Kenya Insights

Category: Economy

  • Del Monte Workers Down Tools Over Harsh Working Conditions

    Del Monte Workers Down Tools Over Harsh Working Conditions

    For the second day running, over six thousand workers at the Multi-National Fruit Processing Del Monte Company paralyzed operations over alleged inhuman working conditions, irregular dismissal of their union representatives, poor pay and unlawful labour employment policies.

    The furious workers accused the fruit processing company of flouting the Collective Bargaining Agreement that the company signed with them thereby backing labour malpractices.

    Led by Edwin Andala, the workers faulted Del Monte for facilitating change of employment systems from direct to outsourcing, a move they said has resulted in job insecurity, biased employment processes and delayed promotions.

    Further, the aggrieved workers who vowed to continue downing tools until the company addresses their grievances stated that the firm has been poorly-paying them to a point that most of them can no longer meet their basic obligations such payment of rent and purchase of food.

    The workers in addition accused some senior company staff of violating workers rights.

    The irate staff stated that Del Monte, as compared to other international companies, has been paying them dismally, turning them into beggars.

    They regretted that while the company had sought to have its lease renewed to continue supporting their livelihoods, the company had turned down their promises and instead embarked on oppressing them.

    Besides some senior management officials demanding bribes and other favours to offer and retain employment security, the workers further regretted that some of them have served the company for over 20 years yet they have never been promoted from casual to permanent employees, a situation that might qualify them to retire with zero benefits.

    Officials of Kenya Plantation and Agricultural Workers Union (KPAWU) who later addressed the angry workers joined them in demanding a better working environment and an end to irregular dismissal of union representatives who have been agitating for the workers’ rights.

    In a quick rejoinder, the company’s managing director Stergios Gkaliamoutsas claimed that the employees were on an illegal strike without notice further refuting claims that the fruit processor had sub-contracted a certain agriculture activity without communicating the same to them.

    Gkaliamoutsas stated that the management has since held a meeting with the employees’ elected shop stewards from the KPAWU and clarified to them, that the contract in question, which is due to commence on 10th January 2022, will not affect any union member employees and no jobs will be lost due to this intended outsourcing.

    “The 2022 labour requirements have increased compared to 2021 and as such we were forced to temporarily outsource for additional manpower through the contract, to cover the additional work. As per the current state of affairs, we forecast that all current permanent and additional contract workers will be fully occupied throughout the year,” Gkaliamoutsas said in a statement.

    A year ago, the food processor was under scrutiny following claims of torture and other abuses on residents by its guards.

  • Kenya Paid Sh8.6B Extra On A Loan Due To ‘Typing Error’

    Kenya Paid Sh8.6B Extra On A Loan Due To ‘Typing Error’

    A typing error by the National Treasury has seen Kenya’s bilateral debt inflate by Ksh8.6 billion, the first Quarterly Economic and Budgetary Review has revealed.

    The extra money was paid as part of repayment for a non-existent loan to the United Kingdom making the country’s bilateral debt service stands at Ksh41 billion.

    This is despite Kenya clearing direct loans it owed the UK in 2020 after paying Ksh35.3 million.

    The error has raised questions about the accuracy of data from the Treasury as the figure was supposed to be included in the Eurobond interest payments for the 10 and 30-year bonds Kenya borrowed in 2018.

    “It is a wiring classification of debt service on the table. It is supposed to be Eurobond payment, not UK debt,” a source told a local publication.

    The National Treasury has since pulled down the Quarterly Economic and Budgetary Review from its online publication after it was questioned about the error.

    The present error comes years after the infamous error that could have added an extra Ksh9.2 billion to a supplementary budget that was presented before the National Assembly in 2009 by the then Minister of Finance, Uhuru Kenyatta.

    Following the error, Uhuru argued that his office had not intended to defraud the public explaining that the error was an oversight.

  • Fleecing KPLC: US Authorities Alarmed Over Extraordinary Profits Made By Ormat From Struggling KPLC

    Fleecing KPLC: US Authorities Alarmed Over Extraordinary Profits Made By Ormat From Struggling KPLC

    American Independent Power Producer (IPP) Ormat Power is on the spotlight in the US for booking outsized gains from Kenya, just days after the President appointed a taskforce to investigate power producers.

    The company’s filings to the Securities Exchange Commission of the United States of America says a huge percentage of income comes from Kenya Power. The utility firm has been struggling to pay Ormat and as of July 2021, it owed the independent producer Sh4.3 billion.

    “A substantial portion of international revenues came from Kenya and, to a lesser extent, from Honduras, Guadeloupe and Guatemala and other countries. Our operations in Kenya contributed disproportionately to gross profit and net income,” the energy firm said in SEC filings.

    Profitable firms

    The company earns twice more than Kengen per megawatt hour. The taskforce investigating power prices advised that all IPPs should slash their tariffs to match state owned Kengen. Kengen is one of the most profitable firms in the region.

    An analysis by the Wall Street Journal owned newsletter Daily Grant says, “ultra premium represents the secret sauce of that windfall. Zachary Truesdell the former MD at Matador Global Management estimated to Grant last year that Ormat earned $94 per megawatt/hour of power provided to Kenya Power, more that double the $45 paid to Kengen.”

    In the SEC filings, the company acknowledges receiving a letter from Kenya’s Parliament to explain the nature of its dealings with Kenya Power, but says it was not about negotiating tariffs.

    “In July 2021, Ormat received a letter from the Kenya National Assembly with a request to respond to various questions and to provide materials regarding our Olkaria complex operations and its PPA. Ormat is engaged in conversations with the Kenya National Assembly to respond to their requests,” said Ormat to the US regulator and investors.

    This web of activities and pricings are an eye opener into how private and foreign players could be charing consumers of their hard earned money through ultrahigh power tariffs.

    The company’s revenue from Kenya has improved from 15 per cent of total revenue last year to 17.5 per cent of the total revenue in 2021. “As of June 30, 2021, the amount overdue from KPLC in Kenya was $43.5 million of which $13.2 million was paid during July 2021. These amounts represent an average of 77.2 days overdue,” the SEC files say.

    Ormat said it believes it will be able to collect all unpaid revenue in Kenya. This belief, it says, is supported by the fact that in addition to KPLC’s obligations under its power purchase agreement, the company holds a support letter from the Government of Kenya that covers certain cases of KPLC non-payment. This includes cases such as where caused by government actions/political events.

    Fixed payments Additionally, the company continued to experience certain curtailments in the first and second quarters of 2021 by KPLC in the Olkaria complex. The impact of the curtailments is limited given that the structure of the PPA secures the vast majority of the Company’s revenues with fixed capacity payments unrelated to the electricity actually generated.

    Due to the high amounts paid to IPPS and high system loses, Kenya is grappling with sky-high electricity prices that continue to keep the cost of living high, while pushing investors out of business which in turn keeps unemployment high.

    In an interesting twist in the sector however, Kenya Power announced last week that it has bounced back to profitability, with Sh1.5 billion in net earnings for the year ended June 30, 2021 compared to a Sh939 million loss last year.

    A detailed analysis from the grants is as below;

    Clean energy is a relative term. Let’s review the peculiar case of Ormat Technologies, Inc. (ORA on the NYSE), the 56-year old, Nevada-based firm that manufactures and installs small geothermal power plants.

    As geothermal energy is both far greener than conventional fossil fuels and represents a reliable, baseload power source (unlike intermittent wind and solar energy), the company is a darling of the prospering environmental, social and governance-focused investment movement.

    Ormat is ranked in the 77th percentile of CHub’s ESG ratings aggregate of 25,208 companies compiled by 787 data sources, topping the average rating of its alternative energy peers, while
    Morningstar bestows a “low” ESG risk rating on the company. ORA is likewise the apple of Wall Street’s eye, trading at 50 times consensus estimates of 2021 earnings per share and six times expected full-year revenues.

    Shares are, however, up just 5% including dividends since Grant’s Interest Rate Observer had its bearish say back on March 6, 2020. Over that time, the S&P 500 has returned 56%.

    The starring role of Kenyan operations in the Ormat story presents a major potential vulnerability. Namely, Kenya delivered 16.4% of revenues through the first six months of 2021, up from 15.7% in the year ago period, and “contributed disproportionately to gross profit and net income,” notes Ormat’s most recent
    form 10-0 filed in early August.

    Ultra-premium pricing may represent the secret sauce for that windfall. Zachary Truesdell, then managing-partner at Matador Global Management, estimated to Grant’s last year that Ormat was earning around $94 per megawatt hour (MWh)
    of power provided to local customer Kenya Power & Lighting Co. (KPLC), morethan double the $45 MWh rate for state-owned geothermal competitor Kenya Electricity Generating Co.

    That disparity has drawn some unwanted attention. This spring, Kenyan President Uhuru Kenyatta convened a task force to scrutinize all power purchaseagreements involving Kenya Power, following the revelation that independent
    power producers (IP’s) were enjoying rates far above those charged by the KenyaElectricity Generating Co. Upon the completion of that review last month, Kenyatta ordered the halt of all power purchase agreements still under negotiation and established a team of auditors to supervise KPLC, while replacing the country’s energy minister. Energy costs in the country will drop by as much as 33% thanks to those enhanced controls, Kenyatta’s office asserts.

    In its 10-Q filing, Ormat acknowledges receiving a letter from the Kenya National Assembly in July requesting information and materials related to its business practices there. For its part, Ormat tells Almost Daily Grant’s that it has not been approached by the Kenyan government regarding a renegotiation of its rates, and that its prices are
    “significantly’ ” lower than those charged by other firms in Kenya.

    Operational risks extend beyond the durability of that lucrative Kenya-based revenue stream. As that 2020 Grant’s analysis pointed out, chairman Isaac Angel served as CEO of Lipman Electronics Engineering Ltd. prior to its 2006 acquisition by Verifone Holdings, Inc. for $793 million in cash and stock. Thanks in part to financial irregularities at Lipman, Verifone was subsequently forced to
    fork over $95 million in a class action lawsuit, a setback which led to the resignation of Verifone’s CFO.

    Then, too, current Ormat CEO Doron Blachar previously served as chief financial officer at Israeli construction firm Shikun & Binui, a company that is now under formal police investigation for bribery. That inquiry is reportedly focused on Kenya and Guatemala, two of Ormat’s most important markets.

    A March 1 analysis by Hindenburg Research alleges that the company routed energy assets through Guatemala via an undisclosed related party, which in turn transferred energy rights to the two senior government officials who approved
    Ormat’s deal to operate in the country. While the company website boasts that its geothermal plants are “powered by nature,” Ormat’s “lucrative international contracts appear to be powered by a slew of payments to senior government
    officials,” Hindenburg writes.

    In March, the company condemned Hindenburg’s report as “inaccurate and filled with innuendo in an attempt to mislead investors about Ormat.” Apart from those allegations, a report last year from local news service NewsZetu asserted that Kenya Power is “broke,” and “technically insolvent,
    .” as net profits collapsed by 92% over the 12 months through June 30, 2019 compared to the
    prior year period. The slow-paying KPLC owed Ormat about $30 million as of the end of July, the 10-Qnotes. That’s equivalent to 37% of 2021 consensus net income.

    Billow Kerrow the former Senator of Mandera has termed it as a “Shame and fleecing Kenyans.”

    In a previous article we did on Kenya Insights and in which we largely relied on the Hindenburg damning report, Ormat came at us with legal demands claiming the publication had some errors, they however didn’t dismiss the entire content.

    In the Hindenburg Report titled ‘Ormat: Dirty Dealings in ‘Clean’ Energy’ it made damning  allegations on the firm’s operations in Kenya saying that;

    • Ormat’s operations in Kenya contribute “disproportionately” to the company’s bottom line, generating an estimated ~41% of the company’s FY 2020 net income. Its customer is the Kenya state power company.
    • A politically-connected businessman admitted to us that he “opened the doors” for Ormat in Kenya and got the go-ahead for the project after an in-person meeting with the Kenya Power boss (who was later charged with corruption) and former President Daniel Arap Moi, widely regarded as one of Kenya’s most corrupt leaders.
    • We present documents showing that Ormat paid contractors in Kenya tied to corrupt government officials, including one run by the son of the former President Daniel Arap Moi along with others run by his documented front-men.
    • The head of the Kenyan state-backed utility who oversaw the original contract with Ormat, as well as the energy minister at the time, were later found to have demanded millions of dollars in bribes to allow international power companies to do business in Kenya.
    • Two former CEOs of Ormat’s Kenyan customer (the state-backed utility) were subsequently arrested in 2018 and more than a dozen top managers were arrested or accused of crimes relating to corruption.
    • The same state utility customer, responsible for driving Ormat’s “disproportionate” financial success in the country, is reportedly “broke” and “technically insolvent”, posing another threat to Ormat’s most lucrative market.

    In sharp reaction, Ormat denied the accusations in a letter to Kenya Insights, “unsupported contentions about third parties such as the “Mugwe firm” and its portfolio, former and current Kenyan presidents and their purported associates, and KPLC managers. These statements are a blatant attempt to sully Ormats reputation through “innuendo” and misleading reporting.”

    Ormart dismissed the allegations against them in the report terming it as a mere “opinion paper” that intends to influence and manipulate the price of a listed stock.

    In their letter, Ormat demanded we publish the following, “Ormat’s Olkaria facility in Kenya is the first and only privately funded and developed geothermal project in Kenya. The project was developed consistently with best market practices at the invitation of the Kenyan government. This project has been widely applauded as a successful
    major Kenyan achievement that has resulted in competitively priced renewable energy. The Company is committed to operate with full transparency with all governmental agencies and
    conducts business with integrity and according to the highest ethical standards in all regions in which it operates    .”

    Kenya Insights complied with the demands and gave the firm a right of reply to the report and allegations. In a letter to Ormat, we asked pertinent questions;

    Letter to Ormat

    For clarifications so that we don’t have to clash again, the editorial will need answers to some questions that perhaps laid ground for the previous ‘misunderstanding’ so kindly pass over the following questions to your client as we have assigned another writer to follow up on this story that we shall publish as a retraction for the previous. Note that our concern is OrPower is at the center of investigations by the parliament and in the good of public, a whole story need to be told not just a PR article:

     

    1. Block & Leviton LLP, a US national securities litigation firm, in March announced that it is investigating Ormat Technologies, for potential violations of the federal securities laws. What’s the reaction to this?

     

    2. Hindenburg Research said Ormat paid contractors in Kenya tied to corrupt government officials. The report widely accuses the management of links to corruption and bribery not only in Kenya but other countries as Honduras. We’d like to get the overall view of the company on this particular report and more specifically to the Kenyan context.

     

    3. OrPower has been accused of exploiting Kenyans with exorbitant prices. For instance, it’s alleged that KPLC buys Sh23 per kilowatt hour yet it can buy the same at Sh0.50 from KenGen. Infact, some are saying that it’s a possibility that cartels in the sector are purchasing power from KenGen at Sh0.50 and offloading to Kenya Power at Sh23. Is this a fact? If so what’s the justification for the high price and direct answer to those claiming it’s exploitation given that Ormat is the second largest producer after KenGen.

     

    4. Recent losses at Kenya Power and expensive electricity bills to consumers have shifted focus to lucrative deals signed between Kenya Power and IPPs. Do you think as a producer this is where the back lay?

     

    5. We’re requesting for the details of operations at Olkaria and agreements or any other relevant document you can avail to us as a matter of openness and integrity.

     

    6. Is it true that the US department of justice is investigating unfair pricing between Kenya Power and Ormat Technologies which was allegedly forwarded by OECD?

    Worthy to note that, we sent the letter on 29th September and a month later and as of the time of publication, we haven’t gotten a reply from Ormat and we can’t tell why they decided not to reply.

    While Ormat distance themselves from bribery allegations, in Kenya some state officials are bragging of having given them a life kick. Disgraced former Geothermal Development Company (GDC) CEO Dr Silas Masinde Simiyu who was also accused of abuse of office and failing to ensure proper management of public funds and fired, has been bragging to anybody who cares to listen that he was behind the successful tendering of Orpower 22 Limited, Sosian Menengai Geothermal Power Limited and Quantum East Africa Power Limited for the Menengai Geothermal Project.

    The Kenya Power and Lighting Company PLC (Kenya Power) recently announced a profit before tax of Kshs.8.2 billion for the period ending 30th June 2021, representing a 216% YoY growth compared to a loss before tax of Kshs.7.04 billion. The strong performance was mainly driven by growth in sales and revenue, as well as a double digit reduction in costs and expenses.

    In the immediate to medium terms, Kenya Power is undertaking deep seated reforms aimed at driving down the cost of power to the end consumer in order to spur social and economic growth, make the business more efficient and agile, and the energy sector more sustainable.

    “The Board recognised that a continued unbalanced approach towards power purchase agreements posed a systemic risk to the sector and the economyas a whole while exposing consumers to high electricity bills. In mitigation, it undertook a collective stakeholder approach to resolve these issues which resulted in the report of the Presidential Taskforce on the Review of Power Purchase Agreements which has made far reaching recommendations which we have started implementing,” noted the Chairman of the Board of Directors, Vivienne Yeda.

    The task force unearthed how Kenya was getting ripped off by IPPs.

    Electricity consumers in Kenya have been paying heavily for the weakening shilling, the latest review of Power Purchase Agreements (PPAs) shows.

    The report by a presidential task force to look into power deals between Kenya Power and Independent Power Producers (IPPs)  shows the country is paying Sh31 more per dollar for a deal entered when the US currency was trading at Sh72 in 2001.

    ”Most of the PPAs executed between the off-taker and IPPs in the country are denominated in foreign currency,” the detailed report reads in part.

    According to the task force set up by President Uhuru Kenyatta, the government bears the responsibility to make dollars or euros available, while the off-taker covers any exchange rate fluctuation risks as well as inflation, by passing the additional cost to the consumer.

    For instance, Tsavo Power signed a dollar-denominated power agreement with Kenya Power in 2001. The currency was trading at Sh72. Today, the dollar is trading at a high of Sh111, Sh29 more.

    The deal between the two companies, however, expired last month.

    Rabai Power on other hand is now earning at least Sh22.40 more per dollar for the deal signed in May 2010 when the US dollar was trading at 107.63.

    The contract which expires in May 2030 means the power producer is likely to reap more as the shilling slides further against the US dollar. The shilling was trading at Sh111 on Monday.

    Ormat is also under the same exchange program.

    Kenya Power is currently forced to shoulder an extra Sh7.60 per dollar to repay the power producer. This is likely to increase as the shilling further drops against the greenback.

    According to the report which is now under implementation stage, the life of a PPA averages 20 years and the exchange rates between the Kenya shilling and the US dollar/Euro is bound to change significantly over the twenty (20) years.

    The task force has recommended renegotiation of some of the power deals, suspension of expensive ones, and termination of ongoing negotiations.

    The report calls for a need to develop locally denominated PPAs to promote use and adoption in local power contracts.

    ”The Taskforce recommends that all future PPAs should be denominated in Kenya Shillings. Stability of local currency will enhance bankability of projects,” the report reads.

    It adds that a monetary policy implementing agency will be required to ensure stable macroeconomic stability to avoid fluctuations in the local currency and erosion of the real value of money.

    ODM leader Raila Odinga has called on the government to review contracts between Kenya Power and independent power producers (IPPs).

    Speaking in Naivasha yesterday after a meeting with local leaders, Raila said the only solution in addressing the high cost of electricity in the country lies in reviewing all power contracts between the utility company and the independent producers.

    The former premier accused the independent power suppliers and unnamed individuals of fleecing the country through expensive deals signed in unclear circumstances.

    Part of the recommendations in the John Ngumi led report by the, Presidential task-force on Power Purchase Agreements is that power purchase agreements with especially both diesel and renewable energy producers is that their tariffs should match Kengen tariffs.

    Matching Kengen tariffs means that most of them will slash their tariffs by half. However Kengen is one of the most profitable companies in Kenya and in the region, meaning the proposal is not that bad.

  • Private vs Public Healthcare: A Sh150K Misdiagnosis Ended Up Costing Only Sh9K In A Public Hospital To Treat Infant

    Private vs Public Healthcare: A Sh150K Misdiagnosis Ended Up Costing Only Sh9K In A Public Hospital To Treat Infant

    Well the bigger debate in healthcare has always been where the best care/treatment comes from between the public and private hospitals. The decision is however settled in accordance to one’s financial might.

    As for the middle class, private hospitals is their ideal place to seek treatment and for the poor, the public hospital is their immediate remedy. Some have argued that in public hospitals one gets the ideal diagnosis, treatment even if the personnel might is feeble, this is attributed to the hospitals not being overdriven with profit making decisions.

    This is unlike private hospitals which are profit driven and doctors are notorious for recommending unrelated tests and drugs just to boost sales and earn commissions.

    Kenyans will have different opinions about the best and ideal healthcare. Nyandia, a young mother has come out to give a story about seeking treatment for her child in a confession that has elicited a debate and opinions from many online.

    Her child was misdiagnosed with bad bacterial pneumonia at Getrudes Hospital and billed Sh150,000 before admission. Unable to raise the requested deposit, she transferred the sick baby to Nanyuki Hospital, a public facility, where she ended up paying only Sh9,000 after 9 days in hospital.

    https://twitter.com/nyandia_g/status/1451861392584232965?s=21

    The middle class in their comfort zones of premium health insurance covers and a doorstep away from private hospitals, have never been loud in advocating for better public healthcare. Quality and affordable healthcare should be accessible to all. If leaders and Kenyans can unite and push for standardized healthcare then we would see less of medical fundraising and a healthier nation.

    https://twitter.com/nyandia_g/status/1451861764170203136?s=21

    The thread by Nyandia elicited reactions with Kenyans sharing their experiences:

     

    MKUNDE: GETRUDEs is a NO for me too .kept misdiagnosing my then 2 year old daughter and giving her the same medication with no progress. Three visits and nothing was solved.

    FRANK: My wife gave birth in a public hospital through CS in 2018. NHIF paid for everything, and on top, she was given 9k by the Oparanya government. 3k each month. Plus some baby clothing.

    KENNETH: My wife experienced a miscarriage,a private hospital demanded 25k before they could even touch her… Took her to nakuru level five and after 3 days of treatment and admission the total bill was 5500 and service was world class…I’m never going to private hospital again.

    ODONGO: There’s a misconception that the pricier the hospital (read private), the quality the service. Other than isolated cases where public hospitals do not have functional equipment and such, I’d advocate for public hospitals any day.

    MBURIA: Beautiful story, public healthcare is quite efficient and affordable only wish we had the governments back up infrastructure wise and manpower. Everything would be so smooth!

    NJOROGE: Very true on public health care …. I have seen it first hand and it works. The only downside is that public health care lacks enough resources. Public hospitals rarely give misdiagnosis …. Maternity too is number one is public hospitals.

    NAMENGE: My 2 weeks old baby was sick, took her to a private hospital in eldoret, was told he need to be placed on oxygen and I need to pay upfront of 100K, Took him to moi referral, he was diagnosed with normal cough, paid 371 shillings only. Public hospital is the best.

    MASINDEH: My baby boy was born preterm @27 weeks weighing 600g spent two months at MTRH mother and baby unit bill was 180k which was paid by Linda Mama! The services were world class. Juzi nikajipeleka mediheal Eldoret for five days bill was 250k and i was just on antibiotics!

    FN: Due to economics of scale the doctors in public hospitals have more experience ( they see an average of 100 patients a day) than in private , private hospitals often hire young doctors to limit opex.

    KIMANI: 10 yrs ago while having our first born my wife was suffering from Severe PET. The baby had to come preterm at 28 wks. At Agakhan the est. bill was 1.5m, I was asked to deposit 600k before anything. A doctor friend advised us to go to Knh. 2.5months later nhif paid our 170k bill.

    FRED: I long for The day the general public realises how much they are fleeced in private hospitals.

     

  • Impacts of counterfeiting on GDP and Foreign Direct Investments

    Impacts of counterfeiting on GDP and Foreign Direct Investments

    Countries across the globe including Kenya are grappling with efforts to stem the counterfeiting menace which has seen a myriad of fake products flooding the markets.

    Kenya for instance has heightened it’s efforts through creation of authorities whose sole responsibility is to curb the vice and bar it’s negative impacts on consumers and the country’s GDP.

    Findings by various researchers show that the scale of counterfeiting and piracy is large across the globe and it’s expected to grow.

    A report compiled by Frontier for International Trademark Association (INTA) and ICC estimated that the value of international and domestic trade in counterfeit and pirated goods in 2013 was $710 -$ 917 Billion. In addition to this, the global value of digital piracy in movies, music and software alone in 2015 was $213 Billion.

    The figures also translated to wider economic costs associated with the effects of counterfeiting and piracy on the displacement of legitimate economic activity.

    These estimates also provide a starting point for inferring fiscal losses regarding the impacts of counterfeiting and piracy on Foreign Direct Investment (FDI) and crime.

    This means that counterfeiting has significant effects in the job market where it displaces legitimate economic activity. For instance in 2013 about 2.6 million job losses was as a result of the crime with the figure still projected to hit between 4.2 to 5.4 million by 2022.

    The researchers applied econometric model which further estimated impacts of changes in the intensity of counterfeiting and piracy on economic growth which was worth between $30 Billion to $54 Billion in 2017 for the 35 OECD countries also still stands to rise.

    The report also projects that the value of trade in counterfeit and pirated goods could be as high as $991 Billion by 2022.

    This is because any market with serious influx of counterfeit goods will support the wider black market, will experience lost genuine employment, discouraged innovation, lost foreign investment and lost tax revenue and reduced economic activities.

    And the perpetrators behind this vice have also continued to up their game by faking genuine products as authorities and innovators struggle to curb the menace.

    In Kenya alone, the Anti-Counterfeit Authority estimates that one in every four products sold in local markets is fake and more than four million Kenyans are using counterfeit products.

    Data from the Kenyan Anti-Counterfeit Authority National Baseline Survey also show that government spends up-to 100 billion KES in fighting the illicit trade where mining, building and construction have been hit hardest.

    Beyond the borders, the Anti-Counterfeiting Group (ACG) which has been fighting the menace for over 40 years had intended for 2020 to be a year of great celebration for it’s members but was interrupted by the arrival of Covid-19 pandemic which resulted to far more unimaginable loss, illness and heartache.

    Counterfeiting criminals and perpetrators of other forms of illicit trade sought nothing but profit from the dangers and disasters that the entire globe faced.

    This resulted to one of the world’s faceless menaces throughout the terrible period, and spread to become a criminal contagion.

    Nevertheless organizations including Kenya National Chamber of Commerce and Industry (KNCCI), Kenya Association of Manufacturers (KAM) and Kenya Private Sector Alliance (KEPSA) have continued to voice their concerns against counterfeiting and piracy which are eating into effective and profitable trading for businesses in Kenya.

    KNCCI in recognition to efforts by Kenya Bureau of Standards (KEBS) which is branding products with a standard check mark is re-affirming it’s commitment to enhance consumer health, protection, safety and economic interest by enforcing article 46(c) of the Kenyan laws.

     

     

     

     

     

  • Fuel Prices Scaled Down

    Fuel Prices Scaled Down

    Energy and Petroleum Regulatory Authority (EPRA) has reduced pump price for a litre of diesel and super petrol by Kshs. 5 while a litre of Kerosene will retail at Kshs. 7.28 cheaper beginning midnight.

    In the monthly fuel review announced on Thursday, EPRA said it will continue to tap the Petroleum Development Levy to ease fuel prices even though landed cost of imported fuel rose during the period.

    Average landed cost for imported super petrol rose by 1.71%, from $548.36 per cubic metre in August 2021 to $557.74 in September.

    Landed cost for diesel also rose 3.1% to $504.68 from $489.51 per cubic metre while landed cost for kerosene reduced by 4.1% to $477.75 per cubic metre from $498.19 recorded in August.

    “Despite the increase in the landed costs, the applicable pump prices for this cycle have been reduced. The Government will utilise the Petroleum Development Levy to cushion consumers from the otherwise high prices,” said Kiptoo Bargoria, EPRA Director General.

    For a litre of super petrol, diesel and kerosene, consumers in Nairobi will pay Kshs. 129.72, Kshs. 110.60 and Kshs. 103.54 respectively.

  • Treasury moves M-Akiba away from NSE to the Central Bank

    Treasury moves M-Akiba away from NSE to the Central Bank

    Summary

    • The latest policy shift is intended to revive the performance of the debt instrument, which was launched in June 2017 to deepen the Treasury bond market and promote financial inclusion.
    • Under the initial arrangement, the Central Depository and Settlement Corporation (CDSC) was tasked with being an issuing and paying agent for M-Akiba on behalf of the government, while the NSE was in charge of facilitating the online trading of the bonds through its systems as well as providing customer service support through a helpline.
    • Regionally, the Dar es Salaam Stock Exchange is seeking to engage the Ministry of Finance and Planning for the development of micro-savings products.

    Kenya’s National Treasury has shifted the issuance of its mobile-based government bond programme, known as M-Akiba, to the Central Bank, away from the Nairobi Securities Exchange and the Central Depository and Settlement Corporation.

    This is after the failure of the initial retail bond due to poor timing, low understanding of the product and weak customer care practices that led to under subscription.

    The latest policy shift is intended to revive the performance of the debt instrument, which was launched in June 2017 to deepen the Treasury bond market and promote financial inclusion.

    “We want M-Akiba to be spearheaded by our fiscal agent, which is really our intention. We want them to be the primary issuer of this instrument. The Central Bank of Kenya (CBK) has better infrastructure, they have better capability and it sits well in the context of financial inclusion, of which the bank is also supportive,” Haron Sirima, a director-in-charge of public debt management at Treasury, told The EastAfrican in an interview last week.

    “We have not abandoned it, but we have learnt a number of lessons. CBK would be the most appropriate entity to speak to as the primary issuer of government securities,” he added.

    Initial arrangement

    Under the initial arrangement, the Central Depository and Settlement Corporation (CDSC) was tasked with being an issuing and paying agent for M-Akiba on behalf of the government, while the NSE was in charge of facilitating the online trading of the bonds through its systems as well as providing customer service support through a helpline.

    “M-Akiba was being issued by NSE and CDSC on a pilot basis. Given the positive response we got from that instrument, we felt that it would be most appropriate for it to be issued by the CBK,” said Sirma.

    Treasury pays CBK 1.5 percent or up to Ksh3 billion ($27.27 million) in fees for each amount of debt raised from the domestic market through Treasury bills and bonds. When the bond was launched, the aim was that the Ksh 1 billion ($9.09 million) on offer would sell out. It even allowed for a green shoe option to expand it up to Ksh 3.8 billion ($34.54 million).

    Although more than 300,000 people registered on the M-Akiba platform atthe initial launch, only 5,988 purchased the bonds, totalling Ksh247.75 million($2.25 million), less than a quarter of what was on offer.

    “The objective of this debt instrument is to deepen financial inclusion. So you don’t look at its success in terms of the amount of money that you raise, but more on the coverage or number of individuals who have subscribed to the instrument,” said Sirma.

    More Kenyans are expected to participate in government bonds by investing a minimum of Ksh3,000 ($27), which is considerably lower than the Ksh50,000 ($454.54) required to invest in other Treasury bills and bonds.

    The cost of buying and selling a Treasury bond in the secondary market on a phone is estimated at 0.335 percent of the value of the transaction, excluding the mobile money transfer charges for loading or withdrawing money from the mobile wallet.

    In comparison, the cost for trading in the conventional government bond is 0.0384 percent of the value of the transaction. This comprises brokerage commission (0.024 percent), CDSC Bond levy (0.002 percent), Capital Markets Authority bond levy (0.0015 percent), Investor Compensation Fund bond levy (0.004 percent), NSE Bond levy (0.0035 per cent) and VAT on brokerage commission (0.00336 percent).

    Regionally, the Dar es Salaam Stock Exchange is seeking to engage the Ministry of Finance and Planning for the development of micro-savings products.

    In 2019, Uganda announced that Cabinet had approved the trading of government securities through mobile phones to boost savings and investment among citizens, and drive economic growth.

    Kenya’s National Treasury has decided to shift the issuance of its mobile-based government bond programme popularly known as M-Akiba to the Central Bank away from the Nairobi Securities Exchange (NSE) and the Central Depository and Settlement Corporation (CDSC).

    This is after the initial flop largely triggered by poor timing, poor understanding of the product and weak customer care practices leading to massive under subscription of the maiden retail bond.

    The EastAfrican has learnt that the latest policy shift is intended to revive the performance of the debt instrument which was launched in June 2017 with a view to deepening treasury bond market and promoting financial inclusion.

    “We want M-Akiba to be spear-headed by our fiscal agent (CBK), which is really our intention. We want them to be the primary issuer of this instrument. CBK has got a better infrastructure, they have better capability and it sits well in the context of financial inclusion of which the bank is also supportive,” Haron Sirima, a Director-in-charge of Public Debt Management at the National Treasury told The EastAfrican in an interview last week.

    “We have not abandoned it but we have learnt a number of lessons and I think again that is really where CBK would be the most appropriate entity to speak to as the primary issuer of government securities,” added Dr Sirma.

    Under the initial arrangement CDSC was tasked with the role of being an issuing and paying agent for M-Akiba bond on behalf of the government while the NSE was in-charge of facilitating the online trading of the bonds through its systems and also providing customer service support through a helpline.

    “ M-Akiba was being issued by NSE and CDSC on a pilot basis and given the positive response we got from that instrument we felt that it would be most appropriate for it to be issued by the CBK as primary issuer of government securities,” said Sirma

    The National Treasury pays CBK 1.5 percent or up to Ksh3 billion ($27.27 million) in fees for each amount of debt raised from the domestic market through treasury bills and bonds.

    According to a survey by Financial Sector Deepening (FSD) Kenya the number of retail customers purchasing the M-Akiba bonds proved to be low despite the much excitement and interest when the bond was piloted and launched on June 30 2017.

    The bond was launched with much fanfare and great hopes that the Ksh 1 billion($9.09 million) on offer would also sell out and even allowed for a green shoe option to expand it up to Ksh 3.8 billion($34.54 million) subject to investor appetite.

    Although over 300,000 people registered on the M-Akiba platform only 5,988 purchased the bonds during the official launch totaling Ksh 247.75 million($2.25 million), less than a quarter of the Ksh 1 billion($9.09 million) on offer.

    However according to the National Treasury the main objective of the M-Akiba bond is not necessarily to raise financing for budgetary support but to promote a national savings culture and enhance financial inclusion.

    “ The while objective of this debt instrument is really to deepen financial inclusion so you don’t look at its success in terms of the amount of money that you raise but more on the coverage or number of individuals who have subscribed to the instrument. That is how we measure its success rate,” said Sirma

    The idea of the mobile traded government bond was mooted in 2011 by both the National Treasury and the Central Bank to deepen and enhance financial inclusion through leveraging on increased mobile phone penetration to democratize access to formal financial systems for savings and investments.

    More Kenyans were expected to participate in Government bonds by investing a minimum Ksh 3,000.00 which is considerably lower in comparison to the minimum Ksh 50,000 ($454.54) required to invest in other Treasury bills and bonds.

    Last year (2020) the National Treasury said it would review the cost of trading in government securities to boost the uptake of treasury bonds as an avenue for savings and investments after poor performance of the M-Akiba bond.

    Yes those (cost elements) are some of the things that we need to look at but you see you can’t look at M-Akiba Bond independently from the conventional bond because it is one and the same thing any way. They are all government securities,” Sirima told The EastAfrican last year (2020).

    “You know the Public Finance Management (PFM) law requires that in raising resources through borrowing you need to look at both the cost and risk elements. So it is not appropriate to just look at the cost element independent of the risk.”

    Total cost for buying and selling a treasury bond in the secondary market through the phone was estimated at 0.335 percent of the value of the transaction excluding the normal mobile money transfer charges for loading or withdrawing money from the mobile wallet.

    On the other hand the total cost to an investor for trading in the conventional government bond is estimated at 0.0384 percent of the value of the transaction.

    This comprises Brokerage commission (0.024 percent), CDSC Bond levy (0.002 percent), Capital Markets Authority bond levy (0.0015 percent), Investor Compensation Fund bond levy (0.004 percent), NSE Bond levy (0.0035 percent) and Value Added Tax (VAT) on brokerage commission (0.00336 percent

    Regionally, Dar es Salaam Stock Exchange (DSE) is seeking to engage the ministry of finance and planning(MOFP) for the development of Micro-savings products popularly known as ‘M-Akiba bonds’ as part of its five-year (2018-2022) growth and development plan.

    In 2019 the Ugandan government announced that the cabinet had approved the trading of government securities through mobile phones to boost savings and investment among ordinary Ugandans as well as drive economic growth.

  • Sh241 Billion Unclaimed Financial Assets, UFAA Releases

    Sh241 Billion Unclaimed Financial Assets, UFAA Releases

    A base line survey report on the current state of unclaimed financial assets was released by Unclaimed Financial Assets Authority (UFAA) has revealed that the current unclaimed financial assets in the country is estimated at Sh241,105,748,942.

    The survey which was conducted to determine the number of holders and estimate the volume of unclaimed financial assets held by each holder and cumulatively across all sectors in the country, showed that the current estimated unclaimed financial asset holders who include institutions in the country is 477,112.

    Announcing the findings of the survey in Nairobi, UFAA Chief Executive Officer, Mr John Mwangi, explained that the Authority’s mandate is to bring closure to ‘lost and found’ financial assets, receive unclaimed financial assets, safeguard and re-unite the assets with their rightful owners, who at times are not aware of their abandoned treasure.

    “UFAA’s performance is based on the number of claimants re-unified. So far the Authority has collected a total of Sh20.3 billion in cash, Sh1.2 billion unit of shares, received 6,000 claims and issued Sh1 billion payouts in 2021,” said Mwangi.

    He expressed that the Financial Services Sector has the highest holding of approximately 62 per cent of the total unclaimed financial assets and the projected unclaimed financial assets over the next 5 years is estimated at Sh156 billion.

    Explaining that financial assets are declared unclaimed when there is no active involvement by users for a period of 2 years, the CEO said the unclaimed money by the Authority is invested in government securities so as to accrue interest that is channeled to unclaimed Assets Trust Fund.

    “UFAA is urging all citizens to claim their financial assets and that of relatives by dialing a short code of *361# or visiting ufaa.go.ke,” advised Mwangi.

    He said the code will help citizens find out whether they have unclaimed financial assets as an original owner or on behalf of a minor, business entity and deceased persons.

    In his remarks, UFAA Chairperson, Richard Kiplagat, announced that the Authority has introduced Unclaimed Financial Assets Management (UFAM) System that is designed to facilitate easier filing, processing and disbursement of unclaimed assets through the internet, as well as provide compliance services where UFAA can carry out audit procedures to holding institutions.

    “The re-unification process has been made easier through the self-service UFAM system to allow a claimant to search for asset, file a claim, download the required documents and track the claims,” said Kiplagat.

    The Chairperson said to favor those with no access to internet, UFAA has partnered with Huduma Kenya to make asset claiming services available in all Huduma Centers across the country.

    “Through partnership with government entities and technology companies, the Authority will continue with sensitization efforts that help target holders and claimants increase declarations to the authority and re-unification of unclaimed financial assets,” he said.

    Kiplagat further urged all institutions that are holders of unclaimed financial assets to submit reports of unclaimed finance that they hold before November 1, 2021.

  • How The State Plans To Control The Prices Of Cooking Gas

    How The State Plans To Control The Prices Of Cooking Gas

    The State will introduce price controls for cooking gas after completion of the Kipevu Oil Terminal that will have a common-user berth for handling the fuel.

    The facility, to be completed in December, will have a common user berth for Liquefied Petroleum Gas (LPG) and allow the State to issue open tender system (OTS) for gas imports, prompting the shift to control of cooking gas prices.

    Petroleum and Gas Director at the Energy and Petroleum Regulatory Authority (Epra) Edward Kinyua told Parliament that the industry regulator will set tariffs for handling gas at the berth.

    Under the OTS, the ministry will award one oil marketer the right to import gas in bulk every month on behalf of the entire industry, enjoying huge discounts, like is the case with diesel, petrol and kerosene.

    Lack of a common-user State facility at Kipevu has locked out firms from handling cooking gas imports at the Port, with only one company handling over 90 percent of the LPG shipments.

    “We are in the process of looking at how to introduce pricing controls for LPG. Regulation of the LPG prices needs common user facilities under the government and the good thing is the upcoming facility at the Port,” Mr Kinyua told Parliament.

    Construction of the Kipevu Oil Terminal started in 2019 and the facility will upon completion have the capacity to handle four vessels of up to 100,000 metric tonnes and an LPG line.

    The terminal will supplement the two aging facilities in Shimanzi and the old Kipevu terminal that are small to handle large quantities of imported oil and gas.

    Price controls for LPG will be similar to the one that currently applies to petrol, diesel and kerosene. The shift to price control regime would ensure affordability of LPG and boost its consumption.

    LPG prices hit a six-year high from July after the Treasury reintroduced a 16 percent value added tax (VAT) on the commodity.

    The 13-kilogramme gas has averaged Sh2,400 while the six-kilogramme model is averaging Sh1,300 after Parliament re-introduced the tax amid opposition from lobbies who wanted it delayed in the wake of the Coronavirus-induced economic meltdown.

    LPG is the second most used cooking fuel in Kenya, with 23.9 percent of households behind firewood that is used by 55.1 percent.

    The price of the commodity is set to rise further next month on the back of a surge in global prices for butane and propane—the by-products of crude oil used in the manufacture of LPG.

  • Broke: NHIF A Risky Insurance Cover, Auditor General Warns

    Broke: NHIF A Risky Insurance Cover, Auditor General Warns

    It’s a bleak future for Kenyans as the National Health Insurance Fund goes broke and may not meet its obligations if there is no turnaround on its financial fortunes.

    A new report by Auditor General Nancy Gathungu speaks it all, indicating that the national health insurer has a funding gap of over KSh3.6 billion. The fund’s performance has dropped compared with the financial year 2017-18 when it earned an extra KSh295 million.

    “The fund’s performance is on a downward trend and if strategies are not in place to reverse the trend, the fund is likely to experience financial difficulties in future,” Gathungu warned.

    The deficit resulted in a reduction of the fund’s earnings from KSh23 billion it posted in the year ending June 2018 to KSh19 billion in the year ending June 30, 2019. NHIF’s performance has been a cause of concern for many leaders, with calls to the government and the fund management to get a lasting solution.

    During the NHIF membership registration drive in Mombasa in July, ODM leader Raila Odinga decried the situation of the fund failing to meet the hospitalisation needs of Kenyans. The former Prime Minister lamented that a number of Kenyans were avoiding going to hospitals because they fear the costs associated with the services.

    “With the current pandemic, hundreds of Kenyans have died simply because they could not afford hospital fees. The chance of a greater segment of our population dropping dead from illness is one infection away,” Raila said.

    “This burden needs to be taken away from the necks of our people. Kenyans are crying for and deserve insurance subsidies that come with both in-patient and outpatient needs in hospitals,” he said.

    The challenges with NHIF have been cited to slow down President Kenyatta’s Universal Health Coverage plan, which is among the pillars of his Big Four agenda. The UHC dream has yet to succeed despite its roots being traced to the Narc government in the botched amendments to the NHIF Act by then Health Minister Charity Ngilu.

    The NHIF management has attributed the fund’s loss-making woes to the fact that millions of Kenyans have left their accounts dormant as only 5.1 million accounts are active out of the registered 10.4 million.

    Chairman Lewis Nguyai, in pushing for individuals to activate their accounts, once told a meeting in Nairobi that NHIF pays KSh2 for every shilling received by a member.

    MPs are currently processing a bill that is hoped would remedy some of the stumbling blocks to the UHC agenda. The NHIF Bill, 2021, seeks to provide that the national and county governments be liable contributors for all public and state officers under a National Health Scheme.

    Private employers would also be required to top up their worker’s contributions to ensure the total amount is not less than KSh500 in effort to raise more cash. The proposed law currently before the Senate also sought to stage mandatory registration for persons who have attained 18 years.

    Away from the concerns that the insurer is cash-strapped, the auditor has flagged some transactions pointing to possible loss of cash. Among those flagged is KSh1.4 billion that was paid for the drawings and design of a proposed resource centre which was to be built in Karen.

    The project is yet to start 15 years later following a land row, whose resolution remains uncertain because of a court case. Gathungu said taxpayers forked an extra Sh3 billion in the construction of a multi-storey car park operated by the fund.

    The project commenced in 2003 at KSh909 million but was completed in June 2011 when the total expenditure was KSh3.9 billion – being 337 per cent more than the original contract sum.

    “The costs escalation was not justified. Although the issue has been discussed by the Public Investment Committee, no action has been taken on the committee recommendations,” Gathungu said.

    PIC had recommended that the director of Ethics and Anti-Corruption Commission investigate the project with a view to preferring charges against those found culpable of any infractions.

    NHIF has also been put on the spot over a KSh340 million loan it advanced to the Moi Teaching and Referral Hospital at an interest rate of three per cent. “However, the loan was not supported with a signed loan agreement between the fund and MTRH,” the auditor said.

    Also of concern is KSh54 million in Consolidated Bank for which no dividend has been paid, with the auditor saying the investments in the bank’s shares are impaired.

  • 1pc minimum tax unconstitutional, High Court rules

    1pc minimum tax unconstitutional, High Court rules

    The High Court has declared the minimum tax, which was to be levied on small businesses at the rate of 1% of turnover, unconstitutional and stopped its implementation.

    In his ruling, Justice George Odunga also issued orders barring the Kenya Revenue Authority (KRA) from further implementing or enforcing the provisions of section 12d of the Income Tax Act, which states that “where a person’s Instalment Tax payable is lower than the Minimum Tax, then the Minimum Tax shall be payable.”

    The move has offered reprieve to businesses who had decried heavy taxation.

    In April this year, the High Court in Machakos granted conservatory orders restraining the KRA from enforcing provisions of the minimum tax pending the hearing and determination of a petition challenging it that had been filed in court.

    The minimum tax was introduced under the Finance Act 2020 and was effective from January this year, charged at the rate of one per cent of the gross turnover of a business.

    A petition filed by Kitengela Bars Association had sought to declare the implementation of the tax as unlawful and unconstitutional.

    On Monday morning, the High Court declared provisions of the minimum tax, unconstitutional and the minimum tax guidelines void.

    Justice Odunga ruled that minimum tax has the potential of subjecting Kenyans to double taxation and also unfairly diminishes capital for those making losses while businesses making profits the capital base are unaffected.

    He ruled that minimum tax should be precise and should only target the intended.

    The move has been welcomed by business owners who say implementation of the minimum tax would have had a devastating impact on businesses that are already reeling from the effects COVID-19.

  • Kenya pays Sh1.7bn to bag foreign loans

    Kenya pays Sh1.7bn to bag foreign loans

    The Controller of Budget (COB) Mrs. Margret Nyakango has flagged the National Treasury for Sh1.65 billion paid to secure future loans arguing that borrowings should now be cancelled to ease the burden of payment on taxpayers.

    The amount is paid as commitment fees charged on borrowers for credit that has not been advanced as a way of guaranteeing that a lender will keep the funds. Nyakango told Parliament that the loans are being sought to undertake 17 projects including road construction,  expansion of Jomo Kenyatta International Airport (JKIA), power connections and construction of a dam to smoothen water supply to Nairobi and road construction.

    Treasury headed by CS Ukur Yatani paid the fees for loans to Chinese, Japanese and European banks at the end of June piling pressure on the country’s bulging debt which now stands at more than Sh7 trillion.

    Nyakango’s red flag on loan applications comes at a time Kenya’s maturing debt has piled pressure on the country’s expenditure plans and sliced funds meant for development projects.

    “We recommend that these loans should be cancelled and this will reduce the loan book balance and consequently save taxpayers payments on the commitment fees,” Nyakango said.

    Controller of Budget Margaret Nyakango [p/courtesy]
    Her call also comes after Yatani’s docket had committed Sh225.08 million to secure  loans meant for funding the installation underground power transmission lines in up market estates of Westlands, Kileleshwa, Riverside and Parklands. The Treasury also committed Sh21.447 million to secure loans for construction of a second runaway at the JKIA.

    But on top of the list are fees to secure loans for an underground electricity transmission line to State House, Ngong Road and neighboring areas at Sh393.8 million and Sh304.58 million for construction of the second phase of Ruiru dam.

    Mrs Nyakango blamed the ineptitude of government agencies tasked with implementing the projects as the reason for the hefty commitment fees as she urged the State to ensure all projects are executed shield Kenyans from losing funds.

    Commitment fees hugely contribute to the fees the country’s growing loan repayment burden. More debts are also falling due to deficits in the  budgetary allocations as the pandemic continues to ravage the economy.

    Kenya secured deals to suspend debt service with rich countries and other creditors including China in January and has budgeted Sh1.169 trillion which is 36.6% towards debt repayment in the year to June. The amount represents the highest component of spending for the financial year.

     

     

  • Kenya Power Has Paid Sh90bn To Private Electricity Producer Since 2010

    Kenya Power Has Paid Sh90bn To Private Electricity Producer Since 2010

    NAIROBI, Kenya, Sep 15 – The government has paid Sh90 billion to electricity generator Rabai Power since singing a Power Purchase Agreement (PPA) with Kenya Power, the sole electricity distributor, in 2010.

    While appearing before the National Assembly Committee on Energy, Rabai Power Finance Manager Zablon Okwoku revealed that the company charges Sh8 per kilowatt as a variable charge excluding fuel and other related costs.

    The meeting was convened by lawmakers who expressed concern over the amount charged by Rabai Power saying Kenya Electricity Generating Company (KenGen) which produces about 75 pe rcent of electricity consumed in the country, is much cheaper.

    “Energy charge is 0.0063 Euros per kilowatts hour, excess starts are 394 Euros per start, and the fuel charge varies from time to time between Sh8-12 per kilowatt hour,” Okwoku said.

    He was hard pressed by members of the committee led by Garissa Township MP Aden Duale to explain why the company received Sh2.6 billion capacity charge from Kenya Power in the 2019/2020 financial year.

    “You are paid 2.6 billion shillings even in the previous years. Why were you paid that money? You are paid that money and what Kenya Power does is that it transfers that payment it has given you to the ordinary Kenyan’s bill. This is why electricity bills are very high in this country,” Duale stated.

    His sentiments were echoed by Gem MP Elisha Odhiambo who termed the 20-year deal between Kenya Power and Rabai as “total theft.”

    “Why would you keep fuel and wait to give back fuel when you are closing the plant? It looks like there is an insider business in this company. Capacity charge is hot air because they are paid for supplying nothing,” Odhiambo retorted.

    In his defense, Okwoku said capacity charge is a fixed charge that is provided for in the PPA framework.

    In the Power Purchase Agreement, Rabai Power is expected to supply electricity to the Kenya Power for 20 years ending in 2030 then give its thermal plant back to the country’s electricity distributor.

    Okwoku added that the agreement is an investment that is expected to make profit through interest

    “It is just like a loan. If you take a loan, you must pay it back, in installments, principle plus interests. Then after 20 years, Kenya Power will repossesses the plant,” he said.

    Duale however interjected arguing Rabai Management was taking the arrangement as a favour yet the government provided the land where the plant sits on and pays for fuel security storage.

    Rabai is ranked as one of the most expensive suppliers of electricity to Kenya Power, a situation which has been linked to skyrocketing electricity bills in the country.

    With the hiked fuel prices in the September-October review, electricity bills are set to soar signaling tough economic times in the country.

    The Energy and Petroleum Regulatory Authority Tuesday hiked pump prices by Sh9.5 average.

    EPRA announced the pump prices for super petrol, diesel and kerosene would increase by Sh7.58, Sh7.94, and Sh12.97 per litre respectively in Nairobi.

    In Nairobi, super Petrol, diesel, and kerosene will sell at Sh134.7 Sh115.6, and Sh110.8 respectively.

    After a long back and forth debate between the MPs and Okwoku, the committee resolved to request for Rabai’s financial audit and invite Kenya Power officials to explain why it committed to such an expensive agreement with a company whose shareholders are majorly foreigners.

  • Sh.165million Legal Fees That’s Endangering Kenya Pipeline Company (KPC).

    Sh.165million Legal Fees That’s Endangering Kenya Pipeline Company (KPC).

    Payment of Sh165 million to lawyers handling several cases relating to the new Sh48 billion oil pipeline has put KPC on the PIC spotlight. 

    The KPC has paid four top law firms the money to represent it in a case involving Sh4.4 billion that a Lebanese contractor is demanding for operational delays in the building of the Mombasa-Nairobi pipeline.

    Zakhem International Construction (ZIC) filed a case in the High Court in 2019 against KPC following a dispute that arose on the contract signed between the two parties. The case was initially progressed by a consortium of two firms, Robson Harris & Munga Kibanga but the High Court issued a partial award to ZIC in June 2020 for $44 million (Sh4.4 billion) for four extensions of time (EOT) claims. As a result of the court award of Sh4.4 billion to Zakhem, KPC hired legal services to mount a stay of execution pending appeal and subsequently engaged senior lawyers to strengthen its case against the Sh4.4 billion award.

    According to documents tabled before PIC by Alex Gitari, the KPC managing director shows that the State Corporation hired Ngatia and Associates, Kihara and Wyne Advocates and MMA Advocates LLP to back up the consortium of Robson Harris and Munga Kibanga.

    The consortium had filed three cases against the Zakhem award. As a result, KPC has so far paid the consortium of Robson Harris and Munga Kibanga Sh128.4 million while Ngatia and Associates has pocketed Sh15.98 million.

    Kihara and Wyne Advocates has received Sh20.5 million while MMA Advocates LLP has so far been paid Sh45 million. KPA owes MMA advocates a balance of Sh45 million.

    The law firms filed three applications at the High Court to stay the execution pending appeal and subsequently, the filling of a substantive Appeal against the precipitate award.

    “The company in a bid to strengthen its legal representation engaged a Senior Counsel (Bobson Harris & Munga Kibanga) who took over the cases but left in January 2021 forcing KPC to engage another firm, M/s Kihara & Wayne who are currently on record for KPC for all ZIC matters that stemmed from the initial suit filed by ZIC,” Mr Gitari said.

     

  • No Insurance Covers for Modified cars now.

    No Insurance Covers for Modified cars now.

    Thousands of motorists face cancellation of insurance covers as underwriters intensify a crackdown on modifications said to be compromising the safety and performance of their vehicles.

    Common alterations that may put vehicle owners in trouble include engine tuning, fitting alloy wheels, height spacers and other modifications meant to reduce the risk of theft or vandalism.

    Several underwriting firms are already turning away those with modified vehicles — leaving motorists in limbo since the law prohibits them from driving uninsured cars.

    UAP Insurance Company on Monday informed its customers that it would no longer insure vehicles that have been modified from using petrol or diesel to liquefied petroleum gas (LPG).

    The insurer said some of the modifications have been done without authorisation from the car manufacturers, raising questions on the safety of such vehicles.

    “Such modifications lower safety precaution standards and aggregate our exposure to liabilities in case of an accident,” said George Odinga, UAP Insurance general manager for underwriting and reinsurance.

    “We have therefore taken a decision not to onboard or renew cover for any vehicle with such modification done without manufacturer’s approval.”

    The National Transport and Safety Authority (NTSA) had in report ruled out any increased risk of fire when it licensed LPG-operated vehicles.

    But UAP has instructed its valuers to be highlighting such modifications in their valuation reports so that the underwriter decides whether it is a risk worth taking.

    “The modification has completely changed the risk from a standard motor vehicle risk to the level of a tanker on the road carrying LPG— highly flammable,” said Mr Odinga.

    The development is a blow to several companies and hundreds of garages that have been earning revenue from modified vehicles to satisfy customers’ preferences for increased comfort, higher efficiency, and distinctiveness.

    Laurence Okulo, a proprietor at Frigate Motors, said he had witnessed a rise in demand for conversion of engines and face-lifting of vehicles.

    “We charge as from Sh150,000 on modifications but it could go as high as Sh500,000 or Sh1 million depending on the extent of modification as customers seek high performance and trendy look,” said Mr Okulo.

    Modifications or customisations are added parts that do not come from the factory, also referred to as aftermarket.

    Insurers nonetheless concede that some changes, like some engine modifications, maybe impossible for many people to detect. Some insurers in markets such as Europe require owners to apply for modified car insurance— a type of insurance that covers modifications to a vehicle.

    However, many Kenyan insurers argue that modifications are making it hard to determine the risk profile of vehicles and therefore almost impossible to pick the right level of premiums.

    ICEA Lion General Insurance senior motor assessor Peter Mzungu said insurers now have to insert modifications as exclusions in vehicle insurance contracts to avoid disputes with customers.

    “Any kind of modification from manufacturers’ specification is prohibited unless the insurer is notified in writing so that they can weigh the risk and decide whether to take it or not,” said Mr Mzungu.

    He said that manufacturers assemble features that are safe for operations but modifications such as the use of facelifts, spacers, and spoilers are interfering with this.

    “A vehicle’s centre of gravity (COG) is well designed during manufacturing to ensure the safety of use. The minute you put in spacers, you increase COG and thereby make the vehicle very unstable on the road,” said Mr Mzungu.

    The instabilities, he said, could mean higher chances of accidents and therefore higher claims.

    Underwriting losses from insuring motor vehicles jumped by 126 percent to a record high of Sh6.86 billion in 2019, with private vehicle insurance returning losses for the eighth running year. The loss softened to Sh5.44 billion last year helped by Covid-19 travel curbs.

    The loss softened to Sh5.44 billion last year, helped by Covid-19 travel curbs.

    Mr Mzungu said minor changes such as replacing safety belts of one vehicle model with advanced ones meant for another could mean the belts failing to deploy correctly in case of a collision, enhancing the risk of fatalities.

    Other facelifts such as putting high valued radio are also seen as increasing the total value of the vehicle and increasing the risk for theft.

    “Unless there is a commensurate increase in insured value, the risk of insurers receiving fewer premiums for a high-valued vehicle is high,” said Mr Mzungu.

    Insurers are also concerned that the modifications mean that manufacturers cannot take any responsibility in case it backfires, exposing the general public to risks such as an accident.

    [BD]

  • The Revised University of Nairobi Fee Structure To Tale Effect Starting September

    The Revised University of Nairobi Fee Structure To Tale Effect Starting September

    All new students joining the University of Nairobi (UoN) should brace themselves for tough times as the administration moves to effect the new fee structure starting next month.

    UoN Deputy Vice Chancellor (DVC) Academic Affairs, Prof Julius Ogeng’o said the revised administrative charges will apply for all first year undergraduate and postgraduate students who report from September 20.

    “This is to inform all students that the revised fee schedule will be implemented with effect from commencement of the 2021/2022 academic years,” said Prof Ogeng’o, in a circular dated August 24.

    He also said that the revised schedule if academic fees will apply only to self sponsored first year undergraduate and postgraduate students reporting on the same dates.

    However, he said that the revised administrative and academic fees will not apply to continuing students in second, third, fourth, fifth and sixth years. “For these students, the fees with which they were first registered will subsist.”

    UoN vice chancellor, Prof Stephen Kiama said has that the university has received a record high of 6407 students, which was more than the declared capacity.

    He said the university Senate met and approved all student admissions placed in the 61 undergraduate programmes at the university.

    Appropriate measures

    “The Senate observed that the Kenya Universities and Colleges Central Placement Service placed more students than declared capacity in several of our programmes but agreed to take appropriate measures and ensure that all students are accommodated into their programmes of their choice,” said Prof Kiama in a virtual address to the UoN community on admission and orientation of first years.

    The new students are expected to receive joining instructions and lectures to begin on October 4.

    The university has also said the admissions of students who had initially been placed by KUCCPS or admitted in the last two years are still valid and have since been urged to register and report on September 20.

    Last month, UoN students protested against fee increments, terming it as unacceptable and wrong move.

    However, the university defended its move saying it was no longer tenable to run the institution with the current fees.

    The administration also stated that it has not been revised fees in the last over 10 years despite the changing needs of the industry in addition to every course having its own costs.

    Similarly, the university said it has had to scrap off some courses off because they have attracted fewer admissions over the past few years.

    The university more than doubled fees, in what has also been considered a move to ease the raging cash crunch, attributed to reduced student enrollment.

    Kenya National Bureau of Statistics (KNBS) report indicated that enrolment at UoN dropped from 98,715 in 2016 to 62,963 in 2020, an accumulative drop of about 36.2 per cent.

    The university increased fees for Master’s courses like communication and MBA to more than Sh600,000 for a two-year programme from an average Sh275,000.

    On the other hand, degree courses like commerce, economics and law under the Module II have been increased by up to 70 percent to about Sh1 million for the four years.

    The fee increment is despite the Ministry of Education directive suspending all universities increment plans, shelving it to next year.

  • Parliament rejects poverty eradication Bill

    Parliament rejects poverty eradication Bill

    The National Assembly has shot down a Bill that intended to establish an exclusive fund to fight poverty in Kenya, arguing that treasury already has the Biashara Fund which is a merger of all existing State-backed funds to eliminate poverty.

    Parliament’s Finance Committee claimed the Poverty Eradication Authority Bill, 2020 was a duplication of what other state agencies had been established to do including Uwezo Fund, Women Enterprise Fund, the Youth Enterprise Fund, and Equalization Fund which are all meant to stem poverty.  The National Treasury Treasury and the State Department for Labour and Social Protection also opposed the enactment of the Bill.

    “The proposed Poverty Eradication Fund should be incorporated in existing funds for efficiency and minimisation of duplication of functions within the public sector,” Ms Gladys Wanga, Chair of finance committee said.

    The unpopular Bill was sponsored by Sirisia MP John Waluke who was pushing for the formation of Authority to coordinate national economic empowerment and poverty reduction agenda through Poverty Eradication Fund.

    The Bill proposed that the creation of the authority would replace the Poverty Eradication Commission which ended on May 26, 2015, as it was recommended by the National Assembly’s Budget and Appropriations Committee (BAC) report in 2013/14 financial year.

    Poverty in Kenya has been fought with mixed success through various programs, education and health initiatives over time but its reduction and eradication has remained complex.

    By 1981 Kenya’s poverty was “officially” estimated at 48% and 51% in 1997 after a more credible survey from the Welfare Monitoring Survey and the 2005/6 Kenya Integrated Household Budget Survey which presented a 46.6% poverty headcount.

    The data was the updated in 2015/16 which remains the country’s most recent official poverty data where overall poverty headcount fell from a CPI-adjusted 46.8% in 2005/06 to 36.1% in 2015/16.

    Meaning the headcount fell from 16.6 to 16.4 million while extreme poverty dropped from 19.6% to 8.6% during the period and food poverty from 44.4 to 32%.

     

     

     

     

  • High Stake for Foreigners As GoK plans to increase cash threshold for foreign investors.

    High Stake for Foreigners As GoK plans to increase cash threshold for foreign investors.

    Kenya has lined up drastic changes to its investment promotion law in a bid to seal loopholes exploited by foreigners to compete with local small traders and commit crimes such as money laundering.

    Interior Cabinet Secretary Fred Matiang’i says the ministry will be seeking parliamentary approval of amendments to the law, including raising the minimum investment threshold for foreigners.

    The Kenya Investment Promotion Act requires foreigners to have a minimum of $100,000 (Sh10.92 million) to obtain an investment certificate that qualifies them for incentives such as investment deductions and tax rebates.

    Dr Matiang’i told the National Assembly’s Committee on Administration and National Security that the current minimum investment threshold was too low given the size of the Kenyan economy.

    The committee is investigating the deportation of Turkish national Harun Aydin, an ally of Deputy President William Ruto, for suspected involvement in money laundering despite coming in on a work permit as an investor in solar energy.

    “For a country our size and the economy of our size, we now need to be a bit more careful when we look at these kinds of things (rules for foreign investors) in future because we have learned the bitter way from some of these things,” the minister said on Friday.

    “That’s how some people can come in [including] money launderers and engage in ‘wash-wash’ (informal language for black money)… and then masquerade around as business dealers.”

    The Kenya Investment Authority (KenIvest) has proposed a flexible minimum foreign investment threshold, depending on the capital requirement of different sectors based on feedback from stakeholders during engagements that led to the development of the country’s first investment policy, launched in November 2019.

    Moses Ikiara, the investment promotion agency’s director-general, said the stakeholders wanted the minimum capital for foreigners to be tripled to $300,000 (Sh32.76 million) for capital-intensive sectors such as construction, energy, manufacturing, oil, and gas.

    Others, he added, felt that the threshold should be lowered for sectors such as ICT whose ventures may not require as much capital.

    “There are many people who were thinking $100,000 is high and were saying when people were innovating something like M-Pesa, they wouldn’t have needed that minimum capital. There are some types of businesses where you require human resources or knowledge more than capital,” Dr ikiara told Business Daily in April.

    “The thinking is to allow innovative investments that are not capital-intensive not to be locked out.”

    The proposed legal amendments, the KenInvest chief had added, will also seek to ring-fence local investors.

    Lawmaker Mishra Swarup (the Kesses MP), a member of the National Security Committee, said the investment threshold for foreigners needed to be raised as much as ten-fold to protect small traders.

    “What’s Sh10 million for investment. It should be a minimum of Sh100 million or Sh200 million. These [foreign] investors are blocking …progress of our citizens,” Dr Mishra said.

    Kenya in June 2019 deported seven Chinese nationals found trading illegally in Gikomba, the country’s largest informal market for second-hand clothes and footwear.

    At the time, the Interior Ministry said three of the Chinese had no valid work permits while the other four were found to be in employment and other “income-generating activities” at Gikomba contrary to the terms under their respective work permit classes.

    “As soon as we amend the law and they give us a higher threshold, we will implement the threshold they give us. So, maybe as Parliament, it is now an opportunity that you have to implement what Hon Mishra says,” Dr Matiang’i told the parliamentary committee sitting in Mombasa.

     

  • Kenya Power and Ministry of Energy Might Have Colluded In Sh18.5b Heist That Taxpayers Paid​ LTWP.

    Kenya Power and Ministry of Energy Might Have Colluded In Sh18.5b Heist That Taxpayers Paid​ LTWP.

    Auditor General Nancy Gathungu in the audit report tabled to Parliament on August 5, said the Ministry of Energy and Kenya Power should be held responsible for the Ksh.18.5 billion bill arising from the Lake Turkana wind farm project.

    The two parties did not ensure a competitive process in picking a contractor for the construction of a transmission line connecting the project with the national grid.

    The Ministry of Energy granted the Lake Turkana Wind Power (LTWP) Limited, a private entity, the exclusive rights to survey the project area and wind resources and to further invite tenders on behalf of Kenya Power. The action has been established to be contravention of the now repealed Public Procurement and Disposal Act of 2005 with the Energy Ministry further failing to justify the criteria for direct procurement.

    Conflict of Interest 

    The Auditor General report flagged conflict of interest given the contracted M/s Isolux Ingenieria SA is affiliated to LTWP who is the proprietor of the wind power farm located in Loiyangalani and holds a private power purchase agreement (PPA) to sell generated electricity to Kenya Power over a 20-year period.

    The terms of the PPA require Kenya Power to pay for power from the plant irrespective of whether the output makes its way to the national grid. Under the PPA, LTWP was to finance, design, procure, construct, install, test, commission, operate, maintain and sell net electricity output exclusively to KPLC.

    KPLC on the other hand was required to evacuate all net electric power from LTWP plant once commissioned for a period of 20 years. The new transmission line connecting the plant to the grid was completed in September 24,2018, 21 months after the completion of the wind farm resulting in the accrued Ksh.18.5 billion bill in deemed generated energy (DGE) payments to LTWP.

    The huge payout arose from a 381-day delay in completion of the 428km high-voltage power line from Marsabit to Suswa sub-station in Narok, the main interchange for power from different sources.

    LTWP commissioned its 310 megawatts power plant on January 27, 2017 but the government, which built the evacuation line did not complete the works until September 24, 2019.

    “Due to delays in completing the transmission line, energy charge was not evacuated from LTWP plant resulting in accrued penalties to the government referred to as deemed generated electricity (DGE) claims amounting to Sh18,499,082,672 (euros 167,261,145) for the period January 27, 2017 to September 10, 2019,” Nancy Gathungu said in a special audit of LTWP.

    Already, the government has paid Sh10.3 billion to owners of LTWP leaving a balance of Sh9.8 billion (euros 81,577,128). “The balance (Sh9.8 billion) is to be recovered by LTWP Ltd through a tariff increase by Kenya Power and Lighting Company (KPLC) of Euros 0.00845/Kwh for the period June 1, 2018 to May 31, 2024 (DEG recovery period) and likely to be borne by the consumers,” Ms Gathungu said.

    The Auditor General queried the legitimacy of the charges given LTWP direct involvement in the procurement of the transmission line’s contractor.

    “M/s Isolux Ingenieria SA and the consultant KEMA, both who has been procured by LTWP Ltd were the key players in determining the success of the transmission line, yet LTWP Ltd was the eventual beneficiary of the delays in the completion of the project by way of the transmission line (TI) interruption DGE payments,” read part of the special audit.

    At the same time, the report stated the payments commenced without any independent review of confirm the readiness of power generation by LTWP.

    Previously, the World Bank warned of the project’s risks as it pulled out of a proposed financing deal noting the ‘take or pay’ obligation exposed Kenya Power to unacceptable high financial risk while the time proposed to put up the transmission line was inadequate. After signing a Ksh.16.9 billion contract to develop the T-line in December 30, 2011, M/s Isolux Ingenieria filed for bankruptcy on 14 July 2017 in Spain, three months after failing to meet the December 30, 2016 deadline to deliver the project.

    Despite state of Isolux Ingenieria, Ministry of Energy continued involvement of the contractor in the project amidst its financial capacity constraints.

    “There was no evidence that an independent financial and technical due diligence on the contractor before the signing of the contractor had been done.”

    The Kenya Electricity Transmission Company ( KETRACO ) stepped in to salvage the project by kicking out the contractor and picking a consortium of the Nari Group Corporation and Power-China Guizhou Engineering who completed the line on September 10, 2018.

    LTWP is owned by seven shareholders namely:

    •Aldwych Turkana Limited (owned by Anergi, an African Power Company established through the joint venture between Africa Finance Consortium and Harith General Partners of South Africa);

    •KP&P Africa B.V.;

    •The Danish Climate Fund through Investment Fund for Developing Countries (IFU);

    •KLP Norfund Investments of Norway;

    •Vestas;

    •Finnfund- the Finnish Fund for Industrial Cooperation Ltd; and

    •Sandpiper.

    LTWP is financed by a consortium of senior and subordinated lenders specifically:

    •European Investment Bank;

    •African Development Bank;

    •The Trade and Development Banks (TDB), formerly the PTA Bank

    •East African Development Bank (EADB);

    PROPARCO;

    •Netherlands Development Finance Company (FMO);

    •Deutsche Investitions- und Entwicklungsgesellschaft (DEG);

    •Eksport Kredit Fonden of Denmark (EKF);

    •Standard Bank of South Africa;

    •Nedbank of South Africa; and

    •EU Africa Infrastructure Fund (EU-AITF).

    Kenya Power currently on the brink of collapse with board wars , financial losses, blacklisted by their Donors.

  • Data Breach: Law Firm Want Radisson Blu Investigated For Invading Privacy By Leaking Guests Records To The Media

    Data Breach: Law Firm Want Radisson Blu Investigated For Invading Privacy By Leaking Guests Records To The Media

    When it rains, it pours. A Lawyer has filed a PIC with the data protection commissioner with regards to a potential data breach of the records of hotel guests of Radisson Blu Hotel & Residence, Nairobi Arboretum, Nairobi, Kenya (Radisson) on August 3, 2021.

    In the heat of deputy President William Ruto getting blocked from traveling to Uganda on a scandalous private visit, it emerged that in his entourage was a Turkish citizen Harun Aydin who apparently is a terror suspect. It would be later told that the Turkish has been on intelligence watch.

    Ruto has apparently brokered a deal with Turkish investors led by Aydin and a Ugandan partner to put up a COVID-19 vaccine plant in Uganda. Intelligence grabs suspected this was a full throttle money laundering scheme hence the rush to put a lid in it.

    It was later reported that Aydin had been arrested in Frankfurt, Germany, in October 2001 on charges of “having planned serious acts of violence as a member of a terrorist group with an Islamic fundamentalist background”.

    As events unfolded, it became public that Aydin had been staying in Kenya.

    24/06/2021 Turkish national Harun Aydin checked into Nairobi’s Radisson Blu Hotel, for face value he was just any other guest and maintained that low profile for weeks until Monday 2nd when he’ll broke lose and his cover blown.

    After the news broke, the businessman quickly checked out of a Radisson Blu Hotel where he had been staying since June. It was not immediately clear who checked him out.

    It emerged that Immigration officials had stormed the hotel seeking to question the man who has been linked to terrorism.

    Under unclear circumstances, a guest list from Radisson Blu Hotel detailing the profiles of guests to oust Aydin was leaked to the public through bloggers.

    It is this leakage of the guest list that included not only details of Aydin the man in focus but names, rooms and check out information of other 34 guests that is now putting the hotel in trouble. Prow & Company advocates want the hotel to be investigated and held responsible for evading privacy of guests.

    “This is insufferable, inconsiderate, contumelious, and opprobrious behavior that wanton to disregard the privacy of hotel guests in Kenya and more specifically Radisson Blu Hotel in order to score short lived perceived political wins.” Reads the letter seen by Kenya Insights.

    “We believe that this is a serious data breach by Radisson Blu Hotel and infringement of the rights to privacy of all Radisson visitors whose private details have been illegally published/leaked. The leaked information, indicates a serious non-committal or willful ignorance of the data privacy protection laws by Radisson.” Part of the letter reads.

    Coming at a time when Kenya is struggling to hold up from the consequences of the pandemic that has slammed the economy, the firm raised a concern on the effects a move like Radisson’s would have on tourism. “The ministry of tourism and Wildlife should treat this matter as a serious national threat to the already ailing tourism industry.” It states.

    “It cannot be gainsaid that the duty of any hotel is the protection of the guest’s privacy, as it is sacrosanct expression of respect, dignity, and psychological integrity of the guests.”

    Indeed the hotel staff is obliged to discreetly protect the guests’ and private data through limited access to the cupboard at the reception desk, inserted passwords on their computers, guests’ data inaccessibility by the unauthorized persons, avoid loud pronouncing of the guest room numbers at key delivery and not revealing name of the guest, address and room number. As such, any information leak connotes serious connivance on the part of the staff and third parties. Imagine a situation where your hotel information is availed to your enemies who won’t hesitate to cause harm? The eventualities are unimaginable.

    The Constitution of Kenya guarantees the right to privacy as a fundamental right. To give effect to this constitutional right under Article 31(c) and (d), the Data Protection Act, 2019 (‘the Act’) was enacted and came into effect on 25 November 2019. The Act has been implemented and progress towards implementation started in November 2020 with the appointment of the Data Protection Commissioner (‘the Commissioner’). As of the date of publication, the Office of the Data Protection Commissioner is in the process of setting up operations. A key action the Office of the Data Protection Commissioner has taken, through the ICT Advisory Committee on COVID-19, was the development of the Guidance Note on Access to Personal Data During COVID-19 Pandemic (‘COVID-19 Guidelines’). The COVID-19 Guidelines were put out for public and stakeholder participation on 12 January 2021, and closed on 9 February 2021. Upon implementation, the COVID-19 Guidelines are expected to provide a policy guidance on processing personal data to actualise responses to and research on the COVID-19 pandemic.

    Harun Aydin on anti-terror Police custody.

    On 15 January 2021, the ICT Cabinet Secretary appointed the Taskforce for the Development of the Data Protection General Regulations, with a term of six months, whose mandate includes development of the data protection regulations, auditing of the Act, identification of gaps or inconsistencies in the Act, and proposing any new policy or legal and institutional framework that may be needed to implement the Act, as well as other tasks related to the full implementation of the Act.

    The constitution of Kenya 2010 provides at article 31 ‘that every person has the right to privacy, which includes the rights not have-(a) their person, home or property searched; (b) their possessions seized;(c) information relating to their family or private affairs unnecessarily required or revealed or (d) the privacy of their communication infringed.

    The Data Protection Act of 2019 which was assented to by the President of the Republic of Kenya on 08 November 2019 (the “Act“).

    The Act brings into play comprehensive laws that protect the personal information of individuals. It establishes the Office of the Data Protection Commissioner, makes provision for the regulation of the processing of personal data, provides for the rights of data subjects and obligations of data controllers and processors.

    The Commissioner’s office is mandated with overseeing the implementation of the Act together with establishing and maintaining a register of data controllers and data processors; receiving and investigating any complaints on infringements of the rights under the Act; carrying out inspections of public and private entities with a view to evaluating the processing of personal data; imposing administrative fines for failures to comply with the Act, amongst other functions.

    Privacy laws are more relevant today than ever before. With data crossing borders following the increased internet penetration and increased use of social media and other digital information platforms, it is becoming more important to ensure that personal data is protected, processed and used for the correct purpose. While these protection laws are (sometimes) good news for those who have data stored or transferred online, it may not be so for those who have to navigate this mass of regulation.

    The lack of a data privacy law previously has been an enormous lacuna in Kenya’s digital rights landscape. With the new law in operation, those violating the law face a maximum fine of 3 million shillings ($29,283) or two years in jail.

    ”Notably, Radisson has compounded duty of notification and communication breach under article 43 of the act which provides that, “where personal data has been acquired by unauthorized person, and there’s a real risk of harm to the data subject whose personal data has been subjected to the unauthorized access, a data control shall-(a) notify the data commissioner without delay within 72 hours of becoming aware of such breach.”

    As of the date of publication, Radisson was yet to make any public statement in respect to the open data breach that was internally orchestrated.

    The lawyer now want the hotel to be slapped with a Sh5 million fine for the breach or in the case of an undertaking, up to one per centum of its annual turnover of the preceding financial year, whichever is lower.

    The ball is now in the commissioner’s court and one of the crucial cases that will have serious ripple effect and most guest of not only Radisson Blu Hotel but larger tourism sector will be paying attention to as far as their privacy is guaranteed.

    As for Radisson guests, there’s much to worry about your privacy as of the latest developments. As the letter signs out, “press play” we await the results.