Tanzania closes 5 banks

In notices released today, the Bank of Tanzania (BoT) revoked the licenses and directed that five banks proceed to compulsory liquidation, by the country’s  Deposit Insurance Board (DIB).

BOT found that the banks – Covenant Bank For Women {Tanzania}, Efatha Bank, Njombe Community Bank, Kagera Farmers Cooperative Bank and Meru Community Bank were found to be critically undercapitalized and that their continued operations would be detrimental to depositors and a risk to the stability of the financial system.

In another notice, depositors, creditors, and debtors of the five banks were asked to be patient as the liquidator (DIB) makes arrangements, collect debts, and works out a payout plan.

 

Kenya’s CBK risk safeguards against bank laundering and terror financing

The Central Bank of Kenya (CBK) has published new guidelines to assist Kenyan banks to assess and mitigate the risk that their institutions and systems may be used for money laundering (ML) or terrorism financing (TF).
They risk rules stipulate, among other proposals that:
  • Senior management of banks are to implement board-approved money laundering/terror financing policies.
  • Bank staff are to prepare periodic reports on money laundering and terrorism finance for their senior management and boards of the bank and also communicate these to the CBK. 
  • Financial institutions will be required to appoint a money laundering reporting officer who will be the point of contact for CBK.
  • Banks should assess and rank TF and ML instances and actions in terms of high, moderate, and low risk. 
  • They should identify countries and regions that are high risk for business; high-risk includes countries subject to sanctions from the UN and other credible organizations, countries that don’t have appropriate banking safeguards and countries known to sponsor terrorism.
  • Banks are to assess their customers for money laundering and terror financing risks; suspicious customer activities include frequent and unexplained movements of money to other accounts, or other institutions, and to far locations. They should also look at politically exposed persons who bank with them including prominent public figures, senior politicians, judicial officers, corporate CEO’s who dealing with them, or their families, may bring a reputational risk to the bank.
  • Banks are to assess their service delivery channels for money laundering risks. They are to pay attention to cash-intensive businesses, including supermarkets, convenience stores, restaurants, retail stores, liquor stores, wholesale distributors, car dealers. 
The guidelines follow an earlier directive on paper bag banking from two years ago. The new ML and TF rules are in draft form and bankers and any interested persons are invited to send comments to the CBK on the proposals before January 31, 2018.

Bank fraud attempts during the holidays?

2017 has been a long year for Kenyans and while December brings several official national holiday rest days –  December 12 (“Jamhuri” or Independence) December 25 (Christmas), December 26 (Boxing) and the January 1 (New Years Day), December is usually considered a  slow month for business activities. This is because many employees take their annual leave days and combine them with the official rests for extended breaks during which they make annual trips with their families to villages, wildlife parks or to the Kenya Coast and other choice destination. This is one of the high seasons for tourism in Kenya, and while hotel rates and airline fares are two or three times what they are at other times of the year, these services are still completely sold out.

The long holiday season has also come to be associated with something else – bank fraud attempts. This was first seen with an odd discovery at KCB that customers could only withdraw amounts over Kshs 100,000 (~$965) from their home branch. i.e the branch in the town where the customers first opened an account, got a chequebook, deposited identification documents. This is a relic of banking, that goes back to the days before there was internet and before banks had network systems that connected branches and enabled customers to transact at any branch, in any town or at an ATM, internet, agent, or devices such as an app or mobile phone – unlike at home branches where managers and staff personally knew their customers and extended services to them. The sudden and odd rule was greatly inconveniencing, as it was introduced just ahead of the travel period when people would be traveling far away from their home branches – to other towns and even countries.

Bank staff later said the Kshs 100,000 limit was a temporary rule that had already been rescinded. It had been introduced with no warning at all, but it was apparently aimed at minimizing fraud attempts.

There were customer alerts at other banks too: Barclays  Bank sent a notice for customers not to share their PIN’s with anyone  – “DO NOT share your banking PIN or password with anyone via phone, email, SMS or even in person” – as their staff would never ask for anyone to share their PIN, while Bank of Africa (BoA) informed customers that banking services would be unavailable on the internet and through ATM’s that were not those of BoA.

Also Pesalink which had an advantage of higher transfer amounts than mobile money service providers, sent a notice to customers at  many of the two dozen banks that have the service about a reduction in limits that could be transferred, by almost 2/3 – at one bank, FCB, this went down from Kshs 1 million (~$9,650) per day to Kshs 350,000 (~$3,340), a temporary measure they said that would be restored after December 26, 2017.

Even the revolutionary M-shwari, a partnership between CBA and Safaricom, which just celebrated its fifth anniversary and which was about to roll out segmented pricing as well as fee rebates to customers who repay their loans promptly, had a 48-hour outage and other disruption over Christmas that left a fraction of its customers (17,700 of the 21.1 million customers) temporarily locked out of the savings and loan system.

And it was exactly five years ago that some Standard Chartered customers faced cases of mysterious account debits that the bank had to resolve after that Christmas break.

Will this fraud be an annual holiday practice? To expect reduced services every December to guard against fraud?  To be continued..

Makueni County Healthcare

The Makueni County government is this week conducting new registration for a universal healthcare program in the 60 sub-wards in the county.  The Makueni University Healthcare program will provide essential health services to county residents at eight sub-county hospitals, and the county referral hospital.

It is being lauded and Makueni Governor Kivutha Kibwana who previously battled with the county assembly (parliament) that he was elected alongside in 2013, now appears to be enjoying a resurgence after his re-election on August 8 which he easily won, while 29 of the 30 county assembly legislators (MCA’s) were voted out.

The MCA’s had tried to impeach the Governor and he subsequently moved to dissolve the entire county government. A commission on inquiry looked into the disputes at Makueni and made some recommendations to the President, but as he never forwarded the report to the Senate for debate and approval, the situation was never fully resolved, until the 2017 election.

In promoting the Makueni health care program, the county government states the high level of poverty (60%) in the region as a reason why they set out to provide free health care to senior citizens (above 65 years of age) in the county through a pilot program in 2016. They deemed it a success and decided to expand it to universal health care and they have already enrolled another 33,344 households, excluding the senior citizens. The ongoing registration aims to net 180,000 new households and the benefits of the program will be improved health care with no out-of-pocket expenses for households which have previously resorted to selling livestock or land to meet family medical expenses. During the test phases, Kshs 138 million was expensed, with the bulk of that going to pharmacy expenses (33%), then inpatient (24%) and laboratory (15%) expenses.

The Makueni program will pay for emergency healthcare, laboratory, radiology, theater, cancer screening, drugs, and ambulance evacuation, among other expenses. The cost is Kshs 500 per year for a household and that will cover a nuclear family – beneficiary, spouse(s) and dependents of school going age. It is separate from the government’s national hospital insurance fund (NHIF), and Makueni will not cover services outside the county, such as scans, MRI’s, post-mortems, ICU, dialysis, and other specialized services not available within the county.

The ambitious and novel Makueni program is similar to one in Muranga county that sought to mobilize savings for county investments, but which was scuttled by regulators and wary investors.

The latest Auditor General (OAG) reports on Makueni noted that the county government received (2015) revenue of Kshs 6.3 billion (that included Kshs 5.9 billion from the national government) and that Kshs 5.4 billion was spent, leaving a Kshs 0.9 billion surplus. The OAG noted the disruption of the government activities but gave an adverse opinion on the Makueni county assembly (legislators) accounts while those of the county government (executive) were qualified. The executive was flagged for operating bank accounts at banks other than the Central Bank, and also for issues with the procurement of assets and construction of dams. The report on the assembly noted issues with lack of supporting documentation, hiring of professionals, including lawyers in the case against the governor, and trips that Makueni MCA’s had made to Mauritius, Boston, London, Malaysia Dubai and Singapore.

Socio-Economic Atlas of Kenya

The Socio-Economic Atlas of Kenya provides a visual look Kenyan statistics, depicting the national population census by county and sub-location and showing the future of Kenya for Vision 2030 and planning purposes. The Atlas booklet that was for sale as a hardback (but also available as a PDF), was produced by the Kenya National Bureau of Statistics and first published in 2014. 

Excerpts

Young population of voters: There are both advantages and disadvantages to Kenya’s youthful population. It represents potential for the future, but it also increases dependency rates and reduces economic participation in the present. Employment creation will be the key to tapping the potential of the expected future labour force and future market opportunities. This implies that job creation is not only a national priority as stipulated in Kenya’s Vision 2030, but that it also requires efforts at the sub-national level; because grossly uneven population distribution will provoke major and increasing migration flows when today’s children and youths reach adulthood. This points to the major role that devolved governance will play in harnessing these potentials and facing the challenges posed by high proportions of young people in the population.

Female economic power: The 2009 census indicates that females head 32% of households in Kenya. This means that females head 2.8 million households, or one in every three. In a basically patriarchal society that assigns household leadership to one person and one gender, this is a high value. It implies that men are absent in one-third of all Kenyan households; in these households, women make the majority of the decisions concerning household matters and livelihoods.

Inequality at the Coast: Kenya’s overall Gini coefficient is 0.45. This value is comparatively high, higher than in neighbouring countries, and means that inequalities are quite pronounced at the national level. This reflects the economic diversity in the country, in particular the gradients between urban economic hubs and rural areas and between high-potential agricultural areas and very poor semi-arid and arid regions. The value is also typical of a nation on the verge of becoming a transition country, exhibiting rapid growth in economic centres and expanding secondary and tertiary sectors.

 

Purchasing Power is in towns: In 2006 prices, Kenya’s mean per person monthly expenditure for goods and services is KSh 3,430. If a cumulative inflation rate of 93% is applied in line with 2013 prices, this national mean rises to KSh 6,620. By this estimate, an average Kenyan family of five with two parents and three school-age children spends about KSh 26,000 per month on goods and services in 2013 prices. This average monthly estimate includes all monetary expenditures as well as consumption of self-produced farm, garden, and livestock products according to their market value. But the clearest pattern to emerge is that of the rural–urban divide. 

The map illustrates how virtually all of Kenya’s major towns exhibit higher mean per person monthly expenditures than their rural environs. The divide is further underscored by the fact that the two highest classes of mean per person monthly expenditure – i.e. KSh 6,000 to 10,000, and more than KSh 10,000 (in 2006 prices) – are found almost exclusively in urban settings. By contrast, the expenditure classes between KSh 1,000 and 3,500 are mostly found in rural sub-locations. This emphasizes the role of towns as national and regional economic hubs featuring growing secondary and tertiary sectors and the bulk of formal employment opportunities leading to continued rural–urban migration. At the same time, it is interesting to note that the phenomenon of slums in the major cities is not visible in the rural–urban graph: The very lowest expenditure class (below KSh 1,000) is almost exclusively found in rural settings. Multidimensional poverty measures could help to better capture poverty in urban areas.