Thursday, 22 February 2018

Kenya Successfully Raises KSh 200Bn Eurobond in London


The Kenyan Government has raised KSh 200Bn in a dollar denominated Eurobond sale on Wednesday which will be applied towards the govt's development initiatives and liability management

The maturity of the two Eurobond issues are 10-year and 30-years with an initial pricing guidance is 7.625 per cent  and 8.625 per cent, respectively.

Henry Rotich, the National Treasury Cabinet Secretary said “The fact that we got $14 Billion in investor appetite reflected the continued support the country has. We now have a dollar yield stretching out to 30 years.”

“Funds from the issue will be applied towards the Government's development initiatives and liability management. We will continue to invest in the infrastructure and capacity to roll out and implement these programmes,” Said Rotich through his Twitter feed.


The new bond will be listed on the London Stock Exchange.

“The coupon on the existing 10-year is at 6.875% and as such, the initial pricing on the 10-year has factored a risk premium that has been triggered by recent debt level concerns that led to Moody’s downgrade,” noted Genghis Capital Analysts.


On Tuesday, the International Monetary Fund said it had suspended Kenya’s access to a Ksh1.5 billion standby facility last June.

In March 2016, IMF approved the two-year standby loan facilities for Kenya: SDR 709.259 million  24-month Stand-By Arrangement (SBA) and a SDR 354.629 million 24-month Standby Credit Facility (SCF)  for a combined SDR 1.06 billion.

However, Kenya had indicated that it will continue to treat both arrangements as precautionary, and do not intend to draw on the new SBA and SCF arrangements unless exogenous shocks lead to an actual balance of payments need.

IMF in November assessed Kenya’s compliance with commitments made under the precautionary financing facility.

One of the conditions for the government from the IMF was to narrow its budget deficit to below 6.5 percent of GDP in the current fiscal year and to 5.0 percent in 2017/2018 fiscal year.

However, on Wednesday it clarified that “The second and third reviews of the program, due respectively in June and December 2017, could not be completed on schedule as an agreement could not be reached on stronger fiscal policies, and discussions were postponed due to the prolonged election period. Kenya continues to have access to resources since June subject to policy understandings to complete the outstanding reviews.”

Anzetse Were, a Development Economist confirmed the same noting “Discussions postponed due to elections not because of Kenya's fiscal behaviour. Targets weren't hit and fiscal reform didn't occur so the issues are still relevant. Let's see what will come out of the discussions. This seems more about fiscal reform than the facility itself.”




Ms. Stephanie Kimani, CBA Group Research Economist, notes that “ Meanwhile, the IMF’s two-year standby precautionary facility is set to expire in March 2018. Given the expected IMF review before expiry, it could perhaps be worth noting that maintaining the facility could be key to anchoring positive investor sentiments as it signals a level of preparedness in the event of adverse economic shocks.”

Faith Atiti, Senior Research Economist,  observes that over the last five years, public debt has risen by 153.7% to KES 4.60 Trillion and could increase further driven by the perennially high fiscal deficit.

As a result ratings agency Moody’s downgraded Kenya’s issuer rating to B2 from B1 but
maintained a stable outlook.

Moody’s projects Kenya’s debt/GDP ratio at 61.0% this fiscal year as rising spending needs, reduced revenue collection and rising debt service obligations exacerbate the fiscal gap.

“The downgrade could undermine government’s ability to raise funds in the external debt market as the sovereign’s risk premium increases,” Atiti had noted.

However, President Uhuru Kenyatta has affirmed that his “Administration shall ensure the prudent, transparent and efficient utilization and management of these funds for the development and implementation of initiatives that will enhance the social and economic welfare of all Kenyans.”

Kenya Needs a Youth Agenda to Overcome Unemployment




The youth in Kenya are defined as those between the ages of 18 to 35 years.  

“Kenya is a very youthful country. The median age is estimated at 19 years, and about 80 percent of Kenya’s population is below 35 years,” according to the 2016 Kenya Youth Survey Report by the Aga Khan University survey that sought to understand the values, attitudes, concerns and aspirations of this critical segment of the population.  

August 2017, the Business Daily wrote that Kenya’s ratio of youth (aged 15-24) to the population stands at 20.3 per cent, above the world’s average of 15.8 per cent and 19.2 per cent for Africa. The millennials add up to 10.1 million out of Kenya’s population of 49.7 million, data from US-based Population Reference Bureau (PRB) shows.  

The greatest challenge that faces the country is how to overcome unemployment and lack of meaningful economic engagement of our youth. 




Unemployment among Kenyan youth is now estimated to stand at 17.3 per cent compared to six per cent for both Uganda and Tanzania by a 2016 World Bank report.

This is because Kenya’s ability to create new jobs has not been in tandem with the rising population and inadequate employment opportunities within the formal sector. 

The Kenya National Bureau of Statistics, in 2016, the economy generated 832.9 thousand new jobs of which 85.6 thousand were in the modern sector while 747.3 thousand jobs were in the informal sector.

Sadly, Kenya’s unemployment rate is projected to trend around 24.00 percent in 2020, according to Trading Economics global macro models.

The Kenya Youth Manifesto - Agenda ni Vijana Sasa 2017 estimates that increasing numbers of nearly 800,000 youth graduating from universities and colleges and entering the job market every year is an economy that is creating very few jobs, yet it is said to be growing.

Read: Youth employment is more of a mirage 

If Kenya can creatively and boldly harness its youth then, it will have substantially addressed the question of its economic under development as the youth constitute the most energetic, active and optimistic segment who can easily be moulded to embrace the dynamics of a new economic outlook, dispensation for the region.

Raphael Obonyo, the external adviser to the United Nations Habitat’s Youth Advisory Board says, “Youth are feeling the burden of unemployment. We must act! Youth in Africa today are better educated, but this has not lifted their prospects of finding jobs.”

He, however, states that “Unemployment rates calls for our youths to think big in terms of being entrepreneurial for survival.”


“Job creation needs to be about creating meaningful work. Not glorified forms of begging! Giving more education to Youth will not help them get employed. This is a myth. Give education relevant for the labour market.”

Thus, Kenya must rapidly, urgently dedicate all its resources towards creating a cadre of its young men and women in their thousands and even millions who have been trained in urban trades and professions. 

These will include being masons, mechanics, electricians, plumbers, carpenters, mobile phone and other electronic technicians, painters, and other trades that service the rapidly urbanizing Kenya, East Africa and the rest of Africa.


President Uhuru Kenyatta learning how to thread, stitch and tailor from 27-year-old Lilian Omae at the NYS Garment Factory

The government has pegged its five year’s agenda to ‘The Big Four’ plan of “Creating jobs, transforming lives.”

According to the 2018/19 Budget Policy Statement from the National Treasury, “The Government will focus on improving and expanding the industry-led Technical and Vocational Education and Training (TVET) Colleges and Universities in order to equip the youth with relevant skills required to drive the industrialization agenda.”

This will involve the construction of more technical and vocational colleges in all the 290 Constituencies and equip them with appropriate training equipment. 

The government also aims at developing more skilled and competitive workers through the planned “paid for” internship program that will lead to the absorption of more than 100,000 young Kenyans into the job market every year.

“In order to implement the prioritized programmes, the Sector has been allocated Ksh 428.277 billion, Ksh 446.326 billion and Ksh 459.384 billion for the financial years 2018/2019, 2019/2020 and 2020/2021 respectively,” reads part of the Budget Policy Statement.

To be in line with the National Government’s agenda, it is prudent for each of the 47 counties to dedicate a substantial proportion of its Constituency Development Funds (CDF) to modernize and equip one Diploma Technical College for the training of the various trades and professions.

This will result in churning out trained tradesmen and tradeswomen and middle cadre college professionals to service the diverse needs of the Kenyan economy in the various skills that are now experiencing shortages of technicians and professionals.

However, It would be a disservice to the youth for them to leave secondary school and have illusions that they are employable anywhere or capable of self-employment.  



In this era of free primary and secondary school education it is incumbent upon every parent whose child leaves secondary school at form four or any other school level to be taken to a local  polytechnic or any other technical college to be trained in an occupational skill for only then will they have been prepared to be a functional citizen of this country who can be employed or become self employed as he or she uses that trained occupational skill to service, participate in the economic activities of the country.

Further, policymakers and elected leaders must stop paying lip-service to the challenges of youth unemployment and put in place measurable blueprints that can empower the youth by imparting occupational skills to them that will enable them to be employable or be self-employed.

Wednesday, 21 February 2018

Going Green an Opportunity for Kenya's Real Estate

The Green Building Strathmore Business School - Photo Courtesy Build Design Magazine

Kenya is committed to reducing its greenhouse gas emissions by 30 per cent by 2030  by implementing cost-saving green technologies as a committed signatory of the International Climate Agreement (ICA).

This is according to Madhur Ramrakha, Kenya Green Building Council’s (KGBS)  says the real estate and infrastructure developers will be key to achieving the goal. 


“We have to be smart in Africa, we cannot follow historical development models and clean up later,” said Ramrakha. 

“In Kenya, green buildings can be constructed at the same or even lower cost as a conventional building as the materials used save energy by as much as 30 to 60 per cent. Strathmore, for instance, was able to save 20 per cent of its projected budget on its first green building structure - Strathmore Business School,” said John Kabuye, vice chairman Kenyan Green Building Society.

According to a study titled Greening Buildings and Communities: Costs and Benefits, supported by renewable energy investor Good Energies, about 50 per cent of all green buildings studied, reported a payback of five years or less just from energy and water savings. However, that figure jumped to 90 per cent when health and productivity benefits were included.

As a key stakeholder at this year’s API Events’ East Africa Property Investment (EAPI) Summit on the 24th and 25th of April, the KGBS will be presenting this ‘green opportunity’ to investors, developers and the public sector. 

With technology improvements driving down capital costs, and green initiatives now improving efficiency and operating costs - alongside a proliferation of green financing instruments, and the increased impact of climate change on Africa’s countries, there is now a real opportunity for this cost-saving momentum, said API’s managing director, Kfir Rusin.

“While a handful of countries have pulled out of the ICA, the US in particular, we believe this period of economic growth led by the non-resource based economies of East Africa provides an ideal opportunity for sustainability to guide and shape the development process going forward," he said.

This is seeing socially conscious customers beginning to demand principled green design in their homes and businesses, especially at the building sector is estimated by the United Nations Environment Programme(UNEP) to contribute up to 30 per cent of all greenhouse emissions. 

 In this, the affordable housing initiative announced by President Uhuru Kenyatta is an opportunity to use environmentally sound principles and products to build better homes.

In East Africa, and Kenya in particular, ambitious warehousing projects, new retail centres and Kenya’s growing importance as a global trade hub are all driving green innovation to reduce costs that will be covered at this year’s EAPI Summit. 

Toby Selman, CEO of Africa Logistics Properties (ALP), argues that such green building practices offer multiple business advantages, despite the initial upfront costs.

“In Nairobi, our flagship ALP North Logistics Centre will be the first EDGE (Excellence in Design for Greater Efficiencies) certified project in the industrial sector in Kenya. We wholly believe that the social, economic and occupier benefits outweigh the higher upfront costs of implementing environmental features on our developments, such as rainwater harvesting, solar power and insulated building. These result in lower operating costs for our tenants and add long term sustainable value to the quality of our buildings.”

“Kenya and the region will continue to enjoy strong economic growth, but if policies and procedures, and most importantly financing and certifications from the region's Green councils are not made transparent and understandable for developers and investors, the region will lose an opportunity. Intrinsically linking commercial viability with sustainability, at a time of such intensive building and development, offers the possibility of elevating the region's people into a prosperous new world,” said Rusin.