Money Market Fund vs Treasury Bills in Kenya: Net Returns After Tax (October 2026)

The Short Answer

At today's rates, a typical Kenyan money market fund (MMF) earns more after tax than a Treasury bill: about 8.86% net for an MMF yielding 10.50%, against 7.68% net for the 364-day Treasury bill. On KES 100,000 over 12 months, that is roughly KES 1,196 more in the MMF. But MMF yields change daily and the T-bill rate is locked in when you buy, so the gap is a snapshot, not a promise.

Data as of 16–19 October 2026. Yields move, so re-check before you decide.

Executive Summary & Parameter Definitions

Retail savers in Kenya mainly choose between Money Market Funds (MMFs) and Central Bank of Kenya (CBK) Treasury bills. The headline rates are not directly comparable, for three reasons:

1. MMFs publish an effective annual yield (EAR), which already includes daily compounding. T-bills quote a simple annualised rate on a discount basis.
2. Both are subject to 15% withholding tax (WHT), which for individuals is a final tax. MMF yields are usually quoted after management fees but before WHT (for example, Nabo Capital states this on its own site), so check each fund's disclosure.
3. MMF yields float daily, while a T-bill's rate is fixed for its term.

This note converts both to a net-of-tax, 12-month result on KES 100,000.

Rates used (October 2026)

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The Mathematics

Let WHT = 0.15.

1. Money market fund: from published EAR to net return

Because the published figure is already an effective annual rate, convert it to a daily rate first, apply tax to the daily interest, then compound:

r_{\text{daily}} = (1 + \text{EAR})^{1/365} - 1 \qquad r_{\text{net,daily}} = r_{\text{daily}} \cdot (1 - WHT)

A_{\text{MMF}} = P \cdot \left(1 + r_{\text{net,daily}}\right)^{365}

For P = 100{,}000 and \text{EAR} = 10.50\%, the net effective yield is 8.86% and A_{\text{MMF}} = \text{KES } 108{,}857.58.

(Do not compound the published rate a second time: it already includes compounding.)

2. Treasury bill: discount price and net return

CBK quotes an annualised rate r. For a bill with t days to maturity, the price per KES 100 face value is:

P_{\text{price}} = \frac{100}{1 + r \cdot t/365}

For the 364-day bill at r = 9.0383\% this gives a price of 91.7317. Withholding tax is charged on the discount (the interest). On a KES 100,000 outlay:

I_{\text{gross}} = 100{,}000 \cdot \left(\tfrac{100}{91.7317} - 1\right) = 9{,}013.54 \qquad I_{\text{net}} = I_{\text{gross}} \cdot 0.85 = 7{,}661.51

The ending value is KES 107,661.51, a net return of 7.66% over 364 days (about 7.68% annualised).

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KES 100,000 for 12 Months: Net Results

The rolled T-bill rows assume the same rate is available at each rollover, which is not guaranteed.

Reading the table: at these rates, the T-bill curve is nearly flat, so locking up money for a year gains you almost nothing over rolling shorter bills. The MMF's advantage today comes from its higher yield, not from a structural edge.

How much would the MMF yield have to fall to lose its lead?

Against the 364-day bill's 7.68% net, an MMF breaks even at roughly 9.1% EAR. A fall of about 1.4 percentage points, well within the range of past MMF yield swings, would erase the gap.

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What About Infrastructure Bonds and SACCOs?

Infrastructure bonds (IFBs) are not a 12-month product, so they are left out of the table above. They are long-dated (for example, bonds reopened in 2025 had maturities of 15 and 19 years and coupons around 12.5%–13%), and selling early exposes you to price changes. Interest on IFBs issued so far has been reported as exempt from withholding tax, but the Finance Bill 2024 proposed a 5% withholding tax on future infrastructure bonds of three years or more. Always check the tax status stated in the specific bond's prospectus before relying on it.

SACCO returns are left out too: dividends on shares and interest on deposits can be taxed differently, and payouts are annual and depend on the individual SACCO. Add a sourced example for a specific SACCO before comparing it here.

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Decision Framework

1. Match the product to when you need the money

• Emergency fund and money you may need within weeks: an MMF's flexibility matters more than a small yield difference. Check the fund's redemption time and any minimum balance.
• Money you are sure you will not touch for 3, 6 or 12 months: a T-bill locks the rate. It is worth comparing against the MMF's current net yield, as in the table above.

2. Compare after fees and tax, on the same basis

• Check whether the fund's quoted yield is net of management fees. Most are, so do not subtract the fee again.
• Apply the 15% withholding tax to interest (daily for the MMF, on the discount for the T-bill) and compare net annual returns.
• Check that the fund is licensed. The Capital Markets Authority publishes a verification portal for fund managers.

This article is educational. It is not investment advice, and past yields do not guarantee future returns.

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Sources and Last Checked

• Central Bank of Kenya: Treasury bill auction results dated 19 October 2026 (91-day 8.75%, 182-day 8.86%, 364-day 9.04%)
• Independent MMF yield trackers (for example, Business Radar and Serrari), snapshot of 16 October 2026
• Nabo Capital yield disclosure (net of fees, gross of withholding tax)
• Kenya Revenue Authority: withholding tax rates
• CBK infrastructure bond reopening details (2025) and Finance Bill 2024 reporting for IFB tax treatment
• Rates last checked: 19 October 2026. Update this section whenever you refresh the numbers.

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