KAM calls for change of laws toreduce excessive drinking

Kenya needs to develop a more comprehensive policy if its fight against illicit alcohol is to succeed, according to a new analysis of the regulation of alcohol in the country by the Institute of Economic Affairs (IEA).

The policy recommendation is contained in a White Paper by the Institute of Economic Affairs and launched by the Kenya Association of Manufacturers during the summit on illicit trade.

Kwame Owino, the Institute’s Chief Executive said that their analysis had shown that the approach taken to regulate alcohol is population-based rather than targeted at reducing excessive drinking.

“Regulation of the alcohol beverage sector is through the Alcoholic Drinks Control Act, which by reducing the amount of time for drinking and limiting the advertising of alcohol, assumes that it solves the problem of heavy drinking. But that does not work and more people are pushed towards illicit alcohol. By suppressing one side, you go back to the other side. Our licensing model actually creates barriers to market entry,” said Mr Owino.

Direct interventions targeting individual drinkers

He said that a regulation model that involves direct interventions targeting individual drinkers and others aimed at specific alcohol-related problems such as drunk-driving are less likely to affect the non-problem drinker.

“Kenya’s alcohol policies should not be exclusive but should encompass a mixed approach involving Problem Directed Policies and Intervention Policies. They have been proven to work elsewhere,” said Mr Owino.

The White Paper was launched at a day-long summit on illicit trade in Kenya, with focus on the alcoholic beverages sector. A resolution paper will be developed from the submissions made at the summit and submitted to the Treasury.

IEA argued that Population Based Policies are easier to administer but are unlikely to be most successful in Kenya given the low per capita consumption of alcohol, demographic changes, dual market structure and expected income growth among Kenya’s working population.

Consumption of alcohol in Kenya stood at 3.4 litres of pure alcohol

Data from the World Health Organisation shows the per person consumption of alcohol in Kenya stood at 3.4 litres of pure alcohol in 2018, much less than the global average of 6.4 litres per person.

Of the 3.4 litres, says the WHO, 1.9 litres is recorded (legally recognized) while 1.5 litres is unrecorded (not officially recognized).

“The negative effect on the industry by illicit alcohol is too big to ignore, given the extent of loss in Kenya. We are not only concerned by the health risk to consumers; illicit alcohol trade denies formal players a level-playing ground and the economy billions of revenue over time. This paper provides some insight to a cross section of stakeholders on how to forge ahead to eliminate this danger,” said Eric Kiniti, the Secretary of Alcoholic Beverage Association of Kenya. The alcoholic beverages industry is a leading contributor to the Exchequer East African Breweries Limited, the leading player in the industry, estimated that it made tax contributions of up to Ksh. 42 billion in the fiscal year 2018.

The significance of the industry is amplified because the direct tax contribution represented 2.74% of all government revenues for the financial year 2017/18.

With the excess regulation that the recorded alcohol is subjected to, says IEA in the White Paper, more consumers are pushed towards the alcohol that is not officially recognised, and which bears risks for drinkers.

“In sum, excessive regulation can generate the unintended consequences of driving demand for alcoholic beverages in the informal sector and generate worse health outcomes owing to the production methods employed in the latter,” IEA says.

Wanyama Musiambo, the head of the Multi-Agency Taskforce on Enforcement of Standards has so far succeeded in clamping down on illicit products.

“We cannot say that we let people drink what they want yet the cardinal responsibility of the government is to protect Kenyans. If nothing else has been achieved, we have achieved public awareness and Kenyans know there is a problem of illicit trade,” said Mr Musiambo.

Mr Musiambo said the taskforce’s work is intelligence-led.

“Once we make a raid, we should, in a very accountable manner, be able to process and prosecute the case as we strengthen our borders to reduce the level of illicit products in this country,” said Mr Musiambo.

Githii Mburu, the commissioner for intelligence and strategic operations, said it is evident that a more comprehensive approach is needed if illicit products is to be dealt with.

“We have to have a more comprehensive approach so that we look at both the policies and the enforcement, and this is where this study comes in,” said Mr Mburu.

A friendlier tax regime

He said that with neighbouring countries having a friendlier tax regime, ethanol is cheaper there and thus the motivation by a lot of those who import it illegally to source it there.

The commissioner said there must be collaboration between the State and non-state actors for eradication of illicit alcohol to work.

“It should never be left to the government. It’s a partnership between the government and the private sector and we must work together for it to succeed,” said Mr Mburu.

Kenya Association of Manufacturers Chairman Sachen Gudka said companies are of the view that the issue of illicit products was bigger than initially thought.

“It is our view that a better informed regulatory and policy framework will be the bedrock with which the agencies tasked with enforcement will better carry out their mandates,” he added.

Also Read: This is what alcohol manufacturers in Kenya want

Kenya’s steel makers lobby for zero rated fees to boost sector

Over 50 stakeholders in the steel sector have called upon the government to zero rate fees in a bid to boost the industry.

The stakeholders who converged for the first ever International Steel Forum in Kenya said that local steel industry is heavily dependent on imported raw materials.

The forum saw the stakeholders sourced from all over the world meet and focus on providing partnership opportunities to boost the sector’s competitiveness and developing frameworks of collaboration to better shape the future of the industry.

Speaking at the event, the Kenya Association of Manufacturers (KAM) Chair Mr Sachen Gudka noted that the local Steel sector has grown over the years, adding that the establishment of stronger partnerships with global investors, would be vital to attain the desired growth in the sector and the economy.

“The future of the sector looks at the development of Smart Infrastructure. Through data and employment of sustainable strategies the sector will spur the productivity of the country and the continent for the next generation.

We are at the juncture where our trade deficit continues to widen as a country, and the numbers in Steel are a clear demonstration of that. If we can forge stronger partnerships, with our global stakeholders finding opportunities to continually invest in Kenya, surely we can turn this around in a short amount of time,” said Mr Gudka.

He further stated that the realization of the targets set out under the Manufacturing and Affordable Housing pillars of the government’s Big 4 Agenda will require a significant input from the iron and steel sector, as it presents opportunities for growth.

According to data from the Ministry of Industrialisation, direct and indirect consumption of steel in Kenya is projected to increase as the country embarks on the development activities as envisioned in the Vision 2030.The major Vision 2030 projects include Lamu port development, railway and roads projects, housing, Industrial parks and the development of the special economic zones all of which utilize steel products. The Iron and Steel industry in Kenya forms about 13 percent of the manufacturing sector, which in turn contributes significantly to the GDP.

The local steel industry is heavily dependent on imported raw materials, as no local sources have been developed to date. The local deposits of iron ore and coal, which are the raw materials for the production of iron, that have been identified in several Locations in the country have not attracted commercial interest.

KAM Steel Sector Chair Mr Bobby Johnson highlighted that though the sector continues to grow, its full potential still remains unexploited, due to a variety of challenges including, high energy cost, Import Development Fees (IDF) and  Railway development levy (RDL) and illicit trade.

Zero Rating to improve sector competitiveness

“We have continued to lobby the government for Zero rating of IDF and RDL for all industry inputs to improve the sector’s competitiveness. In addition,  we are also keen on advocating for the development of clear procedures for smooth implementation of Buy Kenya, Build Kenya and local content – especially for large scale infrastructure projects with a high demand of steel.

If the Big 4 Agenda target to grow Manufacturing’s GDP contribution to 15% is to be met, we must address these challenges.  We remain resilient in engaging the government, with proposals to solve these issues, and anticipate that  favourable  changes shall be effected soon,” concluded Mr Johnson.

It is estimated that the country spends about 60 billion shillings (approximately 750 million US dollars per annum on importation of steel. This import bill can be reduced if high quality steel is produced locally. The development of the iron and steel sector has a spillover effect to other sectors of the economy and has the potential to create employment opportunities to Kenyans. A single steel plant of a capacity to produce 350,000 metric tons of steel per year can generate about 10,000 jobs not to mention the jobs created through other steel related activities.

Other production activities depend on imported hot rolled coils, used for re-rolling into cold rolled coils, which in
turn are processed into galvanized sheets, color coated sheets, bars, rods etc. In 2017, imports of iron and steel were 1.3 million tonnes valued at Sh83,580 million ($826.347 million). Iron and steel exports during the same year are estimated to have been 108,717 tonnes valued at Sh11,717 million ($115.754 million). The local deposits of iron ore and coal, which are the raw materials for the production of iron, have been identified in Kwale, Kitui and Tharaka Nithi but are yet to attract
commercial interest.

KAM is a Business Member Organization representing value-add companies and associate services in Kenya.  Its members’ significant contribution to the economy is estimated at a quarter of the country’s Gross Domestic Product. The Association provides an essential link for co-operation, dialogue and understanding with the Government and other key stakeholders by representing its members’ views and concerns through fact-based policy advocacy.

KAM promotes trade and investment, upholds standards, encourages the formulation, enactment and administration of sound policies that facilitate a competitive business environment and reduce the cost of doing business.

The Association houses the UN Global Compact Network Kenya chapter and its CEO – Ms. Phyllis Wakiaga is the network representative for the country.

Read Also: Kenyan manufacturers back government on recycling

What Africa stand to gain from ACFTA

The African Continental Free Trade Area isn’t simply a ‘Free Trade Agreement’ it’s about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen.

This, according to the East African Business Council (EABC) was the tone from the discussions of the meeting held on Thursday in Arusha about how the East African Private sector including Small and Medium Enterprises (SMEs) could benefit from the AfCFTA.

The one-day meeting, organized jointly between the EABC and the UN Economic Commission for Africa (ECA), convened close to 40 key players from the region’s private sector.

The office for Eastern Africa of ECA estimates large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly US$ 1 billion and job creation of 0.5 to 1.9 million.

“Together African economies have a collective GDP of 2.5 trillion USD, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent”, said Andrew Mold, Acting Director of ECA in Eastern Africa. “This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment”.

Single continental market

According to data from the African Union, the objectives of the CFTA is to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.

The agreement is also expected to expand intra African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general as well as resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

It is also expected to enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.

The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area (CFTA) by an indicative date of 2017.

The Seven Clusters 

The Summit also endorsed the Action Plan on Boosting Intra-Africa Trade (BIAT) which identifies seven clusters: trade policy, trade facilitation, productive capacity, trade related infrastructure, trade finance, trade information, and factor market integration.

The CFTA will bring together fifty-four African countries with a combined population of more than one billion people and a combined gross domestic product of more than US $3.4 trillion.

According to Nick Nesbitt, EABC’s Chairman it is important that the continent having a clear vision to put an end to the fragmentation of the internal market.

“I really applaud everybody who has involved in creating the AfCFTA because their vision is the one of pan-Africanism. It is something our founding founders aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc”, he said.

Kenneth Bagamuhunda, Director General of Customs and Trade at the East African Community Secretariat, cited the experience of Regional Economic Communities as the building blocks for the AfCFTA. “The AfCFTA should build on what has already been achieved in regional negotiations like the Tripartite Free Trade Area, as well as within our respective regional blocks” he said.

Bagamuhunda highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.

The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA, 22 countries that have ratified the agreement, which was the minimum number required for it to enter into force.

According to a study by united nations conference on trade and development (UNCTAD), the CFTA must be ambitious in dismantling barriers and reducing costs to intra-African trade and in improving productivity and competitiveness.  Intraregional trade liberalization needs to be contextualized in a broader developmental framework that will provide benefits in terms of realizing Agenda 2063 of the African Union and the 2030 Agenda for Sustainable Development of the United Nations.

“Development-oriented regionalism can contribute to spearheading Africa’s achievement of development goals, the building of resilience to external financial and economic crises and the fostering of inclusive growth. It can have spillover benefits in terms of helping foster peace, security and political stability on the continent. UNCTAD, working in partnership with the African Union Commission, African States and other development partners, is committed to supporting the attainment of these objectives, embodied under the CFTA.” The study reads in part.

UNCTAD also notes that the CFTA may also mitigate costs associated with inaction in building an integrated market. The international trading environment within which Africa participates is changing rapidly with the proliferation of regional trade agreements and, in particular, mega-regional trade agreements, such as the recently concluded Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership and the Regional Comprehensive Economic Partnership. These arrangements may create spheres of trade centred on partner economies, and African countries face the risk that preferences and trade shares in these markets may erode.

According to an EABC brief on AfCFTA, one of the key steps beyond the ratification of the AfCFTA is to prepare and submit tariff offers, under modalities on goods that will determine tariff liberalization on goods to be undertaken between the AU Member States. Under AfCFTA, African Union Member States have agreed to remove at least 90 percent of tariff on goods imported from other State parties. This implies that under AfCFTA the coverage of products with zero-rated is not intended to be 100 per cent but rather 90 per cent with the remaining 10 per cent tariff classified as sensitive and exemption goods.

Currently is not very clear that 90 percent of tariffs refers to 90 percent of total tariff lines only or a combination of a minimum of 90 percent of total tariff lines and not less than 90 percent of the total value of imports.

In addition, there are uncertainties over the remaining 10 percent tariffs and how these are to be approached in relation to exempted and sensitive products, and how those tariffs are to be liberalized, whether partially or in full, and over what timeframes. Some quarters are proposing that of the remaining 10 percent: 7 percent are classified as sensitive goods with a lengthy phasing-in period, and 3 percent of goods to be exempted altogether. However, it is not known which products will be classified as sensitive and exempt. The most negotiating challenge is to determine which tariff lines will be classified as exempt and sensitive

Also Read: EABC means business when it comes to regional trade

 

Aviation growth in Africa boosts Kenya’s tourism sector

International tourist arrivals into Kenya for the year 2018 have exceeded the 2 million mark for the first time.

This is according to the recently released Economic Survey 2019 by the Kenya National Bureau of Statistics (KBNS) says that the improved performance was a result of conducive environment for tourism, withdrawal of travel advisories and high-profile international conferences and meetings held in 2018.

“The tourism sector registered an improved performance in 2018 compared to 2017. The number of international visitor arrivals increased by 14.0 per cent from 1.778 million in 2017 to 2.027 million in 2018.” The report stated in part.

The number of hotel bed-nights increased by 20.1 per cent from 7.174 million in 2017 to 8.617 million in 2018. The number of international conferences held expanded by 6.8 per cent to 204 in 2018 compared to 191 in 2017. This was boosted by high profile international conferences held in the country and visits by foreign dignitaries during the review period. Visitors to national parks and game reserves rose by 20.3 per cent to 2.868 million in 2018. Overall, the sector recorded an increase in tourism earnings from Sh119.9 billion ($1.181 billion) in 2017 to Sh157.4 billion ($1.550 billion) in 2018.

Some of the high-profile conferences held last year included the First ordinary session of the African Union Ministerial Sub-Committee on Tourism; the 79th International Skal World Congress; Sustainable Blue Economy Conference and; The African Hotel Investment Forum.

“Turning to 2019 economic outlook, we expect activities in the tourism sector to remain vibrant supported by strong expansion in tourists’ arrivals.” Said the Cabinet Secretary the National Treasury And Planning, Mr Henry Rotich.

However, the report notes, activities of the tourism sector are likely to remain vibrant supported by strong expansion in tourists’ arrivals. The construction industry is expected to follow the current trend given the ongoing infrastructural development by the government as well as the prevailing private sector confidence.

The improvement in tourism indicators was also attributable to concerted marketing efforts such as branding of tourism products, digital marketing and global campaigns during the review period.

The tourism sector registered improved performance in 2018 also attributed to growth in aviation sector. The performance was also boosted by visits by foreign dignitaries and revitalized marketing efforts.

International Conferences

The number of international conferences expanded by 6.8 per cent to 204 in 2018 while that of local conferences increased by 7.9 per cent to 4,147 in 2018.

The number of visitors to national parks and game reserves rose by 20.3 per cent to 2,868.9 thousand while that of visitors to museums, snake parks and historical sites grew by 32.3 per cent to 1,034.3 thousand in 2018.

The robust performance of tourism in 2018 indicate the sector is poised to achieve the set targets by 2020 as contained in the Third Medium Term Plan (MTP III) 2018-2022.

The targets include: The number of international arrivals rising to 2.1 million; tourism earnings at Sh 145.0 billion ($1.428 billion) and; hotel bed-night occupancy by Kenyans at 5.5 million.

Residents of Kenya occupied more than half of the total bed-nights in 2018, showing the significance of domestic tourism. The number of hotel bed Hotel Occupancy by Country of Residence Economic Survey 2019 190 nights capacity grew by 19.5 per cent from 22.987 million in 2017 to 26.500 million in 2018.

This may be attributed to new hotels and decentralization of some of the existing ones.

Overall, bed occupancy rate rose to 31.4 per cent in 2018 from 31.2 per cent in 2017 to 1.128 million in 2018. Notable decreases in hotel bed nights occupancy were recorded in the Coastal Hinterland and the Nyanza Basin in 2018.

Overall, according to the study, Kenya’s economy continues to be supported by a strong macroeconomic environment.

The Kenyan Shilling exchange rate against major trading currencies is expected to remain stable supported by diaspora remittances and a significant level of reserves. Further, Inflation is also expected to be stable during the year.

On the demand side, growth is likely to be driven by both the public consumption as well as private sector investment. Public consumption is projected to be underpinned by the ongoing development in infrastructure, while business confidence should remain strong enough to back up expansion in investment. The increased expenditure by the government mainly in support of the Big 4 agenda, is also expected to boost the performance of the economy.

Though the onset of the long rains have delayed, it is still early to predict on its impact on agricultural production. The Kenyan economy remains resilient and is expected to perform better in 2019.

Also Read: UNDP targets USD 4 million at conservation in Kenya

 

How diplomats’ mass exits from Kenya have affected real estate

In filling Nairobi’s many top-end residential estates, the flight of international residents is now being felt in the real estate, a report has revealed.

According to the report released by Hass Consult, economic growth and consumer demand have also affected tax revenue growth and donor funding during the decade-long ‘great recession’ that has followed.

“This steady attrition in numbers was accelerated last year in the new government drive curbing work permits. This triggered a new uptick in international departures, which by the first quarter of 2019 had resulted in significant falls in the sales prices and rents of top-end detached houses, which fell by 4.4 per cent and 4 per cent respectively in the first 12 weeks of the year,” said Sakina Hassanali, Hass Consult’s Head of Development, Consulting and Research.

According to Ms Sakina, the firm foresees some continued downwards pressure in this segment until the international economy improves or Kenya initiates policies to attract renewed growth in international residency.

However, while the top end of the market has been affected by global trends and domestic policies, the other strong mover has come in apartment rentals.

But the other principal strand of this market has been internationals, with Nairobi positioned as one of the four ‘poles’ of Africa, as a centre of diplomatic and commercial activity. This has brought incoming, foreign top management to the African and East African headquarters of European, Asian and American multinationals. It has also brought an abundance of diplomatic staff, and donor-funded staffing, as well as pools of social entrepreneurs and business adventurers.

There has however been a steady downgrading of diplomatic and donor-funded postings since the world financial crisis of 2008, with many western governments running austerity programmes to cover the debt funding for their support of the financial system at that time.

Starting with the top end, it is a fact, and often commented on, that the primary focus for developers over the last two decades, and particularly in the 1990s, and the decade from the year 2000, was at the very top end of the residential market. Thus, today entire suburbs, such as Muthaiga and Karen, Nyari, Runda and Spring Valley, are filled with large detached houses, and lived in by the wealthy.

The report however noted that in filling thousands of large stand-alone houses and villas one has to reflect on the nature and make-up of the market – both for owners and for residents for such homes.

These certainly include the expanding Kenyan elite: CEOs, top politicians, from governors to cabinet secretaries, private secretaries and company directors.

In Kenya’s ever more sophisticated land and property market, the future of all prices is no longer powerful growth. But, as ever, pricing remains a remarkable pointer to unmet demand and shortages and still the clearest guide available to the most strategic development going forwards.

Hass Consult also reported a continuing shift to growth in the Kenyan property sector’s mid-market, as the top-end market adjusts to international pressures and tightening budgets.

Unveiling its property sales and rental price indices for the first quarter of 2019, Hass Consult reported that the strongest price growth in the first 12 weeks of the year was in apartment rents, which rose by 4.9 per cent in just three months, taking the year-on-year growth to 19.6 per cent.

“However, returning to building after the decade of slowdown in apartment pricing would require close attention to location and gaps in the market. “The Kenyan property market has matured, and the only apartments that will now sell and fill quickly are those where developers have properly researched the market and constructed accommodation that fills a proven and unmet need,” said Sakina.

In this, Kenya may also now start to see a new trend in the more widespread conversion of large detached houses into multiple residences. Developer construction over the last 30 years has been dominated by the building of large homes on individual plots, in estates such as Spring Valley, Runda, and Nyari, and areas such as Muthaiga and Karen. However, a substantial proportion of these homes were occupied by international residents. As governments globally have continued to curb foreign spending following the extra debt loading they took on during the financial crisis of 2008, many international and aid-funded operations have been retrenched.

At the same time, changes to Kenya’s work permit regime marked a sharp exodus of internationals in 2018, leading to the vacating of many larger properties. As a result, the prices of detached houses for sale fell by 4.4 per cent in the first quarter of 2019, while rents fell by 1 per cent, as owners and sellers cut prices in an effort to sell or refill. Only in the mid-market of town houses has growth remained solid and inexorable, with sales and rentals having slowed marginally, but remaining robust. In the first quarter of 2019, rental prices on town houses rose by 1.7 per cent, taking year-on-year growth to 11.1 per cent, while sales prices rose by 1.3 per cent, taking year-on-year growth to 7.9 per cent.

“Each quarter we see ever more marked evidence of the relative strength and demand for properties in the middle and lower market, versus the clear slowdown at the top end of the market,” said Sakina.

Also Read: How mergers are shaping up Kenya’s banking industry

Why five Kenyan women in Tech bagged $10,000 dollars

Five Women in tech led companies have bagged Sh1 million ($10,000) each in seed funding courtesy of the Standard Chartered, @iBizAfrica- Strathmore University.

The five teams were selected from a pull of the top 10 teams previously shortlisted and were being incubated at @iBizAfrica-Strathmore University for 6 months where they were offered coaching, mentoring and business management skills to grow their businesses to the next level.

The Exchange sought to find out the reason these five women were picked for the funding.

Among the factors that were considered to select the five winners of this year’s Standard Chartered Women in Technology Incubator 2019 the judges looked at the firms with at least 3 people with demonstrated capacity to execute: clearly defined roles, balanced skill set team lead, business development, product development and marketing. This shows that the firm is in a position to sustain itself in all aspects necessary for growing their portfolios. Firms needed to demonstrate that they were in a position to run their affairs in a well organised manner in a bid to grow.

The judges also set out to look if the winning firms were solving any problem. The firms were expected top therefore demonstrate their relevance by coming in to solve that the society is grappling with. They were also expected to offer solutions that are fit and innovative. The busionesses were expected to prove that they were leveraging on technology and prove that the solution offered was a new technology or a different way of doing things in the market.

Businesses needed to demonstrate that their target market was well described as well as project how big the market opportunity is. Their business models were also looked at. Here, the judges were looking to see if the model is sustainable and scalable.

They were also tasked with a job to prove that in deed their businesses were highly relevant for Kenya in terms of social impact.

The five winning companies for 2019 are:

  1. Abantu (Range) -A startup that focuses on the implementation of unique and innovative technology-based solutions to problems that they are passionate about solving.
  2. Bumpy Maternity Wear – A fashion enterprise established in 2017 in Nairobi, Kenya with an aim of supplying measure to wear clothes for middle class working expectant mums.
  3. Dermi Joy skincare – A local skincare brand that manufactures all natural cosmetics.
  4. Nature’s Bowl enterprise – offers nutritious composite flours that are used to make meals for children and the whole family.
  5. Lugha Ishara community-based organization – A community-based organization with a mission of achieving the transformational development of deaf children through technology-based innovations

The awardees will be supported with extended mentoring and milestone-based disbursement of the winnings for a period of 9 months.

According to the Director @iBizAfrica- Strathmore University Dr. Joseph Sevilla, it was a tough choice selecting the winners from the top 10 pull of very talented young people with brilliant ideas.

“These five teams have shown us dedication, willing to work and just like last year’s winners we are hopeful to see them succeed beyond this program and expand their businesses to grow beyond the Kenyan market.” He said.

Strathmore University Vice Chancellor Designate, DR. Vincent Ogutu congratulated the winning teams and added “To innovate you have to be playful, experimental and be a person who never takes no for an answer. These are the qualities that the top entrepreneurs showcased”.

Speaking at the event Kariuki Ngari, CEO, Standard Chartered Bank Kenya mentioned that in our country, SMEs contribute the biggest share to the country’s Gross Domestic Product (GDP) and represent more than 75% of our working population.

“I would like to appreciate all the Women in Tech participants for being the crème of more than 170 enterprises that applied to this programme. Irrespective of the final outcome, remember that in your own right, you are positively transforming our country’s economy and creating more job opportunities. Just like the Bank, you are striving to be a force for good, promoting sustainable economic and social development in the markets and communities where we operate,” he added.

“We have seen the tremendous transformation the mentoring and injection of seed capital can do for women running start-ups in Kenya. We are hopeful that this year we can show more support to the groups that have applied. We look forward to announcing the shortlisted applicants in the next few weeks,” said Dr. Sevilla.

The Women in Tech is an initiative targeting women led start-ups leveraging on technology as a key drive to innovation in business. Launched in 2017 the program supports female-led entrepreneurial teams by providing them with training, mentorship and seed funding.

Last year finalists Mzurii, Africa Solutions, Nekkta, Maziwa Plus, Avopower, HeriOnline, Zydii, ZOA, Beta Art, Catapult Studios and Bismart each walked away with one million shillings in funding for their businesses and have since shown success and growth in their businesses.

The launch of the programme in Kenya follows a successful rollout of a similar initiative in USA by Standard Chartered.  The Bank first launched the programme to support women in technology in 2014 at the City College of New York where it created the Women Entrepreneurs Resource Center. The US program includes a dedicated workspace, mentorship, coursework and access to an extensive network designed to support entrepreneurs navigating the challenges of starting a business.

Also Read: Stage set for the ‘Women in Tech’ programme

How East African businesses are going to lead the AFCTA

The apex body for East Africa’s businesses, East African Business Council has urged regional CEOs to opportunities arising from the EAC regional integration process.

This takes place even as the council in collaboration with TradeMark East Africa (TMEA) launched the regional programme on Public-Private Sector Dialogue (PPD) for Trade and Investment from 2019 to 2023.

According to EABC Chief Executive Mr Peter Mathuki said “The project aims to enhance advocacy and dialogue on transport and logistics, trade facilitation, customs & tax, standards, and NTBs at regional and country level. In addition, the programme extends beyond the EAC and incorporates the COMESA, COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) and  Africa Continental Free Trade Area (AfCFTA).”

“Public-Private Dialogue can facilitate the trade & investment climate reforms by promoting better diagnosis of investment climate problems, transparency and inclusive design of policy reforms making policies easier to implement. TMEA launched this new partnership with EABC to galvanize and facilitate trade and investments in the EAC,” said Mr. Allan Ngugi, Ag. Director Private Sector Advocacy TMEA.

For businesses in the region to grow and expand within and beyond the EA, there is a need for technical and financial support to EABC in a bid to advocate and input substantive issues affecting the business community in regard to policy formulation and implementation in the region.

According to Mr Mathuki businesses should proactively engage the East African Community through EABC given the proximity advantage that the EAC and EABC Secretariat are located in Arusha. He noted there is a need to remove Non-Tariff Barriers and embark on trading proactively with the neighboring countries even before venturing outside the continent.

“Let’s spur business within ourselves as the EAC bloc,” said Mr Mathuki.

According to the CEO, EABC is keen to enhance dialogue and partnership between the private and public sector; hence EABC will spearhead the programme in close collaboration with the all national and regional sectoral private sector associations in the EAC.

Speaking at the recently concluded CEO Round Table Meeting Mr. Charles Omusana from the EAC Secretariat informed the CEOs on initiatives and programmes that support businesses growth and Investment the EAC Secretariat is working on such as the review of the EAC CET.

He noted, “It is the right of the private sector to demand a better and improved business climate in the region.” He further urged the CEOs to give input on the EAC Private Sector Development Strategy that will be developed.

The Chairman of Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) Arusha Mr. Walter Maeda welcomed closer collaboration between TCCIA and the East African Business Council in a bid to support SMEs to take advantage of the opportunities availed by the  EAC regional integration process.

“Request for waiver of duty from the Import Commissioner for EAC Originating Goods takes 7 days, this delays business and intra EAC Trade” Mr. Amani Temu  from Taha Fresh elaborated one of the obstacles to cross border trade. Among other issues, affecting businesses is the recent notice on no conditional release for imported goods by the Tanzania Bureau of Standards, which subjects imported goods from the EAC Partner States to inspections causing delay.

The steel industry in Arusha is calling for the review of East African Harmonized Standards on hot-rolled steel plates of less than 1mm as the plates are an important raw material for their industries.

“Mutual Recognition of Standards is important to businesses, such protectionist administrative measures are NTBs which hinder intra EAC trade, “ said Hon Mathuki

The CEO Forum in Arusha also agreed to consolidate issues affecting businesses at the ground and through the support of EABC they are keen to engage the EAC Secretary General and Council of Minister for a quick resolution.

This comes at an opportune time when the EAC integration process is marking 20 years in November 2019  since the signing of the Treaty, it is important that the private sector and government dialogue and ensure that protocols and policies work on the ground for EAC businesses. In addition, Article 7 of the Treaty for the Establishment of the EAC states on people-centered and market-driven cooperation as a principle to govern practical achievements of the objectives of the EAC integration process. Further Article 128 emphasizes on strengthening of the private sector as a key partner in the EAC integration.

“Barriers to trading across borders such as multiple product standard inspections, bureaucratic trade procedures delays business transactions and increase the cost of doing business. EABC will evaluate and monitor EAC policies to ensure they work for businesses at the ground level and create momentum for accelerating the policy reforms related to business and investment climate in the EAC ” said Mr Mathuki.

The programme seeks to contribute to the reduction of transport (road, rail, and air) cost and time along transport corridors by 10 per cent and increase the efficiency of logistic services. Furthermore, it will increase the export capacity of East African businesses and enhance customs and other trade-related agencies efficiency by reducing time to process trade documentation.

It will enhance dialogue on customs matters such as tariffs, taxes, levies, Common External Tariffs, and import/export tax incentives. It will also look at Harmonization of East African Standards, counterfeit and sub-standard issues as well as Non-Tariff Barriers,” said Mr Mathuki.

“The operationalization of the Single Customs Territory has contributed to the reduction of delays in cargo clearance in the Northern Corridor, the turnaround time of goods transiting from Mombasa to Kampala has been reduced from 18 days to 4, and goods from Mombasa to Kigali, from 21 days to 6.2, “ said Mr Mathuki.

According to the World Trade Organization to the Central Corridor turnaround time between the port of Dar es Salaam and Kigali (or Bujumbura) has been reduced from over 20 days to 6.

WorldBank’s Ease of Doing Business report (2018), EAC is ranked at 149 out of 190 in the ease of trading across borders.  In the region, the time it takes to export is at an average of 76.hrs which is too high compared to 12.5 hours in OECD High-Income Economies. The cost to export outside the region is at an average of USD427.8 compared to 139.1 in OECD High-Income economies.

The export documentary compliance in the region takes 80.2hours and cost USD 170.2 while in OECD High-Income economies is at 2.4hrs and USD35.2 respectively.

TMEA will continue to play a critical role in facilitating ease of doing business in the region and the continent.

 

ALSO READ: EABC celebrates 20 years of doing business in the region

Digital payments to drive African economies

Digital payments in Africa are yet to be fully tapped, according to iPay MD.

The MD Mr Philip Nyamwaya, speaking at the launch of an affiliates program to unlock Africa’s Digital Payments markets said that Kenya is leading the way in Africa’s dash from cash, although on many fronts, cash is unfortunately still king.

“Cash is still king in Africa and the digital payments market is yet to be fully tapped,” he said adding that as an economy, the country has made great strides in the recent past, however E-commerce is still in its early days.

“Compared to other markets, Kenya is leading the way in Africa’s dash from cash, although on many fronts, cash is unfortunately still king,” he noted.

There are about 45 million mobile money accounts in Kenya with deals worth Sh3.9 trillion ($38.73 billion) settled by mobile phones this year according to latest data from the Communications Authority of Kenya.

Nyamwaya was speaking during the launch of the iPay affiliates programme where the firm is targeting web developers, merchants and digital marketers with clients who are selling online or in-store.

According to the Oxford Business Group, the popularity of mobile money in Kenya has continued to expand against traditional payment methods. However, the fragmentation of the digital transaction market could see cash remain the preferred option for many people.

Growth in mobile payments reached 8% in 2018, and totaled KSh3.6trn ($36bn) in value, according to data released by Central Bank of Kenya (CBK).

The study also noted that while steady, the pace of expansion was slower than in 2016 and 2015, when growth rates of 19% and 17% were recorded, respectively. Muted consumer spending as a result of a combination of factors, including lower-than-expected economic growth, contributed to the slower pace of growth, according to industry stakeholders cited in local press reports.

Despite the more subdued performance last year, the overall trend for the segment over the past decade has been robust; the value of mobile money transactions has jumped more than 20-fold, from just KSh166.6bn ($1.7bn) in 2008, the first full year the CBK recorded statistics for the segment.

A key driver of growth has been the M-Pesa mobile money system, which was launched by local telecoms operator Safaricom in 2007 and allows users to send money, pay bills and apply for loans through their mobile phones.

M-Pesa controls 81% of the mobile money market and had 22.6 million subscribers as of June 2017. It has also been cited as the key factor behind the rapid increase in Kenya’s financial inclusion, which has risen from 26.7% in 2006 to 75.3% in 2016.

Kenya also has the highest rate of mobile money penetration in East Africa – at 59% – and the 10th highest in sub-Saharan Africa, according to GSMA Intelligence.

Despite the growth in mobile money payments and the increasing number of banking options, the use of cash remains key for many Kenyans.

According to the 2016 FinAccess survey, released by the CBK, 94.6% of business owners still used cash as their main mode of payment, with similarly high levels among casual (94.7%) and agricultural workers (92.8%). Conversely, only 43.3% of regular employees were paid in cash, with 47.2% receiving their wages electronically.

“Furthermore, highlighting the important role that cash plays in the economy, Willie Kimani, CEO of supermarket chain Naivas, told a digital payments industry event in March this year that cash still accounted for more than 60% of the company’s transactions, followed by card (17%) and M-Pesa (16%).” a statement by Oxford Business Group noted.

Digital payments in Kenya

Some industry figures have cited the complexity and fragmentation of Kenya’s digital payments system as a factor facilitating the dominance of cash.

The program that has now been launched by the iPay will see website designers, digital agencies, who refer merchants to use iPay as the payment gateway share 5 percent to 10 percent revenue with them for the lifetime of that merchant.

“The merchant can be online or have a physical store preseence, this will be an added value to the web designers eCommerce product offering, even as we grow our transactions base,” Mr Nyamwaya said.

CBK governor Mr Patrick Njoroge says that innovations in mobile phone financial services have allowed for a 75.3% financial inclusion, one of the highest in Africa.

“Innovation will likely come from the intersection of ICT and financial services as it has in the past, but we need to take this beyond simple transfers. Kenya is about to introduce the M-Akiba mobile bond in which a rural Kenyan can participate for $30. Savings vehicles like this could be transformative for low-income populations,” he said adding that there are many platforms and incubators which could also bear fruit in innovative forms.

“It is also important we have innovators that help us move away from standard lending models and products to accommodate income volatility challenges among the lower income segment. This type of innovation is essential for SME growth and can be done,” Mr Njoroge said.

iPay is a payment Gateway that allows you or your merchants to receive payment, send payments or pay bills conveniently. iPay is able to process payments from Mobile Money (MPESA, Airtel Money, Equitel) Mobile Banking (Pesalink), the eLipa eWallet, local bank debit cards, Visa and Mastercard credit cards as well.
The firm has been in opertion in Kenya since 2010 and are also active Uganda, Tanzania Togo with Rwanda going live soon.

Also read: Standard Chartered to lead digital-only retail banking across Africa

 

 

Orca and Swala Oil terminate agreement

Orca Exploration Group has announced termination of its investment agreement with Swala Oil and Gas (Tanzania).

A statement from Swala Oil notes that pursuant to the terms of its investment agreement dated December 29, 2017 with Orca Explorations Group Inc in respect of PAE PanAfrican Energy Corporation (PAEM), the parties have agreed to terminate the Agreement as a result of Swala not acquiring additional shares in the capital of PAEM.

Swala continues to hold 7.933% of the issued and outstanding shares of PAEM through the Company’s subsidiary Swala (PAEM) Limited.

Meanwhile Swala Oil is in discussions with a US-based emerging markets institutional investor for US$75 million in acquisition funding for a transaction.

“In furtherance of this possible transaction, Swala is currently finalizing terms for its funding, which when completed is expected to lead to financing agreements within the next weeks.” A statement from the oil and gas company in Tanzania reads in part.

According to Swala Oil CEO  Dr. David Mestres Ridge , after considerable due diligence and engagement, the Company is finalizing commercial terms for an investment of US$75 million with an institutional investor with extensive experience in emerging markets.

“This capability, when formalised through to definitive agreements, should allow us to contemplate an additional transaction. There can be no guarantees that the financing or transaction contemplated, or any other, will be completed and the Company shall update the market as appropriate.” Said the CEO.