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Old Mutual fails to take extra 6.5pc UAP stake

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Old Mutual fails to take extra 6.5pc UAP stake

Agnes Chege
UAP Old Mutual Group chief financial controller Agnes Chege (left) and CEO Peter Mwangi during the announcement of the group’s full year financial results on April 2, 2019. PHOTO | DIANA NGILA 

Financial services giant Old Mutual has failed to take an extra 6.5 per cent stake in UAP Holdings after a plan of converting the multinational’s Sh2.6 billion loan to the Kenyan insurer into shares was suspended.

UAP had announced that the loan-to-equity deal, meant to ease its debt burden, would be concluded in 2018 but the multinational has suspended the transaction indefinitely even as it amended the terms of the debt.

Old Mutual’s only transaction in UAP shares last year related to the purchase of a combined six per cent stake from the insurer’s directors and founding shareholders Joe Wanjui and James Muguiyi for Sh3.2 billion in November. This raised its interest in UAP to 67 per cent.

UAP’s chief executive Peter Mwangi told Business Daily that the debt-to-equity deal remains an option for Old Mutual.

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“No decision has been taken on the conversion. The debt is outstanding and convertible at the option of the lender. The terms of the loan have been amended to extend the tenure and we continue to service the debt,” Mr Mwangi said.

But it is not clear why the proposed deal was not implemented within the initial timeframe.

The insurer had said the transaction would require approval of its board which Old Mutual controls on the strength of its majority stake.

With the proposed deal shelved, UAP’s debt burden grew in the year ended December and saddled the company with higher finance costs, contributing to the Sh518 million loss in the period.

Its borrowings rose by Sh258 million to Sh11 billion in the review period while its finance costs increased by Sh245 million to Sh1 billion. Old Mutual provided the additional debt.

“There was an additional drawdown of an Old Mutual loan facility that was put in place in 2017,” Mr Mwangi said.

The proposed debt-to-equity transaction was part of UAP’s efforts to ease its heavy debt burden that had seen it explore multiple options, including renegotiating loan terms with financiers such as the International Finance Corporation (IFC).

UAP had taken the loan to fund construction of Equatorial Towers –an office building in Juba, South Sudan.

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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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