Business

Top stories that made headlines this year

The year started on a high note when in January it was revealed that Kenya would join the league of oil exporters by September, when the first cargo was set to reach the export handling facilities at the Port of Mombasa using trucks and the railways.

However, the government later pushed forward the date to March 2017 when Tullow Oil hopes to start exporting 4,000 barrels of crude oil daily. In the same month, the World Bank projected that Kenya would be one of the fastest-growing economies in Africa. It said gross domestic product would grow by 5.7 per cent—while the government expects it rise at six per cent by the end of this year.

In February, the country’s tourism sector got a boost when three hotels were ranked among the top 25 in Africa. The TripAdvisor ranked Kola Beach Resort, Medina Palms and Pinewood Beach Resort amongst the best in the continent. In the financial sector, banks were making a dash to comply with the Central Bank of Kenya (CBK) directives on large cash transactions.

Customers were required to fill a form whenever withdrawing over Sh1 million over the counter. Similarly, CBK Governor Dr Patrick Njoroge asked Parliament to give it time to ensure banks lowered their lending rates instead of imposing interest rates caps.

However, President Uhuru signed the Banking (Amendment) Bill 2015 into law in August, hence placing interest caps on loans and deposits. The month closed on a low after revelations that Barclays Plc was planning to exit the African market.

In March, Barclays finally confirmed its planned exit but Barclays Bank of Kenya said the move would not affect its operations locally. BBK managing director Jeremy Awori said any decision concerning the operations of BBK could only be made by Barclays Africa Group.

But the biggest news was Ugandan government’s shock abandonment of the planned sharing of the Sh400 billion crude oil pipeline with Kenya in favour of route through Tanzania, via Tanga.

The Kenyan line was to pass through the Northern Lamu route. In the same month, retailer Uchumi Supermarkets closed five outlets to reduce its operations and concentrate on a leaner structure.

Meanwhile, the government unveiled the much-awaited laptop project for Class One. April started with bad news for the banking sector after Chase Bank chairman Zafrullah Khan and MD Duncan Kibui were forced to resign following an insider loans scam.

On April 8, the bank went down with Sh96 billion deposits after CBK placed it under statutory management. However, towards the end of the month the lender re-opened under the management of Kenya Commercial Bank, working together with the Kenya Deposit Insurance Corporation (KDIC).

The highlight of the month of May was Safaricom’s announcement of a Sh38.1 billion net profit for the year ending March, cementing its place as the most profitable company in Kenya and East Africa. This was an increase of Sh6 billion on the profit the company made last year.

Co-operative bank also announced a Sh3.4 billion net profit for the first quarter of the year, while National Bank bounced back and announced a Sh334.6 million profit, which was a 34 per cent increase on the same period last year.

The month came to a close with the Nairobi Securities Exchange board directing all listed companies to publicly declare anti-graft programmes taken within and throughout their value chains. In June, National Treasury Cabinet secretary Henry Rotich announced a record Sh2.3 trillion budget that spelt good and bad news for various groups and sectors.

July equally opened with good news after data from Kenya Bureau of Statistics indicated that Kenya had recorded the highest first-quarter economic growth in five years. This was helped by good weather, improved security and continued investment is public infrastructure and a rebound in the tourism sector.

The economy grew by 5.9 per cent in the first three months of the year, compared to five per cent over the same period last year. Parliament gave relief to sugarcane farmers when it passed a bill on VAT exemption on the transportation of sugarcane from the farm to the milling factories.

The financial sector also posted good news when KDIC announced that depositors in the collapsed Imperial Bank would access up to Sh1.5 million of their deposits after the High Court lifted an order stopping the disbursements. But Kenya Airways fouled the mood after it announced a Sh26.2 billion loss for the year ending March.

This was worse than the Sh25.7 recorded last year. However, the month ended on a positive note for borrowers and depositors after Parliament passed the bill that sought to cap the interest rates for borrowers at not more than four per cent of the Central Bank Rate (CBR) and deposits at not less than 70 per cent of the rate. The President later signed the bill into law the following month.

In August, Safaricom scored another record after NSE revealed that the company was valued at Sh841 billion in terms of market capitalisation, which was a Sh188 billion gain since the beginning of the year. Equity Bank also announced an 18 per cent increase in half-year net earnings.

The lender recorded a net profit of Sh10.1 billion compared to Sh8.6 billion posted the year before. Uhuru’s signing of Banking (Amendment) Bill 2015 into law, hence capping interest rates, was followed by mixed reactions with financial institutions registering disaffection while borrowers applauded the President.

September had some good news for tea farmers after Kenya Tea Development Agency announced a record Sh84 billion earnings for leaf delivered this season. This was an increase of Sh21 billion over the previous year.

In October, the Treasury finally approved the long-awaited Sh7.1 billion VAT refunds that had tied many manufacturers to expensive debt and left others with serious cash flow problems for four years.

During the same month, pilots of the troubled Kenya Airways issued a strike notice demanding the removal of CEO Mbuvi Ngunze and chairman Dennis Awori over alleged mismanagement.

But the pilots were prevailed upon to drop the industrial action after former Safaricom chief executive Michael Joseph was appointed to chair the airline’s KQ board, replacing Awori.

A report by the Kenya National Bureau of Statistics released in October revealed that micro, small and medium enterprises are currently the largest contributor to the economy, with an estimated output of Sh3.37 trillion last year against a national output of Sh9.97 trillion.

November was also a good month for the construction sector after the government introduced one-stop approval stations, structured in the Huduma Centre model. However, the government also said it would regulate the cost on land to contain exaggeration of prices by speculators.

But the intended introduction of toll stations on five highways was a damper for motorists on the affected routes. The government held a public-private partnership roads conference in Nairobi to entice potential investors to fund the expansion and maintenance of the selected road network.

The announcement by East African Portland Cement Company that it would downsize its staff by 1,500 as part of a restructuring process was a shock for many employees. As the year was coming to an end, some good news emerged when Panpaper Mills in Webuye reopened after a 11-year shutdown.

The factory will operate under the name Rai Paper after it was sold to private investors. It has employed 500 people and is expected to employ more than 2,000 when in full operation.

Kenya scored another milestone when the Volkswagen Group reopened a motor assembly plant in Thika, which was closed down four decades ago. The vehicle manufacturer will produce up to 1,000 cars per year and the number is expected to increase to 5,000 units.

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