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Banks now face acid test : The Standard

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Commercial banks are at crossroads. They have starved the private sector of credit in favour of investing in short-term treasury bills and bonds. But their reliance on Government borrowing is facing a real test that presents danger from the Central Bank of Kenya (CBK). The apex bank may be persuaded to lower the Central Bank Rate (CBR) by the stability of the country’s economy.
A lower rate would force banks to take a big hit on their bottom line. This proposition is borne out by last year’s events when a 0.5 percentage point drop in the CBR cost the lenders Sh25 billion in lost income. It may be plausible to argue that the National Parliament is in no mood to repeal the law capping the interest rate.
This is despite the heavy lobbying from the International Monetary Fund (IMF) which withdrew its precautionary budget support facility after failing to persuade the government to force MPs to do its bidding.

SEE ALSO :IMF chief sound warnings as leaders gather in Davos

The IMF’s prediction that the economy risked facing heavy winds in the event of the withdrawal of their facility has not come into fruition. The market has also continued to ignore the Bretton Woods assertion that the Kenya shilling is over-valued.
Few options
This is despite some of their local supporters taking up the refrain that the country’s economy is in danger unless the government toed the IMF line.
The failure of these scare tactics leaves the banks with few options if they are to continue making reasonable profits.
They have to loosen their purse strings and rump up their lending to the private sector.

SEE ALSO :Kenya confident of securing IMF loan facility

Treasury’s plan to set up a Credit Guarantee Scheme for SMEs may act as a catalyst to banks that have been reluctant to lend to this sector seen to be risky or defaulting on payments.
Even as banks mull their collective and individual decisions to lend to the sector, it may be useful for them to take a second look at the loans and overdraft portfolios of corporate borrowers. There is a possibility their biggest defaulters are in this sector that has been going through wrenching changes following the massive importation of cheap goods from China and India.
This means the banks may be well advised to join their industrialist colleagues in lobbying the State to step up its anti-dumping and anti-counterfeiting efforts.
These efforts would bear better fruits were representatives of all major stakeholders directly involved.

International Monetary FundCentral Bank Ratetreasury bills and bonds





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Firm sues county for Sh3.5b project delay : The Standard

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[Photo: Courtesy]

An international data company has sued the county government seeking Sh800 million damages for delaying to approve construction of its data centre.

Kooba Kenya Limited Chief Officer Richard Bell told High Court Judge Eric Ogola their effort to start construction of Sh3.5 billion data centre was frustrated by the county government after it refused to approve it.
Mr Bell said the company lost Sh847 million due to the delay between November 2016 and August 2017.
“We had procured financing, including shareholder equity of approximately Sh224 million, as well as a construction debt guarantee facility of Sh850 million committed by Messrs Guarant Co, but the respondent frustrated the entire process,” said Bell.

SEE ALSO :Four Kenyan cyclist to pedal to Hajj through four nations

Bell said investors had so far invested Sh284 million in the project and if no award of damages was made, the project investors stood to lose their sunk costs on the investment.

Bureaucratic hurdles

The company CEO said the delay due to bureaucratic hurdles placed by the county government had severe consequences on their proposed project that was to start operations in August 2017.
He said on April 13, 2017, the court held that the county government had violated the company’s rights and directed the devolved unit to stamp and return the company’s building plans and to issue a certificate of approval.
Bella said despite the orders, the county delayed the entire process, occasioning the petitioner’s loss.
He said the firm had lined up various investors and identified several customers and also negotiated a contract for the project works, but frustration made the investors to withdraw from the project.

SEE ALSO :Port city of Mombasa eager for Smart Sustainable City status

Kooba’s advocate Walter Amoko said the county government only provided them with building plans and certificate of approval on July 18, 2017, a month to the period in which the data centre should have been operational.
Mr Amoko said the company had sought to establish a colocation centre in the county, with a view to constructing multiple facilities in the East Africa Region.
However, the county government, through its lawyer Tajbhai Murtaza, termed the request for damages vexatious, frivolous, misconceived and outright abuse of court process and ought to be struck out with costs.
The case will be heard on May 13, after both sides file submissions.

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Mombasa CountyData firm





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Uganda’s top court upholds ruling on extending president’s rule

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A 4-3 majority decision affirming the validity of 2017 constitutional amendments was widely expected in the East African country where critics say judicial independence has been eroded under President Museveni’s 33-year rule.

Parliament, which is controlled by the ruling party, voted overwhelmingly in December 2017 to scrap an age limit of 75 years for presidential candidates.

The original legislation would have effectively barred 74-year-old Museveni from standing in the next elections due in 2021. Opponents of Museveni, including lawmakers and individual opposition activists, mounted a legal challenge to the amendment first in the constitutional court which rejected their petition.

That rejection triggered their appeal to the supreme court.”The decision of the constitutional court is upheld. This appeal therefore fails,” ruled Bart Katurebe, the country’s chief justice and a member of the panel. The process to amend the constitution was marred by widespread violence including police dispersing rallies by MPs consulting their constituents on the amendments and beatings and detentions of opposition activists

Some opposition MPs were also at one time forcefully removed from the House’s debating chamber by members of military. The petitioners had cited these incidents and other irregularities as sufficient grounds for nullification of the amendment.

Eldad Mwangusya, of the three justices who ruled in favor of the petition said widespread violence and security personnel interference in MPs’ public consultations made the removal of the age limit unconstitutional.”Members of parliament… were assaulted, thrown onto public vehicles, detained and released without charge all of which amount to inhuman treatment which is in contravention of the constitution,” he said.

In power since 1986, Museveni has been accused by critics of using security forces to stifle opposition through intimidation. Political activists routinely allege arbitrary arrests and beatings.

In February the executive committee of the ruling National Resistance Movement endorsed Museveni as its candidate in the next presidential election due in 2021, potentially extending his rule to 40 years.

One of his opponents in the next polls will likely be singer and lawmaker Bobi Wine – real name is Robert Kyagulanyi – who has rattled officials with his fast-growing support base.Kyagulanyi’s following has ballooned since he joined parliament nearly two years ago, drawn by his criticism of Museveni’s long rule and government excesses through his lyrics.




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Video Of The Day: Ministry of Education may scrap 98 ‘useless’ degree courses




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Egg on the face for Wangusi as State House, Ministry disown SIM-card switch-off threat

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Communications Authority of Kenya (CA) Director General Francis Wangusi has been forced to eat his words about an alleged plan by the government to switch off SIM-cards of mobile subscribers who will not have registered for the Huduma Namba before the set deadline of May 18.

In a rather common fashion and frantic attempt to calm down a countrywide storm sparked by his words, Wangusi now claims he was misquoted by the media when he stated: “We are waiting for the 45 days to end. We will say, unless you have a Huduma Namba, you don’t have a SIM-card.

So prepare yourself. And when we say it that way, it could be a polite order but it’s an order that is enforceable.”

Interestingly, according to Wangusi, those words did not suggest any plans to switch off SIM-cards but only “emphasized the importance of the Huduma Namba”

“We wish to clarify that the Director General has been quoted out of context. For the record Mr. Wangusi emphasized the importance of the Huduma Namba as a single source of the truth for the identity of citizens,” said Wangusi.

He issued the statement after State House and the Ministry of Information, Communication and Technology disowned the alleged plan to switch off SIM-cards.

Wangusi, however, added that “Huduma Namba may be considered for use in the registration of SIM-cards.”

“After adequate consultations with the relevant stakeholders and changes in the law, the Huduma Namba may be considered for use in the registration of SIM-cards,” said Wangusi.

“The Authority, therefore, wishes to assure Kenyans that there are no plans in place to switch off SIM cards for subscribers who will have not registered for Huduma Namba by the set deadline of May 18.”

The ICT Ministry, in its statement, reiterated that the Huduma Namba registration is a voluntary exercise in compliance with the recent High Court ruling.

“There is absolutely no directive from the Government to institute any punitive measures against those who don’t register,” reads part of the statement issued by ICT PS Jerome Ochieng.

Earlier, State House Chief Nzioka Waita also emphasized that registration for Huduma Namba is a purely voluntary process and that nobody will be forced to participate in it.

“There is no directive from the Government to institute any punitive measures against those who don’t register. More emphasis will be laid on civic education!” Waita wrote on Twitter.

The roll out of the National Integrated Identity Management System (NIIMS), also known as Huduma Namba, had been challenged in court but the government was allowed to continue with the registration on condition that it should not be mandatory.

A three-judge bench – comprising Justices Weldon Korir, Pauline Nyamweya and Mumbi Ngugi – on April 1, 2019, also barred the government from collecting DNA data and GPS coordinates as well as sharing the NIIMS information with any foreign organization.

 




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