Export of manufactured goods has declined sharply, with Kenya losing its African export market to China and India.
In the last eight years to 2018, the country has watched helplessly as the market for some its key products including textile, glassware, cement, wood and carbon dioxide shrunk leading to massive job losses.
Struggling cement industry has seriously affected export earnings of the product which dropped by 80 per cent to Sh1.5 billion in 2018 from Sh7.5 billion eight years ago.
Cement manufacturers have been struggling with some of the companies downsizing in response to a turbulent environment. For instance, ARM Cement was placed under receivership then sold to Devki Steel when it fell into financial trouble. East African Portland Cement Company recently sent home most of its workers as it struggled to remain afloat as the cement industry faced headwinds with the slowdown in the construction sector.
Export of wood products has also suffered, plunging 65 per cent with the country earning Sh225 million a drop-down from Sh648 million earned in 2010.
Other manufactured goods that have been hit include export of textile yarns and made-up textiles, a low-lying fruit under President Uhuru Kenyatta’s job creation ambition, which fell by a third.
And with some glass-making companies shifting base to neighbouring countries, export of glassware reduced by half with the country getting Sh927 million from Sh1.9 trillion eight years ago.
Export of machinery and transport equipment, aluminium and metal containers have also shrunk as the country continues to lose its competitiveness in manufacturing. Manufacturing sector’s contribution to the economy or gross domestic product has dropped from 10 per cent in 2010 to 7.7 per cent last year.
As a result, Kenya’s export market in the East African region and Comesa, dropped as countries in the trading blocs either found ways to manufacture their products or new trading partners such as China and India that are more competitive than Kenya. Even as exports to African countries have declined, imports have increased with Kenya’s trade surplus narrowing.
Uganda, for example, has seen its exports to Kenya rise nearly three-fold to Sh49.4 billion in 2018 compared to Sh19.3 billion in 2016.
Other countries that have since brought more goods to Kenya, mostly as a result of being in the same trade bloc, include Egypt.
The loss of export market has also led to job losses, according to Statistical Abstract 2019.
Data from the national statistician sounded a warning bell to those engaged in the manufacture of vegetable and animal oils and fats, as this sub-sector shed a staggering 12,743 jobs between 2014 and 2018. The job losses touched 18 manufacturing sub-sectors in what has been blamed on the increased cost of production, including the high cost of electricity, punitive taxes, bureaucracy and high cost of credit, a big blow to one of Uhuru’s Big Four Agenda.
The affected sub-sectors include textile, manufacturing, fish, vegetable and fruit processing that have been identified as part of Uhuru’s job creation ambition under the Big Four Agenda. Manufacturing is expected to create one million jobs by the time the President leaves office in two years.
Current figures could even be worse given that the other affected sub-sector, sugar manufacturing, for example, has seen even more job losses owing to the closure of Mumias Sugar, once the country’s biggest sugar miller.
Experts note that one of the reasons Kenya is losing out is because it does minimal value addition. “We do very little value-addition on tea and coffee,” says Timothy Njagi, a research fellow from Tegemeo Institute, a public policy think-tank affiliated to Egerton University. Dr Njagi says that most of the Kenyan tea is used for blending.
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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.