this thread is dedicated for business and finance issues

Kenyan banks will partner with micro-finance institutions (MFIs) and Savings and Credit Co-operative Societies (Saccos) to draw the un-banked population into the mainstream economy.

Central Bank of Kenya (CBK) Governor, Njuguna Ndungu said the financial market regulator is working on a framework that will see even the most rural of populations gain access to affordable banking services.

"We are working on modalities that will see banks partner with grass root financial services providers such as MFIs," said Ndungu.

Among key strategies lined up for the project is a plan by Treasury to amend the Banking Act, to allow for branchless banking.

The amendment that is awaiting approval by Parliament — will allow banks to extend services to various parts of the country by partnering with established institutions that will act as their branches.

Successful adoption of the proposal will see banks offer financial services through appointed agents.

The development is bound to cut costs associated with opening a branch, and in the process reduce the cost of financial services provision for low-income groups. CBK said it plans to put in place mechanisms to ensure technological innovations such as M-Pesa and Zap are used widely.

Other areas the market regulator will be looking at include State bank reforms and consumer education.

Cost of credit

The market regulator is also betting on the recent establishment of the credit reference bureaus (CRB) to bring down the cost of credit, as bank customers will be able to use their repayment credit history as collateral to acquire loans.

"The establishment of a CRB eliminates systemic risks, which form a huge component in the pricing of interest rates," said Ndungu.

The announcements will complement past efforts by financial market players in increasing financial services access and education.

Currently, 33 per cent of Kenyans have no access to any form of financial services, while 27 per cent access financial services from the informal sector, according to a Financial Access survey by CBK.

Twenty three per cent of the Kenyan population is banked, while another 18 per cent access financial services from Saccos and MFIs.

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They will lock out so many people in this one. I want to see if it will be oversubscribed like the Kengen one.

by James Munyeki
Equity Bank will roll out a multi-billion shilling youth investment training programme, where 50 youth groups from each of the 210 constituencies would benefit.
Chief Executive Officer James Mwangi said the six-week programme would cost Sh10 million.
Mr Mwangi said participants would be trained on small-scale investment skills.
They would also benefit from subsidised loans, to be repaid at an interest ratehttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=1144026242&cid=14&#) of eight per cent.
"We urge MPs to help us establish these groups in constituencies to enable youth benefit from the programme to start small-scale investments," he said. Speaking in Nyahururu, Mwangi said the funding would complement the Sh5 billion set aside for Fanikisha programme and another Sh5 billion for Kilimo na Biashara.
Mwangi noted that the programme would bring the amount set aside for youth and agriculture projects to about Sh24 billion.
The bank’s Chairman Peter Munga said Kenyahttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=1144026242&cid=14&#) can fight hunger and famine using modern farming methods.
"We must ensure farmers access funds to finance their activities."
The two were speaking after attending a fundraiser at the Christ the King ACK Church Cathedral in Nyahururu.


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Weather indexed crop insurance for farmers started

http://www.nation.co.ke/image/view/-/672204/highRes/107528/-/maxw/600/-/23o10b/-/farmer.jpg Farmer working on a maize plantation. Photo/FILE
By JOSEPH BONYOPosted Wednesday, October 14 2009 at 16:16


Small-scale farmers are now being insured against the effects of drought and excessive rain.

This follows a pilot phase for the new Weather Indexed Crop Insurance developed by UAP and Syngenta Foundation for Sustainable Agriculture.

According to UAP head of marketing and distribution, Mr Joseph Kamiri, the product was developed in response to insurance needs of farmers.

“We realised that many small-scale farmers had more failed crop seasons than successful ones and brought them this product to develop a sustainable way of crop farming,” he said.

The product has been tested and saw UAP hand over compensation payouts in form of inputs to farmers who were affected by the prolonged drought situation in Laikipia East district.

The compensation followed 18 months work in developing an index-based insurance scheme targeted at smallholder farmers.

Under the system, farmers register their purchases by sending an SMS to a phone number provided by UAP. The weather stations then monitor the weather and inform the insurance company of impending crop failure and subsequent compensation. Each farmer is then informed via SMS about the payouts.

“We intend to roll it out to other parts of Kenya next year,” said Ms Rose Goslinga Insurance coordinator of Syngenta Foundation for Sustainable Agriculture in Kenya.

Prime Minister Raila Odinga’s trip to China is paying off after his hosts on Friday pledged Sh600 million for infrastructure development.



According to the PM’s Press Service, the Chinese also promised to provide more funds as soon as Kenya lists its priority projects.

The pledge came on the first day of Mr Odinga’s visit to China to woo investors and to seek help to build a port at Lamu and a road and railway network through Ethiopia and Sudan.

Making the announcement in Chengdu, Chinese Premier Wen Jinbao said the Sh600 million was in addition to the Sh1.08 billion given to Kenya for the expansion of Thika Road.

Mr Jonbao also pledged to offer more scholarships to Kenyans at Chinese universities.

Mr Odinga said China and Kenya’s ties date back to the independence struggle. The Premier called for a balance of trade which is currently in favour of China.

He said that in 2007, China exported goods and services worth $980 million while Kenya exported goods and services worth $38 million to China.

“We would want more Kenyan tea, coffee, beef and flowers exported to China,” said Mr Odinga.

The government is also reportedly exploring the possibility of striking a land lease deal with the Chinese after an earlier one agreed with Qatari government fell through, the Saturday Nation has learnt.

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Pension plan targets jua kali sector

http://www.nation.co.ke/image/view/-/676302/highRes/109298/-/maxw/600/-/qpdp2v/-/RBA.jpg The regulator targets five million more people to join the pension scheme. Photo/FILE
By WINFRED KAGWEPosted Friday, October 23 2009 at 20:12

Retirement Benefits Authority (RBA) is targeting 5 million Kenyans in the informal sector, as it seeks to put more people on a retirement plan.

Currently, about 80 per cent of Kenya’s workforce lack any form of pension plan, in an economy without a social security programme to cater for them. Many Kenyans retire into poverty. The retirement authority will do this through partnerships with sector players such as the Kenya National Federation of Juakali Associations.

Generous

“The envisaged scheme for Jua Kali artisans is unique, in that contributors can pay Sh20 daily and whose returns on retirement will be determined by market performance of the funds,” said Dr Geofrey Mwau, the economic secretary of the ministry of Finance.

He was speaking on Friday during the opening of the Retirement Benefits open day held at KICC. The move to reach out to the Jua Kali (informal) sector has been applauded by the ministry of Finance, which said the lack of pension plans for many Kenyans is a major concern for the government.

However, players in the pensions industry says reaching the informal sector as it is now may take some time due to lack of structures.

“For the funds to gain real benefits, the cost of reaching the informal sector should not be higher or so close to the returns as is the case now. This is because members’ funds will bear the burden,” says Ms Joseph Kirono, a consultant with pension administrators AON Minet Kenya.

Structure

He recommends that the easy way to reach the sector is through structured groups. RBA is currently engaged in a campaign with the jua kali federation association to educate people working and investing in the informal sector on the need to save.

This follows indications in the 2009 Economic Survey, which shows that the shift from formal sector employment to the informal sector has grown considerably over the last 10 years and is expected to continue.

There is excitement in the property sector as mortgage lenders prepare to launch new products that will allow pension savers access house loans.

This comes three months after a new legislation was introduced allowing pension-backed mortgage products into the market.

"This is a welcome move as it will allow those individuals who have been unable to raise initial deposits for a mortgage to access credit and own residential houses," said Lazarus Muema, Chairman, Association of Retirement Benefits Schemes (ARBS).

He however cautions lenders to be careful when giving loans to pension savers. The latter are also advised to take up the mortgage during their active working life.

" We are urging pensioners to ensure they liquidate their mortgage upon retirement. This is to safeguard their pension earnings in old age," said Muema.

Previously, the law did not allow use of pension savings as collateral, locking out those going into retirement from owning homes.

However, new guidelines issued by the Retirement Benefits Authority (RBA) opened an avenue for individuals to use their pension savings as security against a home loan. Under the new regulations published in the Kenya Gazette, pension contributors are eligible to start applying for home loans using their savings as guarantee starting June 12, 2009.

The entry into the market of pension-backed mortgages comes at a time when there is a high demand for housing, especially in the low-income segment.

These new products are expected to provide incentives for more individuals to contribute to retirement benefit schemes.

Players in the industry say that while the idea is good, it is up to financial institutions to come up with suitable packages.

However, there is a downside to the deal.

"If there is a crash in the property market and prices fall significantly, pensioners (could) end up without both their life savings or house," warns Charles Mangee, Assistant Divisional Director, Life and Pensions, Eagle Africa Insurance Brokers.

The use of pension savings as collateral comes after Treasury tightened rules governing how pension funds are to be invested, in a bid to better regulate and streamline pensions’ sector and guarantee better income to the scheme members after retirement.

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Mortgage financier, Housing Finance has registered a 57 per cent growth in pre-tax profits for the third quarter this year.

Profit before tax increased to Sh202 million up from Sh128 million during a similar period last year.

Housing Finance Managing Director Frank Ireri attributed the growth to product innovation, cautious loan disbursements and lower cost of funds.

‘‘These results were achieved based on a clear strategy to reduce the bad book. We will continue to focus on product innovation, customer service, credit risk management and cost control,’’ said Ireri.

Loans and advances increased by 33 per cent to Sh13 billion, from Sh9.8 billion during a similar period last year. As a result, interest income increased to Sh1.2 billion from Sh932 million over the same period last year.

The level of bad books as indicated by the net non-performing loans portfolio dropped marginally to Sh801 million from Sh892 million.

Customer deposits increased to Sh12 billion, up from Sh9 billion in September last year.

The growth is attributed to HF’s recent launch of a campaign to increase deposits by unveiling a new account that is set to offer a bridge between savings and mortgage.

The crossover account offers preferential interest rates of up to 10 per cent and mortgage interest rate discounts of up to two per cent when applying for a mortgage.

Ireri said HF is banking on innovation to break into new markets and growth. The firm, in partnership with British American, recently launched a pension-backed mortgage solution known as Home Freedom.

The product enables mortgage applicants to use up to 60 per cent of their pension benefits as additional collateral for mortgage loans.

Meanwhile, Bank of Africa Kenya has announced a 32.6 per cent increase in pre-tax profit for the third quarter ending September 30.

The bank recorded Sh183 million during the period compared to Sh138 million in the same period last year.

Managing Director Kwame Ahadzi attributed the increase in profits to the bank’s strategy of focusing on organic growth.

He said the bank’s network has been steadily growing — giving a boost to its customer base.

Kenya's NIC Bank posted a 12 per cent rise in nine-months pre-tax profits on Thursday to Sh1.19 billion, compared with the same period a year ago.

Interest income rose 23 per cent to Sh3.28 billion, unaudited results show.

Loans and advances were up 21 per cent to Sh2.96 billion, while loan-loss provisions for the group climbed 83 per cent to Sh254.84 million.

The bank said its total assets stood at Sh47.5 billion at the end of September, from Sh39.82 billion last year.

It is ranked 11th in the country by assets.

NIC also operates in neighbouring Tanzania, where it bought a stake in a bank last year.

NIC said its earnings per share rose to Sh2.51 from Sh2.27 at the end of September last year.

The bank's shares closed trade at Sh28.25 on Wednesday on the Nairobi Stock Exchange, compared with a high of Sh205.00 hit on August 14, 2008.

Imperial Bank has reported an 18 per cent increase in pre-tax profit for the nine months ending September 30, 2009.

The bank realised Sh605 million compared to Sh515 million recorded in the same period last year.

Mr Abdulmalek Janmohamed, the bank’s managing director, attributed the improved profitability to growth in customer deposits by 23 per cent from Sh9.4 billion to Sh11.5 billion.

Loans and advances grew from Sh7.9 billion in September 2008 to Sh9.4 billion as at September 2009, which represents a 20 per cent growth against a marginal increase in the provision for non-performing loans of 2.5 per cent in the same period under review.

Interest income grew to Sh2.02 billion, representing a 17 per cent growth from Sh1.72 billion last year, largely owing to an increase in the loan portfolio.

“During this quarter, the bank ran a three month campaign dubbed Save and Win Promotion which led to increased deposits in current and savings accounts where both existing and non-existing customers got a chance to enter a draw to win exciting prices by depositing money into their accounts,” said Mr Janmohamed.

The Bank’s non funded income grew by 10 per cent from Sh376 million to Sh413 million, while assets expanded 21 per cent to Sh15.5 billion in September 2009 from Sh12.8 billion the previous year.

The recent introduction of international money transfer service Western “Union in addition to the already existing MoneyGram money transfer service is a strategy aimed at supporting the growth of the non-funded income,” he said.

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Players in the capital markets called for more market reforms as Safaricom bond issue started trading at the bourse.
The first tranche of a five-year Sh12 billion bond, was initially expected to raise Sh5 billion. It was 50 per cent oversubscribed, and Safaricom exercised the green shoe option, absorbing the extra Sh2.5 billion.
"The 7.5 billion... (will be invested in) the telecoms infrastructure, particularly the data network. This will go mostly to grow our 3G network, and grow our WiMax," Michael Joseph, the Chief Executive of Safaricom said.
The market players want the regulators to keep reforming structures to guarantee increased liquidity in the bond market.
Players called on Central Bank of Kenyahttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=1144030043&cid=14&#) (CBK), and the Capital Markets Authority to extend trading periods for bonds and hasten the re-opening of benchmark bonds.
"A number of international investors have expressed concerns over the level of liquidity at the bond market," Joseph said.
"It is our hope that regulators will provide an enabling regulatory framework that will encourage companies to continue seeing the local capital market as a ready, and capable partner in raising capital to fund development."
The calls come as the CBK and other market regulators undertake reforms to address the concerns raised by transaction advisors and other market players.
Last month, Nairobi Stock Exchangehttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.standardmedia.co.ke/business/InsidePage.php?id=1144030043&cid=14&#) (NSE) automated trading of Treasury bonds at the bourse. In August, the CBK announced the country’s first one-year Treasury Bill, which analysts say will ensure an accurate yield curve that is useful in pricing short-term loans and fixed deposits interest rates.
CBK has also earmarked two, five, 10, 15, and 20 year bonds, as ‘benchmark’ papers for marking out a reliable interest rates yield curve, in addition to the three and six month instruments.
New Regulations
Speaking at the official listing of the bond, Treasury Permanent Secretary, Joseph Kinyua, urged players to exploit the new regulations that are continuously under review to improve bond market liquidity.
"Trading through the secondary market will ensure increased liquidity and at the same time allow for self determination of the values of the listed items," explained Kinyua.
Peter Mwangi, the NSE chief executive said the bourse and other stakeholders were undertaking reforms to ensure that the application process of any bond is made shorter and predictable to encourage companies to list at the NSE.　

^^

They had to focus on the 3G networks especially with the world cup around the corner where they want Kenyans to follow the matches on their phones. It will definitely bring in the cash. Seems like their share price has been rising steadily on the NSE lately.:)

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^^wonderful job:cheers:

By Kipchumba Kemei and Lucianne Limo ,East African Standard
Conservationists are celebrating the recent Government decision to freeze development of tourist facilities in Masai Mara game reserve until a long-term management plan for the entire ecosystem is formulated.
Stakeholders in tourism industry say the current congestion bodes ill for the survival of the world famous resort.
Over the last 15 years, there has been haphazard development of lodges and camps, settlements, mushrooming of trading centres outside its gates, farming and other forms of encroachment on the famed reserve that have congested the ecosystem.
The Kenya Tourism Federation (KTF) has in the recent past blamed the National Environmental Management Authority (Nema) for condoning the construction of several camps within the ecosystem without following the right procedures.
Nema now states that it is not going to process any new Environmental Impact Assessment report on establishment of new sites until an environmental management plan for the entire Mara ecosystem is done.
Protected areas
But it says that the already submitted reports will be reviewed. It does not give the time frame when those who have submitted their assessment reports for establishing of tourist attractions will be allowed to commence construction.
"We are not going to issue licenses for the construction new facilities. The moratorium will be in place until the management plan for both protected areas and wild animal gorges is formulated," says Narok Nema officer Edward Wawire.
While announcing the ban on new developments in the Mara, the Tourism ministry said the reserve is congested and added that a committee had been formed to draw up guidelines on construction within and outside protected areas of 1,510-kilometre ecosystem.
But investors who have been granted permission to construct facilities view the KTF’s edict as a ploy to run some people out of business.
Hassan ole Kamwaro, whose Olkeju Ronkai Lodge opened this month, has dismissed claims that his hotel is situated on a critical conservation area.
A report by the Acting Chief Game Warden of the Mara Triangle Samson Parsime Lenjir noted that the 30-bed facility would compromise the conservation of the endangered black rhino.
But assessments by other environmentalists gave the hotel a clean bill of health.
A Government report that was commissioned three years ago says more than sixty lodges and camps had been developed without impact assessment done, exerting pressure on the fragile ecosystem.
The construction of the establishments along the Mara River, the source of clean water for both human and wild game, the report adds, has also led to serious pollution of water as solid and dangerous effluent from these facilities are discharged into the river, posing serious health hazards.
Most of the development of tourist facilities without control framework and environmental impact assessment are in group ranches and in the wildlife dispersal areas.
Landowners have leased them to private companies and individuals in total disregard of the laid down procedures. Most of them are mobile camps.
The facilities, the report says impact negatively on the environment and affect prudent business management of the lodges and camps within the reserve.
Despite the congestion, the general infrastructure within the Game reserve is inadequate and in deplorable state.
The access roads for game viewing are impassable and calls for immediate attention, it adds.
The encroachment from the bigger picture started with the destruction of the Mau Forest, which is the source of water to the reserve.
The forest cover has been depleted through wanton logging, grazing of animals, charcoal burning and illegal land allocations, affecting the Mara-Serengeti ecosystem.
The destruction of the biggest catchment in East Africa has led to severe water shortage is being experienced downstream with serious consequences to human, livestock and wildlife.
Game viewing
The Government report states that the Narok and Trans Mara county councils lack management plan for the reserve and recommends that a strategic framework of over five to ten years be formulated.
Tourism industry stakeholders have observed that though belated, there was urgent need to formulate a management pan for the reserve that will be reviewed after every ten years.
"There is need top enforce area management plan, good corporate governance and benefit sharing to ensure all communities benefit from the resource," says the Kenya Wildlife Service director Julius Kipng’etich.
"Apart from the ecological concern, the reserve should offer premium game viewing to all visitors with the local communities benefiting equitably," says Dr Kipng’etich.
Narok county council vice chairman Solomon Moriaso observes that the civic body is in the process of tackling all the problems bedevilling Masai Mara, adding that the civic body was liaising with all the bodies concerned in the tourism sector to formulate a master plan for the entire ecosystem.
The Minister for Culture and National Heritage William ole Ntimama warns that if the Kenya Government does nothing to curb the degradation of the larger Mara-Serengeti ecosystem that started with flawed environmental policies, the country’s diplomatic relations with Tanzania and all the countries along the river Nile basin will be strained.

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The Capital Markets Authority (CMA) has approved the application for consent to register a Diaspora Unit Trust Funds Scheme by InvesteQ Capital Limited.
Ms Stella Kilonzo, the CMA chief executive said the fund, which targets Kenyans in the Diaspora will operate pursuant to the procedures prescribed in the Capital Markets Act and Capital Market (Collective Investment Scheme) Regulations, 2001.
A unit trust fund is an investment scheme that pools money together from many investors who share the same financial objective. It is also managed by a group of professional managers.
The portfolio managers invest the pooled money in a portfolio of securities such as shares, bonds and money market instruments or other authorised securities to achieve the objectives of the fund.
In exchange of the money received from the investors, the fund issues units to investors who are known as unit holders.
The fund earns income from the investment in the form of dividends, interest income and capital gains.
The underlying value of the assets of a unit trusts is always directly represented by the total number of units issued multiplied by the unit price less the transaction or management fee charged and any other associated costs.

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Kenya's second largest mobile operator Zain plans to roll out a third-generation (3G) service in July this year after an expected cut in license fees by the regulator, its managing director said on Monday.

Data is the main growth area for operators in east Africa's largest economy and Kuwait-listed Zain, which along with Essar's Yu and Telkom Kenya have a combined market share of just over 20 per cent, have been pushing for lower license costs to allow them to launch 3G.

"We are planning to roll out 3G services in July 2010. We expect the regulator to announce new spectrum costs for 3G during the first week of June which are going to be substantially lower than the current $25 million," Rene Meza told Reuters by phone.

"That will obviously allow all mobile operators to be able to roll out 3G services in Kenya and increase Internet penetration in the country."

A senior government official said in February license fees for 3G telecom services could be cut for smaller mobile phone operators to help them compete better.

Kenya has a 50 per cent mobile phone penetration rate but the number of people with access to broadband Internet is much lower.

The International Telecoms Union says only 8 per cent of Africans have access to the Internet with only 3 per cent having access to broadband.

Early acquisition

Safaricom, Kenya's leading operator with a 78.3 per cent mobile market share, has benefited from its early acquisition of a 3G license, posting a 72 per cent growth in revenue from the data segment in its year ended March.

Meza said Zain Kenya posted a 35 per cent growth in its data business last year -- through 2G -- but said it was hard to predict performance this year since the environment was fluid.

"There are so many variables and aspects that one has to consider. Two years ago we were two mobile operators in the market, now we are four. Regulations will change," he said.

A rise in the number of operators in the Kenyan market has also affected the firm's subscriber base, Meza said, adding Zain Kenya had 2 million users, which compares with the 2.68 million the company said it had at the beginning of last year.

"Entrance of new players in the market, coupled with the global crisis and the post-election violence affected the mobile uptake of subscribers in Kenya's industry," he said.

Zain Kenya, like other Zain operations in Africa, is in the process of being sold to India's Bharti Airtel in a $9 billion deal.

"Hopefully the transaction will be closed soon and we are going to have clearer visibility on the way forward in Africa," Meza said.

^^with CBK regulation of 1b requirement and foreign banks joining the industry, no choice they either merge or perish for the lower tier banks :)

With the World Cup expected to kick-off next week, Equity Bank is positioned to leap from expected upsurge in subscriptions to pay-television after it signed an agreement with MultiChoice on Thursday to ease payment by potential subscribers.

The World Cup, which runs from June 11 to July 11 is expected to increase sales in television sets and subscriptions to pay-televisions.

Speaking during the signing of the agreement at Equity Centre, Nairobi, the bank’s CEO Mr James Mwangi said the arrangement would enable the subscribers quick connection to DStv.

“We are responding to the needs of millions of Kenyans who want to watch the World Cup live from South Africa from the comfort of their homes,” he said.

The new deal will see DStv subscribers pay subscription fee at Equity Bank branches and ATMs countrywide, and through the bank’s Eazy 24\7 platform, offering convenience and easy access.

Under the arrangement, Equity Bank will also extend credit to potential subscribers to buy MultiChoice DStv decoders and television sets and have instant connection to the DStv services.

Subscribers have a choice between DStv decoders at a of Sh6500 or fully installed package with the satellite dish for Sh14,800, or the high definition PVR decoder for Sh38,100.

“This is yet another milestone to provide our customers with easy and convenient payment options,” said MultiChoice general manager, Mr Stephen Isaboke.

Addressing the media after the signing of agreement, Mr Mwangi said the implementation of projects under its Vision 2030 blue print, meant to turn the country into a medium economy in next 20 years were on schedule.

However he said bureaucracy in procurement procedures should be streamlined to accelerate implementation of projects.

Mr Mwangi is a member of the board for the Vision 2030, which recently has been said to be behind schedule in implementation of projects.

However he said strides had been made in infrastructure, agriculture, information communication technology which were ahead in implementation targets.
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Kenya partner banks for micro finance institutions and savings and credit cooperatives in the United Nations to make the heel of the population into the mainstream economy.There a lot of economic issues. Things are very different from here in the U.S. and Britain. Almost everyone has a mobile phone, but no one, from March to March from the phone. Almost everyone has to go to an Internet cafe to get on the Internet.