Starlink Scores 1st Win in Battle Over Cheap Internet as Banks Liquidate Customer Deposits

𝐅𝐫𝐢𝐝𝐚𝐲, 𝐍𝐨𝐯𝐞𝐦𝐛𝐞𝐫 𝟐𝟗, 𝟐𝟎𝟐𝟒

The Competition Authority of Kenya (CAK) has stated it will not investigate claims that Starlink is using lower prices to unfairly attract customers from local internet service providers (ISPs). According to CAK, Starlink, a new entrant in the Kenyan market, does not yet hold enough market power to dominate or pose a competitive threat. This decision highlights the regulator's position that emerging players need time to establish themselves in the market. This is after Starlink was accused of selling their internet at very low prices to lure customers.

Kenyan banks have grown their liquid assets to Ksh3.3 trillion as of June 2024, up from Ksh2.9 trillion in the same period last year, according to the Central Bank of Kenya (CBK). In a report by Business Daily, these assets, including cash, Treasury bills, and deposits, now cover 59.5% of the sector’s Ksh5.5 trillion net deposit liabilities, exceeding the minimum 20% liquidity requirement. Despite a slowdown in government securities investments due to rising yields, banks have boosted their cash reserves and foreign placements, ensuring a robust buffer of over Ksh2.1 trillion to meet short-term financial demands. This adjustment reflects tightening monetary policies and increasing domestic interest rates.

Kenyans may face a potential fuel price increase as major oil marketers push for a review of the fuel pricing formula, which has been unchanged since 2018, as reported by The Standard. Oil marketers argue the formula does not account for rising costs in the supply chain, warning of potential fuel shortages if it is not updated. The Energy and Petroleum Regulatory Authority (EPRA) is reviewing a Cost of Service Study submitted recently, which could lead to adjustments in the pricing mechanism. While any changes may raise pump prices, the government plans to reform the Petroleum Development Fund and phase out fuel subsidies, aiming to stabilise prices and improve financial discipline.

I&M Bank has announced a 0.75% reduction in lending interest rates in response to the Central Bank of Kenya’s (CBK) recent cut in the Central Bank Rate (CBR).According to Capital Business, the reduction will be implemented in two phases: 0.25% effective from 28th November 2024 and an additional 0.5% starting 23rd December 2024. The move aims to make credit more affordable for individuals and businesses, with the bank highlighting its commitment to supporting growth for clients across Corporate, SME, and Personal Banking segments. I&M’s CEO, Gul Khan, stated that the rate cut aligns with the bank’s customer-focused approach to enhance access to financial services. This follows CBK’s directive urging lenders to lower rates to spur borrowing and investment amid slowing credit growth.

In a report by Capital News, the Kenya Urban Roads Authority (KURA) is under investigation for allegedly overpaying Ksh687 million to Cementers Construction Company for incomplete road and bridge projects budgeted at Ksh892 million. Half of the work, awarded in 2018/2019, remains unfinished, including key components on Likoni and Enterprise Roads. The contractor blames project delays on scope changes by Kenya Railways and inflation, seeking to terminate the contract. Lawmakers are demanding accountability, citing severe traffic disruptions and urging the Auditor General to assess value for money while apportioning blame. Further discussions with stakeholders are planned to address the stalled projects.

In a report by Nation, the Treasury Cabinet Secretary, John Mbadi, has confirmed the legal termination of the Ksh238 billion Jomo Kenyatta International Airport (JKIA) deal with India’s Adani Group. Mbadi, who appeared before the Public Debt and Privatisation committee, assured MPs that the cancellation, directed by President William Ruto, adhered to legal procedures and would not result in financial losses to taxpayers, as no funds had been spent. The Adani deal, which included managing and renovating JKIA, was cancelled after bribery allegations against the company surfaced. A related Ksh96 billion contract with Ketraco for electricity transmission projects was also terminated. Mbadi reassured MPs that the government took all necessary steps to avoid liabilities, with Kitui Central MP Makali Mulu calling for accountability if any losses occur.