Kenya

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.

A real estate pricing bubble has pushed the cost of homes to more than 140 times the annual incomes of most Kenyans, making it difficult for millions of families to realise their homeownership dreams, Business Daily Africa reported. Kenyans aspiring to own homes can only do so if they are ready to pay at the rate of 148 times their annual income making them the most disadvantaged lot on the continent when it comes to homeownership, according to a new study of Africa’s housing market.

Kenya’s Treasury has promised the International Monetary Fund a three-year public sector wage freeze, setting up government employees for a tough sail in an economy expected to come under increasing inflationary pressure, Business Daily Africa reported. The deal is part of the conditions for disbursement of the Sh40 billion that the IMF and bilateral donors have promised Kenya to help shield the economy from forex rate fluctuation.

Real estate developers are moving out of Nairobi to smaller towns, aiming to tap rising demand for residential houses that the high cost of land in the Kenyan capital has left unmet and adding a new dimension to property market growth, Business Daily Africa reported. Latest market data indicates that there has been a marked upsurge in construction of new housing units in Naivasha, Kisumu, Mombasa, and Nakuru – a trend that is expected to ease demand pressure on Nairobi and help tame price inflation.

Royal Media Services chairman SK Macharia has moved to forestall a looming bankruptcy by filing an application seeking to set aside a court ruling that ordered his vast estate be placed under receivership, Business Daily Africa reported. Through his lawyers Dr Gibson Kamau Kuria and Mr Paul Muite, Mr Macharia on Monday appeared before Mr Justice Muga Apondi and pleaded to be allowed to deposit Sh35 million as security pending the filing of an intended appeal.

Royal Media Services chairman SK Macharia risks being declared bankrupt for failure to pay a transporter Sh35 million, Business Daily Africa reported. Lady Justice Martha Koome on Friday issued orders that the businessman’s vast estate be placed under receivership and appointed a government official as the trustee of his assets and liabilities. The orders followed a successful bankruptcy petition filed by Livingstone Waithaka, the managing director of Ocean Freight Transporters Company Limited.

The Central Bank has lowered its main policy rate by a quarter percentage point, in a move meant to afford Treasury and businesses cheaper access to credit, Business Daily Africa reported. The Monetary Policy Committee (MPC) announced on Thursday after its bi-monthly meeting that it had cut the Central Bank Rate to 5.75 per cent. Interest rates have been on the rise in the past two months as investors demanded higher returns on Treasury bonds following the State’s announcement that it would increase its domestic borrowing target by 14 per cent to Sh120 billion this year.

Parliament’s Budget Office (PBO) says Kenya’s large and rapidly expanding underground or grey economy is never captured in official data but now accounts for nearly half of the country’s Gross Domestic Product, Business Daily Africa reported. Kenya’s underground economy has expanded rapidly in the past five years to become a mammoth Sh825 billion industry that is denying the government at least Sh275 billion in uncollected revenues, the PBO says.

Commercial banks and micro-lenders are now required to share a wide range of information on their customers, including records of dishonoured checks, compulsory closure of accounts and late payments or credit defaults on all types of facilities, according to the new rules published last week to facilitate the establishment of a reliable risk assessment system.