Minimum wage increased by 12%
2 May 2022
Good morning, the Hilton Hotel Nairobi will close its doors and cease operations on 31st December 2022.
The Hotel began operations in Nairobi on December 17, 1969.
The minimum wage increased by 12%
During the president’s labour day speech, President Uhuru Kenyatta ordered the increase of minimum wage by 12% effective May 1, 2022.
The increase will mean that a Kenyan worker, whose current minimum wage is Ksh 13,500, is now expected to earn Ksh15,120.
“As a caring government we find that there is a compelling case to review our wages to cushion our workers against further erosion of their purchasing power," - President Uhuru Kenyatta.
Does the 12% increase in minimum wage really cater to the rise in the cost of living?
Inflation in Kenya rose to 6.47% last month, up from 5.56% in March.
Kenyans are experiencing a surge in prices of commodities, including cooking oil and fuel, aggravated by supply concerns following Russia's invasion of Ukraine.
Last month, fuel prices increased by Ksh 9.90. In Nairobi, a litre of petrol now retails at Ksh144.62, Diesel at Ksh125.50, and Kerosene at Ksh113.44.
BANKING
Central Bank of Kenya gives approval for risk-based loan pricing
According to the Kenya Bankers Association (KBA) CEO Habil Olaka, Six banks got CBK’s approvals for risk-based loan pricing.
Equity Bank is the only bank to disclose the approval and its loans will be priced between 13 - 18.5% based on client risk.
The risk-based pricing regime for consumer loans is seen as a cure to the stay of interest rate caps which were in place between September 2016 and October 2019.
“The risk-based pricing mechanism allows everyone to play irrespective of their risk. We now have no excuse of leaving anyone behind because we can price risks within a reasonable range” - Equity Group Managing Director James Mwangi
CAPITAL MARKETS
1. Foreign investor participation at NSE dropped to a record low of 47.89% in March
A report by the Capital Markets Authority (CMA) showed that foreigners have been withdrawing from the market, with their participation reported at a record low of 47.89 percent in March.
The solution to counter this would be by encouraging more Kenyans to invest in the market.
Market capitalization on the first trading day this year stood at Ksh2.6 trillion but had dropped to Ksh2.4 trillion at the end of the first quarter.
This represents a decline of Ksh176 billion which is attributed largely to foreign sales.
2. Central Bank of Kenya ordered banks to ration scarce dollars
Last week, The Central Bank of Kenya (CBK) directed commercial banks to ration dollars following a shortage of the US currency.
This forced industries to start seeking dollars in advance since the shortage puts a strain on supplier relations and their ability to negotiate favorable prices in spot markets.
The shortage is as a result of increased dollar demand being driven by increased shipments of raw materials and equipment.
SPAC’s
Kenya shows interest in Special Acquisition Companies
The Capital Markets Authority is considering allowing blank-check firms (SPACs) to list on the local stock market in an attempt to spur initial share sales.
The yet-to-be-published draft of revised public offers and listings regulations are expected to provide the legal framework for the introduction of SPACs in the country.
Special purpose acquisition company describes a company with no commercial operations but instead raises capital through an initial public offer (IPO) for the purposes of acquiring or merging in an existing business.According to Bloomberg, The last initial public offering in Kenya was in 2015 when Stanlib Fahari I-REIT sold securities.
CORPORATE GOVERNANCE
Expiry of grace period for CEOs
CEOs and top executives of firms that have not established an internal code of conduct to report and fight corruption risk a fine of Ksh1 million or a 10-year jail term.
The Bribery Act of 2016 places the offense on directors and senior officials whenever their companies fail to establish internal controls and systems to fight and report corruption.
Background: Last year, in October, a six months grace period was given for firms to set up in-house platforms that will assess risks and exposure to corruption, train staff on fighting graft, and establish internal networks for workers to anonymously report suspected bribery and graft cases.
Companies had six months from 14 October 2021 to comply with the requirements.
TELCO
Ethiopia clears the way for Safaricom
Ethiopia has started changing its national payments law to clear the way for Safaricom to introduce M-Pesa to its market of 110 million people.
Ethiopia’s central bank drafted a Bill that will allow foreign investors to offer mobile money services, boosting firms such as Safaricom that are seeking to start operations in the country this year.
Background: Last year, a consortium led by Safaricom secured the first private mobile telephone license. It is important to note that currently, the license does not have a permit for mobile financial services such as M-Pesa.
WHAT YOU MIGHT HAVE MISSED THIS WEEK
Indonesia palm oil export ban
Manufacturers of cooking oil, soaps, and cosmetics are staring at raw material supply shortages following Indonesia's palm oil export ban.
The development raises fears of future rationing of the products and an increase in prices.
Kenya has 8,500 individuals with a net worth of over $1 million
The Africa Wealth Report 2022 by New World Wealth revealed that Kenya has 8,500 individuals with a net worth of over $1 million (Ksh 115.7 Million)
Kenya is placed fourth in Africa in terms of the country’s number of dollar millionaires, behind South Africa (39,300), Egypt (16,900) and Nigeria (10,000).
Ethics and Anti-Corruption Commission to investigate Tatu city for tax evasion and money laundering
The High Court allowed the Ethics and Anti-Corruption Commission (EACC) to investigate the multibillion-shilling Tatu City real estate project in Kiambu over claims of tax evasion and money laundering.
According to the EACC, Tatu City has been practicing a form of money laundering known as a loan back scheme
Simplified definition of a loan back scheme: A money laundering or tax avoidance scheme in which money is deposited in an offshore bank and then borrowed back by a shell company controlled by the holder of that bank account.
Nairobi Expressway toll fee has increased
Motorists will pay up to Ksh 350 more to use the Nairobi Expressway. This is because the government reviewed the toll charges in order to match the strengthening of the dollar in the past year.
NTSA ordered to reopen the license renewal portal
The National Transport and Safety Authority (NTSA) was directed to reopen its portal to enable users and driving schools obtain and renew licenses.
NTSA shut down the portal in February to comply with the suspension of the Traffic (driving Schools, Driving Instructors and Driving licences) Rules, 2020.