World Bank report says Kenya will save up to Sh2.5 billion monthly from reduced local and foreign trips by employees of national government, counties and parastatals
Civil servants are missing out on Sh2.5 billion in travel benefits and subsistence allowances monthly after restrictions imposed to curb the spread of coronavirus suspended meetings and out of town assignments.
The World Bank in its latest review of Kenya’s expenditure says the country will save up to Sh30 billion in the year to June 2021 or Sh2.5 billion monthly from civil servants reduced local and foreign trips — which often involve lavish travel allowances.
The pause in meetings has denied employees of the national government, the county governments, and parastatals opportunities to boost their wages through perks such as mileage, sitting and subsistence allowances earned from local and foreign travels.
The untaxed allowances have the effect of more than doubling an employee’s pay, making the civil service the preferred employer for many Kenyans.
“With continued limitation of daily subsistence allowance (DSA) and travel-related costs, the government could save up to Sh30 billion in the second half of FY2019 and first half of FY2020 as a result of restrictions imposed to contain the spread of Covid-19 on domestic and foreign travel, training and workshops,” said Felipe Jaramillo, the country director for Kenya, in the report.
The civil service looks set to save additional billions of shillings following the work-from-home directive given that hospitality and training cost taxpayers Sh15.1 billion in the year to last June or an average of Sh1.25 billion monthly.
Employers have pushed their staff to work from home in the wake of the Covid-19 pandemic, which has drastically changed the way business is conducted.
Kenya suspended international passenger travel, closed schools indefinitely, closed bars and golf clubs, imposed a daily dusk-to-dawn curfew and banned public gatherings to curb the spread of the virus that has infected 10,294 people and killed 197 locally.
President Uhuru Kenyatta last Monday announced a phased reopening of the country from the Covid-19 lockdown, lifting restrictions on travel in and out of the Nairobi Metropolitan Area, Mombasa and Mandera and allowing air travel to resume.
But the Treasury says that restrictions on meetings, travel and trainings for civil servants will remain in the coming months, denying public servants fat perks.
The World Bank reckons that public servants use the travel perks to enlarge their salaries.
“While daily subsistence allowances (DSA) paid in connection with domestic and international travel fall under ‘other goods and services’ rather than the wage bill, DSA appears, at times and in part, to be used to supplement formal remuneration,” Mr Jaramillo said.
The highest-ranking public servant is entitled to Sh22,000 for a day’s stay in Naivasha, Mombasa, Kisumu, Nairobi, Kilifi, Lamu and Kwale — explaining why these towns have become popular with government retreats.
The lowest-cadre worker travelling to these towns is entitled to a Sh4,200 allowance per day.
Senior civil servants earn Sh18,000 per day for retreats held in Nyeri, Eldoret, Kericho, Kakamega, Kilifi, Embu, Nanyuki, Nakuru, Lodwar and Garissa. The lowest-ranking officials earn Sh3,500.
The deal gets rosier for civil servants travelling abroad who receive an average of Sh50,000 per day in allowances.
The allowances structure shows that the payouts are higher for visits to the more frequented places like Arusha in neighbouring Tanzania and Addis, the African Union headquarters (ranging between Sh60,930 and Sh21,150), while rarely visited places like war-ravaged Afghanistan attract the lowest stipends of between Sh51,750 and Sh16,110 per day.
The Treasury singled out overseas trips — which often involve hefty travel allowances and huge entourages — and hospitality or entertainment spend by government departments — as examples of wasteful spending.
Spending on foreign and local trips setback taxpayers Sh12.5 billion in the year to June 2019, up from Sh3 billion five year, reflecting a rise of 18.7 percent.
Central government hospitality spending has tripled from Sh3.9 billion in the year to June 2014 to Sh9.8 billion last year. Counties spend undisclosed billions on entertainment like to conferences and training.
Parliament suspended all foreign travel effective March 13 and directed that all conferences, retreats and workshops be held within precincts of Parliament in Nairobi in the wake of the virus outbreak.
Committee meetings have also been curbed, save for those that touch on budget and health that a critical in allocating cash and shaping policy decisions in the fight against coronavirus.
This has stopped the allowances gravy train given the perks have the effect of doubling the MPs basic salary, which stands at Sh580, 000 monthly.
The total take-home for Kenyan MPs rose to Sh1.1 million per month when perks from mileage, sitting and responsibility allowances are factored in.
Foreign and local trips cost taxpayers Sh33.4 billion in the year to June 2019, up from Sh20.3 billion five years ago.
World Bank pushes G-20 to extend debt relief to 2021
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.
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.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
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.
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.
Scope Markets Kenya customers to have instant access to global financial markets
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.
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.