Last month, firms in the private sector experienced growth across different segments. A report by Stanbic Bank shows that the Purchasing Managers Index jumped from 49.3 in April to 51.3 in May. The index measures the economic health of the manufacturing sector. May’s PMI reading indicates the fastest improvement in the business environment since the start of the year.
Areas that recorded a jump include; new orders, inventory levels, output levels, employment opportunities, purchase prices, and output prices.
As per the report by Stanbic Bank, most businesses reported solid growth in the number of new orders in May. Some entities acquired new clients from abroad. Nonetheless, the level of exports grew at the softest rate in 16 months.
Due to the jump in new orders, the level of output in most Kenyan businesses increased in the period under review. Some companies experienced cash flow problems which weakened their level of output.
Purchasing activity increased in May although at a slow growth rate. Manufacturers restrained their purchases due to a sharp increase in input prices. The rate of inflation in May stood at 5.49, as new taxes such as importation fees on commodities came into effect. As a result, traders increased their sales price.
The manufacturing sector created more jobs in May compared to the previous month. Businesses attributed the rise in job opportunities to growth in demand for goods and an increase in marketing roles.
In the past month, Kenya’s private businesses expressed the highest level of optimism in nearly five years. The entities expect continued economic stability and less cash flow problems. The businesses plan to expand their network in Kenya and beyond.
Covid-19 outbreak sends local banks into panic
As Rwanda extended the Covid-19 lockdown for 15 more days, banks in the country and the region are bracing for major shocks, expected to be felt long after the pandemic.
Players in the financial sector say as much as they support the government decisions, the lockdown is likely to put some of their clients out of business, passing on the problem to lenders.
“Banks are only a conduit of exchange of value, when people are not trading, banks are also not trading, most banks depend on the day-to- day transactional fees and commissions.
“Currently, people are not transacting so banks are not making money,” said Maurice Toroitich, chief executive of BPR Atlas Mara.
He said although the central bank’s intervention to set up a Rwf50 billion credit facility and restructuring of loans will help in the short term, with persistent inactivity some of the businesses that had bank loans are expected to close, which will worsen the non-performing loans problem.
“The performance of the loan book is very critical to banks, restructuring of loans will help in the short run but if inactivity persists there businesses that will not even recover, so banks will suffer the losses even long after Covid19 subsides” he said.
To mitigate health and sanitation challenges of coronavirus, banks urged customers to use mobile and digital transactions, and then waived transactional fees which has further shrunk their revenues and compounded their problems.
The banks listed on the Rwanda Stock Exchange like Bank of Kigali and I&M recorded impressive growth according to the latest financial reports they released.
I&M Bank recorded a Rwf10, 817,4212billion ($11.3million) profit before tax for the year 2019, a 12 per cent increment interest and similar income, mainly attributed to the growth in loans and government securities.
BK Group Plc, the sector’s market leader recorded a net income of Rwf 37.3 billion ($40.5million) in its last quarter of 2019, an increase of 36.3 per cent compared with 2018.
BK’s net loans and advances increased by 19.3 per cent to Rwf 678.0 billion ($735.8 million), while client balances and deposits increased by 20.8 per cent to Rwf 642.7 billion ($697.4 million).
Despite the stellar growth last year, BK group chief executive Diane Karusisi cast a gloomy picture for 2020, saying they expect a slump in their loan book as well as a general decline in revenues due to the inactivity that came as a result of the pandemic.
The IMF is asking banks not to hide the losses they accrue during the coronavirus pandemic but instead uphold transparency and regulatory measures to support their recovery. IMF says banks, investors, shareholders and even taxpayers have to bare the losses of stalled economy activity ushered in by lockdowns.
“Transparency helps prepare all stakeholders; surprises only worsen their response, as was proven during the 2008 crisis,” the IMF said on Tuesday.
“Don’t change the rules” IMF warns, adding that doing this in the midst of a crisis will likely cause more confusion.
Locust eradication operations to continue uninterrupted – KBC
All locust eradication base camps are to continue operations unhindered by the Covid-19 restrictions.
Retired Colonel Julius Ngera said that locust control centres are exempt, as the Government intensifies locust control measures amid growing concern over food shortage after the pests invaded most farms across the country leaving a trail of destruction in their wake.
According to the United Nations, the locust invasion was declared the worst in 70 years.
The voracious insects have a strong preference for gramineous plants such as millet and maize, with experts estimating that the insects are capable of destroying at least 200 tonnes of vegetation per day.
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As such the Government has been trying to stem the spread of the locust by among other conducting aerial spraying.
However, with the advance of Covid-19 and subsequent confirmation of positive cases here in the country, stakeholders are uncertain over continued efforts against the menacing pests.
According to Rtd.Colonel Julius Ngera, aerial spraying of areas invaded by locusts will continue uninterrupted by Covid-19 restrictions among others limits movement in and out of four hot spot Counties as well as a 7 pm to 5 am curfew.
Currently, there are six bases in Isiolo, Marsabit, Garissa, Wajir, Masinga and Turkana that also carry out surveillance, monitor and conduct ground and an aerial spray of the desert locust across the country.
The Government is recruiting volunteers to bolster its efforts in eradicating the locusts
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KPA Advertises MD’s Position To Replace Manduku
NAIROBI, Kenya, Apr 10 – The Kenya Ports Authority (KPA) has advertised the position of Managing Director to replace Daniel Manduku who resigned last month.
In a notice placed in one of the local dailies, KPA said it is seeking to recruit an individual with a high degree of integrity and professionalism.
The successful candidate, it said, will work on a three-year contract that is renewable based on performance and business requirements.
“The authority is seeking to recruit an individual with impeccable administrative capabilities and strategic orientation to fill the position of managing director,” a part of the notice read.
Engineer Rashid Salim has been holding the post in an acting capacity after Manduku’s resignation.
Manduku resigned as the Kenya Ports Authority Managing Director on March 27, amid an investigation on questionable tenders.
“I do hereby tender my resignation, which I hope you will accept, effective 1st June 2020. I am immediately proceeding on terminal leave until then,” he said in the letter dated March 27.
Manduku, who was under investigation for corruption was last month arrested by detectives from the Directorate of Criminal Investigations (DCI), but did not face charges because the chief public prosecutor had not approved his file.
He was arrested on March 2, by DCI detectives over a probe into leased extra storage space for containers by the agency in Nairobi in which taxpayers are said to have lost hundreds of millions.
Director of Criminal Investigations George Kinoti announced that his office was investigating tenders worth Sh2.9 billion at the port.
He said they had raised queries on how Sh500 million was spent on the Makongeni goods shed project, manufacture of concrete barriers at Sh1.4 billion and the Sh800 million Kisumu port revitalization project among others.
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