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KNBS: inflation eases to 5pc despite rising food and petrol prices
Inflation eased to 5.0 per cent despite increases in the price of food and petroleum as electricity bills remained unchanged.The Kenya National Bureau of Statistics (KNBS) data shows that inflation eased from 5.27 per cent and 6.45 per cent a month earlier.This is the fifth month in a row that the cost of living measure has dropped when it stood at 8.01 per cent.Food items that recorded price increases include sifted maize flour, beans, tomatoes and oranges while cooking oil prices were down marginally alongside spinach and cooking gas.Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, meaning it is the main driver of the cost of living.Read more
French oil giant Total to finalise takeover of Gapco ‘in months’
French oil giant Total Outre Mer has set a target to conclude the takeover of Kenya’s largest petroleum importer, Gulf Africa Corporation, in the “coming months”.Total Outre Mer, which owns 92.2 per cent of Total Kenya, announced that minority shareholders as well as India’s Reliance Industries — which owns 76 per cent of Gulf Africa Corporation that trades locally as Gapco — have agreed to sell their shares for cash.The transaction, which is believed to be in the region of $400 million (Sh40 billion), will mark the exit of Indian tycoon Mukesh Ambani (the owner of Reliance) from the local petroleum market.
“The net proceeds for the sale will be finalised on completion of the transaction which is expected to be within the coming months,” Reliance said in a statement. Read more
StanChart launches mobile banking push in Africa as rivals retreat
Standard Chartered is to launch its mobile and online banking platform in eight African countries, its consumer banking chief for the region said, as the lender seeks to grow in Africa at a time when some European banks are retreating. StanChart will launch the service for its 1 million customers in Botswana, Ghana, Kenya, Nigeria, Tanzania, Uganda, Zambia and Zimbabwe in the first half of 2016, the bank's regional head for retail banking Jaydeep Gupta said."Africa's populations are moving quickly to embrace mobile banking and local banks have made material investments on the digital side, so to protect and grow our market share we are investing," he said.Gupta said StanChart hopes to grow long-term retail banking revenues in Africa by three to four times the pace of the region's growth in economic output.Read more
Ecobank: Local banks predicted to resist mergers despite pressure for consolidation
The Kenyan banking industry is not ready to willingly consolidate as most lenders are seeking to protect their niche markets, says a report by Ecobank Resear. The comment comes amidst widely held belief that Kenya is overbanked and the market is ripe for mergers and acquisitions.“Asset strategies are too heterogeneous making it too costly for banks to easily crisscross segments,” said Ecobank Research.The analysts argue that the capital requirements in the country is still low and there is no political goodwill for such consolidation. Read more
Imperial Bank chiefs risk Sh4bn fine over details of bond issue
Directors of the fallen Imperial Bank are facing Sh4 billion in penalties and being backlisted from holding the position in any listed company if the Capital Markets Authority (CMA) finds them guilty of misstating details in their Sh2 billion bond issue just before the bank sank.According to the CMA Act, if found guilty, the chiefs face disqualification from appointment as director, or licensed or approved person of a listed company.They may also be slapped with fines of up to two times the amount of the benefit accruing to the directors by reason of the breach.Lying to the CMA may also attract any additional financial penalties in such amounts as may be prescribed by the regulator. Read more
Focus shifts to bonds after CBK rate slash
Market focus turned to bonds after the Central Bank of Kenya (CBK) cut its rate for the first time, driving up the value of the State paper.The Monetary Policy Committee lowered the Central Bank Rate (CBR) by one per cent to 10.5 per cent on account of declining inflation ( at 5.3 per cent from 6.5 per cent), and a stable shilling supported by the higher forex reserves equivalent to five months of import cover.CBK data shows the volume of bonds traded rose by 299 per cent, with deals transacted up to 177 from 71 .Investors targeted the infrastructure bond, which does not attract taxation. Read more
Agriculture Cabinet Secretary Willy Bett: State permits direct tea export
In an unprecedented move, local companies and farmers’ organisations have been given the go-ahead to directly export tea to international markets.The government’s decision is aimed at cutting off unscrupulous middlemen who have continued to eat into the farmers’ profits.Agriculture Cabinet Secretary Willy Bett said what tea producers endure at the Mombasa port is “exploitative and abusive”.He said the government would not let the unscrupulous middlemen have their way.“The government has introduced several new measures to stamp out the exploitation of tea farmers and tea companies and now counties have been allowed to export the tea directly into the world market and seek those buyers who would buy it at high prices,” the minister told farmers at Kaptel SDA Church, Nandi County, where he commissioned the growing of avocados. Read more
KBA: Self-regulation spells new dawn for Kenya’s banking sector
Kenya’s banking sector is facing a defining moment which holds a key to the industry’s catalytic role as a key driver of economic growth.The sector finds itself in a rather critical mix of things, with a buffet of factors converging to alter the state of play.Smarting from a crisis of confidence arising from trouble in some of the banking institutions, the sector has ushered in a new era of self-regulation in a bid to boost ethics and governance.At the same time, a wave of game-changing financial services innovations continue to hit the market—redefining banking—as the industry’s role as an engine of economic transformation gains more traction.Read more
KRA’s tough call of raising Sh327bn 
The Kenya Revenue Authority (KRA) will need to raise Sh327 billion in two months to hit its tax collection targets.Figures published in the Kenya Gazette indicate that the taxman collected a total of Sh888.1 billion against a target Sh1.215 trillion for the financial year.The performance translates to an average collection of Sh88.8 billion per month.The taxman is likely to miss its full-year tax collection target given the shortfall of Sh327 billion or an average of Sh163.5 billion.This will pile pressure on the Treasury to deepen budget cuts or borrow more at a time when analysts have raised the alarm over the growing public debt. Read more
NSE bear run erodes value of agriculture, loss-making firms
The Nairobi Securities Exchange (NSE) bear run that started has since continued to erode the value of a good number of listed companies, mostly those showing massive losses or negative net worth and agriculture stocks.Top on the list of losers is Uchumi Supermarkets which currently has negative assets implying that its assets cannot pay for its liabilities if called today. That means it is in technical insolvency.Other leading losers include National Bank of Kenya (NBK), Home Africa, Atlas Development and TransCentury. Chief investment officer at Cytonn Investments, Elizabeth Nkukuu, said the cause of the fall in prices was mainly the negative news that had been published relating to the companies. Read more
Kenya demands back Sh4bn from China contractor after JKIA deal is cancelled
Kenya is demanding a refund of Sh4 billion from a Chinese firm whose contract to build the second terminal at the Jomo Kenyatta International Airport (JKIA), Nairobi was cancelled amid fears the botched deal could cost taxpayers hundreds of millions of shillings in compensation.Kenya has been in talks with the China National Aero-Technology International Engineering Corporation (Catic) over the past month and negotiations are expected.Transport secretary James Macharia says Catic will have to pay back Sh4 billion as a refund on what the government had paid them before the contract was cancelled.Mr Macharia said no work had been done at the airport despite Catic receiving money from the State amid reports the Chinese firm is demanding billions of shillings as compensation for the botched contract. Read more
EABL warns Sh20-a-bottle row with distributors signals higher beer prices
East African Breweries Limited (EABL) is locked in a row with a section of its distributors over commissions in a dispute that could see beer prices rise by nearly Sh20 a bottle.The distributors, under the Beverage Distributors of Kenya (BDK), are pushing EABL to increase their commissions from the current four per cent to between eight and 12 per cent of the recommended retail price.This sets the stage for another rise in beer prices following an average increase of Sh20 in December with the introduction of new taxes on a number of goods, including water, cigarettes and cars.The distributors currently earn a commission of Sh5.60 to supply a bottle of Tusker and Sh6.40 for Guinness. Read more
NBK bounces back with Sh334.6m quarter one profit
The National Bank of Kenya (NBK) has bounced back to profitability, posting Sh334.6 million net profit with a shocking after-tax a massive jump in provisions for non-performing loans.The lender, however, reported a 32.4 per cent drop in its first quarter profit from the Sh495 million earned.The performance is an improvement on the bank’s loss of Sh1.2 billion, which marked a dip from the after-tax profit of Sh870.7 million and went down as one of its worst performance in history.“The bank enhanced its efforts to recover certain personal and business loans that were non-performing and therefore not earning us interest,” said NBK’s acting managing director Wilfred Musau in an interview.Read more
KCB quarter one net profit rises 6.1pc to Sh4.63bn as bad loans surge
East Africa’s largest commercial bank by assets, KCB, was hit by a Sh7 billion increase in gross non-performing loans (NPLs), even as it recorded a 6.1 per cent growth in net profit. Provisioning for loan losses more than doubled to Sh1.34 billion thereby cutting into the company’s net profit that now stands at Sh4.63 billion in the quarter, up from Sh4.36 billion in the same period.KCB saw its deposits fall by nearly Sh1 billion, amid the industry talk about flight to safety by customers from small banks to big banks after the collapse of several financial institutions. Read more
KCAA: US inspectors in Kenya for direct flights audit
US government officials have arrived in Kenya for an audit of the safety systems and management at the Jomo Kenyatta International Airport (JKIA) as the country prepares to introduce direct flights to the world’s largest economy.The Federal Aviation Administration’s (FAA) safety inspectors, who arrived in the country, will conduct a comprehensive audit of the JKIA to ascertain its compliance with the FAA requirements on safety.The Kenya Civil Aviation Authority (KCAA) director general Gilbert Kibe says the audit follows a visit by the Kenyan delegation to the US led by Transport Cabinet Secretary James Macharia that met officials from the department of transport in America to discuss the same.“The officials are now in the country conducting a comprehensive audit on Kenya’s compliance with the requirements for direct flights to the US,” said Mr Kibe. Mr Kibe said that the US department of transport has given its assurance with regard to giving JKIA a Category One status that would allow for direct flights between Nairobi and Washington. Read more
CBK set to penalise banks that understate bad loans for profits
The Central Bank of Kenya (CBK) will penalise lenders which have understated their bad loans to book higher profits, its head has said.This comes even as non-performing bank loans in the sector rose to 8.2 per cent of total loans, up from 4.6 per cent, with the CBK attributing the spike to compliance with set guidelines.“The ratio of gross non-performing loans to gross loans was 8.2 per cent, partly reflecting better reporting standards,” said CBK governor Patrick Njoroge.Banks have previously been accused of under-reporting bad loans, allowing them to set aside lower provisions and thus push up their profitability.Read more
KRA: Is automation of government processes being underutilised?
Investment in automation of government revenue collection and service delivery processes is expected to enhance revenue collection and at the same time enhance accountability and efficient management of public resources.With Kenya Revenue Authority (KRA) indicating that its tax revenue collection target for the fiscal year is not likely to be met, the effectiveness of KRA tax systems automation has been questioned among other factors contributing to the shortfall. KRA’s plans to outsource a private consultant to support its taxpayer base expansion and revenue enhancement initiatives is a welcome move that is likely to augur well with the frequent public expenditure scrutiny.Read more
Imperial Bank pay plan remains suspended
The Central Bank of Kenya (CBK) and Imperial Bank, which is in receivership, suffered a setback after the High Court declined to lift orders suspending a scheme of payment to depositors, which was being implemented by two commercial banks.Justice Patrick Otieno refused to disallow the extension of the orders as sought by lawyers Philip Murgor and Paul Chege for Imperial Bank and CBK respectively.“To allow the process (scheme of payment) to go on is to disregard the applicants, it will not be just not to extend the orders,” said Justice Otieno in his ruling.Mr Murgor and Mr Chege had urged the court not to extend the orders, an application that was opposed by lawyer Francis Kadima representing Mombasa billionaire Ashok Doshi and his wife, who sued the two institutions. Read more
Kestrel Capital: Treasury's local borrowing exceeds target by Sh100bn
Kenya has over-borrowed locally by about Sh100 billion in the fiscal year surpassing a revised full-year target of Sh191.15 billion, numbers compiled by analysts show.Estimates by Kestrel Capital and Cytonn Investments show the Treasury has borrowed over Sh290 billion largely as a result of lower-than-expected donor disbursements and tax revenues.Kestrel estimated that the Treasury had borrowed Sh275.2 billion, meaning the target had already been exceeded by nearly Sh84 billion. The date of their report, the State has borrowed more through Treasury bills and bonds. Read more
Are new enterprise models disrupting growth?
I attended an Information and Communications Technology for Development conference at the Safari Park Hotel. Participants were largely drawn from the NGOs, research institutions and the donor community.My panel discussion focused on “impact investment,” an emerging concept that puts emphasis on the changing paradigms of foreign aid.The Global Impact Investing Network refers to impact investment as investments “made into companies, organisations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.”It is a form of socially responsible investing that serves as a guide for various investment strategies.Read more
Have corporate leaders lost their ethical obligations
With all the corporate scandals in Kenya, one wonders what is happening to our leaders. It would seem that the moral fabric of corporate Kenya is deteriorating and some leaders seem to place their personal interest ahead of those of other stakeholders, including shareholders.Some of these scandals have meant corporate failures and loss of employment. Why is this happening? Businesses or governments are expected to have good ethical values and act responsibly.Employees probably feel safe going to work in an organisation that has proper ethical values.So how do employees display and practice the correct set of ethical values? The answer lies in leadership. Traditionally, the subject of leadership focused on the primary goal of increasing production and profits. Read more
KRA to auction overstayed imports after amnesty ends
The Kenya Revenue Authority (KRA) will auction overstayed containers at the port of Mombasa  in a move expected to clear unclaimed goods, regional manager Nocholas Kinoti said.The goods set for auction range from kitchenware to tyres, used motor vehicles and sugar. There are also 4,800 bags of Pakistan rice that are slated for the auction, according to a notice the KRA published in the Kenya Gazette on April 19.Despite an amnesty announced three months ago which expired, importers have not claimed their goods as expected, Mr Kinoti said.“We are going to auction all overstayed containers and will hold these auctions regularly. We don’t want importers to keep cargo at the port,” he said. Read more
CBK: Shilling defies CBK rate cut to stay steady
The shilling remained within the month’s range of between 100 and 101 against the dollar even as the Central Bank of Kenya (CBK) cut its benchmark lending rate by a percentage point to 10.50 per cent on Monda.The currency had rallied earlier in May to hit 100 to the dollar, its strongest level in a year after it slipped to 106.1 against the greenback.Reuters reported that commercial banks quoted the shilling at 100.95/05 to the dollar compared with Monday’s close of 100.90/101.00. Read more
CBK: Fall in current account deficit signals machine imports drop
The Central Bank of Kenya (CBK) has raised concern that the sharp decline of the country’s current account deficit signals lower import of machinery.The difference between Kenya’s import bill and value of goods exported has declined to 5.8 per cent of the country’s GDP from 9.8 per cent and is expected to fall further this year to 5.5 per cent.While a narrow current account deficit is preferred for its support to the local currency, the rapid shrinkage has economists concerned as it signals economic slowdown where buying of machinery and plant (and thus foreign direct investment) is falling.“The current account is financed by capital and in the case of Kenya it is foreign direct investments —so what it means is that our financing has come down by that margin really fast,” said CBK governor Patrick Njoroge. Read more
CBK:  Poor dividend season keeps foreign firm’s profit repatriation low and the shilling strong
Lower dividend payout by corporates and intervention by the Central Bank of Kenya (CBK) has helped the shilling hold steady even as dollar demand rises according to analysts.The shilling held at a range of between 100.60 and 100.93 against the greenback according to a Bloomberg News index that tracks the currency, where it has remained steady throughout.This is normally marked by high dollar demand as firms, especially banks with significant foreign shareholding, close register and buy dollars for dividend repatriation.According to CfC Stanbic Bank Regional Economist Jibran Qureishi the current trend is explained by the fact that most companies chalked up below par performance last year and are thus paying less dividend.Read more
Kenya population growth pushes sugar demand to 889,000 tonnes
Kenya’s sugar consumption has increased by three per cent following population growth.Statistics from sugar directorate indicate that consumption stood at 889,233 tonnes from 860,084 tonnes.The statistics paint a picture of fast rising demand, far surpassing the initial estimates of 800,000 tonnes. The directorate commissioned a survey to ascertain the requirement in Kenya.“The study indicates that sugar consumption has gone and has so far passed our initial estimates. We attribute the increased consumption to the growth in population (2.7 per cent),” said Andrew Osodo, head of the sugar directorate.Read more
KenGen stock falls below the cash call offer price at NSE
The KenGen share has slipped below the discounted rights issue price of Sh6.55, dealing a potential blow to the offer as it makes it more attractive for investors to buy the stock in the open market.The share has fallen steadily since the Sh28.8 billion rights issue plan was announced earlier this month, closing at an average price of Sh6.35. The listed power generating company begun selling 4.4 billion new shares at Sh6.55 to its existing shareholders in a cash call targeting Sh28.8 billion, most of it through conversion of government debt to equity.Read more
World Bank gives Kenya Sh15bn for youth jobs
The World Bank has given Kenya Sh15 billion to finance initiatives that help stem the tide of joblessness in the country.The money, which the bank’s directors approved, is earmarked for the establishment of a business grants programme, support companies that offer to bridge jobs skills gaps among college graduates and to strengthen Kenya’s policy on youth development.These are collectively expected to cut poverty levels in the country and put it on a firm path to shared prosperity that narrows the ever-growing socio-economic gulf between the rich and poor.Kenya holds the dubious distinction of being the country with the largest number of unemployed youth in East Africa. Read more
NSE slump pushes pension returns into negative territory
A price slump at the Nairobi Securities Exchange (NSE) and lower earnings from offshore investments pushed pension schemes into negative returns.The schemes recorded a negative 0.2 per cent return over the period compared to a 15.1 per cent gain, a new survey by Alexander Forbes Financial Services shows.The survey which included 373 fund managers holding Sh535.3 billion - more than half the country’s pension industry – showed the best performing scheme posted a return of 15.8 per cent and the worst negative 8.1 per cent.“The weighted average return of the participating schemes was negative 0.2 per cent,” said Alexander Forbes. Read more
Hoteliers to access cheap loans for facelifts
Hoteliers will access cheap loans at interest rates of nine per cent to give facelifts to their facilities in a plan meant to boost the country’s image and attract more visitors.The Ministry of Tourism said it had sought the funds from the World Bank and the French government, to be managed by a yet-to-be determined commercial bank.The hotel refurbishment fund will be used to renovate and expand existing facilities.“We are having talks with the World Bank and French Embassy to put the funds in one of the banks to be issued at rates of between six and nine per cent,” said Tourism Principal Secretary Fatuma Mohamed.“Most of the resort hotels were built in the 1970s hence the need for upgrade," she said.Read more
ICPAK: Lack of accountability threat to Kenya’s long-term growth
Accountability for Economic Growth and Development is the theme of this week’s 32nd Annual Seminar of the Institute of Certified Public Accountants of Kenya (ICPAK).Almost 2,000 accountants are reportedly in attendance and reflecting on Kenya’s political, social and economic challenges and promises, or maybe just thinking about money.The theme is rather appropriate to our democratic and developmental times. We are entering the noisy phase that typically precedes our general elections, with its attendant impacts not just on economic growth but social and political stability.We are in the middle of a mighty brouhaha over the fate of the Independent Electoral and Boundaries Commission (IEBC) (or is it the fate of the individual commissioners?) Read more
Treasury plans mini budget in Sh7bn tax refund
The Treasury plans a second supplementary budget to help clear the Sh7.2 billion backlog of tax refunds, offering relief to firms facing cash flow problems due to the delays.Treasury principal secretary Kamau Thugge told the National Assembly committee on Finance, Planning and Trade that payments for the refunds could also be staggered through the annual budget estimates.Businesses complain that tax is the number one issue that pushes up the cost of doing business, citing by Kenya Revenue Authority’s (KRA) delays in refunding value added tax claims. Read more
Kenya’s economic growth to surpass 3.5pc Sub-Saharan rate, says Rotich
Kenya’s economy will continue to surpass sub-Saharan Africa’s growth rate of 3.5 per cent throughout the year and maintain a 5.56 lead.National Treasury Cabinet Secretary Henry Rotich told 1,800 accountants in Mombasa that despite the global economic slump, Kenya’s economy continued to outdo regional growth by maintaining a higher growth rate.“Due to the global economic challenges, the world economy has been growing at 3 per cent. The sub-Saharan rate is 3.5 per cent while ours is growing at 5.56 per cent. This is very good,” he said.He was delivering a keynote speech during the official opening of the 32nd Institute of Public Accountants of Kenya (ICPAK) seminar at Whitesands Beach Resort in Mombasa.Read more
Co-operative Bank profit rises to Sh3.4 billion
The Co-operative Bank of Kenya's net profit grew by 8 per cent, helped by an upsurge in lending and gains from cost-cutting measures, the lender.The Nairobi Securities Exchange-listed bank announced an after-tax profit of Sh3.44 billion compared to Sh3.17 billion posted in the same period.The bank’s chief executive Gideon Muriuki attributed the performance to a cost-cutting and efficiency drive initiated by the lender.“Operational efficiencies resulting from this project have seen our cost to income ratio improve from a high of 58.8 per cent to 51 per cent,” said Mr Muriuki. Read more
Kenyan auditors to visit US for special Eurobond probe
Kenya’s top forensic auditors will visit London and New York to collect data from international banks that handled the controversial Sh250 billion Eurobond cash, Auditor-General Edward Ouko told Parliament on .Mr Ouko said his office had secured appointments with top US and UK financial institutions as part of an ongoing audit of the $2 billion transaction at the centre of a bruising battle between the Kenyan government and the opposition.The auditors will visit JP Morgan, Federal Reserve Bank, City Transaction Services New York, JP Securities, Barclays Bank, ICB Standard Bank and Qatar National Bank to scrutinise the transactions data, Mr Ouko said. “We are now in a position to say that we have been given appointments to see JP Morgan and other banks that handled the $2 billion Eurobond transactions,” he told the National Assembly’s Public Accounts Committee (PAC).Read more
CMA: Markets regulator limits individual’s shares in NSE to 5pc
The Capital Markets Authority (CMA) has limited individual shareholding in the listed Nairobi Securities Exchange Ltd (NSE) to five per cent in a move that may force sell-offs by some investors. Investors whose shareholding is above the set limits have a six-month period to comply with the regulation.A shareholder can seek exception from CMA to hold more than the prescribed levels. The authority will determine if the applicant meets the requirement which entails integrity, financial standing and absence of criminal record before granting an exception.Shareholding by a private company has also been capped at five per cent while public companies will not be allowed to own more than 10 per cent of the exchange.Read more
NCE: Coffee price rises 5 per cent on high demand at global market
The price of coffee rose five per cent at auction helped by high demand at the New York Exchange.On average a 50 kilogramme bag traded at Sh13,130 up from Sh12,243 in previous trading at the Nairobi Coffee Exchange (NCE).The price at the New York Exchange — which is the benchmark market — went up from US 120 cents a pound to 134 cents, boosting the local sales.“The price of coffee went up this week because of high demand at the New York Exchange which played a significant role in boosting the local sales,” said Daniel Mbithi, chief executive officer at the NCE.Kenya exports nearly 95 per cent of its coffee making it vulnerable to low international prices in times of volatility. Read more
KRA puts rogue bankers on notice over insider loan taxes
The Kenya Revenue Authority (KRA) has fired a warning shot at banks warning that they will be denied tax deductions on bad loans that are issued irregularly or those not fully secured.The KRA’s policy action comes as a number banks struggle with a pile-up of non-performing loans partly informed by insider lending practices, prompting tough action from the Central Bank of Kenya (CBK).Three banks collapsed in a span of nine months egged on by rogue and greedy directors who secretly lent themselves billions of shillings of depositors’ funds, breaching banking regulations.Read more
IRA: Insurance fraud rises over 300pc risking sector profit
The amount of cash involved in insurance fraud more than tripled while the frequency of the crime rose by nearly 22 per cent even as experts said the record is just a tip of the iceberg of total industry fraud. According to a report from the Insurance Regulatory Authority (IRA), Sh366.9 million was involved compared to Sh102.76 million the preceding year. The amount was 0.7 per cent of the total claims.“The amount involved aggregated to Sh366.9 million increasing from Sh102.76 reported. However, this represents 0.7 per cent of the total claims incurred under general insurance business,” said the IRA.Isaac Ng’aru, an insurance expert, said the amounts were probably far higher, but the problem is documenting and proving a case to warrant reporting it to the IRA.Read more
Help Kenya grow, KPMG urges companies
Business leaders should speak out whenever political disagreements threaten economic stability, the chief executive of KPMG, Josphat Mwaura has said.“We cannot sit back when anyone disrupts the business environment that makes it impossible to open our businesses tomorrow,” said Mr Mwaura during launch of this year’s Top 100 small and medium enterprises survey at the Nation Centre in Nairobi.
“Our voice was nowhere as we sat back hoping the political upheavals would pass away and spareour business. We were wrong and never again should the leadership in business remain mute when all is not well. It is the government’s responsibility to ensure that the environment not only accommodates businesses but lures more entrepreneurs to invest money into different enterprises,” he added. Read more
Why intra-trade holds the key to regional growth
As traders rue missed opportunities relating to Uganda choosing Tanzania over Kenya on the pipeline route, other initiatives are going on to spur intra-trade in East African.Hopefully, the initiative by Kenya and Uganda supported by a number of global and regional bodies to create a common platform for facilitating cross-border trade in fish and fishery products, using Busia Border point will succeed.Many times, the cumbersome and punitive inspection protocols for animal, human and plant products across the countries, which have different requirements and standards, has made it difficult for intra trade between the two countries.Read more
CMA extends tax break to non-IPO listing companies
The Capital Markets Authority (CMA) is now extending preferential tax treatment to companies listing by way of introduction as well as cross listings hoping to raise the numbers at the bourse.Firms listing on the Nairobi Securities Exchange can now enjoy a lower corporate tax rate of 25 per cent for five years rather than pay the normal 30 per cent rate, an offer only enjoyed by those listing through an initial public offering (IPO).CMA boss Paul Muthaura said the new rule that took effect — following amendments to the Income Tax Act through the Finance Bill  — is likely to attract more listings especially of SMEs. Read more
KRA: Time to rethink taxation of the informal sector
Calls for meaningful tax reforms have mounted after the taxman collected Sh842.5 billion for financial year. The results are below target of Sh911.6 billion by a significant Sh69 billion.The Kenya Revenue Authority (KRA) however registered 11.7 per cent growth compared to the same period  fiscal year.The missed targets have been attributed to lower performance by the corporate sector, which has led to low income taxes. Taxes in Kenya have been difficult to mobilise for several factors, one of which is the informality of employment in both rural and urban areas.A large informal sector makes broad-based taxation near impossible. With the government commitment not to increase or introduce new taxes in the short term, the question remains on how the Government plans to fund its ever increasing expenditure.Read more
IMF: Africa told to dismantle trade, movement barriers
African economies must reduce trade barriers and make it easier for people and goods to cross borders to boost growth in the face of headwinds from a commodity price drop, African officials and delegates at the World Economic Forum in Rwanda said.The International Monetary Fund said average growth in sub-Saharan Africa would fall to its lowest in nearly two decades this year, at 3 percent, with commodity exporters struggling and government finances coming under pressure."As we develop the regional markets in Africa, we'll reduce the susceptibility of Africa to these global commodity price shocks," African Development Bank President Akinwumi Adesina told a news conference in the Rwandan capital Kigali.Trade between African nations accounted for just 11 per cent of total transactions, compared with Asia where regional trade accounted for 40 per cent and Europe where it was 70 per cent. Adesina said there were some positive signs - Africa-to-Africa investment had climbed, rising from $10 billion to $50 billion a year - although he didn't give a time frame.Read more
CBK imposes cash ratio requirement on microfinance banks
Deposit-taking microfinance institutions will now be required to hold cash with the Central Bank of Kenya (CBK) proportionate to their deposit base following a change of law.Cash Reserve Ratio (CRR) to be held by the micro-lenders will be set by the CBK in a move meant to protect customer deposits while helping the regulator keep a grip on the cash supply in the economy.The microfinance banks currently observe capital adequacy and liquidity ratios similar to banks.“The Cabinet Secretary for the National Treasury, on the recommendation of the Central Bank of Kenya, specifies a microfinance bank licensed under the Microfinance Bank Act, to be an institution for the purposes of section 38 of the Central Bank of Kenya Act,” reads a notice published in the Kenya gazette.Read more
SIB raises valuation of Safaricom share on robust earnings
Standard Investment Bank (SIB) has given the Safaricom share a higher valuation of Sh19.50 after a 19.6 per cent net profit growth, but advised investors to “hold” because the current price was quite close to the previous target figure.The target price is 12.7 per cent higher than the average traded price of Sh17.30 per share. The price is already 8.8 per cent higher than the price when SIB last did the valuation and recommended a “buy”.“We revised our recommendation back to a HOLD from BUY following what we considered robust financial year results for the period. Safaricom has notched 8.8 per cent higher since our last report, and despite a higher fair value,” said SIB in analysis sent to clients. Read more
Equity Bank to service 41 UN accounts in South Sudan contract
Equity Bank is now a major United Nations (UN) banker in South Sudan, a move that could help it revamp operations in the young democracy.The bank said it will host accounts for 41 humanitarian agencies run under the UN umbrella body which are major beneficiaries of donor and international funding in a country rebuilding after decades of war.“We won the tender to bank the UN humanitarian agencies, 41 of them,” said James Mwangi, the chief executive of the bank.“While the commercial sector may not be performing so well, the humanitarian economy which banks in international currencies and pays out in South Sudanese pounds will be very profitable,” he added. Read more
You cannot suckle on the treasury's teat forever, Uhuru tells governors
President Uhuru Kenyatta says county governments must work towards standing on their own two feet financially and not rely solely on disbursements from the National Treasury.In an interview with the press, President Kenyatta said Governors needed to shift from the cultural mindset of asking for handouts from 'serikali' and instead focus on developing their own sources of revenue."When we were in Nyandarua for example, to have a governor come and say oh you know we need your help to get a pyrethrum plant up and running and then I asked the governor, my friend, that's your responsibility. Agriculture is a devolved function. You should have used part of your trips out there to engage individuals who would come and build these plants. This is not for the government to come and do for you. Focus on that and focus less on these other trappings that you people have. We devolved so that counties could be able to focus on those areas that they felt previously were neglected by the national government," he said by way of example.Read more
Nairobi bets on UN forum to market Kenya as safe investment hub
Global trade and investment rules will top the agenda for the upcoming United Nations Conference on Trade and Development (Unctad) XIV to be held in Nairobi.The meeting themed “Translating Agenda 2030 Decisions into Actions”, will take place at the Kenyatta International Convention Centre.“This is the first Unctad conference after the adoption of Agenda 2030 and sustainable development goals. It will, therefore, seek to operationalise the synergies that exist between various outcomes, including the 10th World Trade Organisation Ministerial Conference, COP21 on Climate Change, as well as the International Conference on Financing for Development in Addis Ababa,” says a brief of the agenda for the conference seen by the Nation. Read more
KRA: Why tax authority should work with the central bank
The Kenya Revenue Authority (KRA) must be under some unbearable pressure. Surely they are. I read that they had cautioned commercial banks to exercise due care when it comes to specific loan loss provisioning. Under current laws, specific loan loss provisions are tax deductible; however, there often exists a very thin line between loan loss provisioning for tax deductibility and for accounting or prudential purposes.The former has to be backed by a strong proof of recoverability, often through paperwork, for it to qualify for deductibility. Determination of recoverability sometimes can be a difficult judgment call. To the tax authority, sometimes the causal factors behind recoverability can be temporal and therefore chances of reversal of a borrower’s ‘‘under-water’’ situation could be high: while to the lender, their risk assessments can sometimes show extremely high chances of a borrower drowning.Read more
Imports drop by Sh34bn on reduced global petroleum prices
Kenya’s imports dropped by Sh34 billion on lower petroleum prices and a cutback on food imports, narrowing the country’s trade deficit as exports grew.Official data shows that the country imported Sh321.4 billion worth of goods, down from Sh355.6 billion in a similar period, reflecting a 9.6 per cent drop or a Sh34.2 billion cutback.The period saw the country grow its exports by Sh15.4 billion to Sh146.9 billion, representing a growth of 11.7 per cent.This has helped improve the country’s current account (the difference between the value of exports and imports) deficit to Sh174 billion compared to Sh224 billion.The cutback on imports was due to a lower petroleum import bill which shrank by Sh12 billion to Sh39.5 billion in the review period on reduced global oil prices. Read more
IMF sees rising fiscal deficit as economy’s biggest challenge
The first deputy managing director of the International Monetary Fund (IMF), David Lipton, was in Nairobi this week for high-level engagement with Kenyan authorities, business leaders and representatives of the civil society.Mr Lipton’s visit came after the IMF granted Kenya access to a Sh153 billion ($1.5 billion) precautionary foreign exchange facility to be drawn in the event that the country faces a real external shock requiring injection of foreign currency.The Business Daily caught up with him on Tuesday for a wide-ranging interview on the fund’s engagement with Kenya and the global economic situation. Excerpts.Read more
KenGen gets CMA nod for Sh28bn rights issue
The Capital Markets Authority (CMA) has given KenGen the greenlight to raise Sh28 billion through a rights issue.The NSE-listed power producer said the approval paves way for the cash call to enable it fund its expansion plan by injecting new capital and boosting its capacity to take on new debt. KenGen plans to issue 4.3 billion newly created shares at Sh6.55 per ordinary share at a ratio of two for every share held. KenGen, which is owned 70 per cent by the State, is counting on the rights issue to fund its ambitious expansion plan by providing the new cash and retiring part of its existing debts so it can borrow more.The cash call will see the government convert its loans to KenGen amounting to Sh20 billion into equity, implying that the Treasury will participate in the transaction without providing new cash. Read more
NCE: Poor quality of coffee pulls down the market value
Kenya’s coffee has shed 4.7 per cent of its value as low prices at the premier New York Coffee Exchange and poor quality of local beans rolled back the gains.Data from the Nairobi Coffee Exchange (NCE) indicate the crop earned the country Sh10.1 billion compared to Sh10.6 billion fetched in the comparable period. The volumes of coffee sold through the auction increased to 24.3 tonnes compared with 23.8 tonnes.“This drop is largely attributable to lower prices at the New York Coffee Exchange, which is the global benchmark for coffee prices,” said NCE chief executive officer Daniel Mbithi.Kenya exports nearly 95 per cent of its coffee, making it vulnerable to low international prices.Read more
Kebs summons water bottlers over rise of counterfeit products
The Kenya Bureau of Standards (Kebs) has summoned representatives of water bottling companies for a crisis meeting to discuss the rise of counterfeit products which are posing health risks to consumers.“Kebs has organised a meeting with all water bottling firms in the country following an upsurge of companies that do not follow laid out safety standards. According to records at Kebs, there are 600 registered firms. During the meeting, Kebs is expected to give a directive on water bottling standards,” the State agency said in a letter signed by CEO Charles Ongwae. The Kenya Association of Manufacturers (KAM) supports Kebs’ move to rein in rogue businessmen. KAM said its members were losing billions of shillings to illicit water bottlers. Read more
IMF: Kenya faces higher cost of foreign loans as liquidity tightens
Kenya and other African countries are set to pay high premiums on foreign loans as liquidity in the global financial markets tightens due to risk aversion, the International Monetary Fund (IMF) has warned.
Kenya is among the African countries planning to raise cash from the international markets this year by way of issuing another Eurobond estimated at Sh60 billion.International investors are currently fleeing from emerging and frontier markets to “safe harbours,” IMF first deputy managing director David Lipton said in a speech to students at the Strathmore Business School.“Tighter financial conditions are also going to be a continuing fact of life. There is a degree of uncertainty about financial market developments that is bound to make money harder to come by for African borrowers,” said Mr Lipton.Kenya raised over Sh280 billion ($2.8 billion) through a Eurobond. Read more
CMA approves KenGen’s Sh28.8bn cash call set to start 
The Capital Markets Authority (CMA) has approved Kenya Electricity Generating Company’s (KenGen) Sh28.8 billion cash call which will start on May 23 with the Treasury confirming it will take up its Sh20.2 billion worth of shares.The company said the government, which holds a 70 per cent stake in the power producer, has already undertaken to convert some of its loans into equity through the rights issue — which will considerably reduce the firm’s interest payments. In a statement, KenGen said the rights will be priced at Sh6.55 each, a 22.94 per cent discount on the stock price.The price is also an 18.33 per cent discount on the average price for the 30 trading days preceding the approval of the issue by the board.Read more
ERC: Power levies stagnate for four months, shows data
Power bills will remain unchanged adjustment charges stagnate.Official data indicates that fuel adjustment levy, which is linked to the amount of power generated from expensive diesel and supplied to the national grid, has remained at Sh2.31 kilowatt hour (kWh) of electricity consumed this month.Forex levy, which is passed on to consumers to meet expenses incurred in hard currency by utility firms, has also stagnated at Sh1 per unit, according to the Energy Regulatory Commission (ERC).Rising demand for electricity has prompted Kenya Power to step up the use of expensive thermal power, denying consumers cheaper electricity at a time when the use of low cost geothermal and hydro power has increased. Read more
Economic Survey: Fuel re-exports up on high regional demand
Petroleum re-exports from Kenya climbed 33.9 per cent last year to 752,000 tonnes, representing Sh52.9 billion worth of traded fuel exports, on the back of huge regional demand.Official figures contained in the Economic Survey show Kenya has witnessed a consistent rise in re-exports over the last five years.The country made petroleum re-exports of 561,600 tonnes, amounting to Sh47.1 billion, compared to 111,100 tonnes made representing traded products of Sh9.4 billion.Meanwhile, 55,300 tonnes of petroleum re-sales were made, representing Sh4.8 billion compared to 60,500 tonnes, which represented Sh4.8 billion.Kenya is not a producer of petroleum products but has been importing them for re-sale to Uganda and the wider Great Lakes region.Read more
MP calls for lifting of raw macadamia export ban
An MP wants Parliament to review the Agriculture, Fisheries and Food Authority Act 2013 (AFFA), which prohibits export of raw agricultural produce such as macadamia, cashew nuts and pyrethrum.Maragua MP Peter Kamande has petitioned the Parliament on behalf of concerned macadamia farmers seeking the repeal of section 43 of the AFFA Act which bans export of raw produce except with written authority from the Cabinet Secretary or with the approval of the National Assembly.“Due to the said prohibition, macadamia farmers in the country are suffering and the macadamia industry is on the verge of collapsing,” he said.Mr Kamande said with the collapse of coffee farming, macadamia has been the main source of income thereby ensuring financial stability of the farmers. Read more
Growth rate too feeble to attain Vision 2030 targets
When the Vision 2030 blueprint was launched it was envisaged that Kenya’s economy would grow to double digits within 14 years and edge closer to becoming a higher middle income industrialised nation.In reality, our economy on average has been growing by six per cent. The just released Economic Survey shows an overall growth of 5.6 per cent, an improvement from 5.3 per cent.This economic expansion has been triggered by growth in Kenya’s key sectors of agriculture, construction, real estate, and financial services.As much as this is commendable, it is important to note that to achieve the double digit growth mentioned earlier, would require more deliberate actions by Government to support the industry particularly towards exports development. Read more
Uniform EAC quality checks reduce costs
The cost and time for testing goods at border points have dropped sharply in the region as the five East African states continue to adopt uniform quality standards.It costs an average of Sh20,705 ($205) to test goods meant for regional markets, a 59 per cent drop from Sh50,500 charged before the five EAC states launched their harmonisation and conformity testing programme.A report prepared by an independent consultant and released on Friday shows that it takes only 10 days to test goods as opposed before the programme was launched.“The number of products complying with quality and standards requirements has also increased through certification thus contributing to increased intra and extra EAC trade,” the report sates.The harmonisation, financed by TradeMark East Africa (TMEA) to the tune of Sh1.2 billion ($11.6 million) has been implemented. Read more 
CMA: Maize flour price shoots past Sh100 as shortage hits millers
The price of flour has crossed Sh100, with the cost expected to continue rising as a result of a maize shortage caused by high levels of poisonous aflatoxin in the produce combined with dwindling supplies in the market.Flour prices retailed above Sh100 and the rise is likely to put inflationary pressure on majority of households which rely on the commodity as their staple food.The price of a two kilogramme packet of Jogoo maize meal is retailing at Sh101 from Sh95  while Soko and Pembe are selling at Sh95 in supermarkets. Millers had earlier warned that the cost would rise in the coming.Millers have complained that a lot of maize coming in from eastern region from the short rain crop, which would have supplemented the available stocks in the market. is infested with aflatoxin, stopping them from purchasing it for flour making.The chairman of the Cereal Millers Association (CMA) Nick Hutch. Read more
Investors lose Sh19bn as NSE slips below 4000 points
Investors at the Nairobi Securities Exchange (NSE) lost about Sh19 billion in wealth as the blue chips index fell below 4,000 points .Market capitalisation stood at Sh2.05 trillion compared to Sh2.07 trillion.The NSE 20 Share Index stood at 3964.65 points, down from 4009.26 points.Many counters lost value including those going ex-dividend/bonus mainly banking stocks. Several companies lost value. Kapchorua Tea lost 6.67 per cent, Sasini shed off 5.15 per cent, Housing Finance 6.98 per cent, Uchumi Supermarkets was down 6.25 per cent while KenGen lost 5.26 per cent and Home Africa 6.45 per cent.Read more
EY: Strong dollar forces firms to exit Africa operations
The impact of depreciating currencies against the dollar and the rising cost of lending in the United States was felt in Africa last year as equity firms cashed out of most companies.According to a report by Ernst & Young (EY) and the African Private Equity and Venture Capital Association (AVCA), PE firms sold investments in 44 companies.Kenya is among the four countries accounting for over two-thirds of PE exits.The report shows that in the period, 39 per cent of the ship-outs have been from South Africa, 11 per cent from Egypt, 10 per cent for both Nigeria and Kenya and 30 per cent from other countries on the continent.“The biggest current challenges noted by PE firms included an increasingly tough macro-economic environment, particularly currency fluctuations,. Read more
KRA: The future of taxation in Kenya is compliance
We have seen a number of changes in the way that the Kenya Revenue Authority (KRA) collects tax. Most of the changes have benefited the revenue authority while some benefits have trickled down to the Taxpayers.When we talk of changes in the KRA revenue collection systems, then we ought to mention the digitisation of KRA systems.This is in the form of the introduction of the best platform for compliance so far, iTax, which has replaced systems such as the Integrated Tax Management System (ITMS).iTax was introduced to simplify a regular Taxpayer’s life by giving them the ability to file their Tax returns from the comfort of their homes/business premises and at their convenience. This hasn’t happened without some challenges.Read more
DTB raises stake in Uganda unit with Sh1.1bn injection
DTB Group has invested an additional Sh1.1 billion in its Ugandan unit, raising its stake in the subsidiary. The Nairobi Securities Exchange-listed firm participated in DTB Uganda’s rights issue  that raised a total of Sh1.4 billion. DTB, which previously held a 56.97 per cent stake in the subsidiary, did not say to what level its equity had jumped after the cash call.The move comes soon after the lender invested a similar amount to participate in a rights issue at its Tanzanian subsidiary where it acquired an extra 2.75 per cent stake after taking up shares worth Sh168.1 million left by a section of minority investors.This saw its interest in the subsidiary rise to 65.68 per cent from the previous 62.93. Read more
CMA fires shot over financials cheats
The Capital Markets Authority is mulling over increasing penalties meted on listed companies, which publish erroneous financial statements and those that fail to adhere to the issuance of profit warning.CMA chief executive Paul Muthaura said it is important for the regulator to ensure the fine imposed on the offender is proportionate to the risk exposure on investors.“We are reviewing our internal guidelines to give clearer guidance to the market on how we will be calculating our penalties – it has been noted that some of the penalties are not commensurate to the potential risk exposure to the market,” said Mr Muthaura  in Nairobi.CMA regulations  cap the fine imposed on companies that fail to issue a sufficient profit warning to Sh50,000. Read more
Uhuru calls for more intra-Africa trade
President Uhuru Kenyatta yesterday urged governments to enhance intra-Africa trade through easing business conditions in order to lure investments and better lives.He said this could best be done by improving infrastructure, reducing cost of electricity and filling the gap on disputes resolution.“Africa governments must invest in ICT infrastructure as it helps enhance efficiency and we have to work together to fast-track implementation of electricity projects,” said the president in a speech read on his behalf by Treasury Secretary Henry Rotich.He spoke at the opening of the Ease of Doing Business Initiative Conference at Safari Park Hotel. Read more
Expert group meets in Kenya to discuss continental free trade issues
An expert group comprising representatives of Africa's regional economic communities, the African Union Commission, the Economic Commission for Africa (ECA) and academia is meeting in Nairobi, Kenya, to discuss issues connected to the Continental Free Trade Area (CFTA).The CFTA, which is expected to be in place, will bring together fifty-four African countries with a combined population of more than one billion people and a combined gross domestic product of more than US $3.4 trillion .  With the CFTA, African leaders aim to, among other things, create a single continental market for goods and services, free movement of business persons and investments and expand intra-African trade. The CFTA is also expected to enhance competitiveness at the industry and enterprise levels. The meeting this week will focus on nine issues that can be feasibly achieved or agreed upon ahead of the deadline. These are: trade in goods, trade in services, special African agreement on agriculture, fisheries, industrial pillar, common investment area, trade facilitation and customs cooperation, trade remedies and competition policy and institutional arrangements for implementation. The outcome of the meeting is expected to provide substantial input to the CFTA negotiation process. Read more
NIC Bank’s profit flat as bad debts rise 46.2 per cent
NIC Bank’s bad debts rose 46.2 per cent to Sh13.3 billion in the first quarter ended March, leaving its net profit flat as provisions for loan losses tripled.The bank’s net profit stood at Sh990.7 million in the period compared to Sh993.8 million a year earlier. This came as loan loss provisions jumped 212.2 per cent to Sh1.3 billion from Sh421.1 million.The provisions were the main driver of the 53.6 per cent increase in total operating expenses to Sh2.6 billion.NIC’s loan book expanded by Sh6.4 billion to Sh111.9 billion, which helped to raise total interest income 32.8 per cent to Sh5 billion. Non-interest income, including commissions and forex trading, rose 15.3 per cent to Sh1.1 billion. Read more
DP Ruto calls for tightening of construction regulations
Deputy President William Ruto has called on county governments to tighten construction regulations to avoid a repeat of night's Huruma building collapse.Ruto said the relevant departments should monitor all construction works to ensure safety standards are adhered to."We must make sure that we have buildings that meet the required specifications so that we avoid loss of lives and property," Ruto said.Meanwhile, Interior Cabinet Secretary Joseph Nkaissery has reiterated that they will arrest and prosecute anyone found to have aided and abetted those guilty of constructing buildings which fall short of safety standards."Nobody will be allowed to bring insecurity to this country", Nkaissery said. Read more
Insurance companies in race to meet new capital rules
At least 10 insurance companies are locked in a race to raise a total of nearly Sh3 billion or seek mergers to meet the industry’s new capital requirements. Insurance firms in race to meet new capital rules ahead of time. The list of companies that will have to raise new capital or seek mergers based on their financial results are Metropolitan Cannon, which had Sh65 million in shareholder funds and Resolution Insurance with Sh199 million.While Metropolitan will seek nearly 10 times its current capital, Resolution will need three times its present level of shareholder funds.Under the new law, general insurance companies are required to have at least Sh600 million as capital while life insurers must be capitalized to the tune of Sh400 million. Read more
KRA: Taxman faults CBK bid to have banks increase bad debts class
The Central Bank of Kenya (CBK) and the Kenya Revenue Authority (KRA) have differed over the treatment of non-performing loans (NPLs) in commercial banks for purposes of income tax.While the CBK has asked banks and their auditors to be realistic in providing for bad and doubtful debts, thereby leading to higher provisions for the financial year, the KRA is insisting that it cannot allow for excessive loss provisions that will artificially diminish the amount of tax paid.The banks regulator has lately forced banks to become more prudent in providing for loans that will not possibly be recovered in order to protect depositors’ cash. Read more
Uhuru announces Sh6bn Pan Paper revival plan
The government has announced it has found a "strategic investor" to help revive the collapsed Pan Paper Mills in We buye.President Uhuru Kenyatta said  that the investor had agreed to pump in Sh6 billion after purchasing the company's assets.He said the factory is expected to reopen within three months.The investor, associated with several sugar industries, a plywood firm and an edible oil refinery in the country, is said to have purchased the firm for about Sh900 million, beating five other bidders.The announcement is good news for Bungoma County residents and specifically Webuye town, where many people lost their jobs or business deals when the firm collapsed more than a decade ago. Read more
CBK seizes Sh8bn from Chase Bank directors
The Central Bank of Kenya has seized Sh8 billion from disgraced Chase Bank directors who awarded themselves hefty interest-free loans that brought down the mid-tier lender. Kenya’s banking sector regulator on Thursday said it had confiscated all the prime properties of land irregularly acquired by Chase Bank board members under the guise of sharia-compliant lending.CBK governor Patrick Njoroge said preliminary audit by CBK shows that the directors had awarded themselves 15-year interest-free loans under the guise of Islamic banking.“We have to hold these people to account, the population will not accept that they just walk around scot-free,” said Dr Njoroge at a briefing.CBK collateralised these loans to allow for the re-opening of the bank under the management of KCB. Read more
Kenya reviews tea taxes to boost main foreign exchange earner
Kenya is reviewing taxes and levies on tea production after industry executives and farmers said the charges were putting them at a competitive disadvantage.Producers of Kenya's No. 1 export earner complain about a 1 per cent levy on tea sold at a weekly auction in Mombasa and a 16 per cent value added tax on tea processed and consumed locally.The East African nation is the world's leading exporter of black tea, a crop that offers a livelihood to thousands of small-scale growers who complain not enough cash reaches them.Kenya earned Ksh125.25 billion ($1.24 billion) from tea exports last year on output of 399.21 million kg. A slightly stronger shilling means officials expect earnings to slip to Ksh115 billion to Ksh120 billion.Top buyers of Kenyan tea include Britain, Afghanistan, Egypt, Sudan and Pakistan. Kenyan officials have also been holding marketing trips to Asia in a bid to increase sales of the commodity to countries like China.A Kenyan department of agriculture team is reviewing taxes and levies, the department's principal secretary Richard Lesiyampe said, adding a report was due out shortly. Read more
Lower revenues dip Scangroup earnings
Marketing services firm WPP Scangroup’s net profit for the year  dipped by nearly a quarter on lower revenues and a higher tax rate.The firm, which is listed on the Nairobi bourse, reported after-tax earnings of Sh478.7 million, a 23.4 per cent drop from  Sh625.5 million.The profitability dip resulted from a two per cent decline in revenues to Sh5.02 billion compared to the Sh5.12 billion the firm posted.The firm paid a higher corporate tax of Sh396.6 million as its effective rate increased from 31 per cent to 45 per cent due to deferred tax adjustments, further eating into the firm’s profitability. Read more
KBL: Lobby wants spirits, beer distribution sector opened up
A lobby representing a section of beer and spirit distributors in the country is pushing for opening up of distribution channels to end exclusive contracts in the industry.The distributors largely working with Kenya Breweries Ltd (KBL) who say they are drawn from Central, Mountain, Western, Rift Valley and Coast regions under the Beverage Distributors of Kenya said they are seeking to “streamline the structure, operations and proper regulation in the beverage logistics trade.”They said in a statement that they will embark on aligning distributor contracts with the Competition Act, which was effective, to stamp out price fixing by beverage producers and to allow “a truly open trading platform for all beverage distributors.” Read more
Remove barriers that hinder cross border trade in East Africa
As traders rue missed opportunities related to Uganda choosing Tanzania over Kenya on the pipeline route, other initiatives are continuing to spur intra trade in the East Africa.Hopefully, the initiative by Kenya and Uganda supported by a number of global and regional bodies to create a common platform for facilitating cross-border trade in fish and fishery products, using the Busia border point will succeed.The cumbersome and punitive inspection protocols for animal, human and plant products across the countries, which have different requirements and standards, have made it difficult for intra trade between the two countries.Uganda has a bigger supply for fish products, which on many occasions go to waste, while traders in Kenya face huge domestic demand for fish products that local and export consumption cannot access because of stringent standards and different trade regimes within the two countries.Read more
EAGC: Flour price rally looms in cut maize imports
Maize imports from Tanzania and Uganda dropped by more than half, setting the stage for a rallying in flour prices.A report by Eastern African Grain Council says that imports from Tanzania dropped 50 per cent compared to grains that were shipped.Imports from Uganda dropped 57 per cent, increasing maize shortage that has raised the cost of a 90kg bag to Sh2,500, up from Sh2, 000.“Below average harvests in Tanzania resulted in tightened supplies and reduced exports to Kenya,” says the report.Kenya is a maize-deficit country and it relies on imports from the two East African states to bridge the shortage of 20 million bags that it faces annually. It relies on maize stocks from Tanzania and Uganda to bridge the gap.Read more
ERC rejects firms’ bid to raise diesel prices
The Energy Regulatory Commission (ERC) has rejected a bid by oil marketers to raise diesel prices to compensate them for additional expenses linked to new taxes introduced.Oil dealers reckoned that the regulator failed to include the extra tax on the diesel prices despite paying the government millions of shillings in upfront taxes for the fuel.The excise duty law came into effect, resulting in a Sh2.06 rise in duty on diesel to Sh10.30 per litre. The commission in reaching its decision said all diesel save for a single cargo was discharged at the port, meaning that the oil marketers did not pay the new tax on the larger share of the fuel. Read more
HF profit up 48pc in first quarter on increased lending
Mortgage financier HF Group posted a 47.7 per cent jump in net profit on the back of increased lending.The Nairobi Securities Exchange-listed firm said its net profit in the period stood at Sh327.4 million compared to Sh221.5 million.This came as interest income increased 28.4 per cent to Sh2.3 billion, partly reflecting a 12 per cent loan book expansion to Sh53.4 billion. HF also raised its investment in government bonds and T-Bills to Sh4.2 billion from Sh255 million.“The group also increased its holding of government securities…to take advantage of the improved yields on government paper as well as building a sinking fund towards liquidation of the first tranche of its corporate bond expected in October 2017,” the firm said in a statement. Read more
Mabati Mills profit rises to Sh756 million
Building materials manufacturer Mabati Rolling Mills (MRM) posted a 15 per cent net profit jump in the year ended December boosted by increased sales.The company, whose Sh2 billion bonds mature in October, made a net profit of Sh755.7 million in the review period compared to Sh657 million the year before.MRM made an operating profit of Sh1.9 billion in the period, representing a 2.2 times coverage of its Sh860.3 million finance costs.Its borrowings more than doubled to Sh6 billion from Sh2.9 billion. MRM in 2008 raised a total of Sh2 billion through  corporate bonds.One bond, with a fixed coupon of 13 per cent, raised Sh1.3 billion. The other, whose coupon floats at an extra 1.75 per cent on the prevailing T-Bill rates, raised Sh621.5 million. Read more
SGR will spur economic development in East Africa
It is about 15 months to the eagerly awaited commissioning of the Standard Gauge Railway (SGR) line between Mombasa and Nairobi. This is a massive infrastructural project whose total construction cost has been put at Sh327 billion.Tens of contractors and thousands of hardworking Kenyans in different sections of the 472 km line from Mombasa to Nairobi are currently replacing huge mounds of earth with tonnes of metal that will create the first ever high capacity railway line in the region.The East African region is a perfect example of how land transport infrastructure like a railway line can revolutionize an economy. For more than a century, the East African Railway gave birth to centres, towns and cities along the corridor and across the region. Read more
KRA: Tax reform chorus mounts as KRA misses its revenue target
Calls for meaningful tax reforms have mounted days after the taxman said taxes collected were below  target of Sh911.6 billion by a significant Sh69 billion.The Kenya Revenue Authority (KRA) said it collected Sh842.5 billion — amounting to 11.7 per cent growth. KRA Commissioner-General John Njiraini attributed the missed targets to lower performance by the corporate sector, which he said had led to low income taxes. He added that lower imports during the period caused the related duties to under-perform by a significant margin.Experts blamed the shortfall on “unrealistic” projections for tax revenues in the budget without putting in place the necessary reform measures. Read more
Bidco starts construction of Sh4bn soda and juices plant
Bidco Africa has started construction of a Sh4 billion beverage plant in Thika whose planned commissioning could upset the industry’s domination by industry bigwigs Coca Cola and Del Monte.The factory, which is being funded by the International Finance Corporation (IFC), includes a production and bottling facility for non-carbonated still drinks, carbonated soft drinks and water.The upcoming soft drinks plant is part of a Sh20 billion expansion blueprint that will see Bidco go into other manufacturing streams as it seeks to grow its business four-fold from the present $500 million (Sh50.5 billion) annual turnover.“The groundbreaking for the beverage factory happened  but actual construction started early this month,” said Bidco chief executive Vimal Shah in an interview.Read more
EATTA: Price of tea rises at Mombasa auction as volumes decline
The price of tea at the Mombasa auction rose marginally at auction as volumes of the beverage offered for sale declined.On average a kilogramme of tea fetched Sh209, a 4.5 per cent rise on trading at the  auction.The volumes offered for sale dropped from 5.9 million kilogrammes in the sale to 5.4 million kilos in the sale.“The average price increased to Sh209 when compared to yhe auction where it fetched Sh203,” said Edward Mudibo, managing director of the East African Tea Traders Association.Mr Mudibo said that out of 147,839 packages (9,680,000 kilos) available for sale, 133,585 were sold with 9.64 per cent going unsold. Read more
Kenblest, Fresha join Sh215m Uchumi winding-up petition
Thika-based miller Kenblest Group and Githunguri Dairy, which processes Fresha milk, are among three creditors seeking to join a petition to wind up Uchumi Supermarkets, bringing the total claims in the suit to Sh215 million.The two suppliers and software developer Insync Solutions have filed an application in the High Court, seeking to be allowed to join the petition to liquidate Uchumi, which currently owes its suppliers over Sh3.6 billion.Kenblest Group plans to enter the suit through two of its firms, bread maker Kenblest Limited and its wheat flour arm, Mcneel Millers. Mcneel wants Sh52.7 million recovered, while its sister company is demanding Sh6.1 million.Read more
Tesco to ease beans import terms
UK supermarket giant Tesco is to ease its rules on what sort of green beans it will import from Kenya in future.The chain says its new initiative will save 135 tonnes of edible fine crop from going to waste and should ease the burden facing Kenyan growers trying to produce to specified sizes. Kenyan growers were required to deliver fine beans within a specific size range and to trim them before being packed and shipped to Britain.This move was originally made as a convenience measure to help customers, but after listening to them, Tesco found they prefer their beans uncut.As part of an ongoing review of its food sourcing policy, Tesco has widened the length specifications and stopped the trimming, resulting. Read more
Family Bank receives Sh3.4bn for low cost SME loans
Family Bank has received Sh3.42 billion (€30 million) from European Investment Bank for lower cost long-term loans to small and mid-sized businesses.This is the second tranche by the European lender with the first tranche of Sh2 billion having been secured.The third tranche amounting to Sh1.14 billion is expected in a months’ time, Family Bank said.Small businesses are grappling with high interest rates as rising non-performing loans cloud Kenya’s. Read more
Court stops CBK, Imperial bank from paying depositors
The High Court in Mombasa has suspended a scheme of payment to small depositors of the troubled Imperial Bank being implemented by two banks.Justice Patrick Otieno issued the orders following an application by Mombasa based billionaire Ashok Doshi and his wife Amit. The two have sued Imperial Bank and Central Bank of Kenya.The scheme has been suspended pending hearing and determination of the application.In their suit filed through lawyer Francis Kadima, the couple sought an injunction restraining the CBK and Imperial Bank from continuing with any dealings with their money in any manner, either by investing, transferring to other banks or the Kenya Insurance Deposit Corporation. Read more
KenGen appeals Sh52bn tender award to firm accused of forgery
The Kenya Electricity Generating Company (KenGen) has appealed in court the public procurement appeals body’s decision to award a Sh52 billion tender for supply of geothermal wellheads to a company accused of using forged documents to bag the deal. KenGen has obtained a court order temporarily stopping the Public Procurement Administrative and Review Board (PPARB) from awarding the lucrative tender to RentCo East Africa which has been accused of using a false certificate of incorporation to support its bid for the deal.The PPARB quashed KenGen’s decision to cancel the tender and ordered that the lucrative deal be awarded to RentCo which had partnered with Lantech Africa and Toshiba Corporation. Read more
VAT on service charge hurting hospitality sector
The hospitality and tourism sectors are fragile and majorly anchored on employee capacity.In line with the Vision 2030, the government and all stakeholders are keen to improve the quality of all-round hospitality products, by mounting continuous campaigns and trainings aimed at creating awareness about the importance of providing quality services.Accordingly, to boost the development of the hospitality sector, the government has offered an incentive to employees of this sector to motivate them to work harder.The incentive offered allows the levying of a service charge on services offered to customers in restaurants or hotels.Read more
CBK: Foreign exchange reserves rise to 15-month high as inflows grow
Kenya’s forex reserves have shot up $440 million (Sh44.5 billion) to hit $7.51 billion (Sh760 billion) as favourable macroeconomic conditions led to higher forex inflows and lower outflows.Central Bank of Kenya (CBK) dollar reserves are now at a -high covering 4.89 months’ worth of imports. At the the country had 4.5 month cover at $7.07 billion.Governor Patrick Njoroge said Wednesday the reserves have been pushed higher by improving export earnings, a stable currency and lower demand from oil importers after crude prices plunged.“Inflows from tourism and exports like tea and horticulture are strengthening. There are also portfolio inflows, with investors attracted to invest for the long term because of the favourable environment,” said Dr Njoroge. Read more
NSE: Kenyan telecom giant pushes up trading at Nairobi stock market
Equity turnover at the Nairobi Securities Exchange (NSE) went up 28 percent  to 5.63 million U.S. dollars supported by increased trading of Safaricom shares.The telecom giant moved 13 million shares from the previous trading session's 10.8 million as it held onto the biggest mover top spot, which it had lost.Trading of the stock surged following a 0.6 percent rise in the share price from 0.16 dollars to 0.17 dollars. A total of 19.1 million shares were traded from the 19.8 million shares.Kenya Commercial Bank was the second biggest mover, trading 1.4 million shares but this was a drop from  2 million shares.Diamond Trust Bank (DTB) followed in the third place, trading 774,500 shares. The bank during the trading recorded the highest net foreign inflows of 1.6m dollars, in turn its shares going up by 1 percent to 2.1 dollars.Following the increased trading, the NSE 20 share index gained 0.2 percent to close the day at 3,929.51 while the All Share Index increased with a similar margin to 146.31, mainly propped by the share price in Safaricom shares. Read more
T-bill rates fall as CBK boosts liquidity
The Central Bank of Kenya (CBK) has pumped billions in the financial markets that together with flight of bank deposits led to high subscription for government securities and continued fall in Treasury bill rates.CBK net liquidity injection stood at Sh26.4 billion — comprising a total injection of Sh81.1 billion and reduction of Sh54.7 billion.The single largest injection came from reverse repurchasing agreements of Sh29.8 billion, in which the CBK was paid an interest of 12.66 per cent on average.“The money market was liquid, supported by OMO (open market operations) maturities and reverse repo purchases. The CBK reinforced liquidity distribution in the interbank money market through the reverse repos after a local bank was placed under receivership,” said the CBK in its latest report on financial markets. Read more
StanChart says bonus issue will boost stock liquidity
Standard Chartered Bank Kenya’s upcoming issue of 34.3 million bonus shares will boost the stock’s liquidity and could obviate the need for a share split, the lender’s CEO Lamin Manjang has said.Retail investors in the Nairobi Securities Exchange-listed firm have in recent years pressed for stock splits and bonus shares, arguing that the bank’s shares have become “expensive”.StanChart’s share price reached highs of Sh350 last year, making it the most expensive stock at the Nairobi Securities Exchange (NSE) in nominal terms. Small investors, who have sometimes needed upwards of Sh35,000 to make the minimum investment of 100 shares in StanChart, focus more on the investment threshold and ignore valuation including total issued shares. Read more
Nema hands investors reprieve with caps on audit charges
Investors have been handed a reprieve after environment watchdog started putting maximum caps on fees paid for environmental audits ahead of construction.The National Environment Management Authority (Nema) will now cap the fees based on the risk levels of projects with those deemed to pose great damage to the environment paying a maximum of Sh40 million.Property investors paying environmental impact assessment (EIA) fees as a percentage of the value of projects to Nema, resulting in higher costs for big ticket projects.The EIA fees were initially set at 0.1 per cent of the worth of the project with a cap of Sh1 million. Read more
New East Africa retirement policy in the pipeline
A draft bill is being prepared that could give birth to a National Retirement Benefit Policy, which would then become the official policy document for the six East African Community countries in future.“The draft is being handled by the Treasury and stakeholders are contributing their input and aligning it with the country’s labour laws before it is taken to the Cabinet. We want to come up with a guiding policy that could apply throughout Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan,” said Retirement Benefits Authority chief executive Edward Odundo.He spoke during an Alexander Forbes annual retirement conference in Kwale County.Mr Odundo said a committee had also been set up by EAC member states to harmonise tax regime and retirement issues across the region. Read more
CBK: Small lenders to bear heavy burden of sector shockwaves
Small banks are going to be the biggest bearers of the burden caused by a strong shockwave in the sector following collapse of three banks.The 33 lenders, which share a paltry 20 per cent of the total deposits in the entire sector, are bound to suffer more in the wake of fears that they may sink into deposit freeze as customers seek to “test” their stability.Central Bank governor Patrick Njoroge pledged financial support to these lenders to keep them alive should depositors come calling in a similar panic withdrawal that sank Chase Bank.“Consequently, from tomorrow Monday April 11, 2016, we will avail a facility to any commercial or microfinance bank that comes under liquidity pressure arising from no fault of its own. Read more
NIC Bank injection in Uganda business rises to Sh1.5 billion
NIC Bank has injected an additional Sh376.2 million in its Ugandan subsidiary, raising the cumulative capital investment in the subsidiary to Sh1.5 billion.The new investment is equivalent to one-third of the Sh1.1 billion the bank used to establish the fully-owned subsidiary.“In line with the group’s expansion strategy, NIC Bank injected additional capital of Sh376.2 million into the Ugandan subsidiary to boost their capital ratios and drive business growth,” the Nairobi Securities Exchange-listed firm says in its latest annual report.The additional investment came after NIC raised a total of Sh7.6 billion from debt and equity sources to fund its local and regional expansion plan. The lender raised Sh2.1 billion from a rights issue and Sh5.5 billion from a medium term bond. Read more
CAK accuses banks and millers of colluding to fix product prices
Banks and millers collude to fix market prices, denying consumers an opportunity to choose products based on quality and appeal.Preliminary findings of an investigation by the Competition Authority of Kenya (CAK) have uncovered anti-competitive practices among financial institutions and agro-processing firms whose lobby groups also engage in market zoning.The law imposes a penalty of up to 10 per cent annual revenues on any firm in breach of the competition laws. The CAK however says it will neither publish details of individual firms nor take disciplinary action against them “because they voluntarily submitted the information.”“We are going to give amnesty to these firms but we will closely monitor them to ensure they comply with the competition law, failure to which we will have to punish them,” CAK Director-General Kariuki Wang’ombe told the Business Daily. “The findings have revealed that some of the firms were found to be engaging in anti-competitive behaviour such as zoning and agreeing on specific prices,” he added. Read more
Rotich says road annuity programme still operational
The annuity financing programme for roads, in which commercial banks are to finance contractors, is on course with plans to tarmac the first 500 kilometers of roads already finalise. National Treasury Secretary Henry Rotich said Thursday that contrary to earlier statements – made by him and his Infrastructure counterpart James Macharia – the annuity programme had not collapsed.“Who said that the programme has been abandoned? It is on course and we are going to tarmac 500 kilometers using it,” said Mr Rotich while addressing journalists at the Treasury. Read more
How Deloitte audit row caused a run on Chase Bank
Sharp differences between senior managers of Chase Bank and auditing firm Deloitte on how to handle assets in the lender’s possession under the Islamic banking window triggered a rapid-fire series of events that led to the bank’s collapse.The Business Daily has reliably learned that the outcome of the  audit row is what pushed the SME-focused bank over the cliff, leading to its closure .Chase Bank found itself in a tight position after the Central Bank of Kenya (CBK) directed it to restate its financial results to show the significant changes in its insider lending position that arose from the differences over the method of accounting for the lender’s Islamic banking assets. Read more
Chase Bank, Imperial lock in tea farmers’ Sh4.8bn
The shutdown of Chase Bank has locked in Sh1.9 billion belonging to the Kenya Tea Development Agency (KTDA).The collapse of Chase Bank is likely to have a serious negative impact on KTDA’s liquidity, coming hardly six months after the closure of Imperial Bank cut its access to another Sh2.9 billion.The account in the troubled Chase Bank is one of the 21 that KTDA operates. Managing director Lerionka Tiampati said the agency opted to open numerous accounts in different banks as a risk mitigation measure.The shutdown of Chase Bank brings to Sh4.8 billion the total amount of money that the agency, formed to champion smallholder farmers’ rights, cannot access for its operations. Farmers have previously protested what they saw as low bonus payout by the agency. Read more
ERC: Relief for motorists as petrol price drops 
The price of petrol has dropped to a  low of Sh80.71 per litre in Nairobi, offering a big relief to motorists.Petrol will retail at Sh4.87 per litre, the Energy Regulatory Commission (ERC) announced.This is the sixth drop in a row in the ERC’s monthly reviews and the lowest pump price when the energy regulator started controlling the cost of fuel.But the price of diesel, used for powering industries, trucks and buses, is up Sh0.53 per litre to Sh66.23 in the capital city.The price of kerosene, mostly used by low-income households for lighting and powering cook stoves, also increased Sh1.81 per litre to Sh43.96.The ERC attributed the variation in the price movements of petrol, diesel and kerosene to different import costs of the commodities. Read more
Portland Cement seeks govt partnership in housing deal
East African Portland Cement Company (EAPCC) may be wooing the government into a real estate deal after the company failed to get approval to sell part of their land.The listed cement maker's chief operating officer Albert Sigei told Lands Cabinet Secretary Prof Jacob Kaimenyi this week that the company was interested in partnering with government to put up low cost housing on its vast properties in Athi River.“I know you are passionate about low cost housing and we have ample space on our land in Athi River we are willing to talk about a partnership to develop mass affordable houses,” Mr Sigei said at the launch of the 23rd Kenya Homes Expo in Nairobi.The State rejected a proposal by EAPCC to dispose 1,300 acres of land it has exhausted mining raw materials from in Athi River. Read  more
Barclays Kenya CEO Awori fights to retain brand name after parent’s exit
Barclays Africa Group could still retain its brand name even after its parent company divests from the continent, Barclays Bank of Kenya CEO Jeremy Awori said.Mr Awori said this as he revealed that in the period leading up to the divestment by Barclays Plc, Barclays Africa would retain its brand name.“With the planned deconsolidation it (Barclays Plc) did not say it would conclusively rid of the brand. It depends on who they sell to, and that is not known now,” said Mr Awori as he gave an update on the planned move by Barclays Plc.The mother firm owns 62.3 per cent of Barclays Africa Group, which in turn holds a controlling stake of 68.5 per cent of Barclays Bank of Kenya and shares in 11 other operations in Africa. Read more
Imperial Bank shareholders denied bid to join Sh34bn fraud case
The High Court has declined to enjoin Imperial Bank shareholders in a case the lender filed against 20 companies and individuals in a bid to recover over Sh34 billion they allegedly stole from depositors alongside founder Abdulmalek Janmohammed.Justice Fred Ochieng  ruled that allowing them to join the case as co-complainants might drag it as they intend to pursue conflicting interests from those of the Kenya Deposit Insurance Corporation (KDIC) — Imperial Bank’s receiver manager.The shareholders, in their application, had claimed that the KDIC failed to pursue two companies that were tagged in an audit report as possible suspects in the Sh34 billion fraud. Read more
The real problem with Kenya’s banking sector
Is Kenya’s banking sector facing imminent collapse? This is the question that millions of Kenyans have been grappling with in the wake of the closure of three banks.The answer to that question is an emphatic ‘No’. A close analysis of the entire banking landscape in Kenya reveals an overall rating for the industry of “Good”. This means that overall Kenya’s banking sector remains sound.The analysis is based on 12 parameters assessing asset quality, capital adequacy, earnings and liquidity. There are, however, areas of weakness that need to be addressed. Kenya’s banking sector has grown tremendously. Customer deposits have more than tripled from Sh0.57 trillion to Sh2.6 trillio.Meanwhile, loans and advances to customers more than quadrupled from Sh0.45 trillion to Sh2.3 trillion. Read more
NSE suspends Chase Bank’s Sh10bn bond trading
The Sh10 billion corporate bond issued by the collapsed Chase Bank has been suspended from trading on the Nairobi Securities Exchange (NSE).The NSE suspended the trading of the bond following a directive from the regulator, Capital Markets Authority (CMA).This is the second bank bond to run into trouble after Imperial Bank collapsed  just before it could list its Sh2 billion  bond issued to investors.“Notice is hereby given on the suspension of trading of the Chase Bank Fixed Rate Notes listed on the Fixed Income Securities Market Segment of the NSE, in line with directives received from the Capital Market’s Authority, effective,” said the NSE in a statement released.Read more
Icpak deflects blame, shields auditors over Chase Bank fall
The accountants’ body  shifted blame on the role external auditors played in the collapse of Chase Bank, saying the lender’s directors were squarely responsible for the fall.Speaking in the wake of accusations that the lender’s auditors failed to detect and prevent massive irregularities touching on insider lending, the Institute of Certified Public Accountants of Kenya (Icpak), the body mandated to regulate the profession in the country, absolved the external checkers of any complicity in the collapse“While it is very common to put the spotlight on the role of various regulators and the external auditors, the primary responsibility for fair presentation of the financial results is that of the board of directors. The Kenyan Companies Act is very clear on the duties and responsibilities of the board of directors of any company, whether a bank or otherwise,” said Icpak chairman Fernandes Barasa in a statement. Read more
CfC Stanbic Bank  Jibran Qureishi : Kenya's Eurobond may suffer from emerging markets gloom
The timing of Kenya’s Eurobond issue may be impacted by bad investor sentiments if it coincides with downgrade of South Africa’s credit worthiness.Treasury Cabinet Secretary Henry Rotich was in London  to meet investors in what was billed a "non-deal" roadshow, but Reuters reported that Kenya may return  for a roadshow bond.South Africa, which also held a global conference call with investors on Wednesday for a potential 10-year dollar bond is facing a major downgrade of its bonds to ‘junk’ status the level below which bonds have a higher risk of not being repaid. CfC Stanbic Bank Regional Economist, Jibran Qureishi said that Kenyan debt risks a negative outlook given that investors see Africa as one block. Read more
CMA punishes NBK for breach of profit alert rules
The Capital Markets Authority (CMA) has fined National Bank an undisclosed amount of money for failure to publicly issue a profit warning ahead of announcing a surprise loss.National Bank reported an unprecedented Sh1.15 billion loss for the period ended  without notifying investors as stipulated by capital markets rule.The CMA made a U-turn to punish troubled lender after the regulator had earlier said the lender was in compliance, after the Business Daily highlighted that the bank had flouted listing rules and risked shareholder investments.“Following further discussions with the board and management of National Bank to assess the circumstances that led to the failure to publish a profit warning in a timely manner, the authority proceeded to impose an appropriate financial penalty for the lapse,” the CMA said in a statement. Read more
CMA: Maize flour prices to continue going up 
Millers have warned that the price of maize flour may increase in coming weeks following a grain shortage, putting pressure on households that depend on the cereal as a major source of food. The price of a two-kilogramme packet of maize flour has increased by an average of Sh5 over the past two months on high maize costs. Flour prices have been falling since last September.The maize shortage has raised the cost of a 90kg bag to Sh2,500, up from Sh2,000 and millers say that the situation will worsen until the onset of harvesting.“The supplies of maize have been tight in the market and millers are unable to get enough stocks, this situation would see the price of flour go up in the coming weeks,” said an official of the Cereal Millers Association. Read more
IRA: Mergers seen rising in insurance sector
Regulators are projecting increased mergers and acquisitions in the Kenyan insurance sector, driven by the commencement of higher capital requirements this year.The amended Insurance Act, which comes into effect in June in a phased implementation programme, has adopted a risk-based capital adequacy system that is expected to raise the capital held by some insurers.The Insurance Regulatory Authority (IRA) and the Competition Authority of Kenya (CAK) say the looming higher capital requirements will lead to mergers and acquisitions as institutions seek to beef up their capital to comply.“We believe that with the introduction of the risk based capital in the sector we will expect a lot of movement in terms of capital,” said IRA chief executive Sammy Makove. Read more
Detectives to question Deloitte, CBK officials on bank fraud
Audit firm Deloitte was  drawn into the ongoing huntdown of individuals and entities suspected to be responsible for the turmoil at Chase Bank and National Bank.Ndegwa Muhoro, the Directorate of Criminal Investigations boss, said Deloitte — which is the external auditor of the troubled banks — had been included on the list of those under investigation and will be required to record a statement.Mr Muhoro said Deloitte and Central Bank of Kenya’s (CBK) inspection department officials, have been included in the list of those under investigation for aiding or abetting the massive fraud and theft that is alleged to have taken place in banks.“The team will also grill the firms that audited the banks in question and officers from the Central Bank of Kenya’s supervisory department,” Mr Muhoro said, meaning the CBK itself has not been spared the scrutiny. Read more
TANESCO: Tanzania to export electricity to Kenya
Tanzania is planning a $300 million energy project that will see it export electricity to Kenya. The project is being financed by the African Development Bank (AfDB).Tanzania Electric Supply Company (Tanesco) deputy managing director Deckian Mhaiki told The EastAfrican that part of the project will involve a 2,000MW supply line to Kenya, to be in place.Mr Mhaiki said that Tanesco is in the final stage of floating a tender for the design and construction of the line to a border town in Kenya.He added that Kenya had indicated to Tanesco that it needed about 1,000MW through a double traffic line/ an extension of 1,600km-long backbone electricity transmission line running from the Tanzanian town of Iringa to Shinyanga through the towns of Dodoma and Singida. Read more
BOC Kenya maintains dividend payout despite 35.2pc profit drop
Industrial gas manufacturer BOC Kenya has maintained its dividend payout level despite its profit dropping 35.2 per cent due to increased competition.The company, which is controlled by German firm Linde Group, has proposed a final dividend of Sh3 per share bringing the total payout to Sh5.20 a share. BOC Kenya, which recently appointed a second consecutive female chief executive, made a net profit of Sh148.6 million in the period compared to Sh229.6 million the year before.Sales of industrial and medical gases as well as welding products tanked by a tenth to Sh1.1 billion blamed on imports from rival players and forex losses. “Revenue for the year was down due to increased market competitiveness,” BOC Kenya said in a statement. Read more
Kenyan shilling firms slightly, shrugs bank receivership
Kenya's shilling gained slight ground, shaking off jitters from a day earlier after the central bank put one bank, Chase Bank, under receivership.At 0943 GMT, commercial banks quoted the shilling at 101.20/30 to the dollar, compared with close of 101.30/40.The shilling has appreciated 1 per cent against the dollar."It had weakened a bit on the news for Chase Bank, then there was word that central bank intervened and sold dollars. There was really nothing t weaken it, apart from risk aversion," a senior trader at one commercial bank. Read more
CBK: How Chase Bank director lent himself Sh7.9 billion
roubled lender Chase Bank irregularly advanced Sh16.6 billion to various entities, many of them associated with insiders, without proper security — putting billions of shillings belonging to its 55,000 depositors at risk.Half of the irregular loans went to the bank’s insiders, the Central Bank of Kenya (CBK) said in a statement released  after it placed the lender under statutory management.The CBK statement indicated, for instance, that one director lent himself a total of Sh7.9 billion, mostly without registered collateral and beyond the set regulatory limits.The director lent himself more than the 25 per cent of the total capital limit set in the Banking Act. Read more
Equity trade at NSE drops 33pc
The number of equity trades at the Nairobi Securities Exchange (NSE) declined compared to a similar period pulling turnover down by Sh10 billion.Data from the NSE shows that there were 83,117 equity trade deals carried out in the bourse , compared to 125,915.The quarterly equity turnover declined to Sh36.36 billion from Sh46.34 billion, according to data compiled by Standard Investment Bank (SIB).Although the market has arrested the slide that saw the NSE 20 share index close 21.9 per cent lower, share valuations remain subdued and price movement limited, a scenario that is hurting active trading. Read more
CMA gives Longhorn nod for Sh530m rights issue
The Capital Markets Authority (CMA) has given Longhorn Publishers the greenlight to raise Sh530 million through a rights issue.The NSE-listed firm said the approval paves way for the cash call to enable the company enhance its drive to diversify into the regional African markets, create a new range of products as well as enhance its digital offering.It plans to issue 126 million newly created shares at Sh4.20 at a ratio of 0.86 shares for every share held.The firm's Managing Director Simon Ngigi said up to 10 per cent of the funds raised will be used to build on Longhorn’s digital offering, including growing the number of titles on offer and developing proprietary e-learning platforms.Read more
KRA moves to plug tax leakage loopholes
The Kenya Revenue Authority (KRA) has created a special department to monitor its employees’ engagement with taxpayers in a move that aims to plug the many holes through which it loses billions of shillings in tax leakage.The department, to be headed by a Deputy Commissioner for Ethics and Intelligence, will handle integrity issues arising within and from outside the agency for direct reporting to Commissioner- General John Njiraini.KRA said the head of the department is expected to establish processes that promote ethical behaviour among staff for purposes of improving revenue collection. Read more
New UK, African Trade Insurance partnership will spur development
The UK is a global leader in many of the sectors for which Kenya has greatest demand: infrastructure, advanced engineering, energy, ICT and defence and security.In these and other specialist areas, UK expertise can help accelerate Kenya’s development and economic growth.Kenya is fast cementing its reputation for remarkable economic growth. With GDP growth averaging well above 5 per cent for , impressive improvements in government finances, and falls in oil prices significantly reducing its imports bill, the future is bright for Kenya.The East African Community (EAC) as a whole is emerging as a beacon for trade. It contains fast-developing economies, and last year’s introduction of a single customs territory is already benefiting cross-border commerce. Read more
KRA seeks consultancy to rev up revenue collection
The Kenya Revenue Authority (KRA) is engaging a consultancy to help improve tax collection in the wake of missed targets.The taxman said the consultant would help expand the taxpayer base and support revenue enhancement initiatives.“The consultants must familiarise themselves with local conditions and take them into account in preparing their proposals,” KRA said in a call for bids by interested experts, to be lodged.The KRA is grappling with ways of growing its collections amid massive shortfalls that have interrupted budgetary plans. Fresh data by the Treasury shows the KRA is likely to miss its full collection targets after realising Sh687 billion, with just months to the end of the current budget window.Read more
Coffee prices fall 19pc as quality declines at NCE
The price of coffee has declined by 19 per cent in the last three auctions as the volume of quality beans on sale dwindled.A 50 kilogramme bag of the commodity traded at Sh18,584, down from Sh22,927.The price of coffee had been going up because of quality beans from central Kenya.Farmers from the region have been harvesting their main crop but the main season is expected.Nairobi Coffee Exchange (NCE) chief executive officer Daniel Mbithi said the decline in quality had affected the “good prices” witnessed.“The prices have declined because of low quality beans coming in from the farmers at the moment as the main crop season almost comes to an end,” said Mr Mbithi. Read more
Appetite for Chinese loans risks choking Kenyan economy
The growing appetite for Chinese loans saw Kenyan taxpayers fork out a staggering Sh4 billion as repayment for loans, official government figures have shown.This is a third of the total bilateral debt Kenya repaid global nations during the period, amounting to Sh13 billion.According to the Quarterly Economic and Budgetary Review, Kenya repaid China loans amounting to Sh4.14 billion, comprising a principal amount of Sh3.4 billion and Sh738.22 million in interest.In comparison, the country repaid Japan a total of Sh3.4 billion, comprising Sh2.9 billion as the principal amount and Sh387 million in interes. Read more
ATI: Deal paves way for UK exports to Kenya
British multinationals will find it easier to boost their exports to Kenya after the UK Export Finance (UKEF), an export credit agency, signed a deal with the African Trade Insurance (ATI).The agreement will see the UKEF, which offers payment guarantees to UK exporters, gain access to information about upcoming opportunities for its clients as well as local knowledge of firms and projects.ATI will also provide a platform to raise awareness among project sponsors and investors in African countries of the UKEF support available to Kenyan importers of UK goods and services. “A close partnership between ATI and UKEF will give African buyers and UK suppliers access to each other,” said ATI chief executive officer George Otieno. “UKEF and ATI will be able to identify and promote real business opportunities where UK and African companies can work together, and to provide the local market knowledge needed to facilitate trade.” Read more
Bear market eats Kenya’s stockbrokers’  profits
A tough operating environment saddled by high interest rates and a surge in inflation saw 16 out of Kenya’s 21 stockbrokers’ profits drop, according to financial reports published by close.The industry reported a cumulative net profit decline of 35 per cent to Sh823.5 million from Sh1.26 billion, as revenues shrank with a steady rise in expenses and the fall in brokerage commissions with reduced trading volumes.Industry insiders mainly blamed the steep rise in interest rates from the drop in trading volumes and the subsequent withering of brokerage commissions. Read more
IMF: Kenyan firms raise debts from foreign lenders to Sh850bn
Kenyan companies have increased their borrowing from external sources to an estimated 15 per cent of the gross domestic product (GDP) or Sh850 billion.The International Monetary Fund (IMF) disclosed the preliminary estimate of the private sector foreign debt in its most report on the economy but noted a further assessment of the same would give a more accurate picture of the vulnerability of the corporate sector to external shocks.The IMF said under the programme — in which Kenya is cushioned on forex to the tune of Sh153 billion — several reforms, including improving data on external debt, are supposed to be made to strengthen Kenya’s resilience to shocks.Read more
KROLL Report: UK government now turns its guns on Moi-era looters
The British government has offered to help Kenya trace and recover assets looted by Moi-era power men named in the Kroll Report even as the risk consulting firm said it has only completed a quarter of the job.UK authorities said they are in touch with Nairobi to help identify and seize the more than £1 billion (Sh145 billion) looted from taxpayers and stashed in offshore bank accounts and prime real estate purchases in the UK.The Kroll report uncovered systematic looting of public resources that were subsequently hidden in more than 40 countries and tax havens around the world in the form of cash in banks, land, ranches, and shares in blue-chip companies. Read more
WB: Chinese imports threaten manufacturing goals in Kenya
Kenya is faced with a possible premature decline in industrialisation owing to cheap Chinese manufactured goods and poor domestic conditions, a new World Bank report says.Inadequate infrastructure and policy make the list of local challenges to manufacturing glitter.Released, the report says that Kenya’s manufacturing growth is falling as consumers opt for Chinese goods which are at least 10 per cent cheaper in what could see some industries fold up.Known as de-industrialisation, the decline is a process where a country experiences a reduction in industrial activity and is usually an indicator of a transition to a service economy.Read more
CBK: High interest rates the bane of Kenya’s economic growth
It all started with the efforts aimed at stabilising the Kenya shilling after its worst depreciation.This was due to what economists thought was mere speculation by commercial banks and other financial actors which the country went without a substantive central bank governor.Wiping out excess liquidity and raising interest rates stabilised the shilling by also containing inflation.But these market interventions by the Central Bank of Kenya (CBK) have had a negative impact on the economy as well.Firstly, since it has become lucrative for commercial banks to lend riskless to the government, they can only lend to the private sector industries at a premium that would compensate them for the perceived default risks due to presumed less performing economy.Read more
CA rolls out address system to boost e-commerce
The Communications Authority of Kenya (CA) has started a process to have a nation-wide numbering and addressing system to boost the uptake of e-commerce and improve service delivery.Most homes and small businesses lack proper addresses, slowing down the growth of e-commerce that relies on timely and efficient delivery of goods to customers making orders online of through telephone calls.Players in the delivery and e-commerce space, including Jumia and OLX, have concentrated their operations in major towns with more detailed street and building addresses.Read more
CBK: Interbank rate hits 9pc as banks rush to meet statutory ratios
The interbank market has tightened  to hit a high of nine per cent with some banks increasingly resorting to the Central Bank of Kenya to meet their cash positions.The tightening of the market came as some banks were squaring their liquidity positions, trying to get cash in order to be compliant with regulatory requirements ahead of the (quarterly) reporting deadline.The tightening also came after the deadline for meeting tax obligations passed, indicating money was locked away from the lenders to move into the exchequer accounts.Read more
Kenya GDP growth seen at 5.9pc in 2016, 6pc in 2017 - World Bank
Kenya's economy is expected to expand this year and next, helped by low oil prices, improved agricultural output, supportive monetary policy and ongoing infrastructure investments, the World Bank said.However, the bank said growth could be held back by domestic factors related to the country's next presidential election, scheduled."These include the possibility that investors could defer investment decisions until after the elections, that election-related expenditure could result in a cut back in infrastructure spending, and that security remains a threat, not just in Kenya, but globally," the bank said in a statement on its website.Read more
CBK: Bank holdings of public debt surpass Sh900bn
Banks have raised their holdings of government debt by Sh60 billion to go past the Sh900 billion mark even as interest rates fall and margins on customer loans remain healthy.The lenders held government debt worth Sh908.6 billion up from Sh848.1 billion, CBK data shows.In percentage terms, the lenders hold 56.3 per cent of the debt which stands at Sh1.61 trillion. Total domestic debt has gone up by Sh83.62 billion.The government debt held by commercial banks has gone up by Sh166.1 billion. Total domestic debt stood at Sh1.35 trillion. Read more
Strong regulation exposing ills in the banking sector
The image of Kenya’s banking sector as stable, well-run and highly profitable is starting to unravel with more cases of bank failures, mounting losses and insider fraud coming to light.Increasingly, the lenders are also now reporting larger stocks of non-performing loans and allocating higher sums to cushion themselves from exposure to bad borrowers.This is a far cry when banks reported relatively lower bad debts and provisions despite the tougher operating environment at the time when there was runaway inflation and interest rates of up to 30 per cent.What this demonstrates is that the stellar performance by the industry over the years has been aided by hiding risks and hitherto weak regulation.Read more
Why Kenya should diversify into niche products to benefit from Agoa scheme
Did you know that you can export live chicken and goats duty free to the US under the African Growth and Opportunity Act (Agoa) scheme?A quick examination of the list of products that can be exported to the United States under Agoa, shows a variety of food products such as vegetables, fruits, fruit preparations, meats, grains, nuts, seafood and even broken rice which is not allowed for local consumption in Kenya.It is like an African marketplace, as these are products which are readily available locally and with minimum processing can be exported.Globally, the view has been that the Agoa scheme is mainly used for the export of energy products. This is because 46 per cent of exports under the scheme consist  of crude oil and other energy related products. Read more
 Industrialisation Cabinet Secretary Adan Mohamed: Sacco fund to pinch banks’ earnings
Banks could lose a key loan business once the government establishes a fund where savings and credit co-operative societies (saccos) will borrow money to meet their obligations.The new plan also seeks to create a new window for the groups to directly raise funds from wananchi via sale of shares, thereby enabling them to realise the true value of their stake. Industrialisation Cabinet Secretary Adan Mohamed  told the sacco leaders’ convention at Laico Regency Hotel in Nairobi that the move would enable groups to boost their capital reserves that will be used for expansion, innovation and also help them to undertake various programmes that enhance worth for members’ investments. Read more
Chase Bank gets Sh5bn funding for SME lending
Mid-tier lender Chase Bank has secured Sh5 billion ($50 million) from the African Development Bank (AfDB) for on-lending.Chase Bank chief executive officer Paul Njaga said the facility, already approved by AfDB board, would enable the lender expand lending programmes to small and medium enterprises.Chase Bank is targeting to lend Sh60 billion to the sector. The focus will be on SMEs run by women and youth in sectors such as agribusiness and trade.The bank made the announcement at the Global Entrepreneurship Summit held in Nairobi.“SMEs are the engine of growth of Kenya’s economy in terms of employment creation and income generation. For the sector to grow sustainably, barriers to access financing will need to be addressed,” said Mr Njaga during the signing of the agreement. Read more 
Equity says it paid Sh4.5bn for Congo bank acquisition
Equity Bank has for the first time disclosed details of its acquisition of ProCredit Bank in the Democratic Republic of Congo.The bank said the transaction completed last September was valued at Sh4.54 billion, lower than the Sh6 billion estimate by analysts.The transaction involved Equity Bank ceding 1.8 per cent stake in the group to ProCredit with an additional Sh1.6 billion being cash injection.“The company issued 70,897,782 additional ordinary shares to finance the acquisition of ProCredit Bank DRC, a subsidiary operating in the Democratic Republic of Congo. The value of the shares was calculated with reference to the quoted price of the shares of the company at the date of acquisition, which was Sh40.70 per share,” reads Equity Bank’s. Read more
KRA set to miss Treasury’s Sh1.2trn tax collection target
The Kenya Revenue Authority (KRA) is likely to miss its full-year collection target after realising Sh687 billion to the end of the fiscal year.New Treasury data shows the KRA’s collection for left it with a deficit of Sh527.88 billion against a target of Sh1.21 trillion set by the Treasury for the year.The poor revenue collection run is a continuation from the successive quarters when the KRA failed to meet its target.The taxman missed its half -year tax collection target by a significant Sh47.6 billion, with the Treasury indicating that the shortfall mainly arose from a dip in payroll taxes and delayed application of the Excise Duty Act, Read more
Family Bank’s earnings hit Sh2bn on increased lending and expansion
Family Bank’s net profit  has improved by a tenth to Sh1.98 billion on the back of increased lending to customers following an aggressive expansion campaign.The lender announced that its net earnings grew from Sh1.8 billion as its net loans to customers increased 47.3 per cent to Sh55.9 billion.This increased lending saw the bank’s total interest income grow 40.8 per cent to Sh10 billion, a majority of which came from loans and advances to its more than 1.7 million customers.“The great performance by the bank, though in a very challenging macro-economic environment, vindicates not only our growth strategy but the robust performance culture embraced by staff,” Wilfred Kiboro, bank’s chairman, said in a statement.“We are on course to achieve even greater results as we consolidate our alternative business channels including mobile banking and agency banking.” Read more
IMF projects Sh30bn fall in Kenya’s FDI on oil inflows dip
The International Monetary Fund (IMF) projects that Kenya’s foreign direct investment (FDI) will fall by nearly a quarterr, thanks to a decline inflows into hydrocarbons exploration and an adverse global economy.According to the IMF update on the Kenyan economy, FDI could fall by 23.7 per cent to Sh99.6 billion ($981 million) from the Sh130.4 billion estimated to have been achieved. This amounts to a decline of Sh30 billion.The uncertainty of capital inflows is seen as the main risk factor to the growth of the economy.“A potential increase in volatility of capital flows represents the strongest downside risk; [with] significant uncertainty about FDI in oil and gas exploration,” said the IMF in the staff report.The IMF recommended Kenya receives the precautionary lending facility of Sh15. Read more
TransCentury gets months to clear Sh40bn bond debt
TransCentury bondholders have now given the troubled investment firm additional months to repay the outstanding half of its $80 million (Sh8.1 billion) convertible debt under an agreement reached The Nairobi-bourse listed firm said it had reached an agreement with the majority of its bondholders on the settlement of the bond which matured and that the deal included reducing the debt to $40 million (Sh4 billion).“We have months extension to pay the debt but we are optimistic of clearing it earlier before the new due date,” acting chief executive Ng’ang’a Njiinu told the Business Daily in an interview at his office. Read more
Bonus issue lifts NSE share to a high of Sh27.50
The Nairobi Securities Exchange share hit an all-time high of Sh27.50 Tuesday in the first trading session since the bourse announced a bonus issue that will capitalise Sh650 million from its cash reserves.The NSE share gained the maximum allowable 10 per cent  having opened trading at Sh25, moving 48,700 shares. The exchange announced a bonus issue that will see shareholders get a share for every three held, as its net profit dropped by 4.5 per cent to Sh305.6 million.Investors have, however, factored in the bonus issue —although the shares will eventually carry a price dilution upon listing — as well as the investment plans for the bourse that is set to introduce new products. Read more
Pan Africa buys additional stake in Gateway Insurance
Pan Africa Insurance Holdings has acquired an additional five per cent stake in Gateway Insurance, raising its equity in the subsidiary to 56 per cent.The Nairobi Securities Exchange-listed company first bought into the general insurer, acquiring a 51 per cent stake for Sh561 million.Pan Africa chief executive Mugo Kibati told the Business Daily that the company subsequently raised its interest in Gateway to 56 per cent at a cost of about Sh55 million.The company had announced that it would buy additional shares in Gateway to make the subsidiary’s founders comply with insurance regulations that cap ownership by individuals at 25 per cent. Read more
NSE delays launch of derivatives trade 
The Nairobi Securities Exchange (NSE) will now launch the derivatives exchange, months late due to longer-than-anticipated period for training and preparing market participants for the business.The NSE said the delay was also occasioned by preparation of the systems and processes to be used in the trading of the derivatives business.However, other market players intimated that the delay may also have been caused by the fact that the Capital Markets Authority (CMA) is yet to give a go-ahead on the fees that clients will pay the NSE and the fact that other regulators may have been slow to appreciate their roles in the trading process. Read more
CBK inflation management sets pace for major African markets
The Central Bank of Kenya (CBK) market-oriented approach in dealing with inflation and forex pressure has emerged as a blueprint for African economies with volatile markets, investment bank Exotix partners says.Kenya, faced with a problem of rising inflation and a weakening currency mid last year, instituted two successive base rate hikes (from 8.5 to 11.5 per cent, aggressively defended the shilling and allowed higher rates on government securities to attract foreign exchange.The Treasury has also reacted by tempering spending, thus aligning fiscal policy with monetary policy measures taken by the CBK. Read more
‘A wave of deceit’ costs Mbaru firm, CfC Stanbic Bank Sh418m
An investment bank owned by businessman Jimnah Mbaru and a South African bank have been ordered to pay an investor about Sh418 million arising from what the High Court termed as “a complicated wave of deceit” perpetuated by the two companies.In a judgment delivered by Justice Eric Ogola, Dyer & Blair Investment Bank and CFC Stanbic Bank are to pay Mr John Kung’u Kiarie - a former director of the Kenya Commercial Bank (KCB) - over Sh300 million plus interest at 16 per cent for under-declaring his returns on investment.“It is the finding of this court that the 2nd defendant (Stanbic Bank) joined the 1st defendant (Dyer & Blair Investment Bank) in a complicated wave of deceit whose aim was to trade with the plaintiff’s money without accounting for interest,” Justice Ogola ruled. Read more
KPS: Kenyan firms to get Govt support in international bidding
Kenya’s private sector firms have been urged to form partnerships with foreign companies to avoid being left out of big ticket deals.The Principal Secretary State Department of Public Works Professor Paul Maringa said bigger firms had an array of shared skills that enables them to clinch contracts as well as deep pockets as compared to small individual firms."Look at South African firms that have formed partnerships with Australian firms or the Chinese firms where fifty firms come together to form one company with an unrivalled expertise and funds where their government helps them clinch international contracts across the globe,” he said. Read more
Controlling bank interest rates will stop exploitation
I wish to respond to concerns raised by Mohammed Wehliye’s article in the Business Daily, that poured cold water on my proposed Banking (Amendment) Bill.My proposed law to regulate interest rates is of unique standing. It speaks to the general welfare of the citizenry.It principally intends to provide a mechanism for regulation of banks and financial institutions’ interest rates through the introduction of ceilings.It proposes to put a cap on the rate of interest charged on loans and to fix the minimum rate of interest that these institutions must pay on deposits.The Bill seeks to amend the Banking Act by introducing a new Section 31(a) that requires banks or financial institutions to disclose all charges and terms relating to a loan to a borrower. This is the most fundamental aspect of the proposed law.Read more
StanChart maintains dividend as profit dips 39pc on bad loans rise
Standard Chartered Bank announced a 39 per cent drop in after tax profit weighed down by decreased lending and a sharp rise in non-performing loans.The lender, who had already issued a profit warning last November, reported an after tax profit of Sh6.3 billion down from Sh10.4 billion.“The profit drop was due to three factors: an increase in the non-performing loans portfolio, the financial impact of the restructuring from the updated group strategy and a one-off net capital gain  relating to the disposal of a property,” StanChart chief executive Lamin Manjang noted in a statement. Read more
Ghengis Capital: Oil price rebound raises spectre of rise in inflation
A sustained rebound in the price of oil poses an inflationary risk in the economy with a spin-off expected in transport costs at a time when tax on petroleum products is set to rise.Inflation in Kenya has been tracking downwards due to lower fuel and food prices, standing at 6.84 per cent from 7.78 per cent in  and 8.01 per cent.The price of oil has rebounded sharply, gaining nearly $10 per barrel to $41.50 from $31.“Countries such as Kenya have instituted more taxation on petroleum products, mitigating the cushion that would have existed prior to the new laws. There is a likely risk that the upward movement (to $50-60) would increase inflationary pressures,” said Genghis Capital macroeconomic analyst Kevin Tuitoek. Read more
KEPSA: Private sector workers in Kenya to sign anti-bribery code
Thousands of private sector workers are required to sign a binding anti-bribery code of conduct entered with their employers. More than 400 firms have already signed up in the fight against corporate fraud, a private sector lobby group has reported. Kenya Private Sector Alliance (Kepsa) has said the new code of conduct is expected to enhance the fight against corruption and bribery. “All professional associations and business member organisations that have signed up to the code will also make it a requirement for their members to sign up and abide by the Business Code of Conduct,” the lobby group said in a statement. Private businesses have been accused of propagating corruption to influence the award of tenders, especially in public procurement. In such incidents which are commonplace, prices are often inflated and often, no actual deliveries are made.Read more 
CMA orders Home Afrika to refund bond subscribers Sh300 million
This follows a directive from the Capital Markets Authority (CMA) after Home Afrika was found to have inflated interest rate to make the bond more appealing to potential investors. Home Afrika had targeted to raise Sh900 million through the bond issuance with a return rate of 13.5 per cent. However, the bond managed to raise only Sh301 million after Home Afrika revised the rate of return to 17 per cent. "By marketing the bond as a partially secured bond and further commencing the process of encumbering the assets of a subsidiary of the Issuer (Home Afrika), and by purporting to revise the Coupon Rate to 17 per cent, the Issuer was in contravention of the terms of approval issued by the authority," noted the CMA. CMA ruled that the changes, contrary to the information memorandum Home Afrika presented and terms of approval of the ill-fated bond, constitute a deliberate "misinformation or deception" of the public.
Fidelity sells British fund Duet stake for Sh1.9 billion
Fidelity Commercial Bank has agreed to sell a significant equity stake to British private equity and asset management firm Duet Group for Sh1.9 billion.The third-tier bank ranked number 28 in the industry said the deal, which is subject to regulatory and other approvals, will see the bank’s capital base grow to over Sh3.8 billion.The lender’s managing director Sultan Khimji, however, declined to disclose the size of the stake being taken up by Duet saying further details will be announced.The capital injection will be made through the Duet East African Financial Holdings Fund.Fidelity’s total capital to risk-weighted assets stood at 16.4 per cent against the mandatory 14.5 per cent, giving the lender a thin buffer of only 1.9 per cent on the Central Bank of Kenya (CBK) minimum requirement and putting a strain on the its lending business. Read more
CBK deputy governor says financial inclusion helping fight poverty
Central Bank of Kenya (CBK) deputy governor Sheila M’mbijiwe says financial access has helped address poverty in the country with only Mauritius and South Africa having outdone Kenya in the inclusion.She said this is a cause for celebration as majority of Kenyans are now financially included with the country rated third on the continent. The access points include brick and mortar banks, agency banking and mobile money transfer outlets.“We have 75 per cent financial inclusion which means 90 per cent of Kenyans are within three kilometres of a financial access point,” said Ms M’mbijiwe.The deputy governor said the direct impact of the financial inclusion whose parameters are gauged by the ability of individuals to access basic banking services has seen significant drop in poverty among previously unbanked Kenyans. Read more
Treasury allocates Sh2.7bn for war on corruption
The Treasury has allocated Sh2.7 billion to the multi-agency team to fight corruption in the country.The government has also set aside Sh1.25 billion to pay Evanson Waitiki whose more than 900-acre farm was compulsorily acquired to settle squatters in Likoni, Mombasa.The Treasury has also factored in Sh1.4 billion in the mini-budget that was spent during the El Niño rains.Treasury secretary Henry Rotich said the money has been allocated to the Ethics and Anti-Corruption Commission (EACC), the Director of Public Prosecutions (DPP), the Directorate of Criminal Investigations, the National Intelligence Service and the police to combat corruption. Read more
Rotich opposes MPs’ bid to cap bank lending rates
Treasury secretary Henry Rotich has opposed plans by MPs to cap interest rates at four per cent above the Central Bank of Kenya (CBK) rate.Mr Rotich told the Liaison committee that the Treasury and CBK were working to bring down the interest rates charged on loans by commercial banks and lending institutions.“We have advised that capping interest rates is not a solution. If you fix it (interest rates), banks will check and look for people with high credit scores and lock out those with poor credit records,” Mr Rotich said.“Banks will lend to blue chip companies. If you control prices then you will lock out people from accessing credit,” he added.Read more
ICIFA: 90 financial analysts cleared as new agency moves to weed out fraudsters
Some 90 financial and investment analysts have so far been certified in fresh vetting under a new law meant to rein in quacks and protect investors’ wealth.The Investment and Financial Analysts Act — which came into operation — provides a window for those in the profession to apply for a practising certificate.Those applying will be subjected to tough integrity tests to determine their suitability and must hold globally-recognised professional credentials such as the Chartered Financial Analyst (CFA). The Institute of Certified Investment and Financial Analysts (Icifa) created by the new law said the 90 so far certified work as securities, research and equity analysts, portfolio managers or investment advisers. Read more
Kenya needs viable 21 century economic development model
Two publications covered in the media caught my eye in the past fortnight. The first tells us that Kenya’s growth path, while creditable, has been nothing spectacular; while the other informs us that we were one of the few countries in Africa where the number of dollar millionaires actually rose.Let’s start with Knight Frank’s  Wealth Report which offers that the number of dollar millionaires (that is, those with wealth over Sh100 million) in Kenya grew from 8,760 to 8,962 and that 72 per cent of these millionaires reside in Nairobi, 10 per cent in Mombasa, and the other 1,400 or so are (equitably?) distributed around Kenya.In reverse shilling terms, the Business Daily noted from this report that Kenya now has 462 shilling billionaires (that is, wealth over US$10 million). Read more
Firms to pay a maximum of Sh30m to list on NSE
The Treasury has capped the approval fee payable by initial public offering (IPO) firms and corporate bonds at Sh30 million to encourage listing of more securities.Companies pay a fee of 0.15 per cent to the Capital Markets Authority when listing. A large issue in the size of the Safaricom IPO which raised Sh50 billion would attract a levy of Sh75 million under the rules.With the Sh30 million cap, any company issuing an IPO of more than Sh20 billion will stand to make a saving on the levies chargeable.The Central Depository and Settlement Corporation (CDSC) has also emerged a winner in the revision of capital market levies with the transaction levy charged by the depository rising from the current 0.06 per cent to 0.08 per cent of the value of a given transaction. Read more
KCB gearing to raise tens of billions as capital cover thins
KCB Group, eastern Africa’s largest bank by assets, is set to raise billions of shillings to shore up its capital as its regulatory ratios become tight.The management said in an interview that this follows the reduction in the total capital to total risk-weighted assets (TC/TRWA) to just 15.4 per cent against a legal requirement of 14.5 per cent. This leaves a wiggle room of only 0.9 per cent. The ratio represents the extent to which capital covers risk of loss from loans and is intended to offer a reasonable protection to depositors.The KCB management said details are still being worked but analysts reckon cash likely to be raised would be at about Sh20 billion, and a possible Sh10 billion – bringing the total amount to Sh30 billion.They estimate part of the Sh20 billion will come from a debt instrument to the tune of Sh8-10 billion while the rest would be retained earnings. Read more
Pan Africa Insurance profit falls 97pc on Gateway acquisition
Pan Africa Insurance Holdings has taken a Sh564 million hit from its acquisition of Gateway Insurance, contributing to a 97 per cent fall in the Nairobi Securities Exchange-listed firm’s profit.The company bought a 51 per cent stake in the general insurer for Sh561 million, projecting increased earnings from the subsidiary.Gateway’s performance has however disappointed, a move that has seen the excess value anticipated by Pan Africa surpass the net worth of the subsidiary by Sh564 million.This means Pan Africa paid a hefty premium in the acquisition whose payback is likely to take longer than initially expected.Read more
Treasury pumps Sh4bn more into pension fund
The rising number of civil servants leaving at the end of the retirement freeze has forced the Treasury to seek an additional Sh4 billion for pension, underlining the growing social security burden on taxpayers.The mini-budget that was tabled in Parliament last week shows that the spending on civil servants’ pension is expected to increase 26 per cent or Sh4 billion above the Sh15.2 billion the Treasury set aside for retirees.“There was an extension of the rule whose implication is being felt now and besides, there is usually a pension adjustment of 2.5 per cent,” said Francis Anyona, the director of budget at the Treasury.“This (extra Sh4 billion) is to cover as the expense was high due to age-60 retirees.” Read more
Court stops Barclays from closing its regional centre
The Employment and Labour Relations court has temporarily stopped Barclays Bank from shutting down its regional office in Nairobi, and declaring some staff redundant.Judge Monica Mbaru granted the orders in an urgent application filed by 21 employees who are challenging the planned shut down before redundancy discussions are concluded.The staff, through lawyer Charles Kanjama, said their constitutional and legal rights had been gravely threatened and are likely to be violated if Barclays Bank of Kenya Ltd, and Barclays Africa Group Ltd are allowed to proceed with the intended closure of its regional office. Read more 
KRA: More banks sucked into probe on imports duty evasion scam
The Kenya Revenue Authority (KRA) said apart from Equity Bank, National Bank of Kenya, Commercial Bank of Africa and Cooperative Bank of Kenya were also under investigation over suspected manipulation of customs entries by their employees.“Plans are also underway to expand the investigation scope to cover several other banks,” said spokesperson Grace Wandera.A joint inquiry between Equity and KRA unearthed a syndicate in which traders at the Namanga border post were aided to import goods without paying duty, denying the taxman more than Sh120 million in revenue.Investigations revealed that a total of 2,926 transactions worth Sh123.58 million and involving 916 taxpayers were initiated in the online clearance portal, Simba 2005, without corresponding dealings in the bank’s system to confirm actual payment. Read more
NSE investor wealth up by Sh5.2bn on one-day share rally
Investors at the Nairobi Securities Exchange (NSE) saw their wealth rise by Sh5.2 billion to stand at a total of Sh2.054 trillion.Among the companies whose share prices rose were Safaricom which was up 10 cents to Sh16.50, Crown Paints up Sh5.50 to Sh62 and East African Portland up Sh4 to Sh45.50.Standard Chartered share price also rose by Sh3.00 to Sh203 while CfC Stanbic Holdings went up by Sh1.00 to Sh86.50.Coop Bank share price did not change despite reporting a 36.6 per cent increase in earnings per share before trading began Kakuzi’s price rose by Sh15 a share to stand at Sh316 on the back of robust financial results where the earnings per share were up 229.4 per cent to Sh26.92 and dividend per share was up 33.3 per cent to Sh5.00. Read more
Africa should profile its mineral wealth to attract investors
mining has become a focus for many African countries seeking to widen their wealth base away from just agriculture.During that period, Africa’s economic fortunes have changed dramatically, driven by robust growth in mineral rich countries. Africa boasts of large reserves of the world’s most sought after minerals such as bauxite, cobalt, industrial diamond, phosphate rock, platinum-group metals (PGM), vermiculite, zirconium and rare earths.But the continent remains at the very foot of the technological and skills ladder that it needs to exploit the deposits opening a window for external players to get in. One such country that is offering Africa the mining technology, skills and best practice is Australia.Read more
Court bars CBK from winding up Dubai Bank
The Court of Appeal has stopped the Central Bank of Kenya (CBK) from liquidating Dubai Bank.Judges Alnashir Visram, Hannah Okwengu, and Wanjiru Karanja dismissed an application filed by CBK seeking to stop the ruling by High Court judge Eric Ogola that directed the banking sector regulator to consider a proposal to save the bank from liquidation.“We order that the said orders start running,” the appellate judges said.In upholding the court ruling, the three-judge bench noted that Mr Justice Ogola was driven by the plight of the vulnerable depositors and believed the proposal to revive the bank was worth trying even though he was skeptical it could work.The judges observed that Mr Justice Ogola had just asked the parties to explore other channels of resolving the issue.Read more
ICAEW: UK accounting body sees Kenya's GDP expanding by 6pc
Kenya’s economy is projected to grow by 6 per cent, a UK accounting body has said.The Institute of Chartered Accountants in England and Wales (ICAEW) in its report, Economic Insight: Africa Q1, also projects growth in African economies to average over 4 per cent.But while the global accountancy and finance body points to good news for African economies, it warns that manufacturing, a crucial engine for the economy, still accounts for a small share of output and says the old model of exporting raw materials is becoming unsustainable.“In the East Africa region Kenya’s economy should to expand by around 6 per cent. Thanks to its relatively diversified economy and comparatively low commodity dependence bonding well with the country’s economic growth outlook,” says the report. Read more
Equity, KRA probe unearths Sh120m tax evasion syndicate
Two Equity Bank staff and some Kenya Revenue Authority (KRA) officers face criminal charges after a tax evasion syndicate in which traders at the Namanga border post were aided to import goods without paying duty, denying the tax man more than Sh120 million in revenue was unearthed.A joint probe by KRA and Equity Bank revealed that a total of 2,926 transactions worth Sh123.58 million and involving 916 taxpayers were initiated in the online clearance portal, Simba 2005 without corresponding dealings in the bank’s system to confirm actual payment.“We also conducted computer forensic analysis of the computers at Namanga branch, from which we established that during the period in question only two staff members were accessing KRA IP address,” Gerald Munyiri, head of security at Equity Bank said in an executive brief seen by the Business Daily.Equity, Kenya Commercial Bank and National Bank are authorised to collect revenue on behalf of the KRA. Read more
Treasury withdraws Sh4.9bn set aside for planned National Bank rights issue
The Treasury has withdrawn Sh4.9 billion set aside for participation in the planned National Bank rights issue citing delays in the process.Finance secretary Henry Rotich reallocated the cash in the supplementary budget tabled in Parliament, casting doubts on the execution of the rights issue which has been in the works.“We removed that because it has not taken off,” said Mr Rotich in a telephone interview with the Business Daily.The NBK management in the past has accused the Capital Markets Authority (CMA) of delaying approving the cash call without any solid reason. The CMA has previous attributed its hesitation to a lack of written confirmation from anchor shareholders that they would participate in the rights issue. Read more
UNEP: Weak shilling boosts Nairobi on list of expensive cities
The weakening of the Kenyan currency helped Nairobi improve its standing on the list of the world’s most expensive cities for expatriates, a new report says.The Economist Intelligence Unit (EIU) cost of living survey that was released last week ranks Nairobi at position 78 compared with 69, meaning Kenya’s capital became less expensive for expats.Nairobi is home to the United Nations Environment Programme (Unep), multinational companies and embassies with diplomats, international civil servants and employees being paid in hard currencies such as the US dollar and the Euro.“With the falling cost of oil and a strong US dollar pushing down prices, local inflation has been relatively low across the US. Given that the ranking uses New York as base city, most cities have also become relatively cheaper,” the report says.Read more
Chase Bank blames agency over theft of youth funds
Kenya’s anti-money laundering watchdog, the Financial Reporting Centre (FRC), failed to take action on suspicious transactions in the Youth Enterprise Development Fund’s (YEDF) account at Chase Bank, leading to the loss of Sh180 million, Parliament heard.Anti-money laundering agency ignored youth fund scam signalChase Bank, which hosted the youth fund’s account, told Parliament that the FRC did not act on reports signalling suspicious transactions in the account belonging to Quorandum Limited, the firm that did business with the YEDF.At the time of reporting to the FRC, only Sh6.4 million out the Sh115.7 million in Quorandum’s account had left the bank. Read more
Postbank seeks to issue loans 
Postbank is set to start issuing loans upon conclusion of ongoing talks with the Treasury that include significant capital investment.Anne Karanja, Postbank’s acting managing director, said the bank is looking secure a licence to either operate a new commercial banking subsidiary or launch a deposit-taking microfinance institution.A consultant completed a review of Postbank’s lending capabilities and the bank is implementing the recommendations in consultation with the Treasury, she said.“The bank is making significant progress towards the provision of credit and other commercial banking services … we anticipate to start offering loans,” Ms Karanja said during the launch of a partnership with Visa International. Read more
CBK plans control of inter-bank rate to aid loan pricing
Central Bank of Kenya (CBK) is set to control the rate at which banks lend each other (interbank) so as to make its policy rate more effective in swaying inflation and helping lenders price loans better.The CBK is set to implement an ‘interest corridor’ — setting the upper and lower limits — aligning the interbank rates with the Central Bank Rate (CBR), the International Monetary Fund (IMF) disclosed in a statement.The efficiency of the CBR on inflation and exchange rate has been at times limited by the free movement of the interbank rate which may still provide liquidity in the market at a time the CBK is mopping up cash to rein in inflation. Read more
AfDB gives regional bank Sh4bn to spur growth
The African Development Bank  has extended Sh4 billion to the East African Development Bank to support regional growth.AfDB Regional Director for the East Africa Resource Center (EARC), Mr Gabriel Negatu, said the bank was pleased to partner with EADB in its effort to close financial gaps in the region, thus facilitating growth across the various sectors.EADB said it had been getting increased requests for funds that it is unable to handle given its current balance sheet and therefore approached AfDB to improve its liquidity.“This facility is in line with AfDB’s strategy, which aims, among others things, to deepen financial markets and promote inclusive growth. EADB plays a catalytic role in enhancing growth within the EAC region, supporting various programmes within the region,” said Mr Negatu. Read more
NCE: Coffee price rises as high quality beans increase
Coffee prices increased by 3.2 per cent at auction as quality beans and high international demand continue to push up the value of Kenyan produce.A 50 kilogramme bag traded at Sh22,624  where it fetched an average Sh21,917 before.The coffee price has been rising at the New York exchange from a low of 115 US cents a pound in  sale to 122.“We are witnessing good price because of good quality beans and rising international prices that have helped the local commodity to perform better,” said Daniel Mbithi, the Nairobi Coffee Exchange chief executive.The auction has been enjoying good prices since the  as the much-sought after high quality beans from central Kenya started trickling into the market. Harvesting of the main crop from the eastern part of the country came to an end. Read more
NSE back to positive dollar returns
Dollar investors at the Nairobi Securities Exchange (NSE) have seen their returns rise on the back of a favourable exchange rate environment, lifting the gloom brought by negative returns.Dollar returns at NSE decline as weak shilling spurs exchange-related losses Data compiled by African Alliance shows the dollar return on the NSE FTSE 15 index stood at 4.3 per cent, while the return is also in positive territory at 0.9 per cent.The dollar return stood at a negative 23 per cent, caused in part by a 12 per cent depreciation of the shilling against the dollar and a bearish market whose capitalisation shrunk by Sh251 billion.International investors normally pick their portfolios based on the FTSE NSE indices. The FTSE NSE Kenya 15 Index tracks the performance of the largest 15 stocks ranked by full market capitalisation while the FTSE NSE Kenya 25 Index tracks the performance of the 25 most liquid stocks. Read more
Citi predicts Central Bank Rate cut on stable shilling and low inflation
The Monetary Policy Committee (MPC) is likely to cut rather than raise the benchmark lending rate owing to the stability of the shilling and lower inflation, analysts at Citi say.The next MPC meeting will be held . The Central Bank of Kenya (CBK) held the base lending rate and the Kenya Banks Reference Rate steady at 11.5 per cent and 9.87 per cent respectively.The MPC noted in the January statement that the inflation pressures were temporary, and that the monetary policy measures currently in place are containing any demand pressures in the economy.Read more
Giro Bank profit rises to Sh452m as I&M awaits regulator acquisition nod
Giro Commercial Bank, which is set to be acquired by Nairobi Securities Exchange-listed I&M Holdings, recorded a 12.5 per cent rise in net profit to Sh452.4 million.The small lender had made a net profit of Sh395.5 million, with its performance driven by increased lending and higher income from transactions.
I&M has proposed to fully acquire Giro which had total assets of Sh15.8 billion and total liabilities of Sh12.9 billion, giving it a book value of Sh2.9 billion.Giro has seven branches in the country and will be merged under I&M’s banking business following the acquisition. I&M has not disclosed the value of the transaction that will see it inherit about 9,000 customers from Giro.“Given similarity in strategy (SME and retail focus), we think the acquisition will benefit I&M Holdings on the side of branch expansion given that plans were underway to increase its network,” Standard Investment Bank (SIB) said in a statement.Read more
CMA: CEOs face pay cut as new corporate code comes into force
New rules tying executive pay to the performance of companies have come into force, setting up the top management of the Nairobi Securities Exchange-listed firms that have issued profit warnings for a possible pay cut.The Capital Markets Authority (CMA) gazetted the new corporate governance code, which takes effect immediately, meaning it may start affecting executive pay.The regulations require publicly traded companies to adopt a pay-for-performance formula for remunerating board members and top managers such as chief executive officers (CEOs) and chief finance officers (CFOs). Read more
Sterling Capital analyst: NSE 20 share index hits  high on bank stocks rally
Bank stocks have picked up value as they continue to release financial results, helping the NSE 20 share index record a 4.1 per cent gain.The NSE main index has as a result risen to high of 3980 points.Ten of the 11 listed banks have gained in share prices in spite of mixed financial results from the five that have so far announced results.The spike in share prices has also pushed the sectors market capitalisation into the black, with a gain of 1.1 per cent or Sh7 billion to Sh667 billion.“Banks should stimulate the market as they continue to announce improved results,” said Sterling Capital analyst Eric Munywoki. Read more
CAK raids fertiliser firms Mea, Yara over price fixing
The Competition Authority of Kenya (CAK) raided two fertiliser firms on suspicion of engaging in price fixing.The CAK stormed Nakuru-based Mea Limited and the Yara East Africa, a subsidiary of Yara International, in search of documents to help unravel alleged uncompetitive practices between the two firms—who control about 60 per cent of the fertiliser market.“My officers’ exercised section 32 of the Competition Act which allows us to search business premises,” said CAK director-general Kariuki Wang’ombe told the Business Daily without giving details on fears that it could hurt the investigations.Sources at the competition watchdog said they suspect price collusion between the two firms and the watchdog was seeking board reports, presentations, pricing data and circulars to detect other breaches. Read more
Fastjet announces profit warning, blames 'bumpier' Africa industry
Africa-focused British budget airline Fastjet PLC issued a profit warning citing "prolonged" challenges in the African aviation industry.The low-cost carrier whose entry into Kenyan skies sparked off price wars with regional airlines said challenging market conditions affecting much of the aviation industry on the African continent have been "a lot more prolonged" than it had originally forecast, and therefore, results will be "materially below" market expectations. Fastjet launched Tanzania to Nairobi flights, stepping up competition for Kenya Airways (KQ) and its associate Precision Air which also flies the same routes.The company's shares dropped 34 per cent after the profit warning announcement. Read more
Uchumi’s networth turns negative as liabilities surpass assets by Sh182m
Uchumi Supermarkets’ total liabilities have surpassed its assets by nearly Sh200 million, putting the firm in a negative equity position.Uchumi becomes the second Nairobi Securities Exchange (NSE) traded company to have a negative shareholder equity balance after national carrier Kenya Airways.This means Uchumi and Kenya Airways’ shareholders would not get a cent if the companies were to be liquidated .Uchumi’s heavy debt load of Sh6.3 billion against a total asset base of Sh6.1 billion has crystallised into a negative equity of Sh181.8 million, or Sh0.49 per share as per half-year financial statements.Uchumi and Kenya Airways are now relying on the goodwill of creditors to keep operating, as they scramble to craft a turn-around plan. Read more
CBK to unveil new loan pricing instrument
The Central Bank of Kenya will unveil a pricing mechanism that allows borrowers to compare different bank loan costs on standardised parameters, rather than on interest rates alone.The Annual Percentage Rate (APR) pricing model will further allow consumers compare lending rates offered by banks on a common computation model.The CBK, however, does not have a specific date of introducing the mechanism. This move follows failure by the Kenya Bankers Reference Rate (KBRR) to tame interest rates.“Very soon the will have an APR facility where borrowers will be able to compare what banks are offering and what the true market rate is,” governor Patrick Njoroge told Parliament last week.The APR captures the one-off loan processing fee, insurance cost, security charging expenses and the actual interest charged on a loan facility.Read more
KRA: Excise duty stamp sets stage for fresh consumer price rise
Consumers of excisable goods will pay more when the Sh1.50 excise duty stamp fee and other costs associated with installation of a new sin tax system, manufacturers have said.Brewers, juice processors, soft drink makers and water bottling firms are up in arms against the new stamp cost whose use the Kenya Revenue Authority (KRA) began for beer makers and later for soft drinks.The manufacturers have promised to pass on the costs associated with installing of the so-called excise goods management system to consumers, setting them up for retail price inflation. Read more
CBK says rolling out new-look currency to cost Sh18 billion
The printing of a new-look currency to meet a constitutional requirement will cost the country Sh18 billion, the Central Bank of Kenya (CBK) said.CBK Governor Patrick Njoroge told the Senate that the bank missed the planned deadline to roll out the new currency notes as stipulated in the new Constitution following the cancellation of the tender.The tender was cancelled after the bidders quoted a zero price. The CBK, in consultation with the Attorney-General, ruled the move illegal.The Constitution bars the use of portraits or images of individuals on currency, stating that notes and coins should only bear images that depict or symbolise an aspect of Kenya, meaning the current notes in circulation violate this rule. Read more
Howard Humphreys: London firm targets E. Africa projects with buyout
London Stock Exchange listed engineering firm Atkins is seeking a share of East Africa’s major engineering projects with a buyout of Howard Humphreys at an undisclosed amount.Howard Humphreys whose annual revenue is Sh1.2 billion helped design Garden City, Coca Cola headquarters, the new terminal at Jomo Kenyatta International Airport, Lake Turkana Windpower project among others.The buyout will offer the global players access to Kenya, Tanzania, South Sudan, Rwanda and Ethiopia markets where the company operates.Atkins Middle East and Africa CEO Simon Moon said they were hoping to build their Africa’s presence to match the Middle East portfolio of over $300 million in annual turnover. Read more
Kroll Associates: Moi era men face multi-billion shilling asset seizure
Moi-era men named in the Kroll Report face asset seizure after a lawmaker petitioned the National Assembly to make the report public and recover assets from those alleged to have looted taxpayers’ money.Mukurweini MP Kabando wa Kabando is seeking to compel the government to seize the more than £1 billion (Sh142 billion) looted from taxpayers and stashed in offshore bank accounts and prime real estate overseas, according to a forensic study by Kroll Associates.The lawmaker, in a letter to the Speaker, says the report shows systematic looting of public resources and hidden in more than 40 tax havens around the world by way of cash in banks, land, ranches, and shares in blue-chip multinationals.
“On several occasions, I requested statements … on the status of the Kroll report regarding accumulated illicit capital flight from Kenya,” said Kabando in the letter addressed to National Assembly speaker Justin Muturi. Read more
CfC Stanbic profit dips as Juba forex crisis erodes Sh7bn
CfC Stanbic Bank has reported a 14 per cent dip in net profit largely attributed to lower non-interest income and a drop in earnings from its Juba subsidiary, where the lender suffered a Sh7 billion hit linked to devaluation of the South Sudan currency.The Nairobi bourse-listed lender made a profit of Sh4.6 billion  compared to Sh5.4 billion, blamed on decreased transactional income from the South Sudan business.Juba’s balance sheet — when booked in Kenyan currency — contracted massively to Sh1 billion from Sh8 billion after the South Sudanese pound was devalued by 84 percent to match black market prices. Read more
CBK yet to to print new currency notes despite Cabinet approval
The Central Bank of Kenya has failed to print new currency notes in line with the Constitution despite Cabinet approval.It emerged that the Cabinet gave CBK the go-ahead to develop and begin rolling out the new notes.Correspondence between the Commission on Administrative Justice (the Ombudsman) and CBK seen by the Daily Nation indicates that the Cabinet agreed with the newly-designed notes, paving the way for their printing.The Ombudsman, Mr Otiende Amollo, wrote to CBK Governor Patrick Njoroge asking to be informed of the progress made in printing the new currencies.“The commission received a further communication informing us that CBK had received Cabinet endorsement of the new currency concept designs and embarked on the process of developing the technical currency designs. Read more
Barclays sale leaves customers, NSE shareholders in suspense
Shareholders and customers of the NSE-listed Barclays Kenya may have to wait to know the new majority owners of the bank, following the London parent’s confirmation of plans to sell its stake.Barclays Africa’s equity is valued at more than £3.4 billion (Sh480 billion), according to the lender.Chief executive Jes Staley said the multinational will “sell down” its stake in Barclays Africa due to increased regulatory and capital pressures facing global banks.“We are announcing our intention to sell down our 62.3 per cent interest in our African business … to a level which will permit us to deconsolidate it from an accounting and regulatory perspective,” he said. Read more
SCB: Tough for Kenyan firms as demand drops
Kenyan businessmen had a difficult time as demand for their products fell forcing them to scale down their intentions to hire new employees.The Standard Chartered-MNI Business Sentiment Indicator (BSI), a survey that measures business confidence, dropped to a low with a score of 57 down from 63.9.Analysts at StanChart said the drop reflected a seasonal dip with businesses having enjoyed busy period in owing to holiday spending and back-to-school shopping.“The more negative view of the Kenyan economy revealed by our BSI does not correlate with our view that the economy continues to grow strongly and is likely to see stronger economic momentum,” said Standard Chartered’s chief economist for Africa, Razia Khan. Read more
NSE investors trade cautiously with eye on company earnings
The Nairobi Securities Exchange (NSE) has been oscillating within a tight range as nervous investors trade cautiously with a keen eye on company earnings and developments in the political scene.The NSE 20 share index has held between 3750 and 4000 points, with the market unable to sustain either a rally or price decline beyond a few sessions at a time.Market capitalisation has moved up and down between Sh1.92 and Sh2 trillion, returning to the Sh2 trillion level for the first time.There has been limited corporate activity in the period, meaning that there has been little to excite investors in the market and fuel a share price rally or fall.Read more
ERC: Petroleum consumption hits record high on low pump prices
Kenya’s consumption of petroleum hit a record high as motorists took advantage of lower pump prices to fill their tanks and keep their cars on the road, newly released industry data shows.Consumption of petroleum rose to 1.5 billion litres up from 1.2 billion litres or a 25 per cent growth — the highest rate ever — according to the Energy Regulatory Commission (ERC).The growth was mainly driven by private cars that accounted for more than a quarter of the totalconsumption.“Consumption of super petrol has significantly increased as more people get their cars on the road, encouraged by the psychological comfort that fuel is now cheaper, hence more road trips,” said Edward Kinyua, the acting director of petroleum at the ERC. Read more
KAA: Police put Nairobi, Mombasa airports on high security alert
Kenya stepped up surveillance at its airports in the wake of reports that Somalia-based Al-Shabaab terrorist group planned to attack aviation facilities in Nairobi and Mombasa.Kenya Airports Authority (KAA) acting managing director Yatich Kangugo termed the action “precautionary”, adding that the country’s airports and airstrips were not under imminent threat.“We wish to inform the general public that the aviation industry is very sensitive to all security matters. We take proactive action on any intelligence information however frivolous it may seem,” Mr Kangugo said.“KAA is aware of the prevailing global terrorism threat by among others Al-Shabaab who have issued threats against Kenya. We have consequently raised our operational threat category to high alert in conjunction with other national security organs who have increased vigilance to counter any potential threats.” Read more
Barclays CEO reassures depositors over Africa exit
Barclays Bank  moved to assure customers that its Kenyan operations will not be affected by the planned Africa exit of UK-based holding company Barclays PLC. Barclays PLC's plan to offload its 62.3 per cent stake in Barclays Africa, which in-turn has a controlling stake in Barclays Kenya, has raised confusion and fears of a possible run on the bank’s deposits.“The first and most important is that Barclays Bank of Kenya is not shutting down. I reiterate Barclays Bank of Kenya is not shutting down,” said Barclays Kenya chief executive Jeremy Awori in a move to iron out customer jitters over the future of the bank.“Secondly your accounts are and continue to be safe and are not impacted in any way by these speculations. I assure you that your money is safe with us and you should not be concerned about the operation of your account. We remain, as always, at your service,” the CEO said in a statement. Read more
KNBS: Cheap oil drags down Kenya inflation
The cost of living dropped to 6.84pc from 7.78pc  on lower food and fuel prices, fresh government data shows.“The main contributors to the decline were decreases in the prices of kerosene and cooking gas,” The Kenya National Bureau of Statistics (KNBS) said in a statement.The Food and Non Alcoholic Drinks index decreased by 0.43 per cent, KNBS said.Over the same period the housing, water, electricity, gas and other fuels index decreased by 1.81 per cent. The transport index decreased by 1.62 percent in February compared to the previous month mainly due to reduced costs of petrol and diesel.The National Treasury had earlier warned of risks of imported inflation — with fluctuations in exchange rate, owing to a possible strengthening of the US dollar against the shilling. Read more
MPs in fresh bid to rein in runaway bank interest rates
Parliament has revived its bid to cap bank interest rates in a fresh attempt to arrest the runaway cost of borrowing. MPs are expected to debate the Banking (Amendment) Bill, that seeks to regulate interest rates at no more than four per cent of the base rate set and published by the Central Bank of Kenya (CBK).Mr Jude Njomo (Kiambu), the sponsor of the Bill is also proposing to peg the minimum interest granted on a deposit held in interest earning account to at least 70 per cent of the base rate set and published by CBK.The Bill was formally introduced to the National Assembly after being read a first time and committed to the Finance, Planning and Trade committee for consideration.If enacted into law, banks’ lending rates would be capped at 15 per cent based on the benchmark rate of 11 per cent. Those borrowing personal unsecured loans are paying up to 25 per cent. Read more
CBK: Treasury bill rates decline on high liquidity
Interest rates on the 10-year government bond issued this month fell by nearly two percentage points compared to a similar bond issued on the back of high liquidity in the market, signalling a possible fall in the cost of money.Central Bank of Kenya (CBK) data shows that the 10-year and five-year bond issue will pay interest at 14.26 and 13.94 per cent respectively. Treasury’s 10-year and two-year bond issue had been priced at 16.13 and 15.8 per cent respectively.Investors bid Sh56.52 billion for the bonds  against the government target of Sh25 billion, indicating the healthy amount of liquidity in the market. The government took Sh30.29 billion — Sh5.3 billion above target. Read more
CBK: Banks expect loan default increase on high interest rates
Commercial banks expect non-performing loans to increase during the year due to higher interest rates, government cash-flow problems and tough economic conditions.In a survey conducted by the Central Bank of Kenya (CBK), 46 per cent of credit officers polled said they expected more defaults during the year compared to 32 per cent who predicted improved loan servicing.“The expected increase in NPLs in quarter one may be attributed to various factors including high cost of funds resulting in higher financing costs coupled with a slump in economic activity, which may hamper performance of companies,” reads part of the CBK credit officers’ survey report. Read more
Mortgage firm profit increases to Sh1.2bn
Mortgage lender Housing Finance Group announced a 23 per cent rise in profit after tax to Sh1.2 billion, compared to Sh975 million during a similar period.Group Managing Director Frank Ireri attributed the leap in earnings to a rise in interest income from its banking and mortgage lending subsidiary HFC and profits from sale of properties by HF Development and Investment (HFDI) during the year.“Despite having been a challenging one, we have been able to get a good return. The growth in profitability is mainly due to our diversified banking, property development and insurance strategy,” Mr Ireri said when the group released its full year results at an investor meeting.The company’s net interest income grew by 19 per cent to Sh3.6 billion from Sh3 billion. Read more
KRA impounds 16 containers of contraband sugar
The Kenya Revenue Authority impounded 16 containers stashed with contraband sugar that had been declared as construction materials at the port of Mombasa.The tax collector warned that any public officer found to have colluded with unscrupulous traders will be dealt with according to the law.“KRA has commenced immediate investigations on this act of tax evasion. Such acts undermine our tax collection objectives while frustrating the broader national development agenda geared at promoting Kenyan enterprise,” said a statement from KRA.KRA said it would firmly enforce customs regulations so as to seal all revenue leakages at the port.The authority’s officials found that the 16 containers had been wrongly declared as containing “dividing heads part of grinding machine” and “Truck Boring Mesh” packages. Read more
CBK proposes discount for good borrowers
Central Bank Governor Patrick Njoroge said in a proposal that has received backing from commercial banks that customers who service their loans accordingly would have their loans priced at about 14 per cent. “Information sharing has not managed much in lowering lending rates even for borrowers who have a good record,” Dr Njoroge told a meeting of lenders and firms that appraise prospective borrowers. “A good borrower must be granted a rate lower by 5 per cent (on loans),” added the CBK boss. It would, however, be difficult to extend the benefits to existing loans, Njoroge said, but there was ‘scope’. Lenders have in the past bundled most borrowers on the same risk profile in pricing their loans, because there was no central hub that tracked the repayment histories of prospective customers. In the pricing, the risk of defaulting was loaded on to the eventual interest rates, meaning that good and bad borrowers were awarded the same score. Lenders have shared the creditworthiness of their customers but the focus has been biased towards identifying the riskier borrowers.Read more 
Britam analysts urge State to go slow on borrowing
While releasing their Gross Domestic Product (GDP) outlook, the analysts said cutting debt levels will be key in reviving the struggling economy. “Kenya has failed to meet budgetary targets in recent years, with actual development expenditure only achieving 66 per cent to 80 per cent of targets. This has served to compromise on GDP growth,” noted the managers in the outlook. The asset management firm wants the Government to adopt private sector-led economic growth and also to curb against wastage of development funds. Kenya’s budget deficit as a percentage of GDP has risen to now stand at 8.7 per cent, the widest in East Africa. Foreign borrowing has also increased and by end of last year, it was at 28.5 per cent to GDP. The firm noted that while such debt level is still sustainable, the country remains vulnerable to external shocks such as soaring interest rates and currency movements.Read more 
Safaricom taps big data analytics to grow revenues
Safaricom has hired big data analytics firm, Flytxt to help monetize mobile consumer data and enhance revenues.The Netherlands based company which provides mobile consumer analytics solution services said it would enable Safaricom to improve customer experience through personalized and contextually relevant engagement with customers. Safaricom‘s Consumer Business Director Ms Sylvia Mulinge said better understanding of their  customers would enable them offer individualized services to their customers that help add value to phone usage. Safaricom which boasts of a 25 million client base is East Africa’s largest telecommunications company with a products portfolio in voice, data, mobile money and enterprise segments and is an affiliate of the UK based Vodafone Group. Read more
Mumias seeks Sh2bn more in Treasury bailout
Mumias Sugar is seeking an additional Sh2 billion bailout from the government after falling deeper into the red.The troubled sugar miller posted a Sh1.58 billion after-tax loss compared to Sh1.45 billion net loss.Sugar sales grew by a tenth to Sh2.9 billion, bottled water sales dipped by more than a third to Sh8.6 million, while the energy generation unit recorded zero revenue as the miller did not sell any electricity to Kenya Power.Ethanol sales increased by nearly a fifth to Sh435 million compared to Sh376 million generated. Mumias chairman Dan Ameyo said one of the strategies meant to turnout the sugar miller’s fortunes was “Collaborating with GoK for additional funding of Sh2 billion”. Read more
Ugandan farmers want to cut ties with Bidco
Ugandan farmers want the United Nations Development Programme (UNDP) to cut ties with Kenya’s Bidco and investigate it for alleged malpractices against Ugandan, Kenyan and Tanzanian growers.Bugala Farmers’ Association opposes Bidco Africa’s membership of the Business Call to Action (BCtA) hosted by UNDP. The firm joined the call committing to create 60,000 jobs across the region by 2019.The Business Call to Action — an alliance of six donors including UNDP) — challenges companies to develop innovative business models that achieve commercial success and development outcomes.“For those who know the real business practices of Bidco Africa and its CEO Vimal Shah, the embrace by BCtA of Bidco Africa is a tragedy for smallholder farmers and a major stain on the reputation of UNDP,” says the petition delivered to UNDP . Read more
Six NSE companies in survival dogfight as massive debts hurt
Six Nairobi Securities Exchange-listed companies have accumulated massive debts that have pushed their management into a survival dogfight, exposing the perils of credit-fuelled expansion in tough economic times.The huge debts, which have left some of the firms owing more than their net value, have left investors facing low prospective returns for years to come.Kenya Airways, Uchumi Supermarkets, ARM Cement, Home Afrika, TransCentury and Mumias Sugar Company are all  seeking new cash injections to partly retire their loans and finance ambitious turnaround plans. Read more
Equity, Indian firm in pact to offer low interest loans to solar equipment buyers
Equity Bank has partnered with an Indian solar energy firm to advance buyers of its equipment loans at interest rates of as low as eight per cent.The lender said that the deal with Orb Energy is meant to trigger uptake of solar water heating equipment, solar lamps, solar powered TV and solar panels.Interest on the loans that target homes, retail and businesses will range from between eight per cent to 21 per cent.“We are keen to boost uptake of renewable energy among homes, industries and businesses, hence this arrangement with Orb Energy,” Equity director of operations and customer experience Gerald Warui said 
during the signing ceremony in Nairobi. Read more
CBK: Central Bank wants more time to compel banks to lower lending rates
The Central Bank of Kenya wants Parliament to give it time to compel banks to lower their lending rates instead of imposing caps through the Central Bank of Kenya (Amendment) Bill.The regulator last week published the lending rates of each commercial bank, which showed that lenders were charging up to three times the reference rate set by the CBK.CBK Governor Patrick Njoroge said that given time, the market will force banks to re-price their loans or lose their dominance.“Right now the banks are under a lot of pressure from the population, from you (MPs) and from us as the regulator. They have large margins but they will adjust or lose their positions,” Dr Njoroge said. MPs, through a legislative proposal filed by Sirisia MP John Waluke, want to cap interest rates to five per cent above the Central Bank Rate, which was retained at 11.5 per cent in the monetary policy meeting. Read more
Airtel founder meets Uhuru amid Sh2.1 billion licence row
Sunil Bharti Mittal, the Indian business mogul who founded the giant telecoms company Bharti Airtel, made a quiet but high profile visit to Kenya with a date at State House Nairobi where he met President Uhuru Kenyatta.Mr Mittal, who is the chief executive of Bharti Enterprises, the conglomerate that owns the telecoms firm Bharti Airtel, made the visit at a time when the company’s local subsidiary Airtel Kenya is grappling with a number of regulatory challenges.Mr Mittal, accompanied by Airtel Kenya chairman Titus Naikuni, met Mr Kenyatta at State House where they discussed a range of issues, including Airtel’s support of the public schools digitisation programme. Read more
CBK: Shilling outperforms most African currencies since start of 2016
The Kenya shilling has outperformed the majority of other African currencies in their exchange rate to the dollar.The currency has appreciated to the dollar by 0.5 per cent in the year-to-date exchanging at 101.89 as per the Central Bank of Kenya (CBK) indicative rate, making it the only East African currency rising against the dollar.The shilling’s stable opening to the year has been brought about by benign dollar demand in the market, as well as balanced liquidity that has reduced volatility.Data from respective central banks shows that the currencies of Tanzania, Uganda, Rwanda and Ghana are all weaker to the dollar this year, while the South Africa Rand is only beginning to recover after months of bruising losses to the dollar. Nigeria has been running a fixed exchange-rate policy. Read more
UK sets up Sh74bn war chest to fight for Nairobi exports
Britain announced a Sh74 billion fund to help Kenyans import goods from the UK in the attempt to boost the falling business clout of the former colonial master that started with Kibaki’s presidency.UK’s Trade envoy Lord Clive Hollick, who is expected in the country, is set to discuss details of the fund which also covers UK firms against risks incurred in exporting goods to Kenya.UK Export Finance (UKEF) will coordinate the advance of loans to businesses and entrepreneurs to buy Britain made goods, especially for infrastructure related projects, ultimately boosting the import of British products to Kenya.“Central to his discussions with the government will be UK Export Finance which has set aside up to £500m (Sh74 billion) to support trade with Kenya,” says a statement from the British High Commission in Nairobi. Read more
How investors can manage volatility at NSE equity market
If you’ve looked at the stock market at all, you know it can cause one to cringe.It almost appears to be taking cues from the global market: plunging oil prices, slowing growth in China, steep declines in overseas equity markets and concerns about the Federal Reserve rate decisions.The market has experienced a heightened state of volatility. In the year-to-date, the benchmark index has lost 128 points or 3.2 per cent of its value. It’s also 20 per cent below its  high.Now, high volatility should not be surprising since equity markets stocks are naturally volatile. Nevertheless, it can be unsettling.Therefore, if volatility is inevitable, what can investors do? Is it manageable? The quick answer is yes. And the “how to manage it” is the subject of my article.Every investor is different based on how they perceive volatility, but there are certain things they can do to better “manage” volatility. Read more
Interest rates on Treasury bonds drop as CBK rejects high bidders
Rates on government securities have continued to fall as the Central Bank rejects aggressively priced bids, with the highly liquid market also helping tame the interest rate.The interest rates on the 91-, 182- and 364-day Treasury bills fell by between 0.4 and 0.7 percentage points apiece during auctions, the fourth straight rate declines.The CBK accepted only 24 per cent of the Sh13.74 billion worth of offers made on the Sh4 billion 91-day T-bill issue, at an average rate of 10.84 per cent.On the Sh6 billion 182-day paper, the CBK took up 30.3 per cent of the Sh21.69 billion offered by investors, at 13.25 per cent, but took up Sh9.18 billion out of the Sh9.68 billion worth of bids on offer on the 364-day paper.“The high subscription levels is an indication of high liquidity in the market. The CBK accepted more of the long-term cash on the 364-day than 182-day…the high liquidity comes from maturity redemption and inflows from foreign investors who continue to look for high return,” said Sterling Capital in a market note. Read more
ERC: Motorists get relief as fuel prices fall
The energy sector regulator has reduced the price of petrol by Sh2.14 per litre for the period.The Energy Regulatory Commission has also reduced the cost of diesel by Sh8.82 and kerosene by Sh6.51 per litre, citing a reduction in the cost of importing fuel into the country. The price adjustments mean that petrol will retail at Sh86.50 per litre in Nairobi, while diesel and kerosene will cost Sh67.88 and Sh39.62 per litre, respectively.Fuel consumers in Mombasa will have the lowest prices of fuel in the country at Sh83.2 per litre for petrol and Sh64.63 and Sh36.94 a litre for diesel and kerosene, respectively. Read more
Uber seeks to hire Nairobi managers amid opposition
US online taxi firm Uber is seeking managers to handle its Kenyan and East African operations, indicating the company’s resolve to stay put amid stiff opposition from Nairobi’s regular cab operators.The company has advertised four senior positions for which recruitment is ongoing. The firm, which has recorded rapid expansion globally, has advertised for a general manager for East Africa, an operations and logistics manager, a communications senior associate and a public policy senior associate.Uber entered the Kenyan market, bringing its global metered pricing to Nairobi.Customers are charged for every kilometre covered — unlike the regular Nairobi cabs whose pricing is based on arbitrary negotiations with drivers.Read more
UCL: Indian firm to buy Sh1bn stake in Kikuyu based drug maker Universal Corp
Pharma Strides Shasun, which is listed in India, is set to buy a majority stake in Kikuyu-based drug manufacturer Universal Corporation Limited (UCL) for Sh1.1 billion ($11 million).Strides Shasun, listed on the Bombay Stock Exchange, announced that it will acquire a 51 per cent stake but the sales price could rise further if UCL hits its revenue targets.“This is an all-cash deal and the total consideration will consist of initial pay out of $11 million and a performance-related earning capped at $3 million (Sh305 million) for achieving an EBITDA of $2.95 million (Sh300 million),” said Strides Shasun in a statement.
EBITDA stands for earnings before income tax, depreciation and amortisation.The majority stake purchase is meant to give Strides Shasun access to the multi-billion shilling regional drugs market. Read more
OECD: Kenya to intensify war against tax evasion, economic crimes
Kenya will now be able to pursue individuals who use offshore companies to evade taxes and commit other economic crimes, after it signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.The agreement is the most comprehensive multilateral instrument available for all forms of cooperation to tackle tax evasion and avoidance.It provides for exchange of information on request and assistance in tax collection, among other things.Kenya’s ambassador to France Salma Ahmed signed the convention in the presence of the Organisation for Economic Cooperation and Development Deputy Secretary General Douglas Frantz, committing to exchange information that would help governments to collect revenue domestically. Kenya becomes the 12th African country to sign the pact and the 94th to join it. Read more
CBK: Foreign currency reserves rebound to $7bn after slide
Foreign currency reserves rebound to the $7 billion level after declining.Central Bank of Kenya (CBK) data shows the official dollar reserves rose by $40 million (Sh4 billion) to stand at $7.016 billion (Sh721.9 billion) or 4.47 month import cover from $6.976 billion.The reserves had declined, coinciding with the heightened demand for dollars from the private sector looking to settle payments to suppliers.The decline came after a period of sustained increase between when CBK bought dollars from the market as well as the proceeds of a $600 million syndicated loan taken by the government. Read more
KRA now gets powers to act against tax avoiding companies
Companies that use legal loopholes to reduce their tax burden now stand to pay hefty fines, following publication of new rules bringing into force the Tax Procedures Act.The law gives the Kenya Revenue Authority (KRA) powers to go after taxpayers who have been using such gaps to avoid paying taxes without falling foul of the law.The taxman can now interrogate transactions and reverse those it deems were structured with the sole intention of avoiding tax and order payment of the tax plus a penalty.The Act, which became effective, gives the taxman the authority to charge the taxpayer double the amount that was initially due if a transaction is deemed to have been intentionally structured for purposes of avoiding tax. Read more
NSSF return on assets drops 40 per cent
Net returns on investments by the National Social Security Fund (NSSF) dropped 40 per cent despite a 14 per cent rise in assets under management.The manager’s return on investment dropped from Sh27.32 billion to Sh16.3 billion.Assets under management rose from Sh134.9 billion to Sh153 billion, statistics from the State run pensions fund show.Similarly over the period contributions to the State run Fund increased from Sh7.8 billion to Sh8.4 billion , an increase of 8 per cent according to the Fund’s Financial Statements.Among assets under management by NSSF include Sh8.9 billion worth of undeveloped land, land and buildings worth Sh20.6 billion and quoted stocks worth Sh56 billion.Read more
Uhuru-Museveni sugar deal flops on Kampala shortfall
The much-anticipated sale of Ugandan sugar in the country has flopped due to lack of sugar surpluses in the neighbouring state forcing Kenyan authorities to withdraw import licences.Ugandan sugar millers have been hit by a shortage that has seen leading factory Kakira Sugar Works produce less than 100,000 tonnes out of the projected 180,000 tonnes.Kenya’s Sugar Directorate said it has cancelled a number of permits issued to some traders after they failed to secure sugar from Uganda within the stipulated time.The permit normally allows traders to import sugar, failure to which it is revoked. However, a trader can seek extension if they provide valid reasons.“It is true that there is a shortage of sugar in Uganda and at the moment traders are not bringing in any stocks from the country,” said head of the directorate Andrew Osodo. Read more
Mobile phones top imports by Kenyan traders from China
Mobile handsets top the list of items that traders ordered from China, underlining the popularity of the low-priced smartphones in the Kenyan market despite concerns over quality.Official data shows that Sh15.5 billion worth of Chinese phones were shipped into the country, beating the value of machinery and construction equipment ordered over the same period despite ongoing construction of roads and standard gauge railway (SGR) line.Chinese brands have firmed their presence in the local market with low-cost, medium and high-end smartphones, providing consumers with a wide range of internet-enabled devices. Read more
Banks face fresh competition agency probe over pricing
Kenyan banks face fresh scrutiny from the competition watchdog in the second phase of investigations into their products pricing and possible restriction of customers’ choice.The Competition Authority of Kenya (CAK) says it expects to complete the investigations. The watchdog will also look into the lenders’ disclosures to customers and consumer protection issues.The regulator conducted the first phase which focused on the market structure (number of banks and market shares) and concluded that the structuring is adequate to support competition.“The first inquiry did not reveal signs that the market structure has negative impact on the performance of banks,” said the CAK director-general Wang’ombe Kariuki in an interview. Read more
Imperial Bank owners mulling action on external auditors
Imperial Bank shareholders are contemplating suing audit firm PKF for professional negligence, the second time such action would be contemplated when Trust Bank depositors were cleared by the appellate court to sue KMPG Peat Marwick.The shareholders portrayed themselves as victims of deceit by the deceased CEO Abdulmalek Janmohamed and of professional incompetence of the auditors and the Central Bank of Kenya (CBK) in their first Press briefing collapse of the bank.“Investigations revealed that the external auditors appear to have failed in their duty to conduct the audit according to laid-down standards, and to have failed to perform basic tests, while it appears that the CBK not only failed in its supervision duties but also failed to respond to “tip-offs” given directly to them,” said the bank’s chairman Alnashir Popat. Read more
India-based cement giant eyes Sh12.7bn majority ARM stake
India’s largest cement manufacturer UltraTech Cement is in the race to acquire a controlling stake in Nairobi Securities Exchange-listed ARM Cement, in which it could buy convertible preference shares of up to $125 million (Sh12.7 billion).ARM  announced the impending transaction — expected to be complete — but did not reveal the identity of the potential investor. UltraTech is said to be negotiating with ARM for the controlling stake in Kenya’s second-largest cement manufacturer after the French-owned Bamburi Cement.ARM chief executive Pradeep Paunrana, however, declined to comment on the issue, or confirm that the company is in talks with the Indian giant. Read more
Vodafone launches M-Pesa Ghana in Africa expansion bid
UK telecommunications company Vodafone, which holds a 40 per cent stake in Safaricom, has launched M-Pesa services in Ghana —completing the spread of mobile money in all African countries where the British firm has a presence.Vodafone has in recent years launched the mobile money service in Tanzania, South Africa, Lesotho, DRC, Egypt and Mozambique where it has operations, following the success of M-Pesa in Kenya.The M-Pesa service in Ghana is called Vodafone Cash and its launch brings to 11 the countries where the UK company has launched its mobile cash service globally including in Romania, Albania and India. Read more
EATTA: Tea prices on a losing streak as volumes decrease
Tea prices opened on a losing streak shedding off five per cent of its value in the first auction.On average a kilogramme (kg) fetched Sh278 in auction compared to Sh294 in the last auction.The price of tea has been declining even as the volumes offered for sale declined.The quantities offered for trading dropped to 7.7 million kg from 9.1 million kg traded at the Mombasa auction.“The average price decreased to Sh278 from Sh294 achieved in auction 51. Some 7,745,063 kg were traded as compared to the previous auction where 9,153,733 kg were offered for sale,” said Mr Edward Mudibo, managing director East African Tea Traders Association. Read more

Uchumi calls on Kampala suppliers to lodge claims
Uchumi Supermarkets has asked suppliers of its ill-fated Uganda to make claims as it winds up operations in the market.Kenya’s oldest major retailer told suppliers to lodge claims  ahead of bankruptcy filings at the Kampala High Court.“To all creditors…. You are hereby required to file a reply to the petition from the date of service of the petition on you in the matter prescribed under law.“Should you fail to file a reply to the petition on or before the date, the petitioner may proceed with the hearing of the petition,” said Uchumi in an advert. Uchumi owes suppliers, landlords and employees USh8.8 billion or Sh265 million.Read more
WB: Kenya growth to hit 5.7pc on mega projects
The World Bank expects Kenya’s economic growth to rise marginally to 5.7 per cent spurred by government infrastructure projects.The bank forecasts that the economy will only pick up to 6.1 per cent growth as the standard gauge railway (SGR) and the Lamu Port come into operation.Kenya’s economy continues to be fuelled by large infrastructure projects with some key formal private sector areas like manufacturing performing poorly.“Despite pressure on the shilling, Kenya is expected to grow at a robust pace, supported by large scale infrastructure projects, including the expansion of the railway system, which should help boost domestic trade, and a new port,” the World Bank said in a new report, “Global Economic Prospects”, released. Read more
KNBS: Strong dollar lifts value of exported coffee
The value of Kenya coffee exports rose marginally even as the volume of the commodity dropped by three per cent.Data from the Kenya National Bureau of Statistics (KNBS) indicate the exports grew to Sh2.2 billion in the period under review from Sh2 billion in the corresponding.The KNBS report says the volumes dropped from 16,298 tonnes to 15,732.The good prices were attributable to the strong dollar that favoured exports, as the Kenya shilling weakened by about 13 per cent against the greenback.Kenya exports more than 90 per cent of the locally produced coffee, mainly used by roasters in blending.The price of coffee is expected to gain further following the harvesting of the main crop from central Kenya.Read more
Standard Chartered economist Sarah Baynton-Glen: Businesses see shilling staying stable in the first half
Concern over the shilling’s exchange rate to the dollar has eased among Kenya’s businesses, which expect the currency to remain fairly stable.The Standard Chartered-MNI Business Sentiment Indicator (BSI) survey shows that businesses are starting to enjoy the benefits of the shilling’s stability after a volatile where the exchange rate dropped to 106 units to the dollar, hitting importers hard.The stable rate (which reduces import cost fluctuations) will be a relief to businesses, which have also been strained by higher financing costs and reduced availability of credit.“Kenyan businesses began to see some positive impact from recent exchange rate stabilisation. They expect the exchange rate to be less of a concern,” said Standard Chartered economist Sarah Baynton-Glen in the report. Read more
Employees face bonus drought as NSE firms issue profit warnings
Kenya’s formal sector workers are headed following a steep drop in corporate earnings that is expected to significantly reduce or wipe out bonus payments altogether.That reality has been brought home by the fact that a record 17 publicly traded companies issued profit warnings, alerting investors of reduced earnings and even losses, leaving little room for dividend and bonus payments.The list of companies that issued profit warnings includes Standard Chartered Bank Kenya, Britam, Car & General, ARM Cement and UAP Holdings.The earnings shortfalls resulted from a mix of a deteriorating macroeconomic environment and challenges that were unique to some of the firms. Read more
StanChart slides on NSE big stock list as price slumps 40pc
Standard Chartered Bank’s 40 per cent slump in share price has pushed the lender down three places among the Nairobi Securities Exchange (NSE’s) 10 largest stocks.Market data compiled by Standard Investment Bank (SIB) shows that Co-operative Bank, BAT Kenya and Barclays have all overhauled StanChart in the top list, to number 8 from 5. Investor sentiments on the stock were clouded by a disappointing performance, which saw its net profit drop 24.3 per cent to Sh6.2 billion. Consequently, StanChart issued rare a profit warning, the only banking counter among the 15 listed firms that issued such alert. Read more
CBK injected Sh76bn to soften Imperial Bank closure impact
The Central Bank of Kenya has injected Sh76.6 billion net liquidity into the market after the collapse of Imperial Bank, underlining the impact the closure had on the country’s financial system.Before the closure, the regulator had mopped up Sh28.3 billion from the market as it sought to support a weak shilling.“The CBK stands ready to use all instruments at its disposal to provide adequate liquidity support to the banking system to ensure its stability and robustness at this time,” said the CBK governor Patrick Njoroge, after the collapse of the lender.In the first week following the closure, CBK injected Sh72 billion into the system. Imperial Bank’s closure, shook public confidence in small banks resulting in runs and regulatory support. Read more
PAC set to receive forensic audits on Eurobond, NYS
The National Assembly’s Public Accounts Committee (PAC) is set to receive forensic audit reports on Eurobond, the National Youth Service and the Independent Electoral and Boundaries Commission (IEBC) scandals which hit the headlines.“We expect to receive Special Audit reports from the Auditor General Edward Ouko on both the NYS and the Eurobond,” PAC chairman Nicholas Gumbo said. He announced that the committee would resume its meetings to conclude its report on the procurement of BVR’s, EVIDs and other electoral materials during the General Election by the IEBC and finalise pending business on the scrutiny of the audit of government expenditure. Read more
New Year presents investment windows Kenya should tap for economic growth
There are a number of known challenges we are carrying forward into the New Year.These include terror-induced insecurity, corruption, and high cost of implementing the Constitution. The challenges remain work in progress as relevant agencies continue to address them. As we enter the New Year we should not as a nation allow these hurdles to cloud our focus on many opportunities staring at us. As a start, we are opening the New Year with an economy that is generally doing fine and a business climate that is positive. Kenyans in general remain enterprising and hard working. These are in themselves strengths that we need to build on. Ahead in the list of opportunities are the benefits of heightened economic diplomacy which has increased the outside world confidence, goodwill and interest in Kenya. Read more
KNBS: Balance of payments boost cuts the shilling’s exposure to shocks
The risk of major shocks on the shilling has reduced as Kenya’s overall balance of payments – comprising the, capital and financial accounts – deficit improved by 7.2 per cent in the third quarter.Balance of payments boost cuts the shilling’s exposure to shocksThe improvement was a result of higher value of exports against a lower value of imports, the Kenya National Bureau of Statistics (KNBS) showed.The largest change in the balance of payment was in the current account where the deficit fell by a significant 25.7 per cent to Sh112.4 billion compared with Sh151.2 billion.The account, whose value indicates the value of exports against imports, has been in the negative. In the period, the overall balance stood at Sh51.36 billion, up from Sh47.89 billion recorded, the KNBS data shows. Read more
KPMG set to replace Ernst & Young as Uchumi auditors
KPMG is set to take over from Ernst & Young the auditing of troubled retailer Uchumi Supermarkets, which has accused its former top management of manipulating its financial statements.The consultancy, classified as one of the “big four” global accounting and auditing firms, will take over the role if Uchumi shareholders approve the change at its forthcoming l general meeting.“To appoint Messrs KPMG Kenya as the company’s auditors,” reads one of the agenda items for the upcoming shareholders’ meet. KPMG had been hired to carry out a forensic audit at Uchumi, with preliminary findings revealing that the former management had manipulated books and concealed losses in the retail chain’s financial statements. Read more
NSE outperforms regional peers despite bear run
Kenya’s stock market has outperformed key competitors Nigeria and Egypt despite the ongoing bearish run, data on African stock exchanges show.The Nairobi Securities Exchange (NSE) All share index shed 10.6 per cent in value, compared to a 21.3 per cent of the Nigeria Stock Exchange All share Index and a 29 per cent decline in the Egypt Stock Exchange EGX 100 index.Among the six second-tier markets in Africa, Morocco and Tunisia recorded lower declines than the NSE, while Zimbabwe was the worst performing, falling by 30 per cent. The tier-one Johannesburg Stock Exchange was in the red as well recording a fall of 3.5 per cent. Read more
CA loses power to regulate dominant telcos
Telecommunications sector regulator, the CA, has lost powers to independently monitor dominance and act against its abuse – leaving it with a narrow mandate of licensing new players and allocating frequencies.Parliament stripped the Communications Authority of Kenya (CA) of the mandate through the controversial Statute Miscellaneous Amendments Bill, that President Uhuru Kenyatta signed into law before Christmas.Under the new legal regime, the CA will have to consult the Competition Authority of Kenya (CAK) before making a declaration of dominance and when assessing critical industry factors such as Significant Market Power before making a declaration of dominance. Read more
Safaricom M-Pesa transfers across borders hit Sh17bn
The value of cross-border M-Pesa transactions has hit Sh17 billion since the service was introduced, indicating a high growth potential for mobile money transfers in facilitating international remittances and business transactions. Safaricom signed its first international mobile money transfer agreement with the Western Union. This was followed by another agreement with Money Gram, allowing the firm to it to tap a chunk of transaction commissions from international remittances. Regionally, the telco launched M-Pesa cross border services in Tanzania after acquiring a cash remittance operating licence from Central Bank of Kenya, followed by a similar launch in Rwanda and another one in Uganda.Read more 
StanChart profit alert, Barclays sale report raise eyebrows
The performance of top-tier foreign-owned banks operating in Kenya will come under sharp focus after reports emerged of a likely sell-out of Barclays Kenya’s business by its London-based parent and its British counterpart Standard Chartered issued a profit warning.Local banks outpaced their multinational rivals in the earnings race, reflecting the growing gap between the two groups.Even with the profit contribution by their East African subsidiaries excluded, local banks continued to record a much higher growth rate than their foreign counterparts in their Kenya business units.Standard Investment Bank (SIB) analyst Francis Mwangi, attributed the disparities in earnings growth to the difference in operational strategies employed by the two groups of lenders.Read more
KRA: Capital gains tax reintroduction causes a storm
The reintroduction of capital gains tax (CGT) after it was suspended, quickly became the dominant storyline, culminating in a lawsuit filed against the government by stockbrokers.Opponents of the new tax, effective for shares but still applicable for property, argued that it would stifle the growth of the local equities market which was coming off a bull run that saw market capitalisation surpass the Sh2 trillion mark, alerting the government to the potential tax revenues it could generate.Potentially the biggest losers would be the investors who had entered the market through initial public offerings of companies such as Safaricom, Co-operative Bank, Britam and ScanGroup, given that the shares of these companies had more than doubled in price since listing. Read more
Sterling Capital analyst Eric Munywoki: Rates seen rising in Q1 as State eyes domestic debt
Interest rates are tipped to rise as the government turns to the domestic market to bridge its budget deficit.The State is still below target in domestic borrowing, which coupled with an increase in existing debt maturities will likely see higher borrowing.Investors are, therefore, opting for the shortest tenure government debt ahead of the anticipated interest rate increases, looking to have cash in hand to take advantage of the higher rates in the short term.For bank loan borrowers, rising Treasury bill interest rates may translate into higher loan rates since they are used to calculate the Kenya Banks Reference Rate.“Since, the government did not borrow much in net terms from the domestic market, yet we still saw some upward pressure on rates,” said Sterling Capital analyst Eric Munywoki. Read more
KIA: Kenya raises regulations transparency with online portal
Foreign and local investors can now access Kenya’s investment regulatory data on one platform following the launch of an e-portal aimed enhancing ease of doing business.kenya.eregulations.org is an initiative by the Kenya Investment Authority and United Nations Conference on Trade and Development (UNCTAD) aimed at providing investors with an easy-to-access guide on regulations.Launched on the sidelines of the 10th World Trade Organisation (WTO) Ministerial Conference that ended, the portal is designed to make administrative procedures transparent, swift and efficient.Read more
KNBS: Construction and agriculture power GDP growth to 5.8pc
Economic growth surged to 5.8 per cent compared to 5.2 per cent in the same period, reflecting robust activity in agriculture and construction sectors but indicating that the expansion rate could fall short of the Treasury’s target.The financial and insurance, wholesale and retail trade and transport and storage sectors were the other the main drivers of economic growth in the period, according to data released by the Kenya National Bureau of Statistics (KNBS).With the simple average of growth rate in the first nine months of the year now standing at 5.5 per cent, it would require an even more robust economic expansion for the Treasury to realise its annual target of between 5.5 and 6.0 per cent. Read more  
Henry Rotich: Treasury makes Sh9bn third payment for Eurobond interest
The Treasury paid Sh9.1 billion as the third interest instalment for the Eurobond as yields in the secondary market remained high over local political controversy.The government normally has 15 working days to settle interest payments from the date they fall due or risk being in default.The bond attracts a 5.875 per cent interest while it has 6.875 per cent return. Holders of the bond were expected to receive Sh2.2 billion with Sh6.9 billion paid out for the tenor.“Interest payment. We have paid three times,” said the Treasury secretary Henry Rotich.This means the country has paid out approximately Sh27 billion in the three instalments which is equivalent to 10 per cent of the total sum raised from the bond. Read more
KNBS: Rising food, commodity prices push inflation to 8.01pc
Rising food, beer and cigarette prices helped push up inflation rate, denying consumers the benefits of lower fuel and electricity costs.The Kenya National Bureau of Statistics (KNBS) data shows that inflation rose from 7.32 per cent to 8.01 per cent — marking the highest level when it stood at 8.36 per cent.The inflation rate was above the Central Bank of Kenya’s preferred medium term range of 2.5-7.5 per cent and against the banking regulator’s forecast of lower inflation with the stop of heavy rains.The rise in inflation makes it more likely that the central bank would raise interest rates. Read more
CBK: Cashless payments lift mobile transfers to Sh2.3trn 
Mobile money transfer volumes grew by a fifth almost matching the total moved as more Kenyans used the platform to pay for goods and services.The Central Bank of Kenya (CBK) data shows that mobile payments grew by 19 per cent to Sh2.31 trillion , nearly equalling the Sh2.37 trillion.This means Kenyans made an average of Sh192.7 billion of real-time mobile-based payments, or Sh6.4 billion compared to Sh5.4 billion.Safaricom chief executive Bob Collymore attributed the continued double-digit growth in mobile money use to the convenience of the platform and the increased utility of M-Pesa.Read more
Bank, insurance lobbies face pricing war with CAK
Several powerful associations in the banking, insurance and agriculture sectors are yet to take advantage of an amnesty given by the competition watchdog to stop cartel-like practices, which puts them on a collision course with the regulator.The Competition Authority of Kenya (CAK) offered the bodies an eight-month window to dismantle cartels that fix prices and limit competition.The Special Compliance Programme (SCP), which began, has elicited “good response” from some of the targeted bodies but CAK says many others have ignored the call and face investigations.“There still are some high-profile associations in the two sectors (banking and insurance) who have not submitted their documents for scrutiny. Read more
Trans Nzoia governor Patrick Khaemba: Kenya, Uganda seek transport corridor funds with eye on trade
Kenya and Uganda plan to build another corridor to boost trade between the two East African countries.
Uganda National Roads Authority and the Kenya National Highways Authority are seeking funds from the African Development Bank (AfDB) for the project which will traverse Uasin Gishu County and to the west of the boundaries of Eldoret, Trans Nzoia.The proposed road project dubbed multinational Uganda and Kenya: Kapchorwa – Suam – Endebess – Kitale - Eldoret Bypass Roads Project is expected to start at Cheplaskei; about 13 kilometres from the centre of Eldoret town, following a north westerly direction traversing the Eldoret – Kapsabet - Kisumu road at Kapsaret. Read more
Comesa countries seek harmonised standards to boost maize trade
Restrictions faced by traders moving their maize across eastern and southern African markets are set to ease after six countries agreed to recognise one another’s quality certificates.The Comesa Mutual Recognition Framework (C-MRF) signed in Kampala, Uganda, seeks to eliminate multiple testing by both the exporting and importing countries.The six comprise Kenya, Malawi, Rwanda, Uganda, Zambia and Zimbabwe where the framework will be piloted. Kenya mainly imports its maize from Uganda, Zambia and Malawi.For conformity assessment, the C-MRF will be adopted by the member states through Mutual Recognition Agreements (MRAs).Among the C-MRF key components are common grading criteria, proficiency testing for aflatoxin analysis and a risk-based sampling protocol.Read more
Kenafric’s Sh1bn soda plant stirs beverage market
Sweets maker Kenafric Industries is set to diversify into the production of soda in a move that will intensify competition in the industry that is dominated by Coca-Cola and PepsiCo. Kenafric plans to set up a Sh1 billion factory to manufacture sodas and ready-to-drink juices at its headquarters in Ruaraka, Nairobi.About 30 per cent of the total cost of the investment will be debt while the balance is a mix of the company resources and equity from its shareholders.The drinks will be packed in plastic bottles ranging between 150ml and 300ml as the company woos children and the youth. Read more
KPMG: The Tsunami of Graft: Top officials entangled in a string of theft cases
The year goes down with the dubious distinction of being the moment Kenya got soaked in a ‘corruption storm’ that saw a number of high-ranking public officials and business leaders get entangled in multi-billion shilling theft cases. The Tsunami of corruption reflected recent findings by accounting firm KPMG that the Kenyan economy loses up to Sh500 billion in bribery, creative accounting, wasteful spending, tendering fraud, pillaging of public resources, and other illicit practices.The growing number of graft cases and the evolving nature of the actors helped cement Nairobi’s dubious standing as a hotbed of corruption. Read more
Investment bank Exotix: Economic pressure pushing up Kenya Eurobond yields
Investors in the international markets are demanding a premium on buying Kenya’s Eurobond in the secondary market to reflect the country’s economic struggles, a London-based analyst has said.In an outlook report on emerging fixed income markets, investment bank Exotix Partners said the investors are reacting to the crises that has plagued the Kenyan economy.The prevailing yield of 8.9 per cent compared to a coupon of 6.875 per cent has made the bond attractive to secondary market investors.Rising yields indicate prices have fallen since the issuance (they move in opposite directions) to the disadvantage of the seller who has to discount on the initial buying price when selling their bond. Read more
Banks face stricter CBK supervision
Central Bank of Kenya (CBK) has fired a warning shot at commercial banks that it will impose a more stringent supervision regime as it tries to claw back public confidence severely eroded after the closure of two banks.The banking regulator has sought help from the International Monetary Fund to strengthen its supervision department, whose credibility has come under much scrutiny.The National Treasury also received funds from the World Bank to hire a consultant to advise on improving banking supervision in the country.“We see transition when we shall more aggressively supervise banks,” said Central Bank governor Patrick Njoroge in his briefing. Read more
Kenya accused of going against African position
Before hosting the World Trade Organisation ministerial conference, Kenya ratified the Trade Facilitation Agreement, against a call by African countries to be unanimous in the negotiations for modification of the deal. The deal proposed by UK, adopted and put into consideration at the WTO’s Bali Ministerial Conference, is expected to expedite movement, release and clearance of goods, including goods on transit.It has now been ratified by 63 countries and it awaits another 45 for it to be enforced among member countries.Activists advocating favourable African position at the WTO said it was puzzling why Kenya rushed to ratify the TFA without considering the benefits it could get from not accepting the deal. Read more
IMF: Current account deficit narrows to 6.9pc on tourism inflows
Central Bank boss Patrick Njoroge said the difference between Kenya’s exports and imports narrowed and may contract even further as tourism inflows continue to rise.The current account deficit, which is currently at 6.9 per cent, is expected to contract further as exports strengthen and consumer imports dip, added Dr Njoroge.The International Monetary Fund (IMF) Director of the African Training Institute Vitaliy Kramarenko projected that the current account deficit would decline to 8.5 per cent of the GDP from 10.4 per cent recorded.Mr Kramarenko, however, warned that this figure remained high and required foreign capital flows to be financed. Read more
Nakumatt’s profit drops to Sh305m after high costs
Nakumatt Holdings, Kenya’s largest retailer, recorded a huge profit drop due to high financing costs, a new rating report shows.The report by South African credit rating agency GCR shows the retailer posted profit before tax of Sh305 million compared to Sh823 million. Nakumatt’s long-term credit rating was retained at BB with the outlook classified as stable.“Profits have been heavily eroded by rising interest charges associated with the large quantum of debt that has been used to fund growth — moreover, net profit before tax has decreased from Sh823 million to Sh305 million,” reads part of the document. Read more
TMEA SPO Mr Moses sabiti: Automation of customs clearance ranks Uganda with the best in trade
The automation of Uganda’s customs clearance system has eased cross-border trading in the region and improved the landlocked country’s global ranking.The Uganda Revenue Authority (URA) and TradeMark East Africa (TMEA) of Uganda have been rolling out a ‘Managing Compliance Programme’ which has led to increased efficiency in revenue collection.The reforms include the Authorised Economic Operator (AEO) Initiative, the Customs Management System of Automated System for Customs Data and the Electronic Cargo Tracking System (ECTS).“Increased efficiency of customs is important... Customs revenues contribute over 50 per cent of Uganda’s tax revenues,” said Mr Moses Sabiiti, TMEA Uganda’s senior programme officer.He made the remark at a ceremony organised by the URA to fete the TMEA for outstanding logistics work. Read more
Xpress Money CEO Sudhesh Giriyan:  UAE to Kenya funds transfer cost falls 38pc
The cost of sending money to Kenya from the United Arabs Emirates (UAE) has dropped 38.8 per cent after a cash transfer firm, Express Money, cut its fees to eight sub-Saharan countries. Those sending money to Ghana and Nigeria got the greatest reprieve of 66.6 per cent and 53.8 per cent respectively, while the cost of sending to Uganda came down by 25 per cent and 10 per cent for Tanzania.“Despite the high cost of sending remittances to Africa being a cause of concern and a hot topic of debate among global authorities, very little headway has been made in this direction. Even though Africa is one of the highest potential remittance markets from the UAE, not enough has been done by money transfer operators to bring down remittance costs,” said Sudhesh Giriyan, Xpress Money chief operating officer. Read more
NSE: Car & General profit down 54.2pc on weak shilling
Car & General (C&G) posted a 54.2 per cent drop in net profit, taking a hit from the weakening of currencies in markets where it operates.The company, which has a diversified business including poultry, real estate and motorcycle dealership, made a net profit of Sh127.1 million in the period compared to Sh278.3 million, with its net foreign exchange losses rising nearly 60 times to Sh290.4 million.C&G said it incurred the losses from devaluations of the Kenya shilling by 17 per cent, Tanzania shilling (29 per cent), and Uganda shilling (16 per cent).“Furthermore, due to competitive and consumer pressures, we were unable to increase prices to keep pace with these devaluations, resulting in margin compression,” the Nairobi Securities Exchange-listed firm said in a statement. Read more
CBK forex reserves rebound to hit the 4.5 months import cover
Foreign exchange reserves held by the Central Bank of Kenya rose $57 million (Sh5.83 billion) to hit the 4.52 months import cover level. CBK’s reserves now stand at $7.103 billion, the highest level, with money market analysts saying the prevailing low dollar demand makes it the optimum time for CBK to buy some hard currency from the market.The reserves have increased, with the import cover jumping from 4.3 months’ worth to 4.52 months on a gain of $354 million.“The extra reserves could be coming from direct buying from the market as the dollar becomes cheaper, or from disbursements from external donors,” said a commercial bank treasury official. Read more
TPS issues profit warning on travel advisories, Ebola outbreak
TPS Eastern Africa has issued a profit warning ahead of the release of its results, blaming security alerts issued by governments of its main source markets, the US and UK, for its poor performance.The company said it expects its annual profits to drop by at least 25 per cent.The company also attributed the expected drop in earnings to the Ebola outbreak in West Africa, blaming it for limited travel.The hotel chain also says that the introduction of value added tax on tourism services and park fees has made Kenya uncompetitive. Read more
Ericsson eyes Kenya pay-TV market with on-demand videos
Global IT giant Ericsson is eyeing Kenya’s pay-TV market with a video-on-demand service that will be broadcast on smartphones and tablets.The Sweden-based software and infrastructure firm plans to partner with local mobile network providers to offer a mix of international and local content on the Nuvu platform, which currently has about 3,000 titles including Nollywood, Hollywood, Bollywood, and local gospel content.Subscribers will either pay a premium fee of about Sh511 ($5) to access all content or a fee of about Sh204 ($2) which offers select content. Ericson said the service, already launched in Nigeria, will initially be available on Android app-based devices. Robert Rudin, the Ericsson Kenya Country Manager, said the company’s entry into Kenya is motivated by the rising usage of mobile devices such as smartphones and tablets. Read more
MrAdan Mohamed: China to sharpen agro-processing skills of small-scale farmers in Kenya
The incomes of small holder farmers in Kenya are set to grow after China offered to help them adopt modern production methods as well as value addition equipment at subsidised costs.Despite calls for Kenyan smallholder farmers to embrace new technology, the high costs of special equipment have stood in the way, consequently crippling production.Chinese Technology Companies, who spoke at a China-Kenya conference on agriculture cooperation in Nairobi, however, said they would cooperate with Kenyan farmers to promote the uptake of modern irrigation technologies alongside the development of a home-grown agro-processing industry at low costs. Read more
IRA: Insurance firms earnings fall 53pc as stock market slumps
Insurance companies posted a 56.3 per cent drop in profit after tax in the nine months to September following a poor run of fortunes at the Nairobi Securities Exchange (NSE) and money market.Data from the Insurance Regulatory Authority (IRA) shows insurance companies posted a total of Sh4.5 billion in after-tax profit compared to Sh10.3 billion in a similar period.The profit drop signals a likely dividend drought for shareholders and possible capital injections to recover capital positions for those that post losses.Life insurers were the most affected by the slump, with their profits declining 79 per cent to Sh872 million from Sh4.1 billion while general business recorded a 41 per cent drop to Sh3.6 billion. Read more
KRA seeks more details on BAT bribery scandal
The Kenya Revenue Authority (KRA) is working with UK’s Serious Fraud Office (SFO) and the BBC to get details of allegations linking the parastatal to the British American Tobacco bribery scam.The revenue body said in a statement  that Mary M’Mukindia, who is alleged to have been the conduit for a cash bribe to former cabinet minister and presidential candidate Martha Karua, was not a member of its board at the time the bribery is claimed to have taken place.“The KRA is working with the Serious Fraud Office of the UK and the BBC to get the people involved in the scam and if found culpable, they will be convicted as per the law. Mary M’Mukindia was not a board member then,” said KRA in the statement.A former BAT employee, Paul Hopkins, alleged in a BBC report that BAT routinely bribed officials – including politicians and the KRA – to advance its interests.Read more
CBK: Treasury bill yields begin rising after falling 
Treasury bills have started to rise in line with analysts forecast that the fall in yields on government paper was unlikely to last.In the auction, the 91-day T-bill paper was sold at a rate of 9.941 per cent having risen by 0.279 percentage points.The rise happened despite the fact that the subscription was three times the offer by the Central Bank of Kenya (CBK).Analysts noting that the paper has been at about 12.5 per cent said the CBK appears keen to ensure rates for all the short-term government securities are not too divergent at the primary market.Read more
KBC, Postbank, Sony post Sh7.6bn loss
The Kenya Broadcasting Corporation (KBC), Postbank and South Nyanza Sugar Company (Sony) reported a combined Sh7.6 billion loss, leading the list of government commercial entities that made negative returns.The State broadcaster, which made a loss of Sh5.5 billion, has led the list as it suffers stiff competition from private media houses.The Public Service Commission Report says that Postbank made a loss of Sh1.4 billion, Sony Sugar (Sh730 million), Muhoroni Sugar (Sh605 million), Chemelil Sugar (Sh443 million) and Nzoia Sugar (334 million).The four sugar firms which have been in loss making territory for years over operational inefficiencies are set to be sold to private investors but this has stalled as county governments demand more time. Read more
TS Henry Rotich: EA seeks common warehouse rules to plug revenue leakages
The Treasuries of the East African Community states are seeking common rules to tighten supervision of customs warehouses and stem tax evasion.Treasury cabinet secretary Henry Rotich said there were differences in the warehousing regimes in the region that make it difficult to enforce best practices, thereby leading to revenue leakages.The issue had come up in the discussion between the Treasury and the International Monetary Fund (IMF) on the administration of taxes. The IMF was in Kenya to review economic developments.“We are looking at the warehousing regimes where the countries in the region are going to agree on a unified regime to stop the diversion of goods at ports of entry,” said Mr Rotich. Read more
AFBD: Bank projects 6.5pc GDP growth for Kenya
The African Development Bank (AfDB) forecasts a 6.5 per cent expansion in Kenya’s gross domestic product, despite fears that growth may be slowed down due to weak receipts from tourism.
The edition of the African Economic Outlook report prepared by AfDB also shows that growth of the economy will contract to 6.3 per cent. AfDB pegs its expected expansion of the local economy on growth in the services and construction sectors which it says will compensate for low gains from manufacturing and extractive industries.Overall, the bank expects East Africa’s growth to decelerate to 5.6 per cent this year from 7 per cent due to the volatile situation that was experienced in South Sudan where armed conflict cut oil production  consequently. Read more
DMFA: Sh15bn boost from Denmark to streamline cargo handling in Mombasa
Denmark has launched a Sh15 billion project that will help expand infrastructure and increase efficiency at the Port of Mombasa.The Danish Minister for Foreign Affairs Kristian Jensen, who toured bath number 19 to assess the infrastructure, said the programmes that his government has funded through Trade Mark East Africa company had resulted in a positive impact on business along the northern corridor.
Mr Jensen was impressed by the reduction of the time taken to clear cargo from the port from 11 to five days and pledged his government’s support to cut it even further. Read more
TS Henry Rotich: analysts downplay US rate rise impact on economy
The 0.25 percentage points rise of US Federal Reserve rates is unlikely to be pronounced on the Kenyan economy, the Treasury and financial analysts say.Kenya is among the emerging economies which have benefited from inflows of capital from the US, due to both the near-zero interest rates and quantitative easing instituted to help the US economy recover from the global financial crisis.Treasury secretary Henry Rotich said the short-term inflows into Kenya from abroad are not large enough to shock the economy if the Fed action were to spark a reverse flow to the US.Some financial analysts also said the markets have probably factored in the long anticipated event. Read more
Kenya, EU set to ratify trade partnership
An Economic Partnership Agreement (EPA) meant to give preferential access to a range of Kenyan agricultural goods and services to the European market could be ratified.Bernd Lange, the head of the European Union Parliament delegation attending the ongoing World Trade Organisation (WTO) talks in Nairobi, told Kenyan MPs and senators that the draft trade agreement was set to be ratified.“We import coffee, cut flowers, tea, some fish and vegetables. In EPAs, there are possibilities to discuss further trade arrangements. Time is limited for Kenya to ratify a trade pact. We want the EPAs text to be ready,” said Mr Lange. Read more
Barclays’ parent company could sell Kenyan unit
Barclays Bank Kenya could be sold by its London-based parent Barclays Plc, which is considering selling some or all of its subsidiaries in Africa.The proposed divestitures are being pushed by the multinational’s new CEO Jes Staley, according to a report by the London-based newspaper Financial Times. Both Barclays Kenya and the UK parent declined to comment on the story.Mr Staley is said to be examining Barclays’ overall strategy and is expected to present his plans to investors around the time of the bank’s annual results.He is also expected to announce several thousand job cuts in the lender’s investment banking unit, particularly in Asia, according to the paper. Read more
Ruto tells developed nations to create fair trade environment
Deputy President William Ruto has accused developed countries of putting barriers in the trade of agricultural products from developing nations, making it difficult for commodities from Africa to access Western markets.Mr Ruto said there was need for Western states to create a new environment of fairness among all nations.“Developed countries have put hurdles in the way of agricultural products from developing nations to access Western markets leading to a lose-win situation,” said Mr Ruto.The Deputy President called on rich nations to address the concerns of poorer nations on issues of subsidies and access to markets as a way of addressing trade imbalance.Mr Ruto said the ongoing 10th World Trade Organisation (WTO) Ministerial Conference should result in a new business environment that is fair in trade among all nations. Read more
IMF cuts growth forecast to 5.6pc on low spending
The International Monetary Fund (IMF) has revised down its projected real growth rate to 5.6 per cent from the 6.5 per cent it forecast.It said the slower growth is a result of a slow rollout of infrastructure projects, weak tourism receipts and volatile capital flows.An IMF team has been in Kenya reviewing economic developments.The IMF had forecast that the gross domestic product (GDP) would grow by 6.9 per cent citing spending on the standard gauge railway (SGR) and other infrastructure projects as a major driver.“The growth acceleration is slower than projected under the programme due to delay in planned road infrastructure spending, weaker tourism receipts and volatile external capital flows,” said the head of mission to Kenya Vitaliy Kramarenko. Read more
CBOS: South Sudan pound drops 85pc as the country scraps fixed exchange
South Sudan currency has depreciated 85 per cent in the last two days after the government stopped fixing its exchange rate in a move likely to hurt Kenyan businesses operating in the young nation.
Central Bank of South Sudan abandoned the fixed exchange rate regime, allowing the Sudanese pound to trade freely against other currencies and setting it off on a free fall.The rate had been set at 2.96 South Sudan pounds (SSP) per US dollar but declined to 18.5 pounds a dollar on exposure to market forces of supply and demand, in a twist that effectively leaves depositors in the country with drastically slashed wealth. Read more
CBK: Treasury eyes Sh16bn from reopened bond sale
The Treasury has returned to the market for the Sh16 billion it failed to net during the sale of the Sh30 billion infrastructure bond earlier this month.Central Bank of Kenya (CBK) said the tap sale (reopening), but the offer may close earlier once the target amount is realised. In the initial sale of the amortised bond, investors put in 719 bids worth Sh16.57 billion against the Sh30 billion target, at a weighted rate of 14.95 per cent. The government accepted 636 bids worth Sh13.96 billion, at a rate of 14.75 per cent.“Bids shall be priced at the weighted average rate of the accepted bids for the bond auction held and adjusted for accrued interest,” said CBK in the notice announcing the tap sale. Read more
NIC secures Sh5.6bn EIB loan for small business borrowing
NIC Bank has secured a Sh5.6 billion (€50 million) loan from European Investment Bank to fund its loan book expansion and lend small- and medium-sized enterprises. NIC becomes the second lender to receive cash from the European bank following disbursement of Sh555 million to ABC Bank underlining the growing supply of cash to fund entrepreneurship in the country.“We are accelerating our strategy to grow our retail and SME business. The EIB funding will support our push into the fast expanding SME sector,” said NIC Bank group managing director John Gachora. The mid-tier lender is expanding its branch network. Read more
Investment Bank Exotix: Mastermind seen taking huge hit as tax rises
The higher tobacco taxes that came into effect two weeks ago are likely to hurt Mastermind Tobacco Kenya revenues more than BAT which dominates the mid and upmarket category, London-based investment bank Exotix says. Exotix equities analyst Anthea Alexander says in a new coverage note that BAT’s margins are likely to be protected by its dominance of the premium cigarette segment, which had a lower tax increase compared to the lower-priced segment.The new tax rate of a flat Sh2,500 per mille (1,000) of all classes of cigarettes represents a two per cent increase on the previous tax charged on premium cigarettes for BAT, a 43-50 per cent increase for mid-priced cigarettes and a 108 per cent rise for low-priced or economy cigarettes. Read more
Safaricom war with Bitcoin dealer sparks CBK warning
A legal battle pitting telecoms operator Safaricom and a company owned by President Uhuru Kenyatta’s Cabinet nominee for the ICT docket, Joe Mucheru is behind the Central Bank of Kenya’s (CBK) warning against dealing in digital currencies such as bitcoin, the Business Daily has learned.The CBK advisory, which was published in the local newspapers Tuesday, effectively throws a spanner into the works for BitPesa Limited — a Nairobi-based bitcoin trading platform that is linked to Safaricom’s mobile money service, M-Pesa.“The CBK reiterates that bitcoin and similar products are not legal tender nor are they regulated in Kenya. The public should therefore desist from transacting in bitcoin and similar products,” CBK governor Patrick Njoroge said in the notice. Read more
Private sector credit expansion overshoots CBK target at 21 pc
Credit to the private sector expanded 21 per cent, slightly higher than the target of 19.7 per cent set by the Central Bank of Kenya (CBK).The total credit to the private sector stood at Sh2.15 trillion compared to Sh1.78 trillion. This represents an increase of Sh373 billion.The largest growth – 50.5 per cent – was in the credit to the financial and insurance sector. The sector saw its loans move up to Sh58.3 billion from Sh38.7 billion.The pace of the build-up in credit to the private sector was, however, slower than when it stood at 24.5 per cent – an indication that the regulator has been keen to put a lid on any inflationary pressure coming from the money supply side. Read more
Safaricom value jumps ahead of next top 5 NSE firms
Safaricom’s capital gain in the midst of a general price decline at the Nairobi Securities Exchange (NSE) has pushed its capitalisation ahead of the five next largest companies in the bourse.The company is now valued at Sh657.07 billion, while the combined market caps of the East Africa Breweries Limited (EABL), Equity Holdings, KCB, Cooperative Bank and BAT Kenya stand at Sh655.4 billion going by closing prices.Safaricom is trading at Sh16.40 at the NSE having gained 16.7 per cent. This has translated to a capitalisation gain of Sh94.2 billion. Read more
Diesel prices drop Sh1.15 as ERC fails to include new taxes fully
Motorists operating diesel-powered vehicles will enjoy lower fuel prices during the Christmas season after a large part of the consignment was exempted from a Sh2.06 excise tax increase.The Energy Regulatory Commission (ERC) cut diesel prices by Sh1.15 per litre and said most of the fuel had already arrived in the country when the Excise Act came into effect.Diesel, used for powering industries, trucks, buses and agricultural machinery will retail at Sh78.51 per litre in Nairobi. Diesel prices could have increased had the excise tax increase of Sh2.06 applied to the entire cargo.Petrol declined by Sh0.40 to Sh90.06 while kerosene decreased by Sh1.54 to Sh53.27 in Nairobi.“In line with the Excise Duty Act, one cargo of diesel has been increased by Sh2.061 per litre,” Joseph Ng’ang’a, ERC director-general said. Read more
Justice George Odunga, stops sale of five public sugar companies
The High Court has stopped the sale of five State-owned sugar millers after the Transition Authority (TA) filed a suit against the move.Justice George Odunga stopped the sale pending determination of the TA suit, meaning the auction of the 51 per cent stake in Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies to strategic investors will take longer.This looks set to put Kenya on a collision course with the Common Market for Eastern and Southern Africa (Comesa). The two signed a pact to complete the sale of the firms.TA accuses the Privatisation Commission of overlooking its input on disposing of the millers, adding that it is in breach of the law.TA lawyer Steve Mogaka says the commission was in breach of section 35 of the TA Act which states that government assets and liabilities should not be transferred during the transition period without the approval of the authority. Read more
Mumias hires new auditor, hopes to uphold ethics
Mumias Sugar shareholders appointed RSM Eastern Africa as the miller’s auditors, hoping to end queries of professional misconduct.The resolution was passed at the sugar miller’s general meeting held at the Tom Mboya Labour College, in Kisumu.“We hope the ones we have appointed operate within the laid down professional code of conduct,” said Mr board chairman Dan Ameyo. The sugar company is RSM Eastern Africa's first ever Nairobi-bourse listed client.It takes over from Deloitte.The loss-making sugar miller had already engaged RSM Eastern Africa to audit its books. Mumias paid Sh6.7 million in audit fees to Deloitte. Read more
ITM, Amina Mohamed: Nairobi trade-offs key to new global agreement
At least 164 ministers attending the World Trade Organisation (WTO) forum in Nairobi are expected to make major compromises to lay the foundation for a global trade treaty that has eluded the worldForeign Affairs and International Trade minister Amina Mohamed, who is chairing the 10th ministerial conference (MC10), said the global trade ministers have to use negotiation session to make key offers after Geneva (WTO headquarters) failed to reach consensus on the Nairobi outcome.Areas of interest to Africa include financial and technical support for least developed countries (LDCs), agriculture, fisheries, trade in services as well as trade-related aspects of intellectual property rights (Trips).The US angered the African group after it granted its cotton farmers 60 per cent subsidy which will lower the price of the produce, making the African crop uncompetitive. Read more
KNBS: Nairobi’s poor inflation rises most to hit a 25-month high
The rising cost of food is pushing Nairobi’s poor households to the edge as inflation for the lower income group.Data from the Kenya National Bureau of Statistics (KNBS) shows that inflation for Nairobi’s poor homes rose to 8.6 per cent from 7.23 per cent, marking the highest rate.Poor homes are the only income segment to record inflation above the Central Bank of Kenya’s preferred ceiling of 7.5 per cent, highlighting the pressure on their budgets.The differences in inflation levels among Nairobi’s income segments is linked to their different consumption habits, with the rich spending most of their income on transport, the middle class on utilities and rent while food takes the bulk of the poor’s budget.Read more

Support investors to boost trade, urges Education adviser Mwiria
Kenya must overhaul its trade policies to enable local and foreign investors establish companies in all sectors and absorb trainee graduates.Presidential Advisor on Education Kilemi Mwiria said investors must be supported to set up businesses, while those who are already in Kenya should be encouraged to expand and create more jobs.Dr Mwiria spoke at the third Generation Kenya Programme-McKinsey Social Initiative graduation ceremony at Nairobi School that saw 309 trainees graduated.While Kenya had expanded the education sector, a lot needs to be done to make Kenyan youth employable, he said.upport investors to boost trade, urges Education adviser Mwiria. Read more
KCPA: Lobbies propose tax reductions to revive coffee industry
Lobbies in Kenya’s coffee sector have proposed tax cuts and new measures to help breathe life into the troubled industry.Agricultural Industry Network Chairman Edward Mudibo and Kenya Coffee Producers Association acting Chief Executive Officer Humphrey Wafula complained that fees and taxes account for 35 per cent of the farmers’ total gross sale.“Even the government passes its own costs to the farmers by making the farmers pay for their own Research (2 per cent ad valorem levy), Coffee Directorate (1 per cent) and Road Cess (0.8 per cent),” they said.Consequently, the entities want statutory levies reduced from 4 per cent to 2 per cent, coffee directorate levy cut from 1 per cent to 0.5 per cent, while the 2 per cent Coffee Research Fund and 0.8 per cent levy by Kenya Roads Board and 0.2 per cent County Levy scrapped. Read more
NBR: Rwanda gives Kenya bank subsidiaries to boost capital
Rwanda has joined Sudan in requiring Kenyan banks to inject additional billions into the subsidiaries after the regulator National Bank of Rwanda (NBR) issued new minimum capital requirements.New guidelines by Rwanda’s financial watchdog have given the banks to raise capital buffers by up to 2.5 per cent of their deposits to improve their stability in times of losses and economic stress.Introduction of the capital buffer will push the minimum ratio of core capital to total deposits up from the eight per cent to 10.5 per cent.The ratio of total capital to credit advances will also go up to 14.5 per cent.The introductions will see Rwanda banking sector match the capital requirements of its Kenyan counterpart. Read more
Raising professional, ethical standards of financial advisers
When I got my first job, I was very keen to invest and so I sought the services of a so-called personal finance advisor. I was advised to begin by saving and thereafter invest the funds into some investment schemes that were run by the company the personal finance advisor worked for.According to him, I would make a very good return on my investment and so I followed his advice.It was a hustle getting back my initial investment which I finally managed to do after a long time. I faced the same challenge later when I was advised to invest in shares of various companies with a guarantee that I would make a certain return. Read more
Raila faces arrest if he fails to honour EACC summonses
Cord leader Raila Odinga was summoned to appear before the Ethics and Anti-Corruption Commission on Monday over claims he has made on the use of Eurobond funds. EACC officials have warned that Mr Odinga would be prosecuted if he fails to honour the new summonses.But Mr Odinga has declined to appear before the commission and told the officers there is no threat that he has not faced in his life.The commission, in a statement signed by Chief Executive Halakhe Waqo, spelt out its powers to summon witnesses and suspects.The section reads: “The director and an investigator shall have the powers, privileges and immunities of a police officer in addition to any other powers the director or investigator has under this part.” Read more
NSE firms profit warnings hit 12 
The number of companies issuing profit warnings has surpassed after BOC Gases announce that its projected earnings will be lower. BOC became the twelfth listed firm to issue an alert compared to 11.This is partly based on the fact that its income will not gain the benefit of a tax credit this year, which coupled with exchange losses and increased competition means the firm expects to earn no more than Sh172.2 million, compared to Sh229.63 million. Read more 
NCE, CEO Daniel Mbithi: Quality beans increase price of coffee by 21pc
The price of coffee has increased by 21 per cent at the biweekly auction, as the market continues to receive quality beans from central Kenya.A 50 kilogramme bag of coffee traded at Sh21,522 on average up from Sh17,748 registered in sale.This is one of the highest price the auction has recorded and comes as a relief to farmers who have been grappling with low prices.Nairobi Coffee Exchange chief executive officer Daniel Mbithi said good quality coffee is flowing in from farmers, a move that has been significant in improving the prices. Read more
TIS: Bribes paid to KRA staff jumped most, says Transparency report
Bribes paid to tax officials jumped the highest as Judiciary staff received the largest inducements, a new bribery survey reveals.The Transparency International survey shows that the average size of bribe to Kenya Revenue Authority (KRA) workers increased to Sh6,815, up Sh3,400.Judiciary officials received the largest bribes at Sh7,885, which is lower than the Sh8,390 paid, in spite of the huge resources spent reforming the court system.Average bribes paid to Land officials stood at Sh7,219 while that of the police was at Sh4,821, up from Sh4,411.The Transparency International survey, which interviewed 53,784 people in East Africa, indicated that a measly seven per cent of bribery incidences were reported to authorities. Read more
Chase Bank secures Sh3bn loan for green energy projects
Chase Bank has secured a Sh3 billion loan from the Global Climate Partnership Fund (GCPF) for environmental friendly energy projects.The loan, which has the option of rising to Sh4.5 billion, will be used for small-scale renewable energy projects that are now popular as corporates look for alternatives to expensive power.Chase Bank said it had several high potential projects lined up and will start to disburse financing.“Green energy lending is a key strategic focus for Chase Bank,” said the bank chief executive Paul Njaga. Read more
CAK: WB faults Kenya on foreign stake cap of insurance shares
Kenya should remove the legal restriction on foreigners owning more than two-thirds of an insurance company, a new World Bank study on competition backed by national competition watchdog has recommended.On the basis of the study done by the World Bank’s private lending and investment arm International Finance Corporation (IFC), the Competition Authority of Kenya (CAK) released a report supporting the recommendation.“Foreign equity participation in an insurance company has a ceiling of 66.7 per cent and this could affect the prospects on entry and expansion of insurance companies,” said the CAK in a report based on the Bretton Woods institution study. Read more
Kenyan shilling gains against dollar; main share index up
 The Kenyan shilling firmed, bolstered by limp dollar demand and hard currency inflows from foreign investors buying an infrastructure bond.The shilling was quoted at 101.80/101.90 to the dollar, compared with close of 101.90/102.00.One Nairobi-based trader said there was "subdued demand for dollars" ahead of the auction for a 30 billion shillings ($294.99 million) bond."Dollar (demand) disappeared because... the market is of the view that the infrastructure bond is likely to bring in a lot of off-shore interest," added a second trader.The bond is popular with investors because it is exempt from taxes.After plunging close to an all-time low at 106.80 to the dollar, the shilling has traded in a band of roughly 102.00 to 102.50. The local currency has gained due to off-shore inflows into the infrastructure bond. Read more
ERC: Reliance on emergency power dims prospects of cheap electricity
Kenya’s reliance on emergency power went up by 230,000 units, consequently denying consumers a chance to fully benefit from the El Niño rains that have filled up hydro dams.Data from the Energy Regulatory Commission (ERC) shows that, 5.13 million units of emergency power were produced, up from 4.9 million units generated.Emergency power is priced at Sh18 per unit and is higher than hydro power and geothermal, which are sold at Sh3 and Sh7 per unit respectively. It is the most expensive form of electricity at the moment, even ahead of diesel-driven thermal power, which is priced at Sh10 per unit.Read more
NSE: Mumias share price up on Comesa safeguards extension
Mumias Sugar Company shares at the Nairobi Securities Exchange (NSE) rose 6.7 per cent following the extension of the Common Market for Eastern and Southern Africa (Comesa) quantitative safeguards that give a lifeline to the industry.The share sold at Sh1.60 on average compared to Sh1.50, making it one of the top climbers  trading, as news emerged of the continued sugar import restriction.At the close of trading, the company had seen a turnover of Sh1.26 million with a volume of 778,800 shares. Read more
ICAEW: Kenya vulnerable to US rate hike
Kenya’s widening current account deficit and private sector dependence on debt have left the economy increasingly vulnerable to shock of a US rate hike, a report by UK accountants says.The outlook on African economies by the Institute of Chartered Accountants in England and Wales (ICAEW) says rise in US interest rates, expected, will affect economies in Africa by making imports more expensive and lowering capital inflows as the dollar strengthens.“Kenya ranked in sixth position (out of 53) in terms of vulnerability scoring just under 250 points out of 300. This can be attributed to the nation’s current account deficit, which stands at 10.4 per cent,” says the ICAEW report.Read more
BAT caught up in yet another bribery scam at Uganda subsidiary
Cigarette manufacturer British American Tobacco (BAT) is caught up in yet another bribery scam in Uganda, days after the firm was reported to have bribed Kenya’s former Trade minister Moses Wetang’ula. But the London-based tobacco firm has denied any wrongdoing, saying it is not the subject of any investigation by the UK’s Serious Fraud Office.“As far as we know the SFO has not set up any inquiry but if they do, we will cooperate fully and are confident there has been no breach of the UK Bribery Act,” a spokesman at BAT Plc said in response to the Business Daily’s queries.Solomon Muyita, an ex-employee of British American Tobacco Uganda (Batu), has claimed that the tobacco firm bribed a local environmental official to misreport the impact from a fire at one of its warehouses in Uganda. Read more
KBA: Lenders increase interest on loans as Central Bank asks customers to quit
Commercial banks have defied calls by the industry lobby and regulator to lower interests on loans on the back of a relatively favourable fiscal environment marked by low Treasury Bill rates.The Kenya Bankers Association (KBA) has supported calls by Treasury and the Central Bank of Kenya urging customers to shun the banks charging high interests.“This is a very competitive market and banks compete on factors including price. Those banks that are slow to respond to market movements risk losing market share as their customers will simply vote with their feet,” said KBA chief executive Habil Olaka. Read more 
ERC: Why regulator wants kerosene consumers to pay more
The government’s decision to impose additional taxes on basic commodities has hit most Kenyans hard.Even as consumers are forced to dig deeper to meet the increased cost of living, it is emerging that the situation could have been more dire for low income earners had the National Treasury not resisted the pressure to increase taxes on kerosene.The Energy Regulatory Commission (ERC) has been pushing the National Treasury to increase taxes on kerosene.The regulator says this would compel consumers to abandon the cheap but dirty fuel for cooking gas. Read more
How Imperial Bank depositors will get their cash
The Kenya Deposit Insurance Corporation has released guidelines on how 50,000 Imperial Bank depositors will claim their money.Customers of the ill-fated bank will be required to open accounts at the Kenya Commercial Bank (KCB) and Diamond Trust Bank (DTB) where they should also get a claim form.
The two banks will conduct due diligence and forward the claims to Imperial Bank, which is in receivership, to verify the claims.Accepted claims will then be routed through KCB or DTB, while the unsuccessful ones will be answered at the branch where one lodged the claim.The Central Bank of Kenya (CBK) said the process.Read more
Agriculture Cabinet Secretary Adan Mohamed: Kenya wins sixth Comesa protection from cheap sugar
Kenya has been granted another extension of sugar import limits from the regional trade bloc Comesa, offering relief to local millers that would have to deal with tougher competition from more efficient producers.The tariffs were scheduled to fall to zero and the extension giving more time for it to improve infrastructure and carry out other reforms like sale of the loss-making companies, introduce new cane varieties and revamp roads in sugar growing zones.Kenya has been allowed for more than a decade to protect its sugar farmers that are not competitive with high tariffs.Read more
CBK forex reserves up Sh24bn 
Foreign exchange reserves kept by the Central Bank of Kenya (CBK) rose by Sh24 billion ($230 million), strengthening the regulator’s ability to curb the shilling’s volatility.The increase takes the total reserves to Sh713 billion ($6.979 billion), taking into account the average of the value imported.Analysts attributed the rise in the reserves to inflows from a government bond, a syndicated loan and remittances. The Treasury floated a five-year bond to raise Sh20 billion, and also took Sh60 billion. Read more
Kenya needs Konza tech city in plans to spur economic growth
Following the commencement of the horizontal infrastructure at the proposed Konza Techno City site and investors having been asked to express interest to invest in the city, there has been vigorous debate about the need for project.The dialogue should be encouraged. I believe that Konza City is critical to the future of the country — Kenya needs Konza to play a critical role in its transformation towards technology and knowledge-based economy and to be able to compete in the region and globally.It’s a key Vision 2030 project and will contribute significantly to making Kenya the middle-income status goal. Konza City is envisioned as a sustainable, world-class technology hub and a major economic driver for the nation, with a vibrant mix of businesses, workers, residents, and urban amenities.Read more
KRA: State may lose revenue after excise tax hike
In the world of taxes, there is always the attempt to classify taxes into different distinct pigeon-holes such as direct and indirect, or income and consumptions taxes.Irrespective of where a tax is classified it will either be imposed on gains or profits or on identified transactions.Direct taxes refer to taxes that are imposed on the gains or profits of an individual (natural or juristic). This implies that the individual is allowed a deduction of the expenses that he incurred to generate income and account for tax on the difference; income tax and capital gains tax are good examples.There is also the odd occasion where income tax is imposed on turnover without allowing a deduction for expenses incurred. Read more
Uhuru backs China-Africa partnership to spur development
President Uhuru Kenyatta has said that a partnership with China will help accelerate Africa’s development and contribute to the cause of safeguarding world peace.He said the mutually beneficial and respectful ties between Africa and China resonated with the 10-point cooperation plan presented by President Xi Jinping at the opening of the summit of the Forum on China-Africa Cooperation (Focac) in Johannesburg.The President observed that the Chinese leader’s proposal to establish partnership with Africa based on mutual trust at the political front and a win-win cooperation at the economic front was a step in the right direction.“President Xi was not just all talk. He put $60 billion on the table to back his important statement,” President Kenyatta said. Read more
NSSF eases grip on KenGen after offloading Sh134m stake
The National Social Security Fund (NSSF) has traded its 17.3 million shares in Kenya Electricity Generating Company (KenGen), losing its long-held position as the second largest investor in the power producer. KenGen’s report shows that the fund had exited the Nairobi Securities Exchange-listed firm’s list of top owners as, having held the shares equivalent to a 0.8 per cent stake.The shares traded by NSSF are worth Sh134 million based on the power producer’s share price of Sh7.7 apiece.A local institution, investing under a Co-op Bank custody account, is now the second largest shareholder of KenGen with 13.1 million shares.The exit of NSSF is a rare one for the government-controlled fund that typically invests long term, especially in firms where the State has a significant or majority stake. Read more
TS Rotich: Treasury says Eurobond borrowing rose to Sh281bn
National Treasury received a Sh6.5 billion bonus from the reopening of the sovereign bond that raised Sh75 billion ($750 million) bringing the total proceeds to about Sh281 billion.The initial tranche of the bond had realised Sh200 billion ($2 billion) but this was reopened owing to the good reception at the Irish Stock Exchange where it was listed, Treasury cabinet secretary Henry Rotich revealed.Addressing the press, Mr Rotich said the money raised was first used to settle the syndicated loan that had been secured from commercial banks.“Because of the success we had with the initial bond issue at the Irish Stock Exchange, we decided to go for the tap sale and we were able to get a bonus of over Sh6 billion,” said Mr Rotich. Read more
ERC: Energy regulator assures of low electricity cost for consumers
The Energy Regulatory Commission (ERC) is optimistic of reduced fuel charges following a drop in electricity production using fuel-driven thermal sources. ERC Deputy Director for Electricity Tom Simiyu said that the use of hydro, as opposed to commonly used fuel, will cut the amount of the fuel cost surcharge included in the bills.According to data, electricity generation from fuel-driven thermal sources reduced to 10.4 per cent of the total power production in November.“The reduced thermal generation comes with the benefit of reduced fuel cost charge, which is a significant component in the electricity bills, hence reducing the price of electricity,” said ERC deputy director for electricity, Tom Simiyu. Read more
City Hall now plans to introduce taximeters
Taxi users in Nairobi will pay time and distance-based charges if a proposed law that introduces taximeters is approved.The metered payment will replace the current system where fares are arbitrary and subject to an agreement between the passenger and the taxi driver.A taximeter is a device fitted in a vehicle that calculates the fee chargeable based on distance travelled and time taken according to a set tariff.The Nairobi county government plans to introduce the system in the Kenyan capital with the passing of a Bill that will force all taxi owners to fit their vehicles with type-approved metering devices. Read more
Master Card: Nairobi tops Africa in financial services
Nairobi has been rated the top African city in access to formal financial services, catapulting it into the top 10 cities in economic growth potential.According to the MasterCard African Cities Growth Index, Nairobi’s index value rose from 37.2  when it was ranked 19th, to 41.3 which ranks the city in ninth position out of 74 African cities.A survey by the Financial Sector Deepening Trust (FSD Kenya) showed that financial inclusion level in Kenya is 75 per cent, boosted by the growth of mobile money usage especially in the informal sector.“Nairobi has the highest percentage of the population with a financial account, ranking higher than the South African cities,” says MasterCard in the report. Read more
Treasury accounts for Eurobond revenue
The National Treasury maintained that the proceeds of the Sovereign Bond and the Tap Sales were used to fund part of the development budgets.It said only three transactions were carried out on each of the offshore accounts used for transacting the Eurobond money including repayment of the syndicated loan, expenses relating to the issuance of the Sovereign Bond and the Tap Sales and the transfer of the balance to the Consolidated Fund.“All the proceeds of the Sovereign Bond issued and the Tap Sales issued were fully accounted for and were transferred to the CBK, from where the authority to withdrawal funds was sought and provided by the Controller of Budget,” The Treasury said.Read more
KPMG says Safaricom created 0.6m jobs 
Safaricom’s operations generated more than 682,000 jobs directly and indirectly in the Kenyan economy last year, a study by consulting firm KPMG shows.The report, which was commissioned by Safaricom, shows that the telecommunication company’s voice, data and M-Pesa business generated the direct and indirect jobs through the telco’s products and services such as airtime dealers, M-Pesa agents and distributors. Safaricom chief executive Bob Collymore said the ‘True Value’ report is meant to offer insights into the full economic impact of the telco.“ICT is a driver for growth. It is a tool for our customers to connect, access information and do business,” said Mr Collymore yesterday during the release of the report. Read more
CEO, Lerionka Tiampati: KTDA signs Sh5.5bn loan deal for building hydro-power dams
Kenya Tea Development Agency (KTDA) signed a Sh5.5 billion syndicated loan to fund the construction of seven small hydro-dams as part of strategy to tame operational costs at its various factories.“With the funding that we have received, construction works for Nyambunde, Kiringa, Kipsonoi and Nyamasege small hydropower stations will commence,” said chief executive Lerionka Tiampati.Construction of KTDA’s three hydropower projects in Gura, Chania and North Mathioya are at advanced stages, funded by an earlier credit line from French Agency for Development.The loan is arranged by the World Bank’s private sector lending arm, International Finance Corporation (IFC) in partnership with the Global Agriculture and Food Security Program, French development institution Proparco, and the Netherlands Development Finance Company.Read more
Bank stocks are not a good buy for now
Banks have just concluded the release of results and looking at those numbers, I would advise against further exposure to bank stocks. The outcomes are just too business-as-usual to excite valuations.Looking at the topline keenly, there was visible pressure on the core business. While gross loans and advances grew by 21 per cent, interest income earned from the same only grew by 18 per cent.Growth mismatch in the two key line items is a clear evidence of the existence of pressure on the business. Although you could also argue out the mismatch in two ways.Read more
KRA starts paying Del Monte Sh305m refunds 
The Kenya Revenue Authority (KRA) is set to pay Del Monte Sh305 million in Value Added Tax (VAT) refunds it has failed to remit to the food processing company.The taxman has agreed to pay the sum following out-of-court negotiations that will also see it drop an attachment of assets threat it had slapped Del Monte with over a Sh141 million tax demand.The Sh141 million demand was the subject of another case the fruit processor had filed against KRA, valuing the two suits at Sh446 million.Under the consent filed in court, KRA will pay the sum in nine equal instalments. Justice Mumbi Ngugi adopted the consent as a court order and marked the court case as settled.Read more
PwC says Kenya firms pay less tax than their African peers
Kenya is emerging as a tax-friendlier destination with businesses paying nearly 10 percentage points less tax than the continental average and spending less time filing returns thanks to a technology-based tax system, according to a new PricewaterhouseCoopers report.The PwC data capturing tax payment trends show a Kenyan company in total pays an average tax rate of 37.1 per cent, using a mean 202 hours to comply with its taxes while making 30 payments.According to PwC, Kenya retains a competitive tax position in Africa with the continental average for the total tax deductions standing at 46.9 per cent. Companies take 313 hours to prepare, file and pay their tax obligations on average in Africa. Read more
How market information affects stock performance
Munyao always admired the prospects of trading public equities. From the Bombay Stock Exchange to the Johannesburg Stock Exchange to the Brazilian Securities, Commodities and Futures Exchange, he followed trends around the world. He read all about the DAX, CAC 40, Hang Seng, Nikkei 225, Dow Jones, S&P 500, Russell 2000 and FTSE 100.When Munyao sold his clothing retail business, he decided to plough the proceeds into the Nairobi Securities Exchange. He kept his wife up late at night at times reading through newspapers and analysing information on the different companies he traded.However, slowly Munyao started to lose excitement. He noticed that if the Nairobi Securities Exchange (NSE) went up by 25 per cent, his stock choices only went up by 18 per cent. Read more
CAK: Safaricom seeks to block sale of France Telecom stake over debt
Safaricom is seeking a court injunction to block the sale of France Telecom’s 70 per cent stake in Telkom Kenya until it is paid a Sh639 million claim against the telecommunications company. Safaricom, through its advocate Kiptinness and Odhiambo Associates, moved to court saying it will suffer irreparable loss and damages if the sale and takeover of France Telecoms’ stake in the Kenyan company is concluded before it is paid the amount.France Telecoms announced that it had signed a binding agreement with Helios Investment Partners to acquire the entire 70 per cent stake it held in Telkom Kenya.The announcement triggered a similar demand for debt repayment from the industry regulator, the Communications Authority of Kenya (CA). Read more
KNBS: Higher Cost of Food Drives Up Inflation
The rate of inflation reached its highest level, hitting 7.32 per cent due to costly food items, data by Kenya National Bureau of Statistics shows.Only Sukuma Wiki prices reduced slightly among the basic food items used to measure cost of living. A kilo of Sukuma Wiki was 3.53 per cent cheaper at Sh37.47. The food and non-alcoholic drinks' index rose by 1.08 per cent on higher prices of items such as maize, tomatoes, potatoes and onions among others."This aggregate rise in the food index was as a result of rise in prices of several food items which outweighed the decreases," said KNBS in a statement. Read more
Imperial Bank chief links CBK staff to fraud
A former Imperial Bank manager has denied claims that he blew the whistle on a Sh34 billion fraud scheme that its long-serving chief executive Abdulmalek Janmohammed run before his death .Naeem Shah, who temporarily succeeded Mr Janmohammed as group managing director, says in papers he has filed in response to a suit that receiver managers have file against him that he never made any confessions on his alleged role in helping his boss embezzle depositors’ funds.Instead, Mr Shah reckons that Imperial Bank directors and Central Bank of Kenya (CBK) officials were part of the fraud scheme and were merely implicating him to cover their tracks. Read more
AD&SSL: UK logistics firm Atlas closes Kenya subsidiaries, shifts focus to Ethiopia
Atlas Development & Support Services Limited, a UK logistics company that is listed at the Nairobi Securities Exchange, has announced the closure of its Kenyan subsidiaries.This comes at a time when its fortunes have been dwindling as a result of a downturn in the oil and gas exploration sector where its operations were mainly focused.In a statement, Atlas said that it had faced “increasing creditor pressure” resulting from failure by some of its clients to settle debts and as a result decided to close its Kenyan operations and focus all of the company’s administrative functions and activities to Ethiopia.“We have taken steps to place our Kenyan subsidiaries into formal liquidation proceedings. Read more
Restrictions from large banks puts global money transfers at risk, says World Bank
Two surveys carried out by the World Bank show that unnamed large global banks are restricting or terminating their relationships with other financial institutions putting at risk money transfer services.The surveys indicate that business lines such as clearing of cheques and trade finance are also affected by the move, according to a statement from the bank.According to the World Bank, these restrictions are largely driven by commercial decisions as well as legitimate concerns about money laundering and terrorism financing risks, leaving customers to turn to unregulated financial institutions. Read more
TS Mr Henry Rotich: Water, beer, car prices up as new taxes take effect
Consumers will pay more for beer, juices, water, second-hand cars and motorcycles after the Treasury set the date for application of new taxes on the goods.Treasury secretary Henry Rotich has indicated in a gazette notice that the Kenya Revenue Authority (KRA) will start collecting the taxes.Beer is up Sh30 per litre, kerosene by Sh5.75 a litre, bottled water up by Sh7 a litre, juice is up Sh10 a litre while a charge of Sh10,000 will apply on motorcycles.“In exercise of the powers conferred by section 1 of the Excise Duty Act, the Cabinet secretary for the National Treasury appoints the date the Act shall come into operation,” said Mr Rotich in the gazette notice.Read more
KenGen Sh29bn issue will mainly pay Treasury debt
Listed power producing company, Kenya Electricity Generating Company (KenGen), hopes to boost its cashbook by a net of Sh8.6 billion in the upcoming rights issue and lift itself from a liability position.The company confirmed in its annual report it aims to raise Sh28.6 billion in a rights issue scheduled to be completed, but Sh20 billion is expected to clear a loan owed the government.“These proceeds comprise new cash estimated at Sh8.6 billion to be raised from the minority shareholders. The on-lent loan is expected to convert to equity when new shares are issued to the government from the rights issue,” reads part of the report. Read more
IRA: Insurance fraud more than triples to Sh324 million
Insurance fraud more than tripled, the industry regulator said in a newly-released report covering.The Insurance Regulatory Authority (IRA) said it had recorded 93 cases of fraud involving Sh324 million compared to 88 involving Sh102 million.Motor and medical insurance classes were the most affected segments of the industry that accounted for more than half of the reported cases.“The easy targets for insurance fraud have been motor third party. We have, however, seen an increase in work related injury claims as well as medical related classes,” said Commissioner of insurance, Sammy Makove. Read more
Frost & Sullivan: Cashless deals good for Kenya, says study
Adoption of paperless cash transactions in the matatu and retail sectors could further deepen foreign direct investments in the country, a survey has said.South African based market study firm, Frost & Sullivan said introduction of such platforms by retail and tourism sectors could further entrench use of the mobile phone-based services.Its study titled The Telecommunications Market in East Africa — Key Fixed and Mobile Market Indicators’, says text-based and online-based payment services will be deepened more when the ongoing national Internet backbone rollout is completed.The study says mobile phone operators could take advantage of the prevailing conducive policy framework in Kenya to entrench e-commerce services into tourism, retail and matatu sectors, thereby creating new revenue streams via sale of data bundles and airtime to users. Read more
Auditors on the frying pan after ‘cooking’ of books at Uchumi
Revelations that Uchumi Supermarket management manipulated financial accounts to the tune of Sh1 billion has shifted focus to auditors’ role in listed companies.Releasing the financial results, Uchumi Chief Executive Julius Kipng’etich said the management had concealed losses of up to Sh1.04 billion by cooking the books.“We believe there was manipulation going on, but we had no time so we looked where the manipulation shot up,” he said.Imperial Bank, Dubai Bank, CMC Holdings, Mumias Sugar, Kenya Airways, and now Uchumi, are among companies involved in alleged financial scandals without the auditors raising the alarm. Read more
KQ: Kenya Airways unable to pay its employees
Employees of troubled national carrier Kenya Airways face an uncertain Christmas after the airline said it was unable to pay their salaries due to a cash crunch.Staff who spoke to the Daily Nation but did not want to be named expressed frustration over the move, while confirming that all KQ employees, including pilots and cabin crew were yet to be paid.“We would like to inform all staff that due to unforeseen circumstances, salaries will be delayed,” says the airline’s group human resources director Alban Mwenda in a staff notice number 070/2015 seen by the Nation.The notice, pleads for calm saying: “We are making all efforts to have them paid. We regret any inconvenience occasioned by the delay.” Read more
CAK: Phone firms scoff at plan to raise penalty slapped on poor service
Telecom operators have faulted a move by the Communications Authority of Kenya (CA) to increase quality of service penalties, noting that it will hurt their revenues.CA Director-General Francis Wangusi announced that operators would be penalised 0.2 per cent of their gross turnover for offering poor quality service.Mr Wangusi said the enhanced penalties will act as a warning to operators to strive to offer better services to consumers. Lenient fines have led to continuous poor offering to clients, he noted.He said the Sh500,000 penalty had brought about a surge in sub-standard offering to consumers. Safaricom and Telkom Kenya have said the move is the worst way to manage concerns of poor services to consumers.Read more
IFC cuts Stanlib Reit investment after poor uptake
The International Finance Corporation (IFC) reduced investment in Kenya’s first Real Estate Investment Trust (Reit) to avoid breaching its rules after poor market response to the issue.The investment rules of the World Bank’s private financing arm do not allow the institution to own more than one fifth in such ventures.The IFC ended up investing $6.7 million (Sh684 million) to match the other investors, which is less than half the $15 million (Sh1.53 billion) it was proposing to invest in Stanlib Investment Fahari Income-Reit.“As set out in the public notice issued by IFC, it sought approval from its board to invest up to $15 million.  However, the IFC’s internal policies require it to limit its investment in such projects to no more than 20 per cent,”  Stanlib Fahari I-Reit chief executive Anton Borkum told the Business Daily. Read more
NBK: National Bank tests liquidity ratios as MPs reject State cash injection
National Bank of Kenya (NBK) has nearly reached the limit of its statutory ratios following Parliament’s rejection of the National Treasury’s plans to inject new cash into the institution.Its liquidity ratio stands at 21.1 per cent against a minimum requirement of 20 per cent, leaving a 1.1 per cent headroom. The liquidity ratio was higher at 25.8 per cent.Despite the cash crunch, the bank more than doubled its profit to Sh2.25 billion on the back of a Sh4.1 billion new lending.It boosted its position by Sh1.72 billion from the sale of 12 buildings in the course.Parliament rejected the bank’s request for an allocation of Sh4.9 billion which the Treasury had initially proposed to inject in a rights issue intended to raise a total of Sh13 billion. Read more
StanChart to cut jobs
Standard Chartered Bank Kenya is set to cut jobs, a move it says will lead to retrenchment costs large enough to hurt its performance.The looming layoffs are part of the bank’s strategy to improve its performance after announcing a profit warning.“There will be a redundancy charge which will impact our performance,” the lender said in a statement without indicating how many employees would be retrenched.“The forecasted increased impairment and redundancy charges may result in forecasted earnings falling below earnings by at least 25 per cent.” Read more
SKL: Stanlib Reit fails to hit target as T-bill locks in investors
Kenya’s first Income-Real Estate Investment Trust (Reit) issued by Stanlib Investments has raised under one-third of the targeted Sh12.5 billion in what analysts attributed to competition from other instruments and the market’s poor grasp of the concept.The Fahari I-Reit managed to raise Sh3.6 billion through the offering, Stanlib said in a notice. It termed the offer a success since it exceeded the minimum Sh2.6 billion target.“Following the closing date of receipt of applications and payment for units in the Stanlib Fahari I-Reit, Stanlib Kenya Limited (the issuer) is pleased to announce that the offer exceeded the success threshold of Sh2.6 billion as it has received applications for units amounting to Sh3,619,446,000,” said Stanlib. Read more
CBK: Investors keep off short-term T-bills as yields dip
Fixed-income investors largely stayed away from the Treasury bills as yields came down to approach the single-digit rates.The yield stood at 10.092 per cent having slipped 0.111 percentage points from the auction. The subscription was only Sh474 million against the Sh6 billion offered by the Central Bank of Kenya (CBK).The paper came in at a yield of 11.934 per cent, down 0.152 percentage points from the auction. The subscription was also low at only Sh1.158 billion against an offer of Sh6 billion just as was the case for the T-bill. Read more
RBA: Pensions authority protests order forcing it to give Laptrust licence
The Retirement Benefits Authority (RBA) has moved to the High Court to challenge a recent decision by the appeals tribunal ordering it to issue a certificate to the pension administrator for Laptrust Pension Scheme for county employees. RBA claims in court papers filed that the Retirement Benefits Appeals Tribunal lacks powers to order it to give CPF Financial Services Ltd a certificate of registration as a duly licensed administrator of a retirement benefits scheme without having applied for a permit or meeting the requirements set in the RBA Act.“The said order of the Tribunal gravely prejudices the interests of members of the Local Authority’s Retirement Benefits Scheme whose retirement benefits are at risk of being administered by an entity, which according to the legal opinion issued by the Attorney-General is an illegal entity,” RBA said in the court papers. Read more
WB: Sh1.6trn war chest to fight climate change
Kenya is set to benefit from a Sh1.6 trillion fund ($16 billion) unveiled by the World Bank Group, to help African countries adapt to climate change and build up the continent’s resilience to shocks associated with the phenomena.Titled Accelerating Climate-Resilient and Low-Carbon Development, the Africa Climate Business Plan will be presented at COP21, the global climate talks in Paris, France.A statement by the World Bank says the fund will boost resilience of the continent’s assets — “its people, land, water, and cities — as well as other moves, including boosting renewable energy and strengthening early warning systems”. Read more
KRA: Taxman seeks to help counties collect revenue
The Kenya Revenue Authority says it has opened negotiations with county governments, with a view to commencing revenue collection on behalf of the devolved units.The authority said it has been engaging with individual governments on various areas of collaboration as it seeks to provide cash collection agency services as provided for under the Public Finance Management law.“We are encouraged by the response from the respective county governments, which we have been engaging with a view to obtaining their buy-in for our agency services,” said KRA Commissioner Domestic Taxes, Ms Alice Owour.She announced the plans when she appeared before the Senate Committee on Finance, Commerce and Budget. Read more
Imperial Bank owners and CBK feud over reopening delays
Imperial Bank shareholders have blamed Central Bank of Kenya (CBK) over the delayed reopening of the closed bank, after the regulator accused them of inaction.The shareholders accused CBK and Kenya Deposit Insurance Corporation of failing to follow up the proposed restructuring plan thus delaying the reopening. The shareholders said further delay would derail the recovery plan.“The plan calls for the appointment by KDIC of an independent professional firm to undertake a comprehensive due diligence into the affairs of IBL which would include ascertaining conclusively the size of the funding gap.To our knowledge this has not been conducted so far,” said the shareholders in a rare statement targeting the regulator. Read more
StanChart issues profit warning after posting dismal results
Standard Chartered Bank Kenya has issued a profit warning after posting a disappointing performance.This means that the lender expects a maximum net profit of Sh7.8 billion compared to Sh10.4 billion, reflecting a dip of at least 25 per cent.The bank’s earnings have dropped on the back of rising bad debts and the absence of gains on property sales that had boosted its profits. StanChart’s net profit dropped 24.3 per cent to Sh6.2 billion amid a flat loan book and interest income.The performance was also hurt by a decline in transaction-based income and a sharp rise in loan loss provision. Read more
Chief Executive of Rendeavour: Tatu Industrial Park seeks more investors
Tatu Industrial Park, the light factory area of Tatu City, broke ground on a 420-acre site with plans to target an additional 12 local and multinational companies.Founder and chief executive of Rendeavour, the majority shareholder in Tatu City, Mr Stephen Jennings, told the Nation that a dozen investors had already signed deals to locate their enterprises at the park, with an additional 12 showing significant interest.“I think we will be 80 to 90 per cent sold out,” said Mr Jennings.He said global consumer goods giant Unilever and Kenyan companies Dormans, Kim-Fay and Maxam are among those that have announced plans to build new manufacturing plants at the park. Dormans had already started construction, he added. Read more
Kenyan banks rank poorly among peers in region, says IMF
Kenya ranks in the bottom half among the middle-income countries in sub-Saharan Africa (SSA) in terms of penetration of the commercial banking sector.Data from the International Monetary Fund (IMF) shows that Kenyan banking sector penetration — as measured using total assets — stands at 64.2 per cent of the gross domestic product (GDP), placing it position seven among the 12 countries classified as middle-income in SSA.Kenya’s position is also below the average penetration of 99.2 per cent of the GDP for the same region.Even though the country is not high up in commercial banking, the report notes that its strength lies in the usage of mobile phones to access financial services. Read more
President Uhuru Kenyatta’s: Now let’s walk the talk and eradicate corruption menace
President Uhuru Kenyatta’s pledge to lead from the front in the war on corruption is long overdue.As part of the vanguard that will wage a war for Kenya’s very soul, the President has done well to rope in all the arms of government as well as members of the private sector.We have a multiplicity of institutions whose sole onus is to battle and eradicate corruption. That Mr Kenyatta feels obliged to throw additional bodies into the fray to stem the bleeding is a clear sign that despite the country’s long documented struggle to extricate itself from the clutches of graft, much still needs to be done.By declaring corruption a threat to national security, the President has raised the bar to its highest level; this is about a nation’s survival. Read more
PSA: War on corruption splits private sector
The new assault on graft by President Uhuru Kenyatta has created a rift between the private sector and the chamber of commerce chairman Kiprono Kittony who resigned from the Kenya Private Sector Alliance board.Mr Kittony said the lobby had hijacked an industry initiative when it presented the Anti-Bribery Bill to President Kenyatta.He said the alliance, with about 200 corporates and 90 business membership organisations, does not represent private business in the country and abroad.“As far as we are concerned, we (Kenya National Chamber of Commerce and Industry) are the umbrella body for the private sector, we represent the business community from the ground and Kepsa has not been an inclusive organisation, it is elitist,” he told the Nation at the sidelines of the Kenya-China import and export e-commerce platform launch. Read more
Diamond Trust Bank profit up to Sh4.7bn
Diamond Trust Bank announced an 11.4 per cent increase in group profit after tax of Sh4.7 billion compared to Sh4.3 billion during a similar period .The group’s total interest income shot to Sh18.39 billion compared to Sh15.14 billion recorded in a similar.At the same time, the bank’s group profit before tax edged up marginally to Sh6.91 billion for the period compared to Sh6.24 billion.On the other hand, its group net interest income went up to Sh10.86 billion, compared to Sh9.32 billion, according to its unaudited financial results released. Read more
DG, Francis Wangusi: CA imposes stiffer penalty for poor telecom services
The Communications Authority of Kenya (CA) board has set 0.2 per cent of the gross turnover as the penalty for telecommunication firms that offer substandard services, setting the companies up for heavier fines.Francis Wangusi, the CA director-general, said the new penalty will be effective and will also see data or internet providers subjected to the new penalties.The fine stands at a flat rate of Sh500,000 which Mr Wangusi reckons is too lenient and has failed to give operators the incentive to comply with established quality of service (QoS) standards.“We have made the penalties on the breach of QoS stiffer as a way of motivating the operators decide either to pay 0.2 per cent of their annual gross turnover to the authority or to plough back the money and improve their network quality,” Mr Wangusi said. Read more
Affa: Sugar price falls to a low on inflow of imports
The average retail price of sugar stood at Sh104 a kilogramme,helped by a large inflow of imports.Sugar prices hit an all-time high of Sh135 a kg due to a devastating cane shortage that affected factory operations, closure by some millers for annual maintenance and cartels seeking to profiteer. New data by the Agriculture, Fisheries and Food Authority (Affa) shows that a kilo of sugar retailed at an annual average of Sh104 in the period, reflecting a general cooling of prices as the market responds to the effects of a steady inflow of imports that have helped meet local demand. The country had imported a total of 196,713 tonnes of sugar, surpassing the 192,121 tonnes imported. Read more 
Sterling Capital: Kenya’s foreign currency reserves decline to Sh688 billion
The country’s foreign currency reserves have reduced marginally for two consecutive, sending mixed signals to the market.The data from the Central Bank of Kenya shows that forex reserves stood at Sh688.5 billion ($6.75 billion), equivalent to 4.30 of import cover.The official reserves were Sh693.6 billion ($6.80 billion), equivalent of 4.33 of import cover.“Movements in the amount of reserves depends on the rate at which the Central Bank is selling dollars to the market in order to stabilise the local currency and also the amount of interest being paid on foreign currency dominated debt.The danger lies where you do not have sufficient reserves to mitigate any macroeconomic shocks,” said Mr Eric Munywoki, an analyst at Sterling Capital. Read more
Safaricom: Thousands face SIM de-activation
Thousands of Safaricom and Airtel subscribers have to register their SIM cards afresh or face de-activation after it emerged that the details they used to register their mobile numbers do not match those at the Integrated Population Registration System (IPS). Safaricom and Airtel have been sending SMS to the affected subscribers to confirm their registration details or asking them to visit the firms’ shops with their original ID and a copy to register again.The push by the two mobile firms for fresh registration comes after the industry regulator, the Communications Authority of Kenya (CA), revised the rules for SIM card registration. Read more
PFPTC: MPs publish Bill to tame interest rates
Parliament has stepped up its bid to tame high interest rates through legislation just after commercial banks heeded a call by the Central Bank of Kenya (CBK) and abandoned their plan to raise charges. Anamoi MP Benjamin Lang’at, who chairs parliament’s Finance Planning and Trade Committee, said a Bill that seeks to empower CBK to regulate interest rates has been forwarded to the Government Printer for publishing.“We have scrutinised the Bill and we have cleared it for the next stage. Hopefully the Bill will be published,” Mr Lang’at said.The CBK (Amendment) Bill, sponsored by Sirisia MP John Waluke, seeks to amend Section 36 of the Central Bank of Kenya (CBK) Act, handing the regulator authority to compel banks and microfinance lenders to cap borrowing rates at five percentage points above its signal rate. Read more
UNECA: Why Delhi is key partner for Africa economic progress
It is widely known that China has been making significant inroads into Africa and a great deal of energy has gone into analysing Sino-Africa economic interaction. However, barely any attention has gone into analysing India’s growing footprint on the continent.The Third India Africa Summit took place in New Delhi, signalling India’s interest in the region.Carlo Lopes of the UN Economic Commission for Africa (UNECA) made an important point when he stated that Chinese foreign direct investment (FDI) is less than one per cent of the country’s total global investment yet India invested as much as 16 per cent of its outward FDI, valued at $70 billion, in Africa.Further, Africa is responsible for 26 per cent of India’s total inward FDI stocks at $65 billion, more than Brazil, China, the Russian Federation and the US. Read more
Kenya can’t afford to ignore new US foreign tax law
The US government has passed new laws with potentially far-reaching impact on the corporate world.Whether one is talking about Sarbanes Oxley Act that was passed after the accounting scandal that led to the collapse of America’s energy giant Enron and accounting firm Arthur Andersen the pipeline for legislation targeting corporate malfeasance and economic crimes has been consistently busy.The impact of this legislation is being felt in corporate boardrooms across the world — especially its key provisions that introduced major changes to the regulation of financial practice and corporate governance.Yet the mother of all US legislation that is sending shockwaves through the global financial services sector is FATCA (the Foreign Account Tax Compliance Act). This law mainly aims to curb tax evasion by US citizens holding financial assets abroad. Read more
Judge Eric Ogola: Court ruling could expose Central Bank to multi-billion shilling suits
Decision by the High Court on closure of Dubai Bank Kenya Ltd could leave the Central Bank of Kenya exposed to billions of shillings in claims by depositors.In his ruling stopping liquidation of the lender, High Court Judge Eric Ogola said the speed at which the regulator resolved to liquidate the lender after putting it under receivership showed “that CBK had all the time known that Dubai Bank had serious problems but chose to cover them and instead continue to pamper the bank when the regulator had serious responsibility to the depositors and the public at large”.The ruling was made, in relation to an application filed by a depositor, Richardson and David Ltd, who claimed that the CBK had failed it by imprudent or non-exercise of its supervisory powers. Read more
EABL: Tax reduction boosts demand for sorghum
Demand for sorghum has tripled after the government cut excise duty on Senator Keg.When the government introduced a 50 per cent excise tax on the low cost beer, demand dropped sharply.President Uhuru Kenyatta reversed the charge through the Alcoholic Drinks Control (Amendment) Bill, favouring beer brewed using locally sourced raw materials.The law offers a 90 per cent tax cut for drinks manufactured using at least 75 per cent sorghum, millet or cassava.East African Breweries Ltd (EABL) Group Supply Chain Director Peter Vogtländer said the company is targeting 22,000 tonnes of sorghum.“We are glad to note that the demand for sorghum has tripled, with tax revenues from Senator growing by 30 per cent,” Mr Vogtländer said in Nairobi. Read more 
Treasury secretary Henry Rotich: Enforce austerity measures
Treasury secretary Henry Rotich has once again announced a raft of austerity measures that he believes will help the government plug the budget hole created by revenue shortfalls.In his plan meant to rein in profligate spending by national and county government officials, Mr Rotich has flagged the usual suspects for the chopboard: travel, motor vehicle maintenance and hospitality.The decision appears sound, coming in the wake of the cash crunch that recently hit the public service, including compromising the State’s ability to pay some of its workers.Yet Mr Rotich’s announcement is likely to be greeted with a fair dose of cynicism among many Kenyans, and understandably so.Calls to austerity by the Treasury have gone largely unheeded, with subsequent reports of the Controller of Budget indicating that just about every ministry, department, agency or county has been busting its travel budget. Read more
 Fisheries Principal Secretary (PS) Micheni Ntiba: Kenya gets nod to export farm fish to European market
Kenya has received certification to export farm fish to the European Union, Fisheries Principal Secretary (PS) Micheni Ntiba has said.He said the nod was given.The PS, who spoke when he led a team from the Agricultural Sector Development Support Programme in paying a courtesy call to Meru Governor Peter Munya, did not, however, provide details about the EU move.Kenya has not been exporting fish from aquaculture because it was yet to put in place mechanism to certify the produce for export.The country produced 46,000 tonnes of fish from farms. The government says the country exported 150,000 tonnes of fish. Read more 
Remu Microfinance set for Sh345m Q1 rights issue to fund small firms
Remu Microfinance Bank is preparing to raise Sh345 million from its shareholders through a cash call slated.The rights issue is part of the Sh1.7 billion the micro-lender plans to raise through a mix of equity and debt.“Some of the money has already come. Some shareholders have put deposits which they will then convert into shares,” Remu CEO Peter Mugendi told the Business Daily.He said around 80 per cent of the targeted amount should be in the form of equity injection.The micro-lender has an asset base of Sh400 million. It has some 242 shareholders, including private equity firm Fusion Capital which bought a 25 per cent stake for an undisclosed amount. Read more
Imperial Bank shareholders want to join case against accomplices
Shareholders of collapsed Imperial Bank are seeking to be enjoined in a court case filed by the lender’s receiver managers in pursuit of 20 companies and individuals believed to have embezzled Sh34 billion belonging to depositors.Seven companies, with a combined 86.5 per cent shareholding in the bank, asked High Court judge Fred Ochieng to enjoin them in the suit as co-complainants.The shareholders argue that they had planned to pursue assets owned by the firms and individuals to recover the money and that it would be easier if they were enjoined into the case.Imperial Bank through the Kenya Deposit Insurance Corporation, the receiver manager, moved to court last month seeking to attach assets owned by the firms and individuals to recover money believed to have been stolen by the bank’s founder through an elaborate scheme. Read more
CBK suspends licensing of commercial banks
Central Bank of Kenya (CBK) has in a shock move slapped a moratorium on licensing new commercial banks throwing off balance the entry of Dubai Islamic Bank and the planned conversion of Unaitas Sacco.Dubai Islamic Bank (DIB) had received an approval “in principle” while awaiting the full licence. Staff hired by the Gulf-based bank on the basis of the approval reported but the fate now hangs in the balance.“The Central Bank of Kenya has, with immediate effect, placed a moratorium on the licensing of new commercial banks until further notice,” it said, adding that the moratorium “does not apply to cases relating to resolution amalgamation and acquisition of banks.”The moratorium is likely to force up the price of fringe banks as well as shield large players from new competition. CBK has frozen licensing without official order.Read more
TS: Rotich cuts growth prospects citing tighter monetary policy, El Nino
The Treasury has further trimmed Kenya’s  economic growth forecast due to tighter monetary policy and the potential impact of the El Nino weather which has brought heavy rains, signalling a slowdown in business activity and job creation.Treasury secretary Henry Rotich said said Kenya’s growth would be in the range of 5.8 to six per cent. The government had already downgraded its forecast to six per cent in October from the 6.5 to seven per cent it originally predicted.The reduced economic activity looks set to dim corporate Kenya’s ability to generate profits in what could ultimately depress companies’ ability to hire more staff and up the wages of employees. Read more
NTPS: Banks under pressure to cut interest rates
Pressure continues to mount on commercial banks to lower interest rates on loans, after the Central Bank of Kenya Monetary Policy Committee retained its basic lending rate at 11.5 per cent.National Treasury Principal Secretary Kamau Thugge said that lenders have no excuse in retaining their prevailing high rates in the wake of the lowering of Treasury Bill rates to 9.3 per cent as at .“All banks that have not lowered their interest rates should do so as we have seen the T-Bill rates have significantly come down. We are awaiting the next auction and we feel the rates can only go lower,” said Dr Thugge in Nairobi, on the sidelines of the national budget public sector hearings at the Kenya Institute of Curriculum Development.Read more 
Helios holds on to Sh1.3bn Equity shares
Private equity firm Helios Investment Partners has re-emerged on Equity Group’s top shareholders list with a 0.87 per cent stake worth Sh1.3 billion after the lender announced the institutional investor’s exit.Regulatory filings show that Helios held 32.7 million shares in Equity, indicating that the investor either retained part of its holdings or made a new investment in the country’s second largest bank.Equity, announced that Helios had completed the sale of its 24.9 per cent stake in the bank to a group of institutional investors for $500 million (Sh51 billion). Read more
Sh40bn injection needed to revive Imperial Bank, says CBK official
Troubled Imperial Bank will require as much as Sh40 billion in new capital to be put back on track, a Central Bank of Kenya (CBK) official involved in the revival proposals said.The new capital will cover the deposits and loans that were outside the official balance sheet and financial statements, generally referred to as parallel banking.In terms of deposits, the official financial statement showed the bank held Sh57 billion indicating it was within the threshold of capital set by the law, but court papers revealed there was nearly Sh20 billion more that had not been officially disclosed.In terms of loans, Sh34 billion had been lent without due process as it was not factored into the financial statements. Read more 
KRA, Unilever Tea in Sh1.8bn tax battle
The Kenya Revenue Authority (KRA) is locked in a multibillion-shilling tax battle with Unilever Tea Kenya where it is seeking unpaid taxes dating back to the start the millennium.The taxman issued the tea company—a subsidiary of Anglo-Dutch conglomerate Unilever—with a demand notice of Sh1.887 billion following an audit that revealed arrears in Value Added Tax (VAT), custom duties and penalties.The Kericho-based company disclosed these contingent liabilities in its annual report.“The KRA has demanded payment from the group of Sh1.8 billion for alleged unpaid VAT including penalties and interest in respect of tea sold to third party exporters by Unilever Tea Kenya,” reads the company’s financial statements. Read more
 Equity Bank’s chief executive James Mwangi: Relief for borrowers as banks drop plans to raise cost of loans
Commercial Banks have shelved plans to increase the cost of loans, offering borrowers a much-needed relief and signalling a possible revival of large investments whose prospects looked gloomy with the steep rise in interest rates.The pull-back follows a steep fall in Treasury bill and bond yields from 22.5 per cent to 9.7 per cent.Standard Chartered Bank and Barclays Bank began the race to the bottom with messages to their customers that they had shelved the planned increase in lending rates, leaving them at levels that were revised.Kenya’s largest bank by customer base Equity followed suit with the cancellation of notices sent out telling borrowers of plans to increase interest rates by up to six percentage points — tipping the scales in favour of lower lending rates. Read more
KOTDA: Agency sets Sh250m minimum capital for Konza city investors
Investors eyeing space at Konza Techno City will be required to raise between Sh250 million and Sh2.6 billion for various projects earmarked for phase one, a document from Konza Technopolis Development Authority (KoTDA) indicates.The agency says investors will need to prove their ability to raise the requisite capital and show that they have undertaken similar projects before.Investors are also required to focus on technology, engineering and innovation projects, with the demands meant to lock out land speculators.The expression of interest after which evaluation of the bids will be undertaken, setting the stage for investment flows. Read more
Pradeep Paunrana CEO ARM Cement: ARM seeks Sh10.7bn in private bond
ARM Cement is set to raise up to $105 million (Sh10.7 billion) in debt funding from private investors, increasing its target from the Sh7 billion. The cement manufacturer is now raising the larger amount through a privately placed bond whose offer opened .The cash will be used to retire expensive short-term debts that saw ARM’s finance costs more than triple to Sh1.1 billion.“The proceeds from the bond will be used to replace existing short term borrowings. There is no increase in total debt only refinancing existing short-term debt,” said Pradeep Paunrana, chief executive of ARM Cement. Read more
Equity Bank chief executive James Mwangi: Equity gains Sh30bn as small banks lose deposits
Equity Bank management says it has grown its deposit base by Sh30 billion riding on shift of deposits from small banks.Small banks have suffered loss of deposits after the sudden closure of Imperial Bank that shook the market confidence in the sensitive banking sector.“We are big beneficiaries of flight to safety. During the (turmoil) we got an additional Sh30 billion,” said Equity Bank chief executive James Mwangi on the sidelines of a media briefing.Central Bank of Kenya had confirmed that some of the small lenders had suffered runs forcing it to give them liquidity through what is commonly referred to as reverse repos. Read more
KQ: Sales and leaseback deals way to go for firms in era of cash crunch
A sales and leaseback transaction may be an alternative for businesses in this economic season where credit has become an expensive financing option for companies.A lot of businesses are facing liquidity issues despite having a lot of assets. This is especially so for firms that have embarked on aggressive expansion strategies where a lot of fixed assets like land and machinery have been acquired.In the manufacturing sector, for example, a lot of industries are modernising their plants at this time. This may involve heavy acquisition of machinery and other fixed assets. Many times these rapid expansions do affect the businesses’ liquidity and cash flows. Most of Kenyan State corporations are facing this hurdle. Read more
CBK: Imperial Bank clients cry foul
Imperial Bank customers are a frustrated lot following delays in accessing their deposits, The Central Bank promised a swift resolution of the matter.Central Bank Governor Patrick Njoroge said depositors of the troubled bank who have amounts less than Sh500,000, would access them.It was expected that large customers at the bank, which is under the management of the regulator, would also have access to about 5 per cent of their funds after the reopening, while the balance would be released in a staggered manner.“We are in the dark about everything that is going on, whereas the relevant authorities are not forthright with information,” said Mr Ian Nyoro, one of the bank’s customers. Read more
Expect cheap power soon, KenGen tells consumers
Electricity generating company KenGen has assured Kenyans that the cost of electricity will drop further.This is after the firm injects an extra 511 megawatts of geothermal power into the national grid.KenGen Chairman Joshua Choge said extra megawatts will lift Kenya’s global ranking from the eighth largest producer of geothermal energy to the top five leading countries.Mr Choge said the country’s installed steam power capacity now stands at 579MW, ahead of giant economies such as Japan, Russia and China.He spoke during the handing over of three fully equipped classrooms at Oloirowua Primary School and Olosingate livestock water pan in Suswa, in Narok East sub-county. Read more
NCE: The coffee conspiracy that leaves a bitter taste in the mouths of farmers
An age-old conspiracy between regulators, millers, traders and brokers has deliberately kept Kenyan coffee prices down – even as our top grade Arabica variety continues to fetch premium prices at the international market.Billions of shillings which could have been paid to local farmers end up in the pockets of these networks as farmers’ harvests are sold at knockdown prices at the Nairobi Coffee Exchange (NCE).NCE is where Kenya’s coffee is traditionally auctioned to those holding dealer licences, issued by the Coffee Board, now Coffee Directorate.This conspiracy, which involves the world’s largest coffee buyers and their local networks, is ironically supported by the Coffee Act that favours the top cream of the coffee industry — the brokers, the millers and the traders — and frustrates any new entrant not associated with the network. Read more
CBK: Banks raise loan default alarm on spiralling rates
Banks have raised the alarm on rising risk of mortgage and personal defaults due to the increase in lending rates and the government’s delayed payments to contractors.Credit officers from 40 banks told the Central Bank of Kenya in a survey that defaults looks set to be highest on loans issued to individuals and real estate investors.The two segments will be hit hardest by the recent increase in lending rates and slow payment of contractors by government grappling with low revenues.Lending rates have risen to highs of 27 per cent from 19 per cent following a more than doubling of the cost at which the government is borrowing from the local market — now standing at 23 per cent. “Banks foresee increasing NPLs (non-performing loans) in the personal/household, building and construction, manufacturing, real estate, agriculture and trade sectors,” said CBK. Read more
Devki chairman Narendra Raval: Job cuts hit steel millers as China floods markets
Steel millers say they have cut output and laid off workers as they struggle to compete with a flood of cheap Chinese exports that have hit producers globally.Local millers say they have gradually been reducing the amount of steel bars, nails and other products churned out at their factories as sale of the products is made difficult by Chinese imports. Devki Group, which operates a steel mill in Ruiru town, says that it is producing 10,000 tonnes of steel a month down from between 20,000 and 25,000 tonnes.Devki chairman Narendra Raval said on average the miller sells a kilogramme of steel at Sh65 but Chinese imports retail at Sh55 per kilogramme, a price he says is difficult for local firms to match. The company has been forced to trim its workforce by a half. Read more
Atul Chaturvedi, the CEO of Pearl: Uganda’s Pearl Dairy to build plant in Kenya
Uganda-based Pearl Dairy Farms Limited is set to build a production and repackaging plant in Nairobi's Industrial Area as it moves to grow its market share in Kenya.The company, the agricultural arm of the Midland Group, serves the local market with ghee, butter and milk powder imported from its Ugandan plant.Pearl says initial estimates of the investment in the planned factory stands at about Sh100 million.“We have for long been serving the Kenyan market from Uganda and our new factory will help in repackaging our products and subsequently set up a plant,” Atul Chaturvedi, the CEO of Pearl told Business Daily in an interview in Nairobi.“The repackaging factory will be operational while the manufacturing plant will follow as the sector has shown significant growth encouraging investments,” he added. Read more
KRA: Why Kenya needs to overhaul its tax collection system
As the government’s cash flow slowdown unfolds, the Kenya Revenue Authority (KRA) has been in the spotlight, especially after revelations that it missed revenue target by Sh28 billion.The publication of the statement of actual revenue and net exchequer issues now show that KRA collected Sh203 billion, which was a 10 per cent drop from the Sh227 billion collected in a similar period.But I think this tax collection issue needs to be looked at broadly, and I would like to do so in two ways: first, the income and corporation tax, which contributes half of total tax receipts has some serious gaps. I was shocked to learn that there are only 1.6 million active tax payers, including corporations. Read more
How to boost efficiency in logistics and goods clearance
All over the world, governments have employed the use of ICT to boost revenue generation and drive global competitiveness.Most countries have made it a requirement that advanced consignment details must be received prior to the arrival of the shipment. Shipping and logistics industry is no exception to this development.It is witnessing wide Electronic Data Interchange application for international trade processing to secure ports, goods and safety of vessels on the high seas. The Advanced Shipping Information System (ASIS) commonly referred to as electronic Cargo Tracking Notes (e-CTN) system is yet another tool arising from the use of ICT to monitor the flow of cargo from the port of loading to the port of destination.This innovation also helps in the transmission of maritime security data from ships to shore to curb and address various security concerns in the industry.Read more
TS: Rotich says governors resisting online tendering fear scrutiny
Governors are resisting online procurement because they fear being held liable for financial flaws at the counties, Treasury secretary Henry Rotich has said.Mr Rotich told the Senate County Public Accounts and Investment Committee sitting in Nairobi that the Integrated Financial Management System (IFMIS) was meant to enhance transparency and accountability in the public sector.He said it was improper for governors to push for suspension of the system on grounds that it was not working in counties with Internet connectivity challenges.“We are building capacity for counties that face challenges. Unfortunately, we train staff and later on they are transferred or sacked,” Mr Rotich said at Parliament Buildings. Read more
CBK: Central Bank lays down tough auditing conditions
The Central Bank of Kenya has instructed auditors to probe bank IT systems when conducting checks this year after it emerged that software manipulation was used to siphon Sh34 billion from Imperial Bank.CBK Governor Patrick Njoroge said he had written to external auditors, instructing them to carry out the exercise in the next cycle of looking at lenders’ books.Dr Njoroge, who was speaking at a National Assembly Finance Committee meeting, said the regulator’s supervision unit and auditors did not see Imperial Bank malpractices by failing to interrogate its technology systems.“We were not drilling down to the database in terms of the information they provided especially in terms of loans,” he said. Read more
EACC: Envoys warn of travel ban on corrupt officials
Diplomats from 11 countries led by US and Britain have threatened to impose travel bans on Kenyans implicated in corruption amid reports of high-level graft in the country.The envoys, including those from Canada, Japan and seven European countries, issued the warning following a meeting with the Ethics and Anti-Corruption Commission (EACC).Reports alleging theft of taxpayers’ cash and purchase of goods and services by civil servants at inflated prices have raised pressure on President Uhuru Kenyatta, who has promised to tackle rampant corruption in his government. Several countries, including the UK and the US, have in the past issued travel bans to senior government officials, like former Transport minister Chris Murungaru. Read more
CAK DG: CA in threat to scuttle sale of Telkom Kenya, citing accrued debts
The sale of France Telecom’s 70 per cent stake in Telkom Kenya hangs in the balance after the communications regulator said it could veto it over accrued debts.The Communications Authority of Kenya Director-General Francis Wangusi told the Nation that approval of the purchase is subject to clearance of existing penalties accrued over the period of operation.The regulator is now awaiting an official letter from France Telecom requesting transfer of its 70 per cent stake to Helios Investment Partners, before acting.“Misuse of frequency, failure to meet quality of service are areas we will look at when clearing France Telecom to exit the market,” said Mr Wangusi on phone. “The firm already owes us Sh1.5 billion for licence and frequency fee.” Read more
New IRA rule risks forcing Britam to cut Equity stake
Insurance firm Britam will have to sell part of its stake in Equity Bank if new regulations proposed by market regulator IRA become law.The Insurance Regulatory Authority (IRA) has published a raft of proposed rules, which among other things seek to cap an insurance company’s investment in a commercial bank at 10 per cent of the insurer’s assets.“An insurer transacting long term business shall not invest more than five per cent of the total assets in any company, commodity or group of related companies. Where the company or group of related companies is a bank or financial institution, the maximum limit for the investment shall be 10 per cent,” the IRA’s proposed regulations say. Read more
CEO Centum: K-Rep, Almasi investments lift Centum profits 55pc
Increased investment in Almasi Beverages and K-Rep Bank and a sale of minority stake in insurance brokerage AON Minet helped Centum grow its net profit by 55 per cent.The investment company’s net profit stood at Sh1.9 billion compared to Sh1.23 billion.The earnings growth was attributed to “investment and other income” which grew over three fold to Sh8.4 billion on what Centum credited to income from K-Rep and Almasi Beverages where it has increased its interests.The company also booked a Sh900 million gain from the sale of its 21.5 per cent stake in AON besides earning capital gains on listed stocks it sold in the period. Read more
Company secretary Rebecca Miano: KenGen approves rights issue to raise billions for energy projects
The Kenya Electricity Generation Company (KenGen) board has approved a rights issue to raise billions of shillings for its energy projects.The power producer said it would seek investors’ approval to issue up to 7.8 billion shares, reversing the decision to issue up to 2.2 billion ordinary shares. KenGen had said it would raise Sh28 billion.Company secretary Rebecca Miano said the board’s resolution on the cash call now awaits the approval of the firm’s shareholders at the general meeting to be held. Further approvals are expected from the Capital Markets Authority and the Nairobi Securities Exchange (NSE).Read more
IEA: A third of public revenue goes to pay off debt, experts say
Kenya is using nearly a third of its national tax revenue to service foreign debt which stands at about Sh3 trillion thus adversely affecting provision of essential services.The Institute of Economic Affairs (IEA) on said the payments of both interest and the principal loans had tripled after the government sought foreign donors to fund infrastructural projects within the country.While the public debt burden stood at Sh1.1 trillion, it had risen to Sh2.2 trillion the total debt had grown to Sh2.89 trillion, said IEA. Read more
CBK Governor Patrick Njoroge:  Questions raised as Dubai Bank's clients fail to claim deposits
Questions were raised on the true identity and authenticity of Dubai Bank customers as 7,200 depositors failed to turn up to claim their deposits.Appearing before the Senate Finance Committee, Central Bank Governor Patrick Njoroge agreed that the lack of interest has raised concerns about the sincerity of their transactions with the bank.“Money is something we are used to. Why is it that the depositors are not coming forward? There may be something else going on. But, we have solid evidence that can withstand legal scrutiny,” said Dr Njoroge.Dubai Bank was closed, after being put under receivership on the basis of “violations of banking laws and regulations, including failure to maintain adequate capital and liquidity ratios as well as provisions for non-performing loans and weak corporate governance structures.” Read more
MOTI: Stage set for regional open skies with low taxes
Taxes on regional air fares will be lifted, setting the stage for an open sky within Kenya, Uganda, Rwanda and South Sudan.Mr Nicholas Bodo, officer in charge of air transport, Ministry of Transport and Infrastructure, said aviation officials in the four countries will, give recommendations on how to bring down infrastructure and fuel costs in the region.“We have contracted experts in aviation to look into the matter so as to hasten multilateral air service agreements in the region,” said Mr Bodo on phone.The initiative is part of a wider drive that will see the four countries operate an open air space, ushering in an era of affordable travel around the region. Read more
Afreximbank: Bank calls for more intra-African trade to shield economies
The African Export-Import Bank (Afreximbank) called on African governments to increase intra-continental trade, arguing this will shield regional economies from prevailing global economic shocks triggered by a sharp slump in commodity prices.The bank’s president, Dr Benedict Oramah, said in Nairobi that the massive exodus of capital being witnessed from African economies could be plugged if regional states increase peer-to-peer trade.Dr Oramah said economies dependent on commodities whose prices have plummeted significantly have witnessed instability, which has weakened their currencies and this calls for a shift. Read more
CBK official downplays severity of the shilling’s depreciation
The depreciation of the shilling is moderate compared to other currencies globally, deputy Central Bank of Kenya (CBK) governor Sheila M’Mbijewe said.Ms M’Mbijewe said the local currency’s weakening had been limited to 12-14 per cent, yet many currencies were down by a higher margin.“What the shilling has experienced in terms of depreciation is somewhere between what the Australian and the Canadian dollar have gone through. Ours is moderate by global scale,” said Ms M’Mbijewe.The Ugandan and Tanzanian shillings have fallen by more than 25 per cent while the Ghanaian cedi has lost more than 30 per cent. The Turkish currency has fallen by more than 60 per cent in the same period.Ms M’Mbijewe spoke during a Press conference called by the Cairo-based Afreximbank at the Nairobi Safari Club. Read more
DGICK: Foreign firms wary of law on local shareholding
A law compelling foreign firms to give 30 per cent of their shareholding to locals is a recipe for disaster, investors have said.They termed it unfair and impractical, and questioned the government’s ability to amend the law before becoming operational.Foreigners are worried over the law because an amendment can only be done soon after it comes into force.The Delegation of German Industry and Commerce in Kenya, European Union member-states and Bilateral Chambers of Commerce have together termed the Act a potential harm to international investments.“The rule appears to be nonsensical and impractical,” said Delegation of German Industry and Commerce in Kenya Country Director Ingo Badoreck. Read more
APA boss Ashok Shah buys stake in rival CIC Insurance
APA Insurance chief executive Ashok Shah has bought a stake in CIC Insurance in a rare transaction that gives the owner of the big underwriter a stake in one of his rival. CIC Insurance Group’s newly-released disclosures indicate that Mr Shah acquired 120,000 shares of the NSE-listed firm that were valued at Sh774,000 at the close of trading. APA Insurance is a fully-owned general insurance subsidiary of Apollo Investments Limited, a privately-owned group with life insurance, asset management and property development arms.Mr Shah, the Apollo Investment Group CEO, confirmed buying the CIC Insurance stock, a transaction that has seen his name pop up in the underwriter’s 10 largest owners’ list, under the foreign category. Read more
Barclays MD: Barclays starts agribusiness unit with eye on SMEs
Barclays Bank of Kenya has started an agribusiness unit to finance firms in the agricultural value chain.The lender rolled out the scheme that was developed with its sister firm, Absa, a South Africa-based lender.Speaking at the bank’s headquarters, Barclays managing director Jeremy Awori said the unit will loan out money from a Sh30 billion kitty set aside for small and medium enterprises.Mr Awori said the bank will also channel money through corporate lending for bigger projects including setting up of processing plants.“We are taking a multifaceted approach underpinned by the provision of financial solutions, market access opportunities and knowledge exchange,” said Mr Awori. Read more
KNBS: Exports fall worrying
Reports that Kenya’s exports to Tanzania have fallen should be of major concern to local manufacturers and producers eyeing to grow their businesses.Statistics by the Kenya National Bureau of Statistics (KNBS) showed that United Kingdom (UK) and Pakistan have overtaken Tanzania among the top buyers of Kenya-made goods after exports to the neighbouring state dropped 31.5 per cent in the nine.Tanzanian consumers bought Sh18.6 billion worth of Kenyan goods in the period behind the UK’s Sh29.6 billion and Pakistan’s Sh21.6 billion. Kenya’s exports to Tanzania stood at Sh27.2 billion. Read more
Alliance One: US tobacco firm to audit Sh4bn gaps at Kenyan subsidiary
US-based tobacco firm Alliance One is sending auditors to assess the operations of its Kenyan subsidiary after noticing discrepancies at least Sh4 billion.The company noticed the gaps during its restructuring. It, however, did not indicate if it was looking at criminal conduct or professional malpractices.Alliance One said will send a legal and accounting team to confirm the actual amount involved.“Available information suggests that the discrepancies may stretch back or earlier and could reach approximately $40 million (Sh4.2 billion in aggregate). Because AOI has been unable thus far to determine the timing and amount of these discrepancies, no conclusion has been reached regarding materiality,” said the firm in a statement.“Independent counsel and forensic accountants have been engaged to help determine the nature and timing of the acts that caused the discrepancies and identify the parties responsible.” Read more
IMF warns over high loan rates
The International Monetary Fund has warned that increase in credit rates could lead to financial risks in the region.In the edition of the Regional Economic Outlook for Sub-Saharan Africa launched in Nairobi, the global institution said lending by financial institutions has risen considerably attributed to increased household incomes.“Most sub-Saharan African countries have experienced a decade-long rapid increase in private credit. Real credit to the private sector grew five fold an average annual progression of 16 per cent leading to a doubling of the credit-to-GDP ratio for the region as a whole,” says the report.According to the IMF, though other factors that commonly affect debt such as high interest rates may also play a role, numerous studies have credited episodes of unusually high credit growth with poor economic performance. Read more
CBK: Central Bank to adopt a tough regulation mode
In response to recent developments in the financial sector, the Central Bank of Kenya board chairman, Mr Mohamed Nyaoga, is promising a tough supervisory regime in the country’s financial sector.Mr Nyaoga told the Nation that good governance would ensure that the country enhances its position globally as a hub for financial innovation.“I support the governor’s endeavours to enhance market discipline and supervision. This will not only promote stability of the financial system, but also help the Central Bank to discharge its core mandate of maintaining price stability,” said Mr Nyaoga. Read more
Fidelity Shield downgraded to negative outlook
Fidelity Shield Insurance’s future outlook has been downgraded from stable to negative over weak liquidity and “subdued” cash flow.South African rating agency GCR assigned the negative grade to the insurer but retained BBB+ rate on its ability to settle claims.The underwriter is associated with billionaire Naushad Merali and Mwalimu National Sacco.“The rating outlook has been revised to Negative, owing to a notable weakening in key liquidity metrics for the YTD FY15. This follows cash outlays pertaining to the purchase of illiquid assets in the investment portfolio, together with subdued cash flow generation of late,” reads the rating report.“Overall, Fidelity Shield displays a high risk investment appetite, with financial assets exposed to market risk representing 129 per cent of YTD15 capital (FY14: 87 per cent).” Read more
NCE: Nairobi coffee sales take break on low supplies
The coffee auction took a break as volumes dwindled after the main crop from eastern Kenya dried up.Nairobi Coffee Exchange (NCE) has been grappling with low quality beans at auctions, with the price of the commodity falling.In the auction price of the beverage dropped from an average Sh16,218 to trade at Sh15,198 per 50-kilogramme bag.“In consultation with the marketing agents, we wish to advise that from Sale 3 the auction dates will be different from the normal schedule,” reads a note from NCE to the stakeholders.Chief executive Daniel Mbithi said the new schedules, which would see the auction skip, before resuming, is meant to enable the agents to accumulate the required volumes to warrant the trading. Read more
EAFFA: Tea prices at Mombasa auction fall as volumes rise
Tea prices at the Mombasa auction have dropped for the third time in a row as the volumes offered for sale grew by more than half a million kilogrammes at auction.A kilogramme of tea on average sold at Sh291 during auction from Sh300 in the previous sale.The quantities of tea supplied for sale grew from 6.4 million kilogrammes in the sale to seven kilogrammes.“We witnessed a decline in tea prices in our sale at the auction, with prices coming down by about Sh10,” said Edward Mudibo, managing director of the East African Tea Traders Association.However, in comparison with the corresponding period, the price of the beverage has improved significantly. A kilogramme of made tea was selling at Sh191 compared to the price of Sh291. Read more
IFC: Nigerian firm to construct Sh2.8bn can factory
The International Finance Corporation (IFC) will invest Sh8.2 billion in a can factory that will be set up by GZ Industries.The factory will primarily produce aluminium beverage cans, and is hoped to provide 220 direct permanent jobs, and more indirect openings in the local supply chain in sectors such as logistics and transportation, maintenance and other support services. IFC, the World Bank Group’s private lending arm, announced the planned equity investment in a disclosure document released. GZ Industries, a Nigerian outfit, will be set up on Nairobi-Mombasa highway. It operates two beverage can manufacturing plants in Nigeria. Read more
IMF revise Kenya's growth estimate
The International Monetary Fund (IMF) has lowered Kenya's economic growth projection.IMF Kenya representative Armando Morales said that the multi-lateral lender has trimmed the country's projection down to 6.8 per cent, from the initial 7.2 per cent, owing to the prevailing harsh economic conditions.“The revision of the (economic growth) will be probably downwards because the situation globally and regionally is more negative; we don’t expect a major revision,” Mr Morales said, during the release of the lender's Regional Economic Outlook for Sub-Saharan Africa report in Nairobi. IMF revised downwards Kenya's economic growth projection from 6.9 per cent to 6 per cent, citing the depreciating shilling and the suffering tourism sector. Read more
KEBS: Move to block bad goods from local markets the way to go
The volume of imported goods has consistently been on the increase taking the margin of increase to $2.5 billion compared imports.Besides, there is a significant volume of imports that enter the country illegally through our porous borders and unmanned routes and are not documented. The imports comprise of all manner of products majority of which could be manufactured in Kenya.Data collected by Kenya Bureau of Standards (Kebs) through its market surveillance and quality assurance activities reveals that significant volumes of imports especially those that enter the country illegally are counterfeits and substandard.Consumers are being ripped off their hard earned money as they are unable in many cases to tell the difference between quality products and substandard ones. Read more
ARM Cement has space to push up its gearing ratios
The corporate debt issuance market is still expected to be busy to a close, despite the elevation of the shorter end of the yield curve.BODO: ARM Cement has space to push up its gearing ratios. Total corporate issuances, including three planned issuances, will hit Sh40 billion, which will then represent a 25 per cent.One of the largest planned issuances is ARM Cement, which is seeking up to Sh9 billion, split into an issue size of Sh6 billion with a green shoe option of Sh3 billion, through a private placement.ARM makes an interesting case because of its already elevated balance sheet gearing with debt-to-EBITDA (earnings before interest, tax, depreciation and amortisation) multiple hovering at six times, which makes the balance sheet look a little bit congested. Read more
KRA: Promote job creation to spur economic growth
The finding that corporate Kenya has slowed down new hiring of staff is hardly surprising. The general economic environment has been deteriorating for months now while specific sectors such as tourism are now in a decline.The repercussions are clear: hardship for the unemployed and slower economic growth as aggregate demand and revenue collections take a hit.The Kenya Revenue Authority (KRA) says the country’s largest employers recorded a paltry 3.4 per cent jump in staff costs. This has been linked to a mix of retrenchment and a hiring freeze that has reduced new job opportunities in the economy.Companies and other organisations are clearly jittery about the country’s short to medium term economic outlook that has been painted by insecurity and developments in the macroeconomic environment including high interest rates and weakening of the shilling. Read more
Safaricom eyes SMEs in cash transfer deal for Lipa na M-Pesa with 8 banks
Safaricom has signed a deal with eight more banks to offer retailers real-time money transfer from the Lipa na M-Pesa tills to their banks accounts, a move aimed at recruiting more merchants to the telco’s mobile payment platform. Safaricom eyes SMEs in cash transfer deal for Lipa na M-Pesa with 8 banks. The move mainly targets small and mid-sized businesses — the major users of Lipa na M-Pesa — by boosting their cash flows.Standard Chartered and NIC Bank pioneered the instantaneous transfers, meaning the new lenders will increase the options and availability of the service to traders. Read more
CS Rotich Summoned by senate to explain economy
Treasury CS has been summoned before the Senate Finance committee.Henry Rotich has been summoned four times by different committees over economic challenges facing the country.He will be accompanied by the Kenya Revenue Authority commissioner general John Njiraini, chairman Billow Kerrow said. Rotich will explain the delays in disbursing money to counties and the economic cash crunch that has hit the country.The Treasury is yet to release the money. Rotich told the Senate his ministry proposed interest rate hedging, and foreign currency swap to prevent future cash crises.He also attributed the cash crisis in government to the weakening of the shilling against the US dollar.Kerrow said Njiraini should explain to the committee why he failed to collect the amount of money the commission had targeted.Read more
COTU: New taxes trigger push for higher pay in corporate Kenya
Trade unions are now demanding an increase in workers’ pay to cushion them against the rising cost of living and taxes set to be imposed by the government.The Central Organisation of Trade Unions (Cotu) has directed its 42 affiliate unions to write to their employers seeking a review of the existing collective bargaining agreements (CBA).Secretary-general Francis Atwoli said the decision was arrived at following the government’s decision to raise taxes on essential commodities in a bid to raise more revenue.“The current hard economic times have badly hit workers, who are now unable to afford essential commodities like food, rent, transport to work, medical cover and fees for their children,” said Mr Atwoli. Cars, beer, cigarettes, juices and water will cost more once President Uhuru Kenyatta assents to the Excise Duty Bill.Read more
Chase Bank to get Sh3bn loan for green energy lending
Chase Bank is set to receive Sh3 billion from French fund AFD for lending to environment friendly energy projects.The mid-sized lender is targeting investors in renewable energy projects such as small hydro, biomass, biogas, solar, and geothermal.“This is a facility and will therefore address long term funding requirements of energy projects. The total committed amount is €30 million (Sh3.4 billion), of which €10 million (Sh1.1 billion) will be available immediately for lending,” said the bank’s chief executive Paul Njaga. AFD will provide technical assistance that will be managed by the Kenya Association of Manufacturers (KAM) to help the bank improve its knowledge on lending to sustainable energy projects. Read more
Posta Kenya to launch bus service to grow revenues
Postal Corporation of Kenya (Posta) is eyeing the transport sector in a bid to grow its revenue.The company is looking to introduce a fleet of the “post liner” buses to serve both passenger and parcel businesses across the country. Posta Kenya expects to increase its revenue from Sh3.6 billion to Sh14 billion through the bus service in addition to its mail, courier and payment services.The bus service is awaiting approval from the National Transport Service Commission of Kenya before it can be launched.The bus service is aimed at reducing tariffs charged for parcel and letter transportation. Read more
IMF says Treasury's austerity measures will stabilise economy
The International Monetary Fund has welcomed austerity measures by the National Treasury aimed at restoring stability in the country’s finances.IMF Kenya representative Mr Armando Morales, who had two  warned that the government should prioritise critical spending and cut non-essential expenditure, said the austerity measures announced by the government would steer the country back to stability if properly enforced.“They (measures that have been announced) are exactly what will improve the country’s fiscal position to a point of sustainability and that is good news,” Mr Morales told Smart Company in Nairobi. National Treasury Cabinet Secretary Mr Henry Rotich announced that Treasury would cut back on non-crucial budget allocations in key State departments, freeze non-essential spending and also push the tax man to enhance tax collection. Read more
KCSR: Rising threat of cyber-attacks puts companies on the edge
As you are read this, a local organisation’s internal system is being hacked.Alarming statistics show that 30 companies suffer cyber-attack daily in Kenya. And what is even more worrying is that the devastation caused is unlikely to be detected.The Kenya Cyber Security Report indicates that cybercrime is increasingly becoming a thorn in the flesh of economies as more companies embrace technology and online presence.Companies, organisations and governments adopt technology to improve efficiency, cut costs and serve customers better.However, it is also turning out that this move is exposing them to hackers who can mess up records and finances causing massive damage in a twinkle of an eye. Read more
Co-operative Bank eyes diaspora cash in money transfer deal with SimbaPay
The Co-operative Bank of Kenya has partnered with digital money transfer provider SimbaPay to offer international money transfer services to its customers in the United Kingdom, highlighting increased competition in diaspora banking.SimbaPay woos niche market in scramble for diaspora cash. Kenyans in UK to send money home for freeCo-op Bank eyes diaspora cash in money transfer deal with SimbaPay. To send money via SimbaPay, Kenyans living in the UK with a Co-op Bank account, can download the SimbaPay app from the Apple AppStore or Google Play and proceed to make cash transfers straight from any mobile phone, tablet or computer.For ease of use, all the lender’s branches have been pre-loaded on to the SimbaPay platform which eliminates the need for customers having to remember branch codes. Read more
Treasury secretary Henry Rotich : New law used to make secret offshore payments
Treasury secretary Henry Rotich revealed the existence of 15 secret offshore accounts from which payments are made directly without the Controller of Budget’s approval.Mr Rotich told the Public Accounts Committee (PAC) that the CBK and PFM Acts allow the Treasury to pay, remit and accept for deposit transactions made abroad.The Treasury chiefs have been on the spot for making withdrawals from a New York account that held the Sh173.9 billion Eurobond cash, hosted at JP Morgan, without the approval of the Controller of Budget.The PFM Act was amended, just before the Eurobond was issued, prompting MPs to claim that the change was mischievous and meant to sidestep the budget controller. Read more
SRC rejects county executives’ 66pc salary increase bid
The Salaries and Remuneration Commission (SRC) has rejected county executives’ demand for a 66 per cent pay rise. MCAs' mortgages, car loans cost counties Sh4bn.It would have added Sh1.1 billion to the Sh1.7 billion wage bill taxpayers have been carrying since their offices were created.The County Executive Committee (CEC) members, commonly referred to as county ministers, had written to the SRC asking for a pay increase.They argued that theirs are high-risk jobs fit for better remuneration.The county ministers wanted their pay raised from Sh300,000 to Sh500,000 (or equal to county assembly speakers) – an amount that would have taken their annual wage bill to Sh2.8 billion. Read more
IMF: Poor Kenyans to pay more for basic items as State seeks to raise Sh64b
The Government is planning to raid the pockets of citizens, who are already among the world’s most highly taxed people, to raise more money.According to a National Treasury brief sent to the country’s largest lender, the International Monetary Fund (IMF), Kenya is seeking to raise Sh64 billion through taxation of basic commodities. The targeted products in the move are low-end cigarette brands, beer, fruit juices, soda, bottled drinking water, motorcycles and imported second-hand cars, whose prices are all set to rise. In his brief to IMF boss Christine Lagarde, Treasury Cabinet Secretary Henry Rotich sets out elaborate, but punitive tax measures to hammer low and middle income earners hard, but ironically grants huge breaks to the rich. Even fuel is listed among the products whose price is to be increased but it is not clear by how much.Read more
NTCS: Henry Rotich: Kenya’s economy in turmoil
National Treasury Cabinet Secretary Henry Rotich has, for the first, admitted that the country was experiencing economic turmoil and urged Kenyans to "tighten their belts" as they worked on a turnaround.Mr Rotich likened the economic mess to a situation where passengers flying at an altitude of 40,000 feet are hit by turbulence and their only hopes are in the pilots. "We have no options but to remain in the plan and wait and hope that the turbulence ends," he said. The CS admitted the country was experiencing hard times and asked Kenyans to brace for tougher times as they sort out the situation. The Government has been facing criticism from the Opposition and economists who accuse the State of running down the economy through over-borrowing and corruption. Read more
IMF:Banks to raise bad loan provisions by Sh2.4bn as CBK keeps closer watch
The Central Bank of Kenya (CBK) has compelled banks to reclassify some loans and increase provisioning for probable losses by an extra Sh2.4 billion.According to the International Monetary Fund (IMF), the CBK has been relooking at the numbers provided by various institutions as part of stress-testing to assure itself of the soundness of the banking system.The exercise could be intensified in the wake of the fall of a second commercial bank — Imperial — since the report was first compiled just after the collapse of Dubai Bank.“On-site supervision efforts have intensified, and the CBK has asked banks to reclassify some of their loans and increase provisioning for credit losses (Sh2.4 billion),” said the IMF in an update on the negotiations on the Sh65 billion precautionary credit facility to the Treasury. Read more
AfDB approves Sh5bn Chase Bank loan for SMEs
The African Development Bank (AfDB) has approved a $50 million (Sh5 billion) loan to Chase Bank to boost its lending capacity to small and medium-sized businesses.The loan will mainly benefit youths who rely on Chase Bank’s SME lending portfolio.“Chase Bank’s focus on SMEs is expected to produce significant development outcomes for the proposed line of credit, given the importance of SMEs to Kenya’s economic growth.” AfDB said.“This includes the creation of an estimated 500 jobs for sub-projects funded as a result of the loan, as well as additional government revenues from taxes paid by SMEs.”This line of credit will also support efforts by the Bank to improve Kenya’s SMEs access to financing and complement support extended to Kenya’s SMEs by both the AfDB and other development partners, it further said. Read more
EATA: Tea prices at Mombasa auction fall despite decline in supply
The value of the Kenya tea at the Mombasa auction has started falling after a trend of good performance at auctions that saw the price of the beverage attain a high.The price of the commodity on average declined by Sh15 to trade at Sh303 a kilo from Sh318 it fetched in the sale.The price fell even as the volumes of tea offered for sale dropped by 33,735 kilogrammes from 6.5 million kilogrammes.East African Tea Traders Association managing director Edward Mudibo said there was good general demand for the 120,677 packages (7,928,530kg) offered in the market with only 17.92 per cent remaining unsold though. Read more
President Kenyatta calls for value addition
President Uhuru Kenyatta is pushing for a shift in Indo-Africa trade that will see Kenya and other African countries focus on value addition instead of exporting raw materials.For trade with India to deepen, Mr Kenyatta said, Africa must develop its manufacturing base.“Although Indo-African trade has grown significantly, it has the capacity to grow faster, deeper and broader. But for that to happen, we must shift from the tiring and traditional focus on the export of primary commodities and develop Africa’s manufacturing base and value addition,” he said. The President spoke on Thursday in New Delhi during the third India-Africa Forum whose theme is “Partners in Progress: Towards a Dynamic and Transformative Development Agenda”. Read more
IMF names Kenya among top 10 states exposed to the risks of portfolio flows
Kenya is among the top 10 countries with large portfolio flows that expose them to changes in global investor risk appetites, says a new study by the International Monetary Fund.The report on the state of the economy of various countries categorises Kenya with Ghana, Mongolia and Serbia as facing the risk of the portfolio flows reversing. Such flows relate to cash going principally into the equities and fixed-income or bond markets.Among the risks are sudden depreciation of the local currency and the pass-through to import prices and overall inflation.Sudden appreciation of a currency also encourages consumption of imported goods that become cheaper at the expense of domestic production and jobs. Read more
FSD: Mobile and banking agents lift financial outlets by 33pc
The number of outlets where Kenyans access banking, insurance and other financial services have risen by one-third, a new survey by financial inclusion researcher FSD Kenya shows. The FinAcess Geospatial Mapping Survey shows that, the number of mobile money transfer service kiosks, bank and insurance agents — collectively known as service points — increased by 33 per cent.According to the survey there are now 218 service points for every 100,000 people up from 162 outlets.FSD Kenya’s report says the reforms by Central Bank of Kenya (CBK) and innovation by commercial lenders have been the main drivers of the growth.“The Kenya financial inclusion landscape has undergone considerable transformation. This is as a result of improved infrastructure, technological innovation, institutional developments as well as financial system policy and regulatory reforms,” it says.Read more
KRA: Taxman reports Sh28bn revenue shortfall
The Kenya Revenue Authority missed its first target by a whopping Sh28 billion, precipitating the biting cash crunch that has hit the government. KRA commissioner-general John Njiraini told Parliament that he collected approximately Sh300 billion against a target of Sh328 billion.“We are looking at a Sh28 billion shortfall because of things that are not in our control,” said Mr Njiraini.The figure represents a 10.2 per cent growth compared to a similar period, showing just how high the target was set. KRA attributes the revenue shortfall to a plummeting of corporate taxes as large companies posted lower earnings saddled by higher financing costs in the wake of the steep rise in interest rates and stiff competition from Chinese and Indian products. Read more
Fidelity, Prime banks entangled in Imperial scam
Fidelity Bank and Prime Bank have been entangled in the dispute between troubled Imperial Bank and 20 firms and individuals accused of siphoning Sh34 billion from the troubled lender.Some of the properties whose transfer the High Court has been frozen after Imperial Bank sued the firms and individuals implicated in the mega scandal were used as security to secure loans to the tune of Sh332 million from Fidelity Bank, it has emerged in court.Imperial Bank on Tuesday moved to court to repossess properties it says were acquired using embezzled funds by lender’s founder Abdulmalek Janmohamed in collusion with 20 firms and individuals.Fidelity says part of the land affected by the freeze orders were used by W E Tilley and Value Pak Foods to secure loans. Read more
Supreme Court dismisses banks' appeal against class-action suit
Banks suffered a major setback in a class-action lawsuit that could see them pay their customers billions in refunds for account charges levied.Supreme Court Judges Kalpana Rawal, Philip Tunoi, Mohamed Ibrahim, Smokin Wanjala and Njoki Ndung’u dismissed a plea by the bankers’ umbrella organisation, which was challenging a case brought against it on behalf of all banks.The suit was filed by Ms Rose Florence Wanjiru at the High Court seeking a Sh38,960 refund from Standard Chartered Bank that she said was illegally levied.She said the bank had not obtained approval from the minister of finance to levy the charges as required by law.Read more
Relief as CBK orders Imperial Bank to be reopened 
Customers of troubled Imperial Bank were hopeful after it emerged that savers with deposits of not more than Sh500,000 will start accessing their funds when the bank reopens in a month's time, according to the Central Bank."The exact amount to be paid out is still under discussion and will be communicated later," said a CBK statement released to the press.Depositors at the bank with large sums of money will, however, only access 5 per cent of their funds after the reopening, while their balance will be released in a structured schedule, the Nation has learnt.The decisions are part of several far-reaching resolutions arrived at during back-to-back crisis meetings between the Central Bank of Kenya (CBK), the Kenya Deposit Insurance Corporation and the bank’s shareholders to chart the way forward for the institution. Read more
NSE: Lenders dividend yields rise sharply as market slides
Banking stocks’ dividends have shot up compared to their prices after valuation dropped between 25 and 55 per cent. The bearish trend at the Nairobi Securities Exchange (NSE) has helped bank dividend yields — which relate investor payout and stock price — to rise sharply. The bourse’s main index has lost more than 23 per cent in value.Top 10 yielding stocks include Standard Chartered, Barclays, Housing Finance, CfC Stanbic and KCB Group, according to the NSE. Analysts say the reason banking stocks have become cheap — and therefore have high dividend yields — is the expected lower earnings due to slow profit growth as lending is likely to slow down and cost of funding escalate.Read more
KRA seeks border security unit head
The Kenya Revenue Authority (KRA) has kicked off a search for the head of its newly created border security unit that is tasked with monitoring cargo and human movement to prevent tax leaks and tackle security threats.The taxman Wednesday called for applications for the position of a deputy commissioner in-charge of border security.“Reporting to the Commissioner, Customs and Border Control the deputy commissioner, border security will provide leadership in national border security,” the KRA said adding that interested candidates have to submit applications.The KRA said the official will design and implement a national border security strategy and control structure, participate in national border security committees and advising the agency on critical border security issues. Read more
NCE: Coffee prices fall further on poor quality of berries
Coffee prices continued on a downward trend in the latest auction due to poor quality berries and low prices at the New York exchange.Price of the commodity at the Nairobi Coffee Exchange (NCE) dropped from Sh16,218 to Sh15,198 per 50-kilogramme bag.At the world’s largest auction in New York, the price of coffee declined from 130 dollar cents a pound in this auction to 117 dollar cents.NCE chief executive Daniel Mbithi says the quality of coffee received and the slump in global prices have affected the price of the local commodity.“We are still getting low quality coffee and the price of the commodity in New York has been dropping — these are the two factors that we are attributing to for the low prices,” said Mr Mbithi.He said the auction is receiving the last batch of crop from eastern Kenya as the main coffee season of the region comes to an end though. Read more
World Bank's IFC to invest Sh1.5bn in Stanlib REIT
The International Finance Corporation (IFC) plans to invest Sh1.5 billion ($15 million) in the initial public offer for Stanlib’s Real Estate Investment Trust (REIT).Stanlib is seeking to raise Sh12.5 billion through the security, which will be invested in real estate to generate income for investors. Stanlib’s Fahari I-REIT public offer was launched by the Nairobi Securities Exchange (NSE). It is the first such security in Kenya.IFC’s investment is bound to provide a boost for uptake of the offer. IFC is the private lending arm of the World Bank Group that mainly focuses on the private sector.“Successful establishment of Real Estate Investment Trusts as a liquid financial instrument used to gain exposure to Kenyan real estate help unlock significant capital resources to fund Kenya’s real estate gaps. The total project cost is estimated at $125 million equivalent in Kenyan shillings. Read more
CBK: Forex reserves rise to import cover
Kenya's foreign currency reserves rose of import cover, providing temporary relief to pressure on the shilling.Data from the Central Bank of Kenya shows that forex reserves stood at Sh652.8 billion ($6.4 billion)..The forex reserves have remained below the minimum import cover recommended by law, exposing the country to macroeconomic shocks.Analysts say the build-up of foreign currency at the Central bank is attributable to increased appetite for government securities by foreign investors.Interest rates on government securities are above 20 per cent, providing good returns for both domestic and foreign investors.Read more
Treasury secretary Henry Rotich: High interest rates stall Treasury Sh5bn bond issue through M-Pesa
The government has delayed the launch of the affordable M-Akiba bond due to high interest rates in the market.High interest rates stall Treasury Sh5bn bond issue through M-Pesa. The Sh5 billion bond, which will exclusively trade on mobile phone platforms targeting ordinary Kenyans, was set to be launched.Treasury secretary Henry Rotich reckons that the government is assessing the market environment before floating the debut Sh5 billion bond.“We are waiting to see how rates in the market behave before we set an appropriate date,” said Mr Rotich.Yields bills have all climbed above 22 per cent. While this has propped the shilling against the dollar, it has seen commercial banks raise deposit rates and lending rates to a high of 27 per cent. Read more
S&P: Treasury cash crunch causes S&P to downgrade KCB’s credit rating
KCB, the largest local bank, has become casualty of Kenya’s rapid financial deterioration after a national rating downgrade was extended to the lender.Moody’s sees tough times for small banks
Treasury cash crunch causes S&P to downgrade KCB’s credit rating. Global rating agency Standard & Poor’s (S&P) downgraded the bank’s credit outlook to negative from stable, following similar action on the country’s outlook. S&P said its rating criteria does not allow for a company or any other institution to have a higher rating than the national government.“Under our criteria, we do not rate Kenyan banks above the sovereign because of likely direct and indirect influence of sovereign distress on domestic banks’ operations, including their ability to service their foreign currency. Read more
EACC: Anti-graft agency reveals how NYS cash is stolen
The Ethics and Anti-Corruption Commission (EACC) has exposed corrupt practices in the procurement, finance and internal audit functions at the National Youth Service (NYS).In a report that was submitted to Devolution secretary Anne Waiguru, the anti-graft agency observed procurement guidelines were being flouted including purchase of goods at inflated prices.Prices for various items were above those set by the Public Procurement Oversight Authority (PPOA) and the EACC has called for review of accounting and procurement functions at NYS.“I look forward to prompt implementation of the recommendations made by the EACC in this report,” the Cabinet Secretary said at the Kenya School of Monetary Studies, Nairobi. The event was attended by EACC chief executive Halakhe Waqo and deputy secretary Michael Mubea.Read more
KBA: Sluggish housing sector growth linked to high lending rates
The housing sector has remained sluggish despite prices rising marginally three as homebuyers delayed borrowing decisions over high lending rates.The rate of growth in quarter-three fell well below, according to a bankers’ survey. Kenya Bankers Association Housing Price Index (KBA-HPI) increased to 1.26 per cent from the 0.2 per cent growth.The growth in house prices is lower than the 2.75 per cent recorded. The index tracks house prices using data from commercial banks and the National Housing Corporation. KBA director of research and policy Jared Osoro said the marginal increase in prices is due to low demand as buyers are non-committal on borrowing to buy houses due to the high interest rates and uncertainty in other macroeconomic prices such as the exchange rate. Read more
Rotich banks on tax reforms to collect additional Sh60bn
The Treasury expects new tax policy measures now under implementation to generate an extra Sh60 billion, according to a new report produced by the International Monetary Fund (IMF).With the implementation of the online i-tax initiative, there are expectations of greater compliance with pay-as-you-earn (Paye) that should raise another Sh10 billion while changes in value added tax (VAT) are projected to give an extra Sh8.1 billion.Following the application of the 12 per cent turnover tax on real estate, the Treasury has factored in Sh4.1 billion, up from an average of Sh850 million realised.The turnover tax is applicable on landlords with annual rental income of Sh10 million and below since those above that are supposed to pay income tax. Read more
KDB: Sale of contaminated food products a wake-up call
Confidence in Kenya’s food safety standards has taken a battering after it emerged that contaminated milk powder is on sale.The Kenya Dairy Board (KDB) has issued an alert over the sale by local retailers of milk tainted with toxic cancer-causing chemicals.The board said some of the imported milk powder on sale had been declared unfit for human consumption due to the presence of adulterants such as melamine, heavy metals such as lead, and radioactive materials.This echoes the tainted milk scandal in China. At least six infants were killed and more than 300,000 fell seriously ill as a result of unscrupulous farmers and milk dealers adding the industrial chemical melamine to low quality or diluted milk to fool inspectors by giving misleadingly high readings for protein levels.Read more
Should KRA consider a tax amnesty?
Events in the print media about the government’s cash-flow position reminded me of mathematical problems from my school days.The problems revolved around running taps, which could fill empty tanks at different rates. The questions often asked that if tap A can fill a tank in five minutes and tap B can fill the same tank in eight minutes, how long would it take to fill the tank if both taps were left running at the same time?To add a twist to the problem, the question would introduce tap C, which could empty the tank at a determined rate.The question would paint other more complicated scenarios but the aim was for the students to determine how long it would take to fill the tank or how long it would take to empty it in all these scenarios. Read more
CBK: Change strategy to put economy back on the rails
After the government announced it had secured a Sh77.43 billion ($750 million) syndicated loan, some banks raised their interest rates.This raised questions about what happened to the billions raised via the Eurobond and the implication of rate increases on the economy.However, the truth of the matter is that there are several compounding variables with which the Central Bank of Kenya (CBK) has to contend; variables that put pressure to keep rates high as well as to lower rates. In terms of the pressure to keep rates high, one needs only to remember that the CBK raised the Central Bank Rate (CBR) to 10 per centfrom 8.5 per cent and then raised it again to 11.5 per cent .These increases were done in an attempt to stem the depreciation of the shilling and control upward inflationary pressure. Read more
Police seize Sh153m fake dollars in city printing ring
Police have broken a dollar counterfeiting ring in Nairobi’s Westlands suburb following the arrest of foreign nationals suspected to be behind the scam.Officers from the Flying Squad apprehended the five following a raid on an apartment they were staying in, and found $1.5 million (Sh153 million) in counterfeit notes. The notes were in denominations of $100.The five appeared before Resident Magistrate Joyce Gandani, where they denied the charges. Ms Gandani ordered that they be kept in custody until  when their matter will be heard.Police believe that Abdullaye and Abdullah Tamba, Suleiman Yahya Musa, Mahmat Tamba and Yahya Kangweri had planned to release the forged notes into the Kenyan market.Read more
Treasury secretary Henry Rotich: Treasury gets IMF nod in bid to raise fresh Sh155bn debt
The National Treasury has been backed to raise fresh commercial debt of up to Sh155 billion ($1.5 billion) under an agreement reached with the International Monetary Fund (IMF), even as the economy chokes under huge external liabilities.Newly released documents show the state now views the domestic market as costlier and is opting to go for external debt at a time international rates are still at near zero levels.Already the government has committed to borrow through a sukuk (Islamic) bond — despite absence of an enabling legal framework — to settle the contracted syndicated domestic debt of Sh78 billion (part of the Sh155 billion) and get more cash for infrastructure development.Treasury secretary Henry Rotich disclosed that part of the Sh229 billion initially intended to be borrowed domestically would now be sourced. Read more
Private sector workers still can’t access NHIF cover
Millions of private sector workers cannot access outpatient medical services at private hospitals using the State health insurer’s cover, even as the agency continues to deduct higher contributions pegged on an increase in the range of services offered.Thousands of contributors who tried to use the National Hospital Insurance Fund (NHIF) cover for treatment at private hospitals were turned away,since the agency more than quadrupled contributions on the promise of more benefits, including outpatient treatment.The NHIF had assured contributors access to the better equipped private hospitals,  increase of deductions.Private hospitals have, however, continued to reject the Sh1,200 cash allocation that the NHIF has offered to pay as annual fee (capitation) for every beneficiary, describing it is too little.Read more

IRA: Insurance industry set for new supervision system
The insurance industry is set for a major makeover as the regulator introduces a new mode of monitoring performance.Expected to become effective, the risk-based supervision rather than compliance is what insurance companies should gear up for, according to Insurance Regulatory Authority chief executive Sammy Makove. He said the new standard will, among other things, entail full disclosure and publication of assets, which will in turn provide for evaluation of companies based on capital and risk analysis.Mr Makove was speaking  at the official opening of the Actuarial Convention in Nairobi.“Actuaries, risk managers, compliance officers and internal auditors are important in the implementation of the Enterprise Risk Management (ERM) framework within the financial institutions. They should, therefore, be prepared for the changes,” he said. Read more
IRA: Jubilee maintains market lead with 12.6pc of revenue
Jubilee Insurance has maintained its market leader position, beating off competition from close rivals Britam and ICEA Lion.Fresh data from the Insurance Regulatory Authority (IRA) shows Jubilee’s market share stood at 12.6 per cent, compared to the merged total of Britam and Real Insurance at 11.5 per cent.The newly merged UAP-Old Mutual group is ranked fifth, controlling 6.7 per cent of Kenya’s total gross premiums, behind ICEA Lion’s 7.9 per cent and CIC Insurance’s 7.1 per cent.Pan Africa Insurance Holdings, which acquired a majority stake in Gateway, has a market share of 3.1 per cent while Metropolitan Life- Cannon Assurance controls 1.1 per cent of the industry’s underwritten premiums.Read more
PAC: Treasury queried over secret US bank account
The Treasury has been asked to explain the interest earned from a secret government-owned New York account that held proceeds of the $2 billion (Sh204 billion) Eurobond. The Public Accounts Committee (PAC) wants to know how much interest was earned from the account and who its beneficiaries were as well as the expenditure audit of the Eurobond.This came after the Controller of Budget Agnes Odhiambo told the committee that the Treasury would be best-placed to respond to the question.Withdrawals from the New York accounts were done without the approval of the Controller of Budget—which was in breach of the law.“When money was kept in the special account, did it earn interest and what were the terms? It is the National Treasury that can answer this,” Ms Odhiambo said.She added that Parliament should seek to know the projects that were funded from the Euro Bond.Read more
CBK: Pain for borrowers as cost of loans rise to new peak of 27pc
Kenyan commercial banks have steeply increased the cost of loans, leaving their customers with a massive debt servicing burden that was seen in the wake of the global financial crisis.The increments follow a rise in the cost of government borrowing as the Treasury’s appetite for money increased with the Kenya Revenue Authority’s failure to meet its revenue collection targets.Lending rates have risen to highs of 27 per cent from 19 per cent following a more than doubling of the cost at which the government is borrowing from the local market — now standing at 23 per cent. This escalation in the cost of loans has dashed any hopes borrowers had in the standard loan pricing tool the Central Bank of Kenya (CBK) introduced to protect consumers from arbitrary increase in lending rates. Read more
Form alliances to save airlines, Boeing tells Africa
Global plane maker Boeing urged Kenya to forge alliances with other African countries to save its national airline.Boeing International President Marc Allen said it was uneconomical for airlines to operate within smaller markets where there are no air traffic rights with neighbouring countries.“Africa needs to rationalise its operations via alliances and mergers. I am aware Kenya, Nigeria and South Africa are holding discussions over the issue, especially after security and Ebola issues adversely affected air traffic flow. Look at the European Union whose member country economies have been kept afloat by air traffic business. Africa needs to open its space for people to traverse the region, thereby boosting individual national incomes,” he said. Read more
RSOD: Nakumatt raises Sh5m to help fight cancer
Nakumatt Holdings has raised more than Sh5 million  through its social causes fund-raising scheme to help the Faraja Cancer Support Trust.The retail chain has spread the initiative to all its 54 outlets across East Africa, with the aim of raising Sh12 million.The plan gives shoppers a chance to redeem and donate their accrued loyalty points at Sh2 each.“By deploying our retail technology, we are glad to be building a bridge between social causes and effective fund raising options. This is Nakumatt’s corporate contribution to raising further awareness on cancer,” said regional strategy and operations director, Mr Thiagarajan Ramamurthy. Nakumatt partnered with Faraja Cancer Support Trust to mobilise funds, raise awareness for cancer, and provide access to life-saving cancer screening. Read more
Uhuru orders lifestyle audit for KRA staff
Kenya Revenue Authority (KRA) employees will be subjected to lifestyle audits as part of fresh efforts to stop rampant corruption in the agency that costs the State billions of shillings in revenue leakages.President Uhuru Kenyatta issued the directive with firm instructions to the Treasury and the KRA to speed up the formulation of a vetting plan, saying the integrity of the agency’s officials was crucial to ensuring all eligible taxpayers met their obligations and paid in the correct amounts.“Measures geared towards eradicating corruption in tax collection must be implemented. Towards this end, I am directing the National Treasury to work with the KRA board to ensure speedy implementation of an appropriate staff vetting framework,” Mr Kenyatta said adding that it was important that the taxman ensures all those eligible to pay taxes did so promptly. Read more
CBK: Uganda puts Imperial Bank’s stake in Kampala unit on sale
Ugandan authorities have put troubled Imperial Bank’s 51 per cent stake in the lender’s Kampala subsidiary on sale in a move that signals a possible direction Kenyan regulators might take in resolving the crisis that led to the bank’s closure.Central Bank of Kenya (CBK) governor Patrick Njoroge made the revelation even as he acknowledged that the regulator’s own supervision department officials are among the key players under investigation over the sudden fall of the mid-tier lender.“In Uganda, they are trying to sell the 51 per cent shareholding of Imperial Bank Kenya to a particular investor and to resolve the bank’s problems that way,” said Dr Njoroge.The list of those under investigation for massive fraud that led to the bank’s collapse includes directors of the bank, its management, and external auditors. Read more
KNBS: US becomes second biggest buyer of Kenyan products
The United States of America has overtaken the Netherlands to become the second-largest market for Kenya’s exports, turning the spotlight on Nairobi’s policy of looking East.American consumers bought Sh26.9 billion worth of Kenyan goods ahead of Netherland’s Sh25.3 billion, according to the Kenya National Bureau of Statistics (KNBS) data.Uganda remains the top buyer of Kenya-made goods, but the US has climbed to the second spot from position three last year and position five.Washington imports from Kenya include coffee, titanium ores and textiles which accounted for 79 per cent of the country’s total exports to America under a duty-free trade pact – the African Growth and Opportunity Act (Agoa).KenInvest chief executive Moses Ikiara said the best thing that could happen to Kenya is to grow its trade with the world’s largest economy. Read more
Central Bank, IMF to step up cross-border banks supervision
The International Monetary Fund (IMF) is working with the Central Bank of Kenya to have individual supervisory units for banks with significant cross-border operations.Central Bank, IMF to step up cross-border banks supervision. The launch of the units – dubbed supervisory colleges – is intended to improve monitoring of cross-border operations of the banks to minimise associated risks such as money laundering, avoidance of a money trail and terrorism financing.The move is being made against the rapid expansion of the Kenyan banking industry in the region especially in Uganda, Tanzania, Rwanda and South Sudan. Read more
NSE: Investors in NSE-listed firms lose Sh41bn 
Investors in companies listed at the Nairobi Securities Exchange (NSE) have lost Sh41 billion in just one week, signaling the extent to which the bear market is eroding paper wealth.NSE market capitalisation, an indicator of the quoted wealth, stood at Sh1.941 trillion as compared to Sh1.982 trillion.At the same time, the NSE 20 Share Index remained below the psychologically important mark of 4000 points for the better part. However, it recovered from its sub-3900 level.With the lower prices, foreigners have been getting back to the market as net buyers.“With participation at 59.5 per cent, foreign investors were net buyers for the third straight trading session, accounting for 81 per cent of total buys versus 89.8 per cent,” said Nairobi-based Standard Investment Bank in a note to clients. Read more
Shilling racks up gains ahead of bond auction
The Kenyan shilling strengthened further, with the local currency supported by dollar inflows to be used for purchase of Kenya's high-yielding government debt later in the day.Commercial banks posted the shilling at 102.10/20 to the dollar, from close of 102.40/102.50. The currency, down about 14 per cent against the dollar, was receiving support from inflows ahead of auction of an amortised Treasury bond, and more broadly from its Treasury bills auctions, said a trader at one Nairobi-based commercial bank."There's been really good inflows coming in, chasing the yields," the trader said. Going forward, the trader said the local currency remains on a strengthening trend. Read more
Kenya in talks with neighbours to reduce travel costs
Kenya and its landlocked neighbours are developing a framework around which air fares will be lowered within the bloc ahead of an open air sky.This follows a directive issued jointly by presidents Uhuru Kenyatta, Paul Kagame of Rwanda, Yoweri Museveni of Uganda and Salva Kiir of South Sudan at the 11th Northern Corridor Integration Summit in Nairobi.Open skies policy involves giving flying permits to airlines from foreign countries.“Ensure that there is fairness in pricing of air tickets on all regional routes, specific attention should be given to Juba-Nairobi-Juba and Entebbe-Nairobi-Entebbe routes,” said a communiqué signed by the four leaders. Read more
CBK: We need to strengthen bank supervision - CBK governor
The Central Bank missed possible "malpractice" at Imperial Bank Ltd before it was taken over by a government agency, exposing larger problems in the sector, the central bank governor said.The central bank appointed the Kenya Deposit Insurance Corporation (KDIC) to manage Imperial, after Imperial's board alerted it to "inappropriate banking practices that warranted immediate remedial action"."It is clear that we need to strengthen our bank supervision dramatically," Patrick Njoroge told a news conference.Imperial is the second bank in Kenya to be put under the management of a government agency, when Dubai Bank Kenya Ltd was put in receivership after liquidity problems. Read more
Hasten passage of law on tax collection, Treasury asks MPs
Treasury is banking on Parliament to speedily enact a law that will streamline the collection of excise duty and increase the revenue collected for that category of tax as part of the methods of raising funds for the government. The Excise Duty Bill was passed by the National Assembly but the Finance, Trade and Planning Committee made drastic changes to the proposals by Treasury. The Bill was then rejected by President Uhuru Kenyatta.Treasury CS Henry Rotich and PS Kamau Thugge asked the Budget and Appropriations Committee to help speed up the reconsideration of the Bill, whose enactment would help the taxman collect an extra Sh21 billion. Read more
Resorts& Cities: Golf resort in Murang'a to inject billions into economy
Property developers behind the Longonot Gate mega resort city have launched a golf resort development in Murang’a County, projected to inject Sh60 billion into the country’s economy.The Sh5 billion Makuyu Ridge project will be built on a 1,000-acre land about 72 kilometres from Nairobi.It will boast an 18-hole world class golf course, a shopping mall, hotel, convention centre, office park, church, medical centre, model county school, police station, eco-lodge and petrol station.“Makuyu Ridge Golf Resort will be fully serviced with the following infrastructures; cabro-road network, water supply to each plot, power supply from the nearest transformer and ICT connection,” said Mr James Wathigo, a director of Resorts & Cities.Read more
TCS Henry Rotich: Treasury orders for austerity measures to tame spending
The government announced a new raft of austerity measures as it attempts to restore stability in the country’s finances.National Treasury Cabinet Secretary Henry Rotich said the fresh measures would include cutting back on non-crucial budget allocations in key State departments, freezing non-essential spending and also pushing the taxman to enhance revenue collection.Mr Rotich said the move would ease widespread concerns about the country’s public finances by reducing the fiscal deficit and putting the economy on the right path to recovery.“We are reviewing the budget to ensure that all expenditures are first productive as much as possible and also areas where we will slow down we will obviously do that so that we can achieve less borrowing in the market,” said Mr Rotich. Read more
Public debt nears Sh3trn on wobbly shilling as more borrowing planned
Kenya’s public debt rose by Sh90 billion amidst a weakening shilling to hit a record Sh2.93 trillion.The total debt now constitutes about 51.29 per cent of the gross domestic product (GDP), meaning that more than half of the country’s earnings is effectively mortgaged in debt. When the financial year ended, the debt stood at Sh2.844 trillion or 49.75 per cent of the GDP – showing that the percentage has significantly escalated.“Total public and publicly guaranteed debt stood at Sh2.934 trillion or 51.29 per cent of GDP,” said the National Treasury in the update on the status of the country’s debt.The cause of the increase in debt was disbursements by the foreign donors as well as the weakening of the shilling.Read more
CBK hires US firm to probe fraudsters at Imperial Bank
The Central Bank of Kenya has hired an American consulting firm that was involved in unmasking the perpetrators of a multibillion-dollar Ponzi scheme to conduct a forensic audit at Imperial Bank – the lender that went into receivership.Mystery dogs Imperial Bank closure as CBK keeps mum FTI Consulting will audit the bank’s books, processes and governance system to unravel the “unsafe and unsound business conditions to transact business” that led to the closure of the mid-tier lender.The bank had Sh58 billion in customer deposits at the time of its closure.The Business Daily learnt that forensic accountants from the Washington DC-based business advisory firm are already in Kenya combing through Imperial Bank’s books.They are working with Kenya Depositors Insurance Company (KDIC) officials who took over management of the bank. Read more
Vision economic blueprint: Increased green energy generation key to growth
The region’s interest in renewable energy has grown significantly with most countries shifting focus on their energy mix from non renewable to renewable sources.Kenya, without a doubt has made large strides towards green energy sources. Under the Vision economic blueprint, the strategy is to undertake reforms in various sectors that form the foundation of socio-political and economic growth, key among them boosting power generation from renewable energy sources to drive industrial and commercial activities.Low carbon energy from a mix of geothermal, wind and hydro is already being fed into the national grid, helping to diversify the energy mix and a key driving factor towards the growth of the country’s economy. Read more
Uhuru summons KRA boss as tax revenue shortage bites
Kenya Revenue Authority (KRA) Commissioner-General John Njiraini was summoned to State House to explain the agency’s failure to collect taxes that has left the Jubilee government without money to meet its financial obligations.Senior Treasury officials also attended the meeting with President Uhuru Kenyatta at State House where they were expected to agree on a common narrative ahead of appearance in Parliament. Tax revenues fell behind targets in the first three months of the fiscal year, plunging the Treasury into a cash crisis that has left many government workers without pay and disrupted budget plans.Mr Kenyatta has been under pressure as the cash crunch hit key government departments, delayed payment of teachers’ salaries and occasioned non disbursement of money due to the county governments. Read more
TransCentury plans cash call to pay off Sh5.9bn bond
Engineering and infrastructure firm TransCentury will be going to the market to raise additional cash.The listed firm said in a notice that it would raise the funds for its construction, energy businesses and to pay off a Sh5.9 billion ($56.8 million) convertible bond.The amount to be raised was not disclosed. Neither did the notice clarify whether the firm would be seeking debt or equity financing or both.“The exact nature and structure of the transaction will be decided upon by the company board based on the recommendations of the advisor. Shareholders will be kept appraised of material developments,” said the company in a notice. Read more
Dubai firm says Kebs and KRA staff colluded to steal Sh300m
A Dubai-based firm has claimed that Kenya Bureau of Standards (Kebs) officers colluded with the agency’s former managing director Kioko Mang’eli and some Kenya Revenue Authority employees in an attempt to defraud it of Sh300 million.Geo Chem Middle East says in court papers that Kebs knew that a Nairobi-registered company with a name similar to its own had been registered by Dr Mang’eli in a bid to dupe the State into paying him the sum.The Dubai firm was an inspection agent with Kebs but its contract was cancelled. It claims Kebs still owes it the Sh300 million.The Kenyan-registered Geo Chem Middle East Limited sued Kebs and KRA claiming the sum as compensation for the contract.But the Dubai firm appeared in court claiming that it was the one that had a petroleum products inspection contract with Kebs, and that the Nairobi firm is a shell corporation that Dr Mang’eli was using to fraudulently claim its dues. Read more
US investor to offer loans on M-Pesa, Facebook data
A US company has launched a Facebook-linked mobile phone lending service that allows users to borrow and repay small loans through M-Pesa.The service, accessible through an app dubbed Branch is set to raise competition for other M-Pesa-based loan disbursement platforms such as M-Shwari and KCB M-Pesa.
Matt Flannery, the co-founder of the peer-to-peer lending platform Kiva, said the company will be offering entrepreneurs up to Sh50,000 repayable.The American techpreneur said Branch will target small and micro enterprises that are in need of quick loans but are locked out by traditional banks which demand collateral and see them as high-risk borrowers. Read more
Genghis Capital’s: High interest on bonds to hit bank, insurers’ earnings
Banks and insurance companies’ earnings are expected to take a hit from unrealised losses arising from the hike in interest rates for Treasury bills and bonds.While some of the losses affect the profit and loss account, other unrealised losses have the potential of eroding capital, thereby requiring injection of new cash should certain capital thresholds be breached.Interest rates of the bills have shot to 20.6 per cent up from 8.6 per cent.A rise in interest rates has an inverse relationship with the price of bills and bonds in the market such that losses are incurred once the yield rises because the price falls. Read more
Kenya to reintroduce VAT on all oil products
Fuel prices in Kenya are expected to increase sharply as the government plans to increase taxes on the commodity to raise an additional Ksh16 billion ($152.62 million).The government will impose 16 per cent value added tax (VAT) on oil products to shore up its domestic revenues, which have come under pressure in the wake of burgeoning spending, corruption and wastage.The tax, which is to be enforced, will make the cost of goods and services expensive, increase the cost of doing business in the country and render East Africa’s largest economy uncompetitive to investors.Motorists and households will be hard hit by the imminent taxation measures, which will see close to 40 per cent of the price of petrol per litre now comprising government taxes and levies. Read more
World Bank urges govt to contain spending
International financial institutions have raised the red flag on what they say is runaway government spending amid a financial crunch.World Bank Country Director for Kenya Ms Diaritou Gaye singled out government’s huge spending on infrastructure, warning that Kenya’s expansionary fiscal plan “is not sustainable” and presents a risk to the country’s future growth.“Although heavy infrastructural spending is a boon for Kenya’s production space and future growth, the short to medium term macro-fiscal framework is vulnerable to macro-economic shock as fiscal space has been wiped out,” Ms Gaye said in Nairobi when the World Bank launched an economic update on Kenya. Read more
NSE index falls low as bank stocks make gains after scare
The Nairobi Securities Exchange’s (NSE) main index fell to a new low of 3868 points, even as stock prices of several banks that had earlier fallen recovered slightly.NSE index falls low as bank stocks make gains after scare.The NSE 20 Share Index is now down 24.3 per cent, with the factors behind its fall ranging from poor corporate results and profit warnings to shifting of funds to the primary fixed-income market which is benefiting from high interest rates.The NSE said turnover also declined as well as the number of shares traded.Read more
WB sees fresh round of shilling volatility on Fed rate increase
The World Bank has warned of an impending second round of shilling volatility owing to the country’s vulnerability to a raise in interest rates in the United States.The multilateral institution said the Kenyan economy had benefited immensely from a loose monetary policy in the world’s largest economy but the volatility of the shilling exposed its vulnerability to America’s plan to stop offering cheap money to businesses.“With the ending of the Fed monetary stimulus the flow of cheap capital that has been funding the current account could dry up as investors build their dollar-denominated assets, creating volatility in the foreign exchange market,” warned the World Bank in its analysis on the Kenyan economy.Read more
Cofek: Imperial Bank’s 53,000 account holders’ tales of pain and despair
Imperial Bank depositors were denied access to their money for the third day in a row, leaving most with stalled business transactions and unable to meet their financial obligations. A large fraction of the 52,398 depositors, reduced to paupers by a stroke of the pen, were forced to take up new loans at exorbitant rates to meet immediate financial needs.The Consumer Federation of Kenya (Cofek) said it had received numerous complaints over the Central Bank of Kenya’s (CBK) decision to deny the collapsed bank’s customers access to their money and had registered 15 cases for possible action. Read more
Employee fraud, corruption big challenge at Safaricom
Integrity remains a big challenge for Safaricom, with the telco firing 58 workers for fraud and corruption.The firm singled out asset misappropriation and fraudulent expense claims as its major setbacks in internal fraud. The details were revealed in Safaricom’s Sustainability Report.“We conducted 29 investigations on fraud, compared to 89 when four cases were forwarded to the police for public prosecution,” said the report released. Safaricom took disciplinary action against staff involved in misconduct as the telco carried out 19 audit reviews to ensure effectiveness of internal controls. Read more
Kebs sets deadline for import stickers
The Kenya Bureau of Standards (Kebs) has extended the deadline for importers to start using new standardisation stickers.Kebs had intended to have the stickers in use but relaxed the regulations after complaints from importers on the short implementation period.The stickers known as Import Standardisation Mark (ISM) were introduced and are intended to deter the sale of non-certified imported goods. They will only be printed by Kebs and affixed on all imported retail items.Kebs has been issuing the mark in soft copy to print and affix.“We are glad to launch this new programme whose sole objective is to secure Kebs’ marks of quality. We are kicking off with imports and thereafter we will focus on high-risk commodities such as water and alcohol,” said Kebs managing director Charles Ongwae. Read more
Uhuru pushes EAC for free movement of labour in bloc
President Uhuru Kenyatta has called for fast tracking of the East African Community integration to allow free movement of people, goods and expertise within the region.The President said restricted movement among the five member states of the bloc — Kenya, Tanzania, Uganda, Rwanda and Burundi — was not good for the region’s development.“Our union must be strengthened to allow people, capital and services. We have to allow our people to take their skills and capital wherever they will be best rewarded,” said Mr Kenyatta.The president, who was addressing the East African Legislative Assembly (EALA) MPs during a sitting at the Senate Chambers in Nairobi, challenged the lawmakers to hasten the legislation of the common market protocol and anchoring in law the right to freedom of movement. Read more
Central Bank, CMA on the spot over Imperial’s sudden closure
The  sudden closure of Imperial Bank sent shockwaves across Kenya’s financial services sector even as pressure mounted on the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) to come clean on the matter.The CBK, the banking industry regulator, and the CMA, which oversees the capital markets, are on the spot for failing to smell trouble at the mid-tier lender which got their approval to issue a bond only two months ago.Bond issuers ordinarily go through a rigorous approval process before being allowed to take cash from the investing public and Imperial Bank’s collapse soon after the two regulators allowed it to borrow Sh2 billion from the public has left many questions in its wake. Read more
UHC: Uganda asks Kenyans to accept the sugar deal
Uganda accused Kenya of not being keen to follow the East African Community Common Market protocol.Uganda High Commissioner Angeline Wapakhabulo said that while Uganda has no problem trading with Kenya, Kenyans have no trust in Uganda as a business partner.She spoke in Mombasa during the launch of a Ugandan modular ferry, the Albert Nile-1.The ferry was built in Kenya by Southern Engineering Company in partnership with Damen Shipyards, headquartered in the Netherlands. Wapakhabulo spoke after Mombasa Governor Hassan Joho said East Africa has the potential to create opportunities without relying on foreigners.She said Kenyans should not debate the sugar deal after the two countries reached agreement.The envoy said Uganda produces more sugar than Kenya and it is important for the two countries to develop harmonious trade relations. Read more
SIB: CBK seeks to reassure investors of banking sector stability
The Central Bank of Kenya has come out to assure investors of stability in the banking sector after local banks took a hit from Imperial Bank closure. Shares of most Nairobi-listed lenders closed lower with the entire banking sector recording declines except for I&M Bank-which did not trade.NIC Bank, Standard Chartered and Housing Finance declined the most; falling 6.7 per cent, 5.5 per cent and 4.4 per cent respectively.Kenya Commercial Bank weakened towards close of the session and touched a low of Sh40.50 as local investors picked up the stock as it fell, Standard Investment Bank said in a note to clients. Read more
Centum Investments: What investors can expect from Reits trade on the NSE
Investors have been waiting patiently, or impatiently, depending on who you talk to, to invest in real estate investment trusts (Reits). So, it was with much joy when Stanlib Investments received an approval to raise Sh12.5 billion through a Reit. If any investor is okay holding on to a position for an extended period of time with the single intention of collecting dividends alone, then they should look forward to the launch of these securities.But before I proceed on why Reit shares are a good deal, let me first explain what they are. Essentially, Reits are companies that typically hold dozens of commercial properties, including office buildings, hotels and shopping malls. Read more
KTA: Mombasa plans higher levies for branded cargo containers
Mombasa County has caused fresh uproar with its proposal to raise by Sh10,000 charges on every branded container entering its territory.In its Finance Bill before the County Assembly, Mombasa proposes to charge Sh40,000 on every branded container that runs through its territory, up from Sh30,000 being levied at the moment. Similarly, any branded vehicle will pay a fee of Sh15,000, up from Sh12,000.But transporters have criticised the planned levies saying they could raise the cost of doing business and discourage traders from using the port of Mombasa.“It is wrong for any county to impose taxes without first talking to the stakeholders,” Kenya Transporter Association (KTA) chief executive Willington Kiverenge told the Business Daily. Read more
KRA sues Airtel for Sh531 million claim
The Kenya Revenue Authority (KRA) is pursuing Airtel Kenya for Sh531 million taxes it claims the telco owes from its first two years of operation in Kenya. The taxman says in court papers that the amount arose from Airtel’s $55 million (Sh5.6 billion) purchase of an operating licence.The Commissioner of Income Tax wants the High Court to declare Airtel in default of the amount and settle the due. KRA claims that Airtel should have recorded the Sh5.6 billion licence purchase as part of capital cost — the charges a firm incurs when starting a business — which would have made it not liable to the Sh531 million tax deduction that it booked. Airtel recorded the licence purchase as revenue expenditure, which allowed the telco to deduct the whole amount from its taxable income. Read more
CBK: Sh58bn deposits locked in Imperial Bank shutdown
The Central Bank of Kenya’s (CBK) decision to place Imperial Bank under statutory management effectively removed Sh58 billion from circulation, raising queries over its possible impact on liquidity in the money markets.The bank, which is associated with the wealthy Popat family, Tuesday became the second bank to go into receivership since Patrick Njoroge took charge as CBK governor less than four months ago.“Normal operations of the bank are suspended except for collection of loan re-payments or any other payments into the bank,” the CBK in a press statement that also appealed for patience among depositors as the Kenya Deposit Insurance Corporation (KDIC) — the receiver managers — worked with the Imperial Bank Limited board to resolve the matter in the interest of stakeholders. Read more
Cabinet Secretary for Industrialisation Adan MohamedWhy that director’s job could land you in jail
The law guiding operation of companies in Kenya was such that a stupid decision made by a director could withstand any legal challenge.What is more, the law offered such a director immunity from those affected by the action.It is this lacuna that has seen directors literally escape with murder, looting companies by stripping them of assets or manipulating financials to appear as if the company is doing well while the reverse is true.Instances where companies are set up as avenues to defraud the public have been common.This, however, is expected to change with the enactment of the new Companies Act, signed to law by President Uhuru Kenyatta. Read more
NSE: KenGen ups dividend payout as profit jumps threefold to Sh11.5bn
Kenya Electricity Generating Company (KenGen) has raised its dividend payout by 62.5 per cent after recording a threefold jump in net profit, powered by increased sales and a tax credit.The Nairobi Securities Exchange (NSE)-listed firm’s net profit increased to Sh11.5 billion, up from Sh2.8 billion— marking a 307.5 per cent jump and hitting one of the highest earnings in corporate Kenya.Revenue from electricity sales grew 46.9 per cent to Sh25.6 billion in the review period.A tax credit of Sh2.8 billion also boosted KenGen’s performance.This helped the utility to declare a dividend of Sh0.65 per share, up from Sh0.40, offering a boost to shareholders who have seen the shares shed more than a fifth of their value at the Nairobi bourse. Read more
CBK places Imperial Bank under receivership
Central Bank of Kenya has placed Imperial Bank under receivership for what the regulator termed as unsafe banking conditions.“CBK has appointed the Kenya Deposit Insurance Corporation to assume the management, control and conduct of the affairs and business of the institution and to exercise all the powers of the institution to the exclusion of its board of directors and advise CBK of an appropriate resolution strategy as soon as is practicable and not later than twelve months from date of appointment,” the regulator said in a notice.Imperial Bank is ranked as a mid-tier bank with operations in Kenya and Uganda. It raised Sh2 billion debt through a corporate bond that was marginally oversubscribed. Read more
AIB: Treasury borrows Sh20 billion in domestic market to plug deficit
The Treasury is set to borrow Sh20 billion to plug a budget gap amid high interest rates in the market.
The government bond, which went on sale, comes at a time when interest rates are on a high.In auction, the 364-day Treasury bill rate was at 21.498 per cent.“Investors are expecting higher and higher interest rates and they will be quoting higher rates for this bond,” AIB Capital trader Ronald Lugalia said.This is the second bond, after Central Bank issued another one-year Sh30 billion bond at a rate of 19.062 per cent. Read more
CBK: State’s one-year bond to attract over 20pc interest
The government could pay a steep price of above 20 per cent as interest to investors in the Sh20 billion  bond it has floated for budgetary support.The Central Bank of Kenya (CBK) began selling the Treasury bond. The price will be determined by the market, but is expected to follow the trend of more recent issues.The Treasury bond comes less than a month after the government borrowed Sh30 billion, also for budgetary support, through a bond.The new borrowing also comes at a time when interest rates are rising.The Sh30 billion bond was sold at 19.062 per cent yield while a 364-day Treasury bill that was sold last week had a 21.498 per cent rate. Read more
NTPS: Treasury pegs hope on Sh80bn loan to unlock cash crunch
The National Treasury is banking on a Sh80 billion syndicated loan that is expected to unlock the cash crunch affecting government business.National Treasury Principal Secretary Kamau Thugge told the Nation that the funds would ease pressure on the government by plugging the  revenue shortfall.“We are getting a syndicated loan that could be up to $750 million which comes to about Sh80 billion. That money could be coming,” said Dr Thugge. A National Treasury Ministerial Tender Committee is in talks with three banks, including Standard Chartered, Stanbic and Citi Bank to arrange for the urgent credit. Read more
SMAP: Stick to safety standards to enjoy huge opportunities in European Union market
Many Kenyan farmers must be hearing the word Smap (Standards Market Access Programme). Why should they care about it?Smap is all about the farmers and how they can access the EU market. Kenyan producers have had difficulties accessing the EU market due to various challenges that include chemical residue. Smap is working to eliminate such bottlenecks to ensure as many Kenyan farmers as possible access the EU market.The project is financed under the 10th European Development Fund and has four implementing agencies namely Kenya Plant Health Inspectorate Services, Department of Veterinary Services, Unido and the Kenya Bureau of Standards. Read more
NSE: Investors lose Sh300bn in NSE’s ten-month bear run
Investors in firms listed on the Nairobi Securities Exchange (NSE) have lost Sh300 billion  following a slump that has seen the main index drop.NSE data shows only 13 of the 66 listed companies have gained in value underlining the extent of the bear run. The fall in stock prices has been attributed to introduction of the capital gains tax and the depreciation of the shilling.Monetary authorities have in turn raised interest rates to curb the depreciation, which has in turn pulled investors away from stocks to the fixed-income market.The NSE 20 share index has dropped to 4017.3 points from 5117.4, a 21.5 per cent decline. The size of investors’ wealth, as indicated by market capitalisation, has dropped to Sh2 trillion down from Sh2.3 trillion. Read more
CAK: Regulator to block unregistered phone lines 
Thousands of mobile phone subscribers with unregistered SIM cards will be blocked from the telecoms’ networks as the regulator moves to enforce new rules meant to clear the system of criminals.The planned switch-off comes in the wake of the Communications Authority of Kenya’s (CA) publication of new regulations that are intended to complement the SIM card registration laws that were passed two years ago.The Kenya Information and Communication Act, requires telecommunication operators to register their subscribers within a specified period and keep their details. Non-compliance with the law is an offence punishable by a fine not exceeding Sh5 million.The new regulations, which define the legal process for deactivation of SIM cards, came into effect – meaning subscribers with unregistered SIM cards have about days before losing their lines.Read more
IMF, World Bank pledge to help Kenya tame illicit financial flows
Kenya’s war against illicit financial flows which bleed the country an estimated Sh80 billion  has received a shot in the arm after global economic leaders converging in Lima, Peru vowed to help stop the vice.The World Bank and International Monetary Fund committed to assist countries like Kenya build capabilities in developing domestic policies and practices that reduce such flows.“We are concerned about the adverse impacts of illicit financial flows (IFFs) and harmful tax avoidances, especially by multinational firms, on the sustainability of public finances, particularly in African countries,” said a joint communiqué on international monetary affairs and development released by an intergovernmental group at the Lima meeting. Read more
KRA: Low revenues, high interest rates behind State cash crunch
Low revenue collection, high interest rates and an unfavourable exchange rate are the reasons the Treasury has no money that has stalled payment of essential expenditures, MPs were told.The cash crisis has affected the 47 counties, release of cash for the free primary education and secondary school education funds as well as the National Assembly—with MPs salaries and those of their staff delayed.The Constituency Development Fund, rural electricity connection and some commissions including the Independent Electoral and Boundaries Commission (IEBC) have also been affected by the cash crunch.The Kenya Revenue Authority collected Sh181.2 billion, which was below the expected average for the period, the Parliamentary Budget Office (PBO) said.Read more
Nairobi to host first EA Islamic finance summit in December
Nairobi will host the first East African Islamic finance summit.S&P sees Kenya ripe for Sukuk bonds. The summit whose theme is “Unveiling opportunities” is meant to bring together individuals and firms in the region’s financial sector with their Middle East counterparts.The Treasury has floated the idea of using Islamic finance products to fund the country’s mega projects.Regulatory framework, regional infrastructure projects, opportunities for financing and Sukuk issuance are also expected to be key topics of discussion at the event.Kenya mulls issuing Islamic bond. Islamic finance has been growing steadily since laws allowing for Sharia-based products were introduced. Read more
How brands are getting it wrong with social media
That technology is changing the landscape of how brands integrate and interact with customers is not in question. Social media sites like Twitter, Facebook and Instagram have certainly been game changers, with companies often seeking to outdo each other in wit and speed of response to customers.What brands often forget when interacting with consumers, however, is that they are first and foremost humans. This is a fatal error as physical interaction with customers is just as, if not more, important as virtual interaction.Market research reveals that even companies with a strong digital presence still have physical locations where customers can interact with them. Read more
Treasury Cabinet Secretary Henry Rotich: Kenya to push for economic reforms at Bretton Woods Lima meeting
Kenya plans to spearhead African nations push for economic reforms in the global financial institutions as Bretton Woods members converge in Lima, Peru for the annual World Bank and International Monetary Fund meeting.The landmark meeting which brings together ministers of finance and central bank governors from the institutions’ 188 member countries serves to discuss international economic and financial developments, the state of the global economy, and policies to reduce poverty and promote inclusive economic growth.National Treasury Cabinet Secretary Henry Rotich has already landed in Peru and is accompanied by Central Bank Governor Dr Patrick Njoroge and other Treasury officials.Read more
CBK: Weak shilling lifts central bank’s profit to Sh48bn
The Central Bank of Kenya’s (CBK) profit rose to a record Sh48.1 billion, buoyed by the rapid decline in the shilling’s valueThe super profit is mainly the product of book gains earned from revaluation of the regulator’s basket of international currencies in its vaults.Revaluation gains topped Sh40.1 billion as the shilling weakened from an average of 87.8 units to the dollar to an average of 98.8.“The bank’s unrealised foreign exchange gains went up significantly to record levels of Sh40.7 billion due to increased levels of foreign exchange reserves coupled with a weakening of the shilling,” the CBK said. Read more
Jibran Qureishi, economist CfC Stanbic Bank: Slump hits Kenya’s private sector on weak shilling
High import costs resulting from a weak shilling slowed private sector activity, a survey by CfC Stanbic Bank showed.This signals that the slump in overall economic growth witnessed may have continued.The headline CfC Stanbic Purchasing Managers’ Index (PMI) was 51.9, down from 55. The PMI was the lowest since the launch of the index, further underlining the difficulties experienced by the economy.“The PMI has fallen to its lowest level since data collection began. The weaker exchange rate has certainly increased import costs for most firms which have consequently suppressed their profit margins, perhaps also leading to the significant slowdown in workforce growth,” Jibran Qureishi, an economist at CfC Stanbic Bank said. Read more
CEO Peter Munyiri: Investors spoilt for options as Family Bank unveils Sh6bn bond
Family Bank will raise up to Sh6 billion through its first bond issue that also gives investors choices in both interest rates and currencies.The bank said the first tranche of its Sh10 billion bond issue would see it go to the market to raise Sh4 billion but should there be an oversubscription, it would accept Sh2 billion more through the greenshoe option.Family Bank chief executive Peter Munyiri said the multiple currency option would give investors the choice of investing in the same bond either through dollars or euros.“There are investors who have dollar holdings and want to invest in dollars,” said Munyiri during the launch of the bond at the InterContinental Hotel in Nairobi. Read more
BAT opens Sh152m warehouse with eye on exports growth 
Cigarette maker British American Tobacco (BAT) has opened a Sh152 million warehouse expected to increase its storage capacity for exports.Managing director Keith Gretton said the Cut Rag Tobacco Store would create additional space to increase storage capacity by 300 million kilogrammes, an equivalent of 280 40-foot containers of semi-processed tobacco.“We export 70 per cent of our manufactured products to 16 foreign countries within East and Central Africa region and we want to become the supplier of choice and an exporting hub,” said Mr Gretton during the opening of the facility at BAT headquarters in Nairobi .Kenya is the manufacturing hub for BAT. The export business has helped BAT to weather stiff anti-tobacco legislation and steep taxation. Read more

I&M Bank suspends online card payments
I&M Bank has discontinued debit and credit card-backed e-commerce transactions, citing a massive increase in online fraud.Why financial sector needs change of tack in IT security. The bank said in a notice to its customers that it was stopping use of debit and credit cards for online transactions “to safeguard its customers’ funds.”“We have of late noted an increase in e-commerce or online transaction frauds perpetrated through card payments,” I&M said Kenyan banks migrated their customers from the magnetic strip to the more secure chip –and-pin technology cards, increasing the security for ATM and Point of sale transactions, but it is now emerging that most of the fraudsters moved online where fraud has been on the rise. Read more
WB: Economic growth prospects bullish
 Kenya’s economy has been growing on average at a respectable rate of above five per cent. However, such growth rate is nowhere close to the 10 per cent threshold that Vision envisaged.It is for this reason that the marginal deceleration in comparison of average economic growth of 5.5 per cent and six per cent raise concern.This marginal dip has attracted alarmist commentaries that incorrectly label it as a signal of economic stagnation.Indeed the exuberance of achieving middle-income status has been tamed by reality of data that shows a slowing momentum of the economy. This slowing is a manifestation of several factors including the headwinds of politics of entitlement.Such impulse has indiscriminately captured our national psyche with unrealistic demands for equitable distribution at the personal and institutional levels. Read more
SIB: Safaricom, BAT shares top NSE trade
British American tobacco (BAT) and Safaricom were the most heavily traded stocks on the Nairobi Securities Exchange (NSE).Shares of the two blue chip firms were mainly traded by foreign institutional investors. BAT Kenya stocks worth Sh4.2 billion were traded while for Safaricom shares worth Sh3 billion exchanged hands over the same period.Foreign investors accounted for 52 per cent of buyers and sellers of BAT shares and 80 per cent of Safaricom’s stock’s trading. Analysts say that foreign institutional investors are looking to add stocks that are heavily traded, and in large amounts to their portfolios.“They were focusing on the large caps that have enough liquidity for them to get in and out,” said Standard Investment Bank head of research Francis Mwangi. Read more
Treasury secretary Henry Rotich: Current account deficit hits Sh151bn on imports surge
The gap between Kenya’s imports and exports widened by 62 per cent, contributing to the pressure on the local currency.The gap, also called current account deficit, increased because the value of exports fell while that of imports grew, official data shows.The deficit deteriorated by 61.8 per cent to Sh151.2 billion, one of the major reasons the Kenya shilling has lost 14 per cent.The deficit is mainly due to the country importing more machinery and other capital goods for key projects such as the multibillion-shilling standard gauge railway linking the port city of Mombasa and Nairobi.Treasury secretary Henry Rotich said that the current account deficit was likely to widen through growing imports, given that infrastructure spending on flagship projects. Read more
KRA: Taxman targets SMEs in push to raise revenue collection
The Kenya Revenue Authority (KRA) is projecting to more than double the number of taxpayers turning its focus on unregistered businesses.The authority will target businesses that make between Sh500,000 and Sh5 million increased revenues.The taxman  launched an awareness campaign to sensitise small and medium-sized enterprises (SMEs) to meet their tax obligations. The KRA is seeking to expand the tax base to four million 1.6 million contributors. KRA chairman Marsden Madoka said compliance by the group, a majority of which do not pay tax, will raise collections to a minimum of Sh2.5 trillion  from Sh1.08 trillion'. Read more
CBK: Diaspora remittances rise to Sh14bn on weak shilling
Kenyans working in the diaspora sent home Sh14 billion as they sought to take advantage of the weak shilling.Data from the Central Bank of Kenya (CBK) shows that diaspora remittances increased by 3.2 per cent to Sh14 billion compared to Sh12.9 billion. The amount was also higher than the Sh13.7 billion.“The improvement reflected inflows from North America and Europe,” said CBK.The Kenyan shilling has lost 14 per cent to the dollar, making it more attractive for persons holding the greenback to send money home.Those in North America sent home Sh6.7 billion up from Sh6.4 billion . With inflation average at an estimated six per cent, the depreciation of the shilling ensures that those with the dollar posted inflation beating returns. Read more
MOE: Sharp drop in crude prices busts Kenya’s oil sector boom
Energy Minister Kiraitu Murungi set the country on a frenzy when he announced that Kenya had struck oil.Holding a small bottle half-full of a black substance, Mr Murungi’s announcement changed the country’s profile in an instant. Addressing the country immediately after the announcement, President Mwai Kibaki said the discovery was Kenya’s first step towards becoming an oil producer. Tullow Oil had sunk only one well and made the discovery at Kodekode Village in Nakukulas Location in Turkana East District; a rare feat in oil exploration.The discovery set in motion what would change not only the face of Turkana Country by unlocking vast business opportunities. Read more
Auditor-General raises red flag over KMC’s debts
The Auditor- General has painted a bleak future for the Kenya Meat Commission (KMC), saying its survival depends on support from the Treasury, creditors and other lenders.Edward Ouko says in a new report that KMC made a loss of Sh316,664,883, depleting retained earnings to a negative balance of Sh450,103,027.“The poor performance appears to have been caused by continued reduced proceeds from sales, which dropped from Sh1.1 billion to Sh331.4 million under review,” Mr Ouko says in the KMC audit report tabled in Parliament by Majority leader Adan Duale. Mr Ouko says the State agency’s financial statements reflect arrears of Sh109.6 million owed to livestock suppliers, Sh3.8 million allowances owed to the board and Sh91.7 million owed to staff for gratuity.Read more
CBK: Treasury bill hits 20pc as buyers seek premium returns
The benchmark Treasury bill hit the psychological threshold of 20 per cent rate as investors continued demanding a high premium on lending to the government in a tight market.The paper will give an average return of 20.6 per cent up from 18.6 per cent accepted in the auction. Investors offered the National Treasury more than double the cash it was targeting underlining the attractiveness of the returns.“The total number of bids received was 428 amounting to Sh8.6 billion, representing a subscription of 217 per cent,” said the Central Bank of Kenya (CBK) in a statement.The CBK accepted bids worth Sh7.6 billion. There were 214 bids worth Sh5.1 billion. Read more
IRA: Insurance sector sinks into losses 
The insurance sector posted underwriting loss in general business following a spike in claims in the motor and medical classes.The sector recorded a loss of Sh104 million in the core business compared to a profit of Sh1.2 billion posted in a similar period last year, data from the Insurance Regulatory Authority (IRA) shows.The slide to a loss follows a 20.4 per cent increase in insurance claims accompanied by a slower growth in premiums at 14.1 per cent to Sh58.6 billion.“The claims incurred under general insurance business were Sh24.48 billion during the period under review which was a 20.4 per cent increase,” said IRA.Underwriting profits refer to premium collected less claims paid and administrative expenses incurred.Read more
Airtel’s Sh2.1bn licence renewal fee splits CA board
Telecommunications firm Airtel’s quest to get its frequency licence renewed without paying the required Sh2.1 billion fee has split the Communication Authority Kenya (CA) board, adding a new dimension to the battle to get Kenya’s second-largest operator on a firm footing in the market.  Francis Wangusi, the CA director-general, sparked the controversy with a letter he wrote to the authority’s board advising withdrawal of a demand notice the authority had sent to Airtel asking for payment of the Sh2.1 billion fee.The advisory marked an about-turn by Mr Wangusi, who had previously insisted that Airtel pays Sh2.1 billion for frequency spectrum licence following the expiry of the one it was awarded. Airtel paid a $55 million (Sh4.7 billion) fee for its initial licence. Read more
CMA: New rules to spur Exchange Traded Funds liquidity
Exchange Traded Funds (ETFs), a form of investment vehicle where investors pool their cash, will have to guarantee ability of seller to find a buyer by appointing market makers before listing on the Nairobi Securities Exchange.According to a new policy guideline from the Capital Markets Authority (CMA) the market makers will provide both selling and buying prices to ensure that an investor actually buys or sells the units they seek to at a specified price at any time.It will be the first time that market makers are introduced to the NSE — after a similar effort failed — since the other securities currently listed there do not have any guarantees for liquidity.A seller is not guaranteed to find a buyer on any particular day, nor is a potential buyer necessarily in a position to get a willing seller. Read more
CBK: Supermarkets warned over issuing sweets for change
The Central Bank has warned supermarkets and banks against issuing alternative products as change instead of currency on a false excuse of shortage of coins.Through a statement published in today’s dailies, the Central Bank of Kenya (CBK) says that it is a violation of the law to deny customers the possibility of obtaining their change in Kenyan currency.Many supermarkets have been issuing airtime, matchboxes and sweets instead of currency coins.“The law requires that all monetary obligations or transactions entered into or made in Kenya be settled in Kenya currency unless otherwise provided for by law or agreed upon between the parties. It is therefore a violation to deny customers the opportunity to agree to settle the transaction in any other form,” reads the CBK statement. Read more
ARM: Construction industry faltering under high interest rates
The construction industry is set for further contraction as high interest rates continue to bite.Investors in the industry are calling on the regulator to check high interest rates, saying cheaper loans will offer a lifeline to the segment.“The lending rates are ridiculous. Something needs to be done about them as they have driven the construction costs to the roof,” said Mr Joe Mungai, managing director, Tamarind Properties. Athi River Mining Deputy Managing Director Surendra Bhatia added that high lending rates had stalled the industry’s performance as investors shy away from credit.Read more
Aly-Khan Satchu: Construction drags second quarter growth to 5.5pc
Economic growth slowed down, shackled by the near halving of activity in the key construction and manufacturing sectors in the wake of persistent exchange rate turbulence and the resulting rise in the cost of imported goods.Official data released Wednesday shows that the economy grew by 5.5 per cent between April and June, down from the 6 per cent growth reported.The performance, which analysts said had exceeded their expectations, was, however, still better than the 4.9 per cent recorded.“This is definitely better than I expected,” said Aly-Khan Satchu, an independent analyst who runs Nairobi-based data vending firm Rich Management.Read more
Unga Group builds up dividend as profit soars
Unga Group's after-tax profit has grown by over a third to Sh621.9 million helped by increased sales.The Nairobi bourse listed flour miller has announced that its profit for the financial year to June increased by 31 per cent as its revenues grew by a tenth to Sh18.7 billion.Unga’s performance was pulled back by high finance costs and foreign exchange losses. Finance costs almost doubled to stand at Sh40.2 million from Sh26 million as foreign exchange losses rose to  Sh186.4 million from Sh15.8 million the previous year.Read more
Shilling at one month high on rising Treasury yield
Kenya's shilling was trading at its strongest level, helped by rising yields on government securities and weak corporate demand for dollars.The shilling was quoted at 104.20/40 to the dollar, compared with close of 104.55/75."The shilling is getting stronger. This is due to lack of liquidity and rising yields in government securities that is going to attract a lot of offshore investors," said one senior dealer at a commercial bank. Yields on Kenya's 182-day Treasury bills jumped to 20.695 per cent at auction from 16.301, while yields on 182-day bills shot up to 20.331 percent from 14.551 percent. Read more
CMA gears up for launch of derivatives exchange
The Capital Markets Authority (CMA) is stepping up preparations for the introduction of an exchange for derivatives, which are used for hedging risk.The CMA has partnered with the Dubai Financial Services Authority to train local players on how the proposed exchange will work.The derivatives market is one of the key targets for the CMA and so far the regulators has set out the rules for market players.“The establishment of a vibrant derivatives markets in Kenya is one of the key projects under the Capital Market Master Plan whose delivery is key to deepening the capital market in Kenya,’’ said CMA acting chief executive Paul Muthaura. He added that the regulators has blended international best practices and local realities in coming up with regulations for the derivatives market. Read more
Inflation ticks up to 5.97pc
The cost of living rose slightly to stand at 5.97 per cent from 5.84 per cent on a marginal rise in food prices.There was a marginal drop in energy prices, water and rent helping to slow down the impact of higher food prices.The prices of electricity also eased helped by lower diesel costs and a stable exchange rate.“This was an aggregate result from increases in prices of several food items which slightly outweighed the decreases.”The stable inflation numbers have kept policy makers from raising interest rates further a time when foreign exchange volatility has become a source of worry. Read more
IMF: Lower prices to slow Africa's oil producers economic growth
The International Monetary Fund (IMF) predicts a decline in the economic growth of oil exporting countries with some expected to shed up to two per cent of their gross domestic product.IMF's edition of the World Economic Outlook report attributes the situation to a decline in global commodity prices experienced.The slowdown, according to the IMF, will result into weaker investments both in these countries and developing nations that are dependent on foreign direct investments hence risking their growth prospects.“Global commodity prices have declined sharply and output growth has slowed considerably among commodity exporting emerging market and developing economies. Read more
KAM: Nakumatt, Naivas and Tuskys in debt row with suppliers
Kenya’s leading supermarket chains are entangled in a multi-billion shilling debt row with suppliers who accuse them of refusing to pay for goods delivered to their store. The suppliers, through the Kenya Association of Manufacturers (KAM), have written to three leading retailers Nakumatt, Tuskys and Naivas over undue delays in payments that have forced them to borrow heavily — and expensively — to keep their operations afloat. Manufacturers said the retailers owe them at least Sh8 billion — an amount KAM says has put some of its members at risk of going bust. In the letter to the retail chains, KAM says holding back payments amounts to economic sabotage and has demanded immediate release of the funds. Read more
KPMG: Mumias reports Sh4.6bn after-tax loss as sales halve
Mumias Sugar Company nearly doubled its loss to Sh4.6 billion, while its sales more than halved in the same period. The listed sugar miller reported a 70 per cent increase in its after-tax loss compared to the Sh2.6 billion. Turnover reduced to Sh5.5 billion, less than half the Sh13 billion that was generated by the troubled miller.The NSE-listed sugar company has been in financial difficulty due to mismanagement, shortage of sugarcane and cash flow constraints.A forensic audit that was carried out by financial consultancy KPMG earlier found that there was massive misuse of funds, pilferage and tender manipulation that cost the miller Sh1.1 billion in illegal sugar imports.Read more
TPS: Kenya borrows Sh104.7bn 
Kenya obtained loans to the tune of Sh104.7 billion, according to a Treasury report submitted to the National Assembly.None of the loans have been disbursed, according to the break down by Treasury Principal Secretary Kamau Thugge, which also indicates the repayment terms showing that the last payment for one loan is expected.Dr Thugge submitted the list in fulfilment of the requirements of the Public Finance Management Act, which provides for him to provide a report to Parliament of all the new loans obtained from outside Kenya or denominated in foreign currency.Read more
Mess at NSE as CDSC sends dividend cheques to wrong addresses
Dividend cheques from the Nairobi Securities Exchange worth millions of shillings that were sent to the wrong recipients in "shareholders address mix-up" have been cancelled.The CDSC, which manages all stock accounts on an online platform, blamed the error on a technical hitch that supposedly caused a mix-up of the address lists resulting in sending dividend cheques to the wrong addresses.In a paid advertisement, CDSC allayed fears of any loss saying they had cancelled all cheques that had been sent and was in the process of preparing new ones for issuance and dispatch to the right accounts.“We sincerely apologise to our client, the Nairobi Securities Exchange and all shareholders for this error,” the advert said. Read more
Finance Cabinet Secretary Henry Rotich: M-Akiba bond to divert bank's customer deposits
Commercial banks are staring at stiff competition for customer deposits once the government floats a cheap bond.The M-Akiba bond that will go for as low as Sh3000 will have a better return than the rates offered by any commercial bank in the market.Banks give only 1.37 per cent for the money kept in savings accounts and 6.31 per cent for fixed deposits.Although Finance Cabinet Secretary Henry Rotich did not reveal the rates of return, government officials say it will be set in the prospectus to be released earliest October 16 for the paper that will go on sale.The rate is however expected to be lower than the market rate which hit 18.6per cent for the 91 day bill on auction while 182 day paper went for 14.5 per cent.Read more
Investors attracted by Telkom Kenya’s Sh13bn real estate
Local and foreign firms fighting to take over French firm Orange’s stake in Telkom Kenya are mainly eyeing the company’s Sh13 billion real estate assets, a valuation report shows.The report, which Orange prepared ahead of failed negotiations to sell the stake to Nigerian investors, shows that land, together with frequency spectrums and a vast fibre optic cables network, top the list of assets that the French firm is using to entice suitors as it prepares to exit the Kenyan market.Private equity firm Helios and UK’s British Telecom make the list of investors who have recently expressed interest in buying Orange’s 70 per cent stake in the Kenyan telecoms operator.The Treasury, which owns a minority 30 per cent of Telkom on behalf of the public and will be co-owner with the new shareholders, has been actively involved in the negotiations.Read more
NTS: Treasury eyes Sh5bn from first mobile phone-based bond to be issued 
The first exclusively mobile phone-based Treasury bond amounting to Sh5 billion is to be sold to the public. The bond – which is also the first of its kind in the world – will be purchased through Safaricom’s mobile money platform, M-Pesa, with the minimum investment amount being Sh3,000, down from the current minimum of Sh50,000 which is purchased through the Central Bank of Kenya (CBK).The government declined to disclose the rate of return for the bond. However, it could mirror the most recently issued five-year paper that is at an interest (coupon) rate of 13.2 per cent, payable every six months.“The initial issue will earn an interest rate to be determined shortly during the road shows. The interest rate will be higher than the rate payable on small deposits by commercial banks and other investment channels,” said National Treasury secretary Henry Rotich. Read more
KNBS: Kenya’s exports to Uganda up 
Kenya’s exports to Uganda have grown for the first time amid a political storm over the countries’ bilateral trade.Data from the Kenya National Bureau of Statistics (KNBS) shows the country sold goods worth Sh36 billion to Uganda, up from Sh27.7 billion in a similar period.Exports to Uganda — the largest buyer of Kenyan goods — have been declining on what experts attributed to a vibrant manufacturing sector in Kampala and local firms opening shop in the neighbouring country.The drop defied the creation of the East African Community (EAC) common market, which was expected to boost commerce among five member states, including Tanzania, Rwanda and Burundi. Read more
CAK: Telecoms regulator defends hefty pay to board members
The Communications Authority of Kenya (CA) has attributed hefty sitting allowances paid out to board members to regulatory changes in the industry that necessitated numerous sittings for the directors.In a response to the Ombudsman, Otiende Amollo, addressing the ongoing investigations into irregular allowances paid to board members, CA director-general Francis Wangusi says the board was forced to meet regularly due to changing dynamics in the communication industry as well as changes to the Kenya Information and Communication (Amendment) Act ).Mr Wangusi says in the letter that CA board members have already accounted for more than Sh5.4 million of the imprest payments that had been questioned. Read more
CBK: T-bills rise as investors demand better rates
Interest rates on the 182 and 364-day Treasury bills rose as investors continued to demand a high premium on lending to the government in a tight market.The rates on Treasury bills are now at their highest levels when the market was coming off the shilling’s heavy slide that saw it hit a low of 107 to the dollar.The benchmark 91-day bill, in the meanwhile, jumped an astonishing 4.121 percentage points to 18.607 per cent in auction.Investors are concentrating on short-term paper due to the uncertainty in the interest rates regime.The Central Bank of Kenya was in the market for a total of Sh8 billion through the 182 and 364-day offers last week, but got only a fraction in bids due to the tight liquidity in the market. Read more
ERC: Firms in rush to obey energy audit directive
Industries and large institutions are in a race to comply with a directive to carry out energy audits ahead of  statutory deadline.The Energy Management Regulations published by the Energy Regulatory Commission require consumers of more than 180,000 units of electricity to carry out audits.They target saving of at least 30 per cent per institution within the three years to reduce electricity expenses, especially for industries, which will allow cheap manufactured goods.With the deadline set, ERC says only about 1,000 out of the 3,000 targeted facilities could have complied, leaving owners of the rest at risk of jail terms or fines of up to Sh1 million.“The level of compliance at the moment is not so high but  we have been receiving a lot of reports. We are expecting that by the deadline, about 1,000 facilities will have complied. Read more
CDSC: Treasury to float Sh5 billion M-Akiba bond targeting ordinary Kenyans
Treasury will float a Sh5 billion bond next month which will only be traded on mobile phone platforms targeting ordinary Kenyans.The infrastructure bond will go on the market at a rate to be set by the National Treasury and the Central Bank of Kenya.Individuals can bid with as little as Sh3,000 and a maximum of Sh140,000 for the income tax free bond.“We set the maximum at Sh140,000 because that is the much mobile phone companies are allowed by Central Bank but you can put in the figure daily until the auction closes,” Central Depository Settlement Corporation  CEO Rose Mambo said.
The product will only be available to Kenyans who make up two per cent of the Nairobi Securities Exchange (NSE) Bond market portfolio. Read more
EAC moves to tame mobile money fraud
 Rwanda, Kenya, Uganda and South Sudan are working to reach a common SIM card registration framework to help tame crime that is perpetrated using mobile phones. Officials from the four nations met in Nairobi, where they discussed harmonisation of their legal frameworks to develop a common SIM card registration system.“SIM card registration has been primarily necessitated by the need to ensure that ICT networks, particularly mobile telecom services, are secured from misuse for criminal activities,” said Kenya’s Communications Authority director general Francis Wangusi. “The new framework will help deal with fraud as the region strives to realise financial inclusion for the citizens,” said Joseph Tiampati, the ICT Principal Secretary. Read more
IMF: Civil servants face sack as State seeks to trim wage bill
Thousands of civil servants will lose their jobs if the Jubilee government keeps a promise it made to the International Monetary Fund (IMF).Though the exact number of workers targeted for retirement remains unknown, Treasury documents promise affected workers compensation for the early exit, saying money has been set aside for the exercise.Newly released IMF documents show that the Washington-based institution also managed to get the government’s commitment to extend biometric registration of civil servants to the counties and parastatals as part of efforts to cut the public wage bill.A similar exercise was conducted for national government employees resulting in the removal of more than 12,500 ghost workers from the payroll. The deal also includes a freeze in public sector. Read more
CMA: All firms listing on NSE to enjoy income tax break
Companies listing by introduction on the Nairobi Securities Exchange will start enjoying tax holidays following amendment to the Income Tax Act.The amendment allows a company introducing shares without raising cash to pay corporate tax at the rate of 25 per cent.Listing by introduction means the company only offers the public an opportunity to own part of it.“We expect this provision to spur listing of additional companies on the Nairobi Securities Exchange,” said Capital Markets Authority acting chief executive Paul Muthaura. The tax holiday has been limited to companies conducting an initial public offering (IPO). Read more
NCE: Coffee prices drop 10pc at Nairobi auction in sharpest dip 
The price of coffee dropped 10 per cent on account of low quality beans as the crop season comes to a close.At the auction, the 50-kilogramme bag traded at Sh16,065 on average down from Sh17,955 fetched at the Nairobi Coffee Exchange (NCE).This is the sharpest decline at the Wakulima House-based NCE since the auctions resumed after recess. NCE chief executive Daniel Mbithi said the auction is receiving low-quality beans, which has driven down demand of the clean coffee as well as the prices.“This is a traditional trend where the prices of coffee come down at this time of the year as we head towards the end of the season’s crop,” said Mr Mbithi.The auction has been receiving coffee from the eastern part of the country, with the main harvesting season for the major crop expected. Read more
PwC pulls out of Tatu City offshore accounts probe
Consultancy firm PriceWaterHouseCoopers (PwC) has declined to investigate offshore loan accounts of real- estate development firm Tatu City following an intensified tussle between the multibillion- shilling project’s local and foreign partners. PwC told Justice Eric Ogola that the vicious battle between foreign shareholders Rendeavour and their local partners Nahashon Nyagah and Vimal Shah has stalled a planned audit that the judge ordered.The consultancy said the shareholders had failed to sign an execution letter for the audit, hence it was not able to begin the process.The firm added that one of the parties in the suit had made the anticipated audit part of a slander campaign, which fuelled its disinterest in the job. Read more
Shilling in slight gain as CBK maintains rate
The shilling strengthened slightly after the Central Bank of Kenya (CBK) maintained the policy rate at 11.5 per cent.Thomson Reuters data showed the currency closed selling at 105.50 units to the dollar compared to close of 105.80 – 30 cents stronger.However in the course of trading, the shilling weakened to 105.75 units to the greenback at the lowest and 105.20 units at the highest.At the opening of markets morning, CBK data showed the local currency traded at 105.56/66, a stronger position than the close of 105.70/80. But it strengthened further by the time markets closed.Read more
Family Bank gets nod to issue Sh10bn bond in expansion plans
Family Bank has received approval to issue a Sh10 billion bond as it seeks to fund its expansion plan.The mid-sized lender targets to issue the first tranche of the bond to support a fast-growing loan book.“The bank’s growth momentum and strategic plans needed to be sustained hence the need to raise additional capital. The programme has been structured in such a way that the bank can continuously raise funding for its strategic initiatives up to the Sh10 billion aggregate limit,” said chief executive Peter Munyiri. Family Bank’s total capital to total risk-weighted assets ratio stood at 16.3 per cent, marginally above the statutory minimum of 14.5 per cent. Read more
NYSE: Swiss firm Novartis to launch heart, cancer drugs in Kenya
The Swiss pharmaceutical firm Novartis AG launched a portfolio of 15 medicines to treat chronic diseases in low- and low-middle-income countries starting with Kenya.The Basel-based company with a market value of Sh28 trillion on New York Stock Exchange said that 'Novartis Access' will be launched first in Kenya, Ethiopia and Vietnam, with expansion to eventually include 30 countries.Kenya is witnessing a rapid growth in cancer and heart diseases that have put a strain on the country's finances with the government under pressure to equip hospitals with cancer treatment machines and expertise. Read more
Poland pumps big money into Kenya's milk market
Poland’s entry into the dairy sub-sector with its generous concessional loan of Sh 10.5 billion worth of dairy equipment and expert training has elicited interest among local farmers.Among items on offer are milk chilling and bulking facilities, milking machines, liquid nitrogen plant, milk quality testing machines for the Kenya Dairy Board, cold storage facilities for meat, potatoes and horticultural produce as well as embryo transfer equipment, grain storage silos and mobile grain driers.Polish Ambassador Marek Ziolkowski said his government planned to inculcate a new thinking in the dairy sector in Kenya driven by Polish dairy experts saying this would have a direct impact on Kenyans. Read more
KTDA: Strong dollar earns tea farmers Sh64 billion
Tea farmers have earned close to Sh10 billion more from leaves delivered, helped by a strong US dollar and high pricing of the commodity in the world market.Industry performance data released shows that growers affiliated to the Kenya Tea Development Agency (KTDA) have received Sh28.7 billion in the second round of payment for their produce compared to the Sh19 billion they earned in a similar period.This brings to Sh63.6 billion the total earnings compared to the Sh52.6 billion earned. “Our performance this year has improved compared mainly because of the strong dollar and good market prices,” said KTDA managing director Lerionka Tiampati.Read more
CBK: Banks struggle to meet cash reserve ratio on paying tax
Banks struggled to meet the cash reserve ratio (CRR) requirement as firms paid taxes, recording a deficit of nearly Sh10 billion as the financial markets tightened.The banks had a deficit of Sh9.67 billion in relation to the CRR — the fraction of deposits put at the CBK without earning interest — against the requirement of 5.25 per cent or Sh130.7 billion.“Commercial banks’ clearing account recorded a deficit of Sh9.67 billion in relation to the cash reserve requirement of 5.25 per cent or Sh130.7 billion,” said the Central Bank of Kenya (CBK) report.At the same time the institutions were finding it difficult securing cheap money from one another.Read more
Cost of insurance to rise after brokers lose KRA tax case
The cost of insurance is set to shoot upwards following the dismissal of a case in which brokers had challenged introduction of a new 10 per cent levy on their earnings.Justice Mumbi Ngugi has ruled that the suit was similar to another one challenging introduction of the tax, which was dismissed by another judge —Isaac Lenaola. She held that giving the brokers an audience in the present petition would be tantamount to hearing the same suit twice.The suit before Mr Justice Lenaola was filed by lobbies representing insurers, reinsurers, surveyors and brokers, who will be subjected to the levy. He dismissed the suit arguing that Parliament was within its powers in introducing the tax, and that the court has no legal authority to intervene. Read more
CBK: Monetary team retains policy rate at 11.5pc 
The Central Bank of Kenya (CBK) for the third time retained the policy rate at 11.5 per cent, saying this would keep inflation in check at a time of relative exchange rate stability.The Monetary Policy Committee (MPC) – the independent rate-setting organ affiliated to the CBK – said overall inflation was trending towards the five per cent target.The MPC said the Sh655 billion ($6.2 billion) worth of forex reserves and the Sh65 billion ($610.7 million) precautionary facility from the International Monetary Fund were adequate cushions against volatility in the value of the shilling.The Central Bank Rate (CBR), the policy benchmark, has been retained. It was first raised to 10 per cent, after remaining at 8.5 per cent. Read more
KTDA: announces hefty bonus for farmers
Tea farmers have a reason to smile after the Kenya Tea Development Agency (KTDA) announced a Sh43.25 billion bonus for the smallholder sectorThe smallholder tea sector earnings increased by 21 per cent to Sh63.6 billion up from Sh52.6 billion.Each farmer is set to earn an average of Sh27.61 per kilo of green leaf as bonus, a 56.8 per cent increase from Sh17.61. KTDA Chief Executive Officer Lerionka Tiampati said the weak shilling coupled with market diversification ensured farmers reaped big with the smallholder tea sector earning Sh43.25billion in bonuses.“Sh14.55 billion has since been paid out to farmers based on deliveries to factories at the rate of Sh14per kilo of green leaf.Read more
Stanbic Bank economist Jibran Qureishi: Better T-bills yield could save Kenya high credit costs
The Monetary Policy Committee meeting is unlikely to raise the Central Bank Rate after T-Bills began yielding more and the shilling showed stability.Analysts are, however, divided on the impact of maintaining the rate steady at 11.5 per cent, with the possibility of more expensive loans still real.CFC Stanbic Bank economist Jibran Qureishi said CBK will have no push to raise the rate since the US Federal Reserve decided to freeze interest rates, while yields for both the Treasury Bills went up.“We needed T-Bills to begin yielding better and the headache over the shilling slide would be dealt with. The trend is good so far and the shilling has shown some stability as the market anticipates more inflows. Inflation is equally within the target so I see nothing much to warrant a rise,” Mr Qureishi told the Nation. Read more
EBCE: Chinese banks’ interest in Equity signals Kenya entry
Two major Chinese banks sought to buy into Equity Bank as UK private equity fund Helios Partners exited, signalling potential entry into the Kenyan market of Beijing lenders eyeing growing trade with the region.
Equity Bank chief executive officer James Mwangi said at a briefing there was buying interest from China Development Bank, China Construction Bank, Singaporean sovereign fund Temasek and South African pensions and investment fund Public Investment Corporation (PIC).They, however, took a long time to firm up their bids, according to Mr Mwangi, allowing other buyers to take up the block stakes.Major Chinese lenders have not shown strong interest in taking a stake in the Kenyan banking sector, save for Bank of China Ltd which opened a representative office in Nairobi. Read more
CBK: Kenyan shilling eases as importers seek dollars, eyes on MPR meeting
The Kenyan shilling weakened as importers sought dollars to pay their bills, but traders said tight liquidity was limiting the local currency's losses while caution reigned before a central bank policy meeting.Commercial banks quoted the shilling at 105.45/65 to the dollar, compared with Monday's close of 105.30/40."There's slight (dollar) demand in the market, though the tight liquidity is slowing down the process of weakening. Demand is from all sectors, all importers," a senior trader at one commercial bank said.In a sign of the scarcity of shilling liquidity, the weighted average interbank lending rate rose to 25.2328 per cent from 24.5569 per cent Read more
ICPAK: Accountants’ body seeks green light to set minimum rates
Accountants have set in motion a process that could introduce minimum fees they can charge for advisory services offered to different categories of clients, setting businesses up for a possible escalation of the cost of compliance.The Institute of Certified Public Accountants of Kenya (ICPAK) has written to the Competition Authority of Kenya (CAK) seeking to introduce minimum professional fees in new industry guidelines expected to come into force. CAK’s director general Wang’ombe Kariuki acknowledged receiving proposals seeking to prescribe the minimum recommended fees for each category of services. The list of services included non-assurance, company audits, saccos, pension schemes and public benefit organisations. Read more
KRA sets tax deadline for landlords
The Kenya Revenue Authority has given landlords to pay tax on rental income before the taxman embarks on audits to establish their compliance status. KRA commissioner-general John Njiraini said the amnesty covers interest, penalties and also the principal amount of tax due.It is the first time in Kenya that a tax amnesty also includes the principal amount, he added.In a briefing to the press, Mr Njiraini said that the authority is keen on helping tax payers comply rather than pursue punitive methods of collecting taxes.The KRA boss says many landlords had failed to comply due to various challenges including low level of education, ignorance of tax obligations, complexities of compliance and poor record keeping, especially of their expenses which are deductible from the payable tax. Read more
MTI: Norway pension invests Sh8.2bn in listed stocks
Norwegian pension fund has invested some Sh8.2 billion (NOK 630 million) in Kenya’s publicly listed companies, making Nairobi the second biggest investment destination in sub-Saharan Africa for the Scandinavian retirement fund.The government pension fund of Norway holds stakes in 11 quoted equities at the Nairobi bourse, placing Kenya behind South Africa (NOK 22.68 billion), but ahead of Nigeria (NOK 497 million) and Ghana NOK 15 million.Monica Mæland, minister of Trade and Industry of the oil-rich country, said Kenya remained an attractive market for investors due to the country’s young labour force, innovations in technology and continued investments in energy and infrastructure projects. Read more
Burbidge Capital: PE funds pump Sh100 billion into Kenyan deals
Private equity (PE) firms have invested nearly $1 billion (Sh105 billion) into Kenyan businesses, with financial services attracting the most cash.Data on investments compiled by Burbidge Capital shows that the PE firms have been involved in 18 local deals worth at least $953 million (Sh100 billion) in declared value.According to Burbidge, the largest deals have involved the purchase of Helios partners’ stake in Equity Bank by Norwegian funds Norfund and NorFinance AS for Sh23 billion and Old Mutual’s Sh23 billion purchase of a 60.7 per cent stake in UAP Holdings from businessman Chris Kirubi, Centum and PE firms Abraaj Group, AfricInvest and Swedfund. Read more
CB: Shilling eases on energy, telecom sector dollar demand
Kenya's shilling lost ground on Monday as energy and telecoms companies sought dollars, but traders said tight liquidity was keeping the local currency from weakening further.Commercial banks quoted the shilling at 105.30/50 to the dollar, compared with close of 105.15/25."It all boils down to fundamentals rearing its head: (dollar) demand. The people who can afford right now are the telecoms and energy. Most other people are on the sidelines," a senior trader at one commercial bank said.The trader said the shilling was getting some relief from tight liquidity, which had led to rising interbank lending rates. Tight liquidity makes it expensive to hold dollars.The weighted average interbank rose to 24.5569 per cent, from 23.3978 per cent.Read more
Uhuru rules out higher pay amid calls for talks
President Uhuru Kenyatta ruled out paying teachers higher salaries, saying that doing so would raise the cost of living.In a televised address from State House, Nairobi, the President said the government had taken the decision to close all schools to ensure the safety of children and safeguard school property in the wake of the teachers strike.He also asked teachers to consider the interest of children and return to work and give the relevant constitutional institutions time to handle the pay dispute.“It is wrong to hold our children hostage to wage demands,” he said and reiterated that working in the public sector was a service.“I urge all teachers as parents, as public servants and as Kenyans to reconsider the matter and resume their duties,” said Mr Kenyatta, who was flanked by Deputy President William Ruto. Read more
ICO: Coffee price at Nairobi sale falls again
The price of coffee at the  auction fell.On average, a 50-kilogramme bag traded at Sh17,955, down from Sh18,165 sale at the Haile Selassie Avenue road-based Nairobi Coffee Exchange (NCE).This came as a global report from the International Coffee Organisation released indicated that global daily coffee prices in the world hit negatively affected by the currency movement.“Coffee exports came to 9.6 million bags, 3.6 per cent, with total exports of coffee 2.8 per cent lower on 92.9 million bags,” reads the report.Coffee prices in the country have been volatile mainly because of low prices at the world’s largest auction in New York. Read more
IMF signs off Sh8bn to help stabilise the shilling, Mr Morales
The International Monetary Fund (IMF) has signed off the Sh65 billion ($610.7 million) cautionary lending facility it offered Kenya – handing the Central Bank of Kenya fresh fire-power in its battle to save the shilling.The IMF board made the decision during its executive board meeting, making available an extra Sh8.06 billion ($76.3 million) besides the Sh56.4 billion ($534.4 million) that was signed off, but is not yet drawn.The decision brings to Sh65 billion the total amount so far approved for Kenya.IMF Resident Representative in Nairobi Armando Morales said Kenya had access to the cash, but had not yet faced any major shocks to warrant drawing it.“Approval means that the resources are available for Kenya in the event of a major shock, but so far it hasn’t been released because large shocks have not materialised,” Mr Morales said.The final tranche of Sh8.06 billion ($76.3 million) is expected to be approved during the meeting of the IMF board. Read more
CBK: Banks lower growth forecasts on high interest rates
Commercial banks have lowered their economic growth projections due to high interest rates and fuel prices.In a survey by the Central Bank of Kenya (CBK), the lenders said they expected a 5.55 per cent growth, down from the six per cent projected.“The Survey shows that banks had revised downward their expected growth due to expected increase in the cost of credit with the increase in interest rates; expected rise in fuel prices due to taxation measures which may exert pressure on manufacturing cost; and, sluggish recovery of the Eurozone economy which may affect horticultural exports and tourism,” reads the CBK report.Read more
Rea Vipingo delisted from NSE
Sisal grower Rea Vipingo Plantations has announced it is no longer listed on the Nairobi Securities Exchange (NSE) E effectIVE.The follows the successful takeover of the sisal grower by Britain registered REA Trading.The Capital Markets Authority had earlier issued a green light for the delisting.The sisal grower was at the centre of a protracted takeover battle between Kenyan investment firm Centum Investment and the British majority owners REA Trading but the two sides later reached a sweetheart deal for the acquisition of the agricultural company.REA Trading, which controls Rea Vipingo with a 57 percent stake initially made a takeover offer to acquire all issued ordinary shares of RVP while Centum made a competing takeover offer. Read more
PwC sees entertainment industry growing to Sh350bn 
The value of Kenya’s media and entertainment industry is forecast to grow by 83 per cent to Sh350 billion, with the Internet expected to be its largest driver.New research by audit and financial advisory firm PricewaterhouseCoopers (PwC) released says the industry was valued at Sh190 billion ($1.8 billion) , up 13.3 per cent, when it stood at Sh169 billion ($1.6 billion).The study says television and radio will be the other drivers of the growth, apart from the Internet.“The Internet is expected to be the largest driver of growth, followed by television and radio,” said the research.TV advertising is projected to overtake radio’s. Internet advertising will see the fastest growth rate at a compounded annual growth rate of 16.8 per cent, PwC said. Read more
Industrialisation minister Adan Mohamed: Kenya unveils grand industrialisation roadmap
Kenya unveiled a grand industrialisation roadmap that seeks to make Mombasa a food processing hub targeting the export markets even as it locks in the billions of dollars East African nations spend on imports. Industrialisation minister Adan Mohamed said the plan had identified critical sectors that would drive the sector’s growth through mechanisation.The minister said Kenya would use the plan to earn a significant fraction of the Sh400.4 billion ($3.8 billion) that East Africa spends on processed food imports.“We want to take advantage of the Mombasa port to serve the regional and global markets with processed food,” Mr Mohamed said during the launch of the blueprint in Nairobi.Execution of the plan is set to start with the creation of a local processing hub at Mombasa’s Dongo Kundu special economic zone to be followed by another hub at the one million-acre Galana-Kulalu irrigation scheme in Tana River and Kilifi counties. Read more
Central bank rate tightening in Kenya appropriate, IMF says
Kenya's central bank has acted appropriately by tightening interest rates and its economy remains on track despite headwinds from rising global market volatility and local security challenges, the International Monetary Fund said.Policymakers have raised the rate by a total of 300 basis points after the shilling weakened sharply against the dollar mainly due to expectations of a US rate hike, lower export earnings and a surge in imports.“Decisive steps by the central bank to tighten monetary policy are appropriate," IMF Deputy Managing Director Min Zhu said after the Fund's executive board completed its first review of Kenya's $688 million precautionary IMF credit arrangement.Read more
CBK: Banks slap risky clients with high borrowing rates
Commercial banks have ramped up the cost of loans in the wake of a rise in the base lending rate, leaving borrowers with a growing pain that is expected to persist.The average lending rate stood at 15.75 per cent compared to 15.26 per cent, according to newly released Central Bank of Kenya (CBK) data. This means the cost of loans rose by an average of 0.5 percentage.The lenders said the repricing does not affect all clients, but is mainly targeted at new borrowers as well as risky borrowers who took loans recently on terms that allow variation of interest rates. Read more
World Bank warns of more turbulence from Fed tightening
The World Bank warned that monetary policy tightening by the Federal Reserve could spur a "perfect storm" of threats to growth and financial stability in developing economies.Regardless of whether the Fed begins raising interest rates, Bank economists said in a report that the shift in policy could pose huge challenges to so-called emerging and frontier economies (EFEs) that are particularly vulnerable.It would come as both global economic growth and trade have turned down and sinking commodity prices have particularly hurt a number of developing economies, the report noted, and economic growth among EFEs is already the lowest since the financial crisis. Read more
HOTD: Kenya eyes Chinese tea market
Kenya said that it is formulating strategies in order to export tea into the Chinese market.The Interim Head of the Tea Directorate Elizabeth Kimenyi told Xinhua in Nairobi that the Chinese market will help to diverse tea export markets."We want to reduce our reliance on traditional markets such as Egypt, Britain and Pakistan in order to reduce price fluctuations," Kimenyi said on the sidelines of the Africa Coffee Outlook Conference which kicked off in Nairobi. She added that despite China's huge domestic tea production, it is still a net importer of tea due to its huge population. The Asian giant mainly produces green tea while Kenya produces black tea.Data from the agriculture ministry shows that Kenya produced approximately 450 million kilograms of tea out of which 95 percent was exported."We are expecting to produce a similar amount, especially if Kenya experiences optimal rainfallr," Kimenyi said. She added that tea production was 18 percent below. "This was largely due to adverse weather and frost in the key tea growing areas," she noted.Kenya is the leading exporter of Cut, Tear and Curl (CTC) tea in the world, exporting 499 million kg of tea. Read more
COG: Governors want electronic tendering suspended
Governors opposed the online procurement introduced  and called for its immediate suspension.The governors said the e-system was illegal saying the Public Procurement and Disposal Act is the governing law for procurement does not envisage electronic tendering.Addressing the media in Mombasa after attending a Council of Governors meeting, they said the e-procurement had brought financial operations to a standstill.A statement read by the chairman Peter Munya highlighted 10 areas which had made transactions impossible, contractors not being paid and projects worth billions of shillings stalling. They blamed a haphazard implementation of the programme and accused the national government of failing to put in place proper infrastructure for the process. Read more
Save us the agony, raise the interest rate, Central Bankers tell US
Some of the world's biggest emerging economies are pleading for the United States to end their drawn-out agony and raise interest rates now.Already hit by a commodities crash sparked by the slowing of China's once-booming economy, the mere prospect of the US Federal Reserve raising interest rates — has battered the emerging giants that were once the world's top performers.Lured by the promise of bigger returns when the Federal Reserve eventually begins raising interest rates, investors are already moving their money to safer, yet profitable, US destinations.Panicky investors dumped equities held in emerging economies to the tune of $8.7 billion, according to the Institute of International Finance. The dollar meanwhile, has climbed.Read more
CBK: Shilling firms as corporate demand for dollars subdues
Kenya's shilling firmed in early trading with corporate demand for dollars subdued.By 0656 GMT, the shilling was quoted at 105.15/35 to the dollar, slightly stronger than the close of 105.30/40.The central bank sold dollars, helping the shilling recover after almost touching an all-time low of 106.80 set. Since then, it has steadied.Corporate demand for dollars tends to pick up when regular payments for contracts fall due. For now, traders said dollar supply and demand was balanced.One trader, who asked not to be identified, noted some firms were holding on to shillings to meet a tax payment deadlines, offering some support to the currency. Read more
Tuskys fires contractor over Sh100m loss to employee theft
Tuskys Supermarkets retail chain reports losing millions of shillings to theft by employees, underlining the extent of pilferage risk that the sector operators are facing in the market.The retail chain, which is Kenya’s second largest, said it was losing more than Sh100 million  to theft by employees.Tuskys made the disclosure in a letter to Hipora Business Solutions East Africa, a firm it had hired to help curb rampant fraud within its shops.“The audit report showed on average Tuskys is losing in excess of Sh100 million a month on top of costs associated with the [loss prevention] services,” Tuskys said in a letter.Tuskys’ estimated loss of Sh100 million indicates that employee theft across the retail industry could top Sh2 billion annually, making it one of the biggest victims of internal fraud alongside commercial banks. Read more
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