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Long rains failure to hit household budgets hardest

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Long rains failure to hit household budgets hardest

 

The delayed onset of the long-rain season has set the stage for tough economic times, with households most likely to feel the pinch through increased cost of basic food items.

Agriculture, which is the biggest contributor to Kenya’s economy, relies heavily on favourable weather to boost yields.

The weatherman has projected late arrival and poor distribution of the March-April-May long rains, which is the country’s main planting season.

This is expected to hurt food production and livestock feeds, further squeezing household budgets of the poor and middle class amid stagnant wages.

The Treasury is also set to feel the heat through having to set aside funds for food relief and possible subsidies to cushion the most vulnerable.

More than one million Kenyans in drought-hit areas are already relying on food aid for survival.

The Food Security and Nutrition Working Group (FSNWG), a food security and nutrition platform championed by UN’s Food and Agriculture Organisation (FAO), and IGAD’s Climate Prediction and Application Centre (ICPAC), yesterday listed Kenya among countries staring at a major food crisis this year.

“The delay in the start of the March to June long rains, coupled with forecasted rainfall deficits in April, are building on already dry conditions due to poor October to December rains over some parts of the Greater Horn of Africa,” the firm said in a statement.

“The poor performance of the last season’s (October) short rains already led to below-average crop production and deteriorating pastures in some agro-pastoral and marginal mixed farming areas.”

Some 10.7 million people in Kenya, Ethiopia, Somalia and Uganda’s Karamoja region are already battling with food insecurity, the Nairobi-based agency said.

Although the food insecure population is lower than the 15.3 million people that were hit by the debilitating drought from late 2016 through the first half of 2017, FSNWG warned of a high risk of the food situation worsening, citing forecasted rainfall deficits.

The Kenya Meteorological Department last month warned that the delayed long rains will be poorly distributed when they finally arrive.

Kenya’s food basket areas such as highlands West of the Rift Valley, Central and South Rift Valley as well as the Central Highlands and the Lake Victoria Basin are yet to start receiving sufficient rainfall for planting.

The areas have largely recorded sunny intervals and unevenly distributed rains in parts of the Central and Western highlands, dimming prospects of a repeat of last year’s bumper harvest.

Planting in the agriculture-rich region usually starts in March, with some farmers already having done “dry planting” awaiting rainfall.

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Reduced agricultural output in the first three months of the year has partly pushed private sector activity as measured by the monthly Stanbic Bank Kenya Purchasing Managers Index (PMI) to a 16-month low.

“The drop in the PMI doesn’t really come as a surprise as agricultural productivity is usually weaker in the first quarter,” Stanbic Kenya regional economist Jibran Qureishi said Wednesday. “Nonetheless, as the long rains commence probably from April, higher output from the agriculture sub-sector is likely to underpin private sector activity.”

Dr Miltone Ayieko, director of Egerton University’s Tegemeo Institute of Agricultural Policy and Development, said all indications are pointing to reduced agricultural production this year compared with 2018.

The unresolved price dispute for maize bought by the country’s food reserve, the National Cereal and Produce Board, and delayed procurement of subsidised fertilizer, Dr Ayieko said, are likely to compound the country’s food production this year.

“The unresolved price issue means the farmers may not have sufficient money to buy (farm) inputs and that is likely to lead to less production,” he said on phone. “It’s, however, still too early to say there will be a food crisis. What we need is a clear up-to-date information on what the prediction for weather going forward is.”

A persistent drought in the country is a major jolt to the Treasury’s expenditure plans.

Poor weather for example prompted subsidies and waiver of import duties between mid-May and December 2017 to smoothen purchase of such foods as maize, milk powder and sugar from abroad to meet demand and ease rising prices that followed a biting drought.

The subsidy programme cost the taxpayers about Sh7.6 billion in foregone duty paid to traders.

The National Drought Management Authority (NDMA) last month said Mandera, West Pokot, Kilifi, Laikipia, Nyeri, Garissa, Turkana, Marsabit, Samburu, Tana River, Isiolo, Kitui and Wajir counties are in the grip of drought and need quick intervention.

On March 18, the Treasury set aside Sh2 billion to facilitate food relief programmes in the hardest-hit Arid and Semi-Arid Land (ASAL) counties which are worst-hit by drought, following a meeting chaired by Deputy President William Ruto.

There have been reports of famine-related deaths in some of the ASAL counties, but authorities have disputed this, insisting the country has sufficient food that is unevenly distributed.

“Dry conditions and high temperatures, between January and March, have already led to deteriorations in pastures and water availability in these areas, affecting livestock body conditions, reducing milk production, and leading to earlier-than-normal livestock migration,” FSNWG said.

“Crop production would also be below average in marginal agricultural areas of Kenya, Somalia and Ethiopia.”

Food scarcity will push up prices, raising the cost of living as measured by inflation where food has a weighting of 36.04 percent.

This will result in an upward pressure on cost of other items, including loans.

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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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