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Inflation hits 12-month high due to VAT on fuel

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The rate is the highest in 12 months, an
The rate is the highest in 12 months, an indication that that the impact of VAT on fuel is sieving into the economy. FILE PHOTO | NMG 

Kenya’s inflation increased to 5.7 per cent in the month of September from 4.04 per cent the previous month due to increased taxes on petroleum products.

The rate is the highest in 12 months, an indication that that the impact of VAT on fuel is sieving into the economy.

Data from Kenya National Bureau of Statistics (KNBS) released Friday showed that all the broad baskets used to measure inflation recorded an increase, pointing to the multiple sectors that felt the 16 per cent Value added Tax (VAT) that has since been reduced to eight per cent.

The statistics office said that transport index increased by 7.99 per cent compared to the previous month and 17.29 per cent compared to a similar month last year.

“This was mainly on account of increase in the pump prices of petrol and diesel which triggered increase in prices of other transport components,” said KNBS in a statement.

Matatus were charging Sh449.77 per 250-kilometre journey, up from Sh416.75, according to KNBS data. When compared to last year in September, matatu prices are up 18.5 per cent.

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Price of kerosene averaged Sh109.25 per litre, being 27.2 per cent higher than it cost in August. Compared to September last year, this commodity is now 67.2 per cent more expensive. This even as the price of charcoal rose by 2.6 per cent to Sh141.24 per four kilograms. When compared to a similar month last year, charcoal prices are up 72.5 per cent.

“Charcoal prices increased drastically sometimes ago and this relates to the ban on logging. We expect this to remain so because this ban remains in place,” Central Bank of Kenya (CBK) governor Patrick Njoroge had said on Wednesday.


At the same time, month-on-month price of a litre of petrol jumped by 2.6 per cent to Sh117.54 as that of diesel rose by 5.1 per cent to Sh108.97.

Food and non-alcoholic drinks index which forms about 36 per cent of the basket used to compute inflation, also rose by 0.37 per cent as the increase in prices of some foodstuffs outweighed those whose prices dropped.

The rise in inflation remains within CBK target range of 2.5 per cent and 7.5 per cent. Given that the prices used for September were collected during the period in which most of that time it was 16 per cent VAT that was in operation, CBK expected the rise.

“We expect the CPI number to be unusually high since the survey of prices was taken during second and third week during which most of that time higher prices were in place,” he said on Wednesday.

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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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