Rate cap has led to decline of loan applications and disbursements – KBA


Capping of interest rates at 4 percent above the Central Bank Rate (CBR) has not led to the intended objectives says the Kenya Bankers Association (KBA).

Loan applications and disbursement started declining immediately after the Banking (Amendment) Act was signed into law in August 2016.

“Credit to the private sector is nearly grinding to a halt, with the most affected being unsecured personal loans. Year-on-year credit growth is at 1.7 percent, but month-on-month we are in a negative territory,” said  Jared Osoro, KBA’s director for research and policy on Thursday.

“While it had become clear that lines of credit were becoming popular amongst Kenyan banks, we are not seeing much enthusiasm in that space,” he added.

According to the survey tracking the effect of the Banking Act, Loan applications dropped from 2.2 million in August 2016 to 1.9 million in September 2016, a 17 percent drop.

Over the same period, the number of loans that were disbursed fell from about 1.1 million to below 750, 000, a 32 percent decline, as the market came to terms with the effects of the new law.

From the surveyed banks there has been a 1,933 jobs reduction as the number of management and non-management staff reduced from 28,009 employees as at August 2016 to 26,076 employees by June 2017.  

Over the period, banks appear to be relying more on agents with the number of agencies rising from 41, 686 as at August 2016 to 53, 667 outlets as at June 2017.

“It is increasingly becoming evident that the expectations of the Act are not being met. The inability for credit to adjust towards meeting the growth slack on the back of weak demand and the link between credit to private sector growth – which is nearly at a grinding halt – means that the greater economy is being hurt said Habil Olaka, KBA’s Chief Executive Officer.

“It is now a high time for all stakeholders including the Treasury, Central Bank, and the legislative arm, to re-engage and address the delivery of lower interest rates for the average Kenyan from a win-win standpoint,” added Olaka.

On 14 September 2016, the law capping the interest rates that commercial banks charge at four percentage points above the Central Bank Rate (CBR) came into force. Under the same law, banks have to pay depositors at least 70 per cent of the CBR.

Full Statement of NCIC on the Status of Cohesion in Kenya


The Kenyan National Cohesion and Integration Commission (NCIC) has issued a stern warning to politicians and other Kenyans who are using the current political temperature in the country to cause havoc and lawlessness.

In a statement issued to the media, NCIC notes that the ongoing political contestations on the repeat Presidential polls are causing the country a great deal.

Here is the full statement from the commission:

“Over the last few years, despite numerous challenges, our country has become a robust middle-income nation, a beacon of hope, stability and an enviable business hub in the region. We have charted a very bright future for the Nation guided by a robust Constitution – through which a promising devolved governance system has been rolled out and sets of national values inculcated among Kenyans at all levels.  This national progress must be nurtured and protected by all.

However, the National Cohesion and Integration Commission (NCIC) notes with great concern the consequences of the ongoing political contestations on the repeat Presidential polls. The Commission condemns increasing level of ethnic and political polarization, loss of human lives, intolerance, hooliganism and wanton destruction of property during the anti-IEBC demonstrations. We are strongly saddened by the loss of lives in the various protests.

As an institution established to reconcile Kenyans following the 2007/2008 Post Election Violence, the prevailing political situation in the country is at most irresponsible, unfortunate and untenable. The current political climate indeed strikingly resembles the period prior to 2007/2008 post-election violence. Allowed to take root, the current political dynamics will catastrophically roll back the gains we have made as a nation to build a cohesive, peaceful and prosperous country.

As a nation, we have had enough traumatizing situations and it makes no sense for the politicians to push the nation through another cycle of civil strife.  As a nation, we have travelled a long narrow and difficult path to get where we are today.  But it seems like the political leaders have quickly forgotten the carnage, suffering, pain and agony that Kenyans went through. The age of solving differences, whether political or social, through brutal bloodletting is long gone.  Kenyans of all walks of life MUST learn to talk to one another, dialogue and reason together to find solutions to their differences.

We have noted that the sense of optimism for the Kenyan people is currently undergoing a serious test like never before. Political polarization and the competitive nature of electoral politics are deeply dividing the Kenyan Nation. As a Commission, we are concerned with the deepening sense of anxiety, mistrust and ethnic and political intolerance that threaten to erode the gains we have made in building a cohesive Kenyan Nation. Tensions are rife in some parts of the country, setting Kenyans into a constant mode of fear. Thus, crippling the economy of Kenya.

The increasing use of foul and obscene language, threats and inflammatory statements, largely characterized by inter/intra-ethnic profiling by a section of the political class, is saddening. This has converted the feelings of our national discourse from being issue-based, to ethnic bigotry, insults and threats – a scenario with the capacity to destroy the nation.

We are appealing to the political leaders and their supporters to explore alternative means of resolving the issues at hand. We urge the government and opposition to act with openness, sobriety and tolerance in addressing the source of the current impasse. In the same breadth, we warn those who take pride in spewing hate speech. We will continue to deal with you decisively, without fear or favor.

The Commission is also concerned with the emerging trend of fake news on social media that is intended to incite, misinform, and manipulate public reactions. Those involved in FAKE NEWS should stop. We urge the public to treat sensational news with caution and avoid making unverified conclusion.

To the Independent Electoral and Boundaries Commission (IEBC), we urge you to follow the law and provide free, fair and credible elections. IEBC must recognize that there is a direct correlation between your ability to conduct free, fair and credible elections and peace and stability in this country. Today, as never before, the peace fabric of this nation is intricately interwoven with the conduct of credible polls.  Hence the decisions taken by IEBC have a direct impact on shaping the future of this country.  IEBC must get its house in order and deliver on the mandate as per the Constitution and expectations of the people of Kenya. We urge all the stakeholders to give IEBC the necessary support to enable them deliver on their mandate.

We urge the security agencies to continue maintaining order and calm in the Country. They should equally discharge their role within the Constitution.  We call on the government to investigate and hold accountable those responsible for vandalism and looting.

To the supporters of the political class, we urge you to embrace tolerance, restraint and respect diversity.  Elections come and go, but Kenya remains. Your neighbors remain. Hence, we have to preach peace, love, and unity. Let’s be our brothers keepers!

The demonstrators must respect their obligation under the Constitution to picket. However, they must do so responsibly and respect the rights of other Kenyans to go about their business unmolested, respect private property and refrain from using any form of violence. Your right to demonstrate should not be used to infringe on the freedom and security of other Kenyans. We condemn those who take the law into their own hands and also those who take advantage of the situation to commit crimes.

We commend the media for their efforts in influencing a positive agenda in the ongoing political discussions. We continue to encourage conflict sensitive reporting and vetting of panelists before engaging them in live debates. And as you moderate interviews, we encourage the journalists to adhere to the journalistic code of ethics.

Fellow Kenyans, the merits and demerits of the contestations aside, we must, as a country collectively cultivate the culture of non-violence, respect for the rule of law and tolerance for divergent opinion. It befits us as Kenyans to jealously guard the peace and stability that we have cultivated in the last few years.

A polarized Kenya is a road for endless mistrust, hostility and economic retrogression. That is the road we must not travel.

Entrepreneur Diaries: resilience and consistency key to business success


I had it. I couldn’t remain in employment anymore – everything was mediocre and I was tired of living like everyone else, I decided to pursue my dream.

So I quit in a huff.

I handed in my resignation, cashed in my pension and opened up a restaurant. It wasn’t fancy it wasn’t big but it was mine and that’s all that mattered.

I was going to pursue my dream at all costs and this was going to be my big break. My restaurant would be a smashing success and I would be on prime time television telling the world how all you need to do is have faith to succeed!

The world was going to be my oyster!

Fast forward three years down the line and I haven’t yet made it to prime time – no one has ever come to my restaurant to ask me for an interview, including my own niece who got an internship at a renowned media firm. I get it, she needs to impress her boss and my restaurant is by no means impressive.

I’m a great chef – but like other creatives, I have good days and bad days. I’m always looking over my shoulder to make sure my staff members don’t steal from me and clients don’t take off without paying the bill. It’s exhausting. I love what I do that hasn’t changed and it probably never will.

But here’s a list of 5 things I would have done differently if I had the chance to start again:

 

  • Dream big, start small: I should have started food delivery from my home first and built up my clientele. The first few months were slow, even after marketing the restaurant – so my expenditure was high. I should have focused on quality and repeat sales, I would have made a profit faster if I did this.
  • Targeted customers: I sent flyers to just about everyone I knew friends, family, watchmen you name it. I should have identified who my most likely customers would be and where they would come from and focus on that target.
  • Stand out from the crowd: The truth is restaurants are a dime a dozen and you can find ugali – kuku almost anywhere, I wish I had differentiated myself from my competitors to give potential clients incentive to come to my restaurant.
  • Be consistent: I changed my menu as frequent as I did my hair. Bad idea. My clients got confused, I should have tried out a few dishes first and learnt what my clients liked and stuck to that.

 

  1. Partner if you can: I should have had a partner to manage staff and money – my administrative skills are terrible, I think I would have been further along in my business if I focused on my key strength and that’s making a killer meal.

I’m still not where I want to be – but the good news is that I’m getting there. One of the most valuable resources you will ever have as a business owner is a positive mind.

Successful entrepreneurs may even differ on what each thinks it takes to make it – but they will all agree that positivity, resilience, and consistency are key ingredients that one needs to cross the finish line.


Revuka Capital acts as a bridge between investors and investment opportunities in the East African region. Revuka specializes in market research, investment tours as well as advisory services pertaining to investing in the region.

Banana farming in Kenya under threat from Fungus


Over 300,000 banana farmers in Kenya are facing a great threat from the deadly banana fungus which poses major risks to the world’s banana production.

According to FAO’s Director of Plant Production and Protection Division Hans Dreyer, the fungus is an insidious disease that can last for years in soils and can hitchhike to new fields and destinations through a number of means such as infected planting materials, water, shoes, farm tools and vehicles.

“We need to move quickly to prevent its further spread from where it is right now and to support already affected countries in their efforts to cope with the disease,” said Hans Dreyer.

Hans noted that the long-term resilience of banana production systems can only be improved through continuous monitoring, robust containment strategies, strengthening national capacities and enhancing international collaboration to deploy integrated disease management approaches.

What TR4 looks like

Fusarium wilt TR4 was first detected in Southeast Asia in the 1990s and has now been identified at 19 sites in 10 countries, including the Near East, South Asia and Mozambique in sub-Saharan Africa.

The global programme is initially targeting 67 countries in a bid to prevent its spread and management.

Without a coordinated intervention, scientists estimate that the disease could affect up to 1.6 million hectares of current banana lands by 2040, representing one-sixth of current global production with an estimated annual value of USD 10 billion.

The programme aims to reduce the potentially affected area by up to 60 percent.

“There is also an important knowledge gap regarding the biology and management of the fungus and we aim to address these through this collaborative initiative, also promoting introduction of more biodiversity and improved agronomic practices into banana production systems” said Ann Tutwiler, the Director General of Bioversity International, speaking on her behalf and that of the IITA.

“The disease is also an important concern for the industry and the trade of this popular fruit,” added Pascal Liu, coordinator of the World Banana Forum.

The five-year programme is designed to build on existing initiatives tackling the disease and focuses on strengthening local technical capacities and supporting the development of science-based technologies and tools through research on biology and epidemiology of the fungus, its detection, surveillance, rapid containment actions, soil health and the development of resistant cultivars.

If effectively rolled out, it is estimated that every USD 1 invested in the programme today will produce benefits of between USD 98 and USD 196 in 20 years’ time.

Treasury raises Ksh 13.50 Billion worth of 5-Year T-Bonds


The National Treasury has raised Ksh  13.50 billion from investors through its 5-year bond issued on Wednesday.

It was looking at raising Ksh 30 billion.

The CBK received bids for the bond until Oct. 17 and auctioned it on Oct. 18.

The bond had a yield of 12.6 percent compared to 12.6 percent at the last sale.

The Kenyan economy is taking a hit – President Uhuru concerned


President Uhuru Kenyatta has raised concern over the current political stalemate in the country saying it is affecting the economy.

“Things are slowing down. The economy is starting to take a hit. There is anxiety and uncertainty in the air. We are all feeling it, whether you are from the north, south, east or west of the country. The Kenyan economy is one economy. When Kenya slows down, it slows down for everyone,” said President Uhuru in a penned letter to the Kenyan media.

Uhuru says, the only way out is ‘to get back to work’ and by people voting on the scheduled repeat presidential elections on Oct 26.

“To do this, we need to exercise our democratic right without fear. Because when you vote, peace wins. When you vote progress wins. When you vote, Kenya wins.”

Shareholders at the NSE Lost Ksh 27.4 Billion in Three Days


The equities’ indicators closed the day on Wednesday in the red, making that three sessions of poor performance in a row.

Shareholders have lost 27.4 billion shillings in the three-day period this week with shares traded increasing marginally (+189%) over the same period.

Safaricom Limited was the top mover in Wednesday’s session similar to the previous trading session while closing lower in both sessions.

The Telco accounted for 64.9% of total market turnover in Wednesday’s trading with most of the activity driven by foreign investors.

Foreign participation ticked up to 81.3 percent from 66.4 percent (previously) with Safaricom accounting for 73.2 percent of the desk’s trades. The desk recorded net selling activity with net outflows of 14.86 million shillings.

Bonds turnover closed lower at 0.49 billion shillings on 25 deals in the session from 1.29 billion shillings on 71 deals previously.

Here is an overview of what went down in the agricultural and banking sectors:

Insurance is a business solution to counter cybercrime


Deloitte, a global financial consulting estimated that the cost of cybercrime in Kenya could rise by 30 percent this year.

In 2016, cybercrime cost Kenyan Internet users and businesses about KSh 18 billion according to the  2015 Deloitte Global Threat Index that also ranked the country as the 69th most vulnerable country to experience cyber crimes out of 127 countries globally.

KPMG’s Closing the gap Ensuring your business against evolving cyber threats June 2017 report emphasized that “Businesses need to be aware of the full costs of a cyber-attack in particular those associated with the loss of competitive advantage and customer churn and immediate cost.”

In Kenya cyber threat is evolving daily and companies are realising the potential consequences of a cyber breach.

William Makatiani, Serianu Managing Director disclosed that about 44 percent of financial institutions in Kenya run on a meager cybersecurity budget of less than 1,000 USD annually, whilst about 33 percent of financial institutions in Kenya had no spending on cyber-security.

The Central Bank of Kenya took a proactive step and urged the financial institutions to review their cybersecurity strategy, policy and framework regularly based on each institution’s threat and vulnerability assessment.

Check Point Software Technologies Ltd 2017 global cyber landscape report noted that “2017 has proved to be a lucrative year for cybercrime.

Prominent malware and attack methods continue to evolve, creatively bypassing existing security solutions.”

“ Cyber-attacks are occurring at a higher frequency than previous years. Recent infiltrations have demonstrated the agility, scale, and persistence of an attack that criminals are capable of executing.

All regions have suffered from these large-scale attacks, reinforcing the need for proactive solutions. Massive attack campaigns such as WannaCry, NotPetya and Fireball showcase the nature of today’s threat landscape,” reads part of the report.

The report which collaborates other analysis on this emerging trend notes that most of the prominent attacks use known malware variants that could easily have been blocked had the proper security been implemented before the attack had occurred.

“To stay one step ahead of cybercriminals, organisations should remain attuned to the ever-changing threat landscape.”

It is not gloom,  there are a number of measures companies can take to ensure they minimise the consequences and recover more quickly should a breach occur.

Insurance is part of this solution.

AON Kenya unveiled a cyber-enterprise risk cover that will ensure businesses stay afloat in the event they are breached.

The product covers physical property damage, products liability, business interruption or supply chain disruption from cyber-attacks.

It also includes cyber terrorism coverage; privacy and security liability and event expense coverage; and media liability and technology errors and omissions by endorsement.

According to Aon Chief Executive Officer Sammy Muthui,“Data is an organization’s most valuable asset but it’s also most vulnerable asset. However, as businesses and companies grow, so do their exposure to cyber risk. This simply means that that as the value of a business grows, it raises its profile among hackers.”

Telkom Kenya Introduces Freedom Bundles To Its Customers


Telkom has unveiled a new data bundle proposition –the Freedom Bundle – that grants subscribers free calls within the network, free WhatsApp and free SMS to any local network. Subscribers to the proposition will also be able to make calls to other networks at KSh2 per minute. Subscriptions are available in daily, weekly and monthly options.

Telkom’s Chief Executive Officer Aldo Mareuse says, “We believe in giving our customers the best value. The launch of Freedom Bundles is a testimony to that. More and more people are accessing the Internet on their mobile phones. It is our duty to empower all our customers to enjoy the benefits of real-time communication with competitively priced data, bundled with voice, SMS, and WhatsApp at no extra cost. With this service, they can turn their mobile phones into fully functional personal integrated communications devices.”

“We continue to monitor and review our customer experience, to make it more engaging and superior in quality. We will also continue to develop communication solutions that meet the productivity and lifestyle needs of our growing subscriber base. The Freedom bundle can best be described as a stress-free offering that allows our customers more flexibility and choice while using our services,” adds Mr. Mareuse.

Customers can choose from four options: a Daily bundle at KSh 39, a 3 Days bundle at KSh 49, a Weekly bundle for as low as KSh 99 and for as high as KSh 249 and a Monthly bundle for as low as KSh 499 and as high as KSh 2,999.

Customers can subscribe to Freedom by dialing *544#.  For a subscriber to enjoy the free benefits, they must have a valid Freedom bundle and a data balance of not less than 1MB.

Data, voice and text messaging have contributed largely to the rapid growth of the country’s communication sector. As 4G and 3G mobile coverage grow across the country, Kenyans continue to embrace the use of mobile telecommunication and use of the Internet which is becoming the preferred personalized communication alternative for mobile users.

According to the Communication Authority of Kenya’s (CA) most recent Statistics Report for the Quarter ending June 2017, Internet services are soaring on all fronts.  The report cites the number of mobile data subscriptions continuing its upward trend, recording 29.6 million subscriptions which represented 99 percent of all Internet subscriptions.

Online platform launched to promote trade and ease of doing business


Kenya’s initiative to promote the buy Kenya build Kenya has been given a boost with the launch of online trade portal aimed at promoting trade and improving the ease of doing business.

The National Trade Negotiations Council and Kenya National E-Trade Portal will stimulate business decision making through real time trade facilitation information and expand Kenya’s export product portfolio.

Trade Cabinet Secretary Adan Mohammed said the portal will have information on opportunities existing internationally easing trade processes by among others providing crucial trade information including applicable tariffs, available markets as well as create linkages between the local business community and foreign traders.

The National Trade Negotiations Council is charged with handling all Kenya’s Trade negotiations at Bilateral, Regional and Multi lateral level following its adoption by the national trade policy  adopted by cabinet in 2016


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