Competition Authority of Kenya (CAK) Launches Probe into Multiple Banks Over Alleged fixing foreign exchange trades
17 April 2023
Competition Authority of Kenya (CAK) launches investigation into several banks for allegedly fixing foreign exchange trades
The Competition Authority of Kenya (CAK) launched an investigation into several undisclosed banks for allegedly fixing foreign exchange trades, adding a fresh twist to the ongoing currency crisis that has seen lenders run out of dollars on some days.
According to the antitrust authority, investigations are underway into the possible manipulation and collusion over the dollar exchange rate, potentially leading to fines and imprisonment for those involved if convicted.
Business Daily reported that sources close to the probe revealed that the CAK is pursuing allegations that some dealers at the banks used electronic chat rooms and instant messaging to coordinate their trading activities when giving quotes to customers who buy or sell currencies. This mirrors the heightened probe of global banks in Europe, Asia, the United States, and South Africa over allegations of price-rigging in currency markets.
The investigation comes at a time when Kenya is experiencing a currency crisis, with lenders running out of dollars on some days, leading to a shortage of foreign currency in the country. The shortage has caused a decline in the value of the Kenyan shilling, leading to rising inflation and putting pressure on the country's economy.
ECONOMY
Kenya Expects $1.2 Billion in Financing Inflows Amid IMF Funding Talks
Kenya expects to receive at least $1.2 billion in financing inflows between April and May, according to the country's central bank Governor. This comes as Kenya engages in talks with the International Monetary Fund (IMF) for new funding to help shore up its falling foreign exchange reserves.
The COVID-19 pandemic, the war in Ukraine, and global monetary policy tightening have had a significant impact on Kenya's economy, much like the rest of Africa. This has led to a weakening local currency and international market turmoil, making it increasingly difficult for Kenya to manage its debt burden.
Despite concerns from some market participants that Kenya could follow in the footsteps of countries like Zambia and Ghana by defaulting on its debt, the government has pushed back against such speculation. Instead, they have been focused on finding solutions to the country's financial woes.
"The government is committed to sound economic policies that will put Kenya back on a sustainable growth path," said Central Bank Governor Patrick Njoroge. "We are working with our partners, including the IMF, to find ways to address our current challenges."
DISPUTE RESOLUTION
Banks seek to use mediation to solve commercial disputes
“Banks in Kenya are looking to mediation to resolve commercial disputes and unlock billions of shillings tied up in court cases” - Chief Justice Martha Koome.
According to the Chief Justice, over 12,000 bank-related matters worth Sh55 billion have been referred to mediation, with 5,048 cases resolved and Sh16 billion unlocked so far.
Speaking at the inaugural mediation summit themed "Banking and Mediation: Leading the Way," Kenya Bankers Association (KBA) chairperson John Gachora said that banks would be setting up mediation suites to make mediation the first approach in sorting out issues with customers.
Gachora noted that the mediation process presents a creative solution to resolve disputes, mostly linked to loan repayment terms, within a short period and in a cost-effective manner while preserving the relationship with customers.
Government’s Plan to Enroll Hustler Fund Borrowers into NHIF
The government is planning to require borrowers from the Hustler Fund to enroll in the National Health Insurance Fund (NHIF), as part of a drive to roll out the universal health coverage scheme. The Co-operatives and Small Enterprises Cabinet Secretary, Simon Chelugui, announced the proposal on Thursday during a manufacturing SMEs convention in Nairobi.
According to Mr Chelugui, the Ministry of Co-operatives and Small Enterprises is in advanced discussions with NHIF to channel part of the borrowed cash from the Hustler Fund into the national health insurance scheme. He stated that "bespoke products" would be launched alongside borrowing, including NHIF's health insurance.
Borrowers would pay approximately Sh17 per day, equivalent to the current Sh500 minimum monthly premiums NHIF charges people in the informal sector. This would ensure they are covered for medical and accident expenses.
Mr Chelugui emphasized that this move would benefit hustlers who could receive medical treatment without being detained in hospitals for lack of payment. By enrolling into NHIF, borrowers could walk into any hospital and be treated without fear of financial repercussions.
However, the Cabinet Secretary did not provide any details on how the cash would be deducted from borrowers. The proposal is part of the Kenyan government's plan to achieve universal health coverage by 2022.
Note:
Currently, NHIF has approximately 10 million registered members, including those in the formal sector and self-employed individuals.
The government aims to increase the number of NHIF members to 25 million by 2022.
DATA PROTECTION
Office of the Data Protection Commissioner took enforcement action against 3 companies
Mobile loans lender Whitepath and office space provider Regus Kenya will each be required to pay a Ksh 5 million penalty, for breaching the data protection act.
Whitepath:
The Office of the Data Protection Commissioner (ODPC) stated that it had received close to 150 complaints from Whitepath clients alleging that the digital lender illegally accessed their mobile phone contacts and sent them unsolicited messages.
Moreover, the company failed to comply with an earlier enforcement notice, resulting in the fine.
Regus Kenya: The ODPC fined Regus Kenya for failing to respond to complaints of frequent spamming and inappropriate automated information sent to the complainants.
“Each company is required to pay the ODPC a penalty of Kenya shillings five million pursuant to section 63 of the Data Protection Act and Regulation 20 of the Data Protection (Complaints Handling Procedure and Enforcement),” the data commissioner said.
Ecological Industries Limited: The ODPC issued an enforcement notice to Ecological Industries Limited for non-cooperation despite several notifications of a lodged complaint.
The company is accused of publishing a personal photo on a company catalogue and calendar for marketing purposes.
ENERGY
EPRA Received 13 Applications for New Berths to Handle Cooking Gas Imports in Kenya
The Energy and Petroleum Regulatory Authority (EPRA) received 13 new applications from existing and new entrants wishing to build berths for handling cooking gas imports in the country.
The move comes as Kenya aims to open up the sector ahead of the price control regime in 2025.
According to Business Daily, EPRA hopes that the new applications, which include submissions from the Kenya Pipeline Company (KPC), Eleven Energy, and Fossil Fuels, will bring competition to the sector and reduce the grip of Africa Gas and Oil Ltd (AGOL), leading to price cuts in the handling of cooking gas imports and ultimately lower prices for consumers.
Note:
The proposed 30,000 tonne KPC berth to be built at the Kenya Petroleum Refineries (KPRL) in Mombasa and another one with a capacity of 10,000 in Athi River will provide a common-user facility for importing cooking gas, similar to how shipments of super, diesel, and kerosene are handled.
The KPC facilities will allow for the introduction of the Open Tender System (OTS) for cooking gas imports, where the marketer who quotes the lowest prices will win the tender to import the commodity on behalf of the sector, with the State setting maximum prices.
WHAT YOU MIGHT HAVE MISSED
Kenya’s National Assembly gave its approval for the ratification of the Defence Cooperation Agreement (DCA) between the government of Kenya and the governments of the United Kingdom and Northern Ireland
The Defence, Intelligence and Foreign Relations Committee reviewed the draft agreement and recommended that murder be included as a triable offence under the jurisdiction of the host nation. This means that any visiting UK troops who commit murder on Kenyan soil will be prosecuted under Kenyan law.
The original draft agreement had subjected visiting forces to the laws of the host nation but granted the authorities of the visiting forces primary jurisdiction to try offences arising out of official duty. The amended agreement will now ensure that visiting troops are subject to the full jurisdiction of the host nation in the event of them committing murder.
Fierce Fighting Erupted Across Sudan as Tensions Between Army and Paramilitary Group Boil Over
Sudan plunged into violence after months of tensions between a paramilitary group and the country's army erupted into a full-scale battle on Saturday. The fighting has been described as fierce, with loud noises and explosions heard throughout the night. There have also been reports of battles hundreds of miles away in the eastern city of Port Sudan.
Eyewitnesses in the capital, Khartoum, told CNN that the fighting intensified after Sunday morning prayers, and the situation remains tense. The clashes have left at least 56 people dead and nearly 600 injured, according to the Central Committee of Sudan Doctors.
Sudan's paramilitary chief, Mohamed Hamdan Dagalo, claimed to have seized most of Khartoum's official sites after clashes erupted between his armed group and the country's military on Saturday. However, the country's military leader, General Abdel Fattah al-Burhan, has disputed Dagalo's claims and said that the military has maintained control over government sites.
IMF projections on Economy
The International Monetary Fund (IMF) projected that the size of Kenya’s economy will overtake that of Angola this year even as Ethiopia stretches its lead.
In its latest World Economic Outlook, the IMF stated that the gross domestic product (GDP) of Angola will shrink during the period allowing Kenya, whose economy is expected to grow by 5.3% to overtake it (placing itself at the fourth spot behind Ethiopia.)
Ethiopia, which the IMF had projected in its October 2022 outlook would overtake Kenya to become Eastern Africa’s largest economy, is now expected to overtake both Angola and Kenya to become the third largest economy in sub-Saharan Africa.