Day: March 23, 2024

The Salaries and Remuneration Commission (SRC) will convene the 3rd National Wage Bill Conference next month to discuss strategies and action plan towards achieving a 35 percent public service wage bill.

Three months ago, a meeting by the National and County governments summit held at state house a resolution was muted which will see the national government reduce its wage bill to 35 percent of revenue in line with Public Finance Management (PFM) Act, 2012, by 2028

Speaking during a media breakfast on preparations for the national wage bill conference, 2024, the Chairperson SRC Lyn Mengich said Kenya is not doing well in terms of productivity in comparison with other countries in Africa and globally.

‘According to statistics on labour productivity from the International Labour Organization (ILO), in 2021, Kenya is ranked at number 151 out of 185 countries globally, and number 22 out of 46 countries in Africa’, she explained.

Mengich noted that the public service wage bill, in absolute terms, hit about a t
rillion shillings’ mark in the year 2022, and has shown a positive trend as a percentage of revenue due to interventions by SRC in collaboration with other stakeholders.

Key amongst these interventions, she added, is the implementation of the resolutions from the last wage bill conference.

‘We are not where we need to be, but the trend is clear, that we are heading to the right direction and therefore the upcoming conference will plan for a path of achieving the desired outcome of economic development and public services delivery as well as provide an opportunity to discuss and develop purposeful actions towards enhancing the role of productivity in the fiscal sustainability of the wage bill.

SRC Commissioner John Monyoncho gave a picture of the current situation on the wage bill saying public wage bill in Kenya has been growing within an environment of revenue and financial constraints, consuming a significant portion of the national budget, thus, putting pressure on development and investment share of th
e fiscal budget.

‘The wage bill to ordinary revenue ratio has declined from 54.77 percent in the FY 2020/2021 to 47.06 percent in FY 2021/2022. It is projected to reduce further to 43.54 percent in FY 2022/2023 and 40.45 percent in FY 2023/2024’, he said.

Monyoncho mentioned that some of the drivers in the public wage bill was Low labour productivity, disproportionate increase in the number of public service employees, Sub-optimal organizational structures and even high remunerative allowances payable in the public service among others.

In order to reduce the Wage Bill to Revenue Trajectory towards 35 percent, the Commissioner said that the government had been able so far to evaluate jobs to determine the relative worth of them and this resulted in freezing of salary structures of over 90 State Corporations and Constitutional Commissions and Independent Offices in the 2nd and 3rd remuneration review cycle.

There was also Salary structure freeze for all public officers in the first two financial years of t
he 3rd review cycle (2020/21- 2021/22), two percent average growth of the average monthly gross earnings per employee between 2019/20-2023/24 and harmonization of salary structures towards the 50th percentile and freezing those above, except for Commercial State Corporations whose target positioning is 75th percentile.

Projections in achieving the required 35 percent wage bill by 2028, Monyoncho said will be to improve labour productivity, Manage the wage bill through SRC setting and advice, control employee numbers and leverage technology in payroll management and service delivery.

Council of Governors (CoG) Chair – Human Resource, Labour and Social Welfare, Mutahi Kahiga said County governments public wage bill has been on an increasing trend due to the increased demand for service delivery in health and education and subsequent rise in the number of County Public Service employees and the quantum of compensation.

‘Wage bill as a percentage of total public sector spending is important since it accounts f
or a large share of spending and this affects overall expenditure trends. When this ratio rises to over 25 percent, governments risk reducing their effectiveness by squeezing non-wage bill expenditure such as goods and services, maintenance and capital expenditure needed for long term growth and development. High Public wage bill also signifies high pension liabilities in the future’, the chair who is also the Nyeri Governor said.

Kahiga called upon SRC to work towards ensuring Public Service remuneration is fiscally sustainable, and that the pay should be able to attract and retain requisite and scarce skills in the County Public Service, recognize productivity and performance as well as be transparent and fair.

The theme of the upcoming conference which will be held on the 15th to 17th April has been crafted as, ‘Fiscal sustainability of the public wage bill through productivity’.

Source: Kenya News Agency

Over 1500 Small and Medium Enterprises (SMEs) from across the country are set to receive a boost in financial literacy training, market linkages, business networking and financial access through a newly launched empowerment programme,

The Inua Biashara programme that brings together financial institutions, media houses, the National Chamber of Commerce and Industry as well as learning institutions seeks to address the bottlenecks that many SMEs were facing due to the difficult business environment.

Zetech University Vice Chancellor Prof Njenga Munene whose institution is a key player in the programme said SMEs, being a key pillar in the government’s Bottom-up Economic Transformation Agenda, needed to be supported by all players in order to accelerate development.

Speaking during the launch of the programme at the institution, Prof. Munene said the SMEs would be required to pitch their businesses and successful ones would be selected.

The sector players will help them in sourcing finances, market linkages
providing access to a wider market, business networks, government services, investors, and sourcing raw materials.

‘MSMEs are the backbone of the African economy, accounting for the majority of businesses and providing employment opportunities to millions of people. However, MSMEs in Africa face several challenges that limit their growth and development. These challenges include; inadequate infrastructure, lack of technology and innovation, weak regulatory frameworks, limited access to markets, and limited access to finance,’ he said.

Juliet Kimemia the sector Lead, Trade and investment at KNCCI said more SMEs from various counties would be roped into the programme that would run for the next four years.

She called on the youth who run SME to embrace the opportunity as it would bring them at par with other entrepreneurs and also have their challenges addressed.

‘Use your mobile phones and take advantage of the expanded ICT internet coverage to research and come up with profitable start-ups. Also, ICT will
help you understand business expansion,’ she said.

Her sentiments were echoed by Grace Imeeinza, a Representative of Homeboys Group who said the programme was modified for the youth in SME.

‘Don’t be afraid to invest. Push yourself into startups and embrace such opportunities as they will help in linkages, networks which most youth lack,’ said Imeeinza.

Source: Kenya News Agency

Many Savings and Credit Cooperative Societies (Saccos) in the country witnessed a high default rate in 2023 owing to harsh economic conditions.

The rate of bad loans went up since a section of members with loans were unable to service them leaving Saccos with low cash flow.

Chief Executive Officer (CEO) of Amica Sacco James Mbui stated that in 2023 non-performing loans reached a significant 14.8 percent of gross loans reflecting the prevailing economic challenges.

Speaking during the Sacco’s annual general meeting held in Murang’a town, Mbui noted that during the year under review, the country’s financial sector faced headwinds with a surge in default rates affecting institutions across the republic.

He revealed cash flows of many Saccos were affected thus slowing down performance of many of the institutions.

The CEO explained that challenges that lingered in the form of weakened shilling prompted the Central Bank of Kenya to respond with a series of adjustments to lending base rate.

‘Increase of lendin
g base rate by the Central Bank saw the emergence of expensive loans thus reducing the number of those seeking loans from financial institutions.

‘Amica Sacco, which has a large membership of farmers, was also affected as auctioning of coffee was delayed thus affecting the financial status of our members. We hope this year of 2024, there will be easing of some of the economic challenges in the country,’ he noted.

The value of Kenyan shilling, Mbui noted, has displayed resilience and stability in the first quarter of 2024 thus showcasing a more robust economic position.

‘With a focus on aggressive selling and a commitment to an exceptional customer experience, we remain poised to navigate these economic currents successfully,’ Mbui told the Sacco’s delegates.

He continued, ‘With the hard economic times faced by our members, as a Sacco we adjusted loan repayment period to members who approached us for help’.

Mbui further highlighted that despite the harsh economic situation, the Sacco attracted 8, 815 new
members in last year saying Share capital grew to Sh795.34 million from Sh715.28 million in 2022.

‘Members’ total deposits increased from Sh4.89 billion in 2022 to Sh5.44 billion in 2023, while our loan book grew to Sh6.50 billion in 2023 from Sh5.39 billion in the previous year,’ added the CEO.

Mbui underscored the adoption of digital banking saying the shift to mobile banking helped the Sacco to successfully harness its power to transform ways to serve members.

‘We remain committed to enhancing the reliability and security of these digital channels to ensure our members’ funds are always protected,’ he averred.

Mbui said the Sacco is currently working to digitize and automate credit processes thus simplifying lending procedures.

‘Our current manual approach with human intervention in loan origination, appraisal and approval has proven to be less efficient and slower leading to potential inaccuracies and biases in the assessment. By transitioning to a fully system based process, we anticipate reducing t
he turnaround time for loan appraisal and approval. This will cut processing costs as applications will be done online,’ stated the CEO.

Source: Kenya News Agency

Addis Ababa: Members of the second generation Ethiopian Diaspora have pledged to contribute to development beyond knowing the culture and history of their country.

Prime Minister Abiy Ahmed held yesterday an Iftar program for the second generation members of the diaspora currently in Ethiopia.

Members of the second generation diaspora who were born in different Arab countries and also others that came to spend Ramadan at home participated in the Iftar program.

Members of diaspora approached by the Ethiopian News Agency stated that the Iftar program showed the solidarity of Ethiopians.

They added that they have realized the rapid development of Ethiopia beyond knowing the history and culture of their country.

Abdela Ibrahim from Saudi Arabia said that the Iftar program gave him the opportunity to get to know members of the second generation Ethiopian diaspora from different parts of the world.

According to him, since most of the development works in Ethiopia take the youth into consideration members of t
he second generation should actively participate in development.

Hanan Awol, who was born and raised in Saudi Arabia but now settled in Ethiopia, stated that the development works being carried out in Ethiopia transcend the present generation and are focused on the future.

Therefore, it is necessary to cooperate in the works underway in order to change the country, she noted.

Saladin Abdu, who came from Canada to spend the fasting month of Ramadan, said that he was able to realize the disparity between the misinformation spread on social media and the reality on the ground.

He advised members of the second generation diaspora living in different countries to come and see the current changes in the country.

Faris Ali, who was born and raised in Yemen, said Ethiopia has business and tourism potential suitable for the diaspora that have to exploit the potential.

Hudeten Salih and Hanan Awol, who were born and raised in Saudi Arabia, revealed on their part that they are promoting Ethiopia’s history, culture
and development potential in the Arabic language by using social media.

Foreign Affairs State Minister Birtukan Ayano said on her part that many members of the second generation diaspora have come to their homeland following the call of PM Abiy Ahmed.

She said the call would be implemented in three rounds, and the second chapter is under execution.

Source: Ethiopian News Agency

The banking sector is shaping up progressively in Mombasa with the entry of new franchises sprouting across the Port City.

This is a testament to the sustained investor confidence the Port City has developed, attracting new and established institutions to set up thriving businesses.

Speaking during the launch of the fourth Premium Bank branch in Nyali, the bank’s Head of Business Yayha Dahir said that Mombasa’s significance to the sector could not be overlooked due to many important factors as it was the gateway to the East African region.

Dahir added that key financial players in the industry were developing tailored specific banking solutions and morphing into technology to keep up to speed with the fast-changing global dynamics.

As such, Dahir noted that financial institutions created a niche. In Mombasa’s case, priority areas such as the blue economy were some sectors the bank earmarked to delve into to provide sustainable solutions.

‘The blue economy is a strategic area for the government and as a b
ank, we will be providing the requisite financial solutions to assist in the growth of the sector especially from a microfinance perspective,’ said Dahir.

He went on: ‘Incentivized business modules will go a long way in inculcating smart investments and a saving culture,’ added Dahir.

On his part, Kenya National Chamber of Commerce and Industry (KNCCI) Mombasa Chapter Chairperson Abud Jamal said that deliberate steps by the government and the private sector to streamline the business environment in Mombasa were gradually paying off.

Jamal said that investor confidence was the key to any region’s financial prosperity and the setting up of such critical institutions would revitalize the County’s economic prospects.

‘Increased investments such as setting up of key financial institutions means more capital flow in our County and a flourishing economy,’ said Jamal.

Source: Kenya News Agency