Saccos to Start Listing Loan Defaulters With CRBs - Money Weekly

As with all other election years, it’s expected that the upcoming campaign season is going to have a huge impact on the economy and the cost of living. 

The government has already allocated an extra Ksh8.8 billion to the IEBC to manage the elections, according to the 2022 supplementary budget, and it’s expected that the campaigns will put even more money in circulation, which could lead to increased inflation rates this year. 

Even as we wait to see how things will pan out in regards to the effect of the upcoming campaign season on the elections, let’s take a look at the top financial news from the last one week. 

Bill Requiring Saccos to List Defaulters Backed by Parliament

Hundreds of thousands of loan defaulters are at risk of being exposed following Parliament’s backing of a bill that requires Savings and Credit Co-operative Societies (Saccos) to make customers’ credit information accessible to credit reference bureaus (CRBs).

This is not the first time that the Sacco Societies (Amendment) Bill has been backed by Parliament. The Bill was initially passed by Parliament in 2020, but was then declared unconstitutional by the High Court for having been passed without Senate input.

The Bill was reintroduced in Parliament to ensure compliance with the court order. On Wednesday, the Bill passed through the second reading in Parliament, and is now awaiting the Senate’s input.

Currently, Saccos are only required to share information with CRBs under the third parties’ category. This means that a Sacco can only share information with CRBs and other third parties after receiving consent from a customer, as well as the prior approval of the Central Bank of Kenya (CBK).

Should the Bill be enacted into law, however, it will be mandatory for Saccos to share information on performing and non-performing loans with licensed CRBs. The Saccos will also be required to give customers notifications before and after listing them with CRBs.

M-Pesa, NSE Classified As Key Infrastructure

Safaricom’s M-Pesa and the Nairobi Securities Exchange (NSE) have been classified as critical infrastructure as defined by the Computer and Cybercrimes Act 2018. This comes as the government tries to keep crucial systems – both private and public – safe from the effects of cybercrime.

Among the systems classified as critical infrastructure include data centres, internet exchange points, base stations, and other systems that manage and support the country’s land registration, healthcare, and elections.

Following the classification, anyone found guilty of hacking, vandalising, or interfering in any other way with the operation of these systems will face a 20-year jail term or a Ksh5 million fine, or both.

In addition to the NSE and M-Pesa, other systems that are classified as critical infrastructure under the Computer and Cybercrimes Act 2018 include the National Transport Safety Authority (NTSA) systems, the Integrated Financial Management Information System (IFMIS), and KRA’s iTax system.

The classification comes following the vandalism and destruction of 25 masts in the last 4 years, mostly in Northern Kenya, leading to disruption of communication and loss of millions of shillings in repair and restoration.

Kenyans to Pay Ksh150 Per Trip in BRT Pilot Phase

Kenya is set to launch the pilot phase on the bus rapid transit (BRT) along Thika road starting June 2022. The BRT corridor, which will cover the 27 kilometres between Kasarani and Kenyatta National Hospital, will see passengers pay a flat fee of Ksh150.

Currently, to commute between Kasarani and Kenyatta National Hospital, one has to board two buses and pay a total of Ksh120 on average for a one-way trip. Unlike with matatus, where fare fluctuations are commonplace, the fare will be standard for BRT users.

By introducing BRT, the government hopes to reduce congestion within the route and shorten commuting time. Other routes where the BRT system is set to be introduced include Kenol to Rongai, Mama Lucy to T-Mall, Ngong Road to Juja, and JKIA to Rironi.

Once operational, the BRT system will be cashless. Commuters will be issued with a card that they’ll tap to pay when boarding the BRT buses. The cards will be loaded through M-pesa Paybill, or by designated vendors.

Digital Lender Tala Introduces Credit Option With Flexible Repayment Terms

Digital Lender Tala has introduced a new credit option that will allow borrowers to choose their preferred repayment date based on their income cycles.

Under the new option, dubbed “Jichagulie Due Date,” borrowers will be able to set repayment durations of between 1 to 61 days, with shorter repayment durations attracting lower interest fees. Borrowers who repay within the agreed time frame will not incur any surcharges.

The lender believes that giving borrowers the freedom to choose their preferred repayment durations will allow them (borrowers) to plan their due date based on when they expect money, as well as their other financial obligations. This is expected to in turn lead to a lower default rate and less penalties for borrowers.

Currently, most digital lenders offer borrowers a maximum repayment duration of up to 30 days. Since it entered the Kenyan market in 2014, Tala has disbursed loans worth over Ksh300 billion.

Remittances to Hit New High With Middle East Driving Growth

After hitting a record $3.718 billion (Ksh421.6 billion) in 2021, remittances from Kenyans living in diaspora are expected to hit a new high this year as more Kenyans tap into job opportunities abroad following the reopening of global economies.

One of the regions that will drive this growth is the Middle East, as an increasing number of Kenyans secure jobs in the gulf states, which include the United Arab Emirates, Saudi Arabia, Bahrain, and Qatar.

Data from the Ministry of Labour shows that there are 97,000 Kenyans currently working in the Middle East, up from just 55,000 Kenyans in 2019. There are over four million Kenyans working outside the country.

Since 2016, annual remittances from Kenyans in diaspora have hit a record high each successive year, and experts expect this trend to continue in 2022.

Despite the growth expected to come from the Middle East, the United States is expected to remain Kenya's largest source of remittances. In 2021, remittances from the US accounted for 63.2% of total remittances.

Other Money News

• Recently released data from CBK shows that the amount of Money handled by M-Pesa, Airtel Money and T-Kash agents in 2021 grew by 31.7% to hit Ksh6.8 trillion, up from Ksh5.2 trillion in 2020. The massive growth is an indicator of the economy’s recovery from the disruption caused by the Covid-19 pandemic, as well as the increased adoption of cashless transactions in the country.
• Following the banning of Miraa (khat) exports to Somalia three years ago, Kenya is inching closer to a deal that will see Kenyans export the stimulant to Djibouti. The Djibouti Trade Minister is expected to visit Nairobi later this month to discuss the deal. Should it go through, Kenya expects to export at least 20 tonnes of the stimulant to Djibouti every day. Before Somalia closed its borders, Kenya used to export up to 50 tonnes of Miraa to Somalia daily.
• Musicians are set to earn 52% of Skiza tunes earnings should the Copyright (Amendment) Bill, 2021 be enacted. The bill is already past the second reading, and now awaits the last reading before being enacted. When Safaricom started the Skiza tunes service in 2009, artists used to get a 7% share of earnings, before this was increased to 16%, and then the current 40%.