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Bank branches reveal wealthy, poor counties

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Bank branches reveal wealthy, poor counties


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Central Bank of Kenya. FILE PHOTO | NMG

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Summary

  • Central Bank of Kenya (CBK) data shows that the three counties have 794 branches or 53 percent Kenya’s 1,502 banking outlets.
  • Nairobi accounted for 39.5 percent of Kenya’s bank branches, reflecting the capital city’s economic dominance over the other 46 devolved units created in 2013 to address the wealth imbalance.
  • Bank CEOs say the spread of banks is informed by cash flow and economic activity in the counties, signalling that the outlets are a bellwether of riches in the devolved units.

More than half of Kenya’s bank branches are found in Nairobi, Mombasa and Kiambu, reflecting wealth and income inequality across Kenya’s 47 counties.

Central Bank of Kenya (CBK) data shows that the three counties have 794 branches or 53 percent Kenya’s 1,502 banking outlets.

Nairobi accounted for 39.5 percent of Kenya’s bank branches, reflecting the capital city’s economic dominance over the other 46 devolved units created in 2013 to address the wealth imbalance.

Bank CEOs say the spread of banks is informed by cash flow and economic activity in the counties, signalling that the outlets are a bellwether of riches in the devolved units.

The heavy concentration of branches in Nairobi indicates inequality in the country’s economic development, which has partly been attributed to the previous centralised system of government which guided sharing of resources since independence.

The devolved system of government raised hopes of addressing the economic imbalance, but analysts say there is a need to offer incentives to attract private investors to counties.

BOTTOM COUNTIES

The 20 bottom counties have less than 10 bank branches each, with some like Samburu, Tana River and Mandera having three outlets each.

“Banks follow economic growth, as a result branches are concentrated where the centres of the economy are,” NCBA managing director John Gachora said.

“As banks raced for corporate clients in major cities and towns it led to a concentration in areas where they would find those types of clients.”

The three counties with heavy concentration of banks are home to 17 percent of Kenyans but they house 53 percent of lenders’ outlets in the country.

Counties like Nakuru, Kakamega, Bungoma, Meru, Kilifi, Machako and Kisii have fewer banks than Mombasa despite being more populous.

CBK data on the spread of bank branches matches previous counties’ wealth data from the Kenya National Bureau of Statistics (KNBS).

Nairobi, Mombasa and Kiambu accounted for 30.9 percent of Kenya’s GDP or total wealth. The bottom 20 accounted for 15.6 percent of the country’s total wealth.

Nairobi had 597 bank branches by the end of last year, representing 39.8 percent of outlets in the country.

The Africa Wealth report for 2019 report published this month by Mauritius-based AfrAsia Bank showed that Nairobi accounted for 73 percent of Kenya’s billionaires.

“We expect Nairobi to break into the top five wealthiest cities in Africa soon, possibly replacing Lagos which has been slipping down on the list,” says AfrAsia Bank.

Bank branches have seen little change over the past four years, despite lenders deepening digital and mobile banking.

The number of bank branches decreased from 1,518 in 2017 to 1,502 last year, which translated to a decrease of 16.

“The decrease in physical bank branches was mainly attributed to the adoption of alternative delivery channels such as mobile phone banking, Internet banking and agency banking,” the CBK said.

The rise of mobile banking has allowed lenders to reach customers directly, reducing the need for physical locations in a move that has also led to massive job losses among clerical staff. Over the last five years, banks have shed 6,574 clerical jobs from a high of 18,539 in 2014 as the move towards digital banking over mobile phones allowed them to employ technology to eliminate mundane tasks, managing costs and increasing efficiency.

Basic services like account opening, over the counter transactions and sales are moving onto digital platforms.

DIGITAL PLATFORMS

The digital platforms not only provide money transfer but also credit and savings, payments for goods and services as well as e-commerce through linkages with various financial and non-financial institutions.

Mr Gachora, the NCBA boss, said that the gap left by brick and mortar presence was being filled by digital banking, leveraging on high level of mobile penetration.

“Financial inclusion has been a success in Kenya as most people living in rural areas can access mobile online banking services. Going forward more branches will open and put their focus to sales as opposed to service as most service are now available on digital platforms,” he said.

Penetration of formal financial services stood at 82.9 percent from 75.3 percent in 2016, according to the 2019 FinAccess Household Survey jointly conducted by the CBK, the KNBS and FSD-Kenya.

FSD-Kenya noted that the usage of traditional bank accounts had dropped from 32 percent in 2016 to 30 percent in 2019.

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KQ resumes Mumbai flights after 4 months

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KQ resumes Mumbai flights after 4 months


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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • Kenya Airways will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
  • The airline in a notice to its customers yesterday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

Kenya Airways #ticker:KQ will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.

The airline in a notice to its customers Monday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

The airline will then resume full operations on the route on September 20, flying three times per week on the Indian route, which is one of the most lucrative destinations on its network.

Passengers on the route will part with Sh46,000 ($419) for one-way air ticket on economy class seats from Nairobi to Mumbai- prices that are relatively the same compared to what it was charging before the Covid-19 pandemic.

“Welcome back onboard! Fly from Nairobi to Mumbai starting Thursday 16th September with normal schedules resuming from Monday 20th September 2021,” said the airline in a notice to its customers yesterday.

KQ Suspended passenger flights to and from Mumbai on April 30 until further notice, following a government directive on travel between India and Kenya due to a Covid-19 crisis in that country.

The airline said on Friday that passengers who had booked tickets after May 1, the date of the last flight from Mumbai to Nairobi, will have to change their plans.

Affected passengers, KQ said, could also take vouchers for the value of their fare for future travel within 12 months.

India has seen soaring infection rates in the recent days, since the discovery of a new virus variant. Last month, India put on lockdown one of the states following a spike in cases of Covid-19.

Other countries that have banned flights to India include France, the UK Bangladesh, Oman and Hong Kong that have banned travel to and from India or asked their nationals coming from the Asian country to isolate themselves in government-approved hotels.

India has so far detected 33,264,175 corona virus cases with the number of deaths hitting 442,874 as at September 13.

A large number of patients from Kenya also travel to India every year for specialised medical treatment, especially cancer care, helping to drive medical tourism in the densely populated country that boasts affordable and easily accessible healthcare.

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Lower import volumes push mitumba prices to new highs

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Lower import volumes push mitumba prices to new highs


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Man pulls a cart loaded with second-hand clothes at Gikomba Market in Nairobi. FILE PHOTO | NMG

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Summary

  • Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
  • Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
  • Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

The average price of a tonne of second-hand clothing items imported into the country crossed the Sh100,000 mark for the first time last year on reduced volumes in the wake of safety protocols and guidelines to curb spread of coronavirus.

Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.

Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.

Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

Last year’s drop was the first dip since 2011 when 76,533 tonnes were shipped in compared with 80,423 tonnes the previous year, the official data collated by the Kenya National Bureau of Statistics (KNBS) shows.

The import bill for the merchandise amounted to Sh12.24 billion, a drop of 31.11 percent, or Sh5.53 billion, year-on-year.

TIn imposing the temporary ban on used clothes, Kebs had applied a standard which prohibits buying second-hand clothes from countries experiencing epidemics to ensure disease-causing microorganisms are not imported into Kenya.

Higher quality and relatively lower prices for mitumba has continued to drive demand for used clothes at expense of locally-made products amid higher margins enjoyed by traders largely operating in informal markets.

The lucrative second-hand clothing market has seen traders from China —a key source market for the merchandise —open shops in Gikomba, Kenya’s largest informal market for mitumba, in recent years to cash in rising demand.

Earnings from exports of articles of apparel and clothing accessories fell 5.32 percent to Sh32.92 billion last year compared with 2019, data indicates.

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Court backs Atwoli union in horticulture membership feud

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Court backs Atwoli union in horticulture membership feud


Cotu boss Francis Atwoli

Cotu boss Francis Atwoli. FILE PHOTO | NMG

Summary

  • A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
  • Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.

Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

Mr Atwoli is the secretary-general of KPAWU. The rival union claimed KPAWU had encroached on its area of workers’ representation.

Justice James Rika, however, dismissed the claim and ruled that the dispute should have been taken through conciliation, and was therefore presented in court prematurely.

He also stated that Kefhau must go beyond its registration and recruit sufficient members from the employers, to be granted recognition and organisational rights.

“Registration on its own, does not afford the claimant (Kefhau) recognition. Until there is proof that Kefhau has satisfied Section 54 of the Labour Relations Act, the status quo must be maintained,” said the judge.

“Kefhau must recruit at least 50 percent plus one, of the unionisable employees in the floriculture and horticulture industry, members of the Agricultural Employers Association to be considered for recognition,” he stated.

He noted that there is a Recognition Agreement and CBA, binding Mr Atwoli’s union and Agricultural Employers Association, affecting 73 Flower Growers Group of employers, and over 60,000 employees.

“It is objectionable for Kefhau to be allowed organisational rights, and the legitimacy to receive trade union dues and agency fees, from over 60,000 employees, just on the strength of registration as a trade union,” said the judge.

Kefhau wanted the court to declare that it is the sole trade union, which is allowed by its constitution to carry out activities in the export floriculture and vegetable industry, and an order restraining Mr Atwoli’s from representing workers in that area.

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