Tuesday, November 23, 2010
Thursday, November 18, 2010
Wednesday, November 17, 2010
Tuesday, November 16, 2010
The government is hiring a private firm to implement a rule that will block all the 460,594 officers from committing more than two thirds of their basic salaries on loans and other forms of borrowing.
The move will affect 246,468 teachers and Teachers Service Commission (TSC) employees, 214,126 civil servants and uniformed staff.
It aims at ensuring staff go home with at least a third of their salaries to cater for living expenses.
The new scheme follows revelations by a survey that some civil servants took up loans and hire purchase schemes that consumed all their salaries.
The study found that the workers were not repaying Sh10 million in monthly commitments since their payslips could not support them.
The deferred payments could have gone up since the report was completed in July.
"This is clearly untenable and gives the service a bad image," said the report, titled Introduction of a Payroll Deduction Management Service.
The government has signed an agreement with Payment Solutions Kenya to develop and run the payroll management service.
The firm will validate all payroll data with a view to verifying employees' credit status before they acquire loans from banks, microfinance institutions and hire purchase organisations.
It will also process loan transactions for deduction according to the one third payroll rule. Individual ministries are expected to provide employee information to the private firm in the new arrangement.
According to the statistics, the amount of deferred deductions in the civil service and uniformed personnel stood at Sh8.5 million in July.
The total amount of deferred deductions for the teachers and staff working at the TSC is Sh2 million.
The most common deferred deductions in the civil service and TSC include bank and Sacco loans, hire purchase and social welfare loans, according to the report.
The report said efforts by the government to activate the provision of the one third basic salary rule by using a payroll system that could not effect any deductions beyond the two-thirds of an officer's basic salary had failed to control over commitment of salaries.
Friday, October 15, 2010
Monday, October 4, 2010
Posted Wednesday, September 29 2010 at 20:31
If you are planning to commit a debtor to civil jail as form of punishment for defaulting on payment, think again — it is unconstitutional.
In a ruling that is likely to deal a blow to money lenders, a judge ordered the release of a woman who had been committed to civil jail in Murang’a, saying it was against the UN International Covenant on Civil and Political Rights (ICCPR).
According to Lady Justice Martha Koome, international treaties and conventions that have been ratified by Kenya are imported as sources of the Kenyan Law by section 2(6) of the Constitution.
“An order of imprisonment in civil jail is meant to punish, humiliate and subject the debtor to shame and indignity due to failure to pay a civil debt. That goes against the ICCPR that guarantees parties basic freedoms of movement and of pursuing economic, social and cultural development,” said the judge.
Shame and indignity
Justice Koome made the ruling in an application filed by retired civil servant, Ms Zipporah Wambui Mathara, 58. The mother of four had been committed to civil jail for 30 days for failing to pay a debt of Sh339,855 to Mr David Ndungo Maina.
When a person is committed to civil jail, the lender pays Sh60 every day to the prison authorities for subsistence until the debtor is released or settles the debt. This form of punishment has been used by banks and other lenders to punish defaulters.
But Justice Koome said in the ruling that there were other methods of recovering the debt such as attaching the debtor’s property.
Court papers show that Ms Mathara had borrowed Sh42,000 from Mr Maina in December 2008. In an affidavit filed before a Murang’a court, her husband George Mathara says that they became aware of the court proceedings after she was arrested.
Wednesday, June 9, 2010
Posted Friday, June 4 2010 at 00:00
This will mean outsourcing of archiving services to store off-site vital records such as titles for property, to securities and insurance policies
Wednesday, March 31, 2010
NAIROBI (Reuters) - Financial credit is out of the reach of most Kenyan firms in part because the process of providing securities for loans is excessively bureaucratic and expensive, a report said on Wednesday.
The study, "Cost of Collateral in Kenya - Opportunities for Reform", said the outdated processes invariably increased the costs of borrowing. It called for an overhaul of the "highly fragmented" legal frameworks, including a reform of stamp duty.
"Collateralisation therefore becomes a major deterrent to financial growth as the time and cost involved... means only a small fraction of potential borrowers are able to access finance," said the report.
The study, commissioned by Kenya's central bank and the Financial Sector Deepening trust, said it was imperative land, both urban and rural, becomes a viable source of collateral.
It also called for a unified, fully automated registry system to replace the existing numerous paper-based registries, to cut costs, time and opportunities for graft.
Only a quarter of firms in east Africa's largest economy said they have access to credit, while just 15.5 percent of companies actually use loans, the report showed, only marginally up on the average for sub-Saharan Africa.
"Lack of access to finance remains one of the factors limiting private sector growth," Finance Ministry Permanent Secretary Joseph Kinyua said at the report's launch.
Kinyua said the Treasury would re-assess stamp duty, identified by the report as costly, unfair and a major deterrent to accessing credit.
"Stamp duty is one of those issues we will be looking at in the context of the budget we are preparing. If it is a factor impeding the investment climate in a negative way then we will see what needs to be done," said Kinyua.
The central banks says commercial banks persistently cite the cost of collateral as contributing a significant portion of the premium factored into lending rates. But many Kenyans accuse the banks of greed.
Wednesday, February 17, 2010
The basic function of a credit bureau is to enable banks share information about borrowers for business decision making i.e. credit granting decisions. The bureau also keeps a credit history record of the borrower and can even assign a score related to the credit history.
Good credit scores can ease access to more credit which could be an opportunity for SMEs to access credit without the restrictive collateral requirements.
More on the subject will follow.