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Sh10.1bn SGR revenues revealed – Daily Nation

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By EDWIN OKOTH
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The standard gauge railway (SGR) line raked in sales of Sh10.1billion in its second full year of operations, signalling that the mega project will take longer to break even.

Freight services, which started in January 2018, generated Sh8.4 billion in the year to June, internal performance data from Kenya Railways shows.

The data shows that China Communications Construction Company, the operator, increased sales from the passenger service to Sh1.76 billion, up from Sh1.23 billion a year earlier—reflecting a growth of 43 percent.

The revenues were not enough to meet the operation costs, which are estimated at Sh1.5 billion a month or Sh18 billion a year. Kenya Railways had budgeted to earn some Sh24 billion from the cargo service in the year to June, falling 65.56 percent below target.

The below target performance was attributed to reduced limited storage capacity at the Embakasi Inland Container Depot (ICDN), minimum use of the Nairobi Freight Terminal that handles cargo not stored in containers and cost tariff.

“There were several instances when the ICDN facility was congested, which impacted heavily on turnaround of resources and thus contributing to movement of low volumes. Closure of some lines also impacted on loading capacity of trains,” Kenya Railways wrote on the report.

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The freight services formed the main economic justification for the $3.2 billion (Sh323.20 billion) that President Uhuru Kenyatta’s administration pumped into the project through loans largely procured from Exim Bank of China from May 2014.

Kenya Railways data shows the freight service moved 4,009,386 tonnes of cargo in the year to June against a target of 8,022,514 tonnes.

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In the first full year operation to June last year, SGR made revenues of Sh2.4 billion, but this was based on a freight operations of six months.

Cargo charges on the SGR line from Mombasa to Nairobi were increased by up to 79 percent from January this year in a bid to raise more revenue to pay the Chinese operator.

But some importers said their transport costs shot up by nearly 50 percent when they used the rail due to extra fees, more time spent clearing goods at the Nairobi train depot and the need to send a truck to collect the goods from there.

The below target performance comes at a time when businesses based in Nairobi and upcountry are compelled to use the new railway line because the Mombasa port is contracted to supply it with a minimum amount of cargo.

Moving a 40-foot container to Nairobi by rail costs nearly Sh80,000 – roughly the same as a truck, says the Kenya Transporters Association.

But importers must also pay at least Sh25, 000 for a truck to collect the goods from the Nairobi depot, breaching the Sh100, 000 mark.

The cost of transporting a 20-foot container from Mombasa to Nairobi increased to Sh51,275 in January from Sh35,000, a 46.5 percent rise

Kenya Railways—which acts as the regulator of railway transport—has sought Cabinet approval to cut the freight charges to boost traffic.

Kenya requires additional cash from the railway business to ease the taxpayers’ burden of paying the Chinese SGR operator.

China Road and Bridge Corporation (CRBC) runs the SGR cargo and passenger business for an undisclosed management fee.

The Treasury also expects the SGR business to generate more revenue to help offset loans taken to build the multi-billion shilling railway line.

The Treasury will pay Sh61.2 billion in the year that started July, up from Sh30.9 billion it paid in the year ended June.

Kenya borrowed Sh324 billion for the project from the bank in May 2014, to be repaid in 15 years, with a grace period of five years.

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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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