KBC Channel 1

Author: Ronald Owili

  • Uganda secures immediate IMF disbursement totaling $120M

    Uganda secures immediate IMF disbursement totaling $120M

    Uganda is set to receive $120 million from the International Monetary Fund (IMF) under a credit arrangement with the multilateral lender.

    The immediate disbursement follows completion of a fourth review under the Extended Credit Facility (ECF) to the tune of $1 billion approved in 2021 by the IMF board.

    The funds are expected to help the East Africa Community (EAC) member state tackle near-term response to the COVID-19 pandemic and boost more inclusive private sector-led long-term growth.

    As part of the package, Uganda is also expected to address reforms focusing on key social spending, preserve debt sustainability, strengthening governance and reduce corruption, and enhancing the monetary and financial sector frameworks, IMF said.

    “The Ugandan authorities remain firmly committed to their economic program amidst a challenging environment. Most quantitative targets were met in December 2022 and March 2023. The Quantitative Performance Criterion (QPC) on the ceiling on the Bank of Uganda (BoU) net credit to government (NCG) was missed by a very small margin in March 2023. All structural benchmarks due between March and June 2023 have been met,” said Kenji Okamura, IMF Deputy Managing Director and Acting Chair.

    Completion of the fourth review now brings total disbursement to Uganda under ECF to $750 million.

    IMF projects Uganda’s economy to grow 5.5pc in the current financial year despite external shocks and tighter financial condition, and 6pc in FY2023/24.

    On the other hand, inflation is expected to reach 5pc as per the country’s central bank medium term target by end of the year.

    “The banking system is well-capitalized, and liquidity has rebounded, but the asset quality of some banks has deteriorated. Against this backdrop, safeguarding financial stability and strengthening the supervisory framework remain paramount. The current monetary policy stance is appropriate, but the BoU should stand ready to resume its tightening if signs emerge of a slower-than-expected disinflation. Exchange rate flexibility remains crucial to preserve external buffers,” added Okamura.

  • Casio opens first distribution store in Nairobi

    Casio opens first distribution store in Nairobi

    Japanese watchmaker, Casio, has opened its first store in Nairobi as the firm seeks to tap the growing luxury consumer market in Kenya.

    Casio Computer Company says it considers Africa to be one of its main focus areas and is specifically focusing on expanding its presence in timepieces, education, and electronic musical instruments.

    “We proudly open this store, dedicated to meeting the demands of our esteemed customers in East Africa. Their unwavering support and enjoyment of our timepieces have inspired us to continue delivering excellence,” said Takashi Seimiya, CASIO Middle East Managing Director.

    CASHIO G-SHOCK SERIES | CASIO

    In a bid to meet various segments of consumer style and tastes, the watchmaker says available series in the first store in East Africa through a partnership with its official dealer in Kenya, Top Time, it will include G-SHOCK Series, renowned for its ruggedness and durability, the Pro Trek Series, designed for outdoor enthusiasts with features like altimeters and barometers, and a Retro Aesthetic series that combines classic design elements with modern functionality.

    “Within these series, Casio offers a wide selection of elegant styles, ranging from stainless steel to rose gold and other appealing colors. Whether you prefer a robust and sporty look or a sophisticated and timeless design, Casio has a watch to suit your individual taste,” the firm stated.

    Kenya luxury market is among the fastest growing in the continent according to data by Statista.

    The data projects Kenya’s luxury goods revenue to hit Ksh 30.1 billion this year and register a compounded annual growth rate (CAGR) of 0.62pc until 2028.

    Revenue from sales of luxury watches and jewelry is also expected to reach Ksh 1.46 billion this year.

  • AfDB approves $23M loan for Ghana ship repair facility

    AfDB approves $23M loan for Ghana ship repair facility

    Prime Meridian Docks AssetCo has secured a loan to the tune of $23.04 million (Ksh 2.78b) for the construction of a ship repair facility in Ghana’s Tokodi port.

    The approval by the African Development Bank (AfDB) board will see the special purpose firm design, build, operate and maintain a world-class ship repair and maintenance facility in the Gulf of Guinea under a 25-year concession granted to the company by the Ghana Ports and Harbours Authority.

    The facility whose total cost is $137 million (Ksh 19b) will see PMD construct a 200-meter jetty, dredging of 300,000 cubic meters of rock in the port basin, and procuring and installing a 13,500-tonne lift capacity floating dock.

    “Vessel repair and maintenance is an underserved market on the continent. Investing in it will provide a more holistic approach to supporting maritime transport and its sustainability, which will accelerate regional integration and attract international trade and economic activity,” said Mike Salawou, AfDB Director for Infrastructure, Cities and Urban Development.

    Upon completion, the modern floating dock will offices, a warehouse, mechanical workshops for steel and pipe fabrication, electrical works, blasting and painting, and equipment maintenance, AfDB said.

    At least 400 permanent jobs are to be created from the project, 15pc of which are expected to go to women. This is significantly above the global average of 2pc in the maritime sector.

    The Board also authorized the syndication, on a “best efforts basis”, of additional financing of up to $11 million.

  • Court saves East African Cables from Equity Bank takeover

    Court saves East African Cables from Equity Bank takeover

    The High Court has barred Equity Bank from proceeding with a planned takeover of East African Cables over pending debt.

    Equity Bank through a notice dated June 16, 2023 had appointed an administrator to East African Cables over a Ksh 4.8 billion debt owed by EA Cables parent company TransCentury, prompting the electricity cables and conductors manufacturers to seek legal interventions.

    “I am glad that the brief setback that this unfortunate action had brought to the business is behind us and we can now focus on what we do best, providing quality cables to our customers across the region,” said Dr. Michael Waweru EA Cables Chairman.

    EAC obtained the injunction on the basis that the bank appointed an administrator while parties were engaged in negotiations.

    “We have been on what we viewed as positive discussions with the bank up until a day before the appointment of the administrator, therefore the extreme and unfortunate action taken by the bank came to us as a surprise. EAC is a renowned and astute business and we’ve been committed to meeting our obligations and continue to do so despite the prevailing challenging macro environment,” added Dr. Waweru.

    According EA Cables, the injunction which now puts to a stop to the appointment of the administrator and restrains the lender or their agents from performing any actions in the capacity of administrator of the company will allow the manufacturer to return to focusing on the business operation and strategy.

    “East African Cables is the undisputed number one cable brand in the region, we have built an admired brand that is powering nearly all homesteads, factories, streets in this country and beyond. We are synonymous with the electrification success of this country and are confident of our business model and the unwavering support from our customers, staff and shareholders. We are delighted to resume serving our customers in every corner of our country,” stated Paul Muigai, EAC Chief Executive Officer.

  • Five Kenya startups make the cut for Google’s Ksh 55B fund

    Five Kenya startups make the cut for Google’s Ksh 55B fund

    Five startups in Kenya are among 25 African-based startups which have been selected to join the Ksh 55.6 billion ($4m) Black Founders Fund by Google for Startups (GfS).

    The third cohort from Africa will be among 40 startups selected from Africa and Europe to join the fund which targets to address systemic racial inequality in venture capital (VC) funding by providing equity-free grants and mentoring to early stage black-led high-growth businesses.

    “Startups play a major role in advancing Africa’s digital transformation. We look forward to working with this group of innovative founders who are using technology to solve some of the most pressing challenges in Africa. The Google for Startups Black Founders Fund is committed to addressing the stark inequality in VC funding by providing Black founders with the resources and support they need to succeed,” said Folarin Aiyegbusi, Google Head of Startups Ecosystem in Africa.

    The Kenyans startups who stand to benefit from Black Founders Fund by accessing funding to help them scale and expand to new markets include Uzapoint, a web-based point of sale startups which helps digitize bookkeeping in the informal sector, Jumba which has developed a business-to-business platform for construction sector and Tushop which is an e-commerce platform for group buying of daily essentials in Kenya.

    “At Tushop, our passion lies in leveraging technology to empower Kenyan consumers and increase their buying power. Our ultimate ambition is to transform the way daily essentials and FMCG products are accessed, enabling individuals to save significantly. With the support of Google for Startups, we are one step closer to realising our goal of positively impacting the lives of millions of consumers in Kenya and beyond,” said Cathy Chepkemboi, Tushop founder.

    Others from Kenya include Zydii which has localised digital training solutions for African small and medium enterprises and Fleetsimplify which connects gig drivers to vehicle owners.
    Nigeria lead the team of selected startups with 10 entries, South Africa 3, Ghana 2, Uganda 2 and Senegal , Rwanda and Cote d’Ivore with one each.

    Each selected startup will receive up to Ksh 20.9 million ($150,000) in non-dilutive cash awards, up to Ksh 27.8 million ($200,000) in Google Cloud credits, ad support, mentoring by industry experts and connections within Google’s network.

    Since its inception, the Black Founders Fund has facilitated over Ksh 28.5 billion ($205m) in investor conversations.

    Google says this has sparked significant growth within the participating startups, with their combined monthly recurring revenue now exceeding Ksh 847.9 million ($6.1 million) a 7pc increase.

  • Court halts Equity Bank’s takeover of TransCentury

    Court halts Equity Bank’s takeover of TransCentury

    TransCentury Plc has received a temporary injunction from the High Court barring Equity Bank from appointing a receiver manager to oversee the firm’s operations.

    The Nairobi Securities Exchange (NSE) listed investment company was placed under receivership by the lender over unpaid debt.

    In a statement, TransCentury Group chairman Shaka Kariuki said the lender illegally appointed a receiver while negotiations between the parties were ongoing contrary to set out rules.

    “We are delighted to see that the court has seen the irregularity that marred this very unfortunate and ill intended process. We viewed the bank as a partner and have been in what we saw as positive discussions to arrive at an amicable agreement just a day before the receiver was appointed by the bank,” said Kariuki.

    TransCentury informed its shareholders that it obtained a court injunction on June, 16 2023 barring the lender from proceeding with the appointment of a receiver manager.

    Kariuki said the investment firm is still committed to meeting its obligations, having embarked on a Rights Issue transaction at the beginning of the year.

    “Despite the challenging economic environment that Kenya and the world at large faces, we raised money from our shareholders and were preparing to settle on an agreement favorable to the business and the bank,” he added.

    The injunction puts a stop to the appointment of the receivers and restrains them or their agents from performing any actions in the capacity of receivers of the company.

    TC says this will allow it to return to focusing on the business operation and achieving the strategy.

    “TC Group is steered by a very resilient team and I am confident that we shall recover the time lost as we continue focusing on our mandate of impacting Africa with transformative infrastructure,” stated Nganga Njiinu,  TransCentury Group CEO.

    TC which is an investor in energy, transport, water, industrial, and agriculture sectors is eying the Rights Issue to raise funds to be used to pay off remaining debt and access a working capital.

  • Sacco’s told to share ICT services to enhance inclusion, cut cost

    Sacco’s told to share ICT services to enhance inclusion, cut cost

    Savings and Credit Cooperative Organizations in the country are being urged to share their ICT infrastructure services in order to reduce cost and risks while at the same time increase financial inclusion.

    Speaking during the launch of Stima DT Sacco 10th branch in Nairobi, Cooperatives and Micro, Small and Medium Enterprise Cabinet Secretary Simon Chelugui said the ministry is working on amendments to the Sacco Societies Act to establish the Central Liquidity and Shared Services Facility that will ensure the sacco sector have access to the liquidity for inter sacco lending, access the national payment system and provision of common shared services to more than 5.54 million members of 176 registered in Kenya.

    “For us to focus and remain to true to our course, we have to share these information, communication and technology (ICT) services so that we are able to have a specialized services provider to handle these ICT issues and give you time to focus on provision of financial service,” said CS Chelugui.

    Sharing of services is backed to ensure cooperatives operating in the country spread cyber-security risks and emerging risks while at the same time improving the systems which smaller sacco without financial muscle to acquire the can access.

    Stima DT Sacco added three new branches in Nairobi, Kisii and Meru bringing total branches to 12. PHOTO | Courtesy

    Stima DT Sacco Chief Executive Officer Dr Gamaliel Hassan said the organization is embarking on expansion strategy that will see its more than 180,000 membership access financial services with ease. This comes as firms cut back of physical branches to focus on alternative digital channels.

    “There is indeed a reason and a need where we are saying although the world is becoming very digital and of course we are, we still think with only 12 branches we are putting up with an asset base of Ksh 55 billion, there is still room to grow some more branches. We look at branches becoming an outreach,” said Dr Gamaliel.

    According to Dr Gamaliel, its physical branches have been profitable and investment in alternative digital channels will ensure the two complement each other.

    Currently, Stima Sacco conducts 70pc of customer transactions on digital channels with the remaining 30pc being done via mobile, a figure which is projected to grow further.

    “As a fast-growing Sacco, it is imperative to continue seeking visibility and brand presence throughout the country. We have therefore embarked on an expansion drive to bring quality products and services to all Kenyans,” Albert Mugo, Stima Sacco Chairman.

    The sacco says opening of physical office braches forms part its decentralization policy it is currently implementing in its efforts to enhance accessibility, convenience and ensure the operation effectiveness and impact to its members.

    Stima DT Sacco has also opened two branches in Kisii and Meru bringing total branches to 12.

  • Jaswinder Bedi assumes KEPSA chairmanship

    Jaswinder Bedi assumes KEPSA chairmanship

    The Kenya Private Sector Alliance (KEPSA) has appointed Jaswinder Bedi as its new chairman.

    Bedi who was appointed during KEPSA’s 19th Annual General Meeting (AGM) held Thursday succeeds Flora Mutahi for the two year term.

    Until his appointment, Bedi served as the Vice-Chairperson of the Board since 2021.

    During the meeting, Brenda Mbathi of the American Chamber of Commerce, Kenya was also appointed the vice-chairperson.

    The changes which also saw the lobby group appoint new directors comes as it targets to embark on the implementation of its new business strategy over the next five years focusing on creating a globally competitive market by 2027.

    “The new business strategy challenges us into building partnerships and shared vision with the government and all other stakeholders to realize an enabling business environment that delivers Kenya’s global competitiveness,” said Carole Kariuki, KEPSA Chief Executive Officer

  • Hustler Fund gets additional Ksh 10B in FY2023/24 budget

    Hustler Fund gets additional Ksh 10B in FY2023/24 budget

    Treasury has proposed additional Ksh 10 billion allocation to the Hustler Fund which is expected continue providing affordable credit to individuals and Micro Small and Medium Enterprises (MSMEs) and encourage savings.

    According to National Treasury and Economic Planning Cabinet Secretary Prof. Njuguna Ndung’u, the Financial Inclusion Fund which was established in November last year has received exchequer disbursement amounting to Ksh 11 billion out of the Ksh 20 billion allocated in the current financial year.

    “This money has been revolving within the Fund, providing low interest loans at 8pc per annum to 16.07 million Kenyans, of which 7.1 million are repeat customers. So far, Ksh 30.8 billion has been borrowed from this revolving fund,” said Ndung’u.

    The fund which also acts as a saving scheme has seen total savings by borrowers top Ksh 1.5 billion as mandatory savings, while Ksh 17 million has been saved on a voluntary basis.

    “We have witnessed a phenomenal growth in the number of transactions that currently stand at 43.5 million. The largest number of times a single customer has borrowed from the Fund is about fifty times indicating strong traction to the Fund,” he added.

    During Madaraka Day, the government launched the second product of the Hustler Fund which targets groups such as chamas and saccos who can now borrow loans of between Ksh 20,000 and Ksh 1 million.

    Borrowers on the platform are currently charged an interest at the rate of 8pc annually based on their credit profiles.

  • Budget losers: Kenyans face costly fuel as Treasury hikes VAT to 16pc

    Budget losers: Kenyans face costly fuel as Treasury hikes VAT to 16pc

    The National Treasury and Economic Planning has proposed to increase Value Added Tax on petroleum products from the current 8pc to 16pc.

    The proposal which seeks to remove the preferential rate now sets up consumers who have been forced to dig deeper into their pockets to even more elevated prices beginning July 1, 2023.

    According to the National Treasury and Economic Planning Prof. Njuguna Ndung’u, the move has been necessitated by the buildup of untaxed credit among fuel importers which in the end deny government the much needed revenue.

    “The continued practice by government to subsidize cost of fuel by levying a preferential rate of 8pc distorts market yet the economy should be operating on the principles of demand and supply. Mr Speaker in this respect, I propose to the National Assembly to amend the VAT Act to remove the preferential rate on petroleum products so that the products will be subject to the standard VAT at 16pc,” said Prof. Ndung’u.

    The proposals to hike VAT on petroleum products comes despite rising opposing views from members of the public and other stakeholders.

    In the past, the government had been forced to spend more than Ksh 60 billion on fuel subsidy programme, a move President Ruto said was unattainable.

    “if the anomaly is not corrected at the earliest, the build-up of credits will continue to increase and should the Government seek to charge VAT at the standard rate in the future, it would take years for the Government to collect the much-needed revenues from this sector since the credits have to be exhausted before the businesses start paying VAT,” he added.

    In the last fuel review published Wednesday by the Energy and Petroleum Regulatory Authority (EPRA), a litre of super petrol was reduced by KSH 0.66, diesel by Ksh 1.12 as a litre of kerosene shot up Ksh 0.35.

    Those who also stand to lose in FY2023/24 budget are winners in betting, gaming, prize competition and lotteries who will have to pay excise duty at the rate of 12.5pc from 7.5pc on their winnings, a move treasury expects to discourage gambling activities.

    Treasury in a move to protect and spur local fish production has slapped fish importers with an excise duty tax on imported fish. Importers will now pay excise duty at Ksh 100,000 per metric tonne or 10pc of the excisable value, whichever is higher.

    Manufacturers of powdered juices who have not been subjected to excise duty tax will now be charged excise duty at rate of Ksh 25 per kilogram.

    Treasury has also proposed the introduction of excise duty on imported sugar at the rate of Ksh 5 per kilogram excluding the sugar imported or purchased locally by registered pharmaceutical manufacturers for use in the manufacture of pharmaceutical products.

    In a move to discourage alcoholism, betting, gaming, lottery and prize competition, Treasury is also proposing to introduce excise duty at the rate of 15pc of the excisable value on fees charged on the advertisements by all televisions, print media, billboards, and radio stations in promoting the activities.

    Cement manufacturers can now breathe a sigh of relief after the government moved in to shield local industry from stiff competition by cement importers who will now pay higher tax on the product.

    “To protect them from unfair competition and promote this industry, I propose to the National Assembly to introduce excise duty on imported cement at a rate of 10pc of the excisable value or Ksh 1.50 per kilogram whichever is higher,” said the CS.

    Other losers include furniture importers who excise duty at the rate of 30pc of the customs value excluding the furniture originating from EAC countries.

    Importers of paints, varnishes, and lacquers will also be charged excise duty at the rate of 15pc of the excisable value on the imports.