• Uganda - 364 DAY Treasury Bill
  • Issue No:UG11E2204213
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NAIROBI, Kenya, May 22 – Kenyan’s biggest bank by assets Kenya Commercial Bank (KCB) has restructured loans worth over Sh115.1 billion, to beat Equity Bank, which has reviewed Sh92 billion since the coronavirus pandemic swept into the country and destabilized businesses and lives of ordinary Kenyans.

In a statement, the bank says the debt-relief measures, which were proposed by the Kenyatta-led administration to cushion Kenyans against the impact of the pandemic, have seen customers apply for their loans to be restructured, credit lines expanded and loan tenures extended to keep them financially afloat.

Since mid-March, the Bank has approved the restructuring of Sh91.3 billion worth of corporate loans and an additional Sh20.4 billion in loans to mortgage customers. A further Sh3.4 billion for retail customers has also been approved.

KCB Group CEO and MD Joshua Oigara said customers can still seek deferment of loan payments on their personal, business, corporate and housing loans for disruptions caused directly by the COVID-19 pandemic.

“We made a promise after the pandemic that we would walk the difficult journey ahead hand in hand with our customers. We are therefore offering relief to our customers, upon application so that they are able to weather this storm that was unforeseen the world over. We believe this will not only cushion businesses but create a multiplier effect that will ultimately help to save jobs,” said Oigara.

“We know that the pandemic has affected everyone and we are offering extended financial assistance to provide additional relief to our customers to meet their needs and ambitions. We believe this will go a long way in helping them navigate through their most urgent and challenging situations.”

The relief accommodation is being extended to distressed customers upon request and on a case-by-case basis, based on their circumstances arising directly from the pandemic.

For personal check-off loans and scheme loans, upon request by the individual borrower and the employer (corporate) respectively, the customers can enjoy an extended moratorium benefit for a period by 3 months.

Residential and commercial mortgages customers are getting a moratorium on the principal or both principal and interest for 3-6 months with interest being capitalized monthly as it falls due. However, the Bank could still extend the moratorium for a maximum of 12 months, depending on the severity of the COVID-19 effects on the customer’s business.

On the other hand, micro, small and medium-sized enterprises (MSMEs) can opt for repayment moratorium of 3 months; waived […]

The Kenya Commercial Bank has cracked a whip on 13 of its staff members who were accused of fraud in 2019 as lender tightens grip on staff conduct.

KCB said the number of staff fired in 2019 was slightly high than those fired in 2018 where 10 staff members were sent packing over fraud accusations.

The detection of the staff’s fraudulent acts was made possible by a mandatory check of operations the bank had put in place to minimize losses by identifying unusual behavior in the system. A committee is also put in place to discipline those who have been accused of fraud.

“We built in mandatory checks into our processes/operations as fraud prevention measures,” said the bank. “There is also a management level disciplinary committee, which decides on the consequences for cases depending on their severity.”

KCB said the number of staff being sent home has reduced significantly where it sacked 34 employees accused of fraud and professional negligence in 2017, 31 in 2016, 33 staff in 2015, and about 90 employees in 2014.

Most of the bankers sent home were accused of stealing money, conning customers, or going against the professional conduct stipulated by the Lender.

Fraud attempts have also declined rapidly with KCB saying 639 failed in 2019 as compared to 319 that were reported in 2018.

KCB Group is the biggest bank in Kenya in terms of assets and in the recent rankings by a South African firm, the lender emerged at position 92 in Africa.

KCB came in fourth after Safaricom which was ranked at position ten in Africa, Equity Bank at 82, and EABL at position 90. The four Kenyan firms in the top 100 are also the best in Kenya accounting for more than 80 percent of firms’ valuation at the Nairobi Securities Exchange (NSE). More Articles From This Author

Kenya Commercial Bank Group, the biggest lender in the country has posted a net profit of Ksh. 6.3 Billion for the period ended 31 st March 2020. This represents an 8% rise in profitability from the Ksh. 5.8 Billion posted in a similar period last year.

At the same time, National Bank of Kenya (NBK) saw its profit after tax for the quarter under review rise to Ksh. 155 Million which represents a 134 per cent from a similar period last year. This was attributed to a growth in the loan book and cost management initiatives.

The rise in profitability was largely due to a 20.4 percent rise in interest income to Ksh. 20.2 Billion and a 30.5 percenta rise in transaction-based revenue to Ksh. 7.8 Billion driven by digital banking, improved foreign exchange earnings and additional income from NBK. This saw the total operating income rise by 22% to Ksh. 22.95 Billion.

During the period, customer deposits rose 34 per cent to Ksh.740.4 billion on the back of NBK’s acquisition and onboarding of new customers.

The loan book recorded a 19 per cent growth, expanding to Ksh. 553.9 Billion up from Ksh. 464.3 billion. However, NBK brought on board Ksh. 25 billion in Non-performing Loans (NPLs), which saw the stock of NPLs increased to Sh66.2 billion, up from Sh38.8 billion in 2019. This resulted in loan loss provision increasing to Ksh. 2.8 Billion.

Operating expenses surged 36.7 percent to Sh14 billion on what the lender attributed to the buyout of NBK and salary increments in the first quarter.

The Nation Media Group (NMG) on Friday issued a profit warning to its investors, citing reduced revenues due to the effects of Covid-19 pandemic.

In a statement to shareholders, NMG chairman Wilfred Kiboro said that Covid-19 global pandemic presented an unprecedented risk to the economy in 2020 and possibly beyond.

“The Board of Directors, having reviewed the company’s performance forecast for the current trading period, has determined that the earnings for the financial year ending 31 December 2020, will be lower than the earnings for the previous year by at least twenty five percent,” said Kiboro.

The forecast is for the year ending December 31, 2020, and comes seven months before the year ends pointing out to little hope to turn around things even if things return to normal.

Read: Nation Media Spares Employees Earning Less Than Ksh50,000 In Up To 35 Per Cent Pay Cuts

“The various response measures rolled out to contain the spread of the novel virus have precipitated a significant decline in the revenues,” he said.

NMG reported a 23 percent reduction in profit after tax for the full year ended December 2019 to Ksh856 million down from Ksh1.1 billion in the year ended December 2018.

The company attributed the dwindling fortunes to a reduction in advertising spends and increased costs to print news for traditional media.

In the wake of Covid-19, the media house slashed employee salaries by between 5-35 per cent, for all employees earning over Ksh50,000.

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IMF Country Report No. 20/165

UGANDA

REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT

May 2020 FACILITY-PRESS RELEASE; STAFF REPORT; AND STATEMENT

BY THE EXECUTIVE DIRECTOR FOR UGANDA

In the context of the Request for Disbursement under the Rapid Credit Facility, the following documents have been released and are included in this package: A Press Release including a statement by the Chair of the Executive Board.

The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on May 6, 2020, following discussions that ended on April 27, 2020 with the officials of Uganda on economic developments and policies underpinning the IMF disbursement under the Rapid Credit Facility. Based on information available at the time of these discussions, the staff report was completed on April 28, 2020.

A Debt Sustainability Analysis prepared by the staff of the IMF and the International Development Association (IDA).

A Statement by the Executive Director for Uganda.

The document listed below has been or will be separately released.

Letter of Intent sent to the IMF by the authorities of the Uganda*Also included in the Staff ReportThe IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.Copies of this report are available to the public fromInternational Monetary Fund • Publication ServicesPO Box 92780 • Washington, D.C. 20090Telephone: (202) 623-7430• Fax: (202) 623-7201E-mail:publications@imf.orgWeb: http://www.imf.org Price: $18.00 per printed copyInternational Monetary FundWashington, D.C.© 2020 International Monetary Fund©International Monetary Fund. Not for RedistributionPR 20/206IMF Executive Board Approves a US$491.5 MillionDisbursement to Uganda to Address the COVID-19 PandemicFOR IMMEDIATE RELEASE The Ugandan economy is severely affected by the COVID-19 pandemic. To address the urgent balance-of-payments and fiscal needs, the IMF approved US$491.5 million emergency assistance for Uganda under the Rapid Credit Facility. The authorities have timely scaled up health spending and put in place bold measures to help contain and mitigate the spread of the disease, as well as to cushion the impact on the most vulnerable and the private sector. WASHINGTON, DC – May 6, 2020 The Executive Board of the International Monetary Fund (IMF) approved today a disbursement of SDR361 million (about US$491.5 million or 100 percent of quota) for Uganda under the Rapid Credit Facility (RCF).It will help finance the health, social protection and macroeconomic stabilization measures, meet the urgent balance- of-payments and fiscal needs arising […]

Business. The Stanbic Purchase Managers Index (PMI) survey report for April shows there was deterioration in business conditions following the lockdown . FILE PHOTO Business confidence in Uganda has declined by more than half from the previous Stanbic Purchase Managers Index (PMI) following the current lock-down in the country, indicating how serious COVID-19 is causing havoc on Uganda’s economy.

The Stanbic Purchase Managers Index (PMI) survey report for April shows there was deterioration in business conditions following the lockdown that started on March 24 2020, with the headline PMI registering 21.6 in April, down from 45.3 in March – the lowest reading since the survey began in June 2016.

Deteriorating business conditions have now been signalled for two consecutive months. The survey highlights that company closures, a lack of new orders and restrictions on travel were highlighted as having the biggest impact on business.

The PMI survey report contains the latest analysis of data from the monthly survey of business conditions in the Ugandan private sector.

Stanbic Bank head of Global Markets Kenneth Kitungulu said company shutdowns amid the Covid-19 lockdown led to a further drop in output during April, with most respondents signalling a fall.

The survey states that all five broad sectors covered by the survey-recorded decreases in business activity and that falling demand by respondents and new orders decreased accordingly.

Companies looked to scale back employment and purchasing activity, in each case for the second month, running, adding that restrictions on travel meant those companies that ordered inputs during April faced lengthening delivery times. Several respondents also expressed concerns around the lasting impacts of Covid-19 on the economy.

Mr Kitungulu said the restricted movement during the past 45 days of the lockdown has led to a decrease in aggregate demand and output.

moketch@ug.nationmedia.com

Bank Why government must support the banking sector t o keep credit flowing to stimulate economic growth COMMENT | SIMON MUTUNGI | Following the 2008 Global Financial Crisis, many banks collapsed worldwide while others had to plow through public funds in the form of government bailouts in order to survive. To avert a consequent repeat of this episode, the Bank of International Settlements (BIS), a global standard setting body for Central Banks, under the auspices of the Basel Committee on Bank Supervision (BCBS) amended its standards with the passing of the Basel III Accords. These increased the capital and liquidity requirements that banks are mandated to hold as buffers against shocks in times of crisis.

In 2009, Uganda became part of this risk management framework and the Bank of Uganda (BoU) subsequently implemented Basel III by requiring banks to hold a minimum Shs25 billion in capital. This was done with the passing of the Financial Institutions (Revision of Minimum Capital Requirements) Instrument No. 43 of 2010 in accordance with section 26(5) of the Financial Institutions Act 2004.

Later on, perhaps to restore public confidence in the banking sector after the Crane Bank debacle, the BoU in December 2016 would further raise the minimum statutory capital adequacy ratios to 10 percent (up from 8 percent) of the risk-weighted assets of the bank on top of holding a capital conservation buffer of 2.5 percent of their risk weighted assets. An additional capital surcharge of 1-3.5 percent was charged on the big banks considered as Domestically Systemic Important Banks which currently include Stanbic, Standard Chartered and DFCU.

Strong capital buffers ensure sound banking and indeed the BoU June 2018 Financial Stability Report showed that the banking sector remained well capitalised and that banks had adequate liquid assets. Simply put, now that Ugandan banks built up reserves in peace time, they should use the same to save the private sector in war time.

According to the latest BoU monetary policy, the COVID-19 pandemic has led to a severe contraction in economic activity due to a combination of global supply chain disruptions, travel restrictions, measures to limit contact between persons, and the sudden decline in demand. The lockdown is likely going to force many firms out of business as well as employees out of work. To help stimulate growth in the economy, the government must support the banking sector since it is a central player in the country’s […]

A man shops for maize flour at a supermarket in Nyeri, County. Most supermarkets have recorded low numbers of customers, a trend they blame for their failure to pay suppliers. PHOTO | FILE | NATION MEDIA GROUP The Competition Authority of Kenya wants to protect businesses, especially small enterprises, from collapse due to constrained cash flow.

The law stipulates that retailers found to be withholding suppliers’ pay without a good reason will pay a hefty fine.

The Competition Authority of Kenya (CAK) has started investigating delays by some retailers in paying suppliers.

The agency wants to protect businesses, especially small enterprises, from collapse due to constrained cash flow.

In March, CAK asked retailers and suppliers to furnish it with documents showing the payment status for deliveries made by 25 major retailers. The watchdog told the Sunday Nation that its investigations are informed by information received in April that some supermarkets may have missed payment deadlines without valid reasons.

PAYMENT SCHEDULES

CAK will look at the money owed for products and quantities supplied based on specific dates. The retail chains are required to provide an inventory of payment schedules for deliveries received by the end of May 14.

The law stipulates that retailers found to be withholding suppliers’ pay without a good reason will pay a hefty fine. The penalty for abuse of buyer power is a five-year prison sentence or a fine of Sh10 million or both. CAK may also impose an administrative penalty of up to 10 per cent of the undertaking’s turnover for the preceding year.

CAK’s communications and external relations manager Mugambi Mutegi said they had received retailer and supplier statements on payment status and demands that were being scrutinised.

“The authority is in the final stages of analysing the information and will, in the next two weeks, communicate the next course of action to the specific supermarkets that may have contravened the law and further engage the affected suppliers,” he said in an interview.

CAK was still receiving supplier demand statements that will enable it to determine the gravity of the problem, he said.Sources in retail chains blame the Covid-19 pandemic for the delayed payments. This, the retailers said, is due to reduced customer visits.But some suppliers are of the view that failure to conduct feasibility studies before embarking on expansion has led retailers to open loss-making branches that have hurt their profits, forcing them to use suppliers’ money to meet […]

Business
He, however, couldn’t disclose the amounts owed to suppliers at the moment. The competition watchdog has started investigating supermarkets over delayed payments to suppliers without justification. In a notice yesterday, Competition Authority of Kenya (CAK) Director General Wang’ombe Kariuki requested local suppliers owed by supermarkets beyond a 90-day credit period to submit information to the watchdog as part of the investigations. Mr Kariuki claimed that supermarkets could be “abusing buyer power” hence contravening the Competition Act that is meant to protect suppliers. “The Authority has commenced investigations into possible contraventions of the Act in the retail sector through delays in payment of suppliers without justifiable reasons,” said Kariuki. “The authority is requesting local suppliers owed by major supermarkets beyond a credit period of 90 days from the date of supply to submit information to it.” Persons found abusing buyer power face, upon conviction, a jail term of not less than five years or a fine of at least Sh10 million. The investigations might also see supermarkets speed up processing of payments owed to suppliers. Kenya Association of Supplier Chief Executive Officer Ishmael Bett yesterday confirmed to The Standard that his lobby members had raised concerns over delayed payments by the retailers. He, however, couldn’t disclose the amounts owed to suppliers at the moment. He explained that his entity is in the process of collecting the data. “Delayed payments have been a problem and our members have been inquiring about them. We’ve also received the letter by CAK and have started submitting the information that has been requested,” said Mr Bett. He noted that the 90-day rule was put in place as a protective measure for suppliers. However, payment period limits for suppliers differ because of the various goods being supplied such as fresh produce. Bett further noted that the Government decided to put measures to protect retailers following the collapse of such giants as Nakumatt and Uchumi. Nakumatt, that fell with a Sh38 billion debt, owed suppliers Sh18 billion while Uchumi, that recently survived a liquidation vote, owes over Sh5 billion. “The issue of non payment is nowadays well monitored. There are methods to pursue payments,” he said. In 2018, CAK established a Buyer Power Department to address increased concerns over the negative impact on businesses caused by delayed payment of supplies. Due to low margins, supermarkets chose to expand often with money that is supposed to pay […]

To provide the much-needed information and solutions for Ugandan entrepreneurs struggling with the financial consequences of the COVID -19 pandemic, Stanbic Bank has partnered with ConsumerCentriX on a Business Information Hub.

This website will provide entrepreneurs with advice on financial management to overcome economic slowdown and insights into new developments across industries.

Through a partnership with the African Management Institute (AMI), the Covid-19 Business Info Hub will promote informative virtual training sessions and webinars to help entrepreneurs navigate these challenging new circumstances.

Employing over 2.5 million people, small and medium enterprises (SMEs) are the key driver of growth for Uganda’s economy.

However, as the COVID 19 pandemic unfolds, the SME sector faces reduced business activity and financial security as a result of disruptions to the supply chain, travel restrictions, and changing work environments.

Over the last few months, Stanbic Bank has already introduced a range of innovative products and services to support entrepreneurs with overcoming these challenges.

For example, to address reduced revenues and cash flow, clients can now access an unsecured overdraft facility within 24 hours based on the performance of their banking history.

To reduce disruptions in the supply chain, Stanbic has partnered with Zhejiang International Trading Supply Chain Co Ltd to support enterprise clients importing from China.

The Covid-19 Business Info Hub will become a centralized platform for Stanbic to communicate these responsive efforts with enterprise clients in Uganda.

However, the vision of the site is to become a trusted resource for all entrepreneurs in Uganda, looking for industry insights and relevant virtual training sessions.

Stanbic Uganda’s Head of Personal and Business Banking Grace Muliisa said, “We are aware of various the challenges businesses are facing especially during this time, and we are committed to unlocking new solutions to enable business continuity.“Among the key initiatives Stanbic has put in place to support businesses is the loan repayment holidays, as a measure to protect clients from adverse economic effects of the COVID-19 pandemic.“ We will also continue to be at the forefront of delivering wholesome solutions to entrepreneurs directly through strategic alliances and partnerships to keep them thriving during and post the pandemic.”As the implementing partner, ConsumerCentriX is well-positioned to support Stanbic Bank on this critical endeavour.ConsumerCentriX is an international strategy consulting firm that works with financial service providers and policymakers on translating consumer insights into market strategies and policies to reach the un/undeserved.The firm has extensive experience supporting SME development in East Africa through financial and […]