A bout a fortnight ago, Kenya’s banking industry woke up to merger talks between NIC Bank and Commercial Bank of Africa (CBA), a move that could tilt the balance of power among the country’s big banks and increase competition for deposits and government business.
Whether the new bank will be listed on the Nairobi Securities Exchange — since the proposed merger is between listed NIC Bank and non-listed CBA — depends on consent between the two lenders.
“That is a decision to be made by the two entities. They have just started discussions and we have not heard from them yet. There are a lot of procedures, consultations and processes to be followed. But it is our desire that they be listed,” said NSE chief executive Geoffrey Odundo.
If successful, the merger between the two mid-tier banks would create the country’s third-largest bank by assets at Ksh444 billion ($4.44 billion) with a customer base of 38 million.
The new bank would be in a pole position to wrestle the likes of KCB, Equity and Co-op Bank in the scramble for government deposits and securities.
Co-op Bank would move from third to fourth position in terms of asset base.
The proposed merger is still subject to shareholder and regulatory approvals.
The EastAfrican has learnt that talks on the proposed merger between the two competing lenders have been going on in the background since 2015, with the boards of the two banks evaluating the viability of the move.
Market analysts say the proposed merger would disrupt the banking industry.
“We expect to see a shift in the banking industry as a result of this merger. Ultimately, this will drive innovation in the sector, and we expect other banks to review their business models to survive, particularly in an environment of controlled interest rates,” said Daniel Kuyoh, an analyst at Alpha Africa Asset Managers.
NIC and CBA currently focus on asset finance and serving corporate, high net-worth and retail customers.
CBA’s strength is in corporate and high net-worth clients and retail business through its M-Shwari platform, while NIC is strong in asset financing and the retail business.
“We expect the new bank to come up with a business model that takes into consideration the differentiated product offerings of the two banks,” said Mr Kuyoh.
More banks are leveraging technology to grow deposits, improve customer relations, issue advances and loans as well as transfer funds using mobile platforms and the Internet.
The growth in the use of smartphone technology has created a new distribution channel that has left banks searching for mobile strategies to make online banking available on small devices.
“It is the view of the two boards that a potential merger would bring together the best in class retail and corporate banks with strong potential for growth in all aspects of banking and wealth management,” the banks said in a joint statement.
The proposed bank is expected to have a strong digital proposition and a robust corporate and asset finance offering.
“Such a group will be better placed to seize emerging opportunities in Kenya and the region,” said the statement.
Retail banks are embracing new technology by shifting transactions from the branch to online or mobile channels to save costs.
According to consultancy firm Deloitte, retail and commercial banking should continue to grow at a healthy pace.
According to Deloitte’s Banking Outlook Report (2018), banks should capitalise on the shift to a mobile-centric world by reorienting targeting strategies, product portfolios, and delivery models.
NIC bank currently has regional operations in Uganda and Tanzania, while CBA entered the Rwandan market through the acquisition of the Rwandese subsidiary of Uganda’s Crane Bank earlier this year.
CBA is also planning to expand to other markets such as Mozambique, DRC and Ethiopia through an online presence.
It is argued that Kenya’s banking landscape is headed for increased mergers and acquisitions after the National Treasury and Central Bank said the industry needed fewer, stronger banks to ensure financial stability.
Currently Kenya has about 42 banks including those under liquidation and receivership.
However, 20 small banks control just 8.7 per cent of the banking business, eight big banks control 65 per cent of the banking business, and 11 medium-sized banks have a 25 per cent market share.
Public officers above 58 years and with pre-existing conditions told to work from home: The Standard
Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.
However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
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Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
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Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.
Uhuru convenes summit to review rising Covid-19 cases: The Standard
President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
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Drastic life changes affecting mental health
Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.
Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.
Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.
The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.
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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.
In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020. It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.
A study by Dr. Habil Otanga, a Lecturer at the University of Nairobi, Department of Psychology says that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.
The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.
KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.
Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.
As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.
“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”
Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.
“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.
Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.
“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”
Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.
“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.
Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.
Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.
She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.
Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.
“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added
Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.
“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and also engage in reading that would help expand their knowledge.