Money market funds in Kenya for car savings (2026): rates, tax and withdrawals

A car owner who saves for insurance, tyres and the next car needs somewhere to keep that money for months. A current account pays little or nothing. A money market fund (MMF) usually pays more and still lets you withdraw within days. Here is how MMFs work, what they paid in 2026, and what to watch.

This is general information, not investment advice. Read a fund's own documents before you invest.

What a money market fund is

An MMF is a unit trust: many people's money pooled and lent out for short periods. It buys Treasury bills, bank fixed deposits and other short-term debt. Etica's fact sheet, for example, lists cash and call deposits, fixed deposits, commercial paper and government securities. Interest is earned every day. Etica's fund, for example, compounds daily, so each day's interest starts earning too.

You buy units, often by M-Pesa, and sell them back when you need the money.

Who regulates them

Money market funds are collective investment schemes regulated by the Capital Markets Authority (CMA). Each scheme has three separate parties:

• a fund manager, which invests the money;
• a custodian, usually a bank, which holds the fund's assets;
• a trustee, which looks after investors' interests.

For example, Etica's money market fund names Etica Capital as manager, Equity Bank as custodian and Co-operative Bank as trustee. The custodian, not the manager, holds the fund's assets.

Kenyans held KSh 851.7 billion in collective investment schemes in March 2026, up from KSh 756.3 billion in December 2025, according to CMA figures reported by The Standard.

Before you invest, confirm that the fund and its manager appear on CMA's list of approved schemes at cma.or.ke.

What MMFs are paying in 2026

Yields move every week with interest rates. These are effective annual yields before the 15% withholding tax, as listed by Serrari on 1 October 2026:

Serrari's average across 27 funds was 9.16%. Money254's ranking of net returns for the first half of 2026 also put Nabo Africa (9.60%) and Cytonn (9.40%) at the top, with an industry average of 7.62%.

Check whether a quoted yield is before or after fees. Etica's fact sheet, for example, quotes "an effective annual yield, net of fees and gross of withholding tax", with a 2% a year management fee.

Why yields are falling

MMFs earn what short-term lending pays. On 24 September 2026, the 91-day Treasury bill averaged 8.778% and the 364-day bill 9.043%. The Central Bank Rate has been 8.75% since August 2026.

As rates fall, fund yields follow. Etica's money market fund averaged 13.31% in April 2025. On 1 October 2026 it was quoting 10.18%. Do not plan on today's yield lasting a year.

The 15% withholding tax

KRA's withholding tax table sets 15% on interest paid to residents. The fund deducts it before crediting your account. On KSh 100,000 for a year at 9.83%:

• interest before tax: KSh 9,830
• withholding tax: KSh 1,475
• what you keep: KSh 8,355

Inflation was 6.6% in August 2026, so your real gain is much smaller than the headline yield. An MMF protects savings from inflation. It does not make you rich.

How fast you can withdraw

Check for a lock-in period. Etica's shilling fund has none; its dollar fund has one month. A withdrawal usually reaches your M-Pesa or bank in one to three working days.

That makes an MMF right for the insurance fund and the replacement fund, which you know about months ahead. It is wrong for the repairs fund: a car waiting three days for brake pads is a car earning nothing. Keep repairs money in an account you can reach the same day.

Worked example. Put KSh 9,600 a month into a fund paying 9.83% before tax, for an insurance renewal 12 months away. After 12 months you have about KSh 119,500: KSh 115,200 you paid in and about KSh 4,300 in interest after tax. That interest covers the NTSA inspection fee with some left over. See how car owners save for the full plan.

The risks

• Not a bank deposit. An MMF is an investment, not a savings account. Etica's fact sheet states that CMA "does not take responsibility for the financial soundness of the scheme". Yields are not guaranteed.
• Credit risk. A fund that holds company debt (commercial paper) can lose money if that company fails. A yield far above the others usually means more risk. Ask the fund what it holds.
• Unregulated look-alikes. A product called a "fund" is not necessarily a CMA-approved unit trust. If you cannot find it on CMA's list, do not invest.
• Falling yields. As shown above, yields fell by about three points between April 2025 and October 2026.

How to choose a fund for car savings

1. Regulated first. It must be on CMA's approved list.
2. Big and steady over top of the table. A fund a point lower that has been steady for years beats the week's leader.
3. Easy to top up and withdraw. Check M-Pesa paybill or app access, the minimum (some start at KSh 100) and withdrawal time.
4. One fund per goal, or one fund with clear records, so the insurance money is not spent on something else.

Where Gariboss helps

Gariboss does not hold or invest money. It records each car's daily amount into your own M-Pesa till, matches payments automatically and sends an evening WhatsApp report of who paid. Knowing what came in each week tells you how much you can move into savings with confidence.