by Ronald Njoroge NAIROBI (Xinhua)
-- Kenya plans to leverage on
the newly launched derivatives market to lure more foreign investors into the
capital markets, an official said on Thursday.
Geoffrey Odundo, CEO of
Nairobi Securities Exchnage (NSE), told journalists in Nairobi that the
derivatives market offers sophisticated financial instruments that can widen the
scope of capital market products available in the country.
"We anticipate the newly launched NEXT derivatives market will pull more
foreign investors into the capital markets because it will enhance investors’
portfolio performance by availing risk management tools in the wake of
increasing asset price volatility," Odundo said.
A derivatives market involves the trading of financial instruments like
futures contracts, stocks, indices, commodities, currencies, exchange rates, or
the rate of interest.
Kenya’s NSE is the second African exchange to launch a derivatives market.
The launch follows a successful six-month pilot phase conducted to test the
functionality of end-to-end transactions of futures contracts in a live
environment, Odundo said.
With the derivatives market, the capital market will enhance its liquidity as
investors will be able to make profit whether the markets are down or up, he
Kenya is keen to enhance its position as Africa’s regional financial hub that
can serve the rapidly expanding African economies, Odundo said.
The national development blueprint, Vision 2030, also recognizes the role of
a vibrant financial sector in mobilizing both foreign and domestic resources to
fund economic development, he noted.
The NSE will now offer index futures and single stock futures on selected
indices and stocks, Odundo said said.
Kenyan government to retain at least ten
percent stake in commodity exchange
NAIROBI (Xinhua) -- Kenyan
government will retain a shareholding of at least ten percent in the commodity
exchange that is expected to be launched early next year, a government official
Chris Kiptoo, principal secretary of Kenya’s Ministry of Industry, Trade and
Cooperatives, told a trade forum in Nairobi that 21 agricultural products have
been cleared to trade at the commodity exchange with minerals and metals to be
introduced later on.
Kiptoo noted that the exchange will help stabilize prices of agricultural
products, especially perishable ones which tend to fluctuate according to
The official said up to 30 percent of Kenya’s agricultural harvest is
currently lost as farmers’ produce cannot reach market on time.
"Once the commodity exchange is launched, farmers will be able to store and
receive receipts for their produce in government warehouses that will uphold the
quality of their harvest," said Kiptoo.
Kenya forex reserves surge by U.S. 742
million dollars on World Bank loan
NAIROBI (Xinhua) --
Kenya’s foreign exchange reserves have increased by 742 million U.S. dollars
after the east African nation received a World Bank loan.
Central Bank of Kenya (CBK) data showed on Tuesday that its forex reserves
stood at 9.765 billion dollars at the end of last week, from 9.023 billion
dollars as of July 4.
This marks a second significant jump in the east African nation’s foreign
currencies in under two months after the its forex reserves hit an all-time high
of 10.06 billion dollars at the end of May following the proceeds of 2.1 billion
dollars from Eurobond sold in April.
The World Bank in May approved a 750 million U.S. dollars credit for budget
support and the funds were released to Kenya last week.
"The usable foreign exchange reserves remained strong at 9.765 billion
dollars, an equivalent of 6.2 months of import cover.
This meets the CBK’s statutory requirement to endeavor to maintain at least 4
months of import cover," said the central bank in its weekly bulletin.
Kenya retail sector expanding as
macro-economic environment improves
NAIROBI (Xinhua) --
Kenya’s improving macro-economic environment is boosting the retail sector, with
supermarkets leading businesses that have recorded expansion since the year
Analysts have noted that the 6.3 percent growth rate of the country’s economy
in 2018, which is 1.4 percentage points higher than that in 2017, has ensured
that citizens have more disposable income, giving a boost to the retail sector.
Most of the international and local retailers in the east African nation are
recording a boom, with the businesses opening new branches in the country and
Naivas is the latest retail chain to open a new branch on the outskirts of
Nairobi as it fights for the fast-growing middle-income market.
The local retailer opened its 53rd outlet in Ongata Rongai, a growing
middle-income town in Kajiado County on the outskirts of the capital Nairobi.
"The continued expansion of local retailers is supported by the improving
macroeconomic environment, increased disposable income as a result of an
expanding middle class thus creating demand for goods and services," according
to Cytonn, a Nairobi-based investment firm.
The firm noted that with gross domestic product per capita growing at 10.3
percent per annum over the last four years, from 125,756 Kenyan shillings (1,250
U.S. dollars) in 2014 to1,860 dollars in 2018, the retail sector is expanding.
According to Cytonn, the capital Nairobi’s satellite towns hold the future of
the expanding retail sector.
"These towns are increasingly presenting a viable opportunity to retailers
due to low rental charges of 1.2 dollars per square feet as compared to the city
centre average of 1.7 dollars," said Cytonn.
"Kenya’s retail sector has been vibrant over the past few years, and would
continue to attract interest from renowned international retailers as well as
the robust expansion of local retailers," said Cytonn.
But even as the retail chains expand, they face competition from informal
retail stalls and kiosks, which have over the years dominated the market and
still do, according to Ernest Manuyo, a business lecturer at Pioneer Institute
"Only 30 percent of Kenya’s retail market is formal.
"Which means the kiosks still hold a huge market and the fact that they are
readily accessible and some offer credit makes them appealing to consumers," he
Kenya leveraging on technology to deepen
NAIROBI (Xinhua) --
Kenyan President Uhuru Kenyatta said his government will
continue leveraging on new technologies to deepen financial inclusion and
enhance service delivery.
Kenyatta who officially opened a regional financial forum in Nairobi on
Monday evening said the country has already registered impressive successes in
the deployment of technological solutions in various sectors of the economy.
"Riding on mobile phone financial services, access to financial services in
Kenya has more than tripled from 26 percent in 2006 to 82 percent in 2019," said
Kenyatta during the inaugural Afro-Asia FinTech Festival.
Kenyatta called on Africa and Asia to work together to build more robust
digital economies, adding that Kenya is open to work with other governments and
private bodies in leveraging innovations for technology-driven financial
He added that the country will continue leveraging on technology to enhance
its tax collection through online platforms of iTax and e-Citizen.
Kenya will prioritize domestic savings to
fund development projects
NAIROBI (Xinhua) -- Kenya
plans to prioritize use of domestic savings to fund development projects, a
government official said on Thursday.
Nelson Gaichuhie, chief administrative officer at the National Treasury and
Planning, told journalists in Nairobi that use of local resources is a cheaper
source of finance as compared to local and foreign loans.
"The government will enhance fiscal incentives to encourage the expansion of
the national savings rate," Gaichuhie said during the launch of NEXT Derivatives
trading at the Nairobi Security Exchange.
He said that a high investment rate will be dependent on the ability of the
country to mobilize domestic savings.
According to government data, the country’s saving rate stands at
approximately 12 percent against a target of 30 percent.
Gaichuhie added that the government is exploring a number of reforms that
will accelerate the savings rate in the country.
In 2017, the east African nation launched a mobile based government bond to
raise local funds to finance infrastructure projects.
Gaichuhie observed that the capital markets offers a viable alternative to
raise both short and long term funds.
"The capital markets also provide an avenue to promote domestic savings by
offering high returns on investments," he added.
The Kenyan official revealed that the NSE has one of the most advanced
infrastructure and vibrant markets in Africa.
"If well utilized the capital markets can be a key driver economic growth and
development," he said.
Gaichuhie said that Kenya’s capital market faces a number of challenges that
affect other emerging market such as limited listing and a narrow investor base.
Kenya to focus on Africa to drive export
NAIROBI (Xinhua) -- Kenya
plans to focus on the African continent to drive export growth, an official said
Jaswinder Bedi, chairman of Export Promotion Council (EPC), told journalists
in Nairobi that Kenya has a competitive advantage in manufactured goods as
compared to most other African countries.
"We see an opportunity to expand our export volumes by focusing on sale of
manufactured goods to the rest of Africa," Bedi said.
Government data indicates that in 2018 approximately 40 percent of Kenya’s
exports went to other African markets.
"Most of Kenyan exports to Africa are value-added goods while exports to the
rest of the world are mostly raw materials," Bedi said.
Kenya is likely to reap enormous benefits once the African Continental Free
Trade Area (AfCFTA) is fully operational and tariffs are removed, he said.
"At present non-tariff barriers in the form of product standards present a
huge challenge to the expansion of Kenya’s outbound trade in Africa," Bedi said.
According to the EPC, poor transport infrastructure also hinders the growth
of Kenyan exports to the rest of Africa.
"Merchandise from Kenya often becomes uncompetitive when transported to
landlocked countries in the continent," Bedi said.
Kenya’s export now accounts for 8 percent of its gross domestic product
(GDP), against a target of 15 percent.
The majority of Kenyan exports are agricultural products with little value
addition, Bedi said.
Kenya plans framework to bloc imports that
threat local industries
NAIROBI (Xinhua) -- Kenya
plans to put in place a legal framework to curb imports of goods that threaten
local industries, a government official said on Thursday.
Chris Kiptoo, principal secretary at the Ministry of Industry, Trade and
Cooperation, told journalists in Nairobi the legal and regulatory framework will
soon become operational to prevent unfair import competition.
"The objective is to curb dumping of cheap imports in order to catalyze the
industrialization in Kenya," Kiptoo said.
The east African nation has set a target of expanding the contribution of the
manufacturing sector to the overall economy, at less than 9 percent now, to 15
percent in 2022.
"Kenya is prioritizing the manufacturing sector due to the critical role it
plays in job creation and wealth creation in the country," Kiptoo said.
The ministry of industry says Kenya has huge natural resources in agriculture
and mineral sectors that can be processed to produce goods that have high demand
in global markets.
Kiptoo said economic liberalization in the 1990s led to the collapse of the
country’s once vibrant industrial sector due to an influx of cheap imports.
"We are now prioritizing the revival of industries especially in the textile,
leather, furniture and agricultural sectors in order to expand the country’s
industrial base," he said.
Kenya yet to achieve World Health
recommended tobacco taxation rate - new study
NAIROBI (Xinhua) --
Kenya’s tobacco taxation rate is still below the recommendation set by the World
Health Organization (WHO), a study released on Thursday has revealed.
The study that was conducted by National Taxpayers Association (NTA)
indicated that Kenya is yet to adopt a taxation regime that could help reduce
consumption of tobacco.
"The government should introduce a uniform tax rate to gradually achieve the
70 percent share of tax in the total retail price of cigarettes," Boaz Munga, a
lead researcher of the study.
He said that uniform taxation performs better on account of increasing
cigarette prices, increasing cigarette excise revenue and the total tax share in
"Uniform tax would result in a larger reduction in the number of smokers and
larger reduction in the consumption of cigarettes," said Munga.
He urged the government to avoid frequent amendments in the tax structure to
create a simple system that deters tax evasion.
Munga called on all stakeholders to be involved in reorienting tobacco
control policy to protect consumers rather than tobacco firms.
"The reorientation should be in line with international conventions and
protocols for which Kenya is a signatory, "said Munga.
Munga urged the government and stakeholders to engage in education and
awareness campaigns to enable the country achieve its adopted voluntary target
to reduce tobacco use by 30 percent by 2025.
Irene Otieno, national coordinator of NTA said that Kenya is obliged to
protect present and future generations from the devastating health, social,
environmental and economic consequences of tobacco consumption and exposure to
She said that even though Kenya has increased tobacco taxes, the prevailing
rates which account for about 52 percent of the retail price, still fall below
the recommended WHO minimum of 70 percent.
"Our taxation should reach the WHO recommended standard so that the
increasing Non communicable Diseases (NCDs) can be managed by health
professionals." said Otieno.
The study found that tobacco is likely to impact on Kenya’s national
development agenda negatively given that it kills more than 6,000 individuals
annually, worsens poverty, and impacts negatively on productivity.
According to the ministry of health, it is also estimated that 5 percent of
all deaths from noncommunicable diseases in Kenya result from tobacco use, while
55 per cent of all deaths from cancers of the trachea, bronchitis, and the lung
are attributable to tobacco use.
The study was examining cigarette taxation in Kenya and how it affects
It analyzed the probable effects of recent cigarette tax policy changes on
both tax revenue and cigarette consumption.
World Bank and Kenya launch
by Peter Mutai NAIROBI (Xinhua) --
Kenya and World Bank on Tuesday launched an
initiative aimed at providing a platform for Kenyan youths to use their talents
in developing innovative solutions to drive manufacturing.
Betty Maina, principal secretary for industrialization at the Ministry of
Industry, Trade and Cooperatives said that Kenya Industry and Entrepreneurship
Project (KIEP) will strengthen innovation ecosystem as part of implementation of
the Kenya industrial transformation program.
"The project marks an important milestone towards the ongoing digitizing and
transformation initiatives for Kenya’s global competitiveness that is expected
to create additional jobs for the youths," Maina said at the launch in Nairobi.
Maina revealed that the five billion shillings (about 50 million U.S. dollar)
project that is co-funded by the World Bank will also create industry platform
to link startups, traditional industries and international networks in select
private sector firms for the next six years.
She added that the project will also aid small and medium enterprises (SMEs)
in improving their managerial and technical capabilities in order to better
compete at both local and international markets.
The official said that KIEP will help enhance intra-Africa trade through
increased productivity and competitiveness of Kenyan firms.
"The development of private sector is the key to growth, job creation and
youth empowerment in the developing countries," Felipe Jaramillo, World Bank
country director for Eritrea, Kenya, Rwanda and Uganda said.
Jaramillo said that SMEs are a pillar for the development of national
economies and requires necessary support.
He urged the government to adopt digital economy as a blueprint for
supporting ecosystem to elevate the project to the next level.
"With proper application of innovation, productivity and digital solutions,
Kenya can be the leader in Africa in trade related matters," Jaramillo noted.
KIEP is based on the Kenya Vision 2030 that seeks to transform Kenya into a
newly industrialized, high middle-income nation.
The project will benefit 33,050 individuals and 2,393 firms, including
students, SMEs, and local startups.
Kenya plans to boost exports to combat
widening trade imbalance
NAIROBI (Xinhua) -- Kenya
on Wednesday decried its widening trade imbalance noting that it could affect
growth of domestic industries.
Chris Kiptoo, principal secretary of the Ministry of Industry, Trade and
Cooperatives said in Nairobi that imports are currently three times the level of
"We hope to bridge the trade deficit through growing exports by at least 25
percent annually," Kiptoo said during the opening ceremony of the eighth edition
of the International Flower Trade Expo.
The three-day expo is a platform to bring together flower growers, exporters,
breeders, cargo agencies in the flower value chain.
Kiptoo said that the horticultural and textiles sectors are one of the best
performing industries in the country because they posted double digit growth in
exports last year.
The official added that Kenya hopes to leverage its existing bilateral and
multilateral trade agreements to boost exports.