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NEWS INDEPTH: Low sacco spread slows down financial inclusivity, growth

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Deposit-taking (DT) saccos remain highly concentrated in less than a third of the 47 counties, new data showed, affirming the wide disparity in financial inclusion across the country.

About 60 per cent of all DT-saccos were head-quartered within just eight counties as at 2017, data by the Sacco Societies Regulatory Authority(Sasra) showed, while nearly 75 per cent of all sacco branches were domiciled in just 15 counties.

The number of sacco head offices and branch networks in an area is a critical indicator of financial inclusion and access.

“The continued high concentration of both head-offices and branch networks of sacco societies in hardly a third of all counties in the country is evidence that most parts of the country are still under-covered by DT-saccos and thus almost probably financially excluded,” the regulator said.

Wealthy counties have the highest concentration of deposit-taking saccos, according to an analysis of separate data by Sasra and the Kenya National Bureau of Statistics (KNBS), affirming the disparity in key economic activities and financial inclusion across the country.

Nairobi, with 42 DT-saccos, has the highest concentration of registered head offices of such saccos followed by Kiambu (14), Meru (12) and Nyeri (8).

Overall, the concentration of registered head-offices of DT-saccos remains high among 17 counties which accounted for 137 of all the saccos across the country.

The remaining 37 DT-saccos have their registered offices scattered among the other 23 counties, with the exception of the seven counties of Turkana, Isiolo, Tana River, Wajir, Mandera, Garissa and Makueni which remain without any registered head-offices of the saccos.

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Similar disparity is reflected in the branch network. Data by the regulator showed that 15 counties accounted for 354 of the total 464 DT-sacco branches.

Kiambu leads in the number of branch networks with a total of 46. It is followed by Meru (39), Nairobi (33), and Nyeri (32). Mandera, Wajir and Garissa were the only counties that had no registered presence of any DT-saccos as at 2017.

Analysis of KNBS data showed that the concentration of saccos correlated with the poverty levels in various parts of the country, with a higher presence of saccos in wealthier counties including Kiambu, Meru, Nairobi and Nyeri. The latest poverty index report by the KNBS showed that Nairobi and Central Kenya counties dominate the list of the richest counties.

Nairobi has the lowest share of poor people with 17 persons in every 100 living in poverty, followed by Nyeri and Meru with 19 each, Kirinyaga (22) and Narok (23), according to the report released earlier this year.

KNBS defines households living in poverty as those earning below Sh3,252 a month in rural and peri-urban areas and Sh5,995 in major urban centres.

In Kiambu and Machakos 23 in every 100 residents are classified as poor, while Tharaka-Nithi, Murang’a and Mombasa close the top 10 rich list with 24, 25 and 27 persons in 100 struggling to survive respectively.

Turkana is classified as the poorest county in the 2016 survey with more than 79 in every 100 of its population living in poverty, followed by Mandera (78), Samburu (76), Busia (69), and Garissa (66). Marsabit, Wajir, Tana River, West Pokot and Isiolo counties also form the 10 poorest counties with 63.7, 62.6, 62.2, 57.4 and 51.9 per cent of residents struggling to meet basic needs.

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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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