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Kenyans Lose Homes Worth Millions to Auctioneers

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  • Between January 11-13, the local newspapers have been filled with hundreds of homes and commercial properties set for auction valued in the hundreds of millions.

    From mansionettes located within gated communities in Syokimau, to bungalows in Westlands, to whole apartment blocks in Kahawa Wendani, the auctioneer’s hammer spared no one.

    Among the properties that stand out and have been put up for auction include a 3-star hotel in South B, Nairobi County with a projected annual income of Ksh3 million.

    A hotel along Limuru Road in Ngara, Nairobi, was also listed on January 11, with a Ksh1.2 million highlighted as its monthly rental yield.

    Auctioneers mallet.
    Auctioneers mallet.
    File

    Luxury vehicles were not spared either, as hundreds were listed, with auctioneers jostling to make a killing.

    Thousands of vehicles ranging from personal cars to heavy-duty commercial trucks have been repossessed and put up for auction.

    In February 2020, NextGen Mall (located along Mombasa) made headlines after a local auctioneer listed a section of its 1st floor in order to recover a loan of an undisclosed amount.

    However, if auctions carried out in 2020 are to be used to measure success, just about 10% of the properties on auction are finding buyers. 

    There are instances where the auctioneers have not found anyone willing to bid above the reserve price.

    This has seen phrases like ‘buyer’s market’ thrown around, as predator buyers are in a position to secure assets at almost half their value.

    A recent analysis revealed that of the hundreds of properties on auction, on the back of a slowing economy, only a handful have found buyers. The most affected are high-end properties.

    Auctioneers are finding it hard to dispose of houses (both residential and commercial) and other assets, whose value could be running into billions of shillings.

    Central Bank of Kenya (CBK) building in Nairobi.
    Central Bank of Kenya (CBK) building in Nairobi.
    Simon Kiragu
    Muhabarishaji.com

    A slow economy has meant that demand is low forcing lenders into some very uncomfortable compromises.

    Some banks have had to call clients for re-negotiations so that they can take back their cars but on condition that payments for the loans are on time.

    The staggering number of properties up for auction affirms the recent trend involving defaults on mortgage loans advanced by banks.

    According to a credit survey by the Central Bank of Kenya (CBK) covering the quarter ending June 30, 2020, many banks were preparing to start credit recovery efforts in the following quarter.

    “For the quarter ended September 30, 2020, banks expect to intensify their credit recovery efforts in nine of the eleven economic sectors. The intensified recovery efforts are aimed at improving the overall quality of the asset portfolio,” the CBK report stated.

    “The banks intend to allocate more resources on monitoring and recovery of loans as well as the use of external parties in the recovery process,” it added.

    This was after the banks recorded an increase in Non-Performing Loans (NPLs), where seven of the 11 sectors categorised by banks recorded cases of borrowers failing to pay back the money on time.

    An NPL is a loan in which a borrower hasn’t made the scheduled payments for a period of at least 90 days.

    “The increase in NPLs was mainly due to a challenging business environment as a result of Covid-19 pandemic,” the CBK survey states.

    Last year, banks advanced loan restructuring options for individuals and entities to help cushion them from the impact of Covid-19.

    The number of borrowers defaulting on loan repayment however reached a new decade high of 15%.

    According to a World Bank report published on November 25, 2020, one in three Kenyan workers are employed by firms facing a high risk of temporary or permanent closure and reduced revenues, highlighting the vulnerability of household incomes.

    The economic and social disruptions induced by the pandemic have eroded progress in poverty reduction in Kenya, forcing an estimated 2 million more Kenyans into poverty.

    The negative impact of Covid-19 on the private sector has trickled down to household welfare via reduced job opportunities and lower earnings. Unemployment has almost doubled compared to its pre-Covid level. 

    Coupled with the recent decision by the government to revert to pre-Covid tax rates, Kenyans are forced to dispose of their assets in a bid to stay afloat.

    Job seekers in Kenya.
    Job seekers in Kenya.
    File
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    Kenya

    Badi Announces Uber-like Tech to Fight Cartels

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  • Nairobi Metropolitan Service (NMS) boss Mohammed Badi has announced that a new app is in the works to curb cartels who have interfered with the consistent supply of water in the city.

    Speaking on Spice FM on Monday, January 25, Badi noted that the app was under development by the Ministry of Water.

    He further noted that the app was being developed to function like the taxi-hailing app Uber or Little in which customers would be shown all registered water bowsers and choose which one to buy from.

    He also noted that the app is being developed by the Ministry of Water after it ordered registration of all water bowsers and exhaust trucks in the city.

    The 22 NMS branded Water Bowsers and 5 Ambulances for use in serving Nairobians that were flagged off by President Uhuru Kenyatta on June 30, 2020.
    The 22 NMS branded Water Bowsers and 5 Ambulances for use in serving Nairobians that were flagged off by President Uhuru Kenyatta on June 30, 2020.
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    NMS

    “Nobody knew the number (of water browsers) that are in the city. We demanded that they get registered or lose licenses. Within that registration process, it was a must for you to indicated the place where you draw your water and the areas which you supply.

    “Before, they used to take city water free of charge and sell it to citizens. The Ministry of water now is developing an app where you will be able to order for these water bowsers just like Uber,” he stated.

    He further noted that the app will show the number of bowsers in the area and each individual information about the bowsers.

    “Once you decide what you need in your area, the app will show you the water bowsers in the area, where they collect water to ensure safety and the amount they have paid for that water.

    “It will also indicate to you the amount you are supposed to pay,” he added.

    During the interview, the NMS boss further noted that cartels had infiltrated other sectors of the county including the garbage collection department.

    He noted that some of the trucks filled stones in their trucks before adding a few layers of garbage that would seem heavier when measured hence more revenues for them.

    To rectify the situation, Badi, soon after he assumed office, cancelled all contracts that had been issued at the time and ordered for a fresh evaluation.

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    NMS Director-General Mohamed Badi addresses the media in 2020
    File
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    Kibicho Heads to DCI After Sonko Election Claims

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  • Ministry of Interior and Coordination of National Government Principal Secretary Karanja Kibicho has gone to the Directorate of Criminal Investigations headquarters to record a statement regarding utterances made by former Nairobi Governor Mike Sonko.

    While addressing members of the public at a rally in Dagoretti South on Sunday, January 24, 2021, Sonko alleged that he along with Kibicho, and other state officials, stage-managed some of the chaos experienced in the country during the 2017 general election.

    The former Nairobi Governor accused the “deep state” and “system” of the chaos experienced in the country in 2017. Sonko alleged that he was involved in the planning of the chaos with the aim of portraying the ODM Party as the culprits. 

    Interior PS Karanja Kibicho arrives at DCI Headquarters on January 25, 2021.
    Interior PS Karanja Kibicho arrives at DCI Headquarters on January 25, 2021.
    File

    “The deep state and system have started burning vehicles so that hustlers can be blamed for the chaos.

    The former Nairobi County boss made the pronouncements, further issuing a warning against blaming the chaos on the ‘hustlers’ in the country.

    Kibicho is expected to record a statement with the DCI substantiating the damning allegations made by Sonko. This would probably pave way for investigations into the matter.

    Interior PS Karanja Kibicho enters the DCI Headquarters on January 25, 2021.
    Interior PS Karanja Kibicho enters the DCI Headquarters on January 25, 2021.
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    Kenya

    Kenya's Top CEOs Pocketed Ksh65M in 2020 – Report

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  • The 10 highest-paid CEOs of companies listed at the Nairobi Securities Exchange (NSE) saved at least Ksh 65 million as a result of the tax reprieve the government issued to cushion employees from the Covid-19 pandemic.  

    According to a Nation report published on Monday, January 25, 2020, the national government lost Ksh65.4 billion between April and December 2020, the period that the tax reprieve was in place.  

    The report further revealed that the 1,000 richest people in the world recovered their Covid-19 losses within just 9 months.

    Kenya’s highest-earning CEOs salaries were publicized when the rules requiring listed firms to publish their executives’ pay came into effect.

    File image of Nairobi Securities Exchange Market
    File image of Nairobi Securities Exchange Market
    File

    In 2016, the Capital Markets Authority gazetted a new corporate governance code that directed publicly traded companies to adopt a pay-for-performance formula for remunerating board members and top managers such as CEOs.

    In Kenya, these top executives earn Ksh1 million and above each month. In 2019, the Kenya National Bureau of Statistics (KNBS) data showed that only 2 percent of Kenyans earn a salary of Ksh100,000 per month.

    A recent study carried out by Oxfam International stated that the gap between the richest and poorest is at an extreme level in Kenya. 

    “Less than 0.1 percent of the population (8,300 people) own more wealth than the bottom 99.9 percent (more than 44 million people). The richest 10 percent of people in Kenya earned on average 23 times more than the poorest 10 percent,” the report reads in part.

    The report further predicted that the number of millionaires will grow by 80 percent over the next 10 years, with 7,500 new millionaires set to be created.

    Despite the implementation of measures such as tax cuts to mitigate the harsh effects of the pandemic, the report details a widening inequality gap in Kenya.

    The widening gap between the have and have nots has been accelerated by the impact of the pandemic on the low-income bracket, which has been severely been hit compared to the other categories.  

    Jobseekers queue on Wabera Street, Nairobi, as they wait to be interviewed by The Sarova Stanley on May 26, 2018.
    Jobseekers queue on Wabera Street, Nairobi, as they wait to be interviewed by The Sarova Stanley on May 26, 2018.
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