Nathan
Simple, outgoing entrepreneur
Digital mobile bank loans default rates. The country’s lenders lobby group, Kenya Bankers Association (KBA) recently released a report indicating of up to 21% of digital loans were not repaid between 2015 and 2018. The report did however not reveal how much the association’s members had given out as digital loans. This default rate is more than twice the average ratio of non-performing loans through conventional borrowing, standing at 10.2% over the same three-year period. The higher non-performing digital loans have triggered the increase in the number defaulters reported to one of Kenya’s three credit reference bureaus, diminishing the borrowers’ chances of being able to borrow more. A scheme of avoiding defaults has been introduced by the borrowers who tap loans from a number of firms to settle loans owed to rival digital lenders. This grows the borrowers’ debt and ultimately leads to their negative listing on Credit Reference Bureaus (CRBs).
Love this Post? Share on : Nairobi overshadows other counties in insurance premiums - Blog. Various un-harmonized tax policies Kenya. We briefly looked at the un-harmonized tax policies recently introduced and causing jitters between the taxpayers and the Kenyan taxman in this article. Diving deep into the details, let’s peruse through some of these policies to find out the “devil” in them the saying goes, “the devil is always in the details”. Withholding tax on winnings Betting firms have stuck out their guns claiming mis-interpretation by Kenya Revenue Authority (KRA). The former has been withholding 20% of the positive difference between winnings and the staked amount and later remitting it to the taxman while KRA is of the view that 20% withholding tax should be on all the money in the gamblers e-wallets.
Housing Levy Delays by court injunctions and admission have seen this fail to kick off after public outcry on the announcement of its implementation. Robinhood Tax Tax on returnable containers Excise duty on cigarettes Love this Post? Kenya’s slump in global tourism competitiveness ranking - Blog. Kenya has slipped two spots to 82nd against last year’s position according to a Tourism Travel Competitiveness survey carried by the World Economic Forum (WEF) released recently. This drop has been seen as a result of the recurrent cholera outbreaks that saw the government take action against roadside eateries and closure of some restaurants. Apart from these hygiene concerns, the capital, Nairobi has been steadily escalating as one of the most expensive destinations in the world over the years currently ranked as the costliest in East Africa and 14th in the continent.
The WEF survey, covering 140 countries shows Kenya as lagging in tourist service infrastructure and ICT readiness, resulting in its decline in the overall enabling environment ranking. Appearing position 106 globally in terms of ICT preparedness is a sharp contrast against the nickname “Silicon Savanah”. New un-harmonized tax policies pile pressure on KRA revenue goals. The recent tax policies designed by the National Treasury have created an animosity between the Kenya Revenue Authority (KRA) and taxpayers mainly due to the interpretation of tax clauses with the latest victims being betting firms. These new policies are usually introduced during the start of every financial year even as treasury continuously comes under pressure to cut on national debt and increase revenue.
In the middle of the betting firms and the taxman dispute is withholding tax arrears of shs. 61 billion whereby each has a different interpretation of “tax on winnings”. The situation paints a grim picture of the consultations between KRA and taxpayers in successfully understanding newly introduced tax policies. During the release of its revenue performance report of the financial year 2018-19, KRA indicated that tax policies introduced the previous year raised shs. 48.2 million a margin short of the predicted and anticipated shs. 62.9 million. Love this Post? Kenya ranks highly to expatriates amid security concerns - Blog. The East African business hub, Kenya has yet again improved its ranking as a destination for foreign workers after leaping 15 places within a year in the latest survey done by global network of expatriates InterNations.
The Expat Insider survey ranked Kenya at position 36 out of 64, a major improvement since last year’s ranking. This is majorly due to improvements in every index other than Personal Finance Index where the country dropped from 44th to 53rd. The country also ranked 7th in the easiest nation for expats settlement but showed up in the bottom places in matters safety and security at 58th. Security issues have plagued the country every now and then, the last one coming in January at an expats popular 4 star hotel DusitD2 alongside Riverside 14 Drive.
According to the report, more than 33% of expats worry about the country’s political instability. The annual report usually gets expat insights from 20,000 expat respondents in 64 destinations worldwide. New income generation strategies by local commercial banks. Bank customers paid Shs. 84.1 billion in fees, commissions and service charges in the first half of this year through June even as the lenders devised new channels of boosting their revenue to compensate for the lower interest charged on loans. The half year banking sector data analysis shows that 39 out of 40 Kenyan banks non-interest income increased by Shs. 12 billion during this period helping them recover from slimmer interest margins. This non-funded income realized the fastest growing revenue stream driving their after-tax profit growth by 14.2% to Shs. 67.12 billion in the said duration.
The banks’ core revenue stream, customer loans interest went up by only 1.3% in the period to stand at Shs. 145 billion while on the other hand, government securities interest income rose by 9% to stand at Shs. 66.6 billion. Fees and commissions from forex trading and handling of the growing remittances from abroad have also helped the banks grow their non-interest earnings. Love this Post? Big gainers in Kenya’s currency switch - Blog. Commercial banks in Kenya have emerged as top beneficiaries of the switch to new shs. 1,000 notes amid the rush to beat the October 1st deadline. This has handed the banks volumes of deposits thus increasing their liquidity for onward lending to borrowers.
In June alone, the banks gained shs. 25 billion in deposits which they lent to their preferred low risk borrower, the treasury while still starving individual households and businesses of loans. Speaking at a media briefing organized by the Kenya Business Guide in Nairobi, Mr. Ken Gichiga, a chief economist with Mentoria Economics said the banks’ refusal to lend to individuals is a key barrier against the economic impact that the currency change would have had were the cheap deposits lent to enterprises. The banks’ refusal being seen as a protest to interest rate cap law passed three years ago, Mr. Gichiga said that unless this changes, individuals and SMEs are unlikely to reap from the demonetization. Financial inclusion hurdles in Kenya.
Mainstream banks are being given a run for their money by mobile money banking in Kenya according to the financial access research done by FSD Kenya in July 2019. The research also shows that over 80% of the Kenyan populace are now financially included, representing a triple reach in just over a decade. This means that only about 11% do not use financial devices at all even as the informal sector contributes much of this figure.
Noting that the high cost of financial transactions is still a huge hurdle to complete financial inclusion, the report divided the country into 13 regions with the capital, Nairobi leading at 96% financial inclusion, Mombasa at 94% and the Central Rift being second runner up at 88%. The most improved of regions was the North Eastern, where inclusion jumped from 25% three years ago to 84% this year, mainly boosted by remarkable mobile money penetration in the arid region. Love this Post? Benefits of mobile infrastructure sharing - Blog. Infrastructure sharing has been a subject of discussion among the telecommunications industry for quite a while now. In fact, this already exists whereby the industries share the broadband space resources by purchasing each other’s redundancy.
Redundancy in this context is simply an alternative route for data and information transfer in the case of service outages due to different factors like fiber cables cut among others. The payments space has also used the above like in the case of Visa, among the largest global payments technology company announced a project to establish an agent switching scheme involving six commercial banks which enabled a banking agent to offer services for all the signed up banks from a single device. It is much easier and cost effective in the sense of devices used, advertisement merchandise among others. This however has to work in tandem with a behind-the-scene reconciliation framework, done by the owner of the device, determining who owes the other.
FinTechs advised to thoroughly test products before launch, CBK. Innovators in the financial technology sector alias FinTechs have been advised by the Central Bank of Kenya (CBK) governor Patrick Njoroge and cautioned against rushing to launch products without proper testing and verification. The financial services sector chief regulator insisted on taking time to develop with special focus on addressing particular problems amongst consumers.
Dr. Njoroge was speaking during a two-day Afro-Asia FinTech festival that recently concluded. The first of its kind, the Afro-Asia forum brought together an estimated 1500 delegates comprising of regulators, innovators, financiers and academicians. Referring to the success of M-Pesa, the mobile money platform run by Vodafone’s local run enterprise as Safaricom Ltd that has boosted Kenya’s global reputation in FinTech, he urged patience among developers. Mr. Kenya has been a major destination of funds invested into FinTechs in African alongside South Africa and Nigeria. Love this Post? Projected mobile devices penetration in Kenya - Blog. The East African country is set produce up to nine million new mobile subscribers in the next half a decade according to latest sector review report from the Communications Authority (CA) of Kenya.
The report shows that mobile subscribers in the country has hit a total of 51.03 million and is expected to jump to 60 million by the year 2025 providing almost 50% of the 167 million fresh subscribers forecast in Sub Saharan Africa. GSMA’s report titled Mobile Economy Sub-Saharan Africa (2019) shows the region will have over 600 million unique subscriber base by the same year. Apart from Kenya, other key markets are Nigeria, Ethiopia, Democratic Republic of Congo and Tanzania.
The report also shows that around 239 million people, equivalent to 23% of the population access the internet through their mobile phones on a regular basis. In five years, mobile operators in Sub-Saharan Africa will invest $60 billion in their networks, almost a fifth being represented by 5G technology. Positive effects of the finance bill 2019 on REITs (Part 1) Real Estate Investment Trusts (REITs) have failed to gain its expected traction since introduction four years back in 2015 contrary to it being hailed as a game changer in the property market.
Stanlib Fahari I-REIT is the first and the only one to be listed in the Nairobi Securities Exchange (NSE) thus far while Fusion Capital’s attempt fell short of the minimum investment required by the Capital Market Authority (CMA) to qualify for listing. Due to this situation, the government looks to salvage this situation through the Finance Bill 2019 which proposes to amend section 20 of the Income Tax Act to exempt REITs investee companies from the obligation. This is likely to boost the REIT industry as it will ease the structuring of how REITs hold their real estate investments. Currently, the act only exempt REITs from income tax without extending the exemption to subsidiaries and investee companies wholly owned by them (REITs). Love this Post? Local towns attain SEZ status - Blog. Naivasha, Mombasa and Machakos towns are set for a major transformation after the Government of Kenya set aside a total of 9,000 acres of land in the three towns as Special Economic Zones (SEZ’s) even as it steps up efforts to boost manufacturing in the country.
The gazettement happened last Friday officiated by the Trade and Industrialization cabinet secretary Mr. Peter Munya. This means the zones shall enjoy special tax and infrastructure which will in turn facilitate a wide range of activities like storage, export and re-export. 1000 acres in Maai-Mahiu, Nakuru county, 5000 acres in Malili ranch that hosts Konza City, Machakos county and 3000 acres in Dongo Kundu in Mombasa county contribute to the named SEZ’s. The cabinet secretary for the East African Community (EAC), Mr. A number of studies have indicated that over 120 countries in the world have SEZ’s that have contributed to over 50 million direct jobs.
Tax refunds latest updates. Kshs. 14.2 billion has been refunded to a number of companies in Kenya by the Kenya Revenue Authority (KRA) as being tax refunds, thanks to the Kenya Private Sector Alliance (KEPSA) who have been lobbying for the payments arguing that once done, will result in a cash flow boost thus spurring activity in the private sector. Confirmation from KRA indicate that the said tax refund payments amounting to shs. 14.2 billion have been disbursed over the period between July 2018 and June 2019.
Shs. 11.1 billion of this had been paid out in the last quarter of the financial year 2018/2019, that is April to June 2019. KEPSA chief executive, Carole Kariuki further expressed optimism on the clearance of the past five-year balance of shs. 56.9 billion still pending thus stimulate the much needed expansions and factory upgrades on Kenyan businesses and in turn ignite an annual turnover growth of up to shs. 50 billion. Love this Post? Share on : How to start a business in Kenya - Blog. Research: This is among the most important aspects of this subject as you need to find out how the business will generate income and time taken to break even and start making profits.
This brings out information of what to expect in the Kenyan market, consumer reception of the idea, business locality for optimum growth, competition and the strategies to beat them. Capital: Identifying source of capital should ideally follow research process. Personal Savings, loans from financial institutions or investors, borrowing money from friends and relatives, economic groups/chamas, government sponsorship like Uwezo, Youth and Women Funds are some of the sources of capital locally. Potential: There have been many local startups turned SME’s and even big businesses that have already conquered the odds of the Kenyan business market and made it big in their respective areas of business.
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