Kingdom – describes this right to object as “stronger than any other objection”. Due to its absolute nature, once a data subject exercises this right, a data handler must stop all processing for direct marketing purposes.

Profiling is defined under section 2 of the Act as “automated processing of personal data” to evaluate and predict a data subject’s aspects i.e., interests, preferences and/or behaviour; in this case, to ensure targeted marketing. Regulation 13(2)(b) of the General Regulations expressly prohibits the use of a child’s profile for direct marketing.

Regulation 15 of the General Regulations prescribes instances where use of personal data, other than sensitive personal data, is permitted i.e., where – a) the personal data was collected directly from the data subject; b) the data subject is informed that direct marketing is among the purposes for collection; c) the data subject has given consent for direct marketing; d) there is a simplified opt out mechanism; or e) the data subject has not exercised his/her right to opt out of the direct marketing.

Regulation 16 of the General Regulations dictates that the opt out mechanism should be free of charge, clear, require minimal time and effort to effect, provide a direct and accessible communication channel, and accommodate persons living with disability.

Regulation 17(2) of the General Regulations requires that for a direct marketing opt out mechanism to be compliant, it should have a clear and accessible means for a data subject to exercise this right i.e., by replying with a single word instruction, using a prominent link to a subscription control centre, verbally during a phone call or by following instructions in each message. Further, under regulation 17(3) and (4) of the General Regulations, a data handler may allow the data subject to dictate his/her direct marketing preferences, including by opting out of all future direct marketing communications.

Under regulation 18 of the General Regulations, requests by a data subject to restrict disclosure to third parties must be complied with within seven (7) days.

 

Direct Marketing Infractions by Data Handlers

In ODPC Complaint 1994 of 2023 as consolidated with ODPC Com- plaint 1998 of 2023 and ODPC Complaint 2298 of 2023 – David Owuor & 2 Others v. Ceres Tech Limited t/a Rocketpesa, three (3) data subjects were awarded a cumulative sum of KES. 2,600,000 as compensation against Rocketpesa. The ODPC found that the data handler in inducing the data subjects to take loans, sent unsolicited promotional messages and calls without providing opt out mechanisms and without obtaining consent from the data subjects. For two (2) of the data subjects, the ODPC determined that Rocketpesa had disregarded their objection to processing requests. The ODPC further noted that as a repeat offender, Rocketpesa had not complied with a previous Enforcement Notice issued against it in ODPC Complaint 869 of 2023 – John Otieno v. Ceres Tech Limited t/a Rocketpesa.

 

In August 2024, the ODPC in ODPC Complaint 762 of 2024 – Dennis Gathara v. Goodtimes Africa ordered Goodtimes Africa to pay a data subject KES. 700,000 as compensation for the data handler’s failure to provide an opt out mechanism, honour the data subject’s objection to processing – despite this being an absolute right – and honour a request for erasure of personal data. The ODPC made its determination after investigations revealed that Goodtimes Africa had sent promotional messages to the data subject without his con- sent and in spite of his objection to processing.

 

Recommendations

While the Act stipulates minimum standards when marketing directly to data subjects, good practice requires more than just compliance with the Act and General Regulations but also calls for adoption of the best practice standards.

• Direct Marketing Suppression/Do Not Contact Lists

At a minimum, data handlers have to respect their data subject’s preferences i.e., the data subject’s right to object to processing, opt out of direct marketing activities, and erasure of their personal data. In respect of these preferences, other jurisdictions maintain direct marketing suppression/do not contact lists. This data protection practice is considered better when compared against wholesale deletion of a data subject’s details upon receipt of a request.

A suppression/do not contact list contains a list of people who have communicated their decision not to have their personal data used for direct marketing purposes. In using a do not contact list, a data handler retains minimal contact information for the sole purpose of ensuring that they do not inadvertently contact people who opt out of direct marketing. Thereafter, prior to carrying out any direct marketing initiatives, the data handler can cross check its records to determine who not to market to.

While it may seem counterintuitive when the Act requires a data handler to accede to an opt out request, this practice ensures stricter compliance with the direct marketing provisions under the Act; as only minimal contact details are maintained to ensure personal data is not used for direct marketing purposes.

The determinations by the ODPC referenced above depict blatant non-compliance with the provisions governing direct marketing under the Act. While the Act stipulates minimum standards when marketing directly to data subjects, as alluded to above, this article seeks to give recommendations to ensure data handlers create a robust privacy centric culture within their organisations. In our assessment, this requires more than just compliance with the Act and General Regulations but calls for adoption of the best practice standards that should permeate across the organisation’s data processing operations.

• Granular Consent Options

The Act requires a data handler to obtain a data subject’s consent prior to processing personal data for commercial use. While this is an irreducible minimum when handling personal data, we suggest that data handlers should go a step further and provide their data subjects with multiple consent options.

Regularly seeking consent for specific direct marketing activities, creates transparency with the data subject while ensuring that the data handler can definitively demonstrate that it obtained consent for each direct marketing activities.

In essence, granular consent options allow data subject to communicate their preferences when it comes to handling their personal data. Consequently, the data handler is able to align its marketing initiatives with a data subject’s preference; thereby giving the data subject control over his or her personal data and ultimately fostering trust in the relationship.

• Sensitisation and Training of Employees

Quite apart from training employees on the salient features of the Act, the data handlers would do well to develop customised training programmes aimed at addressing privacy challenges in their business. Such trainings ensure that there is constant messaging to employees of their obligations, which in turn creates a privacy centric culture within the business.

 

Upshot

Determinations from the ODPC reveal just how critical it is to create a privacy centric culture within an organisation. In conducting a cost-benefit analysis, it is clear that having data protection as a key consideration of a business’ operations is prudent. As ICO puts it, data protection must be “baked into” the company’s activities.

Furthermore, while these recommendations ensure that data protection is a key consideration, their application should not stifle a business’ ability to directly market to its customers. The idea is for the direct marketing to be undertaken with due regard to the data subject’s privacy rights.

Every year on the November 26^th, the World pauses to recognise the essential role of safe, affordable, accessible and sustainable transport systems in advancing economic growth, promoting social welfare and reducing greenhouse gas emissions through World Sustainable Transport Day (WSTD).

WSTD is a relatively recent observance, established in 2023 following the adoption of United Nations General Assembly Resolution A/RES/77/286 (UNGAR) in May 2023. Through this resolution, Member States, UN entities, regional and international organisations, and civil society were formally invited to commemorate the Day through education, awareness-raising, and advocacy activities dedicated to advancing sustainable transport.

This approach aims to reduce carbon footprints and encourage environmentally friendly practices in the transportation industry. As with any public awareness initiative, its value is measured by the meaningful advancements it encourages in pursuit of its underlying goals. It is therefore important to assess whether there has been significant transformation in the transport industry since the initiative’s inception in 2023.

The core purpose of WSTD, as established by the UN General Assembly Resolution, is to catalyse enhanced intermodal transport connectivity, promote environmentally friendly transportation solutions, and develop socially inclusive transport infrastructure. Since 2023, various governments and industries have launched different initiatives in each of these areas to meet these objectives.

 

Enhancing Intermodal Transport Connectivity

Intermodal transport connectivity networks are steadily expanding. A notable example is the Lobito Corridor project, which has been strengthened through international cooperation involving the United States, the European Commission, the African Development Bank (AfDB), and the Africa Finance Corporation (AFC). This infrastructure initiative spans Angola, the Democratic Republic of Congo (DRC), and Zambia, linking the Copperbelt region to the Atlantic Ocean via the Port of Lobito in Angola.

The project also underscores heightened focus on securing supply chains for critical mineral resources essential to technologies ranging from electric vehicles and solar panels to advanced defence systems.

Similarly, Cambodia’s government developed the Comprehensive Intermodal Transport and Logistics System (CITLS) Master Plan for 2023 to 2033, which integrates roads, rail, and inland waterways to improve freight flows and enhance the performance and efficiency of the transport sector.

 

Promoting Environmentally Friendly Transportation

According to BloombergNEF, sales of battery electric and plug-in hybrid vehicles are expected to rise by 25% in 2025 compared to 2024. This growth is largely attributed to declining lithium battery costs, which are expected to drive increased production and sales of these vehicles.

Countries are taking significant steps to promote electric vehicle adoption as part of broader sustainable transportation strategies. Quito in Ecuador, for instance, aims for all new public buses entering its transport system to be electric by 2040. Similarly, Kenya has experienced a marked increase in electric vehicle usage over the past few years. The Energy and Petroleum Regulatory Authority (EPRA) reported that by June 30, 2025, electricity consumption for e-mobility reached 5.04 GWh – a remarkable 300% increase from 1.26 GWh in the previous financial year.

 

Socially inclusive transport infrastructure

There has also been a significant rise in efforts to make transport affordable and accessible to all persons. Under this principle, we have focused on understanding the steps that Kenya has taken to ensure social inclusivity in transport infrastructure.

According to the Institute for Transportation and Development Policy (ITDP), Kenya is presently advancing transport projects and policies targeting marginalised groups. ITDP Africa and the Nairobi Metropolitan Area Transport Authority (NaMATA) have implemented coordinated efforts regarding the Bus Rapid Transit (BRT) system (with Lines 2, 3 and 5). The BRT design explicitly includes accessible features, such as level boarding platforms, ramps and wider doors, and priority seating for wheelchairs, pushchairs, and older adults.

Additionally, the National Gender and Equality Commission (NGEC), in collaboration with agencies such as NaMATA, has piloted public transport campaigns aimed at preventing gender-based violence and promoting safer commuting environments for women. These efforts represent only a sample of the broader initiatives being implemented to advance sustainable transport goals, reflecting the increasing commitment of various jurisdictions, government bodies, and institutions toward fostering safer, more inclusive, and environmentally responsible mobility systems.

 

Conclusion

Clear progress has been made toward achieving the objectives outlined above, particularly in advancing e-mobility as a central pillar of sustainable transport. This momentum is encouraging. However, a notable gap remains in technology transfer. While many African countries are embracing e-mobility through policy reforms and fiscal incentives, they continue to lag in developing homegrown e-mobility technologies or building the local capacity to manufacture electric vehicles.

Kenya, for example, has introduced tax incentives to ease the importation of electric vehicles, creating a favourable environment for collaboration with more technologically advanced jurisdictions. These partnerships present a valuable opportunity not just to access the technology, but to acquire the skills and knowledge necessary to adapt, improve, and eventually innovate upon it within local contexts.

In our view, this evolving landscape lays a strong foundation for the future of sustainable transport in Africa, one that is not only environmentally friendly and socially inclusive and anchored in local innovation and long-term self-reliance.

Construction contracts typically delineate the contract sum, modalities of payment and set timelines within which payments must be made. When a party breaches these payment obligations, the aggrieved party often resorts to the contractual dispute resolution mechanisms. However, these processes can be lengthy and do not always guarantee recovery from the defaulting party.

Consequently, there has been need to establish a legislative framework to address payment insecurities in construction projects. Particularly, Kenya introduced a legislative reform through the introduction of the Construction Payments Adjudication Bill, 2024 (the “Bill”) which aims to establish adjudication as a primary dispute resolution mechanism for resolving payment disputes and curing persistent inefficiencies in payment systems.

Nonetheless, questions remain as to whether the adjudication process and use of Dispute Boards (the “DBs”) will in practice, facilitate timely payments. Additional concerns arise as to the extent of the binding nature of decisions by DBs and whether they must be complied with pending any subsequent challenge through arbitration or litigation.

The Court of Appeal in National Irrigation Authority (formerly the National Irrigation Board) v Satom SA [2025] KECA 1472 (KLR) (the “Santom Case”) has provided much-needed clarity on these issues. In its decision, the Court held that determinations made by DBs are binding, and parties are therefore contractually obligated to honour and implement them.

A. Background

The Santom Case was an appeal arising from the ruling of the High Court of Kenya at Nairobi (Majanja, J.) where Santom SA (the “Respondent”) claimed payment with respect to four (4) decisions of the DB under the FIDIC Pink Book. The trial court held that the DB’s determination, being an assessment of parties’ rights and obligations under the contract, is enforceable, binding and continues to be binding unless set aside by amicable settlement between the parties or by an arbitral award.

Additionally, the trial court was persuaded that the enforcement of DB decisions precedes any determination by way of an amicable settlement or arbitral tribunal, entitling the Plaintiff to enforce the DB’s decisions regardless of whether the Defendant seeks to challenge the same in arbitration.

B. Issues

On appeal, the Court dissected the issue of the applicability of the “pay now, argue later” principle as well the DB’s jurisdiction post contract termination as highlighted below:

1. The applicability of the pay now, argue later principle
   Appellants’ Argument: The Appellant argued that while sub-clause 20.4 of the Pink Book indeed creates a contractual obligation for parties to promptly give effect to a DB decision, regardless of whether it is binding or final and binding, this obligation is not underpinned by a “pay now, argue later” principle. The Appellant argued that this principle is inapplicable in this context as DB decisions are intended to be interim until final adjudication and enforcement through arbitration and that the FIDIC Pink Book itself does not explicitly incorporate the principle.
   Respondent’s Argument: In rebuttal, the Respondent reiterated that it obtained four DB decisions two of which became final and binding as the Appellant failed to file notices of dissatisfaction. The other two were binding as the Appellant filed notices of dissatisfaction against them. The Respondent affirmed that the obligation to promptly give effect to a DB decision, whether Binding or Final and Binding, is underpinned by the “pay now, argue later” principle which creates immediate contractual obligations that must be performed promptly, notwithstanding the filing of a notice of dissatisfaction. The Respondent further argued that there was no dispute to refer to arbitration concerning the payment of these amounts.
   Court’s Determination: The Court upheld the “pay-now, argue later” principle and expressed that one of the objectives of the principle is to keep projects alive and insulated from nonpayment and other disruptions while disagreements continue to be resolved. Beyond this, the Court held that this principle is equally applicable where the contract has been abandoned, repudiated or terminated. Notwithstanding the happening of either of the three, an aggrieved party should not be kept out of pocket while awaiting the final resolution of the dispute.
2. Whether the jurisdiction of the DB survives termination of the contract
   Appellant’s Argument: The Appellant argued that the DB decisions were irregularly obtained or entirely without jurisdiction because the contract was terminated on 6^th February 2020 and since the DB is a creature of contract, its jurisdiction is pegged on the continued existence of the contract. As such, the DB clause did not survive termination of the contract.
   Respondent’s Argument: In rebuttal, the Respondent argued that the DB agreement is severable from the main contract, allowing the DB’s jurisdiction to continue post-termination. Furthermore, the DB had already issued a decision upholding its jurisdiction to deal with matters even after contract termination, which decision was never challenged and became final and binding.
   Court’s Determination: The Court held that both parties submitted themselves to the DB jurisdiction in the full knowledge that the contract had been terminated. As such, neither party should be permitted to resile from that position. The Court also held that under Sub clause 20.4 of the FIDIC Pink Book, the DB jurisdiction post-lives the termination of the contract.

C. Conclusion

Ultimately, the appeal was dismissed with costs to the Respondent. This decision firmly reinforces the “pay now, argue later” principle which requires a party to satisfy sums awarded by an adjudicator (the “notified sums”) notwithstanding any dispute as to the actual amount due.

Only after settling the notified sums can the paying party challenge the true value of the works in separate proceedings. This principle ensures swift, interim outcomes that are more cost effective and time efficient thereby facilitating project cash flow and timely completion of works within the project schedule.

 

As a cornerstone of Kenya’s economy, the construction industry is characterised by complex and multi-phased contractual processes involving numerous sectoral players and significant sums of money. Inevitably, disputes in the construction industry arise and perennial issues such as payment disputes, cash flow bottlenecks, project delays, and protracted litigation plague the industry. Persistent inefficiencies in payment systems underscore the urgent need for dispute resolution mechanisms that are fast, cost-effective, and readily enforceable.

Article 159(2)(c) of the Constitution of Kenya, 2010, provides for the use of Alternative Dispute Resolution (ADR) mechanisms, such as reconciliation, mediation, arbitration, and traditional dispute resolution mechanisms.

Although adjudication is not expressly mentioned as an ADR mechanism, it is still contemplated under Article 159(2)(c) of the Constitution. Therefore, it can be argued that Kenyan courts are called upon to promote all ADR mechanisms, including adjudication.

The Adjudication Rules of the Chartered Institute of Arbitrators (Kenya Branch) define adjudication as “a dispute resolution procedure based on the decision-making power of an impartial, third party neutral natural person known as an adjudicator to reach a fair, rapid and inexpensive decision upon a dispute arising under a construction contract.”

The Construction Payments Adjudication Bill (the “Bill”), introduced through Sessional Paper No. 4 of 2024, on the National Alternative Dispute Resolution Policy, seeks to officially recognise adjudication as a dispute resolution mechanism in Kenya, for payment disputes in construction projects. The Bill was recently subjected to public participation, as required under Article 10 of the Constitution.

This article examines the resolution of payment disputes both historically and prospectively, with regard to the Bill.

 

A Walk Down Memory Lane

Payment disputes in construction projects often involve clients, contractors, subcontractors, manufacturers, and/or suppliers, among other stakeholders. Such disputes typically arise from delays in works, time extensions, cash flow shortages, cost overruns, tendering and quality of works, among others. If left unresolved, these disputes can derail the progress of the project and strain the relationship between the parties.

Such disputes have for a long time been subjected to arbitration, as the main ADR method in the construction contracts. This has been undertaken pursuant to the provisions of the Arbitration Act (Cap. 49) Laws of Kenya.

In rare instances where parties have sought to undertake adjudication, they have relied on standard form contracts, such as the International Federation of Consulting Engineers (FIDIC), with the necessary amendments to suit their individual needs.

Such clauses have included the use of Dispute Boards in construction projects as envisaged under FIDIC. Specifically, in its 2017 Red Book, FIDIC allows the use of Dispute Avoidance and Adjudication Boards (DAAB) in managing and avoiding disputes arising from construction projects. In this regard, parties have adopted ad hoc dispute adjudication boards or appointed the boards within timelines stipulated in the contract.

Ad hoc boards are set up at the onset of the project and remain in place throughout its duration, to assist the parties in resolving disputes arising in the course of the project. The DAABs further assist parties to avoid disputes by facilitating and improving communication, thereby encouraging resolution of contentious issues before their escalation into full-blown disputes (conflict avoidance). While DAAB decisions are binding, they remain subject to review in arbitration if challenged.

 

A New Legal Dispensation

The Bill seeks to promote timely payments and equitable remedies for disputes in Kenya’s construction sector by strengthening the adjudication practice with greater efficiency and accountability. It introduces statutory adjudication as a fast, cost-effective mechanism for resolving payment disputes. Statutory adjudication enables cash flow continuity in ongoing projects while preserving the parties’ rights to later pursue arbitration or litigation. If implemented effectively, the Bill has the potential to transform dispute resolution in the construction industry.

The Following are Key Highlights of the Bill:

1. The Bill applies to all construction contracts that either expressly provide for adjudication or where the parties, with mutual consent, submit disputes for adjudication. Conversely, the Bill shall not apply where the construction contracts prescribe a different procedure for the resolution of payment disputes or does provide for adjudication but under a different framework.
2. Construction contracts must contain an agreement in writing to adjudicate payment disputes. The agreement shall be deemed to be in writing if the parties sign a contract to this effect or have an exchange of correspondence between themselves in relation to the works being undertaken and adjudication as the payment disputes resolution mechanism.
3. Once enacted, the Bill shall apply to construction contracts regardless of whether the works are undertaken wholly or partly within Kenya, thereby extending its scope to cross-border projects.
4. The Bill covers a wide range of construction works, including building and engineering works, procurement, surveying, design, landscaping, and material supply, thereby ensuring comprehensive inclusion of all stakeholders.
5. The adjudication process involves:

• Issuance of a payment claim by the contractor;
• Issuance of either a payment schedule or a schedule to pay less by the employer (this schedule must contain reasons and alternative amounts if contesting the claims);
• Issuance of a notice of reference to adjudication by an aggrieved party;
• Filing of a reference to the adjudication body, which then appoints the adjudicator. The adjudicators will be appointed from a panel maintained by a designated adjudication authority. Provisions on their appointment, independence, remuneration and code of conduct aim to uphold professionalism and impartiality. The National Dispute Resolution Council has the mandate of accrediting adjudication bodies, issuing codes of practice, and regulating the sectoral standards. Parties will be jointly and severally liable for adjudicator fees and expenses. The adjudicators will be entitled to lien over the decision until payment is made.
• Adjudicators must render decisions within fourteen (14) days after the date when the adjudicator receives the response to the reference or the date when a responding party should have submitted a response to the reference (extendable with consent). The adjudicators can use flexible procedures, including calling conferences, written submissions, and site visits. The process excludes strict application of the Evidence Act, allowing informality and speed.
• Decisions of adjudicators are binding and enforceable on an interim basis unless set aside in an arbitral or litigation process. The decision must outline the amount payable, interest, and due date and be accompanied by an adjudication certificate.
• Adjudication decisions/certificates can be adopted in the High Court and enforced as judgements for debts. The Application to set aside the decision must be filed within seven (7) days on the following limited grounds: statutory non-compliance, fraud/corruption, or excess of jurisdiction. However, the Applicant must deposit the adjudicated sum as security for costs.
• The binding nature of the decision ensures immediate enforcement (if not challenged), safeguarding project cash flow and maintaining project progress. Adjudicated amounts must be paid within seven (7) days from the date of the certificate, or as may be prescribed by the adjudicators.

The Bill seeks to promote timely payments and equitable remedies for disputes in Kenya’s construction sector by strengthening the adjudication practice with greater efficiency and accountability. It introduces statutory adjudication as a fast, cost-effective mechanism for resolving payment disputes. Statutory adjudication enables cash flow continuity in ongoing projects while preserving the parties’ rights to later pursue arbitration or litigation. If implemented effectively, the Bill has the potential to transform dispute

Conclusion

For Kenya’s construction sector to achieve timely and effective project delivery, it is essential to adopt flexible and fast-track dispute resolution mechanisms such as adjudication. As extensively discussed above, this mechanism makes it both costly and risky for the parties to stall payments, thereby curbing project delays and avoiding potential claims for liquidated damages.

If enacted, implementation of the statute will require widespread training and accreditation of adjudicators, as well as sensitisation of industry stakeholders. Contracts previously negotiated that lack adjudication clauses, may require transitioning through amendments, to facilitate the use of this mechanism. This is owing to the fact that adjudication under the Bill is not a matter of right but must be agreed upon in writing. In any event, jurisdictional issues as preliminary points when challenging an adjudication decision, may arise where the dispute is not covered by an adjudication agreement.

By contrast, in the United Kingdom, parties to a construction contract have an automatic right to adjudicate at any time, even if the contract does not expressly include the mechanism. This right to adjudicate cannot be taken away contractually.

Nevertheless, the effectiveness of the adjudication process will demand a multi-sectoral approach. Specifically, swift enforcement of the adjudication decision by the High Court will be critical, requiring a strong buy-in from the judiciary.

Therefore, the proposed Bill is a step in the right direction, as it provides a governing legal framework that secures statutory access to adjudication, while defining its procedural and substantive elements. Such legislation will strengthen the viability of adjudication as an efficient tool for safeguarding cash flow, preserving business relationships, and ensuring project completion within agreed timelines.

Introduction

The issue of migration of legacy tax balances to the iTax system has not been without its fair share of controversies, with some escalating to the Tax Appeal Tribunal for resolution. The most common denominator in these controversies has been issues relating to statutory time limits on amending self-assessment records, the appealability of legacy migration notifications, and the retrospective assessment of taxes on legacy balances.

The decision of the Tax Appeals Tribunal in TATC NO. E1217 of 2024: Sony Holdings Limited versus The Commissioner of Domestic Taxes, in which we represented the Appellant offers much-needed clarity on the statutory limits applicable to the KRA when issuing communications of migration of legacy balances that differ from taxpayer’s self-assessment records, and on whether such legacy balances may be deemed to constitute tax assessments.

 

The Appeal

In the cutting-edge decision, the Tax Appeals Tribunal made conclusive determination on issues relating to the migration of legacy balances. The case stems from the notification of migration of legacy balances to the iTax platform. This was a common plight of many taxpayers in the first quarter of 2025, where the KRA issued notifications to many taxpayers informing them the intention to migrate legacy balances to iTax upon those balances being validated. Such similar notice was sent to Sony Holdings Limited notifying it of the intended migration of the alleged legacy balances for the period up to 2014 comprising KES. 171,584,860 in income tax and KES. 170,949,668 in VAT and was requested to provide supporting documentation for validation of the alleged debit balances.

Sony Holdings Limited disputed the alleged legacy balances and furnished documentation proving that it had no debit balances eligible for migration to the iTax-system. Notwithstanding such evidence, KRA proceeded to issue an Objection Decision without validating the balances and demanded KES. 201,125,150.88, purportedly arising from self-assessment returns for the years of income 2009, 2010 and 2012. The demand was issued despite the taxpayer having provided documentation for revalidation which clearly demonstrated that no tax liabilities existed for migration.

 

Determination

In its determination, the Tribunal concluded that once a migration notice has been issued and supporting documents requested, the Kenya Revenue Authority is obligated to validate the taxpayer’s balances on the basis of the information provided. Only after undertaking this validation can the Authority issue a tax decision capable of grounding a procedurally sound Objection Decision.

Further, the Tribunal affirmed that a taxpayer cannot be denied the right of appeal on the pretext that it did not exhaust Tax amnesty mechanism. It was held that such route is optional and can only be applicable where the taxpayer has conceded to the principal debt or in case of contentions, the debt has been confirmed by a court of law.

The Tribunal also affirmed that any action of coming up with migration balances different from the self-assessment record after five years of making such self-assessments was contrary to section 27 and 31 of the Tax Procedure Act unless gross or wilful neglect, evasion or fraud was proven.

Lastly, the Tribunal determined that KRA could not demand taxes allegedly arising from the migration balances without validating the said balances based on the documents provided by taxpayer.

 

The Significance of this Judgment

For practitioners and businesses, the key takeaway is that the Kenya Revenue Authority cannot, under the guise of migrating legacy balances, alter a taxpayer’s self‑assessment records that were filed more than five years ago unless it can demonstrate fraud, tax evasion or wilful neglect on the part of the taxpayer. In the absence of such statutory justification, any amended assessment issued by KRA outside the five‑year period following submission of a self‑assessment return is rendered void, as it is expressly barred by law.

Introduction

Can a company that has been dissolved be liable for tax? The issue was recently resuscitated by the Kenya Revenue Authority (KRA) when it decided to impose tax on a company which had been dissolved, raising the question of whether a company that has been dissolved continues to exist for the purposes of tax.

The issue fell for determination before the Tax Appeals Tribunal (Tribunal), bringing into focus the extent of KRA’s powers to raise or enforce purported tax liabilities once the company is dissolved.

 

The Appeal

The firm represented a Client before the Tribunal, where the question of enforcing alleged tax liabilities against a dissolved company was conclusively determined.

The Dissolved Company was deregistered in 2018 under the provisions of the Companies Act (Cap. 486). In accordance with the requirements of the Tax Procedures Act (TPA) it was required to apply for deregistration as provided under section 10 of the TPA. It applied for its PIN to be deregistered and provided the relevant documents as requested by KRA. As is common in many instances no decision was made or communicated by KRA.

In 2024, KRA issued a notice indicating its intention to migrate the legacy balances to the Dissolved Company’s iTax ledger. The alleged balances comprised unsubstantiated ledger balances spread over a period ending more than ten years prior to the date of migration. The Appellant, a former director of the Dissolved Company, objected to the migration on the basis that, at the time of dissolution, the Dissolved Company had no outstanding tax liabilities. KRA nevertheless issued an objection decision affirming its decision to migrate the disputed liabilities, prompting the Appellant to file an appeal before the Tribunal.

KRA contended that a director had no standing to file an objection because he was not the taxpayer to whom the notice of migration had been issued.

 

Determination

In its decision, the Tribunal determined that once a company is deregistered, it ceases to exist as a legal entity and cannot be subjected to tax enforcement proceedings unless it is first restored to the register of Companies. Attempting to enforce tax liabilities against a non-existent entity without such restoration was legally untenable.

The Tribunal found that a director like the Appellant was qualified as an “aggrieved person” under section 52(1) of the TPA and sections 3 and 12 of the Tax Appeals Tribunal Act and could appeal against an appealable decision. He was a person who could be directly affected under section 897(6) of the Companies Act, notwithstanding the Company’s dissolution. Accordingly, the former director had the requisite standing to file the appeal.

The Tribunal further held that, upon the Company’s application for cancellation of its PIN and in the absence of any substantive response from KRA within six months, the PIN was deemed deregistered by operation of law pursuant to section 10(7) of the TPA.

 

The Significance of this Judgment

This Judgment underscores that once a company is legally dissolved and its KRA PIN deregistered, its “tax life” effectively ends, unless the company is restored through a court order.

Proper compliance during dissolution is essential. Companies must notify KRA of their dissolution and make an application for cancellation of their KRA PIN in accordance with section 10 of the TPA. Where this is done correctly, the company cannot be pursued for tax liability unless it is first restored to the Companies register.

For practitioners and businesses, the takeaway is that dissolution of a company is not a loophole to escape pre-existing liabilities. Rather, it serves the purpose of finality and legal certainty by shielding the company from claims or debts that did not exist at the time of dissolution. For any claim to be sustained, due process must be followed as provided for under the Companies Act.

 

Introduction

Few events can unsettle a business, such as an unexpected call from the bank confirming that its accounts have been frozen. Payroll deadlines approach, supplier commitments go unfulfilled, and carefully structured transactions come to a halt unexpectedly. In Kenya, this disruption is increasingly linked not to insolvency or internal mismanagement, but to a single enforcement tool. This is the issuance of an agency notice by the Kenya Revenue Authority (KRA) as the tax administrator.

One of the most effective instruments in Kenya’s tax enforcement tools is an agency notice, which enables KRA to collect claimed, alleged tax liabilities by attaching funds held by third parties. Despite their statutory footing, the use of agency notices frequently lies at the intersection between effective or efficient revenue collection and the protection of taxpayer rights. In this case taxpayer includes a non-resident person who is subject to tax in Kenya. Accordingly, understanding or knowing how to respond to them is not simply a matter of compliance.  Any taxpayer operating in today’s enforcement climate must consider governance, financial continuity, and legal strategy.

In this article, we examine the legal framework governing agency notices in Kenya and outline some of the strategic considerations for taxpayers confronted with their issuance.

 

Legal Underpinning of Agency Notices in Kenya

The legal architecture governing agency notices in Kenya is anchored in Section 42 of the Tax Procedures Act, Cap 469B of the Laws of Kenya (TPA). The provision empowers KRA to appoint any person holding money for, or on account of, a taxpayer as an agent for the purpose of recovering unpaid taxes. Once appointed, that agent is required to remit to KRA any monies held on behalf of the taxpayer, up to the amount specified in the notice. The agency notice is simultaneously served on the taxpayer.

Section 42(2) of the TPA enumerates persons who may be an agent and who may be required to comply with an agency notice, and this includes the following persons:

• a. who owes or may subsequently owe the taxpayer, e.g., employer or debtors;
• b. who holds or may subsequently hold money, for or on account of the taxpayer, e.g., banks, trustees or escrow agents;
• c. who holds or may subsequently hold money on account of some other person for the taxpayer, e.g., financial advisors or executors of an estate; or
• d. who has authority from some other person to pay money to the taxpayer as specified in the notice, but this amount shall not exceed the amount of the unpaid tax or the amount the Commissioner believes will be paid by the taxpayer, e.g., holder of power of attorney, accountants, or trustees of a trust.

In practice, and despite having the various agents listed above, agency notices are frequently served on banks holding taxpayers’ deposits. Our understanding is that they are easy to reach and strictly apply the requirement to withhold funds in compliance with Section 42 of TPA. Upon receipt, the bank is required to ring-fence the affected accounts and remit funds to KRA until the tax liability is paid up. An agency notice, therefore, operates as a statutory demand directed at a third party, effectively interposing KRA between the taxpayer and its funds.

Given the immediacy and commercial disruption occasioned by agency notices, a structured response strategy is essential.

 

Navigating Agency Notices in Kenya

1. Settlement of the Tax Demand

The first consideration for a taxpayer is whether the tax liability is undisputed or contested. If the taxes are not in dispute, the most direct solution is to settle the outstanding amount or negotiate a payment plan with KRA. Under Section 42(8) of the TPA, KRA is required to revoke or amend an agency notice once the tax is paid in full or satisfactory payment arrangements have been made. In practice, confirmation of payment or approval of a payment plan typically results in the lifting of the notice and the release of frozen funds, restoring access to the affected accounts, and mitigating commercial disruption.

 

2. An Agency Notice is an Appealable Decision

Where the tax liability is disputed, the taxpayer’s next recourse is to challenge the agency notice through the statutory dispute-resolution framework as elucidated under the TPA. Jurisprudence confirms that an agency notice is not procedurally insulated from challenge, rather, it is considered an appealable decision under the TPA.

In Commissioner of Domestic Taxes vs. Pevans East Africa Ltd & 6 others [2022] KEHC 10392, the Late Justice Majanja DAS (as he then was) affirmed that the issuance of an agency notice constitutes an appealable decision within the meaning of Section 3 of the TPA.

This position was further reinforced in Mubea Group Ltd vs. Kenya Revenue Authority [2025] KEHC 12003, where the High Court struck out judicial review proceedings on the ground that an agency notice is a statutory appealable decision. The Court emphasized the doctrine of exhaustion of remedies, highlighting that where Parliament has provided a clear mechanism for objection and appeal, taxpayers must pursue that route before invoking the supervisory jurisdiction of the High Court under a judicial review. Therefore, the first point of call is to file an appeal with the Tax Appeals Tribunal.

 

3. Procedural Fairness and Conditions Precedent

Closely linked to the option of appealing to the Tax Appeals Tribunal is the requirement for procedural compliance. Courts have held that agency notices must be issued in accordance with the law.

Section 42(14) of the TPA sets out the specific conditions that must be satisfied before KRA can issue an agency notice. The provision ensures that agency notices are not issued arbitrarily and provides a clear statutory framework for enforcement. Under this section, KRA is directed not to issue an agency notice unless one of the following conditions is met:

• 1. The taxpayer or non-resident subject to tax in Kenya has defaulted in paying an instalment after extension of time to make payment as agreed under Section 33(2) of the TPA.
• 2. KRA has raised an assessment, and the taxpayer has not objected to or challenged the validity of the assessment within the prescribed period.
• 3. The taxpayer has not appealed against an assessment specified in an objection decision within the prescribed timelines.
• 4. The taxpayer has submitted a self-assessment and filed a return but has failed to pay the taxes due before the payment deadline.
• 5. The taxpayer has not appealed against an assessment specified in a decision of the Tribunal or Court.

These conditions collectively ensure that KRA exercises its powers judiciously and only after statutory avenues for compliance, assessment and objection have been exhausted.

 

4. Application for Stay

Once a taxpayer has lodged a substantive appeal, a critical strategic consideration is whether to seek a stay of enforcement of the agency notice pending the outcome of the appeal. The TPA does not automatically treat the filing of an appeal as a stay of execution, making it imperative for the taxpayer to proactively seek interim relief, which, if granted, will allow a taxpayer to access funds when the appeal is pending hearing and determination.

 

5. Obligations of the Agent

The agent is obligated to notify KRA within 14 days of receiving the agency notice if they do not hold any monies on behalf of the taxpayer as provided for under Section 42(6) of the TPA. Upon receipt of this communication, Section 42(7) of the TPA requires KRA to respond within 30 days to the agent by either accepting the notification and canceling or amending the notices or rejecting the notification.

The above provisions confirm that the agent is under a statutory obligation to honour the agency notice and a notification of lack of sufficient funds does not automatically extinguish the notice. Where the notice is rejected, the taxpayer must still seek intervention of the court to have the agency notice lifted, as any funds received by the agent in the future will be attached and utilized towards settlement of the demanded taxes.

 

Conclusion

Agency notices are among KRA’s most potent enforcement tools, capable of immediately impacting a taxpayer’s liquidity and operations, and should never be ignored. Jurisprudence confirms that such notices are appealable decisions, enforceable against third parties, yet subject to both procedural safeguards and constitutional scrutiny.

For taxpayers, the key lies in a balanced strategy which includes promptly assessing the underlying decision, pursuing the statutory objection and appeal process, seeking interim relief where necessary, and engaging constructively with your legal representatives. In doing so, taxpayers can protect their interests while ensuring compliance with Kenya’s evolving tax enforcement landscape.