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Kenyan banks hope to revive South Sudan branches after new peace deal

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Customers at a KCB banking hal
Customers at a KCB banking hall. FILE PHOTO | NMG 

The latest attempt to find long-lasting peace in the oil-rich South Sudan has raised optimism among Kenyan banks with subsidiaries in the war-torn country.

President Salva Kiir and his former vice and now Opposition leader Riek Machar, on September 12, shook hands and signed a revitalised peace deal, pledging to end a five-year civil war that has sent the nascent economy into convulsions.

The deal inked in Ethiopian capital Addis Ababa, however, remains shaky, with scepticism rising over implementation of the agreement.

But Kenyan banks, which run subsidiaries in the country that got independence from Sudan in July 2011, are cautiously optimistic of a lasting solution.

The commitment by Kiir and Machar to ending the devastating civil strife, perhaps the largest in Africa since the 1994 genocide in Rwanda, is seen as likely to restore stability in the battered economy.

KCB Group #ticker:KCB, the first to venture into Juba chasing petro-dollars in 2006 after a peace-deal brokered in Naivasha a year earlier, said it’s keeping a close eye on the developments.

KCB, the largest lender in South Sudan, has over the last three years temporarily closed down some of its 19 branches owing to deteriorating economic activities there.

Group head of corporate and regulatory affairs Judith Sidi-Odhiambo did not disclose how many branches are currently operational, although the bank had in March revealed plans to temporarily shut five outlets.

“Currently, we have scaled down our operations. The recently signed peace deal has revived hopes of economic stability being restored,” Ms Sidi-Odhiambo told the Sunday Nation.

“This is a market that we are certainly excited about and we look forward to resumption of peace and stability in the country, primarily for the sake of the South Sudanese people.”

KCB is among a host of Kenyan lenders such as Equity #ticker:EQTY, Co-operative #ticker:COOP and Stanbic #ticker:CFC, which ventured into South Sudan following a peace deal in 2005, attracted by a large unbanked population and oil wealth.

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The return to civil war barely three years after independence has, however, seen most lenders temporarily close outlets and retain only essential services. Suspension of oil production, which used to support 90 per cent of the economy, from late 2013 send the economy into a tailspin.

The resultant shortage of dollars has over the years plunged the struggling country’s currency, the South Sudanese pound, into a free fall while the measure of cost of goods and services topped 800 per cent — technically hyperinflation.

At the height of currency devaluation in 2015, Kenyan lenders booked tens of billions of shillings in losses.

That, together with labour unrests, has made operation costs unbearable for most businesses.

Equity Bank, which booked Sh5.7 billion in forex losses as a result of devaluation of its assets in South Sudan in 2015, has since scaled down its operations to focus on humanitarian organisations such as the UN missions.
The bank had by early last year reduced to seven its branches in the war-ravaged country from 12 it initially operated.

Ms Mary Wamae, Equity’s group executive director for regional subsidiaries, said the recent attempt to end the civil strife offers a glimmer of hope to revitalising some of the services it had suspended such as loans and foreign exchange.

“South Sudan has been in war since 2013 but it is looking up now. We are hoping that this time round the settlement is going to come to fruition and protagonists are going to agree on way forward for the country,” Ms Wamae said in an interview on August 16.

“We hope that in the next few months if the peace initiative succeeds, we should be able to go back to full banking model.” Doubts are, however, being cast on the commitment by Mr Kiir and Mr Machar with reports of fresh fighting emerging last week. UN’s undersecretary-general for peacekeeping operations Jean-Pierre Lacroix reported renewed hostilities in some states.

“Reports indicate that these hostilities are in response to alleged government attempts to install local authorities in opposition-controlled areas. Both sides appear to have mobilised reinforcements to support these operations to secure territory,” the Voice of America quoted Mr Lacroix as having told the UN Security Council members on Tuesday in New York.

Re-emergence of civil clashes will deal a major blow to the economy, with the country having reportedly resumed production of 20,000 barrels per day (bpd) of oil late last month for the first time since 2013.

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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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