Author: Otiato Guguyu

The Shilling
MarketsNews
Otiato Guguyu

Which way for the shilling as a trillion CBK reserves fail to stem fall

The shilling has continued to dip despite a surge in dollar reserves to a trillion shillings worth of import cover at the Central Bank of Kenya signaling the huge gap in the demand for foreign currency in the market. The Kenyan shilling hit a record low of 139 units against the greenback on Friday last week, despite an increase in CBK reserves on dollar flows from commercial loans and multilateral flows. CBK reserves on the other hand increased to Kes1.049 trillion ($7.532 billion), representing 4.15 months’ worth of import coverage up from Kes857 billion ($6.152 billion), or 3.62 import cover the previous week. Kenya began…

Read More
Water Kenya
EconomyNews
Otiato Guguyu

Court freezes World Bank thirst for higher water costs

Activists and water companies have won first round battle to stop newly increased levies on water that were part of the World Bank’s push to increase regulatory charges for water companies tenfold and introduce a new 5 per cent conservation levy. The 2021 regulations that were set to take effect in March this year have been suspended by High Court after the Mt Kenya Ewaso Water Partnership, Kenya Water and Sanitation, Likii Water Resources, Likiundu Water and five activists filed a petition to halt the changes on claims that the implementation of the regulations will put the cost of water beyond the reach of most…

Read More
Central Bank of Kenya
MarketsNews
Otiato Guguyu

Is CBK yield curve inverting signaling recession?

Short term bonds and bill rates are slowly rising above longer dated government papers setting the stage for what is called an inverted yield curve that is traditionally used to signal oncoming recession. Pressure to repay local loans have pushed short-term interest rates above 11 percent on the three, six and one-year Treasury Bills even as three short-term bonds costs rose above 14 percent. An inverted yield curve occurs when yields on shorter-dated Treasuries rise above those for longer-term ones suggesting that while investors expect interest rates to rise in the near term, they believe that higher borrowing costs will eventually hurt the economy. Analysts…

Read More
World Bank
EconomyNews
Otiato Guguyu

World Bank extra billions to cover funding shortfall from failed Eurobond

The World Bank approved Kenya request to increase allocation under the Development Policy Operation framework (DPO) from $750 million to $1 billion to cover shortfalls after Kenya failed to raise a Eurobond. The green growth funds, set to be disbursed after the Banks board approved the funding this week will be keen in replenishing Kenya’s forex reserves that have come under debt repayment pressures and shilling volatility. World Bank said working closely with the International Monetary Fund (IMF) they determined Kenya needed access to additional funding given the country was unable to raise money through the Eurobond that has led to a buildup of financing…

Read More
Kenya IMF taxes
Featured
Otiato Guguyu

The IMF taxes on Africa’s petty traders of Nyamakima

I was a cab reporter on the City beat when Tuskys was evicted from its 11-year-old iconic BebaBeba outlet in the middle of Nairobi, that up till then had looked as the most ideal location for a retailer, on the bus route to Nairobi middle class surburbs north of the city. Tuskys at the time had not yet began hurtling towards the retail sector collapse. It was a big stable brand. In 2017, the retail sector troubles were being diagnosed as the legacy mismanagement of state linked Uchumi, where patronage had compromised supply contracting diverting money from real suppliers to related parties and insider shell companies. Tuskys explained that…

Read More
Banks Kenya
MarketsNews
Otiato Guguyu

Bank generous to shareholders despite looming liquidity challenge

Banks have stepped up dividend rewards to shareholders to lock in investors as share price collapse on exiting foreign investors. According to the Central Bank annual report, banks proposed dividends increased by Kes5.4 billion from Kes42 billion in December 2021 to Kes47.2 billion in December 2022. The higher payout helped boost the Return on Equity (RoE), which rose above pre-pandemic levels to 26.5 percent on higher returns to shareholders. Bank return on shareholders have rose from 22.3 percent in 2021 and 14.2 percent in 2020 when it collapsed on the effects of the Covid-19 pandemic, a period during which lenders restricted shareholders’ dividend to conserve cash for…

Read More
IMF
EconomyNews
Otiato Guguyu

IMF gives Kenya an extra Kes152 billion loan

The International Monetary Fund (IMF) have reached a deal to boost loans to Kenya by an extra $1.1 billion (Kes152 billion) and expand the Fund programme by another two years, a move that is bound to calm fears over the country’s ability to repay the Eurobond next year. IMF agreed to give Kenya additional support under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements as well as open a new line of credit under the Resilience and Sustainability Facility (RSF) arrangement that will run for a 20 month period. The additional resources bring total programme loans to $3.52 billion, funds which will…

Read More
KRA
EconomyNews
Otiato Guguyu

Mystery of fourfold rise in uncollected Sh1.6 trillion taxes

The Kenya Revenue Authority (KRA) has failed to collect Kes1.601 trillion as at June 2021, a fourfold jump in outstanding debt from Kes415 billion three years’ prior at a time Kenya, East Africa’s giant economy, is struggling to raise revenues from new tax measures. The taxman was at a loss explaining to the National Assembly Public Investments Committee on Commercial Affairs chaired by David Pkosing (MP., Pokot South) which sought answers after audit queries revealed KRA failed to collect taxes on several corporates even after it raised tax claims, conducted audits and issued agency notices. The taxman said it was in the process of validating…

Read More