News and Analysis
November 22, 2024
It is that time of the week again when we look at the news headlines over the last seven days and dissect those that can affect your money.
Welcome to yet another edition of Money Weekly.
This week:
For this and much more. Let’s dive in.
Floods and landslides in Kenya have claimed nearly 200 lives since March and thousands of people have been displaced.
In Mai Mahiu, where flash floods killed at least 50, recovery efforts continue, with military personnel aiding search operations. In Kitengela, Red Cross workers are assisting marooned residents and stranded tourists. Several roads, including the Thika Superhighway, have had traffic disrupted for hours.
The devastating effects come even after Kenyan counties budgeted Ksh1.9 billion for emergency services in the 2023/2024 financial year but have yet to spend Ksh973 million of it. Only 34 out of 47 counties have set up emergency funds, while some, particularly in arid areas, have already exhausted their allocations.
Deputy President Rigathi Gachagua announced plans for a Ksh4 billion emergency fund, and the Kenya Red Cross has set aside Ksh2.6 billion to aid flood victims.
Floods have affected 24 counties, displacing tens of thousands ofpeople and disrupting economic activities.
A report by the Auditor General highlights significant shortcomings in the government's response to the floods.
The report highlights:
The report calls for a specific legal framework for flood management as well as the establishment of a centralised agency to oversee response efforts.
In the meantime, the Energy and Petroleum Regulatory Authority (EPRA) has instructed petrol station owners affected by flooding to cease operations immediately to safeguard public safety and petroleum product quality.
EPRA expressed concerns about potential damage to underground storage tank (UST) systems due to flooding, which could compromise product integrity and harm motor vehicles.
During the 59th International Labour Day celebrations at Uhuru Gardens in Nairobi, President William Ruto ordered an increase in the minimum wage to ensure fair compensation for workers' contributions to the economy.
The increase is aimed at cushioning workers against the cost of living which has gone up significantly.
The president directed Labour Cabinet Secretary Florence Bore to lead the process of raising the minimum wage by at least six percent, emphasising the importance of fairly remunerating workers.
He reiterated the government's commitment to complying with labour laws and ensuring fair pay and safe workplaces for all Kenyan workers.
However, the 6% increase in minimum wage was significantly lower compared to the 22% increase that Central Organization of Trade Unions (COTU-K) secretary-general Francis Atwoli was pleading for.
The increase, which is subject to negotiations, will see the minimum wage increase from Ksh15,000 to Ksh15,900.
A report by Siasa Place Kenya, a non-profit organisation, reveals that Kenyan digital workers are subjected to mundane roles and low pay compared to their counterparts in other countries.
According to the report, despite government efforts to promote digitisation and online jobs, only 39% of Kenyans have actively engaged in or expressed interest in digital jobs.
The report emphasises the need to update the country’s labour laws to protect youth from exploitation.
Siasa Place's Executive Director, Nerima Wako, notes that digital jobs in Kenya often pay poorly compared to those in the US or UK, leading to concerns of exploitation akin to slavery.
In response, Manyatta Member of Parliament Gitonga Mukunji plans to submit a Digital Labour Bill to address labour exploitation and update outdated labour laws.
Mukunji criticises current trade union leadership for failing to protect Kenyan workers, particularly those working for international companies through business process outsourcing (BPOs).
Kenya's national insurance penetration rate was recorded at 2.29%, significantly lower than the global average of 6.7% in a 2022 study.
Jackson Theuri, Britam General Insurance CEO and principal officer, attributes the low penetration to two major challenges facing the insurance industry.
Despite such challenges, Absa Life Assurance Kenya reported a 90% increase in headline earnings to Ksh862 million for the financial year ending December 31, 2023.
This growth was attributed to:
Kenya is looking to push for additional financing from the World Bank’s International Development Association (IDA), the branch of the World Bank that helps the world's low-income countries through grants and low-interest loans.
Meanwhile, the World Bank is warning that Central banks will not be relaxing their monetary policies any time soon due to the ongoing Israel-Gaza war. The Central Bank of Kenya raised the base lending rate to 13% in February from 12.5%, which it maintained in April.
Escalating Middle East Conflict to Impact Fuel Prices
Kenyans have been enjoying falling fuel prices for the last five months consecutively. However, this might change if the conflict in the Middle East escalates. This conflict largely affects fuel prices since the Yemeni Houthis are carrying out attacks on Red Sea shipping lanes, reducing the amount of fuel that can pass through the region, or forcing the ships to take the longer route through South Africa.
According to the World Bank, the recent attacks between Israel and Iran demonstrate an escalation in the war that could push fuel prices above $102 (Ksh13,460) per barrel, which is a 20% jump from the current $84 (Ksh11,084) per barrel. This will wipe out any gains made in the stabilising Kenyan shilling and bring fuel prices back up again.
Epra to Audit 4,300 Fuel and LPG Retailers
The Energy and Petroleum Regulatory Authority (Epra) is looking to conduct a technical safety check audit on 4,300 petroleum and liquid gas (LPG) retail outlets. The audit is also targeting the creation of an inventory of all petroleum and LPF retail outlets.
The liberalisation of the sub sector has yielded economic benefits but the rapid growth of these retailers has raised concerns about a disregard for safety by some operators, posing public and environmental safety challenges.
The government is looking to move to an automated cooking gas tracking system from the current system relying on receipts to enhance the fight against illegal refilling and non-compliant players in the sector.
Poultry Farmers Foresee Losses
If the proposal to import poultry products from the United States (US) goes through the Poultry Breeders Association of Kenya (PBAK), foresee losing Ksh172 billion annually. According to the association, this move will cripple the local poultry industry and affect over 400,000 households.
The deal is being pursued under the ongoing Strategic Trade and Investments Partnership (STIP). PBAK notes that the US is advanced in terms of poultry production technology, infrastructure, policy, access to resources, and availability of genetically modified organisms
Camel Farmers Told to Tap Into China Market
Camel dairy farmers in North Eastern Kenya have been encouraged to seize the opportunity in China's demand for camel milk. The President of the Kenya National Chamber of Commerce and Industry, Erick Ruto, revealed that China seeks nine million litres of camel milk annually from Kenya, potentially translating to annual revenue of Sh5.2 billion for Kenyan farmers.
He also called upon county governments in Northern Kenya to invest in supporting local camel milk dairy farmers, facilitating their entry into the global camel dairy market.
Sacco's Decry Cash Flow Issues
Counties' failure to remit deductions to Savings and Credit Cooperatives (SACCOs) has led to liquidity challenges for these institutions. Despite efforts to address this issue through policy and administrative measures, SACCO industry players continue to struggle due to the consistent failure of employer institutions to remit deductions.
The Sacco Societies Regulatory Authority (SASRA) Annual Supervision Report released in the third quarter of 2023 showed that various employer institutions owed SACCOs approximately Ksh2.7 billion in unremitted funds.
Container Price Surge: Data from the Container Price Sentiment Index shows an uptick in container prices from the beginning of 2024 to date. The increase in the prices of containers is likely to impact the prices of imports, possibly wiping out the gains made by the stabilising shilling. Container prices are currently averaging between Ksh275,994 and Ksh308,543 for a 20-foot container, compared to Ksh156,289 and Ksh159,113 in April last year.
TotalEnergies Dividends: TotalEnergies Marketing Kenya will pay a dividend of Ksh1.92 per share for the year ended December 2023 on or around July 31, 2024, on the register as of June 27. This dividend payment is a 46.5% jump from Ksh1.31 paid the previous year. This is a 17.4% growth in dividends from Ksh102.8 billion in 2022 to Ksh120.7 billion in 2023.
Kenya’s Super Rich: Knight Frank’s Luxury Investment Index has revealed some trends in how Kenya’s high-net-worth individuals (HNMIs) are investing their money.
CBK Reopened 10-Year Bond: The government has reopened a 10-year bond first issued in March and is targeting raising Ksh25 billion. The bond is being issued against the background of falling interest rates. The Central Bank of Kenya (CBK) in the March issue settled for a 16.52% return despite investor bids averaging 17.76%. This made the apex bank reject most of the offers, only accepting Ksh4.84 billion out of the offered Ksh23.9 billion. The CBK is likely to settle for an even lower rate with this reopened 10-year bond.
State zero-rates ethanol: Sugar millers receive a boost after the government zero-rates denatured ethanol. Zero-rated products are usually exempt from value-added tax (VAT). The move is to enable local producers to compete with cheaper imports. Currently, the country can produce over 73 million litres of denatured ethanol, which is used in products such as disinfectants, cleaning agents, printmaking, and solvents.
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