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Study: SMEs face harder times in next six months

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By PATRICK ALUSHULA

More than half of small and medium-sized enterprises (SMEs) expect their business conditions to worsen in the next six months, a new survey has shown, pointing to the rising pessimism among companies as Covid-19 cases soar.

A survey by three research firms – SNDBX village, Wylde International and Amethyst Consulting – says 54 per cent of SMEs expect dark clouds to keep gathering on their businesses, with key concerns being reduced cash flow and disrupted sales.

The majority (68 per cent) of the surveyed SMEs said they performed poorly in April compared to March as Kenya imposed a curfew, closed schools, bars and restaurants in a bid to stop the spread of Covid-19.

“Most businesses are pessimistic about a change in their business finance environment in the next three to six months because of the struggle to pay employees, the probability of business losses and the struggle to meet loan commitments,” says the survey.

PAY EMPLOYEES

The survey shows 26 per cent anticipate that they will struggle to pay employees, 19 per cent expect losses while another 19 per cent say they will find it difficult to meet loan obligations.

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Only 18 per cent expect a positive change in their business finances, while eight per cent see the situation remaining the same.

The survey was carried via mobile phone interviews between March and early April, involving 93 SMEs.

The bulk of respondents fall in the consultancy services sector, closely followed by financial services, hospitality and tourism and manufacturing.

About 55 per cent of SMEs say they had seen a drop in the number of customers, leading to a decline in revenues and weaker cash flow position.

Kenya’s Covid-19 caseload has crossed 11,000 mark. The Health ministry says the peak of infections is yet to come.

The measures the State has taken to contain the health crisis have led to a financial crisis as firms react to falling revenues through pay cuts and reduction of jobs.

FRESH FUNDS

The survey shows 78 per cent of SMEs do not plan to engage in any business development activities in the next three to six months.

The few planning business development seek to defend their margins as opposed to growth.

“The biggest motivation to engage in business development activities comes from wanting to maintain existing relationships with clients followed by taking advantage of sales growth opportunities and to a lesser extent, to avoid making losses,” says the survey.

The Central Bank of Kenya survey in May had revealed that 75 per cent of Kenya’s SMEs face collapse if they fail to get fresh funds from banks or equity partners.

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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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