Category Archives: Kenya parliament

Inside Kenya’s BBI (Building Bridges Initiative) Report.

Last week saw the release of a report from the Presidential Taskforce on the Building Bridges Initiative (BBI), that was the result of a March 2018 ‘handshake’ between President Uhuru Kenyatta and former Prime Minister Raila Odinga who had led different parties into the 2017 Kenya general elections.

The document is sub-titled Building Bridges to a United Kenya: from a nation of blood ties to a nation of ideals and its authors claim to have incorporated the views of about 7,000 Kenyans from all 47 counties.

One of the summarized findings was that elections are too divisive- and the country’s economy gets three good years that are interrupted by two-year blocks of intense electioneering campaigns.

Anyway, on to an alphabetical look at some of the Building Bridges Initiative (BBI) Report clauses.

Anti-Money Laundering: A bank involved in corrupt transactions should be made to repay all the money laundered through it, with interest.

Audits: Devolve the Office of the Auditor-General to the Counties. Also, projects initiated in the final year of an electoral cycle should receive extra scrutiny from the Controller of Budget and all oversight authorities.

Capitalism: We have confused value extraction with capitalism(and) we as a people must build an economy that is dominated by value creation and not value extraction.

CCTV: Link private CCTV of hotels, shopping centres, and other highly trafficked sites to the National Police Service to deter terrorism and crime.

Cyclists: Every new road in an urban area should be legally required to also have a sidewalk for pedestrians and specified lanes for cyclists, with clear signage.

Doing Business Rankings (not the World Bank ones): Develop and launch a measure of ease of doing business for small Kenyan businesses and not just foreign investors. This should be a comparative assessment published annually by the Kenya National Bureau of Statistics and broken down by counties, cities, and towns.

(Fighting) Corruption: One of the summarized findings was a need to reverse the Ndegwa Commission and ban all public officers from doing business with the government. Another is that no procurement officer should be at a post for more than two years.

e-Government: Make Kenya a 100% e-services nation by digitizing all Government services, processes, payment systems, and record-keeping. This should include the ability to offer Kenyans digital identities, e-health records and Kenyans should be able to vote digitally.

(Attitude to) Free Money: When money is known as ‘pesa ya serikali’ (Government money), it is something to plunder not respect; indeed, people who try to save public money are dismissed and even rebuked.

(Use of) Government Services: dubbed “skin in the game of leadership” – all Ministers and county executives and leaders should use the services that they manage on behalf of all Kenyans. E.g. the children of the Education Minister should attend public schools and the Health Minister should use public health facilities.

History (of Kenya): President Uhuru Kenyatta should commission an official accurate History of Kenya, going back 1,000 years, whose production will be led by an Office of the Historian resident in the National Archives.

(Digitization of) Land Records: Complete the digitization of land ownership and give the public access to the database. Also, map and publicize Government-owned land open for commercial leasing under simple and enforceable terms.

Loan Apps: Properly regulate loan apps which are driving up indebtedness of poor Kenyans to destructive effect with their shylock-level interest rates and borrowing from multiple platforms.

Marginalization: The marginalized should not marginalize others – strong evidence was presented that some communities that complained about marginalization at the national level were themselves guilty of marginalizing minorities in their respective counties.

Media: Kenya needs media that uplifts through investing in quality local content (and) should build programming around Kenyan histories and showing what is exceptional.

Mining: Concessional agreements, policies and regulations in mining and oil should be made public in an accessible manner, including clear accounting for the public participation and environmental impact assessments.

New bodies Proposed in the BBI Report:
• A Health Service Commission to look at the human resourcing in the counties.
• A unified and assertive food safety and regulatory body to ensure Kenyan food become safe.
• Nairobi be accorded a special status as a capital city that allows the National Government to maintain it as a capital city and as a diplomatic hub.
• A commission to address current boundary conflicts until they are solved.
• (Compel the) Private sector to form a national, non-profit foundation, chaired by the President, that provides mentoring and support to aspiring business owners aged 18–35. It should match the young entrepreneurs with a business development advisor and a nationwide network of volunteer mentors.
• A Government-run national lottery to replace the private betting industry (which is leading to hopelessness and greater poverty)
• A Sovereign Fund that allows for savings in case of emergencies or extraordinary circumstances.
• An Office of the Public Participation Rapporteur mandated to conduct all public participation on behalf of governmental entities at the national and devolved units.
• A Prime Minister, appointed by the President, from the majority party in Parliament.
• A Department of Happiness, Wellness, and Mental Health in the Ministry of Health.
• Baraza la Washauri: The President should benefit from the private advice of eminent, experienced, and honourable citizens serving as a Council of Advisors on a non-salaried basis.

NHIF: The National Hospital Insurance Fund administrative costs should be cut down to 5%-10%. Currently, this is at about 18%.

Privatization: Expedite the privatization of Government shareholding in assets not delivering value to the public and undertake parastatal reforms.
The findings are further summarized to include “parastatals carrying out County functions should be either wound up or restructured.”

Revenue allocation: Public resources should follow people not landmass. Health, agriculture, and service delivery are also most important that landmass.

Taxation: Have a “flat tax” for every income category above a living wage/income of Kshs 30,000 (~$300) – to reduce tax fraud, encourage compliance, and cut down on corruption in the assessment of taxes.

Tax-cuts:
• Minimize taxation of new and small businesses by giving them a tax holiday of at least 7 years as a support to youth entrepreneurship and job creation.
• Cut taxes in relation to Auditor-General audits .. money should remain in Kenyans’ pockets until there is more accountability and governance on its use at the National and County levels
• Also no double taxation and double regulation at the National and County level.

Wealth Declarations: These should be made public and all senior leaders should publish written statements on how they acquired wealth over Kshs 50 million (~$500,000) and have this available on government websites, along with details of shareholdings, partnerships, directorships etc.

(Reward) Whistleblowers: Offer a 5% share of proceeds recovered from anti-corruption prosecutions or actions to the whistleblower whose information is necessary to the success of the asset seizure or successful prosecution.

White-elephants: To stop the abandonment of incomplete projects with each change of administration, the Treasury should not release monies to the new Governor before obtaining a list of incomplete projects and a plan for their completion.

Way forward: In the BBI report, there is no mention about a public referendum, the TJRC report, and very little about land and historical injustices. It also does not address much on legislative issues such as the two-thirds gender rule, and disputes between the Senate and the National Assembly. Parliament breaks for a two-month Christmas holiday this week, during which the BBI debate is sure to be a topic of much discussion up to February 2020 and beyond.

Banking Week: Interest caps go and Stawi starts

Interest-Caps: This week saw the end of the era of capping of interest rates, that was seen as a populist three-year experiment to reign in large banking-sector profits.

The Government had tried to repeal this, without success, several times over the last few years, and bankers and the IMF have also been vocal about the unintended, and detrimental effects of the caps, on the economy.

Parliament stuck to its guns to the last minute, making farcical attempts to keep the caps in place. But as only 161 MP’s were present to vote, they could not proceed to over-ride the President, as they needed 2/3 of Parliament to be present. While some lawmakers have in the past argued that this high constitutional threshold (of requiring a vote of 233 MP’s) gives the President power to make laws, this has been upheld by the Courts.

The caps did not stop the “super profits” at large banks, but they did weaken smaller banks by limiting their interest-income growth. In the interest capped era, large banks found shifted their lending lend to a national government with an insatiable borrowing appetite, as opposed to small businesses, and when these credit lines shut off, small banks were hit with a rise of non-performing loans.

Stawi: This week also saw the formal launch of Stawi after a pilot phase in which that 80,000 had signed up for this banking industry response to the mushrooming of unregulated loan apps.

Stawi aims to promote savings and lending for small businesses. It is a bank account, opened and operated on phone, and owners can move money through M-pesa (for a flat fee of Kshs 42) and Pesalink. Stawi is hosted by the Commercial Bank of Africa, and, like with its M-shwari product, banking services are only rendered on the app, not at branches.

Users of Stawi have to be registered and in business for six months. New users are encouraged to make Stawi their primary account and to channel transactions through it to get a borrowing limit.

On downloading the app, one is assigned a loan limit based on credit their credit history. Stawi offers unsecured loans of between (~$292) KSh30,000 to (~$2,432) KSh250,000 that can be repaid between one to twelve months at rates of 9% per year.


Kenya Political Party Financing in 2019

What’s to be learnt about the state of political party finance in Kenya? Some parties have published their unofficial financial results for the year 2019.

Jubilee: The ruling party has income of  Kshs 339 million, that includes 240 million from the Political Parties Fund (PPF) and 98 million from members. They spent 80 million on rent, down from 90 million, 173M on general  expenses and 81 million on secretariat staff and executives.  They have 16 million of property

ODM: The main opposition party received Kshs 112 million from the Political Parties Fund, same as last year, and donations of 78M. They have also booked an astronomical accrued amount from the government of Kshs 6.47 billion. They spent 170 million on administrative expenses, 19M on campaigns, 11M on party policy, 10M on conferences, 3M on branch coordination and just 712,000 on civic education. The amount they are claiming for the government is also listed as a current asset and bumps up their balance sheet from 119 million last year, to 6.5 billion.

Other Parties: Meanwhile other parties have been silent on their finances, but are active in other areas. These include the former ruling party – Party of National Unity, which has changed its officials. New parties have been formed this year  include  Transformation National Alliance Party of Kenya (TNAP) with “money bills” as its party symbol, the Democratic Action Party Kenya and the National Ordinary People Empowerment Union (NOPEU).

Summary of results:

1. Party coalitions are dead:  The party coalitions put together for elections appear to have fallen apart. ODM has stopped making payments to its coalition partners and no longer provides for them as they did in their earlier accounts.

2 Expensive secretariats: The amount at Jubilee of 81M  is down from 141M last year and which was a sharp rise from 28M in the previous year. That may coincide with hiring for the 2017 election period. Usually, party activities go into a lull after elections, until the next election cycle. In Kenya, this is set for 2022 unless another constitutional referendum is engineered to happen before that by political leaders.  At ODM, their property assets went up from 8M to 185M. in September 2019 they relocated their headquarters from Orange house to Chungwa House ay Loiyangalani  Drive in Lavington.

Old Pic from the State House FB page

3. Parties IPO: ODM has sued the government for not paying it the amount of Kshs 6.4 billion which it says dates back to when parliament came up with the  political parties act.   

But the National Treasury has been saying it cannot afford  to fund the political parties to the tune of 0.3% of the budget as parliamentarians had their parties, without impeding their constitutional requirement  to also fund the county governments.  Treasury has been allocating Kshs 300 million instead of 3.6 billion a year to the Political Parties Fund.

4. If that payment ever materializes, ODM’s coalition partners, have stated that they will stake a claim for a slice of that windfall. 

Sports betting on ice as Sportpesa and Betin shut down in Kenya

On the last Saturday of September 2019, top sports betting companies, Sportpesa and Betin, separately announced an effective end of their operations in Kenya.

Sportpesa posted a statement on their site saying that Kenyan tax administrators had misunderstood revenue generation in the betting industry  – and that the company would halt all brand operations in Kenya as a result. Earlier, Sportpesa management, without citing  numbers, had said that they had settled all matters with Kenya Revenue Authority (KRA), but have still been unable to obtain renewal of their license from the Betting Control and Licensing Board (BCLB)

Then last week on Wednesday, Sportpesa moved to lay off about 400 employees.

Meanwhile, Gamcode (trading as Betin Kenya) also issued a memo to all employees terminating their jobs as the company had not been operating since July 2019. They said they had been trying to resolve for three month’s as such all jobs would end on October 31.

Betin had several big media campaigns with Kenyan soccer star McDonald Mariga, who has unexpectedly stepped into politics and is now in the middle of campaigns to take up the vacant Parliamentary seat for Kibra constituency, following the death of popular MP, Ken Okoth.

By now, with the English Premier League on, local sports pages would have full-page colour advertisements of weekend and mid-week match betting odds and jackpot opportunities. Sportpesa also had significant spending in Europe sponsoring the Racing Point Formula One  team and Everton in the UK premier league and those teams still adorn  Sportpesa brands.

The claims of banning sports betting have been varied, with their destructive influence on young Kenyans, tax evasion and money laundering at different forums. Even a former Chairman of the Betting Control and Licensing Board, Kimani Kung’u, questioned whether non-payment and non-compliance with taxes was behind the freeze on the top betting companies.

In an interview with Radio Jambo in July, Kung’u said that the revenue of betting companies at the end of 2018 was between Sh20 billion and Sh25 billion and that there is no way that could have risen to Sh200 billion by mid-2019.


There have been three groups of companies: The group of 26 companies that were banned in July 2019 included: Mozzartbet, Sportybet SportPesa (Pevans E A Ltd), Betyetu (Oxygen & Gaming EA Ltd), Betin (Gamcode Ltd), Betway (Blue Jay Ltd), Easibet (Dreamcall Ltd), Betpawa (Gaming International Ltd), Betboss (White Rhino Ventures Ltd), Elitebet (Seal Capital Ltd), Dafa bet (Asian Betting & Gaming Ltd), Lucky 2 U, Cheza Cash (Sekunde Technologies), Palmsbet (Advanced Innovation Ltd), 1X Bet (Advanced Gaming Ltd), Saharabet (Sahara Game Technology Ltd), Bungabet (Galaxy Betting Ltd), Kick Off (Kick Off Sports Bar Ltd), Kenya Sports Bet, Eastleighbet (G&P Trading), and Premier Bet Ltd.

Those reportedly cleared later by KRA in July 2019 include Mozoltbet, East bet,  Lucky 2u, Eazi Bet, Kick off, Eastleighbet, Palms Bet, Bet boss, Betway, OdiBets, Mozzartbet and Ken Bookmakers.

Those xleared in August 2019 include Oyster, CityBet/EAF Galaxy, Shop & Deliver, Kareco, Playco, GrayHoldings/GameCo/Shabiki, NZ Mobile, Cheza Gaming, Hanstaunton Technologies/LottoCoLLP, and Zumabdu/Betlion.

None of the relicensed firms appears, so far, to have the impact and reach of Betin and Sportpesa.

Winners from the shutdown:

  • Moses Kemibaro has done a nice piece about the impact that the ban on Sportpesa and Betin has had on their web traffic and that of the other companies that have come to benefit from new betting activities, including Betika. He writes that “The biggest winners from Kenya’s sports betting armageddon are undoubtedly Betika, Odibets, MozzartBet Kenya and Kwikbet Kenya who have grown massively in terms of audiences and traffic during the last couple of months.”
  • The Internal Security Minister has said that Kshs 200 billion that was previously leaving the country through sports betting firms, is now being spent locally, boosting the local economy.

Losers from the shutdown include:

  • Media companies and newspapers: Gambling companies were among the top advertising spenders in the country up till this year. They would have about two color pages in all the newspapers, radio & TV ads, and several billboards across town. But as of this weekend, the newspapers are devoid of the advertisements except for small ones by Mozzartbet (for a 10 million jackpot for 50 shillings) and Betika (register and bet via USSD, with no data bundle required for a 100 million jackpot for 49 shillings)
  • The Kenya Premier League, which is limping since it lacks a top sponsor. Sportpesa had stepped in after Supersport had pulled out in protest at an ill-advised decision by the league to increase the number of participating teams from 16 to 18.
  • Telcos: Bettors and betting companies generated messages with every bet that incurred fees and bets were settled by mobile money payments. While companies are considering cards as a payment option, that is a minority that lags compared to mobile money usage.

EDIT Oct 11: 

Betin Kenya released a statement, saying that they, as a company, were fully tax-compliant, and that the betting industry had collectively paid Kshs 10 billon ($100 million) in taxes in 2018, but that the government had refused to renew its license, causing it to lay off its staff and shut down its retail outlets.

Mortgage Refinance and Amendments to The CBK Act, 1966

Via a legal alert from Oraro & Company Advocates: The Finance Act, 2018 which was assented to on September 21, 2018, amended the Central Bank of Kenya (CBK) Act, 1966 to regulate Mortgage Finance Businesses (the business). The amendments include having new definitions and the introduction of new powers to the CBK. These amendments came into effect on 1st October, 2018.

New Definitions

  • A Mortgage Refinance Business is defined as the business of providing long-term financing to primary mortgage lenders for housing finance and any other activity that the bank may prescribe from time to time;
  • Mortgage Refinance Company means a non deposit-taking company established under the Companies Act of 2015 and licensed by the CBK to conduct mortgage refinance business;
  • Specified Mortgage Refinance Company means a licensed mortgage refinance company licensed under the CBK Act.

Increased CBK powers

With the introduction of new sections, CBK will now have the power to license and supervise the business. This includes:

  • Determining capital adequacy requirements;
  • Prescribe minimum liquidity requirements and permissible investments for the business;
  • Supervise the business by conducting both on and off-site supervision;
  • Assess the professional capacities of persons managing the business;
  • Approving the board management of the business;
  • Approving the appointment of external auditors;
  • Collecting regular data from the business;
  • Approving the annual audited accounts of the business before publication and presentation at the AGM;
  • Revoke or suspend a license;
  • Receiving reports from the Mortgage Refinance Business.

These are extracts from other documents from Oraro & Company with detailed implications of the passing and presidential assent of the Finance Bill 2018.