Development projects are the most affected in the Sh55.09 cut in the budget proposed by the Jubilee administration to fill the hole left following changes to proposed taxes including halving of 16 per cent levy on petroleum products.
Treasury secretary Henry Rotich has slashed development budget by Sh34.33 billion in the mini-budget to be debated by the National Assembly tomorrow, dimming economic growth prospects and slowing down creation of new job opportunities.
Project spending for the year ending next June is set to drop Sh642.90 billion from initial Sh677.23 billion.
The proposals will affect capital projects not directly related to the ambitious Big Four plan, which covers manufacturing, affordable housing, universal healthcare and food production.
The expenditure plan, if approved by the National Assembly, will see the Treasury spend Sh227.72 billion more on servicing the rising public debt than what State ministries, departments and agencies will spend on development projects.
The biggest losers in the development budget cut are departments for gender affairs and petroleum whose spend has been shaved by Sh2 billion and Sh1.5 billion, respectively.
“Pursuant to the provisions of the Constitution and the PFMA (Public Finance Management Act) 2012, the Cabinet Secretary has received the amendments of the Finance Bill from Parliament amending some tax measures which have financial implication on the budget estimate,” Mr Rotich says.
“As a result we have prepared supplementary estimates No. 1 of FY 2018/19 rationalising the expenditure to the extent of the revenue shortfall due to amendments in the Finance Bill approved by Parliament.”
Allocation to counties have been reduced by Sh9.04 billion to Sh304.96 billion, a move likely to hit non-priority devolved functions.
Overall, the 2018-19 budget has been cut to Sh2.97 trillion from Sh3.03 trillion initially.
The Parliament has been the hardest hit with Sh5 billion budget shave in the overall budget to Sh31.83 billion.
This comprises Sh2.65 billion cut in National Assembly budget to Sh19.21 billion and Sh2.35 billion for Parliamentary Service Commission to Sh12.62 billion.
“The resources are extremely scarce,” Treasury PS Kamau Thugge said last Thursday, emphasising that every ministry or department will have to justify the Big Four component for very it requests from the Treasury.
“We have quite significant amount of non-discretionary expenditure that has to be funded.”
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.