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Cement maker Portland sends home hundreds of staff

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PAUL WAFULA

By PAUL WAFULA
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East African Portland Cement (EAPCC) has declared its entire workforce redundant, effectively firing its entire staff and asking them to reapply under new terms.

In an unprecedented retrenchment decision that has shocked the employees, the cement maker said it has been incurring losses of up to Sh8 million every day and could not continue that way.

“In the last three years, the company’s market share has drastically reduced, impacting negatively on sales and subsequent profitability,” a leaked internal memo signed by its acting managing director Stephen Nthei said.

“This may be attributed to many reasons, key amongst them being increased competition and inadequate working capital,” the memo added.

Mr Nthei said he was in a meeting and is yet to return telephone calls to clarify how many staff will eventually be fired, but the move is set to see hundreds sent home.

But in its most recent financial report for the year ending June 2018, the firm had a total staff count of 936. Out of this, 448 were permanent and the remaining 488 were on contract.  

The loss-making firm, which is majority owned by the government, has also blamed its poor performance on the dilapidated plant and machinery, which it says is in dire need for modernisation to give it a competitive advantage.

“These basic challenges touch on the company’s ability to meet crucial performance indicators including staff costs,” the memo reads.

Consequently, the company says it is now faced with the need to restructure its operations, which will include a staff rationalisation programme “to balance the institution’s running costs and current levels of productivity.”

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“This process will, unfortunately, render jobs redundant. In the spirit of fairness and in regard of the service rendered by the affected staff, this exercise will be done within the provisions of section 40 of the Employment Act and collective bargaining agreement,” the firm said.

Mr Nthei says all positions in the company will be declared redundant and all employees let go.

He adds that all jobs will be reconfigured in line with a leaner organisation structure.

The action by Portland marks a new high in the ongoing sackings in corporate Kenya. No firm has taken a similar action of letting all staff go in the recent past, but it appears the cement maker has taken the action to shield itself from political interference.

According to the terms of termination, staff will be given a notice period according to their individual contracts.

They will also be given severance pay for 30 days for every year worked as well as payment of all accrued gratuity to the date of separation.

They will also be paid their accrued leave days.

They will then be encouraged to compete for the few positions that will be created in the reorganisation. 

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House Prices Decelerate as Demand Remains Depressed

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NAIROBI, Kenya, May 26 – The price of houses continued to decline in the first quarter of 2020 in a trend compounded by constrained ability of potential buyers to afford homes
currently on offer in the market, according to the Kenya Bankers Association House Price Index (KBA-HPI).

According to the Index, house prices decelerated by 0.54 percent in the reviewed period,marginally reversing the decline by 0.07 percent from the 0.61 percent negative growth rate
reported in the fourth quarter of 2019. By the KBA-HPI measure, house prices have remained in the deceleration path for the fifth consecutive quarter.

‘’While the market remained largely depressed, the marginal easing was supported by the supply-demand interaction with a leaning towards more demand in a relative context,’’ the
KBA-HPI indicates, adding that demand shifts in the quarter were based on concluded sales, which rose by 13.95 percent.

The sale numbers point to a market where bungalows accounted for a 33 percent demand increase while the demand for bungalows and maisonettes went down by 95.9 percent
and 57.1 percent respectively during the quarter. The trend, according to the Index, reflects buyers’ adjustments with affordability being a key concern in the housing market.

‘’The decelerating price trend is evidence of a property market with a distinct lack of momentum and characterized by a sign of normalization of house prices as the market
comes into balance after a prolonged period of sustained price growth,’’ noted KBA
Research and Policy Director Jared Osoro.

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Other key drivers of prices in the period included geographical location, with houses in Region 3 attracting higher prices as compared to Region 2 and Region 1. (Region 1 includes Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau and Embakasi, while region includes Thindigua (Kiambu Road), Kiambu, South B, South C, Kabete, Komarock, Imara Daima, Membley, Buruburu, Rongai and Waiyaki Way (Uthiru, Regen, Kinoo, Kikuyu) among others.)

Further, homeowners sought a larger plinth area, more bedrooms, and bathrooms, which attracted higher prices.

While the presence of a back-up generator and other amenities attracted higher prices, home buyers preferred low-density buildings. Unlike previous quarters where apartments
dominated house demand, townhouses were the most preferred in quarter one of 2020 at 45 percent followed by apartments ( 33 percent) and maisonettes (12 percent).

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WHO warns of ‘second peak’ in areas where COVID-19 declining

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WHO warns of ‘second peak’ in areas where COVID-19 declining

Mike Ryan, Executive Director of the World Health Organisation (WHO)
Mike Ryan, Executive Director of the World Health Organisation (WHO), attends a news conference at the United Nations in Geneva, Switzerland May 3, 2019. FILE PHOTO | REUTERS 

Countries where coronavirus infections are declining could still face an “immediate second peak” if they let up too soon on measures to halt the outbreak, the World Health Organization said on Monday.

The world is still in the middle of the first wave of the coronavirus outbreak, WHO emergencies head Dr Mike Ryan told an online briefing, noting that while cases are declining in many countries they are still increasing in Central and South America, South Asia and Africa.

Ryan said epidemics often come in waves, which means that outbreaks could come back later this year in places where the first wave has subsided. There was also a chance that infection rates could rise again more quickly if measures to halt the first wave were lifted too soon.

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“When we speak about a second wave classically what we often mean is there will be a first wave of the disease by itself, and then it recurs months later. And that may be a reality for many countries in a number of months’ time,” Ryan said.

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“But we need also to be cognizant of the fact that the disease can jump up at any time. We cannot make assumptions that just because the disease is on the way down now it is going to keep going down and we are get a number of months to get ready for a second wave. We may get a second peak in this wave.”

He said countries in Europe and North America should “continue to put in place the public health and social measures, the surveillance measures, the testing measures and a comprehensive strategy to ensure that we continue on a downwards trajectory and we don’t have an immediate second peak.”

Many European countries and US states have taken steps in recent weeks to lift lockdown measures that curbed the spread of the disease but caused severe harm to economies.

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Equity withdraws proposed dividend declaration and payment due to market uncertainty

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NAIROBI, Kenya, May 26 – The Board of Directors of Equity Group Holdings Plc, the largest bank on the Nairobi Securities Exchange by market capitalization, has withdrawn its recommendation of a Ksh. 9.5 billion dividend payout to its shareholders.

The withdrawal of the dividend payout speaks to the Board’s assessment of risk, post balance sheet date of December 31, 2019 and of the Group’s approach to prudent risk mitigation and management.

The COVID-19 global health pandemic has led to a great lockdown which has induced a complex and multi-faceted global crisis of health, economic, and social challenges of an unprecedented magnitude.

The pandemic’s effects have created a significant drop in the global GDP, and a substantial loss of employment leading to an economic recession which economists are projecting will evolve into a global depression worse than the Great Depression of the 1930’s. The global economic outlook has worsened considerably since the beginning of the year.

The United Kingdom has entered a severe recession last experienced in the 17th Century, while the United States unemployment rate is expected to reach 25% by the end of 2020 with 39.6 million people already unemployed. The most recent global growth projections from the International Monetary Fund (IMF) have revised the global economic outlook to below the 2.9% achieved in 2019 from an initial projection of 3.3% to -3.0% (negative 3.0%) of GDP growth rate, which they feel is optimistic.

Cautiously, the IMF also projects that if the pandemic fades in the second half of 2020 and if policy actions taken around the world are effective in preventing widespread bankruptcies, extended job losses, and system-wide financial strains, global growth could rebound to 5.8% in 2021.

“The Equity Group Holdings Board took a conservative approach that recognizes the emerging unquantified risk of the pandemic and opted to preserve capital in the face of the prevailing uncertainty,” said Dr. James Mwangi, the Group CEO and Managing Director. He added that, “A strong capital and liquidity position gives us the strength and capacity to cushion our business and accommodate and walk with our customers during these challenging times”.

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Further, the Board would like to encourage the Bank’s customers to seek opportunities to innovate in the age of the pandemic, and to keep looking for growth possibilities even in this trying time in order to preserve cash and capital, and to not just survive the crisis but to be ready to thrive in the New Normal.

By withdrawing the recommendation for a dividend payout the Board is exercising financial prudence so as to conserve cash to enable the Group to respond appropriately to the unfolding crisis in terms of supporting its customers, and to be able to direct cash resources to potential opportunities that may arise as economies in which Equity Group Holdings operates begin to recover.

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“If the economic crisis mutates into a financial crisis, Equity Group will be well placed to weather the challenge with a strong capital base, strong liquidity and an agile balance sheet that improves its leverage, and would allow the financial services group to shield and accommodate its customers throughout this period of uncertainty,“ said Dr. Mwangi.

He added, “However, should the crisis not play out as anticipated, the Board will explore various options and make suitable recommendations that will enhance shareholder value.”

With this approach, the Group leadership and management can focus on strategically positioning the business, in order to protect and preserve its customer base through loan accommodations and rescheduling/restructuring to enable them to go through the prevailing turbulence while at the same time preserving cash to shore up the financial revival and growth of its customers’ businesses post the COVID-19 crisis.

The Board continues to evaluate the potential impact of the pandemic on the Group and to formulate and implement strategic plans to mitigate any effects, and will, in the usual manner ensure that it keeps the shareholders and other stakeholders informed.

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