The I$M Bank has raised its lending by 1.5 per cent to reflect an increase in lending rates by the Central Bank, Business Daily Africa reported. This makes I$M Bank the second industry player to increase the cost of credit in the country with other players expected to follow suit as the CBK tightens its monetary policy. The revision puts the lending rate above the industry average of 13.92 per cent according to the Central Bank of Kenya. Commercial Bank of Africa revised their rates one week ago by the same margin to 14.5 per cent.

Treasury’s new measures to plug loopholes that property dealers use to avoid paying taxes are expected to add impetus to real estate price inflation, as agents pass on the additional levies to home buyers, Business Daily Africa reported. The new measures contained in Finance minister Uhuru Kenyatta’s Budget proposals require real estate developers and land dealers to pay taxes on gains made from the appreciation in the value of properties sold.

Civil servants last year earned better pay than their private sector counterparts in what marks the biggest labour market shift in more than three decades, Business Daily Africa reported. Public servants took home an annual average pay of Sh394,131 compared to private sector employees’ Sh393,760, according to official data contained in the Economic Survey 2011, which was released last week. The change in fortunes of government employees is partly attributed to the reforms that the Kibaki administration has pursued since coming to power in 2003.

Kenyan workers lost buying power last year despite being awarded pay increments after a two-year freeze caused by the combination of the 2008 post-election violence and global economic recession, official data released last week shows, Business Daily Africa reported. Though nominal wages were up by an average of 3.5 per cent, prices of goods and services rose at a higher rate of 4.1 per cent, leaving workers with negative real wages, according to Economic Survey 2011.

Executive pay in the banking sector rose faster than other employees’ take home last year helped by a vicious war for talent as competitive intensified in the lending market, raising the compensation bar, industry statistics show, Business Daily Africa reported. Top bankers’ payroll grew by more than 30 per cent in the year buoyed by a rise in the number of managers and intense competition for top talent that required lucrative perks to hire and retain. This helped widen the pay gap between the executives and the rest of staff – especially in the industry’s top players.

The tax collector has sealed a loophole that allowed companies to claim tax returns on debts that they were finding difficult to collect as it unveiled tighter rules to guide the claim process, Business Daily Africa reported. The Kenya Revenue Authority (KRA) published the new rules in the latest Kenya Gazette in a bid to bridge its tax collection deficit that stood at Sh11 billion in the six months to December amid growing public expenditure.

KCB is set to receive a Sh8.8 billion ($105 million) loan from the World Bank to support its regional mortgage business, Business Daily Africa reported. World Bank’s private lending arm, the International Finance Corporation (IFC), has indicated it is considering advancing the cash to finance KCB’s mortgage and small and medium enterprises business in Kenya, Rwanda, Southern Sudan, Tanzania and Uganda. According to IFC, KCB Rwanda will get $5 million. The final details of the proposed credit line will be discussed at a board meeting slated for June 7.

A rift has emerged within government over an International Monetary Fund condition to freeze civil servants’ salaries for three years — pitting the Public Service Ministry against the Treasury, Business Daily Africa reported. The tussle, if unresolved, looks set to trigger labour unrest since the condition has also been opposed by the Kenya Civil Servants Union, which has taken the government to court for non-payment of salary increments agreed on in 2008. It may also lead to conflict within the grand coalition.

Sustained pressure on food and fuel prices lifted the inflation rate for the fifth straight month in March, bringing closer to reality the possibility of consumer price acceleration touching the double-digit mark before end of June, Business Daily Africa reported. The Kenya National Bureau of Statistics said inflation climbed to 9.19 per cent in March — the highest since the new method of calculating price changes was introduced in November 2009 -- and 2.65 percentage points higher than February’s rate of 6.64 per cent.

The IMF told Zimbabwe to contain public-sector pay demands to avoid stoking inflation and reiterated it would not resume lending until Harare clears its arrears, a Finance Ministry official said Thursday, Times Live reported on a Reuters story. Public servants, who get an average of US$200 a month, are pressing for a doubling of their pay, putting pressure on authorities already spending 70% of revenue on remuneration. An IMF team in Harare for annual talks with the government has warned that pay demands could push Zimbabwe back into an inflation spiral. The team ends its mission next Friday.