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EDITORIAL: MPs must stop populism and vote with a conscience

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Parliament in session
Members of Parliament in session. FILE PHOTO | NMG 

Will Members of Parliament stop populist drama, quick fixes to weighty matters and a pandering to factional interests that prevents them from getting to the depth of issues and make decisions only in the interest of those they represent?

This is the question that is occupying the minds of the majority of Kenyans as Parliament convenes this afternoon to vote on President Uhuru Kenyatta’s proposed austerity and tax measures meant to get the country out of a difficult financial situation.

It must be said that underlying this whole situation has been the Executive’s refusal to live within the country’s means and Parliament’s utter failure to play its oversight role that has allowed profligacy to become part of the national budgeting framework. For it is this sloppiness and failure in oversight that has seen MPs pass successive annual national budgets with huge financing deficits, whose result has been heavy borrowing – and ultimately heavy indebtedness.

In fact, the pricing of government borrowing (the base rate) forms the largest segment of total cost of credit in Kenya – and that comes out of the huge budget deficits approved by MPs. That our parliamentarians do not see this as their problem and still have the audacity to go round and enact legislation that caps interest rates is grossly insincere.

Even more unsettling is the current shedding of crocodile tears in Parliament over the austerity measures President Kenyatta has proposed to deal with the current dire situation.

The refusal to quit the arena of parochial personal interests that is being exhibited in insistence that avenues of wastage such as the CDF is not part of the austerity is disappointing.

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When the deal is done, MPs will wake up to the fact that their narrow and personal interest-driven view of the situation will have let them pass a budget that is extremely troubling to the people they represent. In lieu of making the required budget cuts, parliamentarians will discover that they basically mortgaged ordinary citizens, who will live with heavy taxes on basic services and goods such as money transactions, airtime and kerosene.

Having – by commission or omission – allowed the Jubilee administration to live beyond its means, MPs are now faced with a catch- 22 situation in which they either must take the bitter pill of austerity and big budget cuts or accept the painful tax measures.

That is the only way the country can meet its huge debt obligations – standing at Sh870 billion this year – and remain with some resources to keep the government afloat.

Besides, the Executive, which is the originator of this crisis, must style up and re-evaluate the large expenditure it has in the pipeline, including the Big Four projects.

While we have no doubts in our minds that the projects, especially the housing bit, have the potential of kick-starting the economy through the multiplier effect, our current situation demands that we must reassess our needs and work for right timing.

For now, Kenya needs to resist the temptation to go for grand projects such as the proposed building of the Nairobi-Mombasa expressway being pushed by the Americans as well as put Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor project in the freezer.

Besides clamping down on deficit-inducing projects, serious checks on rampant wastage must be put in place. This is particularly urgent in Chinese-funded projects that are now all the rave—where public officials cut deals that grossly inflate costs and leave the taxpayers with a huge burden.

And finally the fight against corruption must proceed in earnest to stop wanton theft of the little resources available.

For there is no better way to ease the tax pain than stopping wastage.

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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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