Retired soccer legend was rushed to hospital after he collapsed Wednesday while watching a football match at Toyoyo, Nairobi. Medical personnel who rushed him to the hospital said he was not breathing well amid complaints of hunger. The legend famed for ‘Kadenge na mpira’ phrase had been ailing a few weeks but got better and was discharged.
The story of the kind of life the legend is living has been told a million times, but it lands on deaf years of the government. Kenya is known for caring less about its sports legends when girlfriends and family members of sports officials are given free rides and accommodations to Olympics.
The manner in which sports are treated in this country is so biased that some benefit at the expense of others. Soccer is the biggest sport in the world, but it’s not treated with the same respect in Kenya despite the country having produced some of the best players in the region.
We are not strangers to the number of times Harambee Stars players have complained of unpaid allowances or have been on the go slow for the same reason. This has affected the performance of the national to the extent of toppling them from being a top team in Eastern Africa.
The Kenya that would hold soccer greats like Nigeria, Cameroon in the mid-nineties is no more due to poor leadership and lack of government support. The majority of Kenyan soccer players are from Western and Nyanza; the regions have no proper stadia or any good soccer facility to write home. Scouting of new talents is mostly done in Nairobi locking out many upcoming soccer stars in those parts of the world.
Not just Joe Kadenge, the entire soccer fraternity is not treated like athletics. Over 90% of the runners are from Rift Valley, that’s where scouting is done though neighboring regions like Kisii has produced good long distance runners too, Western has the potential to produce short distance runners, but the focus remains only in North Rift.
The region (Eldoret) boasts of the good sports facilities, 64 Stadium received a good face lift, in fact; Olympic trials were held there. Athletics legends have been appointed to the administration of the sport they once excelled in. The 1972 Olympic legend Kipchoge Keino who is now tainted by corruption is the chairman of Nock (National Olympic Committee of Kenya).
Kadenge is ignored and left to languish in abject poverty but God forbid the day the worst will happen, the government will rush to take care of the funeral expenses, politicians will cling on any desperate reason and tell stories to identify with the family. They will not mean any good but that will only provide a better platform for politics and opportunity to woo the community’s vote.
It’s a shame that the most celebrated soccer legend in Kenya collapsed due to hunger, he is a hustling taxi driver who recently could not afford kshs 95,000 for the eye operation and had to depend on good wishers to step on the bill.
On October 13, 2015 a major bank in Kenya closed its doors without notice, due to the unnecessary instructions from the Deputy Governor of the Central Bank of Kenya (CBK) by placing the bank under receivership and put in the administration of Kenya Deposit Insurance Corporation (KDIC), claiming the bank was trading inappropriately.
Imperial Bank Ltd (IBL) had all funds in the bank frozen leaving depositors without any access to their funds. Now 12 months later only a small amount of funds have been released to the small depositors leaving retirees, people in business and investors with no means of support.
The Imperial Bank Directors brought in a UK company to carry out a forensic investigation report; however, CBK has not made the report public!
The only information the depositors have received is from leaks within CBK to newspapers indicating bribery and corruption to the highest levels in the CBK in which it is reported key top officials in CBK were bribed to place IBL into receivership and ensure liquidation of the bank so as to hide the scandal of unsecured loans not serviced for years by IBL directors, CBK auditors & WE Tilley.
The depositors have now embarked on a campaign petitioning the President of Kenya and the Governor of the Central Bank of Kenya, requesting that they intervene in helping in the arrest of all the corrupt individuals involved in the fraud of the funds from Imperial Bank depositors including those in their own departments, the release of the forensic report, transparency of financial events and records since the bank closed its doors PLUS the full payment of the funds to the Imperial bank depositors making good, this shocking breach of investors’ confidence.
The Authorities need to take into consideration the Miserable Plight of the Imperial Bank Depositors who have been reduced the “Status of Ultra Poverty “…with Every Passing Day Ushers in Despondency & Degradation in Our Vicious Society Where those who Commit Crimes Whether they be Economic Saboteurs or Using Brutal Force, both Using their Criminal Brains to Defraud & Fleece the Common Citizens of the Country with Ease ….as they are the “Untouchables” Freely Bribing their Way through the Echelons Of The Law.
When is this all Going to Stop?
Is there No Justice at all In Modern Day Kenya? Why are the Criminals Roaming Freely with Impunity…..Who are the God Fathers Offering them Sanctuary & Safe Haven to Further Indulge in their Immoral & Unethical Behaviour?
ARREST THE MAFIAS & GOONS & PUT THEM BEHIND BARS WITH NO MORE REPRIEVE TO CASH BAILS. CONFISCATE ALL THEIR PROPERTIES BUSINESS OR PERSONAL & FREEZE ALL THEIR ACCOUNTS & ATTACH ALL THEIR PROPERTIES WHETHER WITHIN THE COUNTRY OR OUTSIDE OUR BORDERS. THEY SHOULD PAY THROUGH THEIR NOSES.
HUMBLE & PASSIONATE APPEAL TO ALL THE COMMUNITY LEADER’S WHERE THESE MAFIAS & GOONS HAIL FROM. …TO STOP GIVING THEM UNDUE ATTENTION & PRIORITY & PLATFORM TO FURTHER SUBJUGATE THE COMMUNITY MEMBERS AS IF NOTHING HAS HAPPENED.
Kenya Insights as part of of our social good responsibility, enjoins the depositors in pursuit for justice which will result in getting back their money.
“The deadline to close the world’s largest refugee camp must be lifted,” said Jan Egeland, Secretary General of the Norwegian Refugee Council (NRC). A new report released today by NRC criticizes the returns process from Dadaab camp in Kenya to Somalia, as no longer being voluntary, safe or dignified.
The report, titled Dadaab’s Broken Promise, says that the decision by the Government of Kenya in May to close the Dadaab refugee camps has led to a situation where the voluntary returns process does not meet international standards, and breaks the agreement that Somalis would be assisted to return home safely and voluntarily.
“We are willing and able to enable voluntary return, but the pressure to push more than 280,000 registered refugees from Dadaab camp has led to chaotic and disorganized returns. From what we have seen on the ground, it is no longer voluntary, dignified nor safe,” said Jan Egeland.
“Refugees in Dadaab need international protection. The Kenyan government and the UN refugee agency should reinstate the organized and voluntary process of return under the Tripartite Agreement. The unrealistic deadline must be removed before the situation further deteriorates,” Egeland continued.
The Tripartite Agreement for the voluntary return of Somali refugees from Kenya was signed by the Kenyan and Somali governments and UNHCR in 2013. It was based on international law and created a framework in which returns were to be organized.
“The initial returns programme under the 2013 Tripartite Agreement was largely a success, as it saw Somalis would be assisted to reach their return locations safely and with dignity. We should return to the terms of this agreement, rather than simply aiming to push back as many refugees as possible,” said Egeland.
NRC’s new report highlights the major failures of the current returns process. In addition to failing to meet international standards for voluntary return, the report finds that refugees returning to Somalia are not sufficiently protected. It also reveals that the pressure to speed up the repatriation process threatens to create a revolving door scenario.
“The number of vulnerable Somalis planned for return far outstrips the resources available to support them in Somalia,” warned Neil Turner, NRC’s Country Director in Kenya. “Sustainable return should form a key component of the returns programme. It must prevent families ending up in displacement camps in Somalia or returning as undocumented refugees to Kenya.”
Over 80 per cent of the population in Somalia lives in poverty, and over one million people are internally displaced. Basic social services and infrastructure are mostly non-existent or at best limited. In addition, the security situation in many areas remains fluid. An overwhelming 74 per cent of Somali refugees in Dadaab said in August that they are not willing to return yet, largely fearing insecurity in Somalia.
Facts and figures
• Over 900,000 Somalis are registered as refugees, mostly in neighbouring countries.
• Kenya hosts more than 335,000 Somalia refugees, including over 270,000 in Dadaab refugee camp.
• An estimated 1.1 million people are internally displaced in Somalia.
• Somalia is one of the poorest countries in the world. 43 per cent of the population lives on less than US$1 per day, and the life expectancy is just 51 years.
• Somalia ranks among the five least developed countries in the world, according to the UN’s 2012 Human Development Index.
• Five million people in Somalia – more than 40 per cent of the country’s population – do not have sufficient food. This includes more than 300,000 children under 5 years who are acutely malnourished.
• About 3.2 million people in Somalia need emergency health services, while 2.8 million people require improved access to water, sanitation and hygiene.
A report commissioned by The US’ Department of Labor on Kenya has revealed some disturbing statistics, the annual Findings on the Worst Forms of Child Labor focuses on the efforts of certain U.S. trade beneficiary countries and territories to eliminate the worst forms of child labor through legislation, enforcement mechanisms, policies and social programs.
The Report serves as a resource to foreign governments, NGOs, academics and policymakers working on labor and human rights issues.
The report has established that Kenya has made a minimal advancement in efforts to eliminate the worst forms of child labor. The Government continues to expand social cash transfers to additional households as part of its National Safety Net Program for Results and implemented and participated in several programs to combat the worst forms of child labor. However, the report finds that children in Kenya are engaged in the worst forms of child labor, including in sand harvesting and commercial sexual exploitation.
Kenya has yet to ratify the UN CRC Optional Protocol on the Sale of Children, Child Prostitution, and Child Pornography and its minimum age for work law and compulsory education age are not harmonized due to the lack of a particular compulsory education age. The Government has also not committed sufficient resources to enforcement efforts.
The report notes the commercial sexual exploitation of children,sometimes as a result of internal human trafficking, which is apparently dine by relatives and friends.
Sexual exploitation of children the report indicates is a major problem in Kenya, especially in Eldoret, Kisumu, Nairobi, Nyeri, and in coastal areas. The majority of children engaged in commercial sexual exploitation are girls, but boys are also involved.
Coming at a time when paedophilia cases have been increasing with latest being one Alfayo who bragged on the internet for sleeping with a small girl amongst many other reported and unreported cases of sodomy and rape. Several interventions have been given in the report for the government in ensuring safety and protecting the children.
Public debt has been an issue of public discourse for centuries. The debate is not about to end anytime soon. With developing countries investing much more resources in public infrastructure, education and other social amenities, public debt is expected to become even a bigger point of discussion moving forward. Just before the March 4, 2013, General elections, Kenya for the first time, held a presidential debate. Uganda followed suit earlier on this year. From those debates, it is evident we are yet to start discussing ideas in our presidential debates. My guess, however, is that going forward, these discussions are going to tackle key issues affecting these emerging market economies, key among them the issue of Public debt.
To start us off, let us try to understand some key terms. Debt refers to a contractual obligation in which a party uses the counterparty’s money or any other valuable resource with the view of repaying it at a later date, with interest. People have been borrowing since time immemorial, and they are not about to stop anytime soon. As long as resources for satisfying human needs and wants are limited, we shall always consume something we do not currently own with intent to repay at a later date. Just like individuals, body corporate and governments too, borrow. Public debt is what a government owes to its lenders. Government/ Sovereign debt can be used synonymously with public debt. Public debt can either be domestic or foreign. The former involves borrowing from within a country’s borders and among its citizens while the latter involves borrowing from outside the country’s borders. It could be a loan from foreign nationals, foreign governments or even international financial institutions. Ordinarily, domestic debt is denominated in the local currency while foreign debt is likely to be denominated in a foreign currency. External debt, on the other hand, is the amount of money owed to foreign investors by both the government as well as the private sector.
Since the year 2013, Kenya’s public debt has been on an upward spiral. According to Keynesian Economics, there are two possible scenarios that would put a country’s debt on an upward trajectory; War and recession. Since war is unanticipated, it is usually not planned for adequately in the budget, and therefore in the event of war breaking out, the country is likely to start borrowing to fund the cost of the war. In a recession, the economy has slumped. Jobs are scarce, and demand for products within the economy dwindles. This reduces tax revenue that the government had anticipated and corporate profits plunge, leading to lower corporate taxes being availed to the government. In such a case, the government will operate on a budget deficit, which is, in fact, public debt. For the last four years, Kenya has neither had a war nor a recession. In fact, the Kenyan economy has grown enormously over the period, as H.E the president has persistently said.
Key Facts and Figures
As at 2013, Kenya’s debt ceiling was Ksh. 800 billion. That same year, Parliament in its wisdom or lack thereof raised this ceiling by 500 basis points. We ended the year with a debt ceiling of Ksh. 1.2 Trillion. By the end of 2014, Parliament had more than doubled our debt ceiling. It now stood at Ksh. 2.5 Trillion.This figure was higher than our budget for the financial year 2014/2015 which stood at Ksh. 1.7 trillion. Kenya Debt to GDP ratio has grown from below 30% in 2012 to currently stand at 49.7%, 4.97 points above the treasury’s benchmark.
Is Debt Bad?
In life, nothing is bad. Similarly, nothing is good in absolute terms. What matters is a person’s perspective. In the corporate world, most capital projects are undertaken through use of debts. Most individuals develop themselves by using debt. The government too can make enormous economic progress through the use of debt. In the corporate world, you will rarely find a company that operates on 100% equity. In fact, theoretically, the most valuable firm would be the one that is 100% leveraged. This is because, interest expense as a cost of capital, is a member of an exclusive club called “allowable tax deductions” To illustrate, let’s assume we have Firms A and B. A’s capital structure is 100% Equity while B’s capital structure is 100% debt. If these two companies make the same earnings before interest and tax, firm B will end up paying the lesser tax. Equity, as a cost of capital, is expensive. In practice, however, strong B does not exist. And if it did, it would have a very high risk compared to A. What companies therefore do, is to find a balanced mix between equity and debt. They get a debt that will enable them to enjoy tax benefits while not unnecessarily raising their risk profile. Finding the right balance is what governments should look at while borrowing.
Measuring a country’s public debt
There are various ways that can be used to judge whether a country’s debt is healthy or moving in the wrong direction. This article will attempt to look at Kenya’s sovereign debt using two approaches. The first method, which is preferred by most researchers, is to measure debt as a percentage of GDP. There is no rule of the thumb here. However, the world bank looks at it from two angles; developed economies and emerging market economies. According to the world bank, an extended debt to GDP ratio of above 77% drags economic growth. In fact, it states that for every additional point above the 77% mark, the country loses 1.7% in economic growth. For emerging market economies such as Kenya, the ratio should not exceed 64%. Any figure above that slows economic growth by 2% each year. As a matter of policy, the Kenyan treasury has set its target Debt: GDP ratio as 45%. This is 19 percentage points lower than what the World Bank considers to be the benchmark. To this, end one must appreciate the government’s proactiveness. 19 percentage points is a field, wide enough to play all manner of games.
The second approach that can be used to measure a country’s debt is to look at it about Government revenues. This measure gives you a rough figure of how long it would take for the government to pay its debts if it were to use its ordinary revenue to pay for its debts. The current debt for our country stands at Ksh. 3.2 trillion. The government, on average generates Ksh. 100 billion every month. If we were to use our tax revenues to pay our debts exclusively, it would take us 32 months only! This is, of course, wishful thinking.
Is Kenya headed in the right direction?
There is no simple answer to this question. As alluded to earlier, it is evident we cannot explain our growing debt using Keynesian Economics. However, in a growing economy, the following variables are expected to be on an upward spiral as well. They include population, revenues, expenditure among others. To cater for the increasing need to provide service to the growing public, the government will need to dig deeper into its pocket. At this point, debt is the only option. Unlike in private sector budgeting where expenditure is based on revenue, in public financial management, revenue is based on expenditure. The government comes up with an expenditure plan, before creating revenues. This is why most governments operate deficit budgets.
It is tough to answer the above question. The answer depends on who you ask. I know of a particular person who when asked about our high Debt: GDP, answers by stating that the USA’S Debt: GDP is at 106%.
“This is more than double our own; we should not worry.” He concludes.
France is at 116%, and Japan is at 228%. Bahama’s at only 6%. So if indeed Debt: GDP meant much, Bahama’s would be the most financially stable country in the world. This was as at 2015. Greece closed the year 2015 at 188%. We all know where Greece is, economically speaking.
The above argument is simplistic. It does not take into consideration the individual components of that debt.
Public debt is composed of domestic debt and foreign debt. A large chunk of the US debts are owed to its citizen, and even those owed to foreigners are mostly dollar-denominated thereby eliminating the foreign exchange risk. If bad comes to worse, the FED can just print more dollars to repay its debts. Conversely, as at August 2015, 51.9% of our public debt was external. The risk associated with the foreign debt is that it is exposed to foreign exchange fluctuations, meaning if the shilling were to fall, we would spend more money to pay the debt than we had anticipated. Of course, the government can still hedge against this exposure through the use of derivatives, such as interest rate swaps. However, such derivatives also come at a cost. Japan has the same case as the USA, most of its debts are owed to its own citizens. So, our Debt to GDP ratio should not blind us.
In conclusion, it is not easy to determine if our public debt is sustainable or not, however, if you try to find ou the answer, here is my advice: Borrowing for the purpose of incurring recurrent expenditure is financial illiteracy unless you are in a financial crisis. Secondly, borrowing to loot, in the name of infrastructure development, and borrowing to invest in white elephants like the SGR, is not sustainable.
Finally, it is Adam Smith who once said,
“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?”
The writer writes to inform.
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Disclaimer: This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email:[email protected]
www.pcmakokhasays.wordpress.com.
The frontier market of Kenya isn’t often on U.S. or European investors’ radar. It should be. It offers a timely reminder of financial markets’ complacency about the risk of populism; and the attractiveness of bashing banks to win votes.
East Africa’s most advanced economy has introduced a law setting a cap on commercial lending rates and a floor on deposit payout rates, an instant squeeze on margins that sent shares of Kenyan banks to their lowest in years. Investors were clearly unprepared for a measure designed to make banks poorer — or less greedy, depending on your point of view — in the face of what Kenyan President Uhuru Kenyatta described as ordinary citizens’ frustrations about the cost of credit and earnings from deposits.
Kenya Crush
Bank stocks have plunged since the announcement of a law to cap lending interest rates
Source: Bloomberg
There’s no denying Kenyan banks make rich returns. The country’s largest bank by assets, KCB, has a return on equity of 24.7 percent, according to Bloomberg data, while rivals Cooperative Bank and Equity Group are on 24.5 percent and 26.9 percent respectively. That’s not just leagues ahead of the 5-7 percent ROE at Europe’s biggest banks, it beats the 15-18 percent at South Africa’s top lenders. Market concentration may have something to do with it: Kenya’s seven biggest lenders (there are about 43 in total) hold 80 percent of the banking system’s cash.
But capping interest rates risks damaging the Kenyan economy and stunting credit growth, a danger not lost on officials at the country’s central bank and finance ministry, who opposed the measure. If banks stop catering to anyone but the safest credit risk, it may encourage shadow banks or dodgy lenders to step in. If smaller banks find it harder to make ends meet, they may get bought up, making those dominant banks even bigger. And the new loan cap, at 4 percentage points above the base central bank rate, sets a potentially “unreasonable” ceiling for Kenya’s risk premium, according to investment firm Cytonn.
So why take such a chance? Well, next year’s election and a bank-bashing law may be just the ticket to win votes. Some analysts reckon it’s a purely populist move.
Yet the sell-off of Kenyan bank stocks over the past month suggests markets weren’t adequately prepared for this risk, with the chorus of credible dissenting voices perhaps lulling investors. And while it’s easy to dismiss this as the kind of problem specific to emerging markets, there are echoes of the anti-elite vibe in Europe and the U.S.
Championing the banks, in particular, isn’t much of a vote winner. The U.S. election has put the restoration of Glass-Steagall back on the table, with Republicans calling for big banks to be broken up. British chancellor Philip Hammond is trying to put a protective arm around the City of London by exploring continued access to Europe’s single market, but he’s clashing with the crowd-pleasing instincts of the “three Brexiteers”, Boris Johnson, Liam Fox and David Davis.
There’s still hope that pragmatism will prevail. Calls for a restoration of Glass-Steagall look like posturing, while Moody’s reckons that even if the U.K. quit the single market, its finance firms could probably still do plenty of business in the EU.
Yet the Kenya experience shows the potential for nasty surprises in a populist age, whether self-harming or not. Don’t forget that Brexit itself caught investors on the hop.
As the dust settles on the implementation of new laws on loans and deposits interest rates, the focus is now shifting towards areas that may not have been addressed explicitly or sufficient in the law, that has received praises from the mwananchi and sharp criticism from economists on its long-term effect on the economy, and that’s the Mobile money space.
Since a mid-last week, M-Shwari (a product of CBA and Safaricom) has come under attack from the Consumers Federation of Kenya (COFEK) as well as competitors, who claim that the product should be subjected to the Kenya Banking (Amendment) Act, 2016.
COFEK argued, “The law is clear that it applies to all loans. Whether offered directly or indirectly, any loan from a licensee of the Central Bank of Kenya via an agent and or mobile phone or any other technology is not exempt from the 4 per cent over and above the Central Bank Rate.” Launched in November 2012, Mswari set the pace for mobile loans attarcting others.
In seeking expert analysis on the Mshwari facts as policy of Kenya Insights, material available indicate that, there is no interest levied on M-Shwari loans. The only cost to the borrower is a one-off facilitation fee of 7.5%, charged at disbursement. Time value of money: Tenor of M-Shwari loans is 30 days only, as compared to competing products have longer tenors.
Interest and Fees/Charges are two different types of revenue.
Facility fees in the case for M-Shwari is return the lender earns from the activity of arranging credit. Fees are charged as either absolute amounts or relative amounts. Given the short-term nature of the credit (30 days) and the fact that a customer can payback sooner (at any time within the 30 days), it is more appropriate to levy a fee over interest.
Interest on the other hand follows the concept of time value of money and earns the lender an increasing return over time, for as long as the loan is outstanding. As such, interest is quoted per defined period either as per annum (over 12 months) or per month, etc. M-Shwari loans are levied a fee against the amount disbursed, irrespective of the repayment duration.
If COFEK’s position was to carry the day, we are likely to witness the following scenarios; Erosion of gains in Financial Inclusion- this is because it is the low income earners who usually use M-Shwari on a regular basis for economic gain. If M-Shwari is not viable for business, the bank may be forced to do away with it thereby reversing the gains that have positioned Kenya where it is.
Experts are warning that we would be facing an Economic slowdown/ exclusion- Many traders will be unable to access the more expensive lending products leading to the death of a number of businesses. High cost of credit- Alternative products are more expensive and this includes loan sharks. Failure to repay the loan on time, has very adverse repercussions. Tax Implications- CBA pays taxes on income from M-Shwari. Loan sharks and other competing products do not pay taxes.
Among these areas is mobile savings and lending, as well as discussions on who will lead in the efforts to amend the law and what will be reviewed therein. As the President said when signing the law, “We will implement the new law, noting the difficulties that it would present, which include credit becoming unavailable to some consumers and the possible emergence of unregulated informal and exploitative lending mechanisms.” It is not in doubt that the cracks are already emerging.
Quick Statistics
• Over 420,000 loan applications are made every day
• Over 70,000 loans are processed daily on M-Shwari.
• Majority of the loans are repaid within 30 days.
• Average loan amount is Kes. 3,200.
• Current NPL is by far, much lower by average than the ones you would find in commercial banks
• CBA has increased the interest rate on deposits made to M-Shwari accounts- in line with The Banking (Amendment) Act, 2016
• Close to 16 million customers on M-Shwari have made CBA the biggest bank by customer numbers
• Many small businessmen use M-Shwari as their working capital- with some borrowing and repaying up to 7 times a day.
• CBA has similar propositions to M-Shwari the E.A. region and plans are afoot to extend the footprint to other markets in the African continent. In Tanzania, CBA partners with Vodacom to offer M-Pawa (5 million customers), whilst in Uganda the bank has partnered with MTN to offer the recently launched MoKash.
Like in the media, who opposed digital migration, the banking players in Kenya have also been hesitant on adopting the new changes so it really shouldn’t come as a surprise when they pull dark innuendos but one thing we can’t deny is the fact that mobile loans has been to the advantage of the mwananchi who can now sit at the comfort of their homes and get a quick loan at the touch of a button a break from the traditional tedious ordeal in securing a loan from the Banks.
Refer to the whistle blower report we published previously regarding the scandals at the East African Development Bank and the call to request the Director General Vivienne Yeda to step aside after 7 years of oppressive leadership at the Bank. Following the whistle Blowers dossier received by board members early June, Senior managers met with the Board members on the 15th July 2016 and were able to substantiate with evidence the details published about Vivienne Yeda, the Director General of EADB as true.
Despite the board members receiving collaborative evidence that what was written about Vivienne Yeda was the truth, Vivienne has been left to continue with her work as if nothing happened. More shocking details have emerged on how Vivienne Yeda has misappropriated the Bank funds in a number of ways as we shall explain in this article. Staff members are calling on the member states of the East African Development Bank including Kenya, Rwanda, Uganda and Tanzania, to commission their respective auditor general’s offices to carry out an investigation on the actions of Vivienne Yeda and how she has squandered tax payer’s money. That she should be asked to step aside for the period of the investigations in order not to interfere with the investigations team. Despite the board members confirming the shocking revelations as true, they have done nothing to interdict her. You will know why no action has been taken in this article.
During the interview between the senior managers and the board members, the Directors were shocked to hear that staff never receive end of year bonuses even when the board has annually approved a budget of USD 65,000 annually for staff end of year bonuses. Vivienne has been drawing the entire USD 65,000 which ends up on her personal account. She normally channels such monies through the staff payroll which is managed by Deloitte to her personal account.
Such money is usually transferred to her account either at end of the year or beginning of the year. Investigations can be carried out at Deloitte to confirm the staff salary figures sent to them during these periods starting 2013/2014, 2014/2015 and 2014/2015. Staff members are still in shock that the Director General has been embezzling money meant for staff bonuses. Vivienne has also negotiated her salary increment with the board twice during her 7 years tenor at the helm of the Bank. The board approved both increments; one in the middle of her first five years and the second at the time when she was renewing her contract. Much as the board was shocked to learn that it’s only her who gets salary increments at the Bank.
The fact that she is the DG, Head of legal and Company secretary, she normally alters board minutes to indicate that he salary increment was to take effect one year back for the first increment and a couple of months back for the second increment. Looking at the staff payroll for the periods when her salary was increased, one would notice large sums of money which were channeled through the payroll to her account. Other such dubious payments have been taken out of the Bank to her account through the payroll. She uses the staff payroll to channel funds to her account because she knows the payroll is never scrutinized.
The former finance manager who resigned at the end of May this year was never allowed to look at the payroll because he would question such payments. We doubt that the board would approve bonuses and salary increments to only one person in the Bank. Red peppernews paper in Uganda and as per the whistle blower dozzier, informed you in their article of 13th July 2016 that staff don’t receive any form of motivation either through training and career enhancement or travel and exposure even when funds have been set aside for these purposes.
We confirm that unlike other previuos Director Generals, the Bank pays Vivienne both the profident fund, which she recieves annually and contributes towards her pension which she is supposed to receive when she leaves the services of the Bank. The annual provident fund payment is usually made directly to her account through the Bank’s SWIFT payment system and this appears in the general legder. The USD 65,000 mentioned above can not be her provident fund since it is paid out through the staff payroll. Towards the end of July 2016 even after the board had sat to discuss the whistle blowers report, she went a head to request HR to pay her pension through the end of July staff payroll. Pension is supposed to be paid when a staff member has left the services of the Bank.
But she wanted her pension paid out with the July salary. But after HR had consulted with the senior advisor to the DG, Mr. George Aaron, they declined to pay the pension to her because this would have been iregular. During last year, Vivienne requested finance department to pay her USD 175,000 calling it pension/provident fund in arrears which is fradulent. The finance department declined to pay the money to her account because she failed to provide clear documentation for the money. This needs to be investigated.
In 2014, the Bank was rated by AADFI as the best DFI in Africa.
This was after she had bribed the rating team to give her the top position. Much as one could say, this was good for the Bank’s image,it is not sustainable. The image of the Bank should be enhanced by improving gorvernance, systems, policies and structures in the Bank. At most, the rating agencies coud have been bribed when she is also doing much to improve the Bank. But this has not happened.
She has boosted of posting profits for the Bank, but this is all not true. A lot can be discovered in this area but we shall bring out on example when she has fradulently reported profits which is not real. The Bank is supposed to value all its assets annually and the valuation figures taken into consideration when reporting profits. The high the value of assets the higher the profits reports. Recently a firm was hired to value the Bank assets in Kenya, Uganda and Tanzania. The firm carried out the valuatioin exercise in all the three countries and submitted the reports to the Bank. She was okay with the value of assets in Kenya and Uganda. Because the Bank’s assets in Tanzania returned a lower real market value than she had hoped for, she asked the firm to inflate the figures of the value of assets in Tanzania, but the firm refused. she instead hired another firm which re-valued the assets in Tanzania to give them a value of her choice.
If she had used the real market value as reported by the first firm, it would have reduced the amount of profits reported. But the fact that the second firm hired agreed to her demands, they reported a value which she wanted, and as thus, this helped her to report an increased amount of profits. The Bank money twice for the same service and the results of the assignment were compromised. In the June dossier, we reported that she reported a wrong Non-performing loans percentage to the board of 0.83% instead of 5% during the end of Feb 2016 boarding meeting held in Nairobi. This was to avoid reporting on some Kenyan projects like DARI, Abarderes and Benvar Estates which were non-performing.
Non-performing loans are supposed to be provided for and if the mentioned projects had been reported and provided for, they would erode most of the profits she was reporting to the board. These two examples show Vivienne has been reporting fraudulent profits to the board to give them the impression that the Bank is performing well, when its actually not performing that much and not growing at the same time. This is fraudulent and false reporting to the board and should be investigated and stopped. So many other lies have been told to the board. Believe it or not, this is not sustainable.
NEW YORK, NY – SEPTEMBER 22: Director General of East African Development Bank Vivienne Yeda speaks during the 30th Annual Awards Gala hosted by The Africa-America Institute at Gotham Hall on September 22, 2014 in New York City. (Photo by Bennett Raglin/Getty Images for The African-American Institute)
During the board which sat on the 14th July 2016, Vivienne falsified the portfolio report on the number and amount of projects approved and disbursed between January to July 2016. She reported some of the projects which were approved and disbursed in Q4 of 2015 as projects which were approved and disbursed in 2016 to confuse the board members since the previous dozzier had reported that only two projects had been approved for the entire bank between Jan to June 2016. All these lies are to show the board that she is performing when in real sense there are huge issues within the Bank. This can be verified with the Portfolio management unit in Bank, the chief internal auditor and the finance manager.
Board members were also shocked to learn that renovation of the Head office building on plot 4 Nile avenue cost the Bank (and the tax payer of East Africa) USD 6.6 million. The board did not know that the cost had escalated to this level because she did not seek board approval for the entire sum in one go. She presented the renovations budgets to the board in piecemeal. We believe USD 6.6 million could have put up a brand new building the size of the EADB head office and more. Of concern is that the contractors and the project managers who implemented the renovations were single sourced and the contracts negotiated and approved by herself. She has deliberately refused to put in place a procurement committee and at the same time the bank does not have a procurement expert to support these very expensive procurement contracts. We request that an audit in the processes and procedures of procuring and negotiating the renovations contract be investigated.
Experts can be called in to value the cost of the renovations to confirm that the work actually cost USD 6.6 million and that there was value for tax payers money. The renovations have gone on since 2012 until todate. The fact that the implementation team comprised her friends (project managers and architects who were handpicked from Kenya using a single sourcing method to manage the project), we believe the value of the contracts was inflated so as to give her kickbacks.
The same project managers and architects have been building a hotel and apartments for her in one of the national parks in Kenya which has just been completed. The construction of her hotel and apartments progressed at the same time with the office renovations and it is believed that money for some of the inflated office renovation bills went to her hotel construction.
Another building that has been renovated by the Bank whose renovation costs, value for money and the procedures followed to procure the service providers are being challenged, is a block of apartments commonly referred to as “block 4” in Naguru. The cost of USD 6.6 million mentioned above does not include the renovation costs for this block of apartments. This should also be investigated.
Senior managers have been shocked to hear that the information they provided to the board members confirming the allegations, even after the board chairman had assured managers that they were protected and therefore should not fear to say the truth, has licked to Vivienne including which manager mentioned what. Managers wonder why the board went on to ask the senior managers to expose themselves by revealing the truth, if they knew they were not going to take any action.
The result of this has exposed some managers to harassment and threats from Vivienne and her machinery. Some of these managers have received threatening phone calls indicating that something bad will happen to them and their families if they don’t stop revealing information about Vivienne Yeda.
The first whistle blower report and the red pepper article of 13th July reported that 99% of all international travels at the Bank are undertaken by Vivienne Yeda alone.
An analysis carried on the costs associated with her travels between 2013 and to date reveal that she spends not less than USD 135,000 per year on her travel related costs alone. This is a lot of money and therefore value for this money needs to be investigated.
As per the whistle blowers reported published in red pepper on the 13th July 2016, Vivienne Yeda refused to hire staff to fill all key vacant positions in the Bank and therefore heavily relies on the use of very expensive consultants who have cost the Bank a lot of money with no value for money. The Bank has a legal department with no lawyers at all. She single handedly sourced an international law firm called “Eversheds” based in London who have been doing the day to day legal work at the Bank. This law firm has todate cost the Bank USD 1.2 million to do work which would have ordinarily been done by the staff members in the legal department.
These colossal sums have been spent without a formal contract between EADB and Eversheds, (Atleast no staff member has seen the contract and the terms of engagement including the finance department that is always forced to prepare payments for such expenses. Noformal procurement procedures were followed and most importantly there is not value for money for the work this law firm has been hired to do for the Bank. It also emerged that Vivienne Yeda’s daughter who has been pursuing her studies in the UK worked at this law firm, raising question marks on the possible conflict of interest in giving this law firm huge sums of money. The work of eversheds, the procurement process and value for money should also be investigated.
The Bank received grants worth over USD 3 million from AfDB, DEG and KfW for various capacity building activities at the Bank. That fact that the Bank does not have a procurement committee and a procurement specialist; it becomes questionable how these huge contracts have been selected and awarded. Though for some grants especially from AfDB, the AfDB team got involved in the procurement of consultants though she still wanted to be fraudulent about the process. The fact that Vivienne Yeda single handedly approves the final bidders, to whom these consultancy contracts are awarded, raises several question marks. Some of the contracts cost over USD 900,000 per single consultancy contract.
The fact that key staff positions at the Bank are vacant due to the fact that several senior staff members have resigned because they could not continue working under such conditions. The capacity building interventions will not benefit the Bank much. For the Bank of less than 70 staff members, about 44 staff have resigned since 2012 todate. The systems and policies/operating guidelines being introduced in the Bank don’t add much value when the key users are not in their positions. In a letter written by African Development Bank after an audit they carried out at EADB in April 2016.
The report was addressed to Vivienne Yeda and signed by the Manager Portfolio Management Division atAfDB. The letter reads in part as an example “despite AfDB having given EADB guidance on procurement process for a credit cycle management consultancy firm, to undertake a credit management cycle documentation consultancy assignment at the Bank, Vivienne Yeda’s choice of the consulting firm to be selected was a Kenyan firm charging over USD 800,000 almost three times the price of the next candidate who charged below 300,000”. In AfDB’s opinion after reviewing the technical proposals and credentials of the other firms, the other two consultancy firms that had applied for the consultancy work were also well qualified to deliver the consultancy based on the terms of reference provided. It is possible that these consultancy contracts are inflated and the consultancy firms selected end up giving hefty kick backs to Vivienne Yeda. Most of the contracts with consultants and other service provider have been determined in this manner.
The African Development Bank audit report about EADB further reads in part, we quote “the AfDB officers who carried out the audit noted that, there were several bleaches regarding operational limits in treasury, bleaches in procurement guidelines, and non-compliance of policy in relation to credit approval of some of the high value transactions’. The report further read that “Management committee is effectively made of only the Director General (Vivienne Yeda) which we believe does not conform to best practice and does not exhibit good corporate governance”. These revelations make any one wonder why audit firms like KPMG who carries out quarterly audits at the bank for hefty sums of money have not been able to flag these weaknesses.
The Bank has an internal audit department, but the fact that they have been very critical of how Vivienne conducts bank business (they have reported to the board several times despite the board not taking any serious actions), she chose to frustrate them by not bothering about their reports. She instead chose to duplicate their role by hiring KPMG to carry out quarterly audit reviews at the Bank. Despite the fact that KPMG’s reports indicate that there are no issues at all at the Bank, they have cost the Bank and the tax payers money USD 382,000. We believe she retained KPMG to cover up her loot and since KPMG is looked at as a credible audit firm, the board members would not question their reports but also dismiss the issues raised by the internal audit. The annual financial audit is carried out by PWC, much as we are surprised that they have also not been able to raise a red flag (not even noticing that lots of money is chanelled through Vivienne Yeda’s account through the payroll, among other flaws) of the appalling situation at the Bank.
Vivienne Apopo signing a deal
When the whistle blower report which red pepper published on the 13th July 2016 first came out, Vivienne Yeda hired KPMG Kenya to come and investigate the source of the whistle blower dossier. It was surprising to see that a firm of KPMG’s caliber could accept to investigate the origin of the report as opposed to investigating the facts contained in the report. We believe they have been compromised by money. KPMG came into the EADB offices on the night of 23rd June 2016 in the absence of staff members and hacked into computers of all staff members to try and find out who might have originated the dossier but also to try and delete some of the documents that might be incriminating to Ms. Yeda. The fact that they copied information from hard discs of all staff computers, it is evident that all bank information is now in the hands of those individuals who took the information under the directive of Vivienne Yeda. KPMG went ahead to isolate some managers who were interrogated on 4th July 2016 and their statements recorded to try and find the originator of the dossier. KPMG Kenya has issued an invoice for USD 22,000 to be paid by the Bank (without any engagement letter and terms of reference) for investigating the whistle blower. This is not acceptable. She has hired full times services of an ex-police detective (a one Egessa) to try and investigate staff in efforts to identify the person who originated the dossier. This police detective together with one of the law firms which the Bank uses regularly have helped her to file a complaint which she has taken to Interpol asking them to give her additional protection (in disguise that her life is in danger) but also to give her permission to get staff phone records and also tap staff phone conversations.
This is not acceptable. She has hired full times services of an ex-police detective (a one Egessa) to try and investigate staff in efforts to identify the person who originated the dossier. This police detective together with one of the law firms which the Bank uses regularly have helped her to file a complaint which she has taken to Interpol asking them to give her additional protection (in disguise that her life is in danger) but also to give her permission to get staff phone records and also tap staff phone conversations.
The ex-police detective moves around office with a tape recorder recording staff conversation.
The reason it is being proposed that each EADB member state should commission their auditor general’s office to investigate the massive abuse of office and misuse of tax payers money at the regional Bank is that, each member state (Kenya, Rwanda, Uganda and Tanzania) contribute USD 4.5 million annually as their capital contribution towards the lending activities of the Bank. In other words, Yeda has at her disposal USD 18 million contributed annually by the member states from tax payers money in the hope that the Bank would lend out the money to befitting projects to promote social economic development among the member states.Seeing how the board has chosen to protect someone who is using tax payer’s money in this manner, one wonders why the governments should not channel this money in other useful projects if the Bank cannot get good leadership to enhance the mandate of the Bank. EADB should have been much bigger and visible that it is today if the Board had agreed to change the top leadership at the Bank.
This article reveals some shocking details as to why, despite all the information out there concerning Yeda’s abuse of power and office, she has remained in her office intact and untouchable. The Board members received the whistle blower dossier at the beginning of June 2016 as confirmed by Mr. Muhakanizi during the red pepper interview leading to the publication of 13th July 2016. The same was also confirmed by the chairman of the board on the 15th July 2016 when meeting senior managers of the Bank.
Anyone reading this would have expected the board to have taken immediate action (asking Vivienne to step aside for investigations jointly commissioned by the Bank member states to take place) but this has not happened. Usually under such circumstances, the board would convene urgently to hear from both sides, which they did (board sat one and a half months after they received the report). The board would recommend to the Governing Council of the Bank which comprises of the Ministers of Finance of the Bank Member states who have the powers to sack the Director General according to the charter that governs the Bank. 75% of the Governing board members must vote to sack her if she is to be fired.
Two weeks after the board confirming the allegations, the Director General is still going on with her work at the Bank as usual, and renovations and hiring of consultants is still going on. This procedure should naturally not apply under situations where it is clear that Bank funds have been misappropriated? Is has emerged that the board has remained divided on whether they recommend to terminate her contract or not. As opposed to normal practices in other financial institutions, EADB Board members are allowed to borrow from their own Bank (purely against good corporate governance practices). As earlier reported by the whistle blower and published in the 13th July red pepper, EADB board members borrow hefty sums of money from the Bank to run their personal businesses. Much as Mr. Muhakanizi in his interview with red pepper denied any board member applying for any loans from the Bank, we confirm that, in 2014 the Bank approved a loan of USD 4 million to Mr. Muhakanizi through a real estatescompany called Reunion Estates Ltd. The Bank approved a loan of USD 500,000 for another board member from Kenya called Mr. Francis Karuiru through his company “Edron Communications Ltd’ based in Kenya. Because of the above, board members have been compromised and therefore don’t want to make a firm recommendation to terminate the services of the mighty Yeda.
This being tax payers money, we call upon Governments to take action. The Ministers also don’t get detailed information from board members (who are their permanent secretaries) regarding the affairs at the Bank because of their vested interests which is purely a conflict of interest.
We also report that the Bank, its staff and assets are protected under diplomatic immunity. This means that Yeda and the Bank cannot be sued in local courts of law. This could also explain why she also went against the laws of the EAC member states that protects whistle blowers setting clear procedures to be followed when a whistle blower report comes out. It’s because of this immunity that she has had easy access to Interpol to start investigating who the author of the dossier could be so that the author is punished instead of the accused. A cover letter forwarding the whistle blowers report to the IGG and requesting them to launch an investigation into the abuse of office is attached to this dozzier, but because of the Bank’s immunity, it seems the IGG’s office lacks the Mandate to investigate the Director General.
We believe the immunity status was among others aimed at protecting the Bank and the tax payer’s money. Right now, the Bank’s diplomatic immunity is being used to protect an individual who has abused tax payer’s money. The rights of staff members are being infringed upon the fact that their phone conversations are being tapped; their phone records have been printed and investigated. These staff members are innocent and suffering because one person has bribed her way into impunity.
The auditor General offices among the Bank member states are called upon to investigate the allegations so that Vivienne can account for her actions. This will help retsorestability and growth at this regional Bank.
Meru Governor Peter Munya when he visited Somaliland to negotiate miraa trade deal
Cries that Kenya is being isolated in East African region is no longer news. Uganda, a close ally and business partner changed its mind and routed its oil pipeline via Tanzania; Rwanda gave up the standard gauge railway and chose the Tanzanian route too. After so many years as the regions giant economy Kenya is expected to be more confident than its beginning to sound.
Certain quarters claim there has been a radical change since the entrance of President John Magufuli, a dictator who is bullying beyond his area of administration.
Though it must also be noted that some development projects are driven by national ego and patriotic vanity like medical infrastructures it’s not business as usual for Kenya and its neighbours. The country has suffered yet another blow when it’s would be desperate neighbour Somalia banned Kenyan flights carrying herbal stimulant khat (miraa) without any warning, explanation or indication of how long it will be in place.
Khat is grown in Kenya and Ethiopia but very popular in Somalia. Over 15 commercial cargo flights arrive in Mogadishu daily from Kenya with khat valued at over 400, 000 dollars retail price. So many Kenyans, mostly farmers will be affected if this ban is not lifted. Sellers in Somalia also claim that their families’ livelihoods will be in jeopardy. Civil Aviation minister Ali Ahmed who made the announcement did not give the reason for the temporary ban but he said it was not because Somalia is hosting a regional body meeting on Saturday, Intergovernmental Authority on Development (IGAD).
Though the Kenyan government promised to support the growers of the crop, mainly from Meru region, miraa as its popularly known in Kenya is under serious threat after it was banned in Europe. It’s also banned in United States and Canada. Arguments by a former addict turned anti-khat campaigner Abukar Awale alone cannot be the reason for the ban, that khat contributes a lot to domestic violence.
There is something the authorities are not telling miraa farmers and consumers. Kenyan businesses in or Somalia have been under scathing criticism since the beginning of Operation Linda Nchi. Scrupulous Kenyan businessmen or ‘cartels’ have over the time been accused of running illegal charcoal business, shipping to Oman through Somali. How the charcoal gets to Somalia remains a mystery and so is the reason for miraa ban?
Somali-Somaliland bad blood seems to have caught the governor in the heat. Somali Ambassador to Kenya Gamal Hassan said Mr Munya’s earlier visit to Hargeisa in July had led to political pressure which prompted his government to act.
The ambassador reportedly say Munya linked the territorial integrity of the country to the miraa trade and interfered in the internal affairs of the country. This he say has created a lot of unbearable pressure on the government leading to the ban.
While in Somalia, the Meru governor met with Somaliland Deputy President Abdurrahman Ishmael, the Foreign Affairs minister and his Finance counterpart.
But Mogadishu said Mr Munya’s reported comments on the probable independence of Somaliland angered officials and politicians who are keen to have one united Somalia.
Munya who’s life is now I’m danger following his own alarm, reads a political malice into it coming at a time when traders across his county, largest miraa producers have been staging demos and counting losses from the ban.
The governor claimed that former prominent Meru politician Ntai wa Nkuraru was killed over the miraa issue, and he would not want the same to happen to him.
Calculated move He claimed there was a calculated move by his opponents to malign his name by claiming he was a hindrance in the marketing of the stimulant in the export market. Claims have been rife that the miraa ban came as a result of Munya’s visit to Somaliland early in the year.
A good number of people do not know Vivienne Apopo but amongst the banking fraternity, she’s one of the most powerful figures of the industry in the region. Vivienne Yeda Apopo is a Kenyan banker and business attorney. She is the current Director General of East African Development Bank(EADB).She assumed that position on 15 January 2009. She also currently serves as a member of the Board of Directors of the Central Bank of Kenya, since 14 March 2011.
The East African Development Bank (EADB) is a development finance institution with the objective of promoting development in the member countries of the East African Community. Governments of Kenya, Rwanda, Tanzania and Uganda both have stakes in the Bank. Coincidentally, African Development Bank and Commercial Bank of Africa which is affiliated to President Uhuru also have stakes in the Estimated USD381M assets valued bank.
Vivienne was posed by a section of ruling elite to succeed Njunguna Ndung’u as the Central Bank Of Kenya Governor since they viewed her as a compliant to innuendos that they might pursue. Her bid however didn’t materialize. However, from information within Kenya Insights hold, Apopo’s efforts did materialize elsewhere, creating a corruption and impunity den at EADB.
The lady boss who is a darling to the President given that he holds stakes in EADB, boasts of being untouchable making her run the institution as she wishes knowing no repercussion would befall her in line.
Distressed staff members wrote a petition to the Board of Governors of EADB detailing gross misconduct but Kenya Insights is informed by insiders that she used her influence to silence and water down the petition forcing the staff to seek other alternatives including writing a letter directly to the President who happens to be a double shareholder as GoK and CBA.
The petition from EADB staff members below, details the gritty details of how Apopo is slowly but steadily running down one of the highly valued Banks in the region something that should worry all stakeholders, majorly the individual governments.
We, a group of staff at EADB write to express our concern over the manner in which the Bank is being run under the leadership of Ms. Vivienne Yeda Apopo. We bring to the attention of the concerned parties requesting that her services as Director General at EADB should be terminated immediately for several reasons some of which we will explain below; Despite the fact that the Bank went through a restructuring process in 2011, the loan book is not growing.
The DG is hesitant to grow the business. Much as she might have been good at cleaning up the book and recovering the written off loan (which account for a bigger percentage of the profit the bank has been reporting) she does not have the will and capacity to grow the loan book. The business teams within the Bank have brought in several viable projects in the pipeline but she never wants to approve them or recommend them to the board. Some of these projects have very high social and economic development impacts and are financially viable but she has declined most of them.
The Bank is currently highly capitalized with regular share capital contributions from the member states. The bank has also been able to attract several lines of credits from the likes of African Development Bank, the European Investment Bank, BADEA, OPEC, etc. However out of the Bank total assets of USD 381 million, only USD 165 million has been utilized to lend to projects. The Balance of USD 216 million has been placed as short term deposits in commercial banks.
To confirm that the current DG does not have the interest or capacity to grow this strategic Bank for the region, if you check through the records at the Bank, you will find that over the last 3 years, projects valued at over USD 200 million, (most of which are viable) have been declined and removed from the Bank pipeline at her instructions. Countries like Rwanda and Tanzania have financed less than 5 projects each in the last five years. Yet these countries have a pipeline that she declines, even when the country units and the projects committee of the Bank have recommended them for financing. Uganda and Kenya have equally suffered the same. Countries like Rwanda and Tanzania also subscribe to share capital from tax payers money and yet they are not fully benefiting from the Bank. Her lack of interest to grow the Bank has become worse in that since we started this year of
2016, only two projects in the entire Bank have been presented to the board for approval and we still don’t have projects that she has cleared for detailed appraisal as candidate for the next board approval. We are likely to see no business at all this year much as the Bank still receives viable projects that require funding and at the same time the Bank is well capitalized. The two projects which were approved early this year are far away from being disbursed due to a very slow legal documentation process caused by the reasons we shall highlight below.
Because the Bank is not lending and yet it is well capitalized (some of the lines of credits are used to reimburse some of the projects which have already been funded/disbursed which is fraudulent) the Bank profits have started dropping as evidenced in 2015, which situation is likely to continue because the high profits recorded in the previous years were mainly from recoveries of loans previously written off. These written off projects have fully paid up and at the same time the book is not growing because we are not lending. Coupled with some bad projects which she has single handedly pushed to the board even when the rest of the teams in the Bank have recommended not to proceed (Like Dari Ltd in Kenya) the bank will soon find its self in the situation it was in about 8 years ago with no business, high NPL’s and with some court cases which might take the direction of blue line case.
Much as she declines a number of projects, she still accepts some projects in which she is deemed to have personal interest because some of them are at times not viable like the DARI we have just mentioned above. The Bank needs a new DG who will put systems and structures in place, empower and respect the structures to deliver. Otherwise the Bank is not visible at all in the region and we risk becoming irrelevant very soon.
List of EADB owners and stakes.
Out of all the projects approved by board in the last three years, projects worth over USD 150 million have never been disbursed and will never be disbursed. A few of these projects were declined or halted by the clients but over 80% of these projects were stopped by the DG. The clients got so frustrated and end up going to look for funding somewhere else. She does not want to grow the book and she ends up frustrating good projects. The Bank’s name in the market has been tainted partly because of this practice.
In the first place, she brings such projects to the board to show the board that she is working hard, but at the back of her mind, she is simply manipulating the board members to approve her other requests which have nothing to do with business. She did a lot of that to get the board to approve the several budgets for renovations of the office and residential bank houses, on top of using it as a lobby tool for the board to give her the current contract. We wonder why the board does not ask despite approving many projects, the book is not growing. Please note that all projects we bring to the board will have paid 1%
of the loan amount as appraisal fees. We are supposed to refund 75% of that 1% if we don’t disburse the project. However the appraisal fees refund process has been applied selectively. Clients known to her normally receive their refunds and those not known to her or the small ones never get their refunds. An example is, she refunded appraisal fees for the Rai Holdings group (a multimillion dollar company) but refused to refund for a small farmers organization called Igara Tea Growers. Over USD 500,000 remains un refunded to date much as these funds were part of the profits declared by Bank. Some of the clients have threatened to take the Bank to court if these monies are not refunded.
The Bank is currently experiencing serious governance issues with the current DG making all decisions by herself at all levels. She approves all payments even for buying coffee, she approved any project into the pipeline, she approves all term sheets, she approves all appraisal reports, etc. in other words the Bank is one a person show and if she is away, every thing comes to a stand still. Since she travels a lot and even when she has left any one in charge, that person can never approve or make any decision on anything without her express instructions (even if she is in Europe) which stalls so many activities at the Bank.
The Bank is supposed to have a staff structure comprised of the DG and other Directors/Head of Departments, among others. The Directors/Heads of departments would be running the day to day affairs of the Bank and leave her as the DG to make strategic decisions for the Bank. However the opposite is true. She manages each and every aspect of the Bank’s day to day operations which stifle activities and decision making at the Bank. For very many years now she has refused to fill most gaps in the organization structure which leaves her to run the bank as an individual would run a house hold. She has told some people that the EAC region does not have qualified people that can be recruited to run the Bank in those positions and yet other institutions have been able to recruit people from within the region.
Remember the Bank recruits very highly qualified and skilled staff who once they get into the bank, she makes them idle. She is scared of being challenged and the reason she makes all decisions by her self. This means that all existing structures and activities of the Bank must wait for her approval before anything moves, however small the decision to make might be. We invite the board members to come and interact with staff members in the absence of the DG, they will be shocked at what mess the DG has put this Bank into. In all her life as DG at EADB, she has never held a single management meeting with the senior managers in the Bank and not even with the country managers responsible for the different countries. She has never addressed staff, she never
participates in staff end of year parties, and therefore no body in the Bank knows her vision and strategy for the Bank. Which leaves every one guessing which direction the Bank will take apart from herself? Since she solely determines which projects the Bank should fund, the basis of which is some times is not project viability, rather personal interest and whether she knows the project owners personally or not.
For sure the Bank can not do business in that way. The Bank is currently managing a line of credit from KfW of Euros 8 million with a Euros 1 million for Technical assistance. The financial institutions who benefited from this line of credit include; Dfcu bank (Euro 5 million), Ecobank Uganda (Euros 1.5 million) and Finance Trust bank (Euro 1.5 million). The selection of Dfcu bank and Ecobank were influenced by the DG personally. The fund is meant for rural enterprises but Ecobank has only 4 branches out of Kampala and may not effectively utilize the funds.
Funds were disbursed to Dfcu in July 2015 but todate they have on lent less than 10% of the funds. Ecobank has held the funds for close 6 months now and they have not lent even a single coin. The staff had preferred the smaller banks like Finance Trust bank who have to date lent out over 90% of the funds we disbursed. The smaller banks whose main mandate is to lend in rural areas are more effective for this kind of fund as longer as they are regulated by the central bank. The DG insists on putting in place tough conditions which weed out the smaller banks in the process. The IPC consultants hire by KfW are currently in the bank and can confirm this information. This is an example to show bad leadership and how the DG wants to manage each and every process and decision in the bank. Of course we would propose that KfW puts a halt to the ongoing process for the new agribusiness line of credit until the board has sorted out leadership issues at the Bank otherwise the funds may not meet the objective for which it is meant to achieve.
The permanent secretary Ministry of Finance sits on the board of the Bank and therefore KfW could make sure the board acts through the Ministry of finance. The Bank had a strategy 2010 to 2015, but this strategy changed several times depending on who she was presenting it to. Staff members were not allowed access to the strategy and as a result, if you randomly talked to most staff especially managers and below, they don’t know which direction the Bank is heading. We proposed several times to her that the Bank should hold meetings with all staff to cascade the strategy down wards but she refused all that. Right now the Bank is supposed to be developing a strategy for 2016 to 2020, however she hired a consultant from the UK who is paid very expensively to develop a strategy alone. This activity has not involved other staff and therefore the draft strategy is only
known to her and the consultant. We believe she is preparing the strategy document to simply meet the requirements of the board members and other external parties. However like many other documents prepared by consultants it will never be cascaded widely within the Bank. This can also be confirmed by the IPC consultants who were hired as part of the KfW line of credit technical assistance. So most likely business will continue as usual. She sets targets for countries arbitrarily without putting in place resources to help counties achieve these targets.
The DG does not even hold the quarterly and annual appraisal meetings with the managers who report directly to her. She has delegated this role to a HR consultancy firm (adept systems/Sally Mukwana based in Nairobi) which firm does not appreciate the day today challenges the staff go through in order to do their jobs. Even when the consultant is told of the challenges the staff go through dealing with a DG who can not communicate properly with staff, despises every one, they can’t change how she operates because they still want to be hired for the job.
The HR consultant resorts to intimidating staff and sometimes recommending some of them for firing or not renewing their contracts simply based on imagination. The internal HR unit has been reduced to clerks and can never advise the DG and she takes in their advice. The staff members are de-motivated and frustrated which ends up in many staff members simply resigning and moving on. If some one cares to cross check this information, get to the Bank records and you will be surprised at how many staff have resigned in the last 4 years for such a small organization. This destabilizes the Bank since staff members that are critical to the Bank and have gained understanding of how the bank operates, normally leave the Bank.
The Bank needs stability and growth. But this can not and will never be achieved under the current leadership of our DG. Adept systems consultancy firm (Sally Mukwana) has continuously been retained by the Bank for over four years now, initially to support the recruitment process but after failing to recruit staff. They have ended up duplicating roles of the HR department on an ongoing basis and yet the HR manager and her staff are left idle. The consultancy firm has cost the Bank close to USD 500,000 over time doing assignments which should have been implemented by the HR department if we had a DG who respects her staff.
Much as the Bank might have required short term HR consultancies, they should never have taken on lots of the roles played by the HR unit on a long term basis. The HR consultants have even on several occasions gone to present to the board, when it should have been the HR manager doing this. As a result these permanent consultants cost the Bank a lot of money in air tickets, 5 star hotel accommodation for long periods and consultancy fees. This is a waste of tax payer’s money and gross abuse of office by the DG who hires them.
Because she can not manage people and she never wants to implement recommendations from a professional HR manager, she retains these HR consultants to manage and intimidate staff on her behalf.
known to her and the consultant. We believe she is preparing the strategy document to simply meet the requirements of the board members and other external parties. However like many other documents prepared by consultants it will never be cascaded widely within the Bank. This can also be confirmed by the IPC consultants who were hired as part of the KfW line of credit technical assistance. So most likely business will continue as usual.
She sets targets for countries arbitrarily without putting in place resources to help counties achieve these targets. The DG does not even hold the quarterly and annual appraisal meetings with the managers who report directly to her. She has delegated this role to a HR consultancy firm (adept systems/Sally Mukwana based in Nairobi) which firm does not appreciate the day today challenges the staff go through in order to do their jobs. Even when the consultant is told of the challenges the staff go through dealing with a DG who can not communicate properly with staff, despises every one, they can’t change how she operates because they still want to be hired for the job.
The HR consultant resorts to intimidating staff and sometimes recommending some of them for firing or not renewing their contracts simply based on imagination. The internal HR unit has been reduced to clerks and can never advise the DG and she takes in their advice. The staff members are de-motivated and frustrated which ends up in many staff members simply resigning and moving on. If some one cares to cross check this information, get to the Bank records and you will be surprised at how many staff have resigned in the last 4 years for such a small organization.
This destabilizes the Bank since staff members that are critical to the Bank and have gained understanding of how the bank operates, normally leave the Bank. The Bank needs stability and growth. But this can not and will never be achieved under the current leadership of our DG. Adept systems consultancy firm (Sally Mukwana) has continuously been retained by the Bank for over four years now, initially to support the recruitment process but after failing to recruit staff. They have ended up duplicating roles of the HR department on an ongoing basis and yet the HR manager and her staff are left idle. The consultancy firm has cost the Bank close to USD 500,000 over time doing assignments which should have been implemented by the HR department if we had a DG who respects her staff.
Much as the Bank might have required short term HR consultancies, they should never have taken on lots of the roles played by the HR unit on a long term basis. The HR consultants have even on several occasions gone to present to the board, when it should have been the HR manager doing this. As a result these permanent consultants cost the Bank a lot of money in air tickets, 5 star hotel accommodation for long periods and consultancy fees. This is a waste of tax payer’s money and gross abuse of office by the DG who hires them. Because she can not manage people and she never wants to implement recommendations from a professional HR manager, she retains these HR consultants to manage and intimidate staff on her behalf.
Of great concern is how she has handled the legal department in the Bank. The current DG was in the past years at the Bank as head of legal. Which roles she still duplicates up to today even when she is the DG. The legal department is very critical to the operations of the Bank but it has been crippled because of her. About 3 years ago, the bank had a stable and well experienced team of 4 lawyers from within the region (one from each country), who she frustrated and they all left the Bank.
These lawyers are still within the region working in various institutions they went holding very senior positions. So someone can talk to them to collaborate our story. After they resigned, she hired 4 other lawyers; 3 from Europe, 1 from USA and 1 from Kenya. These lawyers struggled to understand the local lawyers. Coupled with her frustrating them and not allowing them to question any thing, they all resigned in a space one year. The very expensive lawyers from Europe and USA were not necessary, since at that time we dint have many international transactions we were handling and if we had such, it would have made a lot of sense to use external local firms who are affiliated to some international firms. These lawyers disagreed with her mode of operation and all the three resigned.
This is after the Bank had spent a lot of money on them. At the same time, the DG single handedly sourced another law firm in the UK called Evershed who she has also used on several assignments over a period of time. So in procuring both the HR consultants and now the London law firm, not proper procurement guidelines were followed. The Bank does not have a lot of business at the moment to warrant the use of such law firms which charge the Bank an hourly fee of USD 520. The lawyers from this firm are sometimes flow into the country and spend at least a month in Kampala. They have to be accommodated in apartments which cost USD 3,000 per month.
The kind of assignments these international lawyers are paid a lot of money to do can surely be done by our lawyers within the region without wasting tax payer’s money. Simple assignment like reviewing tenancy agreements, reviewing term sheets drafting facility agreements for simple transactions should not be given to the London law firm which over time has cost the Bank close to USD 1 million.
We believe that because of her arrogance, she despises lawyers from within the EAC region. We don’t need such a person to continue heading a regional institution. She can argue that the use ot the London law firm is to avoid court cases like the blue line which almost took the Bank down. But remember blue line case was created by her when she was still the Head of legal at the Bank. Because she is extremely rude and arrogant to clients and staff (much as she puts on a different face to the outsider), this ends up getting the bank is legal battles especially with the clients which could have been avoided. Currently there are some loaming court cases which could easily end up like blue line if she continues as the DG at the Bank. Eden international took the Bank to court because of her arrogancy. She refused to meet and discuss amicably with the owner of the project who is also a Judge of the high court in Uganda.
This very simple case could end up badly. Another project (DARI Ltd owned by Hon Raphael Tuju) in Kenya has been mishandled by herself and there are many chances that it will end up in court for a loan of USD 9.197 million. Every body in the Bank advised against this project but she directed that the project should be taken to the board, it was approved and disbursed. However as we speak, it has already gone bad. An internal legal team recruited from the region supported by a panel of regional law firms from each country can sufficiently support the Bank without the need for London or USA based lawyers.
Currently the Bank has another lawyer on full time basis who was hired from London. He has been made idle and yet the Bank continues to pay him a heavy salary and an expatriate allowance. Even if the bank was to use international law firms, this should be on a very short term basis and on a particular transaction and such costs could be shared with the clients.
The manner in which the legal department has been handled is pure abuse of office and power. During the previous board meeting held in March this year, DARI Ltd and Benver Estates both projects from Kenya were supposed to have been on the NPL list. Because she did not want the Board members to ask many questions about DARI since it was only disbursed recently and not even fully. And by including DARI as an NPL, this would have raised the NPL ration above 5% which she did not want. She instead forced and intimidated one of the staff to lie to the board by including another project called Lake Heights in the portfolio report as an NPL when this project was not an NPL since it had been paying its loans normally for the last 7 monthly installment cycles.
Because of this, the staff who was forced to lie to the board by the DG, resigned immediately he returned from the board meeting in protest of this action, among other reasons all related to how he was belittled by the DG in front of the board members. This information can be confirmed by looking at the Bank records and the portfolio report which was presented to the board and the email exchanges between this particular staff and DG, where she pushed for these changes. We believe this is not the first time she is telling lies to the board members.
The Bank excessively uses consultants who are given short term contracts (3 to 6 months) which are always reviewed for up to 3 years and some beyond. These consultants cost the Bank a lot of money and yet they don’t help to build the institution. DG’s strategy is not to build a sustainable team at the Bank but to use short term and very expensive resources to achieve her person targets. Am sure she does not care what happens to the Bank after she leaves. She has painted a rosy picture to the outsiders and yet the Bank is rotten internally. Things could drastically change if a new DG is appointed for the Bank. For a small Bank of about 65 staff members, we have over 10 permanent consultants. Some of these consultants even sign documents and approval payments on behalf of the Bank which is very dangerous.
The Bank has received some grants from some institutions like AfDB and DEG (both shareholders) to build capacity of the Bank. What she has done is to hire very expensive consultants from Europe who come and work on their own and not allowed to interact with any staff members apart from her self.
These consultants have developed products, policies, manuals, risk management systems, however all these are idle. They can not apply because the day to day users were not involved or the consultants did not interact with the staff to ensure what they develop can be used in this environment.
I can say these grants have gone to waste. And yet they are meant to build the capacity of the bank and staff for sustainability. An independent audit needs to be carried out at the Bank but can only be successful when the DG has been interdicted. She threatens staff members not to renew their contracts and in the end staff keep quiet in order not to loose their jobs. However if every one knew that she is out, you can get the truth about the appalling state of the affairs at the Bank. The DG single handedly participates in all international and regional events, workshops, conferences and meeting where the Bank is usually invited. No staff member is ever involved in such travels and events. Even her country managers have not been exposed to international foras including those where a third party is willing to meet the costs. Under normal practice the DG would sometimes travel with her senior managers for exposure and training purposes but this does no happen here.
If an analysis was carried out on the Bank’s travel budget, you would be surprised that 99% of the travel budget for the bank is consumed by the DG alone. Because she never prepares any reports for such travels and neither does she brief any one on her return, the Bank can not effectively benefit from all the money it spends in such travels. Because she travels a lot and she still wants to control the Bank even while away, the Bank always comes to a stand still whenever she travels. We have lost creditability in the market because we delay to close transactions and can not give quick responses because we always have to rely on her availability to approve any responses.
You will realize that over 50% of approvals are made on mail, because she is rarely around. For example she has not stepped at the head office the entire month of May. Payments to service providers and suppliers have been pending. No project work is moving and everything at the Bank has come to a stand still because she is away. We believe that she could either delegate real authority while she is away so that work can continue but this can not happen. Or else she could delegate her senior staff or country managers to represent her at some of these foras but she never does so. Her expensive trips alongside the high budget for her office and her home cost the Bank a lot of money.
Imagine an institution where the DG earns USD 35,000 per month on top of all her personal expenses being catered for by the Bank including at home, with two SUV vehicles at her full time disposal, while the rest of the majority of staff earn below USD 5,000 apart from consultants. She also frequently cancels air ticks in business class which costs the Bank a lot of money. We believe this is abuse and it should be stopped. All these facts can be confirmed. The DG has on several occations picked perdiems from the Bank that she is going to work from the Nairobi office but she never appears at the Bank’s office in Nairobi at all. Since Kenya is her home country, we imagine she spends this bank time and money on her private errands.
On several occasions, the DG has used the Bank cars to go for her private trips in her home village in western Kenya. The use of the Bank vehicle for her personal trips in her home village has happened several times and can be confirmed from records at the Busia board between Kenya and Uganda. The latest occurrence being during the recent Uganda election period where she spent quite alot of time in her village with the office car. This is total abuse of Bank money and assets. The DG spends a lot of time travelling in the name of looking for partners and lines of credits and yet we can’t lend out the funds we have currently from various lenders. We propose the bank cuts down on the many partnerships being negotiated and instead concentrate on the lending business since this is our core business.
Once we have stabilized and grown the book, then we can get into partnerships and look for more lines of credits. Otherwise we are spoiling our name as a bank because the lender and partners we have are starting to realize that what they were told at the time of getting into partnerships was not true. Once we lose them, word will go around and we shall end up failing to get more in feature.
For example, we have hard KfW and AfDB complain about certain things they were told would be put in place and up to now she has not allowed them to be in place. The Bank has a projects committee and country office projects committees. However most decisions from these committees are not respected by her. If she does not like the project or the owner, even if every one else has recommended the project, it will never be funded. And yet in normal institutions, the DG should not be involved in such technical work and decisions.
If she has an interest in a project (Like Dari) however bad it is, she will intimidate every one until the project has been funded. Whoever tried to oppose her, usually have their contracts not renewed. Recently African Development bank had a supervision mission at EADB. This mission talked to some staff and discovered most of the abuse of office and governance weaknesses we have revealed in this petition.
The mission was conducted by Ms. Juliet Byaruhanga (Senior Private Sector Officer based in Kampala) and Mr. Dennis Ansah (Chief Portfolio Manager Officer based in Nigeria). The board should feel free to read their report or directly talk to them. They will confirm much of what is contained in this petition. She does not respect other institutions and their heads both within the region and out side the region. Most CEO’s in the market have complained that she does not give them due respect. Examples include; she never attends most of the EAC secretariat meetings even when invited by the secretary general.
In 2015, FMO indicated to the Bank that they wanted to sell off their shares and exit the Bank. FMO senior officers who were working on the exit plan made several attempts to meet the DG but in vain. They are not happy with the Bank. Some heads of units from KfW head office in German tried to make appointments to meet with her last year but they failed. They are not very happy with the Bank. The Bank is currently hosting the UNFCCC – Regional collaborating centre for East South and central Africa at the Bank Head office in Kampala.
However the DG has refused to meet the UNFCCC bosses who come to the RCC in our Kampala office on several occasions. The UNFCCC team has hosted several high profile seminars and workshops where she is invited to officiate but she never attends. They have invited her to attend some meetings at their head offices or send staff which she never responds to. They don’t respect the bank and they are not happy. Locally in Uganda where the Bank HQ is located, she has ignored severely high level events.
We appreciate that she can not be every where at all times or attend every event, but some are normally very critical for the Bank and she cant even delegate. As a result, we are loosing value in the market and lately, the Bank is not invited to some key events, where a Bank like EADB would add value being a regional bank. The Bank has started loosing visibility, credibility and relevancy both within the financial services market because we are not financing serious projects but also in the eyes of the key stakeholders because of the way the DG behaves. If you talked to some CEO’s of some commercial banks, they will tell you that she is very disrespectful.
At the moment, there are two large syndicates being arranged in the Ugandan market but the lead arrangers for these syndicates and the participating banks don’t want EADB to participate because of how EADB has handled documentation for syndicates in the past, causing lots of delays to concluding these transactions, since the DG wants to manage every step of the process. The Bank’s image in the market has diminished.
Because of the several resignations, some country offices which generate business for the Bank have been left grossly understaffed for some time and yet she does not seem to be interested in filling up some of these positions. For example, Country office Rwanda has one project officer and the country manager, Tanzania has one project officer and the country manager and Uganda also has one project officer and the country manager. We believe there are enough skills within the region to fill these positions. Much as she tells HR that we cant find the right people in the region. She has on several occasions tried to negotiate with staff from the UK but we strongly believe that the Bank does not need staff from the UK or USA.
The region has enough skills which can fill the positions and deliver for the Bank if well motivated, trained and exposed alongside good leadership. Regarding the bank strategy and her ability to get the outside world to think the Bank has greatly inproved, she has kept various versions of the previous strategy and the organization structure. Depending on who she is presenting to, she has always used different versions of the strategy and organization structure. She has told lies at different foras that certain positions within the organization structure are filled, when she is referring to consultants who go away after some time.
The current strategy has been prepared by a consultant from Maxwell stamp London who are very expensive, they don’t have an appreciation of the local operating environment and we believe the draft strategy in place currently will keep in the shelf like the previous strategies. The consultant has worked by himself and the users have no idea what has been prepared, what has informed the strategies, etc. a proper DG would have involved all key staff in the strategy formulation and review process. Of course she has manipulated the outside world including Lenders, the board, rating agencies only because the Bank cleaned the book and was making some profits. But these might not be the case any longer.
Because she has told many lies to the board and other partners, she never wants staff to freely interact with the board and other partners. The same reason she might not want to travel with staff to some international events for fear that staff could easily spill the beans. Staff members have tended to keep quiet in fear of loosing their jobs since the DG has been given excessive powers to determine staff members destiny.
All staff are given two years contract while some after being renewed are given one year. Two years are two few for a staff working in a development bank. A project cycle from admitting a project into the pipeline to approval, to full disbursement and implementation takes about 5 to 10 years. Staff should be given at least a 5years contract to be available during the life of the projects they work on. However the DG reduced the contract tenor as a tool for her to intimidate staff.
Staffs live and work under fear, praying that after two years their contracts should be renewed. At the Bank contract renewal does not depend on performance per say but on what the DG feels about the particular staff. HR does not have any say in contract renewal. Some staff who she is not in good books with normally have their contracts expire and they work for even months before she renews their contracts. If she wants a staff to leave the Bank, she gives short contracts for 2 weeks to 3 months simply to frustrate the staff until they resign.
The 2 years contract affects staff productivity because after one year, most staff spend time looking for other jobs just in case their contract is not renewed. Remember staffs have families to look after and this uncertainty is normally inhuman. On the other hand, most staff normally depend on staff loans from banks for personal development. Coupled with the fact that the Bank does not give staff loans, no commercial banks out there will give staff loans for 2 years, and even when they do, and such a loan can not help any staff to develop.
These are some of the things that motivate staff to work hard. The bank has serious procurement flaws which need urgent attention. The Bank seems to be loosing a lot of money through the single sourcing approach by the DG. We strongly believe costs have been inflated due to lack of proper procedures. The Bank at some point had hired a professional procurement specialist to support guide the Bank to follow procurement guidelines, but he shortly resigned when the DG tried to arm-twist him to circumvent procedures.
We saw a lot of poor quality work and materials used during the Head office building renovations and yet a lot of money was spent. In some areas of the building, certain fittings are already falling apart. We believe there will be serious issues between the Bank and the contractor when finally handing over the building because of quality issues. A serious procurement audit needs to be carried out. In some cases we observe more items were procured that would normally be required for an institution like EADB which uses tax payers money.
A simple example is a well furnished board room with state of art equipment, which is never used. The Bank continues to spend a lot of money holding board meetings in hotels even when the meeting has taken place in Uganda. The building has two restaurants with state of art fitted kitchens, both of which are never used at all and yet staff have to go out of the building to look for lunch even on rainy days. We believe over procurement and single sourcing approach was used as a means to squander bank money.
To give you an example of how staff are mistreated, all staff including senior managers and the Uganda country manager park their cars on the street or at the Imperial Royale parking lot (about half a kilometer from the Bank) whereby staff have to walk to office after parking their cars whether its raining or not. The office parking space is 75% empty and only used by the DG infront of the building at some tenants at the back of the building.
Seriously the Bank’s core business is financing projects and not letting out buildings. Therefore tenants should not be give priority for parking space over staff members who dedicate their time to work for the Bank. I know because the DG does not want to grow the book through lending, and yet she still wants to report some profit, she is sacrificing staff for tenants because she needs that other income from letting out Bank property to supplement the bank profits. This is not the Bank’s core business and therefore staff should be treated with respect.
Another example is the manner in which foreign staff members working in Kampala are treated when it comes to the use of Bank houses in Naguru. The best houses are given to non-bank tenants and the worst houses are left for Bank staff. Recently one of the flats where most of the Bank staff members were staying was renovated. After the renovation and to every one’s surprise, the Bank staff are being asked to pay higher rent of UGX 1.336 million (about USD 400) and non-bank staff members are asked to pay UGX 900,000.
We are surprised why non-bank tenants both at the office and at the flats are favored more than the Bank staff. We believe the rating agencies (Moody’s and Fitch) have been given false information or influenced to give the bank the Baa3 rating. We are very sure, if carried out an independent rating audit without meeting with the DG, the rating would fall considerably because she has not built a sustainable institution. She only cares about what happens while she is around and she will do any thing including bribing to maintain that status quo. Some lenders have started noticing the lies and it will be a matter of time before things get out of hand.
There is nowhere in the world an institution which is being run in this manner can be rated Baa3 unless the rating agency has been influenced which we believe is the case with EADB. The staff and tenants on the building are concerned as to why the DG moves with an armed body guard at all times. The body guard sits infront of her office door at all times. The DG does not allow any other person in the bank lift when she is in it apart from her driver and the body guard.
In fact the lift is locked when she is in it and opened when she is exiting. This paints a very bad picture for a leader of such an institution. If she can not be free with her own staff and tenants at office, then she is not supposed to be leading such an institution. Sometimes the heads of institutions who rent space at the office building are left dismayed as to why a leader of such an institution like EADB could behave in this manner.
Very interesting is that there are some staff members at head office who spend more than two years without ever seeing the DG. The fact that the DG refused to hire heads of departments including head of legal/company secretary (a position she still heads todate) who would also independently record board and governing council meeting minutes, there has been a conflict of interest and sometimes falsification of minutes of the board and governing council meetings to suite her needs.
Much as there is always a minute taker), she decides the final version of the minutes which are circulated to the board by herself. Some of the board decisions are usually altered and because there is no closer monitoring of her activities, such things go on un-noticed. For example, some time back the board approved an update of the Bank IT systems. However the Bank is currently installing new Bank systems for over USD 1 million which have been single sourced by the DG. Similar situations could have happened with the decisions taken regarding renovations of the Bank building.
It is possible that the money spent on renovating the bank building could have built and furnished a new building of the same size. Similarly sourcing of the IT installations (of the magnitude of over USD 1.2 million) going on at the Bank at the moment was single sourced and negotiated by the DG herself without going through the right procurement procedures. This could lead to loss of Bank money. In order to avoid such situations in feature, we believe DG’s should work for one fixed term of 5 years and rotated from different countries of the EAC like it is for the secretary general of the EAC.
The Bank needs some level of regulation by a financial institution regulatory agency. The member states could decide to have the central banks for the different countries supervise some aspects of the bank on a rotational basis annually. The EAC secretariat could play part of this role, but we believe as a financial institution there needs to be proper supervision of the Bank by a financial regulator. It is important for the powers of the DG to be spread, otherwise this actions of impunity will always continue because of the too much powers the chatter gives to the DG.
You will wonder why as staff of the Bank we have taken very long to bring these issues out in such a manner. We believed that most of these issues have been noted and reported at board meetings by the Chief Internal Auditor but we don’t see the board taking any action to propose change of top leadership at the Bank. A detailed audit report was presented to the board at the end of 2014 by the internal auditors highlighting all these issues but things have instead deteriorated.
This is now long over due and if the Bank is to be saved from going back where it was about 7 years ago, some immediate action needs to be taken. We request that the DG is immediately relieved of her duties. One of the country managers can act for a short period and the board and the governing council finds a replacement. Like we mentioned earlier, the Bank has very qualified and skilled staff who simply needs a good leader to drive the Bank business to greater heights. The fact that we have used these means to bring out these issues, we are willing to go all the way to ensure that change takes place in the interest of the Bank and the tax payer’s money.
And therefore if no immediate action is taken, we shall share this information with the international lenders and the class B shareholders and the media. Obviously the heads of state will get to know as well. Please note that we are not holding you at ransom and neither are we threatening you. We just need to save this Bank. The region needs it. We also encourage the board to meet with the staff, and as long as you promise to protect the staff, you will get to the bottom of the issues.
But with the current DG in office, staff may not be willing to come out and give you more details. There is more that we could not put out here. The DG needs to change now. We are aware of when her current contract will expire but by then, things will be irreversible. Its better she steps a side now. There wont be any crisis. The Bank will continue running much as the board might have to put a mechanism where they support whoever will act as a temporary DG until a new and substantive DG is recruited.
The Bank needs stability and growth. These can only be achieved if Vivienne Yeda is out of the Bank. This can be done peacefully by simply asking her to resign. We are also proposing that the Charter should be amended to among other things, stop serving board members to borrow from the Bank. We are aware some board members have borrowed from the Bank. Once a board member has borrowed from the bank, they get compromised and cannot put the DG at task to explain why certain things are done the way they are done, because they feel they owe her and therefore such board members easily lose objectivity.
This might partly explain why things have gone so wrong and the board is aware and yet not action is taken. We have delivered this document to many recipients using hand delivery, email and courier. However we request that who ever receives it first should bring it to the attention of the Bank board chairman (DR. Kamau Thugge – Principle Secretary, The National Treasury, Republic of Kenya) just in case he delays to receive it to enable him initiate action. This petition was initially sent out weeks ago to the board members. However we have not seen any action being taken. We have decided to share with the lenders (KfW, AfDB and EIB.). FMO has also been notified because we have reffered to them in this petition. Should we not here any reaction and a communication from the board to all staff of the Bank on the actions being taken by end of June 2016, we shall escalate to another level). This might hurt the bank but the board will be held responsible since you are aware of what is happening. You might chose to ignore this petition because it has not been signed by any staff member. This does not stop the fact that there is a big problem which needs urgent attention.
It is common knowledge that Kenya is among the top countries in the world in Corruption matters. This evil that bedevils us has done us more harm than we can statistically quantify. From unemployment to under-employment, the Kenyan youth continues to harbor that elusive Kenyan dream, if ever, there was one. It is because of these economic upheavals that the youths engage in new frontiers to try and make ends meet.
From innovation to invention, an average Kenyan is trying through thick and thin to ensure that they can at least put a meal on the table. The new kid on the block as far as “hustling” is concerned, is Gambling. This article will try to approve or and disapprove gambling as an economic activity that is “The Next Big Thing.” Is a sport betting our new Oil??
A Wiseman once said, a fool and his money are soon parted. There has never been a time in Kenya’s history when this saying became so applicable than today. Gambling is different things to different people. The English dictionary defines it as the act of playing for stakes in the hope of winning. It includes payment of a price for a chance to win a prize.
Wilson Mizner defines gambling as ‘the sure way of getting nothing for something.’ Mizner’s definition thus, excludes existence of any direct Quid Pro Quo in gambling. Is gambling really this bad? If it is, why is it legal in Kenya? Does it have any economic benefits? Let us try to answer some of these key questions.
Before we delve into the nitty-gritty of the cost-benefit analysis of betting, let us first review why one would be interested in this activity in the first place. Psychologists have identified some of the reasons that lead to gambling as:
Desperation for money- this point is tied to the high rates of unemployment.
Since unemployed people do not have any regular source of income, they are generally, financially desperate. This desperation acts like a catalyst for them to gamble the few coins they have with the view that they will win big. After all, one of a gambling advert I see on T.V every day says…”IT IS BIG!” It is not in the gambler’s interest to doubt an alligator that has just come out of the river and reported the crocodile as sick!
Another reason for gambling is for the player to experience highs. Placing a bet and waiting for the final results of the match to know whether one has won or not, is such an enticing experience that keeps the players in some sort of stupor. Ordinarily, a person who engages in gambling based on this reason will have learnt it from peers. Gambling is generally high among youths because of peer pressure.
Supporters of gambling have advanced some key reasons in support of this industry. Some of the reasons are:
It aids in employment creation. In an economy where unemployment is officially at 25%, and unofficially at 60%, it is common sense that we need to create jobs. In this endeavor, we also need to diversify such that our jobs are not shaken by threats such as terrorism.
To this end, gambling both in casinos and on-line sports betting has created an avalanche of opportunities for the youths. In fact, Kenya boasts of 23 sports betting firms as at June 2016. These are in addition to many other casinos that have existed for decades. It is common knowledge that a lot of jobs have been created by these firms.
Ronald Karauri, Sportpesa CEO
It is a source of revenue to the government. At least 50% of our GDP is supported by government revenue in form of taxes. Gambling companies, like any other corporate, they too pay their fair share of taxes. This is a great source of revenue to the government. Other than taxes, they also pay relevant licensing fee to the relevant statutory organs, in this case, Betting Control and Licensing Board.
It is therefore reasonable to understand why the government would permit gambling activities within its jurisdiction. Macau in China, which is the largest gambling town on earth, generated Ksh. 45T in 2014. The second largest gambling city being Las Vegas, which made Ksh.6.5T. In fact, Las Vegas economy is more than 90% built on gambling. Prior to engaging in gambling, it was a mere desert with nothing to show to the world.
Looked at from the perspective of positive Economics, gambling is a good investment and a booming industry that poor countries can encourage as a way of uplifting them from poverty. This argument can be supported by the case of Las Vegas.
Whereas, the above points seem plausible, prima facie, a critical look at the gambling industry proves otherwise. The economic and social costs associated with gambling far outweigh any perceived benefits.
To start with, gambling leads to financial devastation. They say that gambling is a successful business because the house always wins. The player will generally start gambling with the aim of achieving some financial freedom. However, they never reach this level. The more one wins, the more they will gamble with the hope of winning much more.
This trend will continue till finally, they have lost all they had. At this point, one will find themselves in deep debts and financial troubles. Their gut feeling will be to further borrow and win back their bet, so the cycle will continue.
Yet another cost of gambling is job losses. Betting is like a drug. It is more dangerous than cocaine or heroin. It is addictive. The more one gambles, the more they are ensnared in this prison. Once addicted, it alters the normal functioning of the individual. Anxiety and depression will kick in and sooner rather than later, the productivity of the player at the place of work will deteriorate. The only logical end to this story will be firing of the employee who is unable to produce because of depression tendencies that have been caused addiction to gambling.
Julie Gichuru, a partner in betting firm M-Cheza affiliated to her father-in-law Samuel Gichuru entangled in KPLC multi-million heist
Studies also show that 66% of gambling addicts will engage in illegal activities to pay for their gambling debts. This therefore implies that crime rates will increase. The rate of criminal activities in a town prone to gambling is far much higher than the rate of crime in the general population. Mugging and drug abuse is higher among the betting population because of the need to get money for betting as well as trying to control anxiety and depression.
Gambling leads to a lot of family problems. Studies show that 90% of gambling addicts around the world have family issues. In the US, 65% of the couples that consist of one spouse with a gambling addiction end up divorcing. This is a social cost that positive economics overlooks.
In conclusion, we cannot deny the role played by gambling companies in Economic growth. Economic growth should not be confused with Economic development. Gambling can never help in economic development of any economy. While not overlooking the role of gambling as a growing industry especially in developing countries, it is important for us to understand that the Net Present Value of Gambling is negative. Its social and economic costs far outweigh its economic benefits. From a positive economic point of view, Betting/Gambling looks like the next economic frontier that has the ability to grow the economies of 3rd world countries. However, in social welfare economics, there is no Pareto optimality in gambling.
Finally, it is President Barack Obama who once said, “We didn’t become most prosperous country in the world just by rewarding greed and recklessness. We didn’t come this far by letting the special interest run wild. We didn’t do it just by gambling and chasing paper profits on Wall Street. We built this country by making things, by producing goods we could sell.”
The writer is a hustler with ideas that can change the world. He holds a Bachelor of Commerce degree in Finance from JKUAT.
Disclaimer: This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email:[email protected]
China’s Africa Strategy
Decades ago, China influence in Africa was limited. Its aid influence were highly significant and its diplomats relatively unskilled. And many Chinese were unsure about their country’s role as an International actor in the International system. In many instances, China did very little rather than defending core interest like “one China”.
Recently, However, strong economic growth , a more sophisticated generation of Chinese leaders , better scholarship from Chinese government to Africans and a domestic population more confident of china as a global actor have given China a more proactive approach in global politics.
Chinas motives are clear: they are looking for new suppliers for their industries raw materials. Its exporters want market and their governments want support in International Organizations and its propaganda to counter the US influence in the global politics. Africa is therefore a good ground for these strategies. In fact, the whole issue for the Chinese scramble is purely a resource grab. Chinese growth coupled with dwindling oil and mineral deposits is a major factor in the scramble for the African continent. China is the largest consumer of the petroleum product and natural gas and other minerals like copper, cobalt and natural gas.
Chinas motives are clear: they are looking for new suppliers for their industries raw materials. Its exporters want market and their governments want support in International Organizations and its propaganda to counter the US influence in the global politics. Africa is therefore a good ground for these strategies. In fact, the whole issue for the Chinese scramble is purely a resource grab. Chinese growth coupled with dwindling oil and mineral deposits is a major factor in the scramble for the African continent. China is the largest consumer of the petroleum product and natural gas and other minerals like copper cobalt and natural gas.
In the coming years, China domestic oil production will diminish and this might make it likely be the global consumer of such products. China has no strategic oil reserve unlike the United States. That is the reason China has a lot of interest in Nigeria, Sudan, Angola, Gabon and Kenya. China imports about 28% of its oil products and gas from Sub Sahara Africa compared to 15% of the United States.
In the coming years, China domestic oil production will diminish and this might make it likely be the global consumer of such products. China has no strategic oil reserve unlike the United States. That is the reason China has a lot of interest in Nigeria, Sudan, Angola, Gabon and Kenya. China imports about 28% of its oil products and gas from Sub Sahara Africa compared to 15% of the United States.
However, China’s Africa strategy is more than resources but also to open new markets for their products. We have seen Kenyan market flooded with sub standards goods thereby creating a crowding effect for the local goods and services. Ethiopia for example has 90% of the market composed of Chinese products.
Sadly, Chinas unparalleled competitiveness in the developed International Markets is hurting Africa’s economies especially in the textile industry. African leaders are actually treating China as a global power in the Continent.
China is determined to establish long term relationships with the Africa’s elite. These are through exchange programs like scholarship. It is therefore not surprising that Chinese language is to be taught in Kenya alongside the English language. Chinese medical doctors train African ones and provide free medical equipment to African counties. On the economic front, China has opened many investment and trade promotion centers to promote trade with the African continent. The Chinese has created special funds and have reduced bottlenecks for the Chinese investors.
This is aimed at encouraging investment among its people. China uses summits and conferences to reach the African leaders. China view Africa as a market for its arms. Chinese sale of arms to Africa is second to Russia. This is compounded by the fact they don’t lecture African countries on good governance and democracy. Chinese telecommunication giant Huawei for example has huge contracts to provide mobile services in countries like Kenya, Nigeria and Zimbabwe. President Mugabe for example refers to china “My friend number one” Just because they don’t lecture Africans on the need to inculcate democratic principles and uphold Human Rights. The same sentiments are shared by President Kagame and Omal EL Bashir of Sudan. In Africa where the rule of law often doesn’t exist, China’s state led business model could prove a disaster for a continent that is still left with fragile pseudo democracies with no strong civil societies and non-state actors to oversight the excesses of the governments.
In this fragile environment, Chinese influence could complicate democratic consolidation and good governance. Chinas unwillingness to put any conditions to its assistance to African countries could further jeopardize International efforts to promote good governance. China has always used its Veto power at the UNSC to thwart efforts meant at imposing sanctions on states that are considered rogue. Africa will therefore provide a test whether china is a world power able to exert influence beyond its borders.
There is increasing Chinese participation in the energy and resource sectors particularly in fragile states such as Sudan, Angola and DRC. This is linked to attempts by some fragile states to evade pressure by western donors and NGOs to promote more transparent and better governance. Chinese aid is growing throughout the region, particularly in recent years, and appears to be carefully targeted to complement its commercial activities, Including in fragile states.
While these major policy challenges are clear, important key knowledge gaps exist which need to be filled if policy responses are to be appropriately nuanced for Individual country circumstances. The major knowledge gaps are with regard to:
* The need for baseline studies to assess the changing future impact of China on SSA.
* Analyses of the determinants of SSA competitiveness and the steps required to enhance productivity (for example, in clothing, textiles, footwear and furniture, as well as in export-oriented food crops);
* A more thorough assessment of indirect impacts of China’s trade on SSA, facilitating the development of appropriate policies for providing special and differential treatment to low income SSA economies in global markets;
* Determining the impact of China on consumer welfare, income distribution and absolute poverty levels in SSA, through an analysis of the consumer benefits derived from cheaper imports, and the distributional implications of a switch in specialization away from labor-intensive manufactures to capital intensive commodities;
* Distinguishing generic from sub-regional and country-specific impacts, aiding the classification of different types of SSA economies;
* Identifying likely future areas of threat and opportunity;
This growing Chinese presence raises major policy challenges for SSA if the manifold opportunities are to be grasped and the threats minimized:
* It poses particular threats to the manufacturing sector. Here the outlook is not entirely bleak, but SSA countries need to take explicit steps to counter act the dangers posed to existing and future capabilities in industry.
* Although the commodity boom favors some SSA economies, it poses very severe problems of economic management. Poorly-handled, a resource boom can easily become a resource-curse. Much can be learned from the experience of other countries (including in SSA) in handling these resource booms.
* Notwithstanding the welfare gains to the poor from lower import prices, the expansion of capital-intensive mineral production and the decline of labor – intensive manufactures pose severe challenges for poverty-alleviation and income distribution. There is, moreover, the additional problem that resource-production is closely associated with violence, corruption and fragile states. Policies to ameliorate these potential adverse poverty-related impacts need to be addressed.
* Linked to this, China has actively forged closer links with fragile states and this has undermined attempts by the global community to enhance transparency and better governance. There is also emerging evidence that attempts to foster better corporate and environmental governance are also being undermined by China’s presence in some SSA countries.
* African economies are being pulled in different directions with regard to their linkages with other economies. One pressure is to sustain historical links with the EU and North America, cemented by various preferential trading agreements. Another pressure is to strengthen links with other SSA economies, particularly in southern Africa. A third pressure is to enhance links with Asia in general, and China in particular.
Scarce administrative and strategic capabilities may require SSA economies to choose how they respond to these various pulls. There are strong arguments for a concerted ‘look East’ policy.
* The key capability which SSA economies require is the development of dynamic capabilities to scan changing environments, to develop appropriate strategic responses and to implement these strategies effectively. Unless these capabilities are built – in government, in the corporate and farming sectors, and in civil society – the opportunities offered by Chinese growth may be overwhelmed by the threats which are raised. This applies particularly to emerging sectors of Chinese demand (for example, imports of food products).
The writer Is an economist by profession.
Twitter : @Asamoh_
Disclaimer: This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email:[email protected]
President Uhuru signs into law the interest capping bill in Statehouse.
By Philip Makokha
That same day Jesus went out of the house and sat by the lake.2 such large crowds gathered around him that he got into a boat and sat in it, while all the people stood on the shore. 3 Then he told them many things in parables, saying: “A farmer went out to sow his seed. 4 As he was scattering the seed, some fell along the path, and the birds came and ate it up. 5 Some fell on rocky places, where it did not have much soil. It sprang up quickly, because the soil was shallow. 6 But when the sun came up, the plants were scorched, and they withered because they had no root. 7 Other seed fell among thorns, which grew up and choked the plants. 8 Still other seed fell on good soil, where it produced a crop—a hundred, sixty or thirty times what was sown.
The above text comes from the book of Matthew chapter 13. It piqued my interest because, government policies are like seed. The sower is the government- legislature, judiciary and executive. Assuming, an ordinary man immediately appeared after the seeds had started germinating, he would have been thrilled by the seeds sown on rocky ground that had sprung up quickly. I bet, he would even thank the sower.
It is human nature, to live in the present and enjoy facades, which are our daily lives. On August 24, 2016, H.E President Uhuru Kenyatta assented to the Banking amendment Act (2015) which among other things introduces interest rate ceilings and floors. In his statement after signing the law, the president says “…Upon weighing carefully all these considerations, on balance, I have assented to the Bill as presented to me. We will implement the new law, noting the difficulties that it would present, which include credit becoming unavailable to some consumers and the possible emergence of unregulated informal and exploitative lending mechanisms.
First, let us start from the very basics. Interest is the price charged on money. Since it is presented as a percentage, we refer to it as a rate. Interest rate ceilings/restrictions/caps refer to the maximum interest rate charged by the lender to the borrower. On the other hand, interest rate floor refers to the minimum interest paid on bank deposits i.e. deposit rate. The difference between the two is the SPREAD.
Ordinarily, these interest rates are driven by market forces- demand and supply. Market forces work best in a perfect competition market. This is a market where among other features; it has many buyers and sellers. Other markets are monopoly, oligopoly etc. It is not possible in practice, to find a market that is 100% its type e.g.100% perfect competition or oligopoly. Ordinarily, we characterize a market as perfect competition if the features of a pure competition dominate features of alternative market structures. Other than markets, we also need to look at different types of economies. An economy can be Command, free or mixed. Generally, Kenya is a free market economy. As to whether, the banking sector in Kenya is oligopoly or pure competition, I do not know. Theoretically however, it is a pure competition. The Kenyan economy is majorly free enterprise where an owner of capital can put it in any sector and await returns. Of course, there are regulations governing each of the sectors that an entrepreneur may venture into. These regulations are not necessarily barriers to entry.
INTEREST RATE AS PRICE FOR MONEY AND ITS DETERMINATION
Let us throw this animal called interest rate out of the window for a moment. Let us talk about and ordinary good-sugar. How is price for sugar determined? In any business transaction, there are two parties involved. The buyer (demand) and the seller (supply). The buyers want to buy at the lowest possible prices while the sellers want to sell at the highest possible price. So how is the price determined? The sellers will set a price that covers their production costs plus a mark up. The buyer wants to buy at a price that gives them value for money. In a market with only one seller and many buyers, the seller is likely to exploit the buyers while in a market with only one buyer and many sellers, the buyer is likely to benefit. In practice, there exist many buyers and sellers and therefore prices of items are determined at an equilibrium point. On a graphical presentation, this is the level where quantity demanded equals to quantity supplied. QUANTITY DEMANDED IS NOT DEMAND! The prices will generally hang in this range. The interest rate is determined in a similar manner.
BANKING IN KENYA: OLIGOPOLY OR PERFECT MARKET?
The answer to the above question depends on who you ask. Generally speaking, financial industry is a pure competition. There are many sellers and information is readily available. For example, you can easily know what Bank X charges as interest rate compared to Bank Y. Thanks to the Central bank of Kenya. Some people argue that banking industry is an oligopoly- there is a small number of sellers who control the market. To some extent, this is true. Kenya is dominated by less than 10 banks even though we have in excess of forty banks in operation. These banks, it is argued work in a cartel-like manner thereby charging unnecessarily high interest rates. What high interest rate is, am yet to understand.
WHY INTEREST RATE CEILING AND ‘FLOORS?’
Hon. Jude Njomo, having studied the cartel-like behavior of commercial banks and their high interest rates, deemed it appropriate to regulate the interest rates that banks charge in order to cushion the common man-Wanjiku. From what I gather, Wanjiku is a group of people at the bottom of the economic pyramid. Members of parliament therefore, deem it unfair and predatory for the banks to continue exploiting these members of the society. The attempt to cap interest rate is a third one since the last two decades. The other two attempts having been made by the former mp Joe Donde and Hon. Jakoyo Midiwo. The bill, now the Act addresses many things, among them interest rate capping. This is what this article is about. Many countries have tried capping interest rates including Zambia in 2013. The law has since been abolished. Around the world, approximately 76 countries have some sort of interest rate capping. Some sort because, not all interest rate capping work as the one we have enacted.
A study by Samuel Munzele Maimbo and Claudia Alejandra Henriquez Gallegos titled,
‘Interest Rate Caps around the World Still Popular, but a Blunt Instrument’ reports:
‘In this exercise, we found that the main reasons for using interest caps on loans were to protect consumers from excessive interest rates, to increase access to finance, and to make loans more affordable. Most countries regulate interest rates with the broad aim of protecting consumers, as in the case of Spain. Other countries provided more specific objectives, such as protecting the weakest parties (Portugal); shielding consumers from predatory lending and excessive interest rates (Belgium, France, the Kyrgyz Republic, Poland, the Slovak Republic, and the United Kingdom); stopping the abuses arising from too much freedom (Greece); controlling over-indebtedness (Estonia); and decreasing the risk-taking behavior of credit providers (the Netherlands). Similarly, in Thailand authorities stated that the purpose of the caps was to make finance affordable for low-income borrowers.3 Finally, Zambia’s authorities introduced the caps to mitigate the perceived risk of over indebtedness and the high cost of credit, as well as to enhance access to the underserved.
The Zambia law was abolished three months later.
WHAT INTEREST RESTRICTIONS WILL DO
There are two probable things that restricting interest rates will do. One, what the government tells us that will happen and the second happening is what economic theory supports. I will talk about both cases.
According to the government and the supporters of the law, low interest lending rates will increase access to credit by Micro, small and medium enterprises. It will also increase access to credit by families that could not afford credit facilities under a regime without the caps. This will boost productivity and ultimately improve economic growth. Jobs will be created and we shall be a few steps away from achieving a million jobs a year as promised by Jubilee. The government will also achieve greater financial inclusion rates for the Kenyan citizen.
On the other hand, interest rate floors set for saving deposits (deposit rate) will encourage a savings culture thereby ultimately, boosting our economic growth. After all, a saving economy is a growing economy. It is however, misleading to think that limiting deposit rates at 70% of CBR will encourage savings. According to the Central bank, the deposit rate as of April 2016 was 6.92% .With the new low; it will be at least 7%. I do not think a marginal increase of 0.08 will do anything to encourage savings. With the 6.92% of deposit rate, our saving rate is at a mere 1.4%. The interest rate floor will thus, have negligible effect, if any. Low lending rates encourage investment as well as consumption and both these activities are good for economic growth. By controlling deposit rates, the government will be able to arrest any inflationary pressure that would have occurred because of availability of cheap loans. Whereas these arguments are convincing, they are flawed.
However, according to economic theory, two scenarios are more likely to occur. First, availability of cheap loans will increase liquidity in the economy. The question that begs is what is the effect of an increase in money in circulation? An increase in money in circulation will automatically increase consumption. If the increase in money is not accompanied by a commensurate increase in production, as is likely to be the case in Kenya, there is likely to be inflation.
There will be too much money chasing too few goods! This inflationary pressure will lower the purchasing power of our money. The real value of our shilling will be eroded. For example, Ksh.1000 will buy less than it could have bought prior to interest rate restriction. As a result of this pressure, workers will demand more pay. This will cause industrial unrest and production will plunge further because of time wasted on pay negotiations.
If employers will agree to increase salaries, the cycle will continue. This policy therefore, creates a vicious cycle that is a zero-sum game.
The second likely event to occur according to economic theory is credit rationing. A key component of interest rate is the risk aspect. Banks generally weigh the risk profile of a client and adjust the rate accordingly before advancing a facility.
A client either has low risk profile or high risk profile. A client with a good credit history and a regular stream of income is less risky than a client who is probably borrowing for the first time. In a regime where interest rates have no upward limit, banks will accommodate the riskier client by adjusting the rates accordingly. On the other hand, if the rate has a cap, and the risk profile of a client cannot fit within this regime, the best alternative is to deny that client the facility all together.
These clients are SMEs and Wanjiku. Apparently, the very people this legislation intends to protect. From my experience, when someone wants money, the cost is not their priority. The priority is AVAILABILITY. And this is why; Shylocking is a thriving business in Kenya. This ‘locking out’ of potential borrowers, will lead to establishment of more informal lending businesses that are likely to exploit the public much more. The president notes this in his statement. Kenyans will be exploited much more by the unregulated sector of shylocks!
WHAT WORKS?
Spain is among the few countries that have a law similar to what the president assented to on August 24, 2016. Does it work? Whereas interest rates are low in Spain, studies show that it boasts of notoriously high charges. This means, what the banks cannot make through interest, they make through other charges. This is also a possibility. If these charges too, are capped, the banking industry is going to be a no-go zone for investors. Investors like to put their money where it generates the highest possible returns. Since the major role of management is to maximize shareholder value, caps limiting their ability to achieve this goal can only mean one thing: COST REDUCTION.
A huge percentage of total costs for many businesses are labour related and thus, banks may be forced to freeze hiring of new staff or reduce their workforce so as to continue making profits. Is this job creation? Banks are henceforth going to invest much more in technology and less in human labour in order to return value to shareholders.
The best alternative of handling the high interest rates would have been more of moral than legislative. For example, the government through CBK would have advised bank executives to set aside some percentage of their loan portfolio for SMEs and Wanjiku. This alternative accompanied by threats of legislation would have yielded much better results in the long run. We can think of this as setting up of EPZ in the manufacturing industry. In fact, the government could even decide to tax income generated from this portfolio at a lower rate or give it a tax holiday. This would boost credit access to the marginalized without interfering with the banks’ independence. This is more likely to stimulate economic growth and development. Controlling interest rates is sowing on a rock; the seeds will spring quickly because the soils are shallow. They will however, not live for long as they have no roots. Let’s sow in deep fertile soils. It may take long for the seeds to germinate, but when they do…they will grow to maturity and yield maybe thirty times or more of what we sow!
Finally, s I conclude, I would like to paraphrase Dr, Ndii, no amount of growling at critics is going to make foolish policy wise.
The writer Is a degree holder in Commerce, specializing in Finance from JKUAT And a hustler with ideas that can change the world. Twitter: @pcmakokha | Facebook: PC Makokha | IG: PC Makokha
Disclaimer: This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email:[email protected]
Finally, after bustles and tussles around the matter with the Bankers pleading with the President not to sign into law the Interests rates amendments, Uhuru finally inked it into law. On July 28, 2016, the National Assembly passed the Banking (Amendment) Bill, 2015. The Bill intends to regulate interest rates that are applicable to banks’ loans and deposits, capping the interest rates that banks can charge on loans and must pay on deposits. The bill proposed a ceiling on loans at no more than four per cent of the Central Bank of Kenya’s recommended rate.
The Bill was then forwarded to the President for approval. “Since receiving this Bill, I have consulted widely, and it is evident to me from those consultations that Kenyans are disappointed and frustrated with the lack of sensitivity by the financial sector, particularly banks. These frustrations are centred around the cost of credit and the applicable interest rates on their hard-earned deposits. I share these concerns.” Says the President.
This is the third time that the National Assembly is attempting to reduce interest rates to affordable levels. In the previous two instances, dialogue and promises of change prevailed and banks avoided the introduction of these caps. In those instances, banks failed to live up to their promises and interest rates have continued to increase along with the spreads between the deposit and lending rates.
Despite having one of the most efficient and effective financial markets, Kenya has one of the highest returns-on-equity for banks in the African continent. Banks need to do more to reduce the cost of credit and ensure that the benefits of the vibrant financial sector are also felt by their customers.
The President has assented to the Bill as presented. The Government will now implement the new law, noting the difficulties that it would present, which include credit becoming unavailable to some consumers and the possible emergence of unregulated informal and exploitative lending mechanisms. This law is a win for borrowers who’ve had to repay dearly given existing borrowing rates as high as 21%. Now that the Bill will Cap interest rates at 4% above Central Bank Rates that is currently at 10.5%, Interests rates are expected to go down to 14.5%
Mr. Steven Githaiga Ruimuku. Managing Director TARDA
The second part of our 20 scheduled series dedicated to exposing the rot that has become of Tana and Athi Rivers Development Authority(TARDA) MD Steve Githaiga originally born in 1953 but sliced his age down to serve more by changing his name and identity to Steven Githaiga Ruimuku, 1958. This was a calculated move to allow him to stay longer in the public office.
Githaiga has misused his powers as told in part one of the expose to victimise staff members outside his native Kikuyu community and practising open nepotism in the parastatal. While all concerned bodies from EACC to parliament have been served with complaints and evidence how the bully, tribal MD has been misusing his office, actions are yet to be taken.
This is attributed to the simple fact that the fraudulent MD has compromised officials including EACC to sit on his files, putting them on his bankroll while continuing with misusing the office and launching massive looting in TARDA.
In his tenure at TARDA, the MD has irregularly recruited over 40 staff without following the laid down procedures. There were no vacancies available, no budget allocations, no job advertisement made and no BoD approval and no interviews conducted.
Among those irregularly recruited by the corrupt and tribal TARDA MD include Ms Lucy Wangui Ngahu(second wife of the MD), Lawrence NGAHU(BROTHER TO LUCY), daughter to the Director of Regional Authorities, Ms Salome Oyosi, close relatives and relatives as shown in the list below.
The newly recruited officers were not in casual engagement with as portrayed because previous cheque payments for casual employees do not indicate so. Casual payments in Masinga and TDIP are paid through cheque system.
Githaiga was interdicted for misappropriation of Ksh.90M for ESP programme in TANA DELTA which he has never accounted for to date. Its a shame that despite all these open steps of office abuse, the MD who by the way is illegally occupying the office by using illegitimate documents continues to enjoy the office tenure.
In a civilised country, such deceitful characters would not only be forced out of office but thrown into jail for forging documents and looting public funds. He’s bragging that he is the president’s community and that he’s untouchable. Is this the kind of persons the President want to be associated with? Someone who is using his name to loot public funds and to operate with full force impunity?
The scandals and looting by Githaiga in TARDA are overwhelming, and Kenya Insights with the dossiers at hand, will be highlighting these on every episode until the fraud MD is thrown out of office and a new competent MD appointed on merits takes over the office before the corrupt Githaiga sweeps the accounts clean. We, however, give the fraud MD chance to save himself the humiliation and exit the office before we launch the mother of Social Media campaign to not only oust him from the office he is illegally occupying buy expose his dirty linen. He can save himself by resigning, give back the money he stole, clear his office and negotiate with Kenyans he stole from for mercy.
Earlier last year, President Uhuru cut a bilateral deal with Uganda that would see Kenya import sugar from the neighbouring country. His decision was met with fierce criticism from the opposition leader Raila Odinga and leaders from the sugarcane farming region of Western Kenya. The explanation was an importation deal with Uganda would kill the local trade by encouraging sugar smuggling from Brazil.
Uganda barely produces enough sugar to sustain it’s demand in their country and primarily imports from Brazil which is famed for making downgrade sweetener. International anti-narcotics authorities have also marked the route as a leeway for drugs trafficking and Mombasa Port being a mini rigid port facilitating drug trafficking in the region.
The opposition also accused the president of giving the sugar deal an okay in exchange negotiated a deal for his family’s company Brookside to be exporting dairy products to Uganda. Brookside is currently the biggest dairy enterprise not only in Kenya but the whole region.
It didn’t come as a surprise when Jack Alexander Wolf a British citizen was arrested last week together with two Kenyans in connection with the impounding of cocaine at the Port of Mombasa valued at Sh.600M.
Jack Alexander Marrian when he appeared before the court to answer on drug trafficking charges
According to information gathered by Kenya Insights, the three suspects are linked to a drug smuggling cartel from South America and in particular Brazil where the shipment originated from. They were trailed by foreign and local anti-narcotics authorities for months. The cocaine was in a consignment of sugar destined for Uganda from Venezuela when it was seized. The ship carrying the consignment was allowed to leave Mombasa because the drugs were seized after the consignment had been offloaded.
Kenya Insights also learn from reports that the drug haul was flown to Nairobi last week on Sunday and kept at an undisclosed location in Nairobi. This a Deja Vu of the 2004 Kenyan Police seizes of a cocaine consignment worth Ksh. 6.4B the biggest shipment to have ever been nabbed in East Africa. Years down the line, no one has been held responsible.
March 25, 2011, 98 packets of cocaine weighing two kgs each with a street value of Ksh 500 million were netted in Shanzu area in Mombasa. The six suspects, 3 Kenyans, 2 Iranians, and 1 Pakistani national were charged the same day for alleged drug trafficking. The consignment which initially weighed 196 kg came to weigh 102 kg three days later when the suspects reappeared in court. The mysterious disappearance of the 94 kilogrammes of heroin is yet to be resolved. In short, history can pre-empt the outcome of the drugs flown to Nairobi last week, and it will be a twirl.
Back to the case at hand, Jack Marian the Briton arrested in line with the Sh.600M Cocaine haul is a Scottish aristocrats’ son. He’s also head of the East Africa operations at International trading giant ED&F Sugar, and he’s also the son of Lady Emma Clare Clare Campbell of Cowdar, whose family own a popular estate in the Highland of Scotland, mentioned in the Shakespeare’s Macbeth. His mother Lady Campbell, 58, is the daughter of the late Hugh John Vaughan Campbell, the Sixth Earl Cawdor
Marian and his company are part of the Kenya-Uganda Sugar cartel. According to intelligence gathered by Kenya Insights, the cocaine in question was transported in containers which from outside appeared to carry sugar. The shipment we pick was due to be received by Mshale Commodities, coincidentally, Mr Marrian happens to serve as the company’s MD.
Mr Marrian has lived most of his life in Kenya and with his family’s royal stature made friends with powerful families in the land. He had since been released on bond, thanks to his connections and the loose ends in the narcotics laws and most importantly the corrupt judicial systems and also the corrupt police which according to Transparency International is a facilitating factor in drug trafficking.
It’s worth to note that the drugs were seized by US drug enforcement administration officials. The seizure is rare one in Kenya given the corrupt nature of the police who are easily compromised with bribes to let go. Another Kenyan, Roy Francis Mwanthi was arrested alongside Marrian and has also since denied the charges.
Marrian went to Pembroke School according to intel gathered by Kenya Insights lives in Karen, a Nairobi leafy suburb, Springs Valley. Isn’t is a rare case that the suspect Mr Mirrian was arrested then released the consignment flown or disappeared as reported the later he was arrested again charged, obviously without evidence. Perhaps a ploy to dupe public that investigations ongoing while in real sense none would be in place.
A Kenyan detective checks a packet of cocaine on display as an exhibit before a court session in Nairobi October 13, 2005.
On Saturday morning from 5.15am, Kenya woke up to a national power outage in what KPLC attributes to a ‘technical hitch’. Coincidentally, the general outage also rocked Uganda where a national power blackout went simultaneously with Kenya’s. According to Umeme Limited, the country’s power supplier, the blackout was due to a fault at the Owen Fall Dam in Jinja. It’s on an unusual day that you get to witness such a scenario where two countries go into darkness. Keeping in mind the Sugar link in mind a conspiracy of correlation in the cases becomes justifiable.
Talking of coincidences, an international airport as JKIA was also in darkness for two whole hours with all operations in this window period being in shadow, according to explanations from the Kenya Airports Authorities, their backup generators which are programmed to go on automatically on power cut as an alternative mysteriously failed to function and had to be rectified manually.
The generators are supposed and often put in check and up to the task to go on in the case of a power outage it came as a surprise that on this particular day it couldn’t function for two hours. The window period which meant anything was coming in and outside the airport happened undetected is a severe security issue that should and must worry conscious citizens. Whether the power outage at the airport was orchestrated as it may seem or not is a matter of concern that biggest airport could go for two hours without electricity alternative and that people must take responsibilities.
Speaking of responsibilities, Retired Major General Karangi the new Kenya Airports Authority (KAA) head is also not new to controversies, he’s just coming from heading KDF who according to a UN and broadly publicised reports are involved in a sugar-smuggling racket worth as much as $400 million a year. Much of this two-way trade—charcoal going out and sugar coming in—takes place through Kismayo’s sickle-shaped harbour in southern Somalia. The port was captured from al-Shabab in 2012 by Kenyan troops operating under the African Union Mission in Somalia.
Kenya Airports Authority(KPA) new MD Catherine Mturi-Wairi stationed in Mombasa where the drugs were netted and also sits on the Sidian Bank formerly K-Rep Bank Board of Directors becomes a person of interest in the investigations. Sidian Bank belongs to Businessman Chris Kirubi. Catherine’s appointment was marred with controversies with a suspicious quarter pushing for her appointment, but that’s a story for another day. How can she possibly curb the drugs trafficking menace in the port? Can she explain where the haul is?
Kenya Airports Authority(KPA) new MD Catherine Mturi-Wairi
According to finer details gathered by Kenya Insights, the netted drug worth is way more that the Sh.600M as reported in the mainstream and could be worth billions. Power cut off both in Kenya and Uganda could it be that someone orchestrated this and took advantage of the window period to fly in and out drugs or whatsoever it is? Nobody can give an answer since nothing can be trapped.
Everything that happened at JKIA between 5.15am and 7.15am can’t be traced, nothing captured on the radar, and it was a total power blackout from a main power supply and the backup generators. What a coincidence that power also went off in Uganda and that the drug net has the sugar trade players caught up. More questions you ask, more conclusive you arrive at a perception.
That there was a power outage and backup generators couldn’t go on automatically as programmed for two straight hours is a disturbing national security threat at a time when Kenya stands at an all time terror alert. Elsewhere, this is the second time in a row that the national power cut is happening no one taken responsibilities and nothing happens beyond press releases. Kenya is headed to 2017 elections, we wouldn’t want a technical hitch or a monkey explanation cutting off power since we’re using BVR system meaning electricity must be available for smooth transmission or abracadabra in results might be destined.
Keep it Kenya Insights as we dig deeper into this and other more frauds and suspicious deals across the country and continent. If you have a tip or any lead feel free to email me the investigations editor at ([email protected])
Kenya has undergone a raft of reform processes ranging from political to governance, with devolution being the most transformative regarding equity and redistribution of resources. Some have largely viewed devolution as the panacea to a myriad of challenges in Kenya that have been attributed to the unequal distribution of resources among other structural causes.
Conversely, devolution is also being associated with new and emerging challenges. With the devolution, health is now a function of the County governments – the devolution of health budgets has meant an elimination of the traditional HIV /TB /Malaria Budget lines accompanied by inadequate allocations to health sector by the County governments.
Whilst procurement of vaccines remains the responsibility of the national level MOH, procurement of injectable devices (e.g.,. syringes), and budget setting for operations costs has been devolved to the county level. The challenges have led to poor performance of the health sector, and this could get worse if key stakeholders are not engaged and sensitised for national and sub-national governments’ political action to improve health funding and policies.
Furthermore, with the rebasing of the Kenyan economy, Kenya is now a Lower Middle Income Country. Development partners such as The Global Fund and Gavi would take the new income classification in consideration as funding allocations are made, and co-financing commitments by the government are calculated. Similarly, a study carried out by the National AIDS Control Council on Implications to Health (HIV) due to Middle Income Country (MIC) status confirmed there would be short and long term implications at country-level and to program needs.
Thus, there is a need to support advocacy efforts at the country level in Kenya to find more sustainable approaches to health financing in implementing countries. Domestic expenditures for health are particularly vital, and developing countries are already making greater investments in their health systems.
Under the funding model, The Global Fund has entered into an agreement with Kenya for funding support of $ 332 Million through 2017. Kenya has committed $26 million in the FY 2015/16 in domestic financing for health, and it is critical to sustaining the momentum. Gavi’s support for Kenya will be $32 million in 2016, and Kenya is required to co-procure a total amount of $3.4 million for the Gavi supported vaccines in the FY 2016/17.
Mobilising more domestic funds is key in helping to ensure health program sustainability as Kenya transitions from international support in the medium term to long term. Kenya needs to increase the prioritisation given to health in the national budget.
At present Kenya only spends around 5.6% of its budget on health, much lower than its commitment made in Abuja in 2001 to allocate at least 15%. Now as a Lower-middle-income country, with the possibility of losing some of its traditional donors in health in the medium term to long term, Kenya has one of the most vibrant economies in Sub-Saharan Africa. It also poses a significant opportunity to change the equation where 45% of health sector services are funded by donor aid.
There is a chance to change the allocation of funds to health, as well as increased domestic development vote vis-à-vis the recurrent expenditure budgets. According to a study by the Kenya German development cooperation, more that 75% of the health budget is allocated to recurrent expenses. Evidence has also shown that the increase of the budget on health over the years have been low since as budgets have been increased nominally, there have also been rates of inflation.
A study published in 2015 by Results UK, KANCO, WACI Health and Action, “Who Pays for Progress? The Roles of Domestic Resource Mobilization and Donor Aid for Health Financing in Africa” showed that Kenya and countries like it should be wary of the potential health precipice on which they may find themselves given the huge gaps in domestic health financing.
With increased domestic resource mobilisation for health and a graduation and transitions scheme from donors such as the Global Fund and Gavi, the integration or building of human rights-based solutions for access to health services is critical for accountability, transparency, and equity. Supporting transition countries to expand human rights programs to remove human rights and gender-related obstacles to health care and to empower communities to take charge of their health is central to the Global Fund’s transition strategy.
Similarly, gender equality and ensuring the needs and rights of women and girls are enhanced would sustain and improve progress in health outcomes. Gender dynamics within epidemics such as AIDS are such that women and girls are disproportionately affected, as are MSM and trans communities and other key affected populations.
In 2001, heads of states of the African Union made the Abuja Declaration — a commitment to allocate at least 15 percent of their annual budgets to the health sector by 2015. Kenya is one of those countries which have yet to achieve this target. Though significant progress has been made within domestic financing efforts, not enough is being done currently to mobilise domestic resources. Kenya, like many countries with the heaviest disease burden, is unable to fund their responses to AIDS, TB and malaria, and their immunisation programme without international support.
However, Kenya is progressively graduating from international support as its economy grows. Securing political will is key for the Kenyan government to mobilise more domestic resources and increase spending on health in line with its Abuja commitments, and the role of Parliamentarians from all parties is critical to achieving this outcome.
There is the need to highlight the importance and return on investment of investing in health budgets, and promote increased domestic contributions to HIV, TB, Malaria and Immunization.
Asamoh is an economist and contributor on Kenya’s affairs
Twitter: @Asamoh_
This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email: [email protected]
Months after they were acquired, there has been not a single mission of successful deployment of the VN-4s to report. Key components, including shock absorbers and air conditioning, don’t work. Kenyan officers have misgivings about them; they do not even know how to operate them properly, let alone maintain them. Almost all have been parked since they were commissioned
They were supposed to be the machines that made the difference in the war against terror in the Kenyan story; the ones to turn cops into heroes, and the bad guys into, well, not heroes. But the chronicle of the 30 armoured personnel carriers (APCs) purchased by the Kenya government, in a shroud of secrecy, from China is one that speaks of wanton waste and abundant ineptitude.
At the commissioning of the APCs in February this year, President Uhuru Kenyatta was evidently excited. He extolled the “important milestone” that his administration had attained, in its mission to modernisation the police service. It was, he said, one thing his government had done differently from its predecessors in decades, which would give the cops that much-needed boost in the fight against terrorism, banditry and other forms of crime.
The cost of the APCs was never publically disclosed – no police or military purchase ever is – but they are believed to cost less than US-manufactured ones, which go for close to $1.2 million (Sh120 million) per unit. Available information indicates that Kenya was the second country to acquire the VN-4 APCs, manufactured by China North Industries Corporation (NORINCO) Group.
The only other country known to have the same hardware is the Venezuelan National Guard, under the repressive regime of President Nicolás Maduro. The vehicle’s armour is welded shut and primarily provides protection from small arms fire and splinters from explosives. According to armyrecognition.com, the VN-4 is fitted with an open-roof, and a small turret mounted at the front top hull, armed with a 12.7mm heavy machine gun. Three smoke grenade dischargers are mounted on each side of the turret. It has a top speed of 115 km/h and efficient range of 700 kilometres.
The Nairobi Law Monthly’s investigations have returned a damning verdict, which points to a mega scandal within the Presidency, specifically the Ministry of Interior and Coordination of National Government – the same ministry has previously been accused of appropriating billions of shillings in the space of days in inexplicable expenses; the journalist who reported the story was later arrested for ‘questioning’, and was only released after a public outcry
By the time the APCs landed at the port of Mombasa from China, they had not been tested locally; neither had Kenyan police officers, who were to be the primary users, undergone any form of training on how to use or maintain them.
Don’t miss out to get your copy of the August release of Nairobi Law Monthly when they hit the streets the first week of August and get the finer details of what would be one of the biggest scandals to ever hit Jubilee government after Eurobond and NYS scandal.
Health CS, Nicholas Muraguri delivering his speech during ‘Anza Sasa’ campaign launch at Weston Hotel, Nairobi.
The Ministry of Health through the National AIDS and STI Control Program (NASCOP) has launched a campaign dubbed “Anza Sasa” to encourage all those who test HIV positive to get ARV treatment regardless of their CD4 Count. In the past, only those with a CD4 count of 500 and below were eligible for treatment.
“ The aim of providing antiretroviral treatment to all people living with HIV is two pronged; first,, it will enable the individual who is on antiretroviral therapy to reduce the level of the virus circulating within their body to an undetectable level and as such reduce further damage to their immune system and improve the body’s ability to fight off infections averting unnecessary illnesses, disabilities and even deaths related to HIV said Dr. Sirengo, Head of the National AIDS and STI Control Program (NASCOP). Secondly, with an undetectable viral load level, further transmission to people who are uninfected with HIV will be minimized”.
New Guidelines on Use of Antiretroviral Drugs for Treating and Preventing HIV Infection in Kenya 2016 were also launched to provide guidance on the use of antiretroviral medicines for treating people living with HIV. Kenya currently has 1.5 million people living with HIV and an estimated 900,000 have been receiving treatment.
“As a paradigm shift from previous guidelines, these new guidelines that are in line with international standards and World Health Organization recommendations stipulate that all people living with HIV be put on treatment with the lifesaving antiretroviral medicines”, said Dr.Nduku Kilonzo, NACC. The services will be offered free of charge at all public health facilities providing HIV care and treatment services in Kenya.
Another new shift is that the use of antiretroviral medicines to prevent HIV transmission will particularly be emphasized through the elimination of mother to child transmission of HIV (eMTCT) program where all pregnant women identified to be HIV-infected will be started on antiretroviral medicines immediately upon diagnosis in order to reduce transmission of HIV to the unborn baby. Upon delivery, infants born to a mother who is HIV-infected will be tested for HIV at birth or within two weeks after delivery.
“The infants who are identified to be HIV-infected will be initiated on antiretroviral medicines immediately in order to increase their chances of survival whereas infants who are not infected will be provided with preventive antiretroviral medicines for twelve weeks after birth, this will go a long way in reducing new infections among children, said Cabinet Secretary for health, Dr. Cleaphas Mailu. The breast feeding women will be closely followed up to ensure that they closely adhere to antiretroviral therapy and remain virally suppressed throughout the breastfeeding period in order to prevent HIV transmission to their babies.
Antiretroviral therapy is now also recommended for HIV negative persons to prevent acquisition of HIV and is known as pre-exposure prophylaxis. This intervention will be accessible at specific HIV prevention, care and treatment service delivery settings under close supervision by NASCOP and County Health team and will be available to populations at high risk of acquiring HIV .
“The Ministry of Health is committed towards the implementation of the recommendations provided in the Guidelines on use of Antiretroviral drugs for treating and preventing HIV Infection in Kenya 2016 towards reducing new HIV infections and deaths related with HIV and reaching HIV epidemic control” said Dr. Cleaophas Mailu Cabinet Secretary, Health
Other guidelines and documents that were launched during the same function included Integrated Biological and Behavioral Survey for Key Populations, the Polling Booth Survey 2015, Report, Reaching the Unreached: The Evolution of Kenya’s HIV/AIDS Prevention Programme for Key Population report and a training manual on Responding to Violence against Key Populations to Promote Access to HIV Services
NASCOP’s Voluntary Medical Male Circumcision program also launched Results of Active Adverse events surveillance for PrePex circumcision in Kenya. To prevent occupational exposure to HIV among health workers, a report on Occupational Exposure to Blood/Body Fluids and HIV Post Exposure Prophylaxis in Health Care Facilities in Kenya (2011 – 2014) was also launched as well as several handbooks on HIV treatment literacy materials for parents, caregivers, children and adolescents were also launched. And as the country moves towards strengthening quality and efficiency in the health sector, HIV commodity management guidelines were launched.
John Odullah, a lawyer from Karachuonyo n Homabay County, met and struck a rapport with Mr Hans Frederick Dydensborg- the president of Global Medical Aid and an advocate for the Danish Supreme Court, in 2014. Mr Hans was in the country for a conference.
Being a Kenyan of goodwill, Odullah asked Mr Hans if he could make a donation of medical equipment to his home county, to which Mr Hans obliged. Mr Odullah contacted his friend, Kisumu Central MP Ken Obura to be the consignee for the container Mr Hans was going to ship in.
Obura agreed to this and used his NGO (Ken Obura Foundation) to bring it into the country. Being a charitable organisation, they thought it wouldn’t attract huge tax rates. When the shipment docked in Obura’s name, port authorities demanded up to Sh.7M for clearance.
The amount was too huge for the MP so they asked the county government of Homabay to chip in and help. The county government later backed off leaving off the charity project in limbo.
Gutted with impediments and constant demands for money, Mr Hans recently flew in the country to try and get the container cleared. His efforts to get in touch with the consignee, Mr Obura, bore no fruits as the legislator embarked on cat and mouse games. He lied that he was out of the country but was seen in Parliament buildings on the same day.
Well-wishers loading medical equipment as donations destined for Africa
On deeper investigations, Mr Hans realised that the said Ken Obura Foundation only exists on paper with no physical address. Obura, according to the frustrated donor, was plotting with port officials to buy time for the container to be declared late for clearance and put up for auction. He would then swing in, buy it at a reduced value and then sell the consignment to the counties at the market price.
Items in the container included endoscopy devices, a fundus camera, two x-ray developers, 363 disinfection scopes, eight washing and disinfection machines, a dexa scanner, 30 microscopes, a paraplegic laboratory and 120 infusion single and triple pumps.
Homabay County and it’s neighbours are faced with high HIV/AIDS prevalence, not to mention water-borne diseases and other infections. Add that up with the averagely low income of the residents, and the medical donation would have gone a long way in improving the health and livelihood of the residents, but greed and personal interest have gotten in the way.
For 19 months, the container with medical equipment donation valued at Sh.30M meant for poor Kenyans who are unable to afford quality healthcare lay at the Mombasa port.
Corrupt officials at Mombasa port demanded that Mr Hans pay a Sh.2M bribe to have the container cleared, but he wouldn’t oblige. He turned to Mombasa county to pay the clearance fee and take ownership of the donation, but they too declined the offer.
Defeated and frustrated, Mr Hans redirected the shipment back to Denmark. That’s how Homabay County residents lost out on a Sh30M medical donation.
