When Kiambu MP Jude Njomo introduced a Bill in Parliament in December 2015 seeking to cap bank lending rates, the reaction was timid.
After all he was not the first legislator attempting to take on commercial banks. Long accused of suppressing growth through expensive lending to businesses.
Two others had attempted and failed. Months later in 2016, the first-time Kiambu MP became a household name.
Cheered by Many
And cheered on by many who hoped President Uhuru Kenyatta will assent to the proposed law. And compel banks to lower their lending rates.
The former Kiambu MP’s Banking (Amendment) Bill 2015 had no doubt rattled titans in the banking sector. Amid intense lobbying to persuade President Kenyatta to reject the proposed law.
The anxiety caused by the Bill perhaps best played out on Wednesday during a joint meeting between bank executives. And Central Bank of Kenya governor Patrick Njoroge in Nairobi.
The usually confident and vibrant CEOs were reduced to talking in hushed tones. Typical of a meeting of convenience.
The controversial Bill brought unity of purpose among the bank executives. With a prime of goals of shooting down the ambitions of one man — Njomo.
Bankers were aware the momentum was building against them and even sought to appease Parliamentarians with a memorandum of understanding (MoU).
That creates a Sh30 billion fund to be lent out to small and medium sized enterprises (SMEs) on concessionary rates.
Njomo, however, said he is unimpressed by the bankers’ move. Arguing the MoU needs to be anchored in law, through a Bill so as to commit the lenders to their promises.
He recommended banks to set aside 30 per cent of their loan book — about Sh600 billion – for SMEs.
The 51-year-old Kiambu legislator was unperturbed by the lobbying bank CEOs. even as he continued enjoying the limelight as the people’s champion.
The father of four admits he has loan facilities but points out that his push for regulation of interest rates is not driven by personal bias but an obligation to protect the public.
“Of course I have also borrowed just like every other Kenyan. But this is not a personal, it concerns the whole republic,” said the Kiambu MP to the Business Daily.
Njomo’s confidence was anchored on the overwhelming support from Parliament. That passed his Bill after legislators were convinced by his 2,000-word report, detailing why caps would be necessary on bank lending rates.
Besides, his Bill comes under a more democratic legal regime. Which gives Parliament powers to veto the President, in case he declines to sign the Bill into law.
In August 2015, attempts to cap bank interest rates through a Bill by Gem MP Jakoyo Midowo, flopped on a technicality.
Budget and Appropriations Committee
This was after the Budget and Appropriations Committee said the proposed amendments to the Finance Bill, went against Article 114 of the Constitution.
Mbeere South MP Mutava Musyimi, who chaired the committee, asked the Speaker to decline an amendment to the Central Bank of Kenya Act.
Meant to cap rates filed by Mr Midiwo. He said any changes to a money Bill must be approved by the Budget committee.
National Finance Stakeholders
After taking the views of Treasury, the CBK and other stakeholders in line with Article 114 of the Constitution.
Another legislator Joe Donde also unsuccessfully attempted to cap bank interest rates nearly 22 years ago.
In his proposed amendments to the Banking Act, Mr Donde had argued then that at 24 per cent, the interest rates charged by the banks had made borrowing out of reach of many Kenyans.
In addition, businesses were failing after banks moved in to auction them for failure to service loans due to the high interest rates, he argued.
The Bill, therefore, proposed to have the rates pegged on the 91-day Treasury bills. With a margin of four per cent.
His Central Bank of Kenya (Amendment) Bill 2000 was, however, vetoed by then President Daniel arap Moi who cited anomalies.
Moi’s Recommendations to the Bill in 2000
In a memorandum sent to Parliament and which sought to make amendments to the bill, Moi reminded the MPs that State control of interest rates, would be against the spirit of the liberalization policy.
Another bone of contention between the President and Donde was the requirement that a nine-man committee, be formed to be in charge of formulating and implementing monetary policy.
Moi’s amendment proposed that the committee should have 10 members, including the governor of the Central Bank. His deputy, the chief economist and seven others, two of whom must be women.
Role of the Committee
The President further wanted the role of the committee to change from being proactive, to that of an advisory one.
Unlike Mr Midiwo who used strong words against banks, Mr Njomo cut a diplomatic figure — very calculating in his move.
“I am not against banks making profits, but what we are against as legislators are banks making so much profit.
Moments of Controversy
And other businesses that borrow money from banks to do business do not make any profit,” he says.
Mr Njomo has had his moments of controversy. Notably when he was quoted in 2013 as having said he would quit his position, if MPs salaries were slashed as had been recommended by the Salaries and Remuneration Commission.
He, however, maintains he was misquoted by the media.
Njomo’s Early Life
Mr Njomo was born in Kiambu where he attended Riara Primary School, before joining Kanunga Secondary School.
Where he sat for his A-levels. He joined Kenya Polytechnic, the current Technical University of Kenya, and trained in electrical engineering.
He was employed by Kenya Power and Lighting Company (Kenya Power), before branching to private business and later joining politics.
Read more at https://thebigissue.co.ke
How KRA Earned Sh50bn From Banks, Despite Covid-19 Pandemic
Despite the severe effects emerging from the Covid-19 pandemic, Kenyan commercial banks were reporting double-digit profitability growths resulting from the global crisis, earning huge dividends for their shareholders.
It can be noted that most government institutions discouraged cash transactions in order to contain the pandemic level. This directly promoted digital transactions like mpesa and m-banking.
Besides owners, a new survey has shown that Kenya Revenue Authority(KRA) was the second best beneficiary of the supernormal profits.
According to PricewaterhouseCoopers (PwC) report, more than a quarter of corporate taxes paid to KRA in the year to December 2021, came from banks.
On Wednesday, a report was released on behalf of the Kenya Bankers Association (KBA), indicating the corporate taxes paid to the KRA surpassed 22.82% to Sh50.7 billion. A year earlier, the sector’s corporation tax payment amounted to Sh41.28 billion.
Banks are among the most profitable institutions in Kenya. They are among the biggest revenue generators in a country where tax compliance among corporates is at a low level.
The taxation law requires local companies to pay 30% of their profits as corporate taxes.
A whooping Sh198.24 billion was the total corporate tax paid in Kenya last year, with banks accounting for 25.57% (Sh50.7 billion) of the amount.
“The increase in 2021 compared to 2020 was largely driven by increase in profits with the profit before tax of the banks increasing by 85.17 percent in 2021 relative to 2020,” said the report.
“The profit before a tax increase is aligned to increased economic activity in 2021 as reflected by the GDP growth which grew from a contraction of 0.3 percent in 2020 to 7.5 percent in 2021.”
Check out: Kenya Exits Top 10 UN World Suppliers
According to KRA, the banking sector includes 44 listed lenders, 7 micro financiers, 16 SACCOs, and 38 custodian banks, not forgetting international financiers and bureaus with local offices.
The study focused on both the corporate tax and Value Added Tax (VAT) that it is not able to recover (irrecoverable VAT). Also, the taxes that banks collect as an agent of government such as PAYE.
Overall, the banking industry contributed Sh129.52 billion in taxes accruing from day-to-day operations in the year under the review.
Documented filings from 38 banks which participated were relied on. This represents 97% of the market share.
Kenya Exits Top 10 UN World Suppliers
A new report has indicated that Kenyan businesses’ supplies to United Nations (UN) agencies dropped by 11% by last year. This has edged out the country from the top ten spot.
During the period, Kenya’s supplies reached a Sh62.4 billion value compared to the Sh70.3 billion worth of goods supplied a year earlier. A drop of Sh7.9 billion occurred.
However, the report did not give reasons for the drop.
It can be noted that last year was markedmuch affected by Covid-19 pandemic which started in 2020. The pandemic severely affected businesses both locally and globally, destabilizing operations of multinational agencies.
Short-term disruptions rose from the pandemic, provoking long-term changes in daily world operations like business and lifestyle.
However, contrary to kenya’s supply ability, its continental brothers like Nigeria and Ethiopia experienced an increase in the supplies. Parhaps, the reason(s) for the controversy was not revealed in the report.
“Procurement from suppliers in Africa rose by $303 million overall due to increased procurement activity by WFP (World Food Programme), IOM (International Organization for Migration) and UNICEF in particular,” says the report.
“Kenya, the largest country by procurement volume in the region, experienced a $67 million (Sh7.9 billion) decrease in procurement between 2020 and 2021, while procurement from suppliers in Nigeria and Ethiopia increased by $92 million (Sh10.8 billion) and $89 million (Sh10.5 billion), respectively.”
Health, the largest procurement sector of the UN system
The largest procurement sector of the UN system remained to be Health.
The sector’s procurement nearly doubled in 2021 to 2020(from $10.6 billion (KSh1.2 trillion) to $5.5 billion(KSh649 billion) respectively.
It should be noted that the UN had increased procurement at the period, as it highly participated in the comabatment of the pandemic.
“A significant part of the increase in the sector was driven by procurement related to Covid-19 vaccines and their distribution,” said the UN whose agencies.
Science, engineering and construction, were the second-largest sector.
In 2021, procurement in the above sectors represented 12% total UN procurement, hitting $3.5 billion (Sh413 billion.
World’s top UN suppliers
In 2021, the UN sourced goods and services from suppliers in 223 different countries and territories. This represented growth across all geographical regions.
The US maintained its top spot as the giant supplier to the UN. During the period, US supplied goods worthSh271 billion to UN.
Mexico tied the US at the top spot as it supplied goods of the same value in the period.
The UN complex in Kenya
Several UN agencies are hosted in the country, including the UN headquarters in Africa.
The complex which lies in the capital city of the country, is the administrative centre of two main UN agencies: United Nations Environment Assembly (UNEA) and the United Nations Human Settlements Programme (UN-Habitat).
Additionally, the centre hosts the global headquarters for two programmes — the United Nations Environmental Programme (UNEP) and the United Nations Human Settlements Programme (UN-Habitat) among several others.
Aliko Dangote, how a USD500,000 loan built a USD20Billion net worth June 2022
Dangote was born in Kano, Kano State into a wealthy Hausa Muslim family. Dangote’s mother, Mariya Sanusi Dantata, was the daughter of businessman Sanusi Dantata.
Aliko Dangote’s father, Mohammed Dangote, was a business associate of Sanusi Dantata. Through his mother, Dangote is the great-grandson of Alhassan Dantata. The richest West African at the time of his death in 1955.
Dangote was educated at the Sheikh Ali Kumasi Madrasa, followed by Capital High School, Kano. In 1978, he graduated from the Government College, Birnin Kudu.
University Education and Entry into Business
He received a bachelor’s degree in business studies and administration from Al-Azhar University, Cairo.
The Dangote Group was established as a small trading firm in 1977. The same year Dangote relocated to Lagos to expand the company.
Dangote received a $500,000 loan from his uncle, to begin trading in commodities including bagged cement. As well as agricultural goods like rice and sugar.
Dealings with the Central Bank of Nigeria
In the 1990s, he approached the Central Bank of Nigeria, with the idea that it would be cheaper for the bank to allow his transport company to manage their fleet of staff buses.
A proposal that was also approved. Today, the Dangote Group is one of the largest conglomerates in Africa.
With international operations in Benin, Ghana, Zambia and Togo. The Dangote Group has moved from being a trading company to be the largest industrial group in Nigeria.
Conglomerates in Dangote Group
It encompasses divisions like Dangote Sugar Refinery, Dangote Cement, and Dangote Flour. Dangote Group dominates the sugar market in Nigeria.
Its refinery business is the main supplier (70 percent of the market) to the country’s soft drink companies, breweries and confectioners.
The company employs more than 11,000 people in West Africa. In July 2012, Dangote approached the Nigerian Ports Authority to lease an abandoned piece of land at the Apapa Port, which was approved.
Largest Sugar Refinery in Africa
He later built facilities for his sugar company there. It is the largest refinery in Africa and the third largest in the world, producing 800,000 tonnes of sugar annually.
The Dangote Group owns salt factories and flour mills and is a major importer of rice, fish, pasta, cement, and fertilizer.
The company exports cotton, cashew nuts, cocoa, sesame seeds, and ginger to several countries.
Other Major Investments
Additionally, it has major investments in real estate, banking, transport, textiles, oil, and gas. In February 2022, Dangote announced the completion of Peugeot assembling facility.
Which is in Nigeria and followed his partnership with Stellantis Group, the parent company of Peugeot, the Kano and Kaduna state government.
The new automobile company, Dangote Peugeot Automobiles Nigeria Limited (DPAN) factory, which is based in Kaduna, commenced operations with the roll-out of Peugeot 301, Peugeot 5008, 3008, 508 and Land Trek. “
Dangote became Nigeria’s first billionaire in 2007. Dangote reportedly added $9.2 billion to his personal wealth in 2013, according to the Bloomberg Billionaires Index.
Making him the thirtieth-richest person in the world at the time, and the richest person in Africa. In 2015, the HSBC leaks revealed that Dangote was a HSBC client.
And that he had assets in a tax haven in the British Virgin Islands. As of June 2022, Dangote is the wealthiest person in Africa, with an estimated net worth of US$20 billion.