Barclays Bank Kenya (BBK) has launched a new virtual banking product specifically for the Small and Medium Enterprise business. Timiza, a mobile-based virtual account enables customers and non-customers to access banking services directly from their phones. The product is targeted at the youthful population running or wish to start businesses and need quick access to capital keep their business going.
Tullah Stephen
By Peter Nduati
The cost of living in Kenya has seen a drastic increase in the past year that may spill over to the first quarter or half of 2018. Factors such as increased cost of oil and the rise of the US dollar have had a direct impact on the increase in the cost of living. Such factors directly affect a majority of costs including the cost of food, land, property and much more. 2017 being an election year made things harder for businesses and trade in general which directly affected the circulation of money within our economy.
More Kenyans have had to dig deeper and deeper into their pockets just to make ends meet. The government has made efforts to try cushion Kenyans from the high cost of living following the Price Control (Essential Goods) Bill signed into law by former president Mwai Kibaki in 2011 to cushion citizens from high cost of living. Last year, and perhaps closest to our hearts the Government introduced subsidized maize flour placing Kenya’s most loved meal within reach of every Kenyan. The government has also slightly reduced payroll taxes that took effect in the beginning of January. Pay-As-You-Earn (PAYE) bands will be expanded by 10 per cent as promised in last year’s budget, taxpayers monthly relief will also see an increase in a bid to yield monthly savings depending on a person’s salary.
Nairobi is the 75th most expensive city to live in the world and with this in mind every single asset and item owned and bought extremely valuable. On average Kenyans spend an estimated amount of ksh.130,000 on furnishing their households. Most Kenyans live in estates that do not have proper security. Furthermore are paying rent or a mortgage for their said home but do not consider any form of insurance to protect anything within their household leave alone the household on its own. The high cost of living has seen more home owners ignore home insurance as its seen as an extra cost in this harsh economic time but how much do you really loose in the event of an unexpected event such as a fire in your home, theft or damage of property as compared to the cost of paying for a home insurance premium?
Say you come home one day and find that your home has completely been robbed clean which is a very common scenario in many estates in Nairobi, how big of a loss will you have encored? How expensive would it actually be to replenish all you have lost? Insurance measures come into play to save you at such moments; the burden of replenishing all your stolen items will be the responsibility of your insurer instead of you as an individual.
The appropriate steps must however be followed in order to legitimately make your claim. It’s very simple to claim for your home insurance all you need to do is follow four steps. Notify your nearest police station for all losses, notify your insure of the claim and submit the relevant documents, await the insurer to process the claim and finally the claims are paid within 7 days of signing discharge voucher.
The cost of insurance is dependent on the value of your property and for home insurance its dependent on the value of items within your house that are covered within your insurance cover. The common worry is the lump sum cost of the insurance premium however what very few Kenyans are aware of is that home insurance can be broken down into monthly installments. With Monthly installment payments, customers are able to enjoy lower monthly costs that ensure protection of their valued items throughout the year.
According to the Insurance Information Institute 95per cent of homeowners in the United States of America have home insurance this is due to the high level of awareness on the importance of home insurance. 51per cent of them are under the age of 30 and take protective measures to ensure they safeguard their homes and assets within their homes. Kenya has not gotten to this level of awareness yet however it is a goal that we must work towards, the uptake of insurance will increase Kenyans are given proper knowledge on home insurance to enable them to make informed decisions.
The writer is the C.E.O of Resolution Insurance Kenya
Despite the harsh economic conditions hampering millennial ability to buy property, it has done nothing to stifle their enthusiasm.
Investing in land or real estate, was once considered something one should do later on in their life time. While there is nothing wrong with investing at the later stages in life, most young people believe that it is not possible to invest in land until one is established and experienced enough in life. This could perhaps be in their forties, fifties or even sixties.
For long real estate was reserved for the affluent and the well connected. However, a new trend is emerging. Millennials, the generation currently aged between the age of 25 and 35, are increasingly becoming the most important generation for developers.
“Buoyed by disposable income and burgeoning investment acumen young people have realized the need to prepare well for the future. Investing in your twenties or thirties is not only a possibility but it’s the best decision one can make,” says Reuben Kimani the co-founder and the C.E.O of Username Investment Limited. He add that the sector has proven to be the finest avenue for creating wealth
Username Investment, is among a few companies in Kenya offering real estate products targeting millennial. Kimani says a huge percentage of these population have well-paying jobs and are now looking at the best places to put their money.
Real estate investment, he explains, provides higher returns compared to other investment options. “The returns in the sector continue to remain high at an average of about 25.8 per cent with a capital appreciation of 17.4 per cent over the last six years.”
“Our main focus is to offer products that are not only affordable but also offer value for investment. Most of the clients we have are demanding. These are people on their first jobs and are looking for properties to develop within a period of five to six years of making purchase.”
The company founded in 2013 has for far successfully undertaken 18 projects. The hottest product on sale by the investment firm currently is a project named Ngong Blossom.
The project is located 41 kilometers from Nairobi in Ngong. The property divide into 295 one eight acre plots, overlooks Ngong hills and enjoys proximity to the Ngong-Kimuka standard gauge railway station.
Kimani says property around the area has been pricey locking out many prospective buyers.
However the company says its strategy is to target masses making it easier for the company to sell at a bargain. To purchase an eighth of an acre one will have to part with KSh349, 000.
For those looking to pay in installments. The payment plan according to Kimani is flexible and friendly. Minimum bookings for each plot is KSh35,000 with a monthly installment of KSh 25,000 per month over a period of 12 months. All fees are inclusive of legal fees stamp duty and title processing fee.
The company reassure investors of graded access roads, boreholes, an estate gate and a perimeter fence. There are no limits to what structures an investor wants to build, however, the investors are encouraged come together and agree on the kind of structures to be put up.
One of the selling point the company runs with is the ability to deliver title deeds in a period of between four to six months upon completion of payment. The company’s track record speaks for its self says Kimani. Since inception, the company has been able to issue over 4,000 title deeds.
There is also a refund policy in place for buyers who change their mind. According to Kimani, all an investor needs to do is to submit their request to the company and the refund is done within a maximum time of six months.
Other projects the firm has undertaken or currently offering include Tinga suburb where an eighth of an acre goes for KSh179, 000 and the Haven-Konza where an eighth of an acre goes for KSh349,000.
According to Kimani the prices of these projects depend on the location of the piece of land and the available infrastructure such as major highways or projects such as Standard Gauge Railway tend to cost higher.
When selecting a property or where to live, Kimani says millennial place value on different factors. Preserving an established lifestyle is key. “They expect to live near proper facilities, schools and hospitals among others. Real estate, Kimani says can be intimidating for first timers especially with cases of buyers falling in to the hands of scammers. There has been a lot of fraudulent cases reported with investors losing millions.
Data released in 2016, shows that there are over 7000 land fraud cases. The scams according to ministry of lands costs the economy about KSh60 billion.
Among the tricks used by fraudsters include manipulation of illiterate land owners, collusion with government officials and lawyers duping their unsuspecting clients.
Kimani says Username Investment was also a victim in their early years starting out. Together with his co-founders, the young investor’s ignorance saw conned into illegally buying a piece of land. Though they were able to recover a portion of the money were conned, the company says the most important thing was the lesson learnt.
“It’s a different ball game all together now that we are dealing with a huge number of customers. We ensure that we undertake due diligence before we purchase land.”
Due diligence process can be an arduous task. A lot of red tape is involved. The process involves conducting search at the lands registry, ground survey, physical visit to the land, background search of the seller’s identity and dealings. If the seller is a company, buyers should confirm its authority to hold and sell land.
For Username Investment, Kimani says the focus now is offering products out of Nairobi and its environs. Neighboring counties such as Nakuru and Naivasha are among the top of mind destination for the investment company.
The rise of technology has allowed fintech companies to offer alternative to traditional lenders. Now this firm wants to offer credit to everyone regardless of their status
Like many others, Mary Wafula a small scale trader in Nairobi’s Kenyatta market, struggles with economic slump, growing supplier pricing as well as access to finance to sustain or even grow her business. For small scale traders like Wafula who have very little or no savings, rainy days are all about borrowing money from friends or lending institutions such as banks or credit unions.
But, banks and credit unions have been reluctant to approve any loans for small businesses even those that are considered stable. Their main argument has been that such businesses are risky and often don’t offer many returns.
The reluctance to offer loans to small business or personal loans by banks and credit unions has seen a number of fintech companies come in to save the situation.
Buoyed by the growing mobile and internet penetration, fintech companies are developing products geared towards providing digital loans to the lower cadre population. One such company is Okolea International Limited.
Okolea, is a finance company offering digital loans, money transfer, digital payment and accounting software. According to the companies CEO, Peter Muraya, the company’s goal is to leverage on existing and emerging technologies like artificial intelligence and virtual reality to power innovative financial solutions and improve the day to day lives of people.
“Our goal is to offer loans to everyone without prejudice. We believe no one should be discriminated against regardless of their social class.”
Digital lending products have been growing in popularity over the last few years. They have been known to offer smaller amounts of loans compared to micro-finance institutions.
Customers accessing higher amounts mostly invest into business while those qualifying for smaller loans often spend on consumption, emergencies and recurring expenses such as rent.
“One of the key things we have been focusing on has been quick turnaround time. The ability to get loans instantly without documentation at any time is what Okolea appealing to the market.”
For one to qualify for Okolea instant loan, all they have to do according to Muraya, is to download the app on android play store. Once, you have downloaded, you pay facilitation fee of KSh100 to access loans. The facilitation fee according to Muraya is meant to enable the company carry out a due diligence process and check applicants credit worthiness.
“This amount is to enable us conduct a background check on the borrower’s details and status from the Credit Reference Bureau (CRB).” Once the process is complete, the borrowers can access as little as Ksh150 and a maximum of KSh100, 000. Loan limit increases with the applicant’s ability to pay previous loan.
According to Muraya, the company like most digital credit companies, relies on mobile based data such as users M-Pesa transaction records to determine their credit score and loan amount.
The annual percentage range from 20 to five per cent based on the repayment period for the borrowers. Repayment period is within a month.
Those that default on their loans are blacklisted by CRB and locked out from further accessing loans. This does not only apply to loans from Okolea but other digital credit companies. Research by Microsave an international financial inclusion firm show that about 2.7 million Kenyans have been listed in the last three years. Out of these over 400,000 have been listed for amounts less than USD2.
Since inception, Okolea has been able to disburse over 500, 000 loans to its 80,000 registered members. The average amount of loan according to Muraya is KSh1200 though this figure could change in the future.
Muraya says the busiest months for the lender is during the months of January and February. “During this time people are looking for money to take their children to school after spending most of their cash on Christmas holiday. “
Kenya has more than 20 digital credit offerings with the number growing every day. This Muraya says is fueled by a growing demand for instant loans as well as the increasing popularity of mobile money transfer services.
Mshwari is currently the most popular providing both savings and loans through M-Pesa platform. Others include California backed digital lender Branch, Equitel, Tala and Saida. A growing number of loans issued with Mshwari at 63million, KCB Mpesa at 4.1million and Equitel at 3.6million.
Similar to Okolea, these apps allow users to download the app then link it with their social media accounts. The app the uses algorithms to analyse data from the user’s handset to determine their credit score.
Industry data show that 90 per cent of loans in Kenya are currently disbursed via mobile phones. Data from the Central Bank of Kenya indicate the volume of cash moved through mobile money transfer platforms in 2016 grew by a fifth to cross the KSh3 trillion mark.
Though these services have offered a solution to one of the teething problems to the common man. They have not been without challenges.
The default rates are high, says Muraya. “Most people fail to pay their loans out of ignorance, some see the loans as too little for lenders to follow up.”
There are also cases of multiple borrowing. Over time with the growing number of products and services, it has been difficult to know how many other loans borrowers have taken. This means borrowers taking more credit than they can manage. It is common for borrowers to take up a loan to pay another. This creates a debt cycle that in the end increases their default rate.
For Muraya and his team, the target is now set on growing the company’s market share. This he says will be through offering products that resonate with the market demands and trends.
Please Note. On our print edition we indicated that facilitation fee was Ksh150 and the repayment period to be 12 months. This has since been corrected in our online version to reflect the true figures. The facilitation fee is Ksh100 while the repayment period is within one month.
WorldRemit has announced that it will be partnering with leading mobile money operators to increase mobile to mobile remittances and unlock the millions lost in sending money to Tanzania from around the world.
According to the mobile money remittance company,mobile to mobile remittances to Tanzania can cut the overall costs of remittances for both the senders and recipients by as much as 50per cent .
A recent report from FSD Africa reveals that Tanzania is the most expensive country in Africa to send money to from the UK, costing just under GBP17 to send GBP120. In comparison, sending money to mobile money accounts with WorldRemit saves senders as much as 50per cent of the fees while saving time and money for recipients by removing the need to travel to major cities to collect cash from agent locations.
With just under $390 million being sent in remittances to Tanzania globally, the saving could increase funds entering the Tanzanian economy by tens of billions of Tanzanian shillings. WorldRemit announced the figures at the GSMA Mobile 360 conference in Dar es Salaam following the launch of a major partnership with Huawei which will enable WorldRemit to accelerate the growth of its mobile money network internationally and to work with local mobile money providers to promote mobile to mobile remittances.
The savings are even greater when the indirect costs of sending and collecting money are also considered. Mobile to mobile transfers remove all the indirect costs such as travelling to an agency to pay in and collect money, the cut paid to a third party doing this on your behalf, time off work and many more.
WorldRemit, which connects to over 20per cent of all global mobile money accounts reports that it is seeing a significant switch from cash pay out to mobile money when sending money to Tanzania. More than ten times as many transfers are being paid out as mobile money than are paid out as cash.
WorldRemit has successfully pioneered a mobile-first and online approach to international transfers and now processes more than 74per cent of all international remittances to mobile money accounts from money transfer operators.
The company connects leading payment systems around the world to enable people to send money via bank transfer, card payment and now also Android Pay so that sending money is entirely cashless and the process is seamless. Using WorldRemit, money can be paid out in over 140 countries as mobile money, bank deposits, cash pickup-up or airtime top-up – as easily as sending an instant message.
Remittances are one of the fastest growing mobile money products according to the GSMA and often the first step to opening a mobile money account and financial inclusion. Mobile money accounts enable customers to start saving and open up access other vital financial services such as loans and insurance.
Alix Murphy, Director of Mobile Partnerships at World Remit said: “Saving on the transaction costs is only part of the picture. Our goal is to help people to save time and money on all aspects of sending and receiving money internationally. Mobile to mobile remittances mean there is no need to travel, take time off work or to ask others for help in collecting money. So, there are no indirect costs so people can send money more frequently and stay closely connected to friends and family.”
“Over 90per cent of remittance transactions are made using cash in both the sending and receiving countries. Whilst this service has worked reasonably well historically it is inherently expensive due to the number of hands that the money must pass through. Using new technology, and mobile payments in particular, improves efficiency and transparency and importantly can lead to lower costs and greater convenience for customers,” said Leon Isaacs, CEO at Developing Markets Associates (DMA).
Press Release
Visa and Direct Pay Online Group (DPO), the leading online payment service provider in Africa, have announced that they are enabling 20,000 more merchants to accept mVisa payments, facilitating mobile commerce in Kenya and connecting more people and businesses to the global economy. Consumers will be able to use Visa’s innovative, secure and interoperable mobile payment solution at leading airlines, hotels, travel agents and tour operators across the country.
mVisa is a mobile payment solution, backed by Visa’s global payment network, which enables consumers to pay merchants or send money to friends and family direct from their bank account via their mobile banking app. mVisa also offers merchants of all sizes a cost-effective and secure way to accept electronic payments. Consumers can pay merchants by scanning a QR code on a smart phone or by entering a merchant number into a feature phone. The payment is pushed directly from the consumer’s bank account into the merchant’s account and provides real-time notification to both parties.
“Visa’s partnership with Direct Pay Online is an important milestone in our mission to enable digital commerce across Africa,” says Sunny Walia, General Manager, East Africa for Visa. “Now even more merchants and customers will benefit from the speed, convenience and security that mVisa offers whether they are making online or in-store payments.
“Enrolled merchants will receive a unique QR code that customers can scan to make mobile payments such that funds move within the banking system into their account at no extra cost. Consumers control the payment using either a QR scan for smart phones or a USSD code for feature phones, and they can send money anywhere in the world that mVisa is accepted” he added.”
Eran Feinstein, DPO Group CEO says: “We are very excited to partner with Visa. This partnership offers our merchants and their customers the freedom to pay and be paid with ease and convenience. It is a great addition to the payments options we are currently offering our merchants. At Direct Pay Online, we remain committed to providing solutions that bring ease while making payments online and this partnership with Visa helps us live up to this commitment.”
Direct Pay Online was established in Kenya in 2006 and has since expanded to Tanzania, Ethiopia, Uganda, Rwanda, Zambia, Zimbabwe, Malawi, South Africa, Namibia and Botswana. The Group processes merchant payments, mobile money and e-wallets.
Key Kenyan merchants that will now be able to accept mVisa payments through this partnership include Fly 540, Nation Media Group, Amref Flying Doctors, Travel Creations and Azam TV.
Fountain Technologies Ltd (FTL) has entered into a strategic business alliance with Ferri Group, a Luxembourg based company, which will see the two companies jointly bid and tender for industrial and electrical projects.
This will be done under a profit share agreement on a project by project basis for any amounts up to US$ 100 million per transaction, with an option for Ferri Group to acquire minority equity stake of about 30% in FTL within two years’ time. The strategic alliance will enable the two businesses to jointly pursue and develop energy infrastructure projects in the region.
The deal was signed a few months after FTL, a subsidiary of FEP Holdings, announced that it was seeking a strategic and financially endowed investor to help the firm bid for multi-billion shilling energy and telecoms infrastructure projects in the region.
“Through this alliance, we intend to capitalize on existing sales networks and marketing for the distribution of Ferri Group and FTL product lines, as well as increase access to International lines of credit with reputable, global financial services providers,” said Maurice Korir, the FEP Holdings Chief Executive Officer.
He said the strategic alliance would help improve FTL’s absorption of costs, through leveraging on Ferri Group’s global and trusted network of affordable and quality supply chain. “Big-ticket energy and infrastructure projects have high margins but are capital intensive”, he noted.
With the financial muscle and efficiency that Ferri Group brings on board, we are projecting additional yearly revenues for Fountain Technologies of up to US$ 10 million by 2020,” revealed Mr. Korir.
FTL is currently implementing energy and telecoms infrastructure projects across the region worth over Ksh2 billion. In Kenya FTL was among one of only two Kenyan firms who were awarded Rural Electrification Authority (REA) contracts to extend electricity supply to 591 public facilities and 35,460 households in 16 counties under the BADEA project. The remaining 80% of the project was awarded to international companies.
For the most recent KPLC last mile project more than half of the tender amount awarded went to international companies with the remaining amount being distributed across nine local companies.
The BADEA project, with funding of Ksh 6.3 billion, is financed by the Arab Bank for Economic Development in Africa (BADEA), Saudi Fund for Development, OPEC fund for Development and the Government of Kenya. FTL was allocated lot three covering south Rift Region mainly Kajiado , Narok counties.
The company has also secured tower strengthening projects in Tanzania worth Ksh70 million and a Ksh92 million project for construction of a diesel power station in Kakuma town.
The strategic alliance allows both companies to better serve the East African market by creating synergies that leverage both parties’ strength and competitive advantages. The CEO of Ferri Group, Roberto Ferri noted that, “The agreement with Fountain Technologies was designed to delight clients through support in improved product and service offering, financing and building human capital in various industrial and energy solutions. Fountain Technologies would help to reinforce Ferri Group’s brand reliability through consistent, innovative and differentiated services in all African countries where it exists”.
Some of other services offered by FTL include the Base Transceiver Station installation, onsite configuration, commissioning and integration of the site onto the network. With the new partnership there will be broadened service offering to include underground power cabling and industrial solar solutions.
It has also played a critical role in switching BTS of the various telecommunications companies in the region from 2G to 4G. The company also specializes in civil works and tower erection and all other associated civil works such as access roads.
“FTL is also involved in laying fibre optic networks, erection of transmission towers, conductor stringing for both Hv and Lv power lines and substation rehabilitation,” said Mr. Korir.
He revealed that FTL’s next big frontier is renewable energy in off grid areas having ventured into solar installation, design and dimension solutions for corporate and personal deployment, installation of customized solar solutions and energy audit consultancy services.
”This is a win-win strategy for both firms as Fountain Technologies ltd will acquire both the core and strategic capabilities required to compete effectively within the African energy and power infrastructure sector whilst they (Ferri Group ) are on solid path to initially acquiring new clients and subsequently deepening their presence in the sector enabling them achieve the objective of having a consolidated and diversified global business,” added Mr. Byron Mudhune, the strategy and transaction arranger.
-Press release
Procter & Gamble (P&G) Kenya on Saturday unveiled its new brand of washing powder ‘Ariel’ in both machine and hand wash format. This comes in the wake of a recent survey by P&G that revealed that about 2 per cent of Kenyan households own washing machines. Out of these population the survey further revealed that 60 per cent use ordinary washing powder in their machines.
According to Francisco Gala, Ariel Brand Manager, the new Ariel Auto machine wash powder, has smarter active ingredients optimally able to remove tough stains on sensitive areas such as collar, armpits and cuffs.
“The formula works deep down at the fibre level to clean, protect and enhance quality of clothes. It also offers an excellent stain removal in just one wash.”
Using traditional detergents, Gala explains, leads to generation of a lot of foam which prevents proper cleaning with the modern washing machines. “Clothes may not be washed properly in shorter cycles and consumers may opt for longer cycles. Meaning they will have to spend more electricity on their washing or result to cleaning manually.”
Ariel Auto wash product will retail for KSh890 for the 2kg pack while KSh1,295 for the 3Kg pack. As part of the launch activities, P&G has partnered with HotPoint Kenya to provide the product not only with every purchase of the washing machine but also educate consumers on how to use the product.
Ariel Auto’s launch is set to intensify competition in the laundry care products. Already Unilever Industries the makers of Omo, already stocking their machine wash product in some stores in Kenya.
Gala said the demand for laundry products is expected to grow in the coming years owing to the favorable demographic trends. “With Kenyans investing in washing machines, it is essential that we offer them quality products designed for this purpose.”
As Samsung Electronics seeks to grow its market share in the entry level smartphones segment, the increasing appetite for quality but yet affordable entry level smartphones in the Kenyan market will be a key determinant to its growth in this segment.
The consumer demand and popularity of devices within this market segment topped 69% according to a report released by Data Fintech that covers the period between January 2016 and February 2017.
Jung Hyun Park, VP and Managing Director, Samsung Electronics East Africa said, “Just as we have on the mid-tier and the flagship devices, consumers in the entry-level segment still want to enjoy taking selfies and awesome pictures from a good quality front-facing and rear camera, coupled with a great storage capability.”
Key among the devices that will push Samsung’s drive in this segment is the Galaxy Grand Prime Plus. The 5-inch screen device comes with a 5MP front-facing camera and an 8MP rear camera. Both front and rear cameras have a LED flash, enabling users ease in taking photos in low light. The smartphone runs on Android 6.0.1 Marshmallow which can be upgraded to Android 7.0 Nougat CM14. The update enables faster browsing that improves user experience on video calls and easily supports 3G and 4G networks.
The Grand Prime+ also features a 2,600mAh battery, 8GB internal storage and a micro-SD slot that can take up to 256GB of memory.
Mr. Park further added that the Grand Prime+ device gives Samsung Electronics the opportunity to reach out to consumers’ in the lower income segment looking for a device that offers functionality at an affordable price. E-commerce firm Jumia Kenya, in a report released in April, indicated that there is a significant opportunity for smartphone vendors to reach out to rural and peri-urban parts of Kenya since most of the smartphone sales are concentrated in urban areas at 65%.
The Samsung VP further mentioned “The performance of the devices within our entry-level segment will enable Samsung retain its market leadership in the midst of growing competition from new entrants in this segment,”
The Grand Prime+ is available at Samsung Brand Stores, Safaricom shops, FoneXpress shops and authorised dealers countrywide and comes in gold and black colour variants.