The True State of Kenya’s Economy: The Numbers

By Soko Directory Team / April 11, 2016




Recent happenings in the Kenyan economic sector have left investors worried, future investor scared, economic analysts predicting doom and many tongues both electronic and print wagging about it. What is the exact state of the economy of Kenya? Is the economy of Kenya moving in a jet-like speed towards the land of no return? Are those in power trying to give us false hope by struggling to convince us that everything is in order while nothing appears to be? What is the appearance of the future for Kenya?

Someone said that numbers don’t lie. Numbers are silent witnesses that tells no lies. Since they are silent witnesses that tells no lies, they, therefore, need a person who is bold enough to speak on their behalf. They are ever silent. They never talk when someone tries to change them or manipulate them but they always stick to their course: the truth.

With the National Youth Service struggling to put on a brave face, Uchumi Supermarket kicking and trying to convince us that it is still alive, National Bank of Kenya jumping out of the blues and declare a 1.2 billion loss without a prior warning, Chase Bank giving its customers heart attacks and sleepless nights after being placed under receivership and hotels closing down business at the coast, how can one say things are okay? How can one say that the economy is stable? How can one say that the government is committed in ensuring that the rate of unemployment is reduced?

Let us set off with the Kenyan banking sector. With what has been happening in the banking sector lately, everyone whose money is in the bank has a reason to worry. In a span of one year, three financial institutions have been placed under receivership after failing to wade through the financial waters facing the sector at the moment. These banks were:

  • Dubai Bank Kenya Limited placed under receivership on 14th August 2015.
  • Imperial Bank Limited placed under receivership on 13th October 2015
  • Chase Bank placed under receivership on 7th April 2016

These coupled with the National Bank of Kenya registering losses, Barclays Bank being in the process of selling its businesses in Africa with many other banks predicting a doom future due to escalating non-performing loans has left the banking sector ailing. According to some sources which appear to be closer to the source, apart from pressure from the Social Media, Chase Bank had at least 16.6 billion shillings that were deemed irregularly advanced to various entities with half of them being linked to insiders as well as to assets that were not clearly benefiting the bank. The closure of the bank left over 55,000 depositors in limbo without access to their money. The coming down of Imperial bank according to sources privy to the matter was as a result of massive fraud practices that were executed by the staff at the bank.

The National Bank of Kenya came into the public limelight after it announced 1.2 billion loss without prior warning to investors and shareholders as stipulated in the law. The law stipulates that a firm, upon realizing that its profits will be lower than 25 percent, has to make it public within 24 hours through media outlets prior to the release of the final financial results, something that National Bank did not adhere to. Is the banking sector ailing? Do Kenyans still have the confidence to bank their money with the 42 + banks currently operating in the country?

Uchumi Supermarket, the once largest retailer not only in Kenya but in the East African region is now a wounded buffalo struggling to remain afloat. The retailer closed down its subsidiaries in Uganda and Tanzania in what was seen as a recovering strategy after a wave of losses. The management said that it aimed at concentrating on the Kenyan market so as to make a strong comeback. Back home things remained even worse, some branches were closed and people lost their jobs with some matters still pending at the court. It is said that Uchumi came down because it operated under the falsehood of hoodwinking people that it was financially health. In 2013 for instance, it is said that the management said that the retail had made 357 million shillings as profit yet the true profit was 123 million shillings. In 2014 also, the retailer is said to have made a profit of 384 million shillings when the reality was 336 million shillings. These, coupled with the stiff competition on the market, Uchumi came down and though still kicking, analysts see no future for the once vibrant retailer.

Read: Is the economy of Kenya ailing?

The National Youth Service Scandal, who does not know about it? The fact is that people know about the scandal but many don’t know about what transpired and what really happened. It is said that a total of 791 million shillings were mismanaged at the National Youth Service. National Youth Service is under the Ministry of Devolution. Under the same, is the Youth Fund with more than 400 million said to have mysteriously disappeared. The hard questions are; how much money was allocated to the Ministry of Devolution? Apart from the NYS and the Youth Fund, what other channels have siphoned money at the Devolution ministry? What is the government doing to try and recover the looted funds? Most young people who were the beneficiaries of the NYS have now been rendered jobless. Some 800 hundred who had been trained at NYS with paramilitary skills were sent home after money to graduate them failed to come by. What happens when you sent back into the village such young and vibrant people?

President Uhuru Kenyatta, during the State of the Nation Address said that hotels at the Coast are fully booked. Are they really fully booked? It has now emerged that at least 40 per cent of hotels across the Coastal Region have been reported to either been closed or scaled down its operations due to low tourist season. Malindi and Watamu are the worst hit after Chartered airlines from Italy ended flights to Mombasa due to low passenger turnout. 80 per cent of hotels in Kilifi County have shut down due to an international tourist drought while over 5,500 workers in Malindi and Watamu have been laid -off following the closure of hotels since last week.

Out of the workers sent home, 3,000 are said to be permanent and contracted workers while 2,500 are casuals. About 10 hotels in Diani are also in the process of closing down for the low season or renovations.

According to Kenya Union of Domestic, Hotels, Educational Institutions, Hospitals and Allied Workers (KUDHEIHA) North Coast branch, more workers are expected to lose jobs since more hotels are in the processing of closing down by the end of the month of April up to mid-July, when they will re-open for the high season.


 

Article by Juma Fred and Vera Shawiza.

 



About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author








Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE

ARCHIVES

2019
  • January 2019 (256)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (251)
  • July 2019 (340)
  • August 2019 (293)
  • September 2019 (170)
  • 2018
  • January 2018 (291)
  • February 2018 (219)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (238)
  • June 2018 (178)
  • July 2018 (257)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (187)
  • 2017
  • January 2017 (183)
  • February 2017 (195)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (246)
  • June 2016 (183)
  • July 2016 (271)
  • August 2016 (249)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (109)
  • May 2015 (117)
  • June 2015 (121)
  • July 2015 (150)
  • August 2015 (157)
  • September 2015 (188)
  • October 2015 (170)
  • November 2015 (174)
  • December 2015 (208)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950