KBC Channel 1

Author: Ronald Owili

  • Crisis-hit China Evergrande shares plunge by 80pc

    Crisis-hit China Evergrande shares plunge by 80pc

    Shares in embattled Chinese developer Evergrande have fallen by around 80% as they started trading in Hong Kong for the first time in a year and a half.

    The shares have lost more than 99% of their value in the last three years as Beijing cracked down on property firms.

    Evergrande is at the centre of a real estate market crisis threatening the world’s second largest economy.

    On Sunday, the firm posted a 33bn yuan ($4.5bn; £3.6bn) loss for the first six months of the year.

    However, that was an improvement on the 66.4bn yuan loss it reported for the same period a year earlier.

    The company’s “directors have taken a number of measures to improve the liquidity position and financial position of the group,” Evergrande said in a filing to the Hong Kong Stock Exchange.

    The firm added that its revenue for the first six months of this year had jumped by 44% to 128.2bn yuan from a year earlier. However, its stockpile of cash fell by 6.3% over the same period.

    Evergrande shares had been suspended from trading since March last year.

    “The key for policymakers at this moment is to prevent financial contagion and limit spillover into the overall financial system,” Qian Wang, chief Asia Pacific economist at investment firm Vanguard told the BBC.

    “Policymakers will need to provide further liquidity and credit support to the economy and the real estate sector,” she added.

    Problems in China’s property market have added to concerns about the post-pandemic recovery of the world’s second largest economy.

    Also on Monday, China halved a 0.1% tax on stock trading to “invigorate the capital market and boost investor confidence”.

    The move came days after the country’s central bank cut one of its key interest rates for the second time in three months, in the face of falling exports and weak consumer spending.

    Major share indexes in Hong Kong and mainland China were trading higher after the news.

    Last month, Evergrande revealed that in 2021 and 2022 it lost a combined total of 581.9bn yuan.

    Earlier this month, Country Garden, which is also one of China’s biggest property developers, warned that it could see a loss of up to $7.6bn (£6bn) for the first six months of the year.

    Rating agency Moody’s downgraded the company’s rating, citing “heightened liquidity and refinancing risks”.

    China’s real estate industry was rocked when new rules to control the amount of money big real estate firms could borrow were introduced in 2020.

    Evergrande, which was once China’s top-selling developer, had racked up debts of more than $300bn as it expanded aggressively to become one of the country’s biggest companies.

    The firm missed a crucial deadline in 2021 as it failed to make interest payments on around $1.2bn of international loans.

    Evergrande has been working to renegotiate its agreements with creditors after defaulting on debt repayments.

    Earlier this month, the company made a Chapter 15 bankruptcy protection filing at a court in New York.

    Chapter 15 protects the US assets of a foreign company while it works on restructuring its debts.

    Evergrande’s financial problems have rippled through the country’s property industry, with a series of other developers defaulting on their debts and leaving unfinished building projects across the country.

  • Kenya-Re H1 net profit up Ksh 72M, begins Indian market

    Kenya-Re H1 net profit up Ksh 72M, begins Indian market

    The Kenya Reinsurance Corporation (Kenya-Re) has commenced plans to vacate the Indian market over rising losses stemming from agriculture underwriting business.

    In the half year period to June 30, 2023, the reinsurer saw its net earned premiums decline 33.5pc from Ksh 9.8 billion reported last year to Ksh 6.5 billion on account of a Ksh 2 billion haircut it took to ease further losses according to chief executive officer Dr Hillary Wachinga.

    “We are doing a strategic withdrawal from the Indian market where we suffered heavy losses in agriculture business and if you look at our half year performance, you will notice we have taken a haircut in premiums because we have forgone Ksh 2 billion premiums from the Indian market,” said Dr Wachinga.

    Due to bad weather which affected India’s agriculture sector, Kenya-Re saw it underwriting for the sector fall to Ksh 500 million from Ksh 2.5 billion reported last year.

    However in a bid to protect its bottom-line from further losses, Dr Wachinga says the reinsurer is now focusing on solidifying and expanding underwriting business in Africa with the coming of the African Continental Free Trade Area (AfCFTA).

    “We intend to really support the subsidiaries that we have in Africa by opening new satellite offices targeting big economies specifically the Democratic Republic of Congo (DRC) and South Africa and support our Abidjan and Lusaka offices,” he added.

    During the period under review, the firm net profits rose marginally to Ksh 904 million from Ksh 832 million it earned last year.

    Total income on the other hand reduced by 26pc, from Ksh 11.8 billion to Ksh 8.8 billion in the first six months of this year.

    Kenya-Re also saw its net claims paid out during the year fall from Ksh 6.5 billion to Ksh 4.2 billion, a 35.4pc drop.

    The insurer also saw its operating expenses reduce by 72pc, to Ksh 300 million from Ksh 990 million as asset base increased from Ksh 70.1 billion to Ksh 72.8 billion, a 4pc growth.

  • Implementation of tax policy key agenda for new KRA boss

    Implementation of tax policy key agenda for new KRA boss

    The Kenya Revenue Authority (KRA) will push for the enactment of the National Tax Policy to enhance fairness and equity in the tax system.

    KRA Commissioner General Humphrey Wattanga  who was sworn in Thursday says the authority will further deploy technology to deal with tax evasion to meet the Ksh 2.9 trillion shillings in current fiscal year 2023/24.

    Plans to craft Kenya’s first tax policy have been on the card for a long time with the private sector nudging the government to establish the policy in order to create a predictable taxation environment.

    The policy recommends comprehensive reviews of tax laws every five years and adequate stakeholder engagement before any amendment of tax laws.

    Wattanga said he will ensure the policy is implemented in the next three years.

    The last financial year that ended in June saw the taxman miss the revenue collection target by Ksh 107 billion, having collected Ksh 2.17 trillion.

    In July, KRA recorded an 18pc jump in monthly revenue collection to Ksh 155.1 billion compared to a similar period last year driven by new tax measures.

    Wattanga replaces Githii Mburu who tendered his resignation in February 2023, after serving for three years and seven months.

  • Xi urges China, Africa to join hands for modernization

    Xi urges China, Africa to join hands for modernization

    Chinese President Xi Jinping on Thursday delivered a keynote speech at the China-Africa Leaders’ Dialogue and urged China and Africa to join hands for modernization.

    China is willing to launch the Initiative on Supporting Africa’s Industrialization, which will support Africa in growing its manufacturing sector and realizing industrialization and economic diversification, Xi said.

    The initiative stressed that through the nine programs under the Forum on China-Africa Cooperation, China will channel more resources of assistance, investment and financing toward programs for industrialization.

    He said China will launch the Plan for China Supporting Africa’s Agricultural Modernization and will help Africa expand grain plantation and encourage Chinese companies to increase agricultural investment in Africa.

    The plan aims at helping Africa achieve food self-sufficiency and independent sustainable development, promote food production in Africa, effectively boost Africa’s ability to safeguard its food security, and help it reach related goals in agricultural modernization.

    China will host the second Forum on China-Africa Cooperation in Agriculture in Hainan this November, said Xi, adding that China will provide additional emergency food assistance to some African countries in need to help Africa tackle the current food crisis.

    China will also launch the plan for China-Africa Cooperation on Talent Development, planning to train 500 principals and high-caliber teachers of vocational colleges, and 10,000 technical personnel with both Chinese language and vocational skills for Africa every year, Xi said.

    In 2013, Xi announced the principle of sincerity, real results, amity and good faith for China’s Africa policy. “Over the past 10 years, China has stayed committed to this principle,” Xi said.

    The Chinese president noted that China is pursuing the great rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization, while Africa is making all-out efforts to build a new Africa that enjoys peace, unity, prosperity and strength.

    Xi called on China and Africa to work together to create a sound environment for realizing their respective development visions by promoting just and equitable international order, practicing true multilateralism and unequivocally opposing vestiges of colonialism and hegemonism in all forms.

    China is ready to work with Africa to implement the new vision of common, comprehensive, cooperative and sustainable security, advocate the resolution of differences and disputes through dialogue and cooperation, facilitate the political settlement of international and regional hotspot issues, and safeguard world peace and stability, he said.

    The Chinese president also said China and Africa should work together to build an open and inclusive world economy, advocating for the building of an open world economy, where developing countries are better involved in the international division of labor and share the fruits of economic globalization.

    “We should overcome estrangement between civilizations through exchanges, promote inclusiveness and mutual learning between civilizations,” Xi said.

    Noting that there are various paths leading to modernization, Xi said that the African people have the most say on which path suits Africa best, and advancing modernization through integration is the independent choice made by the African countries and people.

    Looking ahead, China will work with Africa to enhance the synergy of their development strategies, and will continue to support Africa in speaking with one voice on international affairs to keep improving its international standing, he added.

    China will also work actively at the G20 summit next month to support the African Union’s full membership in the group, Xi said, adding that China supports making special arrangements on the UN Security Council reform to meet Africa’s aspiration as a priority.

  • NCBA Group nets Ksh 9.3B in profits in first half of the year

    NCBA Group nets Ksh 9.3B in profits in first half of the year

    NCBA Group has disclosed that its profit after tax during the first six months of this year to June has increased 20.3pc to stand at Ksh 9.3 billion.

    The profit increase from Ksh 7.8 billion reported over the same period last year was driven by arise in operating income which grew 7pc to Ksh 31 billion and reduce loan impairment charges which eased 21pc Ksh 4.4 billion.

    “These strong operating results are attributable to consistent focus on our strategic priorities,” said John Gachora, NCBA Group Managing Director.

    During the period under review, the lender’s loan book surged 35pc year-on-year to stand at Ksh 457 billion while customer deposits rose 10pc to reach Ksh 517 billion.

    Similarly, NCBA Group registered a 9pc increase in total assets which stood at Ksh 660 billion by the end of the first half of the year.

  • KCB Group first half net profit down to Ksh 15B

    KCB Group first half net profit down to Ksh 15B

    KCB Group has reported a decline in profit after tax to Ksh 15.6 billion in the first six months of the year to June from Ksh 19.5 billion the lender reported over the same period last year.

    KCB Group Chief Executive Officer Paul Russo attributes the 20.1pc profit drop to aggressive provisioning on facilities in KCB Kenya, inherited legal claims in National Bank of Kenya (NBK) and staff restructuring costs incurred in KCBK and NBK being an investment to right size the organizations.

    “Despite a challenging economic environment across our operating markets, the business remained resilient delivering a strong balance sheet and increased contribution from regional businesses. Profitability was under pressure in the first half from increased funding costs on higher market deposits rates, prudent provisioning on legacy credit facilities, and provisions for legacy legal claims at NBK,” said Russo.

    During the period under review, loan provisions rose 136pc to stand at Ksh 10.2 billion compared to Ksh 4.3 billion the firm reported in the first half of last year as the lender’s loan book grew by 234.5 billion to stand at Ksh 964.8 billion representing a 34pc increase.

    On the other hand, staff costs rose to Ksh 17.5 billion from Ksh 14.1 billion reported last year, a 24.1pc increase.

    As a result, the giant lender reported a 60.1pc increase in total operating expenses which surged to Ksh 50.6 billion compared to Ksh 31.6 billion reported last year.

    “Looking ahead, noting the actions we have taken and with significantly improved liquidity, business focus is on accelerated performance in the second half of the year while supporting the distressed customers” he added.

    KCB Group total assets grew 54pc to stand at Ksh 1.86 trillion in the first half of the year ending June 30, 2023, from Ksh 1.2 trillion.

    The balance sheet growth was driven by consolidation of Trust Merchant Bank (TMB) acquired in December 2022, and increase in customer deposits to Ksh 1.47 trillion, the lender said.

  • Artificial intelligence chip giant Nvidia sees sales more than double

    Artificial intelligence chip giant Nvidia sees sales more than double

    Technology giant Nvidia says its sales have hit a record after more than doubling as demand for its artificial intelligence (AI) chips soars.

    The company says revenue jumped to above $13.5bn (£10.6bn) for the three months to the end of June.

    Nvidia also expects sales to soar further in the current quarter and plans to buy back $25bn of its stock.

    The firm’s shares rose by more than 6.5% in extended trading in New York, adding to their huge gains this year.

    Nvidia also said it expects revenue of around $16bn for the three months to the end of September.

    expectations and would equate to a rise of around 170%, compared to the same time last year.

    “A new computing era has begun,” Nvidia’s chief executive, Jensen Huang, said in a statement.

    “Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” he added.

    The strong performance was driven by Nvidia’s data centre business, which includes AI chips.

    Revenue for that unit came in at more $10.3bn, a rise of more than 170% from year ago, as cloud computing service providers and large consumer internet companies snapped up its next-generation processors.

    This year, Nvidia’s stock market value has jumped to more than $1 trillion as its shares more than tripled in value.

    That made it the fifth publicly traded US company to join the so-called “Trillion dollar club”, along with Apple, Microsoft, Alphabet and Amazon.

    Nvidia was originally known for making the type of computer chips that process graphics, particularly for computer games.

    Now its hardware underpins most AI applications, with one report finding it had cornered 95% of the market for machine learning.

    ChatGPT – which generates human-like responses to user queries within seconds – was trained using 10,000 of Nvidia’s graphics processing units clustered together in a supercomputer belonging to Microsoft.

    AI products are expected to dramatically change how we use computers and the role they play in our lives.

  • Nine steel manufacturers fined Ksh 338M for price fixing

    Nine steel manufacturers fined Ksh 338M for price fixing

    The Competition Authority of Kenya (CAK) has slapped nine steel manufacturers with a Ksh 338.8 million fine for colluding to hike prices.

    According to the competition watchdog, the cartel conduct by the firms to artificially inflate prices of steel products led to increase in the cost of construction of homes and infrastructure.

    Investigations by CAK found the firms to have engaged in price fixing, through agreeing and collectively setting prices and price adjustment timelines.

    “Cartels are conceived, executed, and enforced by businesses to serve their commercial interests, and to the economic harm of consumers. In this matter, the steel firms illegally colluded on prices and margins as well as output strategies,” said Dr. Adano Wario, CAK Acting Director-General.

    Steel products such as bars, pipes, beams, and sheets, account for over 20pc of the total cost of constructing a house according to analysis by the regulator.

    The nine companies penalized for the price fixing include Nail and Steel Products Limited which will pay the state Ksh 22.8 million in fines, Brollo Kenya Limited which will pay Ksh 9.4 million and Blue Nile Wire Products Limited which has been fined Ksh 9.2 million.

    Others are Tononoka Rolling Mills Limited which has been fined Ksh 62.7 million, Devki Steel Mills Ksh 46.3 million, Doshi and Hardware Limited Ksh 41.6 million, Corrugated Steel Limited Ksh 87 million and Jumbo Steel Mills, and Accurate Steel Mills Limited which will pay Ksh 33.1 million and Ksh 26.8 million in fines respectively.

    “This penalty is the highest-ever imposed by the Authority and it should send a clear message that cartel conduct is illegal under the Competition Act. In a liberalized market like ours, the forces of supply and demand should signal prices, free from manipulative business practices. Agreements between competitors seek to defeat this fundamental facet of a free economy,” added Wario.

    The firms with the exception of Accurate Steel Mills, have been penalized for output restriction by agreeing to limit imports of certain steel components, thereby causing an artificial shortage that raised prices, the authority said.

    CAK says as part of the investigation, it is engaging five other steel firms in settlement negotiations as prescribed under section 38 of the Competition Act.

    The engagement is aimed at achieving a speedy and
    cost-effective resolution and a return of effective competition in the sector.

  • WorldSkills to honour 100 TVET students

    WorldSkills to honour 100 TVET students

    At least 100 students from Kenya’s  Technical and Vocational Education and Training (TVET) institutions have a chance to represent the country during the WorldSkills International Competition that will be held in Lyon, France from next month.

    This follows the launch of WorldSkills Kenya National Competition 2023 in which the students will compete in 19 skill areas among them, mechatronics and wielding.

    “We as a government are fully committed to promoting skills and talents of the youth of this country. The youth form an integral part of the Government’s agenda and through this competition, we aim to inspire innovation, and empower the youth of Kenya to shape a brighter and more prosperous future,” said John Tuwei, Acting Director, Directorate of TVET.

    Formed in 1950, in Spain, WorldSkills International has a membership of 85 countries.

    Kenya became the 84th member of WorldSkills International on October 13, 2020.

    Last year, Kenya bagged gold in the restaurant services category and a bronze in cooking during the WorldSkills Africa 2022 competition held in Namibia.

    “The quality of TVET in the country has tremendously improved and through this kind of competitions, our students will be exposed to the International market. We are grateful for the development and corporate partners who have joined forces to harness the skills of the youth in the country,” added Dr. Kipkirui Langat, Director General, Technical and Vocational Education and Training Authority (TVETA).

    The entrants in the the competition stand to gain industry-based developed test projects.

    The competition has been organized by WorldSkills Kenya, TVETA, in collaboration with Ministry of Education, Kenya National Chamber of Commerce and Industry (KNCCI).

    The four-day competition will be held at the Kenya School of TVET, Dedan Kimathi University of Technology, Boma International College of Hospitality and Technical University of Kenya.

  • EAC begins talks on Somalia’s membership

    EAC begins talks on Somalia’s membership

    The East African Community (EAC) on Tuesday began talks in Nairobi, the capital of Kenya, to admit Somalia into the regional economic bloc.

    Peter Mathuki, the secretary general of the intergovernmental organization, told journalists that the talks will be the final stage before Somalia can join the EAC.

    “We will deliver the report of the negotiations to the council of ministers as well as the summit of the heads of states of the EAC before the end of the year,” he said.

    The EAC member states include Burundi, Kenya, Rwanda, South Sudan, Tanzania, the Democratic Republic of the Congo (DRC), and Uganda.

    On January 25, the EAC sent a team of technical experts to Somalia to verify and assess the preparedness of Somalia to join the regional bloc as the eighth member.

    Mohamud Abdirahman Sheikh Farah, Somali minister of Planning, Investment and Economic Development, said that his country is keen to join the EAC because it already enjoys close socioeconomic ties with all members of the trading bloc. “We have also received a positive reception from the heads of state of all the EAC members,” Farah said.

    Rebecca Miano, cabinet secretary in Kenya’s Ministry for EAC, Arid and Semi-Arid Lands, and Regional Development, said that the EAC verification team has confirmed that Somalia meets the basic requirements of the EAC Treaty for admission of foreign countries into the economic bloc.

    Miano noted that during the negotiations, the EAC will highlight to the Somali delegation, the benefits, obligations, and commitments of partner states under the EAC Treaty which will be the basis for the negotiations in good faith by both teams.