Business

Kenya: Treasury commissions audit to remove ‘ghost’ pensioners

The Government has turned its wrath to civil service retirees as the state moves to contain spiraling wage bill and patch up its wobbling financial status. Treasury Cabinet Secretary Henry Rotich With recurrent spending surpassing the statutory requirement of 70 per cent of the budget, National Treasury has announced new plans to audit the payrolls of retired civil servants in a bid to control financial hemorrhage on ghost pensioners. Cabinet Secretary Henry Rotich noted that the proportion of development expenditure to the national budget has fallen to 28 per cent, up from 30 per cent, while recurrent expenditures have risen from 70 per cent to 72 per cent. The current state of affairs implies that more resources are being diverted from development to pay salaries and allowances for public officers. “I think, it’s worth expanding this audit exercise to pensioners because these people were also civil servants and during their time, ghosts workers may have existed,” Rotich told Weekend Business. “We shall expand after the current one is completed.” Rotich’s remarks came as the Salaries and Remuneration Commission (SRC) revealed that about half of the 700,000 employees in the public sector are ghost workers. Preliminary findings of an on-going audit of public service payroll shows that the  country could be losing close to Sh1.8 billion annually through payment of salaries to ghost workers. An estimated Sh150 million is paid every month in salaries for employees who are dead, non-existent, retired or sacked, but are still retained in Government payroll.  Public sector wage bill is estimated at Sh475 billion and is projected to hit Sh500 billion in the 2014/2015 financial year. In the 2012/2013 financial year. the amount paid to civil servants in salaries and wages accumulatively stood at Sh458 billion. SRC chairperson Sarah Serem said about a half of the total workforce in the public sector do not exist. “We have 700,000 employees in the public sector and there is an indication that close to half of them are ghost workers,” said Serem. The Devolution and Planning Ministry has started looking for a private sector firm to assist in rationalising the public sector work force in both national and county governments. Among the key tasks that the private sector consultant will be charged with, include establishing the optimal number of workers within government. Serem said a huge wage bill that is not commensurate with productivity is a threat to sustainable government expenditures and eats into the limited public resource. “We want to bring sanity in remuneration by linking it to productivity,” said Serem. “With all the numbers that we have seen, the public sector wage bill is truly becoming a crisis. It’s worrying,” explained Serem. The country’s total wage bill to Gross Domestic Product (GDP) currently stands at 13 per cent, which Treasury reckons is unsustainable and way above the seven per cent desired internationally levels. The National Treasury expects the country’s budget for the 2014/15 financial year to drop by Sh100 billion partly due to a reduction in wage bill and interest payments on domestic debt. A cross-section of economists feel that private investments in the economy stand the risk of weakening owing because of the ballooning domestic debt linked to Government borrowing to pay wages. “Over borrowing from the domestic market is not healthy to the economy because it crowds out the private sector,” said Samuel Nyandemo, a senior lecturer at the University of Nairobi’s School of Economics. According to Dr Nyademo, the borrowed funds are also not used productively but to pay wages. By James Anyanzwa, The Standard

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USAid gives Sh1.7 billion to Isiolo and Marsabit counties

The United States Agency for International Development  (USAid) will spend Sh1.7 billion to boost the livestock sector in Isiolo and Marsabit counties. The amount to be disbursed through USAid partner, Resilience and Economic Growth in the Arid Lands — Accelerated Growth (Regal-AG) will be used over the next five years to spur the livestock sector in the two arid counties. Isiolo Governor, Godana Doyo and Regal-AG Chief of Party Cary Farley signed a memorandum of understanding at the governor’s office yesterday. County Secretary Ibrahim Wako and the Executive in charge of Lands and Agriculture Suleiman Shunu accompanied Doyo. Regal-AG Isiolo regional manager Erastus Kyalo accompanied Dr Farley. A similar MoU was signed with Marsabit County two weeks ago. Livestock sector Farley said the initiative is aimed at building the capacity of pastoralists in the two counties that will eventually improve the livestock sector. ‘‘This USAid project is part of the US government’s Feed the Future strategy,’’ said Farley. He said the project locally is intended to empower the poor to take part in and benefit from sustained growth of the livestock chain that is critical to the pastoralists’ livelihoods. The funds will be used to  improve environment, expand end market and catalyse commercial investment. They will also improve livestock productivity and promote value chain inclusivity of women and youth among others. Doyo said successive government policy in northern Kenya had neglected the livestock sector, which is the backbone of its economy. ‘‘We welcome this noble gesture because it will improve the livestock sector in the entire northern Kenya region and in the process spur economic growth,’’ he said. He said the counties in the region are working with the National Government to set up disease free zones to ensure that livestock are free from contagious diseases. ‘‘We are working on a grand plan to eradicate livestock diseases in the region. This had been a major constrain in getting international market for our livestock and its products,’’ he said. Establishment of holding grounds at proposed abattoirs in Isiolo and other neighbouring counties said the governor will help in value addition for livestock and its products. By ALI ABDI, The Standard

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Impact investing key to unlocking Kenya’s growth potential

Starting a business, conventionally, is largely driven by the need to make profits, and the higher the margins the better for the proprietor. Downcast often occurs when companies report slump in profit, as this is considered not good enough to create investor confidence and attract more shareholders. And every time a listed company announces its performance, what dominates in the minds of investment and financial analysts is if the key data released guarantees them handsome return. However, there is a growing focus that seeks to balance the desire for profit but more importantly, focuses on improving the living standards of the society. Industrialist, Manu Chandaria, believes that there is a huge potential for social entrepreneurship to create far-reaching economic impact in Kenya’s social fabric rather than focusing only on profit making. “The wealth you create is not yours, but you are a trustee of that wealth so as to improve the social environment,” he explained. Chandaria’s thinking is that earning extraordinary profits cannot create the desired impact on society and such institutions are doomed to fail in the long-term. “Business, social responsibility and understanding the plight of the people must be the focal point,” he said adding that to serve the society is not just writing cheques, but being part of the pain they go through. In a society where, health, water, environment and education remain key challenges, harnessing the positive power of enterprise is what inspires Nicholas Sowden. Sowden, the founder of Penda Health, a Kenyan company, argues that a good business is one that aims at solving societal problems and in the process makes profit, which it can use to expand to other regions. “On health, the opening up of many health centres using the profits to reduce the suffering of the people is what impact investing is all about,” he reckons. Market rate Speaking on the sidelines of a one-day workshop on impact investing in Kenya at the Strathmore Business School, Eme Essien Lore of Rockfeller Foundation observed that impact investing is where a company seeks to make profit that is below the market rates or good enough to compensate capital. “This is a robust business model capable of improving the living standards of the community,” she argued. Lore, a senior associate director in the Africa region underscores that a business engaged in impact investing by making reasonable profit, above the return on capital, but able to sustain the company to expand tend to offer services to more people. George Njenga, dean at Strathmore Business School also argues that impact investing or social entrepreneurship remains key to assisting the Kenyan economy grow and assist a good number of people get employed and acquire wealth, rather than few getting richer at the expense of majority. “Enhancing the productivity of more people by enabling them perform their functions is the key to starting a business,” he stated. Some of the areas where improved productivity can be found and where there are numerous challenges, include health, water, farming, agribusiness and renewable energy. “A profit margin of eight per cent to 15 per cent or just above market rate by a business to improve the living standards is considered an impact investing,” he explained. However, he reckons that profit margin should be good enough to sustain the business and ensure that it does not collapse. He, however, argues that majority of the listed companies are driven by the desire to make higher profits to satisfy their demanding shareholders, as impact investing is least of their concern. Participants of the workshop strongly felt that it’s upon the government to create policies that favours impact investing by offering incentives to corporates and in the process more of its citizens stand to benefit from the opportunities created. He argued that his firm imports solar panels from Germany at a cheaper rate compared to the ones assembled locally that is heavily taxed. By WINSLEY MASESE, The Standard

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President Uhuru set to flag off fertiliser to counties

Kenya: President Uhuru Kenyatta will on Tuesday officially release the national soil test results and flag off lorries containing subsidised fertilisers. The event is set to take place at Egerton University, Njoro, in Nakuru County. Agriculture Cabinet Secretary Felix Koskei said the function would be a clear indication of the Government’s commitment to ensure the country achieves food security. Briefing the media in his office at Kilimo House, the CS said his ministry was keen on increasing access to agricultural inputs by resource-poor farmers as envisaged in Vision 2030. The State Department of Agriculture, he said, was implementing the National Accelerated Agricultural Inputs Access Programme (NAAIAP) targeting 2.5 million resource-poor farmers. Koskei said under this initiative, 142,750 metric tonnes of assorted fertilisers had been imported since the year began, and would be distributed countrywide. He said fertiliser use in Kenya had grown significantly over the last two decades, but lamented that the average use was less than 10kg per acre, against the recommended rate of 75kg per acre.” With such low fertiliser use, the nutrient balance in most production systems is negative. This results in depletion of soil nutrients which is a fundamental cause for declining food and cash crop production,” sais Koskei.  “To mitigate environmental concerns on soil health, efficiency and effectiveness of fertiliser use, NAAIAP embarked on countrywide soil testing to inform fertiliser recommendations for different soils and regions,” he said. NAAIAP contracted the Kenya Agricultural Research Institute in 2012/2013 financial year to analyse soils from 4,470 farmers in 147 sub-counties. He said optimal use of fertilisers will enable farmers to improve their yield and ultimately their livelihoods.

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Samsung unveils hitech curved TVs

Samsung has unveiled a new hitech curved TV set that is expected to hit the market next month. COMPARISON: A journalist (right) reacts after noticing the big picture quality difference between a flat TV set (left) and curved TVs. The New Times / Stephen Nuwagira The UHT TV set is the first of its kind globally, according to George Ferreira, the Samsung Africa chief operating officer. “It (curved screen) gives a great picture and enhanced viewing experience, its strong curve draws the human eye naturally, makes pictures more realistic and provides greater sense of depth,” Ferreira explained  during the Samsung Africa Forum 2014 in Malaga, Spain recently. He added that one can also be able to search the Internet, watch TV and video clips at the same time, among other functions. The Samsung Africa Forum 2014 also marked the global launch of the curved TV sets and other new state-of-the-art electronics made by Samsung. Ferreira said the electronics firm is looking to consolidate its position as a market leader in Africa through constant innovation to create a smart Africa and ease work processes. Other products launched at the event include sleeker tablets, a hitech triangle air conditioner, a battery and solar-powered TV set targeted for people with no access to power grid, or those with unstable electricity supply, next generation still cameras, a four-door refrigerator, washing machines, video games and printers, among other products. Meanwhile, Samsung is to focus on making tablets to tap into the growing market for content. The firm had previously favoured laptop production but now seems to be driven by shifting market trends that point to rising quest for content, an observer noted. The electronics company is also planning to start making new age professional cameras for still and video photography. The two-day annual Samsung Africa Forum 2014 was attended by dealers, information technology developers, business and government leaders, and journalists from across the globe. Source The New Times

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Uganda: Arabica coffee prices increase

Prices of Arabica coffee parchment have rebounded to sh4,200 per kilogramme, up from sh3,000 after nearly six months of price stagnation. A farmer picks Arabica coffee beans. A kilogramme of Arabica now goes for sh4,200 from sh3,000 The increment came at the right time, the back-to-school period, when most coffee farmers need to pay school fees for their children. Students and pupils reported back to school for the first term on February 3. Joseph Sodo, a coffee farmer from Katongo parish, Kapchorwa district, explained that the rise had offered a lease of hope to the coffee business. Sodo, who has a child in secondary school and two at primary level, last week sold off 32 bags to get fees for them. “With the price increment, it means each 65-kg bag of premium Arabica coffee parchment rose to sh273,000 up from sh195,000. I got sh8.7m which enabled me to pay my children’s fees,” Sodo said. “The huge gain I made from this increment, however, is the fact that I had 2,400kg of stocked parchment that I had purchased when prices were still low.” Prices of Arabica coffee parchment in Bugisu region are mainly dependent on the price at the New York Stock Exchange (NYSE) where its green beans trade under the name Bugisu Arabica. For over six months, Bugisu Arabica had been trading at $2.4 per kilogramme of green beans. The price, however, rose to $2.7 per kilogramme towards the close of January, prompting a rise in local prices. Since prices of premium parchment peaked at sh11,000 per kilogramme in 2011, prices had kept a steady drop settling at sh3,000. Godfrey Woniala, a coffee farmer from Sisiyi subcounty, Bulambuli district, explained that the increase would motivate farmers to put in more effort in tending their plantations during the coming season. “We had lost hope. Coffee is so costly to maintain because it requires fertilisers, pruning, weeding and spraying before even the actual processing of red cherries into parchment. When prices are low, it doesn’t make business sense to invest more and reap less”. By Daniel Edyegu, The New Vision

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Uganda: Oil firms urged to reveal genuine partners

Oil companies have been urged to sensitise the public about the genuine partners who sell their products to boost the fight against substandard engine oils in Uganda. The call was made on Friday after an operation by the Uganda National Bureau of Standards (UNBS) in the heart of Kampala that led to the closure of Standard Wave Auto Parts shop. The Nabugabo road shop was selling counterfeit engine oils to the unsuspecting members of the public. “We urge all oil companies that manufacture and supply motor oils to inform members of the public who their authorized retailer are so that the public is not easily duped,” advised Margaret Lukoye, UNBS’ Public Relations Officer. The sale of fake engine oil is rampant throughout the country. Some of the brands affected by this evil are those of major global players like Total, Shell and Kobil among others. Usually, the production of this substandard oil is orchestrated from waste lubricants, which are purchased from gas stations, only to be recycled and  put in new packages—and thrown onto the market for the consumption of the unsuspecting public. After a public uproar about substandard engine oils recently, UNBS and the Police combed shops in the city, which led to Shafik Lukyamuzi’s house in Bulange, where a lot of these substandard oils were being packaged. By Billy Rwothungeyo, The New Vision

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