Millions Risk Losing Out In New Huduma Namba Law - Money Weekly

The last week has been a week of mixed fortunes. For the formally employed, ending a week with a holiday and starting a new week with two holidays has been a great opportunity for rest and reset. 

For business owners, three holidays within a week were just too much. Meanwhile, it has been up and down for Form One parents preparing their children for their first day of secondary school.

Despite all that has been happening, the Money254 team has been here closely following everything happening in the world of money. Here’s our weekly roundup of all the top money news from the last seven days that impact how you earn and spend your money.

Lack of Huduma Namba to Lock Millions Out of NHIF Cover

Millions of Kenyans risk losing their National Health Insurance Fund (NHIF) cover over a new proposed law that requires all government services to use the Huduma Namba cards to authenticate an individual's foundational data before offering them services.

According to clause 9 of the Huduma Namba Bill, “any government agency that requires personal particulars of an individual shall, at the first instance, rely on the NIIMS database to authenticate the foundational data of such individual.”

National Interagency Incident Management System (NIIMS) is a system intended to create and operate a national population register as a single source of information about Kenyan citizens and foreigners resident in the country. Once registered, an individual is issued with a unique identifier called Huduma Number (Namba in Kiswahili) 

If the bill becomes law, all Kenyans will need to produce Huduma Namba cards to access government services, including NHIF services.

According to the NHIF, however, only 5.6 million Kenyans out of the 13 million registered NHIF members, and their 26 million dependents have been issued Huduma Namba cards. As it stands now, if passed, the new law would make NHIF cover inaccessible to the millions who are yet to receive their Huduma Namba cards.

NHIF has asked Parliament to amend clause 9 of the bill by deleting the words “at the first instance” in order to protect its members from losing their cover. The National Assembly Committee on Administration and National Security has endorsed NHIF’s amendment proposal, which is now awaiting debate in Parliament.

Safaricom to Hide Lipa Na M-Pesa Customer Details from Merchants

When you make a payment through Safaricom’s Lipa na M-Pesa, the merchant receives your details as part of their confirmation receipt, including your full name and phone number. However, some merchants have been accused of using this information to send unsolicited marketing messages, while others sell this data to third parties, creating a security risk for users.

In a bid to boost customer privacy, Safaricom has announced that starting June 2022, it will introduce changes that will protect customers’ information when they make payments through Lipa na M-Pesa.

Once the changes take effect, merchants will only receive a customer’s first name and a masked phone number. For instance, if a customer named Jane Doe makes a payment, the merchant will receive the following details [Jane, +2547XXXXX517].

The move will be crucial in protecting customers in a market where companies have been accused of showing little concern for customer privacy. According to a survey by Ernst & Young, 21.7% of Kenyan companies admitted to sharing their customers’ personal and financial data without seeking the customers’ approval.

Increased Lending Grows Bank Profits By 18% In Two Months

Kenyan banks reported an 18.8% increase in pre-tax profit in the first two months of 2022, which has been attributed to reduced provisioning for bad loans and increased lending.

According to data from the Central Bank of Kenya (CBK), pre-tax earnings for Kenyan banks rose from Ksh30.4 billion in the first two months of 2021 to Ksh36.1 billion in the first two months of 2022. This profit growth comes on the back of increased lending to the government and private sector as the economy continues to recover. 

Government credit grew from Ksh1.39 trillion in February 2021 to Ksh1.78 trillion in February this year, a 27.5% increase. Meanwhile, credit to the private sector stood at Ksh3.13 trillion in February this year.

Some of the sectors that experienced strong credit growth include transport and communication (24.1%), consumer durables (14%), business services (11.6%), trade (8.9%), and manufacturing (7.6%).

Six Out of 10 Kenyans Living In Debt

Data from a recently released financial health and inclusion report by Deloitte shows that close to six out of 10 Kenyans are living in debt, an indicator of weakening financial health among Kenyans.

According to the same report, only three out of 10 Kenyans have some money set aside for emergencies. Meanwhile, only four in 10 Kenyans have enough money set aside to make future investments.

The report also notes that Kenyans’ financial health has dropped from 39.4% in 2016 to 17.1% in 2021, while financial inclusion rose from 75.3% to 83.7% in the same period. Deloitte describes financial health as the degree to which an individual can meet all their current needs and maintain the same in the future.

According to the report, some of the factors contributing to poor financial health include poor knowledge of financial management, expensive banking and digital payments, credit and debt, and the low penetration of savings and investment products.

Risk-Based Loan Pricing to Be Delayed by CRB Listing Freeze

Kenyan banks have been pushing for a new credit pricing model that will see them vary the cost of credit based on a borrower’s risk level. However, the CBK directive to freeze credit reference bureau (CRB) listing for defaulters of sums below Ksh5 million could delay the implementation of this new model.

The CBK directive, which has been in place since November last year, was implemented following a presidential order on Mashujaa Day 2021 to ease access to credit amid Covid-19 recovery.

CBK has already approved switching to the risk-based credit pricing model for at least six commercial banks, including Equity Bank, Bank of Africa, Bank of Baroda, Bank of India, and Access Bank. However, the Kenya Bankers Association (KBA) is of the opinion that despite the approvals, it will be impossible for its members to implement the new model until the CRB listing freeze expires in October this year.

The KBA believes that switching to the new pricing model will unlock credit to the private sector. However, experts at Deloitte believe that the new model could choke credit supply to certain borrower segments.

Workers Rejoice Following 12% Increase in Minimum Wage

President Uhuru Kenyatta provided some reprieve for Kenyan workers by increasing the minimum wage by 12% during Monday's Labour Day celebrations.

Following the increase, the lowest-paid worker will earn Ksh15,120, an increase from the Ksh13,500, the minimum wage for the last three years. According to President Uhuru Kenyatta, the government’s decision to review the minimum wage will help cushion workers from the hike in living costs due to inflation over the last few years.

Other Money News

• The back-to-school rush starting this week is expected to increase remittances as Kenyans living in diaspora chip in to help their families and friends take children back to school. Data from global payments firm WorldRemit shows that remittances for April and May are expected to exceed the Ksh40 billion sent home in March.
• The government has banned the importation of used passenger buses starting from July 1 in a move that is meant to protect and promote local assemblers. The new regulations cover used mini, large, double-decker, single articulated, and bi-articulated buses. However, importation of micro-buses of not more than 7 metres in overall length is still allowed, provided they fall under the eight-year rule.
• The Higher Education Loans Board (HELB) announced that it had extended the 100% Penalty Waiver on Wednesday. The waiver, which was initially meant to run from March 1 to April 30, will now run till June 30, 2022. The loans board has urged its beneficiaries to take advantage of the waiver to clear their outstanding loans without incurring any penalties.
• The World Bank has announced plans to revise the global poverty line to $2.15(Ksh249) per day, up from $1.90 (Ksh220) per day. This means that individuals who spend less than Ksh249 per day will be considered to be living in extreme poverty. The revision is set to reflect the global rise in the cost of living over the last couple of years.