Connect with us

Business

NEWS INDEPTH: Tough task ahead in Kenya’s drive to improve its roads

Published

on

Loading...


Kenya has a total road network of 230,000 kilometres but only about half of it is in good or fair condition, a new audit showed, an indication of the huge task ahead in infrastructure upgrade.

As at January 2016 the country had a gazetted total road network of 161,456.4km comprising of 39,995.1 km categorised as national trunk roads and 121,456.4km of county roads. The data was based on the road inventory and condition survey carried out between 2007 and 2009 and covered roads with way-leaves greater than nine meters.

The Kenya Roads Board (KRB) in partnership with the World Bank in August 2016 undertook a fresh audit that covered all roads including narrow ones which are less than nine meters wide. A large component of the country’s road network consists of narrow roads and tracks with reserves of between six to nine metres and had previously not been mapped.

The new audit revealed that 57 per cent of the country’s total road network is currently in either good or fair shape, albeit an improvement from 44 per cent in 2009 due to larger funds disbursements through the Roads Maintenance Fuel Levy (RMFL).

An estimated 33 per cent of paved roads across the country were certified as in good condition in 2018, while 48 per cent were found to be in fair condition.

About 30 per cent of gravelled roads were in good condition in 2018 while 41 per cent were in fair condition.


“A bigger percentage of the unpaved county network is either poor or very poor, indicating the need for more resource allocation to upgrade the roads,” the KRB said.

Industry estimates showed that about Sh70 billion is required for the maintenance of the entire road network annually, exclusive of the backlog for maintenance. Allocations towards road maintenance are made through RMLF collections.

Loading...

The KRB said fuel levy collections increased by about 30 per cent following the rise of the fuel levy rate from Sh12 to Sh18 per litre in June 2016.

The projected annual collection for the financial year 2018/2019 is Sh68.996 billion.

“This collection is however still inadequate for road maintenance given that backlog in maintenance has not been addressed fully, and that a total of Sh11.18 billion will be allocated to the Road Annuity Fund,” KRB said.


Faced with fund deficits for road maintenance, the government through KRB is considering alternative road maintenance financing mechanisms such as incorporating long-term infrastructure bonds, public private partnerships, introducing levies on motor vehicle insurance and annual licences, and levies on outdoor advertisements.

It is estimated that these sources would yield Sh60 billion in additional funds annually.

“Further, KRB is currently undertaking a detailed review of road construction materials with the view of recommending cost-effective materials for road development and maintenance.

“Other potential savings are expected to be realised from revised road construction specifications and contract documents,” KRB said.

Roads constitute the most important mode of transport in the country, accounting for the transportation of more than 95 per cent of all freight and passenger traffic.




Source link

Loading...
Continue Reading

Business

Kenya listed among Sub-Saharan Africa countries with high potential for Islamic Banking

Published

on

Loading...

NAIROBI, Kenya, May 8 – Kenya has been listed as one of the countries with a high potential for Sharia Finance, an Islamic banking model with several restrictions and principles that do not exist in conventional banking like interest fees.

Middle East, Africa, India, and Jersey Finance Director Faizal Bhana said Sub-Saharan Africa’s share of global Sukuk issuances is only a mere 2 percent, despite an Islamic population of more than 200 million people.

Sukuk are financial products whose terms and structures comply with Islamic law, with the intention of creating returns like those of conventional fixed-income instruments like bonds.

“When you are coming to Africa, the story is very different. Africa is home to 250 million Muslims in Sub-Saharan Africa. At the moment, the penetration for Sharia compliance finance across the continent is 21 countries providing Islamic Finance services,” he said.

Speaking to Capital Business, he revealed that the Islamic Finance industry has a compound annual growth of 11 percent since 2006, with assets worth multi-trillion shillings.

Loading...

“We need to look to all forms of financing. And Sharia compliance financing is one form and because of its links like sustainability and ethical, for government, it is an easy win,” he said.

He said there is a need for regulators to provide enabling legislation for Sharia finance services and more so for sovereign and corporate issuance of Sukuk.

The common practices of Islamic finance and banking came into existence along with the foundation of Islam.

However, the establishment of formal Islamic finance occurred only in the 20th century.

Advertisement. Scroll to continue reading.

Currently, the Islamic finance sector grows at 15-25 percent per year, while Islamic financial institutions oversee over $2 trillion.

Islamic finance strictly complies with Sharia law. Contemporary Islamic finance is based on a number of prohibitions that are not always illegal in the countries where Islamic financial institutions are operating like paying or charging interest, investing in businesses involved in prohibited activities like gambling.

Due to the number of prohibitions set by Sharia, many conventional investment vehicles such as bonds, options, and derivatives are forbidden in Islamic finance.

The two major investment vehicles in Islamic finance are equities and fixed income instruments.

 

 

 

 

Advertisement. Scroll to continue reading.

Loading...
Continue Reading

Business

CMA okays Crown Paints’ rights issue to fund expansion

Published

on

Loading...
Crown Paints head of sales Bhavesh Gandhi and CEO Rakesh Rao during the company’s launch of all-weather paints at the Trademark Hotel, March 1, 2020. [David Gichuru, Standard]

The Capital Markets Authority (CMA) has given the nod to Crown Paints Kenya Plc to raise Sh711.80 million from shareholders via purchase of additional shares.

The regulator, in a statement yesterday, said it had approved the firm’s bid to issue and list 71,181,000 new ordinary shares on the Nairobi Security Exchange (NSE).

“The rights will be issued on the basis of one new ordinary share for every one existing share,” noted CMA.

The additional funds raised will boost the company’s financial flexibility to navigate through a tough business environment brought about by the Covid-19 pandemic.

It would also boost the firm’s growth strategy according to the information memorandum.

Loading...

“The group’s management plans to use the rights issue funds to facilitate the development of new products, retiring of current facilities and funding regional expansion,” CMA said in a statement.

Wyckliffe Shamiah, the CMA chief executive observed that the disclosures made on the rights issue comply with the capital markets regulations and will enable investors to make an informed decision.

Mr Shamiah noted that the regulator had reviewed the application for exemptions from complying with Regulation 4 of the Capital Markets (Take Over and Mergers) Regulations, 2002 concerning the intention of the company’s major shareholders, who have undertaken to take up their full rights entitlements.

Take a quick survey and help us improve our website!

Take a survey

“They are also willing to take more than their initial entitlements subject to availability during the rights issue,” said Shamiah.

Crown Paints is expected to make bi-annual updates to CMA on the use of the proceeds of the rights issue.

Loading...
Continue Reading

Business

Branch buys local micro finance bank

Published

on

Loading...
The deal gives Century Microfinance Bank a much-needed lifeline. [Courtesy]

Branch International Ltd has acquired microfinance lender Century Microfinance Bank in a move that gives the financial technology (fintech) firm a stronger presence in the country’s financial sector.

According to regulatory filings published by the Competition Authority of Kenya (CAK), Branch has acquired 84.89 per cent of the issued share capital in the microfinance bank.

The deal has been approved by the market regulator.

“The Competition Authority has authorised the proposed transaction as set out herein on condition that the acquirer and the target will each maintain the terms agreed with the borrowers in respect of all loans existing in their loan books at the time of the acquisition,” explained CAK in a notice in the Kenya Gazette.

The deal will further give Century Microfinance Bank a much-needed lifeline, coming in the wake of depressed earnings due to disruption from digital lenders and recently, the Covid-19 pandemic.

Customer deposits

Loading...

According to Central Bank of Kenya (CBK) data, the micro-lender recorded Sh348 million in assets as of the end of December 2019, a 19 per cent drop from Sh431 million in 2018.

The firm also recorded Sh326 million in liabilities for the year ended December 2019 with customer deposits sitting at Sh256 million during the period under review. The lender made Sh82 million in total income in 2019, the majority of it from interest on loans, fees and commissions.

Take a quick survey and help us improve our website!

Take a survey

Brach International, one of the leading fintech players in the Kenyan market has over the years increased its user base across the region to more than three million.

The firm says it has disbursed more than Sh35 billion in loans, the majority of which it lent to users in its African markets in Kenya, Nigeria and Tanzania. In 2019, Branch secured Sh17 billion in the new financing and a partnership with Visa to issue virtual pre-paid debit cards to its users.

The acquisition of Century Microfinance Bank will allow the fintech firm to deploy more solutions to grow its digital and physical foothold in the Kenyan market.

Loading...
Continue Reading
Advertisement
Loading...
Advertisement
Loading...

Trending