CRB Listing Suspended, Hope for Cheaper Cooking Gas: Money Weekly

Kenyans are in a collective jubilant mood, and the hope and optimism for economic recovery is tangible following the lifting of the dusk to dawn curfew by President Uhuru at the Mashujaa Day Celebrations in Kirinyaga. 

Aside from lifting the curfew, the President also issued other directives that will have an impact on the economy and the financial wellbeing of Kenyans. In today’s edition of Money Weekly, let’s take a look at how the President’s directives will affect your finances, as well as other significant money news from the past week. 

Relief For Borrowers As Uhuru Bars CRB Listing

Speaking at the Mashujaa Day celebrations at Wang’uru Stadium in Kirinyaga, President Uhuru Kenyatta suspended CRB listing for defaults on loans of less than Ksh5 million. The directive applies for loans defaulted between October 2020 to date for a period of 12 months up to September 30, 2022.  

The ban on CRB listing is a bid by the President to cushion Kenyans from the effects of the pandemic, which has led to decreased consumer demand and job losses as businesses scale back their operations. 

This is the second time the government has suspended CRB listing since the start of the pandemic. In April last year, the government banned CRB listing for defaulters for a period of six months. 

The six-month period lapsed in October, but lenders gave defaulters a 3-month grace period to start repaying their loans. Starting in January this year, lenders resumed CRB listing for defaulters. 

With the new directive, CRB records of Kenyans who have defaulted on loans below Ksh5 million since October 2020 will not be incorporated in their credit reports for the period ending September 2022.

The suspension of CRB listing will make it easier for Kenyans who stood the risk of being blacklisted to access more credit, allowing them to rebuild their businesses and survive through the pandemic.

The President’s decision to bar CRB listing comes even as M-Pesa announced that defaulters on the Fuliza overdraft service will have their access to their KCB M-Pesa and M-Shwari accounts blocked, and the funds in these accounts used to settle Fuliza debts.

Ksh1 Million Limit For Reporting Cash Transactions To Be Revised Upwards

The President has also asked the National Treasury to revise the limit for reporting cash transactions by bank customers from the current Ksh1 million. 

Currently, bank customers who make cash deposits exceeding Ksh1 million have to state the source of the funds, and why the deposit could not be made electronically. 

Similarly, customers making withdrawals exceeding Ksh1 million have to explain why the cash withdrawal is necessary, the intended use of the funds, and the intended beneficiaries of the money.

President Kenyatta noted that while Kenya is committed in fighting money laundering and terrorism financing, the Ksh1 million threshold is too low and hurts the growth of many small and medium enterprises in a country where majority of transactions are still done in cash. 

Should this directive be implemented by the National Treasury, financial institutions will still be required to report large and unusual transactions to the Financial Reporting Center. 

Ksh25 Billion Unveiled To Spur Job Growth

The Mashujaa Day celebrations also saw President Kenyatta unveil a Ksh25 billion economic stimulus package that is aimed at spurring job growth and jumpstarting economic recovery.

Under the stimulus package, the tea industry will receive Ksh1 billion to support the fertilizer subsidy, while the coffee industry will receive Ksh1 billion to be used in completing on-going interventions in the sub-sector. 

Ksh1.5 billion will also be injected into the sugar industry to facilitate payments to farmers and support factory maintenance, while the livestock sector will receive Ksh1.5 billion to help combat the effects of the ravaging drought in ASAL counties.

The stimulus package will also inject Ksh8 billion into the education sector. The funds will be used to construct 10,000 classrooms, with the construction set to be undertaken by local contractors. 

Another Ksh3.2 billion will be allocated to the Ministry of Health to be used in the construction of an additional 50 new level 3 hospitals across the 47 counties, while Ksh10 billion will go towards the third phase of the Kazi Mtaani initiative. 

Long Term Fuel Subsidy to Protect Kenyans From High Fuel Prices

The government has been directed to set up a long term fuel subsidy scheme that will protect Kenyans from high fuel prices in the face of rising global crude prices. 

Speaking in Wang’uru, the president gave the National Treasury and the Ministry of Petroleum up to December 24, 2021, to come up with a framework that will keep fuel prices in the country stable, despite volatility in global prices.

As of Tuesday October 19, the price of a barrel of crude had risen to $85.45, sparking fears that prices in the country could hit new highs. 

The President’s directive comes after reports that the Treasury had diverted Ksh18.1 billion meant for the fuel subsidy program to fund SGR operations, leading to the rise of fuel prices to an all-time high of Ksh134.72 for a litre of petrol. 

Firms Owned by Youth and Women to Be Spared From Construction Agency Listing Fees

A new Bill before the National Assembly seeks to cushion construction firms owned by youth, women, and people with disabilities from paying registration fees to the National Construction Agency (NCA).

To be registered by the NCA, local contractors are currently required to pay between Ksh5,000 and Ksh100,000 based on their registration category. Renewing the annual licence, on the other hand, costs anywhere from Ksh2,500 to Ksh30,000, depending on category.

Should lawmakers pass the Bill, firms owned by youth, women, and people with disabilities will be exempted from paying the registration charges. It is hoped that this will create jobs for these groups, at a time when the country is grappling with runaway unemployment.

State Hopes to Reduce Cooking Gas Prices With New Loading Plant

The government is planning to construct a Liquefied Petroleum Gas (LPG) loading facility at Changamwe in a bid to shorten loading times for cooking gas and reduce demurrage costs. 

*A demurrage charge is a charge imposed by a shipping line to a consignee if a container is not cleared within the agreed period.

Currently, there is limited storage for LPG in Mombasa, and as LPG ships wait for extended periods to offload, huge demurrage is incurred. The demurrage costs are then passed to consumers, leading to high cooking gas prices. 

It is hoped that the new facility will lead to faster offloading and cut down demurrage costs, translating to lower costs for consumers. 

At the moment, the government, through the Kenya Pipeline Company (KPC) is in the process of finding a consultant to perform an environmental impact assessment study of the proposed facility, which will be capable of offloading 500 tonnes of LPG per day. 

This coming at a time insurers are warming up to the idea of allowing motorists who have modified their vehicles to use liquefied gas as alternative fuel to be insured. Insurers had earlier warned motorists against modifying their vehicles without manufacturer approval over fears that such modifications would expose them to third party liabilities in the event of an accident.

In a circular dated October 13, the Association of Kenya Insurers gave it's members the go-ahead to insure modified vehicles using LPG as an alternative fuel after an assessment at an energy company leading the conversions locally and several meetings found no increased risk.

“The purpose of this circular is, therefore, to advise members that motor vehicles fitted with LPG can be insured without fear of any increased risk. The assessor also recommended that warranties and exclusions can be included in relation to the insured to inform the insurer and the insured to keep service records, vehicles to display an identification sign,” the circular signed by AKI Chief Executive Officer Tom Gichuhi reads in part.

An estimated 3,500 cars have been successfully converted from using either diesel or petrol to LPG in Kenya so far with motorists reporting up to 70% in fuel savings.

Industrial Assets Outperform Other Real Estate Classes

A new report by property management firm Knight Frank has revealed that industrial assets are the highest performing class in real estate. 

According to the report, industrial assets are giving an average yield of 12%. In comparison, retail and office assets are yielding 9% on average, while residential assets are yielding just 6%. 

Knight Frank attributes the attractive performance of industrial assets to the government’s favorable industrial policies as it tries to attract international investment.