Kenya

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.

Kenya’s public pensions provider, the National Social Security Fund (NSSF), risks losing a significant portion of its movable assets next week over a Sh663 million debt it owes a developer for breach of contract, Business Daily Africa reported. NSSF was left holding the multi-million shilling debt after it lost a legal tussle pitting it against a company it had contracted to build an estate in Nairobi’s upmarket Kitisuru area.

The Attorney-General has been directed to respond to a petition filed by the Kenya Planters Co-operative Union (KPCU) seeking to be bailed out of receivership, Business Daily Africa reported. Constitutional Court Judge Roselyn Wendoh on Wednesday told the State Law Office to file its replying affidavit within 14 days. Kenya Commercial Bank (KCB) and Coffee Board of Kenya were also asked to respond within seven days upon being served by the AG. The parties involved in the dispute will return to court on November 3 to confirm compliance with the orders.

Kenyans should use the recently launched credit information sharing system to negotiate favourable terms and lending rates with commercial banks, the financial services sector regulator, the Central Bank of Kenya, has said. The bank fears that the system is beginning to look like an additional weapon in the hands of lenders to tighten the rules for individual and household borrowers to the exclusion of potential benefits.

Uchumi Supermarkets’ 12,0000 owners have agreed to convert the chain’s debts into equity in a bid to win back firm’s trading rights at the Nairobi Stock Exchange, Business Daily Africa reported. Uchumi’s shares were suspended from trading on the stock exchange in 2006 after it closed its stores following an aggressive but failed expansion plan that led to a Sh1.2 billion loss and left the firm reeling in a Sh2 billion debt owed to suppliers, Kenya Commercial Bank and PTA bank. At the time of delisting from the bourse, Uchumi shares were trading at Sh14.50.

Plans by the Government to set up a contributory pension scheme for civil servants has stalled, leaving the retirement benefits time bomb that forced the government to push the retirement age to 60 years nearing explosion, Business Daily Africa reported. Treasury officials said the scheme, which was to come into force on Thursday next week, could not take off for lack of an appropriate law to support it. It will now await the outcome of the vote on the Draft Constitution, according to Anne Mugo, the Director of Pensions.

The payroll crisis at City Hall could be deeper than initially thought after it emerged that more than a third of its 12,000 workers are either dead, inexistent or serving on forged papers, Business Daily Africa reported. In the first hint of the findings of a PricewaterhouseCoopers staff audit carried out in February, Town Clerk Philip Kisia said on Thursday there were 4.215 illegal workers who would be cut off from the payroll. The move would save the council some Sh2.5 billion annually, bringing it closure to financial independence.

Revolving funds that were meant to help Kenyan youth and women start businesses are chalking up bad debt, causing fear of a looming liquidity crisis that could also rob them of support from financiers, Business Daily reported. Fund managers said there has been a huge build up of bad debts in the past 12 months forcing them to consider involving the provincial administration in the disbursement of new loans.

Kenya may be headed for a jobless recovery, economists said, citing new labour market data showing that the productivity of workers has declined to record levels, forcing businesses to turn to capital for additional capacity to keep pace with growth, Business Daily Africa. The data from the Federation of Kenya Employers (FKE) shows that economic hardships linked to soaring inflation and skills deficiency has shackled productivity growth on factory and shop floors, making workforce expansion unattractive to business leaders.