World Bank’s Warning on Kenya’s Shadowy PPP Deals as IMF Speaks on Finance Bill 2024

Wednesday, December 11, 𝟐𝟎𝟐𝟒

In today’s money news, the Business Daily reports that the IMF has distanced itself from public backlash over Kenya’s Finance Bill 2024, emphasizing that revenue measures are the government’s sole decision. IMF Deputy Managing Director Nigel Clarke clarified that the fund provides advisory support to help Kenya achieve fiscal consolidation and macroeconomic stability, but specific policy choices remain with Kenyan authorities. The Finance Bill, which sparked violent protests earlier this year, has been criticized for bearing perceived IMF influence. Clarke’s visit to Kenya included discussions with President William Ruto and key financial officials, aiming to refine future IMF engagements and support Kenya’s economic reforms while respecting local feasibility and sovereignty.

Cabinet Secretary Wycliffe Oparanya has issued a stern warning to Sacco managers against using borrowed funds to pay dividends, calling such practices unsustainable and harmful as reported in The Standard. Speaking at Kuscco’s Annual Leaders’ Summit, he emphasized that Saccos facing losses must not distribute dividends and that managers who do so will face legal consequences starting next year. With over Ksh1 trillion in member deposits, the Sacco sector is critical to Kenya’s financial ecosystem. However, cases of mismanagement, such as recent incidents involving Kuscco, highlight the need for robust oversight and governance. The government plans to enforce stricter audits and financial safeguards under the Cooperatives Bill 2024 to protect members’ savings and restore trust.

The World Bank has warned Kenya against non-transparent public-private partnership (PPP) deals, citing risks to public trust following the cancellation of a Ksh27 billion project linked to India’s Adani Group as reported by the Business Daily. The lender emphasized the need for competitive bidding to prevent backlash and ensure accountability. Privately initiated proposals (PIPs), which bypass open tendering, have raised concerns about corruption and inefficiency. With Kenya’s public debt surging, the government has increasingly sought private investors for infrastructure projects. The World Bank urged stricter adherence to procurement rules to maintain investor confidence and avoid public unrest over opaque agreements.

Co-op Bank's digital loan disbursements surged to Ksh56 billion by September 2024, driven largely by pay advances accessed by salaried workers as reported by Business Daily. This marks significant growth compared to last year, reflecting increased reliance on short-term credit options. The loans, offered under its "EasiAdvances" program, saw a drop in interest during the pandemic but have rebounded as more employers reinstate full pay. The digital lending sector continues to grow, providing quick financial solutions for employees while adapting to shifting economic conditions.

According to the Star , phone flashing fraud is threatening Kenya’s Buy Now, Pay Later (BNPL) financing model, which has boosted smartphone penetration to 68.3%. The practice, involving illegal software modifications to bypass payment security, has caused losses exceeding Ksh100 million and forced some companies to withdraw popular phone models. Sales have plummeted, while online tutorials and collusion with defaulting customers fuel the problem. In response, firms are enhancing security, tightening KYC processes, and focusing on less expensive models, though these measures strain legitimate dealers. Industry leaders are calling for stricter enforcement and consumer education to safeguard the BNPL ecosystem.  

Citizen reports that the Africa Bitcoin Conference, held in Nairobi, explored Bitcoin's potential to drive economic growth across Africa, with experts like Jack Dorsey and Christian Keroles emphasizing its ability to combat currency devaluation, corruption, and financial exclusion. Bitcoin's decentralized and transparent nature was highlighted as a tool for economic liberation, particularly in regions where traditional financial systems are inaccessible. Kenya, with the third-largest number of Bitcoin users in Africa, is leading the charge through startups like Gridless and Bitcoin Dada, positioning itself at the forefront of the digital currency revolution.