Businesses Stare At Billions In Losses Over Long Weekend - Money Weekly

The coming five-day ‘weekend’ is a mixed bag of feelings for Kenyans. Employed Kenyans are looking forward to resting, recharging, and spending more time with their families and loved ones. At the same time, employers and business owners feel the pinch of potentially losing significant portions of their income over the long weekend.

Whichever side of the divide you fall on, let’s look at the top financial news stories that might affect your pocket as we head into the long weekend.

Business to Lose Billions of Shillings Over 5-Day Weekend

Businesses are facing losses to the tune of billions of shillings over the coming five-day weekend that starts from Friday to Tuesday. 

Top businesses like banks, government offices, the Nairobi Securities Exchange (NSE), courts, schools, and the currency market are set to be closed over the period, resulting in a loss of revenue for both the private sector and the government.

The long holiday comes following the government’s declaration of Friday as a national holiday to allow Kenyans to mourn the death of former President Mwai Kibaki. Kenyans will also get Monday and Tuesday off to celebrate Labor Day and Idd-ul-Fitr.

With the economy generating Ksh25.3 billion on average every day, the five-day closure will likely result in massive losses.

Kenya Emerges Fourth in Africa’s Dollar Millionaires Rankings

The Africa Wealth Report 2022 has ranked Kenya fourth in Africa based on the number of dollar millionaires in the country. According to the report, there are 8,500 Kenyan individuals with a net worth exceeding $1 million (Ksh115.7 million).

However, this figure is significantly higher than the figures in other reports, such as the Knight Frank Wealth Report released in March this year, which placed the number of dollar millionaires in the country at 3,323. This indicates how challenging it is to track wealth in Africa.

According to the Africa Wealth Report, South Africa came first with 39,300 dollar millionaires, followed by Egypt and Nigeria with 16,900 and 10,000 dollar millionaires.

Kenya also ranked fourth in the number of individuals worth over $10 million (ksh1.1 billion), with 340 individuals making the list. Again, South Africa topped the list with 2,080 such individuals, while Egypt and Nigeria came second and third with 880 and 510 individuals.

In terms of individuals worth over $100 million (Ksh11.5 billion), Kenya ranked fifth with 15 centimillionaires, behind South Africa (94), Egypt (57), Nigeria (28), and Morocco (22).

According to the report, there are no dollar billionaires in Kenya. While there are billion-dollar empires in Kenya, they are held by several family members. Egypt tops the list with seven dollar billionaires. South Africa follows with five, while Nigeria and Morocco have four and three-dollar billionaires respectively.

Looming Cooking Oil And Soap Shortage Following Threats to Ban Palm Exports

Kenyans are staring at cooking oil, soaps, and cosmetics supply shortages following Indonesia’s threats to ban the exportation of palm oil, a key raw material in manufacturing these products.

The ban could further push up the price of these products, which are already very high. For instance, the cost of cooking oil has shot up by over 30% in the last couple of months. A supply shortage would make this essential product unattainable for most Kenyans.

Indonesia accounts for about one-third of global palm oil exports. Malaysia, the second-largest producer of palm oil, is facing labour shortages, which have hurt the production of the crucial raw material.

Maize Shortages Pushes Flour Prices to Record Ksh148

A limited supply of maize in the market has pushed the price of maize flour to an all-time high of Ksh148 for a 2kg packet, up from an average of Ksh120 just a week ago. This comes as the price of a 90Kg bag of maize soared from Ksh3,700 last month to Ksh4,500 this week.

The increase in the price of maize flour, a staple in most Kenyan homes, will make the shopping basket even more expensive for Kenyans who are already reeling under the high cost of other essential commodities, including milk, cooking oil, sugar, and eggs.

The maize shortage in the country has also pushed up the price of animal feed by Ksh400 for a 70kg bag starting this week. This is likely to push farmers out of business and lead to even higher meat, eggs, and milk prices.

Kenya in Negotiations With UAE For Oil on Credit As Fuel Shortages Continue

The government is in talks that will see it import oil on credit from the United Arab Emirates (UAE) to avert the ongoing fuel crisis. The deal will allow the National Oil Corporation of Kenya (Nock) to bring in 30% of the country’s fuel needs on credit.

Much of the petrol and diesel stocks shipped in by Nock will be sold to small independent dealers, who control 40% of the local fuel market.

The introduction of the fuel subsidy last year matched wholesale prices to prices at the pump. While this relieved Kenyans from high prices, it made business unprofitable for independent dealers who the big players do not supply.

By supplying fuel to these independent dealers through Nock, the government hopes to prevent recent situations where the big players seem to have held the whole country hostage - according to the petroleum ministry.

Stock Market Investors Lose Over Ksh51 Billion In 3 Weeks

The Nairobi Securities Exchange (NSE) has lost over Ksh51 billion in paper wealth in the three weeks since April as foreign investors continued letting go of their stakes in Kenya’s blue-chip firms.

At the start of April, the market opened at a capitalisation of Ksh2.43 trillion. By Tuesday, 26 April, this had fallen to Ksh2.37 trillion. Some factors that have been blamed for this fall include the upcoming general elections, profit-taking by investors, and the effect of the Russia-Ukraine tiff.

The biggest losers are KCB Group, which shed Ksh14.1 billion, Safaricom, which lost Ksh12 billion, and Equity Group, which lost Ksh3.96 billion. Other losers include East African Breweries Plc, which shed Ksh3.95 billion, and Co-op Bank, whose capitalisation dropped by Ksh1.1 billion.

Other Money News

• The government has announced that the ban on scrap metal, which was imposed in January to curb public infrastructure and utilities vandalism, will be gradually lifted starting from May 1. However, the business will only be open to licensed dealers, millers, and smelters.
• The East African Breweries Limited (EABL) has announced plans to increase the prices of beers and spirits if the government goes ahead with the plan to raise excise taxes on alcoholic products. Through the Finance Bill 2022, the government has proposed raising excise duty for a litre of beer from Ksh121.8 to Ksh134, Ksh287.7 to Ksh335.30 for a litre of spirits, and Ksh208.2 to Ksh229 for a litre of wine.
• The Kenya Motor Industry Association (KMI) reports that new motor vehicle sales grew by 11.7% in the first three months of 2022, an indicator of a continued economic recovery. In the three months, formal motor vehicle dealers sold 3,203 units, compared to 2,867 units in a similar period last year.
• The Ministry of Transport has raised the toll rates for the Nairobi Expressway by 16% even before the road is opened to the public. Once the road is commissioned, saloon cars will pay Ksh360 to use the Expressway from James Gichuru to Mlolongo, a Ksh50 increase from the initially-planned toll of Ksh310. Similar hikes will be implemented to use sections of the road. The Ministry says that this increase reflects the weakening of the Kenya shilling over the last year.
• The Energy and Petroleum Regulatory Authority (EPRA) has kept electricity prices unchanged for four months in a row by retaining the fuel cost charge (FCC) at Ksh4.63 and the foreign exchange fluctuation adjustment (FERFA) at 73 cents.
• Diaspora remittances hit a record of $363.6 million (Ksh42.2 billion) in March, up from $321.5 million (Ksh37 billion) in February. March’s remittances were 25.2% higher than the $290.8 million (Ksh33.7 billion) remitted in March 2021. Remittances for the first three months of 2022 grew by 23.5% to $1.024 billion (Ksh118.4 billion), up from $829.4 million (Ksh95.9 billion) in a similar period last year. Diaspora remittances have remained Kenya’s top source of foreign income since 2017.