Expenditure on development projects in the first five months of the current fiscal year surpassed the target set by the National Treasury, pointing to increased economic activities which boost job opportunities for the expanding unemployed graduate youth.
A total of Sh203.1 billion was pumped into capital projects in the July-November period, the Treasury says in the draft 2019 Budget Policy Statement (BPS), Sh3.2 billion more than what it had targeted.
The bulk of the cash was, however, issued in October and November after development spending massively fell short of the Sh169.3 billion target in the previous three months by Sh101.2 billion, the Treasury said in the quarterly Economic and Budgetary Review for the first quarter (July-September) last November.
That means about Sh135 billion was disbursed to various development projects in October and November.
Underperformance in the absorption of development funds in the July-October period has largely been blamed on President Uhuru Kenyatta’s directive to State ministries, departments and agencies to finish projects already in progress before initiating new ones.
“The exercise to clean up the development project portfolio triggered by the presidential directive on inclusion of new projects in the budget also slowed down the uptake of development expenditures in the first quarter. This picked up strongly in the second quarter (October-December 2018) of FY 2018/19,” the Treasury says in the draft BPS statement.
Mr Kenyatta last July froze implementation of new projects by ministries and other State organs until ongoing ones are completed.
He directed that any new projects must be cleared by Treasury Secretary Henry Rotich first, adding that officials who defy the order will be held personally responsible.
“There will be no new projects that will be embarked on until you complete those that are ongoing,” the President said on July 20.
“Even if new projects are aligned to the Big Four they cannot be started without express authority from CS or PS of the National Treasury.”
Higher spending on development projects such as roads, water, power plants, real estate and electricity transmission lines stimulates economic activities, helping create job opportunities and grow government revenue, largely taxes.
The Treasury has not broken down expenditure by various ministries and departments in the draft BPS report, which will form the basis for the budget for the year starting July.
Treasury statistics in the monthly Statement of Actual Revenues and Net Exchequer Issues, however, shows the State departments of Transport and Energy posted the highest absorption rate of development funds in the five-month period through November.
The Transport department, charged with implementing projects such as the ongoing second phase of the standard gauge railway (SGR) from Nairobi to Naivasha, had the highest absorption rate at nearly Sh9.4 billion, or 75.2 per cent, of the Sh12.49 billion full-year budget.
The Energy department, which largely provides oversight in the building of power plants and transmission, absorbed 59 per cent, or Sh13.17 billion, of the Sh22.33 billion development cash it has been allocated in the current financial year.
Expenditure by the Department for infrastructure, however, remained the largest by size, with issues amounting to Sh16.37 billion or 22.6 per cent of the Sh72.35 billion estimates for 12 months through June 2019 to oversee such as roads and bridges.
Others with high absorption of development funds were Health (Sh5.42 billion of the Sh28.22 billion), crop development (Sh3.36 billion of the Sh16.76 billion), Interior (Sh3.33 billion of the Sh16.94 billion), Basic Education (Sh2.94 billion of the Sh9.25 billion) and University Education (Sh2.83 billion of the Sh10.31 billion).
Development spend by Department of Water and Sanitation in the five-month period was Sh2.56 billion of the Sh23.58 billion full-year estimates, while that for irrigation and ICT stood at Sh1.24 billion of the Sh5.79 billion and Sh1.01 billion of the Sh10.80 billion projection.
Overall, expenditure on development projects accounted for 24.5 per cent of the Sh829.1 billion spent in the period. That is short of the legal requirement for 30 per cent in three to five years under section 15 of the Public Finance Management Act of 2012.
“The government will continue with fiscal consolidation efforts. Deliberate steps will be undertaken to narrow the budget deficit and stabilise public debt, prioritise development expenditures while protecting social spending and investments,” the Treasury says in the draft BPS.
The government remains the biggest buyer of goods and services from the private sector, and reduced spending on projects hurts momentum in economy which is recovering from a five-year low in 2017.
State spending puts money in private hands through demand for raw materials, which ultimately creates new jobs.
Cement makers, steel manufacturers, contractors and the thousands of workers employed in the infrastructure pipeline benefit from public spending and usually feel the pinch of a drop in public expenditure on development.
Private sector activity, as measured by monthly Stanbic Bank Kenya’s Purchasing Managers Index (PMI), appeared to pick up towards the end of last year, closing at a high last seen in 2014.
The headline PMI Index — the measure of private sector activity such as output, new orders, employment and supplies delivery times — rose marginally to 53.6 in December from 53.1 ia month earlier.
A point above 50 denotes growth in overall business activity compared to the previous month, while a reading below that mark denotes a contraction in activity undertaken by firms.
“The Stanbic PMI closed the year strongly, recording the highest average since 2014. We believe that GDP growth remains on track to test 6.0 per cent year-on-year in 2018 and furthermore the good weather conditions in …(quarter four) will have underpinned the agrarian sector as well,” Stanbic economist for East Africa Jibran Qureishi said in a statement on January 4.
“Moreover, firms scrambled to clear backlogs of stock in December which subsequently boosted output, while surprisingly costs remained steady for firms during the festive season as well.”
Companies further reported increased export orders, indicating that firms experienced an influx of both domestic and overseas demand.
Kenya’s economic activities last year recovered from a five-year low in 2017 spurred by improved weather and a better investment environment following a March 9 truce between President Uhuru Kenyatta and Opposition chief Raila Odinga — popularly known as the Hand Shake.
“Growth momentum will likely be sustained in 2019, as healthy remittance inflows and a tighter labour market drive solid private consumption, while upbeat business confidence fuels a strong expansion in fixed investment,” Researchers at FocusEconomics, a Barcelona-based economic forecast and analysis firm, said on December 14.
BCCI: The bank ‘that would bribe God’
“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank. The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain.
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
East Africa celebrates top women in banking and finance
The Angaza Awards for Women to watch in Banking and Finance in East Africa took place Online via Zoom on 8th June 2021.
The event was set to celebrate the top 10 women shaping banking and finance across East Africa. The 2021 Angaza Awards, which will be a Pan-African Awards program, was also announced at the event.
Key speakers at this webinar were Dr Nancy Onyango, Director of Internal Audit and Inspection at the IMF; and Gail Evans, New York Times Best Selling Author of Play Like a Man, Win Like a Woman and former White House Aide and CNN Executive Vice President.
Dr Nancy Onyango advised women to deep expertise in their fields, spend time in forums and link with key players in that sector.
“Gain exposure with other cultures by seeking for employment overseas and use customized CV for each job application,” said Dr Onyango.
According to Gail Evans, women should show up and be fully present in meetings and not be preoccupied with other issues.
“Be simple and avoid jargon. Multi-tasking only means that you are mediocre Smart people ask good questions in a business meeting. Most women face drawbacks due to perfectionism, procrastination and fear of failure, said Evans.
She advised women to play like a man and win like a woman, be strategic, and intentionally make their moves to get to the top.
“For us to pull up businesses that have been affected by effects of COVID-19 pandemic, we need to re-invent business models, change the product offering and make more use of digital platforms,” said Mary Wamae Equity Group Executive Director.
Mary Wamae emerged top at the inaugural Angaza awards( East Africa) ahead of other finalists.
While women continue to excel in banking and finance, the number of that occupies top executive positions is still less.
“There is a gap for women occupying C suite level and it continues to widen in the finance sector. At entry level, there is still an experience gap for women,” said Nkirote Mworia, Group Secretary for UAP-Old Mutual Group.
She said that at the Middle Management level, women do not express their ambition. For this reason, UAP-Old Mutual has developed an executive sponsorship program to help women get to the next level.
Mworia added that most women hold the notion that top positions in management have politics and pressure.
“One needs leadership skills and not technical expertise to get to the top,” said Mworia.
According to Catherine Karimi, Chief Executive Officer and Principal Officer of APA Life Assurance Company, women need to focus on the strengths and natural abilities that they already have.
“Take risks and raise your hand to get to the high table. Find mentors along the way and develop your own brand and not compare yourself with others Focus on your strengths because it will make you move faster in the career ladder,” said Karimi.
Lina Mukashyaka Higiro, a Rwandan businesswoman and chief executive officer of the NCBA Bank Rwanda since July 2018, has three lessons for women who want to excel in banking and finance.
“Always spend at least 20 minutes each day reading, seeking genuine feedback from other staff members and widen your network,” Higiro told the webinar.
Women picked for Angaza awards
Mary Wamae, Executive Director, led this year’s Top 10 Women in Angaza Awards, Equity Group (Kenya)(2)Catherine Karimi, Chief Executive Officer, APA Life Insurance Company (Kenya)(3)Lina Higiro, Chief Executive Officer, NCBA Bank (Rwanda)(4)Elizabeth Wasunna Ochwa, Business Banking Director, Absa Bank (Kenya)(5)Joanita Jaggwe, Country Head of Risk and Compliance, KCB Group (South Sudan)(6) Millicent Omukaga, Technical Assistance Expert on Inclusive Finance, African Development Bank (Kenya)(7)Emmanuella Nzahabonimana, Head of Information Technology, KCB Group (Rwanda)(8)Judith Sidi Odhiambo, Group Head of Corporate Affairs, KCB Group (Kenya)(9)Rosemary Ngure, ESG & Impact Manager, Catalyst Principal Partners (Kenya) and(10)Pooja Bhatt, Co-Founder, QuantaRisk and QuantaInsure (Kenya).
The Kenyan Wallstreet, a financial media firm, partnered with Kaleidoscope Consultants to raise awareness of seasoned women shaping and influencing the sector through their organizations.
The Angaza Award criteria included assessing the applicants’ area of responsibility and contribution to firm performance. Professionals in Banking, Capital Markets, Insurance, Investment Banking, Fintech, Fund Management, Microfinance, and SACCOs were invited to submit their applications or nominations via the Kenyan Wallstreet Award Web page.
IFC in New Partnership to Develop Affordable Housing in Mombasa County
NAIROBI, Kenya, Jun 14 – International Finance Corporation, a member of the World Bank Group, has signed a new deal in support of affordable housing in Kenya.
The corporation has partnered with Belco Realty LLP, to develop a mixed use affordable living complex that will consist of 1,379 residential units and over 4,500 square meters of retail and commercial spaces in Kongowea, Mombasa County.
Together with the Kenyan firm, IFC says the partnership will help meet surging demand for housing in Kenya.
Under the agreement, IFC will help identify suitable international strategic partners to invest equity of up to $12 million, or Sh1.3 billion in Belco and to provide the company with the necessary technical support to develop the project.
The development, known as Kongowea Village, will be developed to foster inclusive and affordable community living within the city.
Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa says the project, which will be located on eight acres within the heart of Mombasa city, will aim to be a catalyst for wider city regeneration.
The project will be developed to meet IFC EDGE certification requirements and will incorporate the latest technologies in passive cooling, energy efficiency and water conservation to support sustainable urbanization.
Kongowea Village is expected to create 1,160 jobs and business opportunities during the three-year construction period and many more after completion of the project within the themed retail arcade.
“Access to quality housing is a growing problem in Kenya and across Africa,” said Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa.
“Developers often target the high end of the market, but this project is aimed squarely at the lower-income bracket. Helping Belco identify the right partners for this project is expected to attract more developers to Kenya and other parts of Africa to help meet rising demand for housing.”
“IFC‘s engagement with Belco will help Kenya support its rapidly growing and urbanizing population by increasing access to affordable housing. The problem is similar across most of Africa, where population growth and demand for quality housing are combining to outstrip supply. We are pleased to partner with a company such as Belco that is committed to contributing to solving this challenge,” said Emmanuel Nyirinkindi, IFC‘s Director for Transaction Advisory Services.
IFC’s partnership with Belco is part of its broader strategy to support better access to affordable housing in Kenya.
In 2020, IFC invested $2 million in equity in the Kenya Mortgage Refinance Company (KMRC) to help increase access to affordable mortgages and support home ownership in the country.