Finance Bill 2026. How it Will Impact Kenya’s Capital and Money Markets

The Finance Bill 2026 has been a subject of discussions among ordinary Kenyans as well as policy makers. This is because even small tax and policy adjustments can significantly influence liquidity, investor behaviour, and capital flows within the economy.

Kenyans are expected to submit written memoranda to the National Assembly’s Departmental Committee on Finance and National planning by 25^th May 2026.

From a money and capital markets perspective, several issues stand out.

“The proposal to remove the preferential 5% dividend withholding tax for East African investors and move toward the standard 15% rate could reduce the attractiveness of Kenyan equities for some regional investors. This may affect foreign participation and liquidity at the Nairobi Securities Exchange, particularly in high-dividend banking stocks,” CFA Dedan Maina told Business Today in an interview.

He said that markets generally prefer policy stability and predictability. Frequent tax adjustments, therefore, tend to make investors more cautious, especially long-term institutional and foreign investors who rely on certainty when allocating capital.

“Additional taxes or friction within parts of the digital and financial ecosystem may slow consumption and business activity in the short term, eventually affecting corporate earnings and overall investor sentiment,” said Maina.

On the positive side, proposals aimed at easing access for non-resident investors and improving administrative efficiency could support broader participation in Kenya’s capital markets over time.

“For the bond market, continued heavy government borrowing to finance fiscal deficits may keep yields attractive, sustaining strong demand for government securities. However, this can also continue crowding out parts of private sector borrowing by competing for available capital,” said Maina.

Overall, as the CS Treasury John Mbadi prepares to present the 2026/27 budget speech in parliament as well as table the 2026 Finance Bill, markets will mainly be watching three things.

How proposals in the Budget 2026/27 as well as the Finance Bill will impact on investor confidence, liquidity flows into equities and bonds and whether the Finance Bill supports economic growth or primarily focuses on revenue extraction.

“In capital markets, perception matters almost as much as policy itself,” said Maina. After 25^th May 2026, the Finance and National Planning Committee reviews all submissions and prepares a report for debate in the National Assembly.

The Finance Bill proposes changes to the Income Tax Act, VAT Act, Excise Duty Act, Tax Procedures Act and other measures. If passed, most of the changes will take effect from July 1^st 2026.

The last Finance Bill under the Kenya Kwanza administration, took an ugly turn after protests erupted in the streets of major towns in Kenya, the public expressing their displeasure with the fiscal proposals contained in the Bill.