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Here’s how Kenya can unlock $6b impact capital

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By KRISZTINA TORA
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By putting in place investor-friendly policies and establishing a national advisory board to catalyse impact investment, Kenya can unlock $6 billion of capital to finance programmes aligned to the United Nations Sustainable Development Goals.

This was the conclusion reached at the inaugural Global Steering Group for Impact Investment, Kenya Impact Dialogue on December 10. More than 200 investors, entrepreneurs, policy-makers and development finance professionals convened in Nairobi for the summit. Impact investing is made into companies or organisations that have a social and environmental impact, and also yield financial returns.

An advisory board will work closely with the existing SDG Partnership Platform, a collaboration between the UN and Kenya’s government in support of its “Big Four Agenda — food security, manufacturing, affordable housing and healthcare — which also forms part of the 17 SDGs. The UN has already done extensive groundwork in relation to SDG3 on healthcare — work the board will be building on.

Working with investors and social entrepreneurs, we have launched 22 national advisory boards globally. They serve as platforms for private, public, and civil society actors to jointly create an enabling environment for impact investing.

One major success has been the establishment of wholesale funds to direct capital efficiently and productively to projects.

Wholesale funding occurs when a financial institution receives deposits from larger entities outside of traditional consumer and retail deposits such as governments or other financial institutions.

Inspired by the UK’s Big Society Capital, the $950 million impact wholesaler founded by GSG chair Sir Ronald Cohen, Japan is channelling $620 million per annum into a wholesaler, Canada is building a $560 million wholesaler, Australia and South Korea are each building $300 million wholesalers, Portugal is building a $65 million social innovation fund and South Africa’s wholesaler fund is expected to total $140 million.

A Kenya advisory board could work with the government to create a similar impact investment wholesale fund to boost the supply of capital.

One key recommendation contained in the Kenya State of Impact Investing Report, which we launched at the Kenya Impact Dialogue, is that the government should make the regulatory environment more investor-friendly. For example, policymakers should encourage foreign funds to register in Kenya, rather than abroad in countries such as South Africa or Mauritius, where tax incentives are more favourable.

Another action the government could take would be to recognise and define social enterprises. Currently, there is no recognition or definition of social enterprises, which have the option to register themselves as limited liability companies, sole proprietorships, not-for-profit organisations, co-operative societies and corporations.

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In the absence of a separate registration category for social enterprises, they prefer to register as limited liability companies as it gives them the opportunity to be listed on the national stock exchange in later stages of growth.

However, it also imposes an obligation on them to abide by same tax and regulations as other established businesses, which often creates additional financial burdens for these early stage enterprises.

Investors have the wherewithal to improve market fundamentals by combining different forms of capital and instruments. The majority of existing funds focus on equity, notwithstanding the increasing number of enterprises and deal closures are low; averaging around 20 for past five years.

Meanwhile, the current structure of investment, which is akin to the Silicon Valley model, needs to be adapted for Kenya. Different funding structures and instruments, including debt, mezzanine, guarantees and more patient risk-taking capital are required in this market. A mezzanine loan can be converted into equity if the borrower fails to repay. A financial guarantee is a promise to take responsibility for another company’s financial obligation if that company fails to meet its obligation.

Impact investors in Kenya are increasingly investing in the same companies, so much so that over 70 per cent of the capital deployed in the country in 2017 went to just five companies. There is a need for impact investors to widen their horizon and invest in companies outside of their usual network and outside of the major cities.

On the demand side, there is a need for increased awareness among social enterprises on the different instruments and mechanisms of impact investments. Many social enterprises are not aware of how they can benefit from the different instruments available on the market. As
a result, they end up only absorbing grants or traditional debt funding.

At the Kenya Impact Dialogue, we learned that the Kenya Private Sector Alliance, is already working on a social enterprise policy and legal framework. Kepsa has brought on board and formed a national committee consisting of Ashoka East Africa, British Council, ActionAid, GIZ, Academia, Thomson Reuters Foundation, Trust Law and others.

We therefore believe Kenya has a unique opportunity to support and attract more impact investment for local social enterprises and the larger regional impact sector capturing emerging impact investors, social enterprises, incubators and support providers.

But the demand far exceeds the support needed by entrepreneurs. With a national advisory board and investor-friendly measures firmly in place, Kenya could unlock capital at sufficient scale to drive an impact investment revolution, representing a win for investors and for its people.

Krisztina Tora is a market development director at the Global Steering Group for Impact Investment in England.

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Public officers above 58 years and with pre-existing conditions told to work from home: The Standard

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Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.

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However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
SEE ALSO: Thinking inside the cardboard box for post-lockdown work stations
Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
SEE ALSO: Working from home could be blessing in disguise for persons with disabilities
Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.

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Uhuru convenes summit to review rising Covid-19 cases: The Standard

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President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
SEE ALSO: Sakaja resigns from Covid-19 Senate committee, in court tomorrow

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Drastic life changes affecting mental health

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Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.

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Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.

Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.

The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.

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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.

In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020.  It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.

A study by Dr. Habil Otanga,  a Lecturer at the University of Nairobi, Department of Psychology says  that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.

The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.

KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.

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Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.

As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.

“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”

Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.

“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.

Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.

“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”

Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.

“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.

Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.

Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.

She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.

Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.

“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added

Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.

“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and  also engage in   reading that would  help expand their knowledge.

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