The Debits And Credits Of President Kibaki

Many Kenyans believe that Kenya’s economy was at its best during the reign of the late President Mwai Kibaki. Dr. Mwai Kibaki who was an economist from Makerere University in Uganda excelled in managing Kenya’s economy between 2002 and 2013 thanks to his academic and professional background and sufficient experience in national treasury prior to his presidency. During Kibaki’s reign, there was a global recession which began in the United States as a result of deregulation of the financial industry. There were also internal civil wars in the country which were fueled by tribalism in Kibaki’s government, unevenness in sharing national resources between regions and mistrust among politicians in the then ruling party. Despite all these challenges in Kibaki’s 10-year tenure as the country’s chief executive, the gentle Kenyan politician managed to place Kenya in the top 12 list of Africa’s largest economies with a moderately low appetite for foreign debt yet with fairly significant investment in infrastructure.

Just like John Myriad Keynes, a great classical economist whose ideologies are taught in business schools today, Kibaki believed in free markets and in liberalization of the economy through policy interventions. President Kibaki opened up commercial lending in the country by providing sound regulations of the money markets through the Central Bank of Kenya. Kibaki also grew revenue collections by expanding the tax collection base. He borrowed from the West and the East based on affordability of loans and reasonableness of terms and conditions. Kibaki’s success in public debt management went a long way in managing inflation levels and stabilizing the shilling against other currencies. Unemployment rate and poverty index of Kenya compared to other East African countries was slightly higher throughout Kibaki’s regime indicating that the gap between the rich and the poor existed at very wide margins. This could be attributed to the capitalistic nature of Kenya’s economy whose seeds had been sowed by Presidents Moi and Jomo Kenyatta in Kenya’s years of infancy. In my qualitative analysis of Kibaki’s performance as briefly summarized in this column, I found a leader who understood economics of the country in theory and in practice. The consummate economist set the stage for Kenya to take off as an economic powerhouse in Africa and as a significant participant in global trade. His policies on management of the economy are widely admired across political divides, private sector leaders and the electorate of his time.

Ethics, Self-Care And Burnout Prevention

Hosted by Dr Dawn Elise Snipes on 11th July, 2019

Paulo Coehlo’s quote, “When you say ‘yes’ to others make sure you are not saying ‘no’ to yourself,” summarizes the theme of this webinar. Over and over again, ethics and self-care need to constantly be at the top of our to-do lists otherwise our productivity in any business will be compromised. We need to intentionally and deliberately pursue behaviours that not only match our moral codes but those that promote our well-being too. Burnout is associated with suboptimal care and reduced mental and physical health care. It was first spotted among those in the “helping profession” but it is now also reported among workers and other professionals who develop depression-like symptoms often due to stress-related to their vocational roles.

Some signs and symptoms include physical and emotional exhaustion, insomnia, impaired concentration or memory loss, physical symptoms e.g. hypertension, absence of positive emotions, substance use, cynicism, lack of resilience/patience and forgoing important personal activities. Consequently, this impacts one’s health, their interaction with customers, co-workers and family, their attitude and general life satisfaction. The causes of burnout maybe and are not limited to excessive workload, emotionally draining work, lack of support, resources, rewards or control, unclear or ever-changing requirements, pessimism and perfectionism, value conflict, reluctance to delegate, high achieving type A personality, work-life imbalance and unpleasant working environment. Malasch Burnout Inventory (MBI) is commonly used for self-assessment exploring three components: exhaustion, depersonalization and personal achievement.

There are individual and system strategies that may aid to curb burnout: periodic self-assessment, enforcing realistic boundaries, mindfulness and meditation, healthy breaks and exercises, journaling, planning and to-do lists, practicing deliberate gratitude, being aware of personal negative feelings towards certain clients, identifying what upsets you about them and appreciating that it may not mean you are bad- remember all behavior is a form of communication. Organizations and institutions need to: grant their employees paid time off, increase staff capacity and provide a reasonable workload for each, organize frequent retreats, improve communication, perform efficiency audits, ensure proper work-life boundaries are maintained, increase staff input on changes and decisions and have an efforts-reward balance. 

It is good to note that burnout occurs through stages: honeymoon, onset of stress, chronic stress, burnout and habitual burnout. When one is self-aware, they can notice unusual changes in their body or environment and rectify them before burnout becomes habitual.  Burnout work environments are a reality but burnout doesn’t have to be.

Market Inflation Cripples Kenyan’s Food Security

Many Kenyans are currently caught in the grip of heightened food prices engendered by the currently market inflations that have steadily been escalating. Kenyans have protested on social media about the high cost of living using the #LowerFoodPrices in vain. They criticize the government for failing to stem the rise in the prices of everyday items. In March, the Kenya National Bureau of Statistics (KNBS) reported a 9.2% food inflation rate, which is predicted to increase further with the increase in fuel cost. This means a greater majority of Kenyans are and will be unable to put food on the table.

In 2021 Kenya was ranked 87/116 qualifying countries on the 2021 Global Hunger Index. In the same year, 2.6 million Kenyans were said to be in a food insecurity crisis. This is termed a ‘serious’ food and nutrition insecurity situation. Food and nutrition security means that all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food that meets their food preferences and dietary needs for an active and healthy life. In the whole country, prices of basic food items like milk, bread, sugar, and maize flour have spiked sharply in recent months, making it difficult for Kenyans to afford the recommended three meals per day. While these frustrations on social media are collective, the financial squeeze is more painful on a personal level.

Those hit hardest by these increased costs are the vulnerable. The pressure to shift to cheaper, sugary, salty and fatty food alternatives in order to have enough to eat may be enormous. Those who need to manage their diets to control diabetes, heart conditions and so on may face the prospect of worsening health. If, as expected, these food price rises become the ‘new normal’, even fit, healthy people would risk developing chronic disease as a result. Moreover, there can be poor educational attainment, poor mental health and social isolation, or increased mortality rates. Both short-term and long-term policies that have been enacted by the government should be implemented. Some households might require emergency food assistance by the government and donors, food subsidies, cash transfers, food for work and school feeding programs, adjustment of trade and tax measures, enhancement of agricultural production by providing agricultural input subsidies etcetera. At a household level, families need to budget, cut on junks, enrich foods and preserve the leftovers, and invest in kitchen gardening. 

Remaking Twitter & Becoming Elon Musk

In the just ended decade, big names in digital media ownership included Mark Zuckerberg of Facebook, Larry Page of Alphabet, Bill Gates of Microsoft and Jeff Bezos of Amazon. These among others in big-tech companies have shaped how information is organized and consumed around the world. They have also added impetus to conversations around data privacy, freedom of speech and e-commerce from their innovative applications such as Facebook, YouTube, LinkedIn and Amazon that bring communities together. These companies have grown their shareholder’s equity majorly from advertisements and selling of data. Between 2011 and 2020, most of these companies were in their growth stages implementing subscription strategies and clearing barriers from governments to operate in different jurisdictions. From 2021, the oligopolistic big tech sector is witnessing change of strategies and business models from most of these companies. Facebook for instance rebranded to Meta in a bid to regain trust from the public on its commitment to uphold data protection laws and to offer better the experience of using its products.

Starting January 2022, a new kid has come to the block with a mission to democratize freedom of speech on social media and to make social media work for its users rather than for government policy makers and a few board members running the company. Elon Musk disclosed his 9% stake in twitter through a statutory filling with the US. Securities and Exchange Commission. This also implied that Elon Musk was the largest non-institutional shareholder of twitter and deserving a seat on twitters board. Musk however turned down an offer by twitter’s CEO Parag Agrawal to join the board. Since the start of April 2022, Elon Musk has publicly engaged twitter users on how they want twitter to function. He thinks twitter should not only depend on income from advertisement but also innovate to earn revenue.

Elon Musk’s strategy to take over twitter from public listing to private ownership is timed and fueled by his wealth and influence in corporate governance. With immense success in Tesla, SpaceX, The Boring Company, Starlink and OpenAI, Elon Musk who is currently the world’s wealthiest person has attracted trust from leading lenders like Morgan Stanley Bank in purchasing twitter shares at premiums as high as 38%. His negotiation skills and mastery of organization politics has earn him credits in convincing twitter board to lift “poison pill” defense strategies from his hostile takeover plan of twitter.

Transforming Ownership Of Sectional Property In Kenya

Sectional Property Act 2020

The repealed Sectional Property Act of 1987 was unpopular to developers because of its harsh provisions favouring the property’s purchaser. Before the enactment of the Sectional Properties Act of 2020, developers of off-plan townhouses and sectional units used to register the specific units under long term leases which amounted to ownership. The current law is appealing and attractive to the developers due to modification of harsh provisions such as the one that required the property buyers to deposit the initial amount with a trustee instead of paying it directly to the developer.

The Sectional Properties Act, 2020 applies in respect of land held on freehold title or on leasehold title where the unexpired residue of the term is not less than twenty-one (21) years, and there is an intention to confer ownership. The law requires registration of sectional plans, which ought to describe two or more units and be presented to the Land Registrar.

The new law protects the purchaser by establishing a corporation that allows the unit owners to manage the apartment, flat or townhouses. The Act provides that a sectional plan should be accompanied by an application for registration of a corporation and a list of the owners of the units, which can be updated from time to time. Once a sectional plan is registered, the registrar is required to close the register of the mother title of the land where the sectional property sits and open a separate register for each unit described in the sectional plan.

The registrar will then issue a certificate of title if the property is freehold or a certificate of lease if the property is leasehold in respect of each unit of the sectional plan. The owners will then acquire shares in the formed corporation to own the common spaces as tenants in common in shares proportional to the unit ownership. The above law streamlines owning sectional properties in Kenya. Consequently, more investors will venture into the real estate business as developers of sectional units, improving the economy and making it easy to own homes in Kenya. The unit owners will also be able to take a loan using the certificate of ownership as security, hence boosting financial inclusion in the country.

Global Trade Amidst Russia -Ukraine War

The war between Ukraine and Russia has yet again put the global economy at the verge of collapsing even before the world fully recovers from disruptions caused by the COVID19 pandemic. For the past two years, unexpected events have significantly changed the way we do our things. The International Monetary Fund has warned that the fight between Russia and Ukraine could pose a great economic threat that could hurt the anticipated post-covid 19 recoveries. Global economy profoundly remains affected by the negative impact of the pandemic. However, there is slight stability in the second half of 2021 amid Omicron that threw the global markets into a frenzy.

Countries that have economic links with Ukraine and Russia are at particular risk of scarcity and supply disruption and are most affected by the increasing commodity supply. Recently the US government promised to sanction Russia for potential retaliation and this has already seen a push down of stock markets and driven up gas and oil prices. This clash could cause dizzying spikes in energy and food prices, fuel inflation fears and spook investors, a combination that threatens investment and growth in economies around the world.

For Kenya’s economy alone Kenyans have been forced to dig deeper into their pockets because of the cost of fuel due to the strengthening of the dollar relative to Kenya shillings meaning that the country will spend more on imports. This has seen the cost of fuel rise by ksh.5 and a total jump in oil prices which has hit $100 per barrel.

The world’s major economies, from Russia to the US are experiencing a multi-year high in inflation levels due to shortages in the supply of commodities whose demand is growing because of lifting covid-19 restrictions. For Kenya, food prices are expected to rise while imports will suffer delay in delivery. Manufacturing Industries may experience imported inflation which could put further pressure on the shilling against the US dollar. To mitigate the ongoing war the European Union should speedily find a solution to the war to salvage the already suffering world economy caused by Covid -19 pandemic.

Eruko Sacco: Deepening Financial Access In Turkana County

Availability and equality to access financial services is key for development of grass-root economies across the country. Access to timely, appropriate and affordable financial products and services promotes financial inclusion which is a key enabler for growth of businesses and for personal development of individuals. In Turkana County, Eruko SACCO Limited is on the frontline to register members, mobilize savings and pursue economic opportunities in the agribusiness sector to maximize returns for members. The SACCO which has its offices in Lodwar town has seen its membership growing overtime and is now present in all the seven sub-counties of Turkana.

The Vision of the SACCO is to be a leading community empowering organization through initiatives that promote sustainable and diversified livelihoods. Eruko SACCO is regulated by the Sacco Societies Regulatory Authority and is governed by a board of nine directors who are elected in an AGM. To execute its mandate of economically empowering its members, Eruko SACCO engages in bee-keeping and production of honey for sale, manufacturing of soap and detergents from natural aloe-turkanensis plants that grow in Turkana County and advancing loans to its members.

The SACCO is on a continuous membership recruitment exercise. For one to become a member, an application form must be completed and submitted to the secretary of the society. Ordinary members are required to pay Kes.500 to join while membership by prescription can be attained by paying an entrance fee of Kes.10, 000. Upon admission of an ordinary member, a monthly savings of at least Kes.500 shall be required from members. Members can access loans twice their Savings after a six months period of consistent saving. Loans attract an interest rate of 12% per annum and must be guaranteed by a member of the SACCO.

Eruko SACCO is a true vehicle for development in North Western Kenya and its impact is being felt right from the grass-root level. The SACCO has strategic partners supporting its development and has enjoyed stability thanks to good leadership. Start your journey of saving and unlocking economic opportunities together with likeminded people by joining Eruko SACCO. Contact the SACCO via or call +254 718 250 315 for enquiries at Eruko SACCO.

Fundamental Insights On Property Investment In Kenya

Hosted by Chams Media in partnership with Purple Dot International on 26th January, 2022

The webinar presenters were: Renu Hunjan a real-estate marketing strategist, Austin Waga head of mortgagees Stanbic bank and Adeel Madhani a legal expert practicing with Mohamed Madhani & Co Advocates. Together, these panelists equipped attendees with critical information on matters property investment. An investment possession is a real estate property, purchased with the intention of earning a return on the investment, either through rental income, the future resale of the property, or both. The property may be held by an individual investor, a group of investors, or a corporation. For third parties, a license allows access to a property at a fee. It could also be a long-term endeavor or a short-term investment. Investment property is also a term that may be used to describe other assets purchased for the sake of future appreciation such as art, securities, land, or other collectibles.

Robert Kiyosaki says, “Real estate investing, even on a very small scale remains a tried and true means of building an individual’s cash flow and wealth”. People, especially Kenyan investors have always had faith in real estate. Anyone interested in property investment of whatever kind, ought to establish at full length, the when, why, what and how of what they desire.  The legal requirements for anyone interested in the ownership of any investment are an identifying document (ID or Passport) and a Kenya Revenue Authority (KRA) pin.  It is important for any prospective buyer to do their due diligence before any commitment; this involves a thorough background search, finding someone locally to physically check things on the ground as photos can be deceptive at times, hiring an independent advocate, personally checking on the property developer, pegging payment on construction milestones and if possible having the bank do it’s due diligence too.

It is safer and easier to purchase properties that are fully managed. It is also critical to consider whether one’s goals can still be achieved, especially putting into consideration a country’s tax obligations. For land purchase, it is important for one to have a physical title deed and also ensure a search is done to verify that they are the rightful owner. For other properties, it’s better to have a sublease than a share certificate.

Finally, those interested in mortgages ought to understand the bank requirements and be aware that the lending bank has to consider their residential status and whether their income is sustainable and verifiable.   

Position Of Cooperative Movement in Kenya’s Economy

Savings and Credit Cooperative Organizations (SACCOs) are arguably the oldest form of banking in Kenya. Most of these organizations began as traditional table-banking groups with little or no formal organization but with structures of leadership, unwritten policies and a circuit of meetings in which deposits were received from members. Today, many such groups have formalized and are registered with Sacco Societies Regulatory Authority (SASRA). This development in the financial service sector has transformed Kenya’s economy through the convenience of savings and access to credit that is in SACCOs. In rural areas where agriculture creates the most number of jobs, the cooperative movement has been recognized by the government as a vital institution for mobilization of material resources for development. At a minimum, SACCOs offer savings accounts and loans. Deposit-based loans are usually sized at three to four times the amount of the member’s savings held at the SACCO. What makes the model unique is that loans are secured by the members’ deposits, and oftentimes by guarantees who also have deposits in the SACCO. The loans are fairer in their pricing and easier to access when compared to bank loans. Moreover, SACCOs pay higher interests on deposits than Banks, and members with SACCO shareholding enjoy guaranteed dividend payment annually. SASRA’s 2019 report highlighted resilience in SACCOs despite COVID-19 related constraints in the economy. For instance, total deposits held by Deposit Taking (DT) SACCOs stood at Kes.545 billion in 2020, a 13.4 % improvement on Kes.380 billion recorded in 2019. The growth reflects resilience in Saccos despite a difficult year that saw economic activates crippled by the global pandemic. Gross loans stood at Kes. 474.8 billion in 2020 from Kes.429.6 billion in 2019 being a record growth of 13.2%. The government of Kenya has been driving reforms to enhance governance, financial soundness, and sustainability of SACCOs consistent with policy developments articulated in cooperatives development policies (CDP) of 2019. Some of policy reforms that were initiated include: creation of a central liquidity facility and a shared technology platform, operationalization of deposit guarantee fund for SACCOs, establishment of SACCO Fraud Investigation Unit, and prudential supervision of non-deposit taking SACCO commodity referred to as Back Office Services Activities (BOSA SACCOs). These legal amendments have been drafted and submitted to National Treasury which has been included in Financial Bill for 2021. This is a milestone in ensuring that the capital investment in Saccos is protected.

The Minimum Tax Burden Is No More

The Constitutionality of Minimum tax provision

In a Constitutional Petition filed early this year, The High Court in Machakos declared section 12D of the Income Tax Act unconstitutional and hence null and void. Section 12D had introduced Minimum Tax as a blanket target on all taxpaying business entities at a rate of 1% on net sales regardless of whether they made losses or profits. Justice George V. Odunga while delivering the judgement on 20th September 2021 noted that the Minimum tax provision was in contravention of Article 201 (b) (i) of the Constitution of Kenya 2010 for subjecting taxpayers to double taxation hence punitive in nature. The Kenya Revenue Authority (KRA) had banked on the introduced new tax to widen its tax base. The court however noted that when the tax collector chose to widen its net for a bigger catch did not care about the effect its decision will have on Small Scale Businesses which are currently in perennial losses due to the abysmal economy caused by the covid-19 pandemic.  Justice Odunga stated that;

“The minimum tax has the potential of not only subjecting the people to double taxation but also unfairly targeting people whose businesses for whatever reason are in a loss-making position to pay taxes from their capital rather than profits.”

The KRA wanted to utilize the Minimum tax to capture treacherous business entities that were avoiding taxes through the declaration of constant losses. The above tax system is however discriminatory especially on entities making losses since they will have to tax their capital as opposed to profits. The court further noted that a tax system that reduces the capital base falls short of the values of an optimal tax system.

Economists, financial experts and associations such as Retail Trade Association of Kenya (RETRAK), Kenya Association of Manufacturers (KAM), Kenya Private Sector Alliance (KEPSA), Deloitte, Price Waterhouse Coopers (PWC) and Kenya Bankers Association (KBA) had earlier on opposed the 2020 amendments to the Income Tax Act introducing Minimum tax due to its punitive nature on businesses with low-profit margins and high capital turnover. Firms in the category of fast-moving consumer goods (FMCG) have a reason to smile since they were the worst hit businesses by the new changes in the Income Tax regime due to their low-profit margins and high capital. Business entities can now operate without fear of reducing their capital to pay tax.