According to Jaindi Kisero, the Nation business editor, many local companies are doomed to fail if they continue using overdrafts and short-term borrowing for their long-term plans (as the Hillcrest schools apparently did). It is a result of the failure of Kenyans to develop appropriate sources of capital for growth such as long-term loans or taking in new shareholders.
Category Archives: bank service
Banking Round-up
In Nigeria, Banks have turned their tellers into prostitutes, appropriately titled “relations managers.” With 89 banks in Nigeria, competition can be fierce, and many businesses have complained of harassment by “corporate prostitutes” and Women’s Rights Watch Nigeria and other groups accuse some banks of “specifically mandating young, unmarried female staff to target and convince wealthy young men [that] these employers insist on skimpy outfits and unusual work hours”.
In Britain, Barclays Bank staff won’t get paid on time owing to a Banking error. The wrong date was entered into the bank’s computer system and as a result, as many as 62,000 Barclays UK staff and another 40,000 former employees will get paid a day late.
In Uganda, a Bank now collects taxes for the URA or Uganda Revenue Authority. Look for this outsourcing model to be expanded in Kenya where bank’s already collect utility payments for KPLC and other cash-strapped bodies.
In Botswana, the Finance Minister has warned Banks about their poor service. Mr. Gaolathe said there is growing concern amongst the general public regarding long queues in banking halls, especially at peak times and also took issue with the commercial banks for focusing on the prestige market at the expense of the larger community.
Lastly, in Canada customers pay as much as 16,000 shillings in banking fees (Can$C258 a year) for current accounts at some Banks.
Banks help Tsunami relief efforts
Beyond the food aid and cleaning up, survivors of the tsunami need a lot more help to re-build their lives and businesses. Banks are helping in some parts of India by waiving interest payments and extending loan periods and in South Africa by waiving bank charges related to fund-raising efforts for victims. I hope Kenyan Banks can emulate such efforts whenever there are local disasters here such as floods, fires, or other devastating events.
Is the era of Personal Loans Over?
The Central Bank Governor, Dr. Andrew K. Mullei, was on KTN last night announcing that he was going to raise interest rates to slow down the growth of private sector credit, and by extension inflation.
He however decried that Bank’s had raised their lending rates too quickly (at least five bank’s announced interest rate hikes this week of about 2%).
NIC
According to the Standard of November 16, NIC MD’s Davidson’s three–year contract was not renewed by his board of directors owing to escalating costs of the MOVE roll out – and leading to them advertising for a new MD.
The NIC Move was truly revolutionary, it captured the public’s attention and made a lot of business sense to customers at other banks, who then moved their accounts to NIC.
NIC had put together a package that appealed to them – key features were flat monthly charges (800 shillings), 8 a.m. to 8 p.m. and Sunday banking, personal loans tailored to medical, educational, holiday etc. needs (really the same brochure printed several different ways), ATM service, etc.
10 months after the launch of MOVE in November 2003, and with one quarter left in the year, customer deposits stand at 11 billion (up 3 billion so far), loans at 10 billion (up 3 billion), net interest income is 670 m, total is income 867 m, operating expense are 615 m – and profit after tax is now 177 m after nine months.
From NIC 3rd Q results in Nation of November 23, 2004 (‘000 shillings)
Item 2003 September 2004 Proj. 2004
Deposits 7,951 10,936 14,581
Loans 6,896 9,989 13,319
t. income 944 868 1,157
Staff exp 200 198 264
t. expenses 527 615 820
Profit 243 176 234
So while NIC has had an exceptional year with growth in customers, deposits and loans, gained A+ credit rating, won tons of marketing awards (including the MSK Award for Best Launch, its end-year profits will likely not reach those of 2003.
While rock bottom interest rates may be the main culprit, perhaps the NIC Board would feel that this was the wrong time to launch the MOVE product, and may blame the MD for that.