Category: Financial Advisory

  • Selu to invest Sh13bn in Galana-Kulalu project

    Selu to invest Sh13bn in Galana-Kulalu project

    The then Water and Irrigation Cabinet Secretary Sicily Kariuki at the Galana Kulalu Food Security Project.
    Image: ELIAS YAA

    After a successful pilot phase last year, Selu Limited, one of the companies funding the government-backed Galana-Kulalu irrigation project, announced plans to inject at least $80 million (Sh13 billion at current exchange rates) in the next three years.

    The company reports that its trial produced unprecedented yields of maize—up to 35,90 kg bags per acre—the highest in Galana Kulalu’s history and nearly four times the national average. As a result, the company plans to grow its operations on the 20,000-acre farm.

    According to Selu, it has completed the first 500 acres of development, which included a feasibility study to determine whether large-scale commercial maize farming on the 1.75 million-acre government-owned ranch would be feasible.

    According to Mr. Nicholas Ambanya, CEO of Selu Limited, “the recently concluded pilot phase has yielded remarkable results, with record-breaking maize yields of up to 35, 90-kg bags an acre, the highest ever recorded in Galana Kulalu’s history and close to four times the national average.”

    “With 20,000 acres of land slated for commercialization and high productivity to significantly boost Kenya’s annual maize production, the project has significant potential to impact food security in Kenya.”

    According to the company, the project was implemented in collaboration with a consortium made up of Campo-Brazil, LEAF Africa, and BrazAfric Group, which contributed their large-scale tropical commercial farm management expertise.

    In the race to achieve carbon-neutral food production, the firm said the investment would be directed toward implementing full irrigation, smart agriculture, and introducing renewable energy solutions. This development is expected to drastically alter the social and economic circumstances of the surrounding communities.

    The government of Kenya is working with the private sector to develop the Galana-Kulalu project as part of its efforts to ensure food security in the country.

    In order to guarantee the success of the development phase, Selu Limited, a limited liability company founded to invest in and transform the Galana Kulalu irrigation project through creative and sustainable farming practices, launched a number of crucial initiatives to build the pilot.

    The alliance between Leaf, Campo, and BrazAfric is strategic because, with Campo’s 40 years of experience in learning from and implementing tropical agriculture in Brazil and abroad—the company currently cultivates 243,200 hectares, or about 600,000 acres—there are substantial synergies to be gained in the project’s commercialization.

    “The Galana Kulalu Project will significantly improve the social and environmental conditions of the local communities in addition to agricultural advancements.”

    Credits: Kabui Mwangi

  • US firms enjoy billions in savings from Ruto tax cut

    US firms enjoy billions in savings from Ruto tax cut

    Two American businesses operating in Kenya have stated that they have benefited greatly from lower taxes for foreign companies’ local branches last year, thanks to a decision made by President William Ruto’s administration.

    Ormat Technologies Inc, a US company that has power generation operations in Kenya, disclosed a tax benefit of $9.4 million (Sh1.49 billion), suggesting that foreign companies will make billions of shillings in savings from the controversial Finance Act, 2023 that reduced the corporate tax rate for the branches from 37.5 percent to 30 percent.

    The ruling brought foreign corporations’ corporate tax rates into line with those of domestic ones.

    ORMAT TECHNOLOGIES Desert Peak power plant 

    American Tower Corporation (ATC), a US-based tower company, also disclosed tax savings against the backdrop of a local public backlash against growing taxes and levies.

    “The company applied the applicable changes in the Finance Act in its third quarter [ended September 2023] condensed consolidated financial statements,” said Ormat in a trading update.
    “An approximate $9.4 million benefit was recorded under income tax (provision) benefit as a result of the statutory corporate income tax rate for branches being reduced from 37.5 percent to 30 percent.”

    The business disclosed that a new tax benefit in Kenya somewhat offset the increase in its income tax provision for the nine months ending in September.
    It did not, however, reveal the benefit’s true value.

    “The increase in the income tax provision during the nine months ended September 30, 2023 was…partially offset by a benefit in the current year from the application of a tax law change in Kenya,” said ATC.

    3,645 telecom towers are owned by ATC and leased to regional mobile network providers in the nation through its local subsidiary ATC Kenya.
    Although the precise number of foreign businesses operating in Kenya is unknown, data from the Business Registration Service indicates that 89 were registered in the current fiscal year, which began in July.

    This implies that the tax cut will result in billions of shillings of lost revenue each year for the Kenya Revenue Authority (KRA).

    However, President Ruto is wagering that, at least over time, profits from overseas investments will grow to offset the revenue loss.

    Credit: Brian Ambani

  • Sasra offers non-deposit taking saccos levy relief

    Sasra offers non-deposit taking saccos levy relief

    Sacco shareholders during their AGM in March 2023. FILE PHOTO | NMG

    The most recent schedule published by the saccos regulator states that non-withdrawable deposit taking saccos will pay a discounted annual levy instead of the current 0.175 percent paid by deposit-takers. The levy is computed as a percentage of the money that an organization has on hand.

    The annual levy for non-deposit taking entities under the supervision of the Sacco Societies Regulatory Authority (Sasra) is set at 0.1 percent of the total amount of non-withdrawable deposits held by the entity as of the end of the previous financial year (to June 2023).

    If a sacco’s sole source of income is the receipt of deposits that are not withdrawable for the term of membership and may be used as security for loans and domestic money transfers, then the sacco is considered non-withdrawable deposit-taking.

    Since 2010, Sasra has been in charge of overseeing deposit-taking saccos, with the Commissioner for Co-ops overseeing the remaining ones.

    But in 2020, Sasra’s authority was increased to include overseeing saccos that had non-withdrawable deposits of at least Sh100 million.

    All non-deposit taking saccos that organize membership and subscriptions to share capital through digital or other electronic payment platforms, as well as those that share capital from individuals living outside of Kenya, are now subject to Sasra regulations.

    Compared to the 0.175 percent that deposit-taking saccos pay on their total deposits, subject to a maximum of Sh10 million, the 0.1 percent levy, capped at Sh6 million, is a discount.

    In a notice published in the gazette last Friday, Sasra stated that the levy “shall be based on the total non-withdrawable deposits held by the sacco society as indicated by the audited financial statements of the Sacco society for the immediately preceding financial year.”

    Credit:  PATRICK ALUSHULA | BD

  • Stock market today: Wall Street holds steady as yields rise following strong jobs data

    Stock market today: Wall Street holds steady as yields rise following strong jobs data

    NEW YORK — After a report indicated that the economy is still being driven by a robust job market, albeit one that may be a little too strong, Wall Street is remaining mostly stable on Friday.

    Although the S&P 500 started trading with a 0.1% increase, it was still headed for its first losing week in the previous ten. As of 9:40 am Eastern time, the Nasdaq composite was up 0.1% and the Dow Jones Industrial Average was down 4 points, or less than 0.1%.

    In response to the jobs report that revealed U.S. employers had unexpectedly increased hiring last month, Treasury yields increased in the bond market. Workers’ average hourly pay increased as well, contrary to economists’ predictions that it would decline.

    For workers, these high numbers are encouraging, and they should maintain the economy.

    Wall Street, however, is concerned that the solid data may also persuade the Federal Reserve that inflation is still trending upward. Thus, it’s possible that the Fed will keep interest rates high for a longer period of time than anticipated. For markets that have already risen sharply on expectations that the Fed will significantly lower rates this year, that could be bad news. The other major factor influencing stock price determination is interest rates.

    Due to the jobs report, traders had to lower their expectations that rate cuts will start in March. Based on data from CME Group, they are now betting on a 56% chance of that, down from nearly 89% a week ago.

    The yield on the 10-year Treasury swept back to 4.05%, up from 4.00% late Thursday and from less than 3.80% last week. High rates and yields slow the economy by discouraging borrowing and spending. They also hurt prices for investments and raise the pressure on the financial system.

    This week’s pullback for stocks is not a surprise for many on Wall Street, who had been calling its big run since autumn overdone. Critics say the number of rate cuts traders are betting on for 2024, which is double the three that the Federal Reserve has indicated, is unlikely unless a recession occurs.

    On Wall Street, Constellation Brands climbed 2.5% after the seller of Corona and Modelo beers in the United States reported stronger profit for the latest quarter than analysts expected.

    Credit: San Choe, AP.

  • Kenya’s Eurobonds cross Sh1trn mark on weak shilling

    Kenya’s Eurobonds cross Sh1trn mark on weak shilling

    Kenya’s outstanding sovereign debts, or Eurobonds, will cost the country more than Sh1 trillion to pay off due to the sharp depreciation of the Kenyan shilling since the securities were issued.

    Kenya’s outstanding Eurobonds at issuance were valued at Sh697.7 billion, but due to the depreciation of the local currency alone, they have since increased to Sh1.117 trillion, according to an analysis of the debt trend.

    This mimics the dangers associated with taking on foreign debt, which exposes the nation to refinancing risks when the obligations mature.

  • Nairobi Coffee Exchange to be Brought Under CMA Supervision

    Nairobi Coffee Exchange to be Brought Under CMA Supervision

    As it changes to The Coffee Exchange, Nairobi Coffee Exchange (NCE) will soon come under the Capital Markets Authority’s (CMA) oversight.

    Kenya intends to create a marketing and trading system at the Nairobi Coffee Exchange that encourages equitable, transparent trading activities. Part of this agenda includes the full implementation of the Capital Markets (Coffee Exchange) Regulations.
    In addition, it aims to improve price discovery and offers coffee farmers significant advantages.
    Since then, the CMA Act has been amended to give the regulator the authority to control spot commodity markets, such as Kenya’s coffee commodity market.

    This development ends a protracted dispute and uncertainty about the CMA and Coffee Directorate’s mandates and who between them has the final say on issues pertaining to the NCE’s operations.

    When a task force headed by Hon. Simon Chelugui, Cabinet Secretary for Cooperatives and Micro, Small, and Medium-sized Enterprises (MSMEs), concludes the Nairobi Coffee Exchange transition process, the CMA will take over as the exchange’s regulator. The taskforce’s assignment is to oversee the Nairobi Coffee Exchange’s rebranding as The Coffee Exchange.

    Augustus Kipkoech Chepkurwo, Peter Githinji Njuki, Kenneth Gitonga, and six other people are members.

    The taskforce will remain in operation for a full year, ending on December 7, 2024, with the option of an extension if needed.

    It will have its headquarters at the ministry’s Social Security House.


    A secretariat has already been established, tasked with conducting research, creating and carrying out the team’s programs and activities, interpreting policies, producing reports, and providing pertinent background information.

    Also read: NSE’s Next Listing Expected to be Marula Mining

    Credit: Jackson Okoth