SUNDAY FINANCE

Hey there dear reader!😃

The sweet sour habit of us Kenyans yearning for the last minute adrenaline is a trait that unites us all. Actually, nothing accurately describes a majority of us Kenyans than the words, “tutafanya tu kesho”. Assignments, “tutafanya tu kesho”, washing the re-used utensils (bachelors and bachelorettes), “kesho asubuhi ntaziosha”…important things we postpone and the mundane tasks we bring them forward and accomplish them with unmatched diligence, “as long as tumefanya”. What is time, eh?😂

The past week we got to ignite this adrenaline as we dutifully assembled at the huduma number stations after being threatened that our sim lines would be switched off and that we would be visiting our chiefs to get government services. These threats got the better of us as we didn’t want to visit our chiefs who we don’t know exist or what purpose they serve. We just hear our parents say, “shifo”. Anyway, I hope we were able to get this service and if not, you have one more week dear reader. Don’t be tempted to say “Uh, si they’ve extended. I’ll go when the line is not long”. Time waits for no man.🎓

Enough with the huduma number. Let us bring ourselves up to speed with the week’s finance stories.

THIRD EUROBOND ISSUE

If you are like me, you probably came to hear of the word eurobond during the “eurobond scandal” where billions of money were spent but unaccounted for (which sounds like every other theft story we’ve heard of ). So this week, Kenya floated its third eurobond valued at sh 210 billion to mainly meet the debt service obligation of the sh 75 billion Eurobond issued in 2014. This act is similar to an individual taking an m-shwari loan to retire a tala loan, and then taking branch to pay tala and then after that, bankruptcy and CRB😂.

So then what is this fuss about eurobonds? Isn’t it okay to take another loan to pay off another loan? Weeeeell. Let’s first understand what Eurobonds are. Like any type of bond, eurobond is a form of raising capital to finance investments. They are mostly issued by corporations and governments. What makes them unique is that they are issued in a currency different to that of the “borrower’s home currency.” For example, let’s say Huduma company is headquartered in Nairobi. It wishes to expand its operations in U.S. To finance this project, it decides to issue a bond that’s denominated in the U.S currency. (You see; the bond does not trade in shs but in dollars). That’s a typical example of a eurobond and you can read more of its pros and cons here.

But with Kenya, this third eurobond is not being used for investment. Our lenders have called for their maturing loans to be paid and thus to fulfill this obligation, the government has taken another “loan” to finance the debt service. Some of the money will also be used to meet the budget deficit. Kufuliza tu.😔

Another Bank Merger

Our banking sector has over the years outperformed other sectors of the economy in terms of profit making. Many banks have thus been formed with an aim of sharing the promising pie in the lucrative industry. However, as many join, many have also struggled to compete with the “big boys”. The big boys are not resting their laurels as many are merging to become even “bigger boys”, the most recent case being the proposed merger between KCB and NBK.

KCB which is a known giant in the industry plans to have NBK operate as a standalone subsidiary two years post acquisition before fully integrating it into KCB Bank Kenya (Business Daily). This merger has its eyes on creating a balance sheet institution worth sh 1 trillion by 2022 😮. Of course this will put them above the other big boys but with the tread of bank mergers, competition will remain stiff and more profits will be realized. (Which makes me wonder, how, just how do bank employees earn “peanut salaries” when their organisations are making crazy profits?) Feel free to comment below😊.

And in related news, NIC managing director, John Gachora, will serve in top seat in the merged group between NIC and CBA.

Parking Finder

I bet we have once in a while been in situations where we are with family searching for a parking spot in town. Often a lot of time is wasted in the process coupled with paying some young men to watch your car.

Some students have however come to the rescue. Patrick Mwangi and Samuel Githae are two innovative students that developed an app, Parking Finder that enables motorists to find parking spots that are close in proximity. This is an inspiring story of how we as students can use our knowledge to solve problems in our society and seeing them as valuable opportunities.

“Not all can be famous but all can be great because greatness is determined by service“. This is one quote I love a lot becomes it reminds me of the common purpose we all share, to serve. I believe we all can serve in the capacities we are in. And with this service, we grow and help each other to achieve greatness.

That’s all for today dear reader. Thank you for reading through and i hope to meet you in our next blog. As always, feel free to share your comment. Cheers and have a blessed week.😊🍻❤