Category Archives: KBA

Coronavirus in Kenya: Week One

The Outbreak

  • March 13: The Ministry of Health confirms the first case of coronavirus in Kenya on March 12 from a Kenyan citizen who returned to the country from the USA via London 
  • March 22: Kenya confirms 8 new cases, bringing the total number to 15. It is tracing 363 other people and institutes a mandatory shutdown of major social activities in the country. 

Banking Industry:

  • March 15: President Uhuru Kenyatta appealed to banks and mobile operators to reduce the costs of mobile transactions and calls on Kenyans to use credit cards, mobile money and other forms of cashless payments. 
  • March 16: Safaricom waived fees for M-Pesa payments below Kshs 1,000 (~$10) for 90 days and raises M-Pesa transactions limits to Kshs 150,000 and also increases daily transaction caps and maximum mobile money wallet sizes up to Kshs 300,000 ($3,000). Airtel and Telkom Kenya follow suit a day later. 
  • March 18: Bankers meet the President at State House where the Central Bank of Kenya (CBK) Governor announces that all commercial bank personal loans that were there in good standing on March 2, are eligible for extensions for up to one year while SME and corporate borrowers can approach their banks to be assessed for loan restructuring, with the cost borne by banks. Also, that banks would no longer charge fees for customers to check their bank balances.
  • Different banks announced their compliance with the new rules.   
  • March 19: The Kenya Bankers Association confirms that all banks will assist clients who come in to speak about how COVID-19 has affected their employment or business operations, and whose loan repayments were up to date as at 2 March 2020. They also ask all customers to observe 1-metre (or 3 feet) social distancing at branches
  • March 20: The CBK announces presents Kshs 7.4 billion ($74 million) to the Government to support the coronavirus fight efforts. This it says are the proceeds from the demonetization exercise that concluded in September 2019 and is the sum of (old) Kshs 1,000 notes that were not turned in and which the CBK had classified as being miscellaneous receipts. 

Famous People in Quarantine

  • March 18: Senator for Kericho County Aaron Cheruiyot announces on twitter that he is in self-quarantine. 
  • March 19: Members of Parliament and Parliamentary staff who arrived from London on March 9 are reported to be in self-quarantine. 
  • March 19: Ambassador Macharia Kamau Kenya’s Principal Secretary to the Ministry of Foreign Affairs announces on twitter that he is in self-quarantine after returning from New York. 
  • March 20: Jane Marriott, the British High Commissioner to Kenya announces on twitter that she is in self-quarantine, following her trip to the UK. 
  • March 22: Kenya’s Cabinet Secretary for Health announces that Gideon Saburi, the Deputy Governor of Kilifi County, has been apprehended and put in a mandatory 14-day quarantine after he failed to isolate himself after returning from a trip to Germany. Also that he will be charged in Court after his isolation period. 

Mandatory Quarantine in the Eastern Africa region 

  • March 18: Uganda announces immediate mandatory quarantine for arriving visitors, at their cost.  
  • March 21: Ethiopia announces mandatory for passengers arriving from March 23, at their cost. However, diplomats will be quarantined for 14 days at their embassies, while transiting passengers will be placed in isolation at the Ethiopian Skylight Hotel until they resume their connecting flights.
  •  March 22: Kenya has suspended all international flights other than cargo from March 25. Also, all arriving passengers will undergo mandatory quarantine at a government institution at their own cost. 

Internal country shutdowns

  • March 14: Rwanda closes schools, places of worship, large gatherings, and asks people to work from home. 
  • March 15: Kenya’s President announced the Government has closed all schools, suspended official foreign travel, and will encourage all employees to work from home. 
  • March 18: Uganda closes schools, universities and bars, and bans weddings and religious services for a month. 
  • March 21: Rwanda closes its borders to movement of people and cancels international flights, other than cargo ones. It also suspended tourism and research in 3 national parks where gorillas are found.
  • March 21: Nigeria shuts its airports to international flights as coronavirus cases reach 22.  
  • March 21: South Africa closes its airspace to foreign travelers.
  • March 22: Kenya orders a suspension of religious services at all places of worship, closure of bars and bans gatherings including weddings, and birthday parties. Restaurants are to remain open for delivery services and funeral events are restricted to a maximum of 15 mourners.

Flight cancellations/ Airlines reschedulings:

  • March 17: Kenya Airways updates its schedule, reducing London flights to five times a week, Dubai & Johannesburg to once daily, and Johannesburg to two daily. It also suspends flights to Bangkok, Khartoum, Djibouti & Mogadishu. 
  • March 18: Rwanda announces a halt to all commercial passenger flights into/out of the country on March 20 including operations of Rwanda Air for 30 days. 
  • March 19: Kenya Airways suspends flights to Antananarivo, Bamako, Bangui, Blantyre, Brazzaville, Kigali, Kilimanjaro, Luanda, Yaounde/Douala, and Zanzibar. 
  • March 20: Ethiopian Airlines announces 30 routes closures. The list is not revealed till the next day – and the listed countries include Egypt, Lebanon, Somalia, Djibouti, Namibia, Equatorial Guinea, Cameroon, Chad, Madagascar, Angola, Congo, Mali, Senegal, Rwanda, South Africa, Canada, Spain, Belgium, Switzerland, Indonesia, Israel and all US ones. 
  • March 20: South African Airways immediately suspends all operations until the end of May following a government notice prohibiting the embarkation/disembarkation of non-SA crew and passengers. The only flights that will remain will be domestic service between Johannesburg and Cape Town.
  • March 22: Emirates announces cancellation of all passenger flights from March 25 .. but .. 
  • March 22: Turkish Airlines to suspend most of its flights – leaving just a handful of flights to New York, Washington, Addis Ababa, Moscow & Hong Kong (via AlexinAir).
  • March 22: Kenya Airways suspends all international flights. Cargo flights remain, as will passenger services to Mombasa and Kisumu. 

Corporate Restructuring’s: 

  • March 13: Trading was suspended at the Nairobi Securities Exchange. This came following news of the discovery of the first coronavirus case in Kenya and the main share index dropped by over 5%. Past instances when circuit-et breakers have been tripped include in the period of post-election violence in 2008, and in September 2017, on the day that Kenya’s Supreme Court nullified the results of the August 8 presidential election. 
  • March 13: Kenya’s insurance regulator, IRA, communicates that insurance companies will continue to provide their services to policy holders affected or infected with the virus .. but insurance companies say their re-insurers do not cover pandemics such as Coronavirus. 
  • March 16: Ethiopian Airlines restructuring plans include scaling up cost-saving programmes and asking service providers for temporary relief, discounts and waivers. They have also started to renegotiate all contracts, including aircraft leases as well as scaling down offices and reducing staff.
  • March 16: Java adjusts seating and promotes delivery as do other restaurants. But many other restaurants closed. 
  • March 18: It was revealed that The Standard Group plans to lay off 170 workers. 
  • March 18: Churches to restrict attendance numbers.
  • March 18: The African Development Bank cancels all travels and requires staff to work from home. The Bank’s Board of Directors is reviewing the configuration and design of the Bank’s statutory Annual Meetings originally scheduled for May 26-29, 2020 in Abidjan
  • March 18: Kenyan listed companies and licensed investment schemes that were to host annual general meetings (AGM’s) in March, April and May 2020 have been asked to defer them to later dates.
  • March 20: Kenya Airways CEO sends a memo to staff following COVID-19 and writes that in the last 24 hours, nine countries in our Africa network, the UAE and India have announced travel restrictions. So far, we have reduced approximately 65% of our flights, and this is changing by the hour. He announces that instead of layoffs they will ask staff to take salary reduction and paid & unpaid leave. The leadership team and he will take 75% and 80% respectively, while that for other staff will be 25% or 50% depending on the pay grade.
  • To facilitate supermarket shopping home deliveries, Tuskys has partnered with Sendy and Naivas has partnered with Glovo.

Government Adjustments 

  • March 16: The Ministry of Lands closes all land registries for 28 days from March 17. 
  • March 16: Kenya’s Sports & Culture Ministry closes all museums, archives, stadiums, public libraries, and cinemas for 30 days.
  • March 18: Kenya’s National Assembly and Senate both go on a month-long recess. 
  • March 18: Kenyan courts embraced digital filings and rulings of cases. 
  • March 19: Public health campaign to stop the spread is launched. 

Uplifting News

  • March 21: A thread to help those losing jobs their jobs this week and to help match their skills with part-time or remote-work opportunities. 
  • March 22: The first shipment of medical relief equipment offered by the Jack Ma Foundation arrives in Africa for distribution to different countries. The total will be 500,000 test kits and one million masks had been pledged on March 13.

Inuka for SME’s from Kenya Bankers

During a Kenya Bankers’ CEO chat on Friday, it was revealed that local banks would, through the Kenyan Bankers Association (KBA), soon launch an Inuka initiative for small and medium enterprises (SME’s).

Accelerated lending to SME’s was one of the pledges that the banks had set out to accomplish ahead of the passing of the interest rate capping bill of 2016 by Kenya’s parliament as it edged closer to becoming a law.  The banks committed to set aside  SME support facilities at all banks that would channel Kshs 30 billion to SME’s and a third of that would go to SME’s owned by women and youth. These firms would borrow at a concessionary rate not exceeding 14.5% and banks would progressively report, each quarter, on their allocations, SME loan uptake, and loan performance.

But the interest rate cap did pass, which resulted in SME’s borrowing at the same level of interest that the banks had pledged. Other commitments that the banks made and which they  have fulfilled include ending the practice of account oolong charges, and they also  rolled out the KBA cost of credit web site and calculator to enable bank customers to properly assess the cost of loans offered, with the impact of bank fees, before they commit to borrow any money.

After the chat with I&M Bank CEO, two more KBA CEO chats are scheduled in that next few weeks with the CEO’s of Dubai Islamic Bank Kenya on 29th September and of Family Bank on 6th October.

M-Akiba Reloaded: More government bonds via phone

On Friday the Treasury Cabinet Secretary launched the second tranche of M-Akiba, the government bonds that can be bought and traded via mobile phone. 

The first tranche of M-Akiba, worth Kshs 150 million was launched in March 2017, and marked at 10%, maturing in April 2020. They had their highest trading day on May 12 when about Kshs 345,000 was traded; usually, about Kshs 100,000 per day ($1,000) of M-Akiba are traded by investors so far. At the time of launch, the indication was that another Kshs 4.85 billion was to be raised in June 2017.

The new M-Akiba infrastructure bond issue (MAB2/2017/3) is targeting Kshs 1 billion (~$9.7 million), with a green shoe option to raise another Kshs 3.85 billion. These are also three-year infrastructure bonds (dated 24 July), paying 10% per annum, with interest paid every six months, and the minimum investment is, again, Kshs 3,000 (~$29). Payments for the new bonds will be done on mobile money such as M-pesa (by dialing *889#) as well as through Pesalink – a new service from Kenya banks that allows their customers to make payments via phone and mobile money transfers of up to Kshs 1 million  (~$9,700) per day – which is seven times greater than what they can do with mobile money, under current banking rules (set to prevent money-laundering). The deadline for investors to apply for the M-Akiba bond is July 21, and the trading commission for will be 0.1% of allocations.

EDIT (July 23 Nation): MAB2/2017/3 has been extended to 8th September and the bond will start trading on 12th September. It has been reported that investors bought Kshs 128 million before the initial deadline, and the newspaper notice of the extension mentions that these invests will be paid for interest earned between July 24 and 11th September.

EDIT February 22, 2019: A new tranche of M-Akiba bonds will be on sale from February 25 to March 8, 2019, with the Treasury targeting to raise Kshs 250 million by offering investors 10% interest. The bond targets investors who can put in as low as Sh3,000 via their mobile phones then lock it in for a period of three years. They then earn interest after every six months and principal amount upon reaching maturity date. Those wishing to exit early can do so through Nairobi Securities Exchange where the bond will trade on the secondary market. 

‘Akiba’ means ‘savings’ in Swahili.
$1 = Ksh 103

Kenya Bankers launch Cost of Credit Calculator

Last week, the Kenya Bankers Association (KBA) in conjunction with the Central Bank of Kenya launched the cost of credit loans calculator feature.

It is available on the KBA website and as an app (in the google store) and one important feature is that it allows borrowers to see the annual percentage rate (APR) – the true cost of a loan, which can vary greatly from the original loan interest rate that is advertised. It also enables customers to download repayment schedules and see the entire amount that has to be paid back to a bank (the total cost of credit).

Many loan customers pay their installment and get to what they consider the end of the loans only to find they owe a bit more. This is because they only go by the amortization rate (schedule of principal and interest) but leave out other charges and fees which are incurred in securing the loans – such as legal fees, insurance, government taxes and fees, valuation, security and other loan fees.

At the time of drawing a loan, there’s a temptation to forego paying many of these upfront, and ask the bank to add the myriad charges on to the loan – but these can add up over the duration of the loan.

This comes after an earlier attempt by the KBA to get all banks to price their loans around a single rate – the Kenya Bankers Reference Rate – KBRR. This was abandoned after interest rate caps law was passed in 2016.

Pesalink & The Wajanjas

The Wajanjas is the name given to the pre-launch activities of Pesalink which was unveiled three weeks ago. Pesalink is an initiative of the Kenya Bankers Association that may be the next revolutionary thing in Kenyan banking. Already 20 commercial banks have activated it.

While it may appear to be a reaction to mobile money, and m-pesa, Pesalink is actually a reaction to the banks’ own customer habits and the prevalence of the mobile phone – and recent bank internal numbers show customers moving from branches to phones. According to Barclays Bank, its customers did 43% of their transactions at their branches in 2016 down from 59%. At KCB, 75% of customers use mobile phone banking services and 91% of loans transactions are processed on phone, while at Coop, just 25% of transactions were done at branches at branches in 2015.

One of the main bank activities now is customers performing real-time cash transfers and payments. This is done by customers going to ATM’s or getting cash which they then upload to mobile money to be sent to a recipient, who then withdraws cash at an agent, and probably re-deposits it into a bank. But all that changes with Pesalink which short-circuits the long chain as transfers can be initiated at by phone (USSD / bank app), at a bank branch/agent, or bank ATM or over the (bank) Internet – and sent to any recipient registered at any of the 20 banks. This will also lower the costs of transacting. For the consumer, it currently costs a lot of money to send money, and Equity Bank CEO, James Mwangi,  said Kenyans spent 59 billion to transfer money last year, but that figure should come down with Pesalink.

In addition, the mobile money limits of Kshs 70,000 per transaction and Kshs 140,000 (~$1,400) per day don’t apply here. Pesalink limits are similar to that of bank cheques – which can go up to Kshs 1 million shillings (~$10,000). This is very useful when there are events like fundraisers, weddings, and (unfortunately) funerals. These are often expensive affairs where as soon as funds are raised they have to be disbursed quickly to service providers.

Another useful feature, that’s finally here, and which mobile money has failed to incorporate, is adding in the reason for a transaction. You can tag each payment with a useful message as to what it is for “bride car hire” or “apartment F6 water repair” and this helps account holders to track their mobile money transfers over time.

Try out Pesalink at your bank, by designating your phone number, and your primary bank account number. NIC Bank has some nice menus (PDF) that explain how simple it is to use Pesalink.