Category Archives: Nairobi cost of living

Nairobi retail shopping upstarts.

The Nairobi shopping scene has been upended by several new chains that have opened stores in several malls like Two Rivers in the last few months. They include:

  • Carrefour: This franchise has been around for almost three years now, and has replaced Nakumatt, taking up space vacated by the former giant, at several top-end malls like the Junction, Mega and Galleria. They offer new experiences and different retail operations for customers and suppliers.
  • LC Waikiki: Has a large selection of clothes – for men, women, and children – priced quite affordably compared to other stores like Mr. Price and Deacons who, frequent visitors to Johannesburg say, charge double what the same items cost in South Africa.
  • Miniso: Japanese gift shop chain (that’s really Chinese?) looks confusing at the entrance, but inside they have lots of stuff – electronics, travel items, gift items, and you end up spending a lot more time browsing than you expected, and returning many times to purchase other items.
  • Decathlon: Sports shop at the Karen Hub, is well-arranged, with exercise and sports equipment and clothing. It’s perfectly priced for many people who are experimenters and want to buy stuff to try out new sports for themselves and for children. They sell in-house brands like “Kalenji” shoes (a play on “Kalenjin” runners?) that cost a fraction of name brands like Nike and Adidas. They put out all their stock for customers to pick and try, unlike other shops who put one item on display and have the rest in the backroom where clerks have to go and retrieve the right size of an item. They also have self-service check-out counters and their payment options are completely cashless.

Cancer Insurance in Kenya

Kenyan insurance firm, ICEA Lion (the Insurance Company of East Africa), launched a cancer insurance policy in October. They have been advertising in newspapers, TV with the promise of cover for just Kshs 165 ($1.$ per month). Yet there is a billboard, and their own FAQ’s, that state that the policy is NOT a medical insurance cover. So what is it?

Cancer impacts: Cancer is becoming more prevalent, affecting thousands of Kenyan every year and has been cited in the illness and death of many Kenyans. Today’s Nation newspaper has a report than one in five Kenyans will develop cancer in their lifetimes and that one out of every eleven deaths in the country is due to cancer.

Cancer afflicts all groups, and the working and the wealthy seem as afflicted as poorer Kenyans, who may not have any medical insurance. Treatment comes with hefty bills for scans, operations, radiation, chemotherapy and other treatments, whether in Kenya or overseas, especially in India. There are dozens of fund-raisers every month within families or online, or in church groups etc.

Features: The ICEA cover pays out a percentage of the sum insured when one is diagnosed with invasive cancer (which is spreading to other organs or healthy body cells) or a brain tumour.

ICEA pays the insured person, not the hospital so that they meet their medical or other ordinary living expenses for which cancer treatment would pose a burden. The policy offsets financial obligations arising from medical expenses and is targeted at heads of households. Recent surveys on financial inclusion found that 42% of Kenyans use their own savings to manage shocks and risks, such as medical treatment, and 28% use social networks.

The ICEA policy pays 10% upon diagnosis, 5% of the sum insured for each course of chemotherapy (for up to five instances or five years), 5% of the sum insured for each course of radiotherapy (for up to five instances or five years), and 20% of the sum insured for one surgical procedure in the first five years.

Another 10% is paid in case there is a relapse between years five and ten, and another 10% is paid if there is a remission after year ten. If someone requires palliative care (basically pain management with no more chance of recovery), 100% of the remaining insured sum is released.

For brain tumors, 10% is paid on diagnosis, and 40% of the insured sum can be used to pay for surgery.

Payment is made within two weeks (14 days) of a claim. Payments can be made to the policy owner, or their beneficiaries and is done regardless of other medical insurance in place.

Joining: No medical tests are required for sums up to Kshs 5,000,000 (~$49,250). The maximum age to join is 60 years and the cover expires when one turns 65 years. The policy runs for a minimum of 5 years.

Policy Costs: ICEA has a premium calculator on their website e.g. for a 25-year old to have the cover of Kshs 5 million, it will cost Kshs 1,174 per month or 14,000 per year. And for Kshs 10 million (~$98,500) of cover, that will be Kshs 2,349 per month or Kshs 28,187 ($277) per year. The cost increases as one gets older and if one is 45 years old, and with the looming cap of 65 years, to get Kshs 10 million cover will cost 18,310 per month or Kshs 219,722 ($2,164) per year. Also, payment is waived if someone is diagnosed with stage 4 cancer.

Exclusions:

  • If one is diagnosed within three months of purchasing the cover.
  • If one has signs of cancer within the 12 months before they purchased the policy or had been diagnosed earlier.
  • No payments for surgery to diagnose cancer.
  • Benign or malignant tumours (i.e. cancer which is not spreading )
  • For some prostate tumors or some leukemia (blood cancer) types.
  • If a woman had a mastectomy or lumpectomy within five years before the policy started.
  • For any cancer caused by a pre-existing condition.

Medical Insurance in Kenya: Medical insurance is not a lucrative product. According to the Association of Kenya Insurers (AKI), eleven companies underwrote medical insurance of more than one billion shillings in the year, topped by Jubilee, followed by others such as AAR, Resolution, APA, CIC, and Madison. But the industry saw Kshs 56 billion of claims in 2018, that was led by medical insurance with claims of Kshs 20 billion ($197 million), followed by private motor and commercial motor with claims of about Kshs 14 billion each. Only seven out of twenty-three companies made an underwriting profit from medical insurance.

⁩Other firms with medical insurance that extends to some cover for cancer-related illnesses include UAP / Old Mutual, GA Insurance, and the National Hospital Insurance Fund under their “SUPA” cover.

Toxic Business: Banned in the European Union, poisoning Kenya

Agriculture is one of Kenya’s key income earners contributing 24% of GDP and employing 75% of the population either directly or indirectly. As a result, the demand for pesticides is high and increasing with the need to increase agricultural production to keep up with population increase. Imported chemical pesticides in the market account for 87% and has more than doubled in four years from 6,400 tonnes to 15,600 tonnes in 2018, yet there are few safeguards to control application.

Every year fresh produce from Kenya is rejected by the European market when it is found to have harmful levels of chemical residue. When returned it finds its way to local fresh produce markets and consumed by unsuspecting Kenyans. The result is a huge healthcare burden on households as more people, especially children, fall ill.

A report by Kenya Plant Health Inspectorate Service (KEPHIS) showed that 46% of the fresh vegetables sold in Kenyan fresh produce markets have high levels of pesticides with harmful active ingredients, with Kale (94%) having the highest level of pesticides and herbicides that are harmful to human and animal health.

A small-scale farmer Joseph, who has adequate training in the handling of pesticides, prepares to spray his crops by mixing the chemical with water in a backpack sprayer pump, using his bare hands and no protective mask or clothing, he gives the pump a firm shake to mix the ingredients in it and then proceeds to splash water on the exterior of the sprayer pack to rinse off the chemical overspill with his hands. The small quarter acre, gently-sloping vegetable garden surrounds his family’s house, which further exposes his family to harmful chemicals. He is not aware of the danger of handling these pesticides, only focusing on their efficacy in pest control.

At the local roadside Market, Daniel Maingi of Kenya Food Rights Alliance purchases green capsicum and spinach to take for testing at the University of Nairobi’s Pharmacology & Toxicology Laboratory at the Department of Public Health, where Professor Mbaria confirms harmful levels of chemicals containing toxic active ingredients on the sample vegetables.

The “Pesticides In Kenya: Why our health, environment and food security is at stake” report by Route To Food Initiative (RTFI), makes a distinction between the toxicity of the active ingredient and the toxicity of the chemical product. In the European market, the manufacturer of a chemical product first registers the active ingredient, which is then tested and must be identified by name on the product label.

Of the “247 active ingredients registered in Kenya, 150 are approved in Europe, 11 are not listed in the European Database and 78 have been withdrawn from the European market or are heavily restricted in use due to potential chronic health effects, environmental persistence, and high toxicity to wildlife.”

In a case of double morality standards, these chemicals are available to Kenyan farmers threatening the health of both citizens and the environment by contaminating the soil and water. Most of these pesticides take years to degrade and therefore persist in the environment for many years and many are acutely toxic causing severe long-term toxic effects, disrupting the human endocrine system, harming wildlife and other non-target organisms that are crucial to the ecology.

The Pesticide Control Products Board (PCPB) set up by the Government of Kenya under the Pest Control Products Act of 1982 regulates the importation, manufacture, distribution and exportation of pest control products. PCPB has registered 247 active ingredients in 699 horticultural chemical products, with more products registered than active ingredients as one active ingredient can be by several companies. Of these, a quarter are banned in Europe and they include big brand names such as Syngenta, Bayer and BASF.

In Kenya, chemical companies host robust carnival-like events where smallholder farmers are bussed in from across the country and paid a stipend to attend. Throughout the festival, no mention is made to farmers about safe handling or protective clothing when mixing the chemicals for application on the crops. The farmers appear to completely trust the chemical companies to have their best interests at heart and do not ask any questions. At these marketing events, several chemicals are presented as solving multiple problems and are touted as the best in the market.

Glyphosate-based agrichemicals have received an enormous pushback globally for its carcinogenic properties. However, there are other harmful ingredients that should attract much more attention in use in Kenya, but banned in the European Union. Carcinogenic active ingredients include Chlorothalonil, Clodinafop, Oxyfluorfen and Pymetrozine. Mutagenic active ingredients include Cabendazim, Dichlorrvos and Trichlorfon. Endocrine disruptor pesticide active ingredients include Acephate, Carbofuran, Deltamethrin, Omethoate and Thiacloprid. Active ingredients that hamper development and are harmful to reproductive health include Abamectin, Carbendazim, Carbofuran, Gamma-cyhalothrin, Oxydemeton-methyla and Thiacloprid. Neurotoxic active ingredients include Abamectin, Acephate, Dichlorvos, Glufosinate-ammonium, Omethoate, Permethrin and Thiacloprid.

Before the advent of chemical herbicides, farmers would weed their farms by hand and using hand hoes, this has been increasingly replaced by pesticides even for the smallholder farms under five acres. Mono-cropping or monoculture where one crop is planted year in year out, depleting the soil of nutrients and necessitating the increased use of fertilizers to improve yields with each subsequent year, also encourages the spread of crop pests which require chemicals to treat. Another area that receives little focus is post-harvest storage pesticides. If fertilizers are subsidized, why not include hermetic storage technology (HST) storage bags that provide moisture and insect controls, without pesticides, in this policy?

If we continue to consume chemicals, consciously or subconsciously through the food we eat, the water we drink and the air we breathe, then the next generation we produce will be of a lesser quality than ourselves, as will subsequent generations.

A guest post by Velma Kiome 

Acorn Green Bond for Student Accommodation in Nairobi

This week saw the approval of the first-ever green bond in Kenya, issued by Acorn Holdings to fund student accommodation projects around Nairobi.

Acorn is one of the largest developers in Kenya, having delivered over 50 projects worth $550 million in the last decade. These include the local headquarters for Coca Cola, Equity Bank and Deloitte, and the UAP Tower, which is currently the tallest occupied building in Nairobi. They plan to raise up to Kshs 5 billion ($50 million) investors through a bond that has a bullet maturity in five years and which pays 12.25% interest. The green bond issue is partially guaranteed by GuarantCo up to a maximum of $30 million.

Acorn has ventured into purpose-built student accommodation (PBSA), under two brands, Qwetu and Qejani. They are developing projects close to universities around Nairobi, which target students at campuses of USIU, University of Nairobi, Daystar, KCA and Riara universities.

This is to address the current situation where the increasing number of students at universities live in sub-standard housing, without amenities, in poor condition or which are considered unsafe. These are mostly in older building not designed for students such as former domestic-staff quarters. Yet students require reliability water & electricity, Wi-Fi, security, furnishings etc. and which ensure security and privacy.

Qejani is a high-rise, mass-market, offering which students can rent for between Kshs 7,500 -12,500 ($125) per month for single, double or quadruple room accommodations, while Qwetu is their premium brand.  The funding will go towards completing student accommodation facilities including Qwetu USIU Road 3 & Road 4, Sirona Phase 1 & 2, Bogani East Road Qwetu, Bogani East Road Qejani, and Nairobi West Qwetu.

The green bond offer, which is restricted to sophisticated investors, opened on 16 August and closes on 27 September 2019. Allotments will be done on 30 September 2019, with the minimum level of subscription set at 40% for it to be deemed a success.

Other aspects of the bond issue:

  • It is restricted to sophisticated (institutional) investors.
  • Opened on 16 August and closes on 27 September 2019. Allotments will be done on 30 September 2019.
  • The minimum level of subscription is set at 40% for it to be deemed a success.
  • Stanbic Kenya is the issuing and paying agent for the green bonds, and they will confirm that funds will not be used for more than 65% of the project costs with Acorn contributing the other 35%. 
  • Helios Partners are investors in Acorn.
  • GuarantCo is sponsored by the governments of the UK, Netherlands, Switzerland, Australia and Sweden and by FMO, the Dutch development bank.
  • Moody’s Investors Service has assigned a provisional B1 to the Acorn bond.
  • The issue will be certified as a green bond given that Acorn’s projects are constructed in accordance with the International Finance Corporation – IFC’s EDGE (“excellence in design for greater efficiencies”) requirements for sustainable buildings and certified by the Green Business Certification Inc. (GBCI) “.. they aim to steer construction in rapidly urbanizing economies onto a more low-carbon path. Certification is based on benefits generated from providing solutions in construction and operation: energy, water, and materials.” 
  • The green bonds program is endorsed by the Central Bank of Kenya, the Capital Market Authority and the National Treasury.

EDIT October 3, 2019.

Edit: Jan 13 2020: Acorn Holdings listed the Kshs 4.3 billion green bond on the Nairobi Securities Exchange.

EDIT Jan 20 2020: President Uhuru Kenyatta rang the bell to mark the cross listing of Kenya’s first green bond on the London Stock Exchange (LSE).

To be updated.

Kenya Finance Bill 2018

In a year in which there were crucial changes proposed to Kenya’s tax system, the National Assembly passed the Finance Bill 2018, but the President refused to assent to it and sent it back to Parliament with his proposed amendments to fuel, banking, housing, gambling and other taxes.

Sectors affected by the memorandum.

  • Banking: For every transaction your bank charges you, currently there is a 10% levy which will now go up to 20%. Also, the fee on money transfer and mobile banking services will be 20% on excisable value – up from a proposed 12.5%.
  • Telecommunications: a tax on telephone and Internet services will be 20%, up from an earlier 15% tax on the excisable value
  •  Food: He proposed reinstating a sugar confectionery tax that parliament had dropped.
  • Fuel; Kerosene will cost the same as diesel after the introduction of an anti-adulteration tax. VAT which Parliament had pushed back by another two years, and which the President wrote would cause a Kshs 35 billion shortfall in this year’s budget. He, therefore, proposed an immediate reinstatement of VAT at 8%. (VAT in the country is levied at 16% for all other goods and services that qualify).
  • Housing: Employers shall pay a new housing development levy on behalf of employees – with the employer’s contribution at 1.5% of salary and the employees at 1.5% of salary – up to a maximum of Kshs 5,000 – to be remitted on the 9th of the following month to the proposed National Housing Development Fund.

Employees who don’t qualify for the low-cost housing proposed will still have their money go to the Housing Development Fund and will get it back when they retire,

  • Gambling: tax reduced from 35% to 15%.

The President also asked Parliament to reduce the national government budget by Kshs 55 billion. Parliament was on a month-long recess but has resumed this week for special sitting sessions relating to the Finance Bill 2018. They received the President’s memorandum on Tuesday 18th September, with the budget committee meeting on Wednesday to review and approve these changes for Parliament to vote on Thursday 20th September.