Figures that marked 2015 in Kenya

The year 2015 was a roller coaster for Kenyan businesses as they hurtled from one tough challenge to another.

Corporate profitability was under pressure with 15 firms listed on the Nairobi Securities Exchange, (NSE) issuing profit warnings for the year.

The year also saw the World Bank, the International Monetary Fund (IMF) and the National Treasury revise downwards Kenya’s growth forecast thanks to the volatile shilling, weak revenues and sluggish exports.

The reduced economic activity dimmed companies’ ability to generate profits.

This means many firms may not hire more staff or increase wages.

This gloomy scenario is certain to worsen the already dire situation of unemployment.

IMF has sounded a warning saying 2016 would equally not be a smooth ride for the global economy.

And bearing in mind how world economies are intertwined, Kenya is certain to feel the effects of global headwinds.

Analysts predict a slowdown in business activity and job creation.

More specifically in 2016, economists are wary of a weak shilling, which could stoke inflation and push the Central Bank to increase interest rates notwithstanding the feeble growth trajectory.

Experts have consequently called for urgent fiscal and economic reforms to shore up growth prospects.

Broadly, the following are the important figures that marked the year 2015 and will continue to be critical in 2016:

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5.4 pc

The Kenyan economic growth as predicted by the World Bank.

It is lower than a previous estimate of six per cent.

In September this year, the IMF revised downwards Kenya’s 2015 economic growth projection from 6.9 per cent to 6 per cent, citing the depreciating shilling and the struggling tourism sector.

Similarly, the government too, in April, cut economic growth projection from 6.5 per cent down to 5.3 per cent.

In 2016, the World Bank predicts the economy to expand by 5.7 per cent, down from 6.6 per cent.

But it is not the World Bank only that has trimmed Kenya’s forecast for 2016.

IMF has also lowered Kenya’s 2016 economic growth projection.

IMF has equally slashed the country’s 2016 economic projection down to 6.8 per cent, from the initial 7.2 per cent, owing to the prevailing harsh economic conditions.

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15

The number of companies listed on the Nairobi Securities Exchange that have issued profit warnings for 2015.

They include TPS Eastern Africa, BOC Gases, Crown Paints, East African Cables, Standard Group, Uchumi Supermarkets, Standard Chartered Bank, Mumias Sugar, Express Kenya, among others.

During the first quarter of the current financial year, the Kenya Revenue Authority attributed the shortfall in revenue collection for the period to poor performance by local companies, which reduced income from corporate and payroll taxes.

In 2014, 11 companies issued profit warnings.

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Sh542bn
The amount that Treasury expects to borrow in the 2016/17 financial year to plug gaps in the national budget.

Fiscal deficit in FY2016/17 will be sealed by net external financing of Sh239 billion (3.3 per cent of GDP) and net domestic borrowing of Sh239.8 billion (3.3 per cent of GDP), according to the 2015 Budget Review and Outlook Paper.

The document projects that the 2016/17 budget targets on revenue collection, including appropriations, will amount to Sh1.6 trillion, up from the Sh1.3 trillion projected for the current financial year.

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Sh250bn
The amount of proceeds from the sovereign bond issued by the government in June 2014 and the tap sales issued in December 2014.

Treasury for the better part of late 2015 fought off claims by opposition leader Raila Odinga that the money was misappropriated.

Treasury said Mr Raila’s allegations were based on a “misinterpretation” of figures in the Budget Review and Outlook Paper and the Budget Policy Statement.

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10,000km

The cumulative length of roads the Government plans to build across the country over the next five years.

The government in 2015 ditched the much hyped annuity road financing plan for the planned implementation of the programme over concerns of inflated costs, in favour of an older, cheaper construction model.

An older model — Engineering, Construction and Procurement (EPC) — will now be used in 2016 after realising that accumulated costs per kilometre would average a staggering Sh300 million under the annuity programme.

Under EPC, Transport Minister Mr James Macharia has said costs are set to go down to an average of Sh30 million per kilometre.

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Sh64.2bn
Revenue shortfalls witnessed by Treasury during the start of the current financial year.

During the period, tax revenues were largely below the revised target in all categories.

Income tax was below target by Sh23.8 billion, VAT was below target by Sh10.4 billion.

Import duty and excise duty were below the revised target by Sh2.7 billion and Sh3.7 billion respectively.

Similarly, external grants amounted to Sh27.4 billion against a target of Sh66.4 billion, representing an underperformance of Sh39 billion.

In 2015 the National Treasury was hard-pressed to meet its obligations indicated by late remittances of county funds, Higher Education Loans Board, and delay in releasing free primary and secondary education funds last month.

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60pc
The level of work completed on the Mombasa-Nairobi-Malaba standard gauge railway, one of the government’s flagship infrastructure projects.

Phase 2A of the project between Nairobi and Naivasha will begin in 2016 and will cost Sh153 billion ($1.5 billion).

This is more than the Sh327 billion ($3.8 billion) spent on the 427 kilometres from Mombasa to Nairobi, because of a rugged terrain, according to officials.

President Uhuru Kenyatta has said the new railway would cut the cost of transporting goods between Mombasa and Malaba by 60 per cent reducing the cost of locally-produced goods upon its completion in 2018.

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Sh9m
The monthly salary that Safaricom’s CEO Bob Collymore takes home.

He disclosed that he has net assets worth Sh277.49 million in Kenya and the UK.

Safaricom posted a 23 per cent increase in 2015 first-half profit to Sh18.1 billion as mobile-data revenue surged.

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Sh28bn
Amount Treasury hoped to raise as revenue after new Excise Duty Act took effect on December 1, 2015.

The move saw Kenyans pay more for fruit juices, cigarettes, beer, liquor, soda, bottled water and wine.

The price of fuel and imported second-hand cars and motorcycles also went up.

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October 13
The date the Central Bank of Kenya (CBK) put Imperial Bank under its management citing unsafe and unsound banking conditions at the lender.

The financial regulator has since announced a restitution process for the lender.

Out of the troubled bank’s 50,000 depositors, only 10,600 have however lodged claims as at December 22, according to CBK Governor Dr Patrick Njoroge.

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5pc
Treasury’s average projected inflation by 2017.

Treasury has warned of risks of imported inflation in 2016 — with fluctuations in exchange rate, owing to a possible strengthening of the US dollar against the shilling.

Treasury has also noted that uncertainty in the international oil market is likely to affect the economy.

In November, the Central Bank of Kenya advisory committee voted to retain the benchmark lending rate at 11.5 per cent backing the regulator’s position that commercial banks should not raise lending rates.