Kenya has launched an ambitious and highly coordinated financial risk mitigation strategy aimed at shielding the economy from internal and external shocks.
For the first time, regulators, policymakers, financial institutions, and international partners are coming together under a unified risk governance framework.
Dubbed the National Integrated Financial Risk Mitigation Strategy, the initiative seeks to identify vulnerabilities in advance, absorb disruptions effectively, and ensure recovery mechanisms are in place to protect the economy from systemic collapse. This comes in the wake of recent economic turbulence, including currency depreciation, rising public debt, and recurring climate disasters that have tested the resilience of Kenya’s financial institutions.
The strategy is being led by the National Treasury, with strategic input from the Central Bank of Kenya (CBK), Capital Markets Authority (CMA), Insurance Regulatory Authority (IRA), and Retirement Benefits Authority (RBA). These institutions are collaborating with county governments, commercial banks, insurance firms, SACCOs, and pension funds to ensure implementation at all levels.
International development partners, including the World Bank, International Monetary Fund (IMF), and African Development Bank (AfDB), are offering technical and financial support. The World Bank is reported to be funding digital risk surveillance tools and training programmes, while the IMF has seconded experts to assist with macroprudential modelling.
Treasury Principal Secretary Dr Chris Kiptoo, speaking at a policy launch event at the KICC in April, emphasised the urgency of the plan:
“We have been reacting to crises for too long. This strategy turns that around, making us anticipate, prepare, and bounce back stronger. It’s no longer business as usual.”
Although officially launched in April 2025 in Nairobi, the strategy has its roots in months of policy drafting, risk mapping exercises, and regional consultations that began in late 2024. County-level planning workshops have since been held in Mombasa, Kisumu, Eldoret, Nakuru, and Nyeri, with participation from local treasuries and financial service providers.
Implementation will be phased from July 2025, beginning with high-risk sectors such as banking, insurance, and pensions, before extending to fintech, co-operatives, and county finance systems by mid-2026.
While Nairobi remains the central coordination hub, the strategy is intentionally decentralised. County governments are being equipped to conduct local risk assessments, integrate risk data into their budgets, and develop emergency financial plans. County treasurers are being trained to model floods, droughts, or price shocks and respond with actionable financial measures.
In Turkana, for instance, the county government is piloting climate risk insurance tools to protect pastoralist communities. In Kiambu, a SACCO-led data programme is digitising credit risk analysis for small-scale traders using tools introduced under the national strategy.
Kenya’s economy has been rocked by several shocks in recent years, including inflationary pressures, prolonged droughts, the depreciation of the shilling, and an increasingly volatile global market. According to the CBK, Kenya’s financial stability index dropped by 12% in 2023 alone due to the ripple effects of global interest rate hikes and investor withdrawals.
The cost of climate-related financial losses has also spiked. In 2024, insurance payouts due to floods and drought exceeded KSh 15 billion, the highest level in a decade. Additionally, public debt servicing has consumed nearly 60% of government revenue, leaving limited room for fiscal manoeuvre.
– By Wambui Wachira
