It seems like ages since the year began, yet this is only the second edition of Money Weekly this year, which perhaps give credence to the urban myth of the 45 days of Njaanuari.
Anyway, being a Thursday, I’m here to give you your weekly dose of financial news affecting your pocket. Today, we look at the impact of the pandemic on hospitality sector jobs, how rising global fuel prices could affect what you pay at the pump, the surging cooking gas prices, shorter payment settlement periods for online workers, and many more financial news stories.
Let’s dive in…
According to a new report by the Tourism Research Institute, over 1.1 million full-time employees working in the hospitality sector lost their jobs in 2021 due to the Covid-19 pandemic as industry operators sought to cut costs. The loss of jobs resulted in labour income losses worth Ksh152. Billion.
Among the most affected were workers in accommodation, shopping, food and drinks, passenger transport, and tourist attractions.
Despite the job loss, however, there is hope for the industry following an increase in the number of tourists arriving in the country. In 2021, the number of international arrivals increased by 53% to 870,465 visitors, up from just 567,848 in 2020.
While the 2021 visitor numbers are yet to hit pre-covid levels, there is hope that a steady growth in the number of visitors will see a large number of those who lost their jobs rehired this year. According to Tourism Cabinet Secretary Najib Balala, foreign tourist numbers will cross the 1 million mark this year.
After enjoying stable fuel prices over the last 3 months, Kenyans could in coming months find themselves having to pay more for fuel following rises in global fuel prices.
Global fuel prices have been steadily increasing over the last couple months, culminating in a 7-year high of $88.47 (Ksh10,037) per barrel on Wednesday. The last time global fuel prices hit such prices was on October 10, 2014.
The latest surge in global fuel prices has been attributed to an attack on fuel trucks by militants in the United Arab Emirates (UAE), which disrupted a supply chain that is already on its knees.
Despite global prices rising steadily over the last months of 2021, fuel prices in the country have remained stable, thanks to a government fuel subsidy that is supported by the Petroleum Development Levy.
With the new prices, the government will have to increase the amount paid to oil marketers under the subsidy if it wants to keep prices unchanged at the pump.
However, with some of the funds in the subsidy kitty having been diverted to pay for the Standard Gauge Railway (SGR) loans last year, and amid complaints by oil marketers over delayed compensation from the state, there is a high likelihood of the subsidy being dropped in the February to March review.
Scrapping of the subsidy could see the prices of petrol and diesel rise to Ksh144.7 and Ksh128.44 respectively per litre in Nairobi, which is what motorists would currently be paying without the subsidy. Such an increase would in turn have a huge impact on the already sky-high cost of living.
In the period between January last year to January this year, the cost of cooking gas has increased by 48%, or close to Ksh1,000, pushing the price of the commodity to an 8 year high. Currently, a 13kg cylinder of cooking gas at Total, Rubis K-gas and Shell Afrigas, three leading LPG suppliers, is retailing north of Ksh2,950.
Players in the industry have attributed the price increase to surging global prices and the reintroduction of the 16% value added tax (VAT) on LPG. However, the increase in prices is three times the 16% VAT, which points to a situation where players in the industry are using the tax as a cover to inflate prices.
With the 2019 census showing that more than half (53%) of urban households and 5.6% of rural households in the country rely on cooking gas, this increase will put huge pressure on families, which are already struggling to put food on the table amid huge wage cuts and job losses occasioned by the pandemic.
Several motorists in Nairobi have found their cars clamped by city parking attendants despite having paid their parking fees, forcing them to pay hefty fines for mistakes that are not their own. Such situations are a direct result of the city having two parallel parking fee collection systems.
Up until last year, motorists in the city were required to pay parking fees to City Hall using the mobile SMS code *235#. In March last year, however, the Kenya Revenue Authority (KRA) took over the collection of parking fees within the city and introduced a new mobile SMS code, *647#.
Despite the introduction of the new SMS code, the older code was left active, meaning if a motorist made a payment to the old code, the payment would still go through. This created a loophole that rogue parking attendants have been taking advantage of to make money from motorists. As a result, many motorists have found their cars clamped after paying for parking using the old code.
Online workers with clients outside the country, as well as Kenyans with families abroad have a reason to celebrate after Equity Bank announced that it had cut the time taken to settle PayPal payments to just 24 hours, down from 3 days.
By doing so, Equity bank hopes to enhance efficiency and boost cash flows for Kenyans who use PayPal to receive payments, and at the same time encourage the uptake of ecommerce and the digital economy in the country.
Currently, Equity Bank is the only bank that allows PayPal account owners to withdraw funds directly into their bank accounts.
In related news, Equity Bank has come up with a new payment solution that will allow traders and businesses to receive payments from different mobile payment platforms, including Safaricom Mpesa, Airtel Money, Equity Money, Equitel, and Pesalink.
The proliferation of mobile money platforms in the country has provided customers with different options whenever it comes to transacting money digitally. To accept payments from customers using different payment platforms, merchants have been forced to subscribe to multiple paybill and till numbers to cater for each platform.
With the introduction of the Equity Bank’s new till number, however, this will no longer be necessary. Using that one till number, merchants will now be able to accept payments from different mobile money platforms directly into their bank account.
The new till number also comes with a QR code that customers can scan to make payments using scan-to-pay channels, including Masterpass, M-VISA, UnionPay, and Equity Mobile App.