Saccos Purchase Bank Loans from Members: A New Trend in Financial Services
6 February 2022
Happy New Week!
Saccos are buying off bank loans from members
There is an upswing in Kenya's financial sector as SACCOs (Savings and Cooperative Organizations) are now acquiring bank loans from its constituents. According to Business Daily, multiple sacco leaders reported that they were witnessing a surge in inquiries by members seeking to transfer their loans from banks to saccos.
Backstory: Banks have switched to risk-based pricing models which has resulted in revision of interest rates to as high as 18%. Sacco’s buying off bank loans is a tactic to shield the borrower from the high interest rates.
A win for Sacco’s?
Unaitas Sacco chief executive Martin Muhoho told Business Daily that the move offers the sacco movement a chance to accelerate the growth of their loan book and win new members.
Despite this opportunity, Renson Ndoro (Imarika Sacco chairperson) explained that some saccos are cautiously buying off the loans to avoid a liquidity strain or a pile-up of non-performing loans.
An effective method for alleviating the possible liquidity constraints faced by Sacco's would be the creation of a central liquidity pool, allowing for inter-Sacco borrowing and facilitating loan buy-off demands.
CAPITAL MARKETS
The NSE to implement block trades.
The Nairobi Securities Exchange (NSE) updated its trading regulations to allow for the implementation of block trades.
What is a block Trade? A block trade is a large securities transaction privately negotiated and arranged away from public markets to minimize its impact on the security price.
“The NSE has noted a trend where there is an increase in block trades and given the inability to conclude such via the normal board, investors have been seeking exceptions for transfer outside the NSE, thereby compromising transparency given that such trades are not reported. This has necessitated the need for the NSE to accommodate such transactions which may be prearranged by the parties involved.” - Mr. Geoffrey Odundo, Chief Executive, NSE.
The NSE expects that the block board will drive more liquidity in the Kenyan market
Click to access the rulesCORPRATE
1. Kenya Airways cargo unit KQ Cargo & Astral Aviation signed a codesharing agreement
Kenya Airways Cargo (KQ Cargo) signed a codeshare agreement with Nairobi-based air freighter Astral Aviation.
The agreement is expected to boost trade and commodity movement from the Middle East into Africa by leveraging the strengths of the two cargo operators at Jomo Kenyatta International Airport.
KQ will put its codeshare flight numbers on Astral Aviation flights originating from Dubai in the United Arab Emirates into Nairobi, for onward distribution within Africa.
Past working relations: During the COVID-19 pandemic, Astral Aviation contracted Kenya Airways repurposed Dreamliners to carry Covid related materials from Guangzhou to Nairobi for onward connection to the rest of Africa.
2. Equity Bank Kenya completed the Acquisition of Spire bank
Last week, Equity Bank (Kenya) Limited completed the acquisition of certain assets and liabilities of Spire Bank Limited.
The acqusition followed the receipt of regulatory approvals from:
The Cabinet Secretary Treasury and Planning under Section 9 (1) of the Banking Act.
The Central Bank of Kenya under Section 9, ( 5) of the Banking Act.
The Sacco Societies Regulatory Authority.
The Competition Authority of Kenya.
Corporate approvals from the board and shareholders of Equity Bank, Mwalimu National Savings & Credit Co-operative Society Limited (Mwalimu Sacco) and Spire Bank.
Effect of the Acquisition
Customers holding deposits in Spire Bank, other than the remaining deposits from Spire Bank’s controlling shareholder, and specified loan customers have transitioned to become Equity Bank Kenya customers with new Equity Bank accounts.
“The new customers from Spire Bank, will enjoy the same relationship and our empathetic approach in the provision of banking services. They will be able to access their money anytime and without restrictions. Equity remains committed to playing a part in resolving the challenges of our people as we have continuously done in the past” - Dr. James Mwangi, Equity Group Managing Director and CEO
AVIATION
The International Civil Aviation Organization Elevated Somalia’s Airspace to Class A
The International Civil Aviation Organisation (ICAO) officially restored Class A air traffic control services over Somalia.
It has been 30 years since radio navigation in Somalia went offlineClass A air traffic control services means the restoration of ground control to cordinate air traffic
Before, pilots flying over Somalia relied on announcing their aircraft’s position, altitude, heading, and speed over a dedicated radio frequency, leaving it up to other airborne pilots to be tuned in and monitor these broadcasts. With no ground control to coordinate traffic and assign flight levels, there was no warning for pilots if their aircrafts were approaching too closely.
According to the International Air Transport Association (IATA), the reclassification of Mogadishu Flight Information Region to Class A airspace will enhance safety by providing better situational awareness for pilots flying in the country’s upper airspace.
WHAT YOU MUST HAVE MISSED
Water Resources and Management Authority’s (Warma) proposal to increase tariffs threaten to further increase electricity costs
Water Resources and Management Authority (Warma) applied to the energy regulator (EPRA) seeking an upward review of the its levy to Ksh 2 per unit of power, from the current Ksh 0.01 per unit.
The push for the upward review of the Warma levy is separate from the application made by Kenya Power on behalf of other State energy agencies to increase electricity bills by up to 78% from April this year.
Charges of financial impropriety against Flutterwave Inc have been withdrawn
The Kenyan government withdrew charges of financial impropriety against Flutterwave Inc.
Seven months ago, the court froze the company’s bank accounts in Kenya over suspicions of financial impropriety.
The withdrawal of the charges is a positive development for Flutterwave Inc which is preparing for an initial public offering on the Nasdaq stock exchange. Flutterwave was last valued at more than $3 billion and had raised more than $450 Million in VC Funding.
Fuel crisis Looming ?
According to The Sunday Nation, the Government is yet to pay oil dealers for subsidies on diesel and kerosene since taking office in September last year.
The article on Sunday Nation stated that the six-months delay is detrimental to the oil dealers who are losing out on both their working capital as well on as the foreign exchange rate
Inflation highlights January 2023
