Kenya’s President William Ruto has recently lauded the Finance Bill 2025, calling it a “carefully crafted” piece of legislation that will be instrumental in the country’s economic growth. During his address at the Uhuru Gardens on May 1, 2025, which coincided with the annual Labour Day celebrations, Ruto emphasized that the bill was designed to stimulate economic growth, enhance competitiveness, and expand opportunities for businesses and the workforce. His remarks reflect a strong belief in the bill’s potential to reshape Kenya’s fiscal landscape.

The Finance Bill 2025, approved by the Cabinet earlier in the week, aims to address several critical areas within the Kenyan economy, including tax relief, labour rights, and the improvement of the business environment. According to the President, the bill is part of the government’s broader vision to foster a spirit of enterprise and productivity, ensuring that the country’s economic trajectory continues on a positive path.

A Shift in Tax Relief System

One of the key provisions of the Finance Bill 2025 that President Ruto highlighted is the significant change in how tax reliefs will be applied. Under the new framework, employers will now be able to apply eligible tax reliefs and exemptions directly when calculating the Pay As You Earn (PAYE) tax for employees. This marks a departure from the current system, which requires workers to claim tax reliefs through the Kenya Revenue Authority (KRA) after filing their annual returns.

This change is expected to bring immediate financial relief to workers and reduce the administrative burdens that both employers and employees currently face. “This will increase efficiency and immediately benefit employees,” Ruto stated, underscoring the positive impact this modification will have on workers’ take-home pay. By simplifying the process of applying tax reliefs, the Finance Bill seeks to enhance overall financial efficiency, benefitting not just individuals but also businesses across the country.

Strengthening Workers’ Rights

In addition to tax reforms, the Finance Bill 2025 also reflects Kenya’s ongoing commitment to improving workers’ rights and welfare. In his Labour Day address, President Ruto announced that Kenya would ratify two important International Labour Organisation (ILO) conventions aimed at safeguarding workers’ dignity and rights.

The first of these is ILO Convention 189 of 2011, which focuses on the protection of domestic workers. Domestic workers, who often work in informal and sometimes exploitative conditions, will benefit from enhanced legal protections under this convention. By ratifying this convention, Kenya will take a significant step towards ensuring that domestic workers are treated with the same dignity and respect as other employees, with fair pay and reasonable working conditions.

The second convention, ILO Convention 190 of 2019, aims to eliminate violence and harassment in the world of work. With the growing awareness of workplace harassment and violence, this move signals Kenya’s commitment to ensuring safer working environments for all employees. President Ruto highlighted that these ratifications are part of a larger effort to uphold international labour standards and provide better protection for workers in Kenya.

“We believe these actions are essential to ensuring that we continue to uphold the dignity and rights of all workers in our country,” the President said, reiterating the government’s dedication to improving workers’ conditions. The ratification of these conventions is expected to bring Kenya in line with global labour standards, further enhancing its reputation as a country that values and protects its workforce.

Affordable Housing, Health Insurance, and Pension Deductions

The issue of salary deductions has been a point of contention among many Kenyan workers, particularly with regard to the contributions towards affordable housing, health insurance, and pension schemes. While the recent deductions have reduced workers’ immediate take-home pay, President Ruto took the opportunity on Labour Day to address the concerns surrounding these contributions.

Ruto acknowledged that these deductions have had an impact on workers’ monthly earnings but emphasized that they are crucial investments for the long-term security of Kenyan workers. “We understand the sacrifices being made, but these efforts are crucial to ensuring a more secure future for every Kenyan worker,” he said, urging the public to see the broader picture.

The contributions towards affordable housing, for example, are part of the government’s vision to provide quality, accessible housing for all Kenyans. Similarly, investments in healthcare and pensions are seen as critical to ensuring that workers have access to essential services, both during their working years and in retirement. “These investments in housing and healthcare are part of our long-term vision to build a more prosperous and equitable society,” Ruto remarked.

The President’s comments reflect the government’s intention to balance the immediate financial pressures on workers with the long-term benefits of a more robust social safety net. By ensuring that Kenyans have access to affordable housing, healthcare, and a pension scheme, the government aims to provide a foundation for financial security that will benefit the nation as a whole.

Fostering a Business-Friendly Environment

The Finance Bill 2025 also focuses on improving the business environment in Kenya, with provisions designed to enhance competitiveness and encourage investment. According to President Ruto, the bill is a response to the need for structural reforms that will allow Kenyan businesses to thrive in an increasingly competitive global market.

In his address, Ruto reiterated the importance of creating a workplace environment that supports both the growth of businesses and the welfare of workers. He highlighted that the Finance Bill 2025 is aimed at reducing barriers to doing business in Kenya, streamlining processes, and providing incentives for entrepreneurs.

The bill includes measures to simplify business registration and licensing processes, making it easier for startups and small enterprises to enter the market. Additionally, the government is introducing tax incentives for businesses that invest in key sectors such as technology, manufacturing, and agriculture. These incentives are intended to spur innovation and create jobs, particularly for young people entering the workforce.

“We want to make it easier for Kenyan entrepreneurs to start and grow their businesses, and for investors to see Kenya as a competitive and attractive destination for investment,” Ruto explained. By creating a more business-friendly environment, the government hopes to attract both local and foreign investment, which is crucial for economic growth and job creation.

Long-Term Vision for Economic Growth

President Ruto’s comments on the Finance Bill 2025 reflect a broader, forward-thinking vision for Kenya’s economic future. The bill, which was introduced as part of the government’s ongoing efforts to modernize the economy, is seen as a key instrument for achieving sustainable growth, job creation, and poverty reduction.

At the core of the bill’s provisions is a commitment to fostering a more inclusive economy—one that provides opportunities for all sectors of society. This aligns with the President’s long-term vision of a more diversified and resilient economy that is not overly reliant on any single industry or sector. By focusing on areas such as agriculture, manufacturing, and technology, the government aims to create a more balanced economy with opportunities for both urban and rural populations.

The President also emphasized that the Finance Bill 2025 is not just about short-term economic recovery but also about building a foundation for future generations. The bill’s focus on improving access to essential services, such as healthcare and education, as well as creating a more competitive business environment, is seen as laying the groundwork for a prosperous and equitable future.

“We are working to ensure that our children and grandchildren will inherit a Kenya that is prosperous, secure, and inclusive,” Ruto said, expressing his belief in the long-term benefits of the bill’s provisions.

Conclusion: A Carefully Crafted Blueprint for Kenya’s Future

As Kenya marks another Labour Day, President Ruto’s praise of the Finance Bill 2025 highlights the importance of strategic planning and legislative reforms in driving economic growth. By addressing key issues such as tax relief, workers’ rights, and the business environment, the bill provides a comprehensive blueprint for the country’s future.

While challenges remain, particularly with regard to the immediate impact of salary deductions, the government’s long-term vision is clear: a prosperous and equitable society where every Kenyan has the opportunity to succeed. The Finance Bill 2025 is a crucial step toward realizing that vision, and it reflects the government’s commitment to improving the lives of Kenyan workers and businesses alike.

With its “carefully crafted” provisions, the Finance Bill 2025 sets the stage for a new chapter in Kenya’s economic development, one that promises greater opportunities, enhanced competitiveness, and a brighter future for all Kenyans.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

2nd May, 2025