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Import tariffs increase seen slowing down global air cargo

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Eldoret International Airport
Workers pack goods for transport at the Eldoret International Airport. FILE PHOTO | NMG 

Global air cargo expansion will sharply drop to two percent in 2019 compared to this year’s 10 percent growth, according to a report released last week by the International Air Transport Association (IATA).

The slow growth is attributed to countries increasing their import tariffs to protect local companies. The US has imposed import tariffs on China — 25 percent on steel and 10 per cent on aluminium.

“The 3.7 percent annual increase in cargo tonnage to 65.9 million tonnes is the slowest pace since 2016, reflecting the weak world trade environment impacted by increasing protectionism,” read the IATA report.

“Cargo yields are expected to grow by two per cent. This is well below the exceptional 10 percent yield growth in 2018. Overall cargo revenues are expected to reach $116.1 billion up from $109.8 billion in 2018.”

Higher prices for imported goods could also persuade consumers and firms to switch to locally manufactured products thereby increasing domestic demand and reducing imports.

However, international firms are countering this by either setting up their business in the markets that have imposed protectionism measures or getting into strategic partnerships with local companies.

According to a 2018 research conducted by financial services institution, HSBC on the impact of protectionism, 28 percent of the global firms surveyed were looking at joint ventures and subsidiary companies to navigate any local barriers.

More than 6,000 firms participated in the survey with 70 percent of the companies in the Middle East and North Africa saying that governments were becoming more protective of their domestic economies.

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Some 68 percent of firms in Asia- Pacific noted the same while 61 percent of them in the US and 50 percent in Europe said that there was a rise in protectionism.

Companies are also engaging in e-commerce and electronic supply chains as a strategy of countering the increased import tariffs.

This year Kenya imposed 25 percent import tariff on Tanzania for products such as wheat flour while Dar es Salaam also issued a 25 percent duty on Kenya’s edible oils and cement.

These trade wars between countries could negatively impact the global economy.

In a 2018 study, conducted by management consulting firm, KPMG on the re-emergence of protectionism and its impact, if the rest of the world responds to the introduction of import tariffs on steel and aluminium by the US by implementing retaliatory tariffs of five percent on all manufactured goods, growth in the global economy would slow by approximately 1.3 percent.

Besides, increased tariffs on imports, Kenya is also set to report slowed growth in its air cargo next year due to a shortage of supply of flowers to international markets.

Horticulture exporters have already issued warning that it expects a shortage in flower exports due to delay in production. This will affect the supply to Europe, the country’s biggest market for flowers, during the peak season from December to February.

Moreover, flower export companies such as Oserian flower farm have already issued a notice to their stakeholders announcing that they will be a delay in flower production in the peak season due to delay in fertiliser supply to farmers.

“In the coming season, we expect a significant drop in the flower exports as farmers are getting limited fertiliser from the government which is affecting their production. Supply will be affected from Kenya which is the leading flower supplier to the European Union, holding 38 percent of the market share.

“About 150,000 employees may be rendered jobless due to the shortage,” said Clement Tulezi, the Chief Executive Officer of the Kenya Flower Council.

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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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