Kenya’s oldest stand-alone mortgage provider HF Group said Friday its digital banking platform dubbed HF Whizz added half a million new subscribers slightly over eight months after launch.
The Nairobi Securities Exchange-listed firm’s newly appointed chief executive, Mr Robert Kibaara, said this underlines the vast potential of mobile banking at a time banks are embracing technology to counter disruptions from financial innovations.
Mr Kibaara, who was poached from NIC Bank last December where he held the director of retail banking, is eyeing to turn around the fortunes of the lender by growing it into a fully-fledged bank, with the company de-emphasising its property investment business that has been hit by a slowdown in the real estate sector.
The strategy, Mr Kibaara said, is anchored on four pillars including “building a digital bank, expansion into new banking segments and maintaining dominance in mortgage finance.”
“Through HF Whizz, we have become accessible to new customer segments that would otherwise be difficult to reach with the brick and mortar model,” said Mr Kibaara.
“Our digital innovation is customer-led, with products and services geared towards providing an end-to-end digital experience that allows customers to self-serve from wherever they are on the globe.”
HF Whizz, launched in July last year, entered a growing market of commercial bank-backed lending apps such as Commercial Bank of Africa’s M-Shwari, KCB-M-Pesa, Equity’s Equitel, M-Coop Cash and Barclays Timiza.
There has been growing use of fintech in the Kenyan banking sector as technology leads to fundamental changes in how the banking sector operates and delivers value to customers.
“Through the app, the lender has acquired 550,000 new customers, reflecting a 600 per cent jump in customer numbers; disbursed over 1,000 loans per day with the number of disbursements growing daily and registered transactions exceeding Sh2.5 billion,” said the bank.
Other banks are increasingly adopting mobile banking apps, signalling an era of shifting towards digital banking as lenders transfer their services online amid falling customer traffic at branches.
The HF app — available on Google Play and App Store — is part of the predominantly mortgage lender’s diversification strategy.
Through its banking arm, HFC, the group is targeting the growing micro-lending segment which is becoming lucrative for banks as interest rates are not controlled, although risky.
The app enables customers to open an account, access loans, and deposit and transfer cash on mobile phones.
The lender said customers transfer up to Sh200,000 daily, borrow up to Sh50,000 for 7.725 per cent interest, deposit cash via pay bill number 100400, among other services.
Mr Kibaara is implementing the turnaround strategy at a time when the lender has posted lower earnings on the back of rising defaults, forcing it to scale down its lending. Housing Finance posted a net loss of Sh598 million in the year ended December 2018, down from a Sh126 million net profit made in the previous year.
The bank blamed “an unfavourable trading environment”, saying it has led to a slowdown in the real estate sector growth. Housing has been one of Kenya’s fastest growing sectors over the past decade, with returns from real estate outpacing equities and government securities. This attracted high-net worth investors into the sector.
But a dip in prices and the slow uptake of newly-built units have raised fears of renewed pressure on developers, who borrowed to fund for-sale projects, as obligations mature.
HF Group saw its interest income drop by Sh1.08 billion to Sh6.045 billion as it struggled with reduced income from customer loans which dropped by 15 per cent to Sh5.661 billion.
Mr Kibaara said the lender has also diversified into new segments, including diaspora banking, SME banking, institutional banking and personal banking.
“This expansion is informed by the need to reduce the concentration in real estate, which is capital intensive and requires long-term funding,” said the bank.
HF Group also expects to benefit from the government’s push to construct 500,000 affordable homes over the next five years.
Illicit fuel trade catches on, leaks billions in tax revenue : The Standard
Cases of unscrupulous petroleum dealers diverting fuel products on transit to neighbouring countries are on the rise.
This is denying the government billions of shillings in taxes.
Regular reports on illegal practices by players in the petroleum industry and the penalties meted by the Energy and Petroleum Regulatory Authority (EPRA) show a shift over time, with what is commonly referred to as “dumping” becoming a major headache for authorities.
Previously, adulteration of super petrol and diesel using kerosene was the biggest concern, according to recent reports by the regulator.
But a raft of measures by EPRA since 2018, including the hiking of taxes levied on kerosene and pushing its price to be at par with that of diesel, appears to have eliminated the problem. The focus has now shifted to fuel dumping.
For instance, in its report for the quarter to March 31, this year, EPRA reported a number of cases of fuel dumping and none for adulteration.
Over a similar quarter in 2018, just before it went on an all-out war with players that used kerosene to shore up volumes of petrol and diesel, the regulator had reported all manner of offences relating to adulteration.
According to the Petroleum Institute of East Africa, adulteration of petrol and diesel with kerosene loses the country an estimated Sh34 billion in tax revenues annually.
Fuel dumping is equally costly in that when products meant for export end up in local petrol stations, the players do not pay taxes in Kenya, as they are supposed to pay the same in their home countries.
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The government currently takes 43 per cent of the money that consumers pay for fuel, which translates to about Sh47.17 per litre of petrol, Sh37.23 for diesel and Sh36.49 per litre of kerosene.
Most of the fuel for export is destined for the landlocked DR Congo, Uganda and Rwanda markets.The regulator noted that the cases of fuel dumping were not widespread, but were still an issue of concern.
EPRA Director General Pavel Oimeke said the regulator had over the last two years closed down about 30 petrol stations and revoked several licences as part of the measures to fight fuel dumping.
“It is not widespread, but there are snippets of dumping in the market still occurring. We undertake monitoring with our contracted service providers as well as EPRA staff. With combined with product marking, we are sure that if a product is diverted into the local market, we are going to find them at the stations,” he said.
“We have closed about 30 stations, which were found with export products.”
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Ban on flights extended as State confirms 16 new cases : The Standard
The government has extended the ban on international flights by 30 days as it confirmed 16 new cases of coronavirus.
The total tally of persons who have tested positive for the disease now stands at 142.
There have been four deaths while four patients have recovered.
Suspension on prison visits has also been extended by 30 days starting today.
The extension of ban on international flights follows the expiry of an earlier one of 14 days, which ended yesterday.
Transport Cabinet Secretary James Macharia said the decision was reached after a meeting with the National Emergency Response Committee on Kenya’s situation to which he is a member.
The suspensions, as has been the case, exempts charter flights from countries wishing to evacuate their citizens.
“We do not want flights just landing at Jomo Kenyatta International Airport. Whoever is coming should give us a 72-hour notice at the very least,” said Macharia.
The requirement for notice before planes are allowed in Kenya was not there initially.
The suspension also exempts cargo flights, which Macharia said can land provided they have no passengers on board.
The provision on cargo flights, he said, was key due to shortage and need for medical supplies.
“We are keen to import and supply medical equipment. In fact, we are already planning for a Kenya Airways flight to China on Wednesday to collect some key medical equipment,” the CS said.
Macharia, who spoke during the daily briefing on the coronavirus pandemic, lamented that some of the directives issued to operators in the transport sector were being ignored.
This is primarily by matatus, which were instructed to carry less than their vehicles’ passenger capacity to ensure one metre social distance.
Matatus are under instructions to ensure high standards of hygiene by providing hand sanitisers or handwashing points.
“From tomorrow (April 6, 2020), any matatu not observing the directives will have their Sacco licenses suspended and the operators charged in a court of law as per the Public Health Act,” said Macharia.
Motorbikes or boda boda operators must also carry one passenger at a time and wear face masks at all times failure to which they too will be charged in court and their bikes impounded.
The measures came after prediction that cases in Kenya may hit 1,000 this week, 5,000 mid this month and 10,000 by April 30.
Globally, the number of infections stand at 1.2 million across 183 countries with 65,884 deaths.
Ministry of Health Chief Administrative Secretary Mercy Mwangangi said so far, 3,836 samples have been tested.
Between Saturday and Sunday, 530 samples were tested of which 16 turned positive; among them 15 Kenyans and a Nigerian.
Nairobi registered the most cases, at 12, followed by Mombasa with three and one in Kilifi. The counties have been singled out by the Ministry of Health as high-risk.
Of the 16, nine are from a batch of 2,050 people who were put under mandatory quarantine by the government. This was upon their arrival from overseas before the suspension of international flights on March 25.
“This is a testimony that mandatory quarantine is aimed at protecting the country,” said Dr Mwangangi.
The rest are from contact tracing of persons who had at one point come into contact with earlier cases.
Some 11 of the 16 had travel history while five are local transmissions.
The mandatory quarantine requirement, extended by another 14 days, has already been opposed by some of the those being held.
However, Mwangangi said mandatory quarantine was necessary. “These are painful decisions that we have to take,” she said.
Ministry of Health’s Acting Director General Patrick Amoth said the ministry will not go back on its word to enforce the mandatory quarantine.
“Up to 55 per cent of the cases that have turned positive are from those held in mandatory quarantine. We will not waiver on the extension just to please some people while others are following the set directives,” said Dr Amoth.
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Cotu okays sacking of 50,000 farm workers : The Standard
The process of declaring thousands of horticulture workers redundant due to the current crisis caused by Covid-19 has started.
The Agricultural Employers Association (AEA) and Central Organisation of Trade Unions (Cotu) in a joint exercise, will send an estimated 50,000 workers home without salaries, as the number of those affected by the pandemic globally continues to rise.
Flower farm workers will be the most affected after the total collapse of the sector that employs more than 150,000 workers directly.
The collapse of the Dutch auction, which accounted for 70 per cent of flower exports, and the lockdown in Europe has played a major part in the current crisis.
According to the AEA boss Wesley Siele, they had a meeting with Cotu in which it was agreed that the workers would be sent home due to the current crisis.
He noted that already, seven farms had indefinitely suspended their operations and sent all their workers home.
“We have signed an agreement with Cotu to send an estimated 50,000 workers home without salaries as we continue to monitor the situation,” he said.
Siele noted that since the country recorded the first case leading to flight cancellations, the sector has lost Sh8 billion, with the figures rising by the day.
“Some farmers involved in export of fresh produce are still in operation despite a challenge in high freight charges but those involved in flower growing face a total shutdown,” he said.
He called on the government to support farmers involved in production of fresh produce by zero-rating farm inputs like fertilisers and chemicals.
“We need to address the issue of food security in the coming months by supporting farmers at this planting season as failure to do so will lead to food shortage in the future,” he said.
Siele expressed the association’s concern that two weeks after the president ordered for VAT refunds, the directive had not been effected.
On his part, Kenya Export, Floriculture, Horticulture and Allied Workers Union Secretary General David Omulama called for support to hundreds of the affected workers.
Mr Omulama noted that in Naivasha, all the over 50 flower farms had sent nearly all their staff home, meaning an economic crisis for the lakeside town and families.
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