Drought-stricken Tea Harvest puts Damper on Economy and Emplyoment
Kenyan tea growers sent half of their workers on leave or assigned them non-core duties due to a prolonged drought that’s halved production at leaf-processing factories. Prices of the commodity could climb amid a looming shortage in the world’s biggest exporter of the black leaves variety, according to traders.
“We are operating for three days a week because there is no crop to pluck,” Kenya Tea Growers Association’s Chief Executive Officer Apollo Kiarii stated, “About half the number of workers who are supposed to run the operation fully are not working.” Workers usually operate six days a week, according to Kiarii.
Hot and dry
While rainfall was expected to peak in April, most parts of the country have remained dry with hi…
INVESTMENT OPPORTUNITY: Biogas Plants to provide rural Schools with Electricity
Kenya has begun a drive to construct cow dung-fired biogas plants for public schools in nearly half of the towns in the country aimed at cutting heavy cooking costs.
The Ministry of Energy Tuesday invited investor bids to build biogas digesters for schools in 22 counties outside Nairobi, Mombasa and Kisumu cities. Biogas is produced by treating biodegradable waste materials such as paper, crops and sewage in a bio-digester – a sealed tank to accelerate the breakdown of the waste into methane, the burning gas. The gas can be used for cooking and lighting.
“This project aims to relieve public schools of the burden incurred in heating water and cooking since most have available biomass waste,” said Energy principal secretary Joseph Nj…
Growth & Election Outlook
Of the 82 countries for which we are game enough to make a forecast for GDP in 2050, Kenya is the one that we expect to show the fastest growth: its real GDP in 2050 should be seven times larger than it is today (at the other end of the list is Italy, where we think real GDP will only be 18% higher). Fast population growth, a modest improvement in the business environment, urbanisation and fast-growing neighbours all contribute to the long-term good news story (with climate change posing the largest downside risk).
In the more immediate term, Kenyans will be electing a president on August 8th, and we expect the incumbent, Uhuru Kenyatta, to be re-elected, albeit by a smaller margin than he achieved last time. Elections in Kenya have s…
Number of Work Permits issued cut by 50%
Kenya has cut work permits issued to foreign nationals by nearly half over the past four years amid stringent rules on job passes for non-citizens. Immigration department issued 5,851 permits last year, down from 7,683 in 2015 and 11,360 in 2012 when the tough regulations were introduced. Kenya in 2012 shut the door on foreigners seeking permits for jobs that pay less than $2,000 (Sh206,000) per month or Sh2.74 million per year.
The new rules also locked out expatriates from employment in the medical, real estate, engineering, accountancy and legal professions unless employed in businesses that start from scratch. The regulations are particularly targeted at foreigners holding jobs that can be handled by Kenyans in an economy struggli…
Interest Rate slightly up at 6.34%
Kenya’s inflation rose slightly to 6.34% year-on-year in September from 6.26% a month earlier, the statistics office said yesterday.
The Kenya National Bureau of Statistics said in a statement that on a month-on-month basis, inflation was at 0.34%. Rising food prices outweighed consumer gains from falling fuel prices, it said.
New Law caps Banks' Prime Lending Rate
Kenya’s President Uhuru Kenyatta signed into law yesterday a bill capping commercial bank lending rates, saying banks had in the past failed to live up to pledges to lower their rates when parliament tried to introduce caps. Parliament passed changes to the banking law in early August to cap commercial interest rates at 400 basis points above the central bank’s policy rate, now 10.5%. The changes had since been awaiting presidential approval.
Businesses in the east African country have complained that high commercial lending rates, which can reach 18% or more, hobble corporate investment. Individuals say the high rates put borrowing out of reach of many. Though the National Treasury and the central bank had opposed caps, they have bot…
Tea Agency shows how it is done: US$ 55m Loan signed to build 7 Hydro Dams
The Kenya Tea Development Agency has signed an US$ 55m syndicated loan to build seven small hydro-dams to cut reliance on the national grid and trim factory costs. The agency accounts for about 60% of tea output in Kenya, the world’s leading exporter of black tea – a major foreign exchange earner for East Africa’s biggest economy. The loan was arranged by the World Bank’s private sector lending arm International Finance Corporation (IFC), the Global Agriculture and Food Security Programme, as well as French and Dutch development banks Proparco and FMO.
KTDA chief executive Lerionka Tiampati said construction of three hydropower projects were at an advanced stage and with the new funding construction will commence on four more small hy…
GDP Growth Outlook under Pressure
Kenya is among the brighter spots in Africa at present although we have become a little bit more concerned about the medium term outlook as a result of fiscal slippage, a lack of co-ordination between policy makers and increasingly tight liquidity conditions.
GDP growth recovered slightly in 2Q15 to 5.5% y/y, up from a one-year low
of 4.9% y/y in 1Q15, on the back of higher electricity production and elevated
growth in construction. The former can be attributed to an increase in
hydroelectricity output and the commissioning of a new geothermal power
plant in 2014 while the latter is due to substantial public sector infrastructure
investment. Better rain fall has also boosted the agricultural sector where
Courts fight Corruption to improve Ease of Doing Business
Yesterday, a Kenyan court charged the former head of the state-run Geothermal Development Company and other senior executives with abuse of office arising from the award of a contract for transporting drilling rigs. Former managing director Silas Simiyu and eight others charged with him for abuse of office responded “It is not true” when their charges were read out to them by a court clerk. Kenya’s chief prosecutor, Keriako Tobiko, earlier authorised the prosecution of Simiyu and others on accusations of irregular award of a contract for moving the company’s drilling rigs to private-owned company Bonfide Clearing and Forwarding company in the financial year 2012/13 (July-June).
Nairobi’s anti corruption chief magistrate Kennedy Bidali…
World Bank holds back on GDP Growth Forecast for 2016
Volatility on Kenya’s domestic foreign-exchange market and the monetary policy response to calm those fears will damage the country’s economic output, the World Bank said as it lowered the growth forecast for East Africa’s biggest economy. The economy will probably expand 5.4% this year, compared with an estimate of 6% in December, the Washington-based lender said in a report titled “Storms Clouds Gathering” published on Thursday. It also cut its projection for 2016 by a similar margin to 5.7%. “The revisions reflect the reassessment of risks associated with macroeconomic instability resulting from exchange-rate volatility, inflationary threats associated with concerns about currency depreciation and delayed fiscal consolidation, balance…