Today's business news...in Summary...01 August

Business
1

Kenya:

  1. Investors will continue paying the punitive fees for environment audits (NEMA)and levies to the construction regulator (NCA) for their projects despite the Treasury abolishing the charges in June. While the bulk of the tax measures took effect after the announcement of the Budget Statement on June 8, the project fees have remained unchanged making it costly to build homes, power plants and office towers……

  2. Investors sold back Treasury bills worth nearly Sh25 billion to the Central Bank of Kenya (CBK) just over a week ago, indicating those facing low liquidity were unable to borrow from the market hence the move to liquidate income generating securities. Big banks reluctance to lend small rivals said to be pushing small lenders to dispose of securities to plug a liquidity shortage….

  3. Two of the country’s large banks, Equity Bank and Barclays, are among the most expensive lenders in the country despite enjoying economies of scale, newly released data shows. Barclays Bank is the most expensive among large banks lending at an average 19.2 per cent followed by Equity at 19 per cent. The data was released by the Central Bank of Kenya (CBK) only days after MPs passed a law to cap interest rates….

  4. The government has revoked the 20 per cent excise tax on locally assembled vehicles, offering relief to an industry that had started reeling from the imposition of the levy.

  5. Kenya’s first oil truck leaves Turkana, marking the beginning of transport trials as Kenya moves closer to becoming an oil-producing country. Tullow Oil Company says it will transport crude oil by road for the very first time under the Early Oil Pilot Scheme (EOPS) from Lokichar in Turkana to Mombasa. The oil will be transported on two trucks and this will later rise to 20 trucks after the upgrade of the road is completed….

  6. The cost of living has increased to a three-month high in July due to rising prices of food and fuel. Official government data shows that inflation rose from 5.8 per cent in June to 6.39 per cent representing the highest rate since April…

  7. Prospective investors in Kenya’s real estate and stock market have been left with limited choices of where to put their money as a combination of economic and political factors continues depress. Industry experts say returns on the stocks and property markets have flattened and investors are now moving their money to short-term, risk-free Treasury bills and bonds, which guarantee a fixed rate of return….

  8. This week the Central Bank of Kenya offered 91 day Treasury Bills for a total of Kshs 4 Billion. The total number of bids received was 196 amounting to Kshs 3.74 Billion representing a subscription of 93.53%. Total bids accepted amounted to Kshs 2.67 Billion. The market weighted average rate was 8.671% and the weighted average of accepted bids which will be applied for non-competitive bids was 8.293% up from 7.919% in the previous auction.

  9. All is set for President Uhuru Kenyatta to preside over the commissioning of a multibillion-shilling fertiliser factory in Eldoret this week. The President will open Toyota Tsusho fertiliser factory as he embarks on his tour of the North Rift. The Sh103 billion fertiliser plant, the first of its kind in Africa, will manufacture 150,000 tonnes of subsidised fertiliser annually….

  10. Uchumi Supermarket will receive a bailout package of Sh1.2Billion from Kenya Government, says GOK Spokesman Manoah. Esipisu. He also said that management will be vetted and fresh audit of books conducted before release of the bailout package and those responsible for the collapse of Uchumi will also be prosecuted…

  11. Large depositors who have their money locked in Chase Bank will get to access it in August as receiver manager KCB Bank, the Central Bank of Kenya and Kenya Deposit Insurance Corporation begin a due diligence process that will unlock some of the deposits…

  12. A Bill whose passage is expected to pave the way for direct flights between Kenya and the United States of America will be tabled in parliament in August. Direct flights between the two countries are expected to bolster trade by $1.8 billion, with the fresh produce, textiles, handicraft and tourism sectors among the major beneficiaries….

  13. American online taxi hailing firm Uber has guaranteed its drivers a minimum peak-time and off-peak pay to shield them from any loss of income arising from reduction in fares that took effect in Nairobi last week. Uber drivers will earn an indemnity of between Sh500 and Sh450 for every peak and off-peak hour respectively that they fail to get ride requests when their Uber gadgets are online……

  14. Kenya Commercial Bank is locked in a dispute with a trade union over an attempt to alter the terms and conditions of its employees. There has been disquiet at KCB Bank Kenya after the regional lender issued new letters of appointment to 2,500 employees as part of a restructuring plan.

  15. Kenya’s aviation regulator has denied Kenya Airways’ low-cost airline subsidiary Jambojet a licence to operate international scheduled flights in the region. Its debut on the regional stage would have raised competition for rival carriers including Fly540, RwandAir, PrecisionAir, Ethiopian and UK budget airline Fastjet, which recently introduced flights between Nairobi and Dar es Salaam….

Africa

  1. Tanzania has agreed to acquire an 8% stake in the $2.5 billion crude oil refinery plant that the Uganda government plans to build in Hoima. The refinery is to be developed under a public-private partnership, with lead investor taking a 60 per cent stake and the Uganda government 40 per cent.

  2. The new 800km Addis Ababa-Djibouti railway line is on track to open fully this year. The $3 billion railway is expected to boost Ethiopia’s trade by reducing the goods movement duration from two days to eight hours….

  3. Transparency will soon become a must in East Africa’s extractives industry when new rules by the US Securities and Exchange Commission are enforced. The new rules require American registered firms to publicly declare money paid to governments for commercial development of oil, natural gas and other minerals. The rules are expected to reduce revenue sharing disputes between governments and communities in areas where extractive activities are carried out….

  4. Labour Force Survey 2016 Pilot report by the National Institute of Statistics of Rwanda (NISR) has indicated how unemployment rate representing the percentage of unemployed labour force is now at 13.2%…

  5. Tanzania is in negotiations with China for $6 billion funding to build a standard gauge railway line that will link major coal fields with Mtwara port and other East African countries. The 997km line to be completed in 2023, is expected to reduce the cost of transporting coal from southern Tanzania to the rest of the region by 72%….

Business quote for the day

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Credits- Various

Good day…

20 Likes
2

Good stuff…
But mainly for faxe mbirrionaires Kama Dj CK na Rollout… Yangu ni hiyo ya KCB na Ekwity

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We have some of the most stupid MPs known to mankind. Look at points 3 and 8. MPs cap interest rate. Lets say they cap it at 5%. Point 8 says Treasury Bond Interest rates average rate was 8.671%. So that means that a person can simply borrow money at 5% walk down the street and buy Treasury bonds that pay 8.67%, wait one year cash the Bond, pay back the loan at 5% and pocket the difference. WITH NO RISK taken. No president will ever sign such a law. He will bankrupt the country.
Another way of looking at this is the Treasury Bond rates indirectly determine interest rates. Banks charge a premium over the this interest rate to prevent you from doing what I have just described. Thats because banks routinely invest in Treasury bonds since it is a safe and guaranteed way of storing money.
Moses Kuria is right. We have way too many MPs with nothing better to do.

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4

Are they going to export the 2 truck loads of oil or it will be for local consumption?

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5

Thank you @Okiya.

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sande sana

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Haiya. The oil thing. Finally its starting to take shape… But two lorries. Watado nini na hiyo oil?

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2 lorries of crude oil, when refined, will yield 2 kasukus of petrol/diesel/whatever. Sasa, hio ndio itafanya kenya kuwa first world?

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They have passed a law that caps the interest rate at some figure above the CBK rates, the interest to be paid to you by the bank is also 70% of the prevailing CBR rate, sio kama saa hii depositors get paid 2% while the banks charge 19% on loans.

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the cap is 5% above the KBRR rate

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1.That bill won’t be signed. It is not workable with the current economic environment.
2.Within 30 days the banks will have lowered interest rates.

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Refer to Done Bill which proposed the premium to be not more than 4 points above TB rate

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Bill wont be signed. The rate above the Treasury Bond interest rate is simply the bank factoring in business costs to what is lends you. That is they factor in default costs in case the loan isnt paid off, administrative costs, legal, etc. There are many banks in Kenya in stiff competition. If one bank could make profit by only charging 1% above that rate, they would be doing it. If they do sign it, the smaller banks and the less effiecient ones will simply stop issuing loans.

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14

My guess is nothing will happen.

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My point was that there is a formula that can be used to cap without doing dictating or messing the industry. The cap can be even 10 points above tbr