If there is one thing that significantly transformed Kenya’s socio-political and economic landscape in 2018, it can only be the March 9 political truce between President Uhuru Kenyatta and opposition leader Raila Odinga — popularly known as ‘the Handshake’.
It pulled Kenya back from the brink, cooled the excruciating political heat that followed the contested August and October 2017 presidential elections, put the country on the path of reconciliation and created space for a resumption of economic activity that had come to a near standstill.
The handshake came just four months after Mr Kenyatta was controversially sworn in for a second and final term following a repeat election that Mr Odinga’s opposition alliance boycotted and dismissed as a farce.
Just five weeks earlier, Mr Odinga and his opposition supporters had put the country on a cliff-hanger with his January 31 swearing-in as the ‘’people’s president’’ at Nairobi’s Uhuru Park amid threat of bloody clashes with security forces.
But when they stood on the steps of Harambee House, the Office of the President, in central Nairobi on March 9 to announce the truce, the two leaders offered a diagnosis of what ails Kenya that did not surprise many. Defusing ethnic competition, strengthening devolution, inclusivity, avoiding divisive elections, security and shared prosperity is all Kenya needs to be at peace with itself and continue in its journey of improving the lives of its citizens.
The two protagonists turned friends then went on to announce that their rapprochement would mean an end to the violence, bitterness and political instability that followed the disputed elections and put the economy on the path to recovery.
They were right. Weeks and now months since the handshake, Kenya’s business climate has stabilised and the economy, though struggling with major non-political challenges, remains on the growth path.
“The truce helped the economy, and stopped the disintegration of business associations,” said Nairobi lawyer Charles Kanjama even as he acknowledged that major challenges such as the ballooning national debt remain.
Kenya’s delicate tourism sector was one of the early beneficiaries of the truce that saw a steady arrival of thousands of foreign visitors, earning the country some valuable dollars that ultimately contributed to the shilling’s stability. This was the very first piece of the handshake’s ‘peace dividend’ that was then followed by key sectors such as the stock market.
The average daily traded turnover at the Nairobi Securities Exchange (NSE) rose 31 percent to Sh868 million in the six months to June compared to a similar period in 2017, setting up stockbrokers and their agents for higher commission earnings.
Ultimately, the Kenyan economy got enough headroom to expand by an estimated 6.3 percent in the first six months of 2018 offering hope for more jobs. That was until September when the government muddied the waters with the introduction of an eight percent value added tax on petroleum products that set inflation on a roll.
The Kenya National Bureau of Statistics (KNBS) data indicated that a rebound in the agriculture and a stable macroeconomic environment in the first half of the year helped lift the economy as the knocks of last year’s prolonged electioneering and drought faded away.
Kenya Private Sector Alliance (Kepsa) chief executive Carole Kariuki said the truce between Mr Kenyatta and Mr Odinga had boosted efforts to stabilise the economy and gave businesses breathing space from the political heat that hurts business and investments.
The Kenyan economy ordinarily takes a dip every five years as businesses hold back investment decisions awaiting the outcome of the ever contested elections.
“The truce enabled the private sector move into 2018 with renewed optimism and confidence as calm returned following the turbulent year that was 2017.” Throughout 2017, economic activity had buckled under the weight of a biting drought that crippled farming, and the elevated political uncertainty that characterised the bruising presidential contest as the country headed to the August polls – putting on hold investment decisions.
That, together with the debilitating effect of a sharp drop in loans to the private sector following the September 2016 introduction of a law capping interest rates, resulted in the slowest economic growth in five years at 4.9 percent.
Thanks to the handshake that had improved to 6.3 percent by the end of the second quarter of 2018.
Ms Kariuki said the business community, in partnership with the government, was building up on the gains from the truce to work on “targeted policy and business reforms”. That has since put Kenya firmly on the path of progress earning the country a better ranking (61) in the World Bank’s ease of doing business report and the third best in Africa.
“As we usher in 2019, we aspire to leverage on the momentum, work in partnership with all stakeholders and focus on the country’s ambitious development goals, including the Big Four agenda to stimulate further growth and development,” Ms Kariuki said, adding that “2019 is the year we define our future and put Kenya on path to economic supremacy.”
Meanwhile, the National Treasury has upgraded Kenya’s economic growth projection this year to six percent from 5.8 percent in June, largely banking on renewed private sector confidence and increased agricultural output.
Besides, heavy rains in the second quarter of the year portend good tidings for the agricultural sector that has made Treasury secretary Henry Rotich quip that growth could touch a seven-year high.
“Economic recovery is on course, reflecting a return to stability and renewed confidence following the conclusion of the lengthy electioneering process in 2017 and improving weather conditions,” Mr Rotich said.
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.