The World Bank Approved KES 138 Billion Budget Support Loan for Kenya
5 June 2023
The World Bank Approved KES 138 Billion Budget Support Loan for Kenya
The World Bank has given its approval for a significant budget support loan of KES 138 billion ($1.0 billion) to Kenya. This loan comes under the Fiscal Sustainability and Inclusive Green Growth Development Programme Operation (DPO), which aims to promote sustainable economic growth and address fiscal challenges in the country.
Kenya's request to the World Bank to raise the loan amount by 33 percent was granted due to the tightened global financing conditions.
The Sh138 billion loan will be divided into two equal parts. Half of the amount, approximately KES 69 billion, will be drawn from the World Bank's International Development Association (IDA), which focuses on providing low-cost financing to low-income economies.
The remaining half will be sourced from the International Bank for Reconstruction and Development (IBRD), which offers semi-concessional financing.
The IBRD tranche of the loan carries a maturity period of 18.5 years and has a variable interest rate set at 85.0 basis points above the Secured Overnight Financing Rate (SOFR).
Click here to read full article
CAPITAL MARKETS
Central Bank of Kenya Targets KES 60 Billion from New Infrastructure Bond Sale
The Central Bank of Kenya (CBK) has initiated the sale of a new seven-year amortized infrastructure bond with the aim of raising KES 60 billion. This move comes as the apex bank gears up to conclude its domestic borrowing program for the 2022/23 financial year next month. The bond, which is tax-free, will be available for purchase until June 13.
In an effort to make the bond even more attractive, the CBK has introduced a structured redemption cycle. Under this scheme, 20 percent of the outstanding principal will be retired on June 15, 2026, and an additional 30 percent on December 13, 2027.
Apart from the appealing tax benefits and redemption structure, the CBK is counting on renewed investor interest in bonds to achieve full subscription for the paper. Investors who were previously inclined towards shorter-term Treasury Bills have demonstrated a growing interest in government bonds. This trend was evident in the recent successful subscription of a three-year bond, which accumulated KES 58.1 billion through two consecutive tap sales following the bond's primary issuance.
Click to here to read full article.
INSURANCE
APA Life Assurance Approved to Manage Graduated NSSF Contribution
APA Life Assurance has obtained approval from the Retirement Benefits Authority (RBA) to manage graduated NSSF contributions on behalf of employers. The approval covers workers earning more than KES 18,000, also referred to as Tier II contributions. This move positions APA Life Assurance, a part of the Apollo Group, as a key player in handling higher-tier pension contributions.
Through their scheme, the APA Umbrella Pension Fund, the underwriter will now be responsible for managing deductions on behalf of individuals, employers, and employees. This marks a new era of competition among private schemes vying for employers who choose to opt out of the NSSF as a custodian of the higher-tier pension contributions.
Catherine Karimi, the Chief Executive of APA Life Assurance, expressed her satisfaction with the regulatory approval. "This regulatory approval further solidifies APA Life's position as a reliable and authorized institution for managing Tier II contributions," stated Karimi in a press release on Wednesday. She also emphasized the convenience and peace of mind that partnering with APA Life Assurance brings to employers fulfilling their obligations towards their employees' social security contributions.
The approval from the RBA recognizes APA Life Assurance's ability to effectively administer and safeguard Tier II contributions. It attests to the company's compliance with the rigorous standards and requirements set forth by the regulatory authority.
Click here to read the full article.
JUDICIARY
British Gold Trader Petitions for Removal of Judiciary Chief Registrar Over Gold Scam
Demetrios Bradshaw, a British gold trader and director of Bruton Gold Trading LLC, lodged a petition before the Judicial Service Commission (JSC), seeking the removal of Judiciary Chief Registrar Anne Amadi from office. Bradshaw accuses Amadi of involvement in a KES 100 million gold scam and alleges gross misconduct. The petition highlights multiple grounds for her removal, including her dual role as an employee of the judiciary and a consultant for Amadi and Associates law firm.
According to the petition filed before the JSC:
Bradshaw has an ongoing case at the High Court, demanding a refund of over Sh100 million that he claims to have paid to Amadi and Associates.
Bradshaw asserts that he fell victim to a gold scam orchestrated by the law firm.
In light of these allegations, Justice Alfred Mabeya recently issued an order to freeze Amadi's accounts and those of her law firm until June 9, pending further investigation and a ruling on her application to unfreeze the accounts and strike out the case.
In the petition, Bradshaw urges the JSC to take swift action in accordance with the applicable laws and remove Anne Amadi from her position as Chief Registrar with immediate effect. The petition cites various instances of alleged misconduct, including Amadi's alleged receipt of money into a personal account linked to her law firm and her continued control over the operations of said account.
Click here to read the full article.
PUBLIC-PRIVATE PARTNERSHIPS
President William Ruto's Administration to Revitalize Maritime Industry Through Ambitious PPP
President William Ruto's administration unveiled plans to lease the operations and management of five crucial ports in Kenya. The ambitious public-private partnership (PPP), valued at KES 1.4 trillion. This decision marks a departure from the previous administration's proposal to hand over the ports to private investors.
The Kenya Development Corporation (KDC), a development finance institution, has disclosed that the Kenya Kwanza administration is actively seeking private players to oversee sections of Kilindini Harbour, Dongo Kundu Port, Lamu Port, Kisumu Port, and Shimoni Fisheries Port. The ultimate goal is to enhance the competitiveness of the northern corridor, a vital trade route.
The KDC has emphasized that the ports currently face challenges such as congestion and extended dwell times for cargo. The ports will be leased or concessioned to private operators who will implement a landlord-type port management system to address these issues. This approach is expected to optimize operations and improve efficiency.
Click here to read the full article
ENERGY
Government Allocates KES 25.2 Billion to Clear Fuel Subsidy Debt in New Budget
In an effort to resolve the longstanding controversy surrounding the fuel subsidy debt owed to oil marketers, the government has set aside KES 25.2 billion in the new budget. The allocation aims to clear arrears and provide relief to oil marketers who have been burdened by compensation delays, which in turn have impacted their cash flow.
Treasury Cabinet Secretary Njuguna Ndung’u has submitted proposed changes to the 2023/24 budget, including provisions for payments to oil companies. This move is intended to address the financial challenges faced by these firms and ensure their smooth operations. With the compensation delays, major oil companies have been compelled to increase borrowing from banks to sustain their high capital outlays. Furthermore, several small dealers have been forced to temporarily shut down their businesses due to the financial strain.
In a report presented to the Budget and Appropriations Committee (BAC), Professor Ndung’u stated,
"Mr. Chairman, following the re-organization of government, the Parliament's resolution while approving the 2023 Budget Policy Statement (BPS), and to take care of payment of fuel subsidy arrears carried over from the financial year 2022/23, we have proposed amendments to the financial year 2023/24 budget as approved herewith - oil exploration, distribution of oil and gas - Sh25,222,411,755. The funds will cater for fuel stabilization and will be funded through the Petroleum Development Levy (PDL)."
Click here to read the full article.
The Cost of Electricity has Soared by 67% in Nine Months
The cost of electricity in Kenya has skyrocketed by 67 percent in the last nine months. A combination of factors, including higher fuel costs, currency depreciation, and the review of electricity tariffs, has led to this unprecedented surge. The burden of this surge has fallen heavily on consumers, with the cost of electricity now exerting significant pressure on consumer spending.
A comprehensive analysis conducted by the Business Daily, using data from the Kenya National Bureau of Statistics (KNBS), reveals the alarming rise in electricity prices. The average price of 50 kilowatt-hours (kWh) of electricity has surged from KES 796.83 in August of the previous year to a mean of KES 1,326.54 at the end of May this year.
This implies a staggering increase of over 67 percent within this relatively short time span.
WHAT YOU MUST HAVE MISSED
The United States Department of State postponed the date for the increase of worldwide visa fees
The United States Department of State has postponed the date for the increase of worldwide visa fees to June 17 from the earlier pronounced date of May 30, amid a public outcry that will see some applicants pay upto Sh42,000 to acquire the travel document.
The increase of the fees in ranges between seven and 53 percent, which was first announced on May 3, was attributed to the rising costs of processing the travel document.
Sun King to access KES 18 Billion for its operations
Sun King, is set for $130 million (Sh18 billion) financing that will see it sell products such as solar lanterns to customers in Kenya on credit, with expected payments to be used to settle the debt.
Sun King and Citibank on Tuesday announced the Kenyan-shilling-denominated deal, structured as a sustainable securitization transaction, that will see development finance institutions and commercial lenders including British International Investment, Absa Bank Kenya and Stanbic Kenya team up to provide the funds.
The International Finance Corporation invests in Africa Conservation and Communities Tourism Fund (ACCT Fund)
The International Finance Corporation injected $13 million KES 1.79 billion into a pan-African fund, enabling operators of safari camps, hotels and lodges to access loans to recover from lingering shocks of the pandemic.
IFC said that the investment in Africa Conservation and Communities Tourism Fund (ACCT Fund) targets ecotourism businesses in East and Southern Africa.
Conservation tourism in Kenya, South Africa, Tanzania, Botswana, Namibia, and Zambia facing liquidity challenges that emanated from the Covid-induced travel restrictions three years ago will be prioritised under IFC’s new investment.