Category Archives: KBA

ESG requirements for Nairobi companies

The Nairobi Securities Exchange (NSE) has launched an environmental, social and governance (ESG) disclosures guidance manual for listed companies on the Nairobi Securities Exchange. 

The guidance was developed with the Global Reporting Institute (GRI) as a proactive initiative by the NSE ahead of more formal rules expected from the Capital Markets Authority (CMA). The NSE is the fourth exchange on the continent after Egypt Nigeria and Botswana to publish guidelines.

NSE board member Isis Nyong’o said 50% of exchanges worldwide have published guidelines, and there are moves to make disclosures mandatory rather than voluntary and companies will soon not be able to attract foreign funding without ESG disclosures. She said that after a grace period, the NSE will also require companies to report annually on ESG.

The guide lists benefits of ESG reporting as more effective capital allocation, access to new sources of financing from sustainability-conscious investors such as DFI’s and P/E funds, more efficiency, better regulatory compliance and better supply chains.

ESG reports are to be prepared following the GRI standards. Companies are advised to recruit ESG champions from across their organization, familiarize their teams with the ESG reporting requirements, provide resources, raise awareness, and develop management plans. They are also to map out and engage with stakeholders – both low-influence such as customers and suppliers, along with the high0influence ones who are regulators and investors.

Companies are to publish their ESG reports and seek external assurance from third-parties to enhance credibility and accuracy and can also integrate their ESG reporting with the Sustainable Development Goals (SDG) they have prioritized – whether they are in banking, investment, manufacturing, agriculture, energy & petroleum, construction, commercial & services, insurance, or telecommunications sectors.

For banks, the Kenya Bankers Association has already produced sustainable finance principles for the industry while the Central Bank has developed guides on climate risk management. Some ESG areas that banks could report on are: 

  • General measures including; governance, strategy, ethics, stakeholder engagement, business models, risk management & controls.
  • Economic measures including; financial return versus economic viability, community investments and taxes. 
  • Social measures including; working conditions, financial products information to customers, consumer protection, inclusivity, political funding, and cyber security.
  • Environmental measures including; materials sourcing, emissions, energy-choice, waste management, electronic waste management, and environmental impact assessments. 

It is expected that adhering to the ESG reporting approach can be used to meet the reporting requirements of the CMA’s corporate governance code for listed companies. Currently, ESG, as measured by sustainability reports, is largely the preserve of larger institutions including Safaricom, Bamburi (parent is Lafarge), East African Breweries (parent is Diageo) and Absa, KCB, Cooperative and Stanbic banks.

The NSE plans to have more training and capacity building sessions about the ESG guide manual which can be downloaded from their website.

KBA documenting the History of Kenyan Banking

This month, the Kenya Banker’s Association (KBA), the umbrella and advocacy group for the banking industry is celebrating its 59th anniversary. One of its recent projects has been to document the history of banking in the country. This stretches back to 1896 when the National Bank of India, which later evolved into KCB, opened a branch at Mombasa.

The KBA’s Banking History website and documentary project has a timeline of different banking eras. Key moments over the last 125 years include the banking growth that followed the Uganda railway, developing local regulation after Kenya’s independence, the Africanisation and the indigenous banks push in the 1970s. Others are surviving bank collapses in the ’80s and ’90s, interest rate controls and recent banking responses to Covid-19.

Key throughout has been the embrace of technology from the late 1960s, on through computerization and on to the mobile phone era of the 2010s. Along with tracing banking trends like increasing financial inclusion and developing products for informal and small businesses, the KBA timeline also highlights how banks are anticipating, building skills and preparing for the next age of banking. This is expected to revolve around competition with global fintechs, digitization of all customer processes, and embracing financial sustainability principles.

Sustainable Finance by Kenyan Bankers

The Kenya Bankers Association (KBA) launched a report on the progress towards the implementation of sustainable finance in decision-making at Kenyan banks.

The KBA houses a Sustainable Finance Working Group that complies mid-level managers at Kenya banks that champions and promotes sustainable finance principles and practices among Kenyan banks. The report shows that 85% of banks have aligned their credit policies to responsible and sustainable lending practices and 57% of banks have integrated sustainability reports into their financial reporting. The results are based on voluntary disclosures by banks.

KBA also launched a revamped Sustainable Finance Initiative e-learning website that is now Persons With Disability (PWD)-friendly.

Since it was originally launched in 2015, over 99% (33,000 employees) of banking industry staff have received training on how to make more inclusive financial decisions. The bankers are trained on different modules, including on green bonds and with case-studies from other markets. The top-performing banks in SFI e-learning have been NCBA, Bank of Africa, Diamond Trust, I&M, and Sidian banks. Also, bankers can now sign in with user names, as access is no longer based on their email addresses, which created hitches when people learning switched banks.

The new platform has got case foreign and local studies on blue and green finance. Some of the ones cited in the report include the Acorn Green Bond, arranged by Stanbic and guaranteed by GuarantCo, which raised Kshs 4.3 billion for environmentally- friendly student accommodation in Nairobi. Others are CBA’s $2 million lending to M-KOPA, a seller of solar-powered devices to low income, mostly unbanked households, on a pay-to-own instalment basis and Standard Chartered’s Kshs 10 million 3-year loan to assist Uhuru Flower Farms to acquire a solar system to reduce their energy costs and improve the reliability of the power supply.

Also this week, Family Bank joined the United Nations Global Compact network, and became the 4th bank in Kenya to commit to building a sustainable business that adheres to the ten principles of the network.

The KBA sustainability study was done with support from WWF-Kenya which is also supporting the green bonds program in Kenya.

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 .. 
https://twitter.com/AlexInAir/status/1241759364068904961
  • 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.
  • EDIT: March 2 2022: Two years after Corona’s outbreak, the Kenya Government has almost completely rolled back its restrictions and health measures – and tests will no longer be required for fully vaccinated travellers (but may be set by airlines and destination countries), masks are no longer mandatory in open spaces (but at crowded meetings & in palens), contact tracing has been stopped, and people can return to office work, while churches, public transportation and sports can resume at full capacity. THIS WAS FAKE NEWS

EDIT COVID RESTRICTIONS LIFTED

  • March 11 2022: With 17.8 million vaccines having been administered in Kenya, and a positivity rate of 1%, the Government announced a rollback of measures including facemasks will no longer be mandatory in open spaces, but people are encouraged to wear them at indoor venues, passenger transport can resume at full capacity, all quarantine is halted, sports spectators can resume attendance, churches and meeting can resume as long as people are vaccinated and the practice of taking temperatures at public entrances is halted. Also, all international travellers into the country will load data onto a Ministry of Health app, all unvaccinated travellers into the country must have a recent covid test result and will be tested at their own cost, while vaccinated truck drivers from East Africa will not require Covid tests. The measures were announced exactly two years since the onset of Covid in Kenya.

    • 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.