Sanctions on Russia affect Kenyan exports
7 March 2022
Good Morning. Last week, a study by Knight Frank on Kenya’s dollar millionaires revealed two interesting facts:
a) Wealthy Kenyans are packing their bags. According to the study, nearly a third of wealthy Kenyans are seeking a second passport or new nationality to access better investment opportunities, healthcare, and quality education overseas.
b) The number of Kenyan dollar millionaires rose by 39 to 3,362 as of 2021. A third of the dollar millionaires (or 803 of the 3,362) are self-made and aged under 40 years.
FOREIGN EXCHANGE RATE
Sanctions on Russia has affected Kenyan exports
Kenya’s exports of tea, flowers, coffee, and fruits to Russia have been derailed in the wake of sanctions imposed on Russia by Western nations.
The value of exports from Kenya to Russia is estimated at Ksh10 billion ($87.5 million) annually.
Among the sanctions imposed on Russia are:
Western leaders have frozen the assets of Russia's central bank, limiting its ability to access $630bn (£470bn) of its dollar reserves.
The US, the EU, and UK have banned people and businesses from dealing with the Russian central bank, its finance ministry, and its wealth fund.
Selected Russian banks will be removed from the SWIFT messaging system, which enables the smooth transfer of money across borders. The ban will delay the payments Russia gets for exports of oil and gas.
Western leaders have also put Curbs on products that can be sent to Russia.
Excluding Russian banks from SWIFT (the international payment system), and its central bank from international operations has made it harder for Russia to pay for imports and receive cash for exports.
These factors have made it riskier and more expensive for Kenyan exporters to export goods to Russia.CAPITAL MARKETS
Investors at the Nairobi Stock exchange hedge against volatility in global markets
On Wednesday, investors at the exchange purchased gold-backed exchange-traded fund (ETF) worth Ksh 91.7 million.
All trades were carried out by foreign investors, mirroring the trend elsewhere in global markets, where investors are shedding risky equities and turning to safe-havens like gold, the dollar, US bonds, and the Swiss Franc.
Gold was trading at Ksh219,922 per troy ounce (31.1 grams) on 1 March.
NAIROBI COUNTY
Why you might have to pay more for parking fees in malls
Last month, the Nairobi County Assembly approved amendments to the Nairobi City County Finance Bill 2021, which introduces new levies for establishments offering parking services.
The bill requires such establishments to obtain a license from City Hall to operate the service.
The Levy introduced by the Nairobi City County Finance Bill 2021:
Malls and big business establishments offering parking services in Nairobi are required to pay between KES 500,000 and KES 2,000,000 annually as a single business permit fee.
Businesses with a parking capacity for 50 vehicles will be required to pay Ksh500,000 every year while those with capacity for more than 100 vehicles will be charged Ksh2 million.
If implemented, The new levy will lead to malls and private establishments increasing parking fees as they will pass the costs to motorists.
UNIVERSITIES
1. HELB announces a 100% penalty waiver for defaulters
The Higher Education Loans Board (HELB) announced a 100% penalty waiver for loan defaulters.
Note: The waiver lasts from 1st of this month to 30th April 2022.
In releasing this announcement, HELB CEO Charles Ringera stated that it was important for all beneficiaries to honor their obligation as stipulated in the loan application terms & conditions so as to empower the dreams of other students.
2. The University of Nairobi announced that it would reduce the number of courses offered at the institution.
Lecturers at the University of Nairobi are facing mass layoffs after the announcement that Nairobi university would reduce the number of courses offered.
This announcement comes less than a year after the university cut off 250 units that had fewer students than expected.
The reduction in the number of courses offered is an attempt by the University to cut costs.
The University of Nairobi has been facing financial difficulties due to the decline in student enrolment numbers, mismanagement of funds, and low State funding.
There has been a decrease in the number of students at the University, down from 70,515 in 2019 to 58,488 in the year to June 2021.The university has defaulted on statutory deductions such as pensions and tax for its employees, resulting in debts of over Ksh 34 billion.
MANUFACTURING
Kenyan manufacturers are pushing for the removal of import duty on raw materials
The Kenya Association of Manufacturers (KAM) is proposing that the government should remove the import duty on raw materials. The association stated that this proposal would lower production costs of local goods and improve their competitiveness in the global market
“the government should only tax the final product and should avoid double taxes by national and county governments.” - Kenya Association of Manufacturers
Currently, Imported raw materials and semi-processed goods attract a duty of 10% and this contributes largely to the high prices of locally-made goods.
BUSINESS
Kenya imported 325 helicopters from South Africa in 2020.
According to data from the South African tax authority, 325 helicopters worth approximately Ksh3.6 billion were imported into Kenya by different individuals in the year 2020.
The rise in the number of helicopters in the country can be attributed to the intense political campaigns ahead of the August polls as political leaders use choppers to travel across the country for campaigns.
What you might have missed last week
Absa Bank Kenya Plc signed a Ksh 1.25 billion Loan Portfolio Guarantee Facility with the African Guarantee Fund (AGF)
The deal will increase credit accessibility for local small businesses, including start-ups.
Green and women in business enterprises will access up to 75% cover.
Other businesses (which are not green- and women-related) will receive up to 50% of cover.
Standard chartered to enter Kenya’s local e-commerce market
Standard Chartered is set to enter the local e-commerce business through Solv, an India-based technology firm in which it invested in December 2020.
Standard Chartered Bank Kenya will be the financial partner of the platform which offers small businesses an online marketplace and provides credit and support services.
Businesses using the Solv platform can access loans and invoice-based financing for orders placed on the platform.
They also get access to other services including logistics and insurance.
Safaricom Received a Global Mobile Award for the Mpesa Super App
Safaricom scooped the prestigious Global Mobile Award (GLOMO) for the M-PESA Super App at the Mobile World Congress in Barcelona.
M-Pesa received the award under the category for “Best Mobile Innovation for Connected Living”
The Global Mobile Awards celebrate the most innovative and brilliant solutions in the mobile and digital industry.
The University of Nairobi (UoN) deregistered over 30,000 inactive students
The deregistered learners included those whose studentship had expired, those on expulsion, and the ones with unexplained failure to transit to the subsequent level.
Nairobi’s most dangerous roads
The latest National Transport and Safety Authority (NTSA) survey revealed that Outering road in Nairobi is the most dangerous road.
This is because the Fatal accidents that occurred on Outering road accounted for 44 of the 371 road accident fatalities in 2021.
Waiyaki way - 38 fatalities were recorded.
Mombasa Road - 29 fatalities were recorded.
Northern and Southern bypass-es - 29 Fatalities for each section were recorded.
Ngong road - 22 fatalities.
Thika Super Highway - 25 Fatalities recorded.
6. Want to Know how your country voted on the UN resolution against Ukraine Invasion?
