The enthusiasm with which banking institutions marketed personal loans in 2003/4 has now waned.
Sources in the banking industry say the large number of defaulters in the unsecured loans category have shored up the long-standing problem of non-performing loans (NPLs), forcing most banks to review their lending rules.
This entry is triggered, by my having to spend an unproductive hour this morning queuing to pay an electricity bill to the Kenya Power & Lighting Company (KPLC). On most days, the halls at KPLC (and at bank halls and post offices in some remote towns where KPLC has no offices) are choke-full of thousands of individuals lining up to pay electricity bills in cash.
The Company needs new thinking and new ways of enabling payment for this basic service. Imagine if you could only pay for your cell phone airtime at a Safaricom office. Safaricom would have to hire all the 12,000 workers about to be sent home from Telkom Kenya to collect its Kshs. 20 billion annual income (Safaricom currently has about 2,000 employees). Yet it can collect payments from even the most remote parts of the country easily. Or how many workers would Kenya Airways or Kenya Breweries have to employ to collect their sales revenue? Instead, these companies have outsourced collections of their revenue to banks, travel agents, bars, kiosks etc.
KPLC, which also collects more than Kshs. 20 billion annually, has no mechanism for collecting payments by credit cards or the internet. You can pay by cheque, but you have to think twice about that because it can cost you up to Kshs. 10,000 extra if the cheque bounces or clears late (bank charges and a deposit averaging your electricity bill for two months are added to the original bill. On the plus side, you can also pay by ATM if you have an account with Standard Chartered Bank (which I don’t)
Kenya Bus trouble: Kenya Bus Services is going through some turbulent times as creditors have tried to sell some of their buses during the busy Easter weekend. General Motors Kenya moved to Court to attach 17 Msafiri buses over a 198 million shilling debt, and last week Kenya Grange Vehicle Industries tried to ‘sell’ 10 of KBS newest vehicles (the double-decker buses?) over a 6 million shilling debt – but both moves were halted by the Courts.
Braeburn (school) buys Hillcrest (school): The Saga of the Hillcrest schools, formerly owned by Kenneth Matiba’s Alliance Investments, took a new turn when the schools were sold to the Braeburn Group to settle a Kshs. 620 million debt owed to Barclays Bank. Earlier this week MP’s and some lobby groups launched a campaign to urge the Government to save the Matiba group companies from predatory foreign banks.
SMS Banking: National Bank has launched SIM-ple banking which will enable customers to check balances, verify salaries, make utility payments and about 30 other services. This Nation article said that there’s a vast potential for mobile banking that is not being exploited. It’s probably due to the cost as both Prime and Co-operative banks already offer mobile banking at 30 shillings per SMS request, but the service is currently free at Dubai Bank.
No to a Strong Shilling: Central Bank has announced that it will move to weaken the Kenyan Shilling if it gets too strong against the US dollar. The shilling hit a 21-month high of 72.9, and bank forex dealers expect the dollar to fall below the 70-shilling mark soon. However, a strong shilling makes Kenya’s principal exports like coffee, tea and flowers, more expensive
US: No to Africa: The US will not finance recommendations made in the Commission for Africa Report.
Interest Rates inch up: Barclays Bank base lending rate is now 13.75%. In 2003 lending rates at most banks were about10%. The new rates at major banks of 13 – 14% are still far below the 25 – 28% rates that they charged customers in the late 1990’s.
Local financial institutions are missing out on a billion dollar business due to their failure to cater for the needs of the Kenyan community abroad, a recent survey of the banking sector indicates.
The survey, however, noted that banks such as Commercial Bank of Africa and National Industrial Credit (NIC) Bank have launched products that target Kenyans living abroad.
A lot of Kenyan’s abroad have asked me about how they can open, and operate, bank accounts in Kenya from overseas. It’s not an easy thing to do, as most Banks’ open account following face-to-face meetings where you draw signatures in their presence and they inspect you ID and other documents. So it’s best to open an account when you visit Kenya.
Scene One:
Went to the Post office yesterday, bought two envelopes and also stamps to send them at 21 shillings each. Got home and saw on the evening news that stamps had been raised to 25/= per letter w/immediate effect.
* I’m partly to blame as the notice appeared in the newspapers yesterday – but I didn’t read them till evening. But surely the post office clerk who sold stamps should have known! Fortunately, just now, am told that the new tariffs become effective March 14th, not immediately
Scene Two:
Trying to open a savings account with a certain Bank, I was told that I required a PIN card (Kenya’s attempt to replicate a social security number)
Since I know my PIN number, but no card, I went to Times Tower (Kenya Revenue Authority headquarters) to get a PIN card printed.
• Arrive for obligatory body search (00:30)
• Enter building 2 of Times Tower, wisely ask for directions at information desk, told to go to other building (1:00)
• At the other building, stop at information desk, told to go to desk 18 with my national ID only (3:00)
• Desk 18 has two men chattering excitedly in vernacular as they point excitedly at a computer screen (5:00)
• After a minute, I’m told to see lady at desk 17 who’s making entries in her computer. Join her line (6:00)
• line ends & it’s my turn: she looks at me and tell me ID’s are presented at desk 15 (7:00)
• At desk 15, gentleman takes my ID, enters it in computer. Finds and scribbles my PIN (10:00)
• He takes it over to lady at desk 17 and disappears back into the staff office area (11:00)
• Another lady takes over at desk 15. She says she can’t answer about things she didn’t handle (15:00)
• Line up back at 17. She tells crowd at her desk to line up straight, and not crowd her desk (17:00)
• Guard walks up and merges the two lines that have formed into one (19:00)
• My turn, she enters my data and the printer clutters. She asks me to wait (22:00)
• She removes two printouts and read names, not mine (25:00)
• The line is finished, am all alone. So she manually feeds the printer to get my card. (27:00)
• I get a copy of my PIN card (28:00)
Otherwise, the office was ok and KRA staff were helpful but seemed tired.
My main complaint was that I had to go through desks 15, 17, and 18 when one person could have taken my ID, checked it in the system and against my picture, and printed me a card (This would have taken maybe 2 minutes at most, not 28 minutes)