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Central Bank posts Sh4.6bn deficit on stronger shilling

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CBK building in Nairobi
CBK building in Nairobi. FILE PHOTO | NMG 

The Central Bank of Kenya (CBK) posted a deficit of Sh4.6 billion in the year ended June when the strengthening of the shilling saw the institution book large unrealised losses on its dollar holdings.

The bank had reported a surplus of Sh17.5 billion the year before.

CBK’s foreign exchange losses in the review period stood at Sh18.6 billion, overshadowing higher interest income and reduced interest and operating expenses.

The shilling traded at 101.05 units to the dollar at the end of June 2018 compared to 103.71 units at the end of June 2017, representing an appreciation of 2.63 percent against the greenback.

“The strengthening of the Kenya Shilling against the US dollar over the fiscal year 2017/18 was largely supported by strong foreign exchange inflows into the domestic market as well as investors seeking to participate in the securities market,” CBK said in its annual report.

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The bank added that the dollar weakened steadily through late 2017 and into early 2018 amid uncertainties with regard to US economic policies and “a growing appreciation among investors for the improving fundamental prospects outside of the US.”

Before factoring in relative currency movements, the bank had an operating surplus of Sh16.1 billion in the review period compared to Sh9.9 billion a year earlier.

CBK’s total interest income surged 39.1 percent to Sh20 billion, buoyed by higher reserves and rising interest rates on dollar-denominated fixed income assets.

“Interest income rose due to the higher interest rates on US dollar denominated reserve instruments plus higher reserve levels,” CBK said.

The bank’s official reserves rose steadily to $8.9 billion in June 2018 compared $8.5 billion in June 2017.

Average yields on one-year US treasuries, meanwhile, rose from below one per cent in early 2017 to the current rate of 2.63 per cent as the Federal Reserve continued with its quantitative tightening policy.

CBK’s lending to the government and banks earned it interest income of Sh3.2 billion and Sh3 billion respectively.

Its interest expenses dropped 48.7 percent to Sh881 million, partly due to the benchmark Central Bank Rate (CBR) dropping from 10 percent in 2017 to 9.5 percent in June 2018.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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