Kenyans are earning more on average; they are living slightly longer and staying in school for more years, boosting the country’s Human Development Index up one notch from position 148 in 2017 to 147 last year.
According to the latest United Nations Development Programme (UNDP) index publishes on Tuesday, each Kenyan on average made Sh309,778 ($3,052) up from Sh298,004 ($2,096) in 2017.
Kenyans are now expected to live up to an average of 66.3 years, up from 65.9 last year and have an average of 6.6 years of schooling out of an expected 11.1 years, which is higher than the 4.6 target set by the 2030 Sustainable Development Goals.
Despite the increase in average wealth, UNDP has raised concerns about the rising levels of inequality that are concentrating wealth at the top, leaving behind huge swathes of the population that is struggling economically.
UNDP said that the richest 10 percent of the population took up half of the country’s incomes, leaving the other 90 percent at the bottom of the economic pyramid to scramble for the other half.
“In Kenya in 2015 the top 10 percent received 48 percent of national income, while the bottom 40 percent received nine percent,” the report said, painting a dire picture of the inequalities that divide the rich and the poor.
Central Bank of Kenya data shows that while long-term and fixed deposits associated with the wealthy, money market funds and cash-rich corporates rose from Sh1.28 trillion in October 2018 to Sh1.41 trillion in October this year, the cash in people’s pockets reduced from Sh269 billion to Sh227 billion in the same period.
Foreign currency deposits also rose from Sh553.2 billion to Sh625.3 billion in a similar period, an indication that the wealthy are protecting their value and hedging against the local currency.
Kenya has been a country of contrasts, growing its Gross Domestic Product at an impressive average of 5.7 percent over the last couple of years.
However, this growth has failed to trickle down to the population owing to the structure of the economy. Agriculture, which employs 57.5 percent of the population, pays low wages for workers and proportionately low returns for farmers, accounting for lower earnings per capita.
The latest Kenya National Bureau of Statistics data indicates that dominant sectors of the economy such as agriculture, which accounts for 34.2 percent of gross domestic product, transport (eight percent), manufacturing (7.7 percent) and real estate (seven percent) paid the least wages although they account for more than half of the GDP.
Agriculture’s share of the top earners was a measly 0.9 percent, manufacturing (two percent), real estate (3.1 percent) while the ICT sector, where East Africa’s most profitable firm Safaricom sits, had 3.2 percent of its workers earning above Sh100,000.
UNDP warns that rising inequality is fuelling unrest globally witnessed by a wave of demonstrations triggered by ‘the cost of a train ticket, the price of petrol, political demands for independence’.
“What we are seeing today is the crest of a wave of inequality; what happens next comes down to choice. Just as inequality begins at birth, defines the freedom and opportunities of children, adults and elders and permeates those of the next generation, so, too, policies to prevent inequalities can follow the lifecycle,” Achim Steiner, the UNDP Administrator, said.
While Kenya has been lauded for introducing policies like free education and mobile-led financial inclusion, funding for education as a percentage of the Gross Domestic Product has been on a decline since hitting 7.3 percent in 2005. The index showed that Kenya spent 5.2 percent of GDP on education in 2017, the lowest since 2000.
Kenya’s spending on health is also at a 16-year low – at 4.5 percent of the GDP in 2016 – down from 6.1 percent in 2010.
The report stresses that health is one of the biggest challenges for all countries posing the serious risk of sinking even the well-off middle class into poverty.
“As Anirudh Krishna points out in his analysis of the life stories of 35,000 households in India, Kenya, Peru, Uganda and North Carolina (United States), many low-income individuals are just one illness away from poverty,” the report states.
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.