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Millers raise the red flag as surplus sugar drives down prices

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A customer picks sugar at a supermarket in
A customer picks sugar at a supermarket in Nairobi. FILE PHOTO | NMG 

Sugarcane millers have raised concerns over “mysterious” surplus of sugar in the market that has left them with thousands of kilos of unsold stock, setting the stage for lower sugar and cane prices.

Millers say the surplus sugar, which emerged 10 days ago, is threatening their cash flow.

The cost of a 50kg of sugar bought from the factories has dropped to Sh4,500 from Sh6,200 — a 37 per cent fall –over the period.

This looks set to cut retail sugar prices, which has risen from Sh107 a kilo in January to the current Sh152.

“The price decrease is attributed to competition from cheap imports,” says the Sugar directorate, the regulator.

“It is good to note that imported sugar supply dropped in May 2018 drastically following the Government’s crackdown on contaminated sugar in the market.”

The crackdown slowed down imports, boosting the cash flow of local millers who have struggled to compete with foreign millers on high cost of production.

Sony Sugar managing director Bernard Otieno said the surplus could be the result of availability of sugar flowing in from Uganda through Busia and release of duty-free imports held from 2017.

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“The supply could be dominated by dumped sugar that is being re-exported from Uganda and posing as local production,” he said.If the trend continues, he cautioned that the market could collapse as the price of local sugar is bound to go down drastically.

This has slowed down cash flow since factories are not selling sugar because of diminished demand from local traders, said Mr Otieno.

His counterpart from Chemelil Sugar Company Gabriel Nyangweso also raised the alarm that the influx of sugar has started taking a toll on the company as over 20,000 bags lie in the warehouse. “We are concerned that we might not be able to pay our farmers if things remain unchanged in the next one week,” said Chemelil Sugar Company’s newly elected chairman Zedekiah Bundotich.

The company, which resumed operations after a six-month break, is currently operating at half capacity and crushing 1,400 tonnes of sugar daily. Due to the declining market, the Chemelil sugar is sold in the neighbouring Kisumu, Kericho, Nandi Hills and Kapsabet.

Mr Nyangweso however revealed that they are exploring Eldoret, Baringo and Nakuru as they attempt to expand their market and make a comeback in the largely turbulent industry. Mr Bundotich cautioned that the move by the standard gauge railway (SGR) to discount freight costs from Mombasa to Nairobi by 50 per cent could adversely affect the price of local sugar.

“This means that the price of imported sugar could further fall by half while the local sugar experience higher transport costs due to increased cost of fuel,” he said. “The economy of western region which heavily relies on sugarcane is under threat as they compete with cheap imported sugar that is arbitrarily dumped to the market,” he said.

To protect the industry and Kenyans from consuming harmful products, the Sony Sugar boss called on the Kenya revenue Authority (KRA) and the Kenya Bureau of Standards to test the products.

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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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