What the new Government inherits
21 August 2022
Good morning. The outgoing health committee in parliament has tasked the new parliament with the pending review of hospital charges. The committee wants the new parliament to review what hospitals in Kenya can charge.
This includes professional fees, cost of medicines, hospitality, and medical devices among others.
Economic hurdles facing the new government
Kenya’s new government will inherit Ksh 505 Billion in pending bills owed to suppliers and contractors, a debt of Ksh 8.6 trillion, drought and starvation in several parts of the country, and citizens battling the increased cost of living.
Pending bills owed to suppliers and contractors
Kenya’s new parliament will inherit more than Ksh 500 billion owed to suppliers and contractors by ministries and State agencies. These bills have exposed many small and medium-sized businesses to closures and auctions.
Latest Treasury statistics showed that pending bills climbed to Ksh 504.7 billion at the end of the last financial year in June, a 40.39% jump over Ksh 359.5 billion the previous year.
Kenya’s debt
Kenya’s debt at the end of the 2021-2022 fiscal year stood at Ksh 8.6 trillion. This is an 11.5% yearly rise in public debt from Ksh 7.7 trillion recorded in June 2021.
New provisional data from the National Treasury shows that:
Gross public debt was up by Ksh 822.5 billion across the period.
Non-bank & non-residents hold the bulk of Kenya’s domestic debt at Ksh 2.2 trillion through holdings of Treasury bills and bonds
Fuel subsidy
Oil marketers in Kenya warn of fuel shortages because the government has delayed paying them the subsidies meant to keep the prices of fuel low.
The companies are owed Ksh 65 Billion shillings (USD 542M) for supplying fuel for the three months since June 2022.
ECONOMY
Fuel prices expected to rise?
The Energy and Petroleum Regulatory Authority (Epra) stated that the Kenya Pipeline Company (KPC) has applied for a review of the transportation and storage tariffs for the period 2021/22 to 2024/25.
This means that Kenyans could experience higher fuel prices over the next three years should the Kenya Pipeline Company (KPC) be allowed to increase the transportation and storage tariffs for petroleum products
According to Epra, KPC aims to use revenue from the proposed tariff to partly fund the enhancement of the firm’s pipeline between Mombasa and Nairobi.
KPC contracted Lebanese firm Zakhem International Construction for the multi-phased construction of the 450-kilometer oil pipeline for Sh48 billion in July 2014.
JUDICIARY
High Court bars appointment of board members to Rural electricity agency
The court temporarily barred eight members of the Rural Electrification and Renewable Energy Corporation (REREC) Board of Directors from discharging their duties following a dispute regarding their appointments.
The affected directors are Wacuka Ikua (Chairperson of the Board), Brig. Hassan Sora, Rhoda Njuguna, Wahome Gitonga, Mary Mwiti, Eva Sawe, Samuel Mugo Kimani and John Karamunya Limakamar. The court also suspended their appointments.
Ms. Ikua was appointed by President Uhuru Kenyatta through a gazette notice dated April 14, 2022, while the other members were appointed by Energy Cabinet Secretary Monica Juma in May and August. They were hired to serve for a period of three years.
The court order was issued by Justice Hedwig Ong’udi in a suit filed by Mr David Simiyu, who claims the appointments breached the law over a lack of competition and transparency in the recruitment.
TRAVEL
Ethiopian airlines: pilots fall asleep and miss landing
An Ethiopian Airlines passenger plane missed its landing and overflew the runway at the Bole International Airport. Reports state that this incident occurred after its two pilots fell asleep.
On Monday, Flight 343, a Boeing 737-800, was flying from Khartoum, Sudan, to Addis Ababa, Ethiopia, The Aviation Herald reported. According to the aviation publication, the pilots woke up after the autopilot system disconnected, setting off an alarm. The pilots then made another approach and landed the plane safely.
Data from flight radar shows that the plane failed to start its descent as it approached the airport. The autopilot system kept the aircraft cruising at 37,000 feet (11,200m).
MARKETS
Kenyan investors reluctant to lend to the government
The August Treasury bond sale fell Ksh 11.5 billion below target as investors demanded higher rates that forced the Central Bank of Kenya (CBK) to leave bids on the table.
Bidders offered a total of Ksh 49.1 billion in the bond sale that targeted Ksh 50 billion, out of which the CBK accepted Ksh 38.5 billion.
The three-tranche bond consisted of a three-year security, a 10-year offer, and another facility of 20 years.
Investors demanded on average 12.45% from the three-year paper, but the CBK was willing to pay a return of 11.8%.
WHAT YOU MIGHT HAVE MISSED
Most Banks in Kenya have increased interest rates on loans
The latest bank loan and overdraft rates data published by the Central Bank of Kenya show that most banks have increased interest rates on loans to 14% with some banks going as high as 16.4% .
Examples are: a) Eco bank — 16.4%, b) Middle East bank — 16.1%, c) Kingdom Bank — 15.3%
The Judiciary Fund has been activated
After six years, the Judiciary Fund was finally activated giving the courts financial independence. The Judiciary Fund Act was passed in 2016 but its operationalization has been delayed over the years as the Judiciary fought with the Executive over the activation of the Fund.
On Friday, the Judiciary announced that the Treasury had loaded Ksh 9 billion into the Fund for the half-year budget for 2022/23.
Kenya exported Miraa worth Ksh 1 billion to Somalia in its first three weeks
Kenya exported miraa worth Ksh 1 billion to Somalia in under a month since the resumption of trade. Head of Miraa Pyrethrum and other Industrial Crops Felix Mutwiri stated that the country had exported 375 tonnes in the last three weeks.
Despite the good news, the earnings could have been higher. This is because currently, the traders can only ship a maximum of 19 tonnes a day while previously, the limit was 40 tonnes.
Intellectual property rights in Russia being used as a war tactic
The Russian government issued a decree stating that Russian companies are no longer obliged to compensate owners of patents, utility models, and industrial designs from “unfriendly” countries. The unfriendly countries are the western states that issued sanctions against Russia, including the UK and US
This means that Russian businesses can use intellectual property, such as patented inventions or fashion designs, without having to pay or seek the consent of the rights holders.
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