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KENYA

Kenyan debtors struggle to hold on to assets as repossessions rise

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NAIROBI (Reuters) – The Nairobi car auctioneer hopefully scanned empty rows of rickety plastic chairs in a dusty lot for more bids but saw only too many vehicles and not enough buyers, an increasing problem as Kenya’s economy slows and repossessions pick up.

A severe drought earlier this year, a bank lending slowdown and prolonged political uncertainty are creating a growing pool of distressed borrowers whose assets are being seized by newly aggressive lenders in the east African powerhouse.

George Muiruri, managing director of Leakey’s auctioneers, says they are holding 10 auctions a month, up from about four a year ago.

“Things are tight,” Muiruri told Reuters as he prepared to auction vehicles ranging from luxury cars to battered workhorses once owned by painstakingly-built small businesses.

“Because of this political environment, people are postponing so many plans,” he said, adding: “You find that you repossess and then there are no buyers.”

Kenya’s free market credentials, staunch alliances with Western nations and relative stability in a region roiled by conflict has made it the richest economy in East Africa and a favored regional headquarters for global firms like Google, IBM and General Electric.

But growth slowed to five percent in the second quarter of this year, below the official year’s forecast of 5.5 percent, as a prolonged election season took its toll.

Kenya held presidential, parliamentary and local elections on Aug. 8, but a Supreme Court ruling on Sept. 1 annulled President Uhuru Kenyatta’s re-election and ordered a fresh contest, now scheduled for Oct. 26.

Now even that date is in doubt; opposition leader Raila Odinga says he will not participate unless the election board fires officials that he blames for irregularities in August polls.

Many businesses want elections over before investing further, mindful of the weeks of post-election violence that followed the disputed 2007 presidential poll, killing around 1,200 people and plunging the economy into a nose-dive.

“People stopped investing in real estate or businesses waiting to see the outcome of the election … There are delays in payments from end to end,” said a bank CEO, who did not wish to be named.

SMALL BUSINESSES HIT

Those delays are choking John Wambua’s small business transporting plastic water tanks to retailers. His clients haven’t paid for three months so he has been unable to service the loan on his truck.

“We have had a big challenge due to the election. The people we transport the water tanks for are not selling and so we have no work,” he said wearily at the auction yard, where he had gone to beg for more time before his truck is auctioned.

His story is common: there is a glut of repossessed vehicles, land, homes and office equipment being sold off cheaply across Kenya.

At Leakey‘s, which also operates three separate storage yards around Nairobi, the number of vehicles stored awaiting sale doubled to 1,500 in the past year, Muiruri said.

Bank credit, formerly easily available, has dried up after the government capped commercial lending rates last year, leaving lenders unable to refinance seized assets.

Non-performing loans in the banking industry rose to 10.7 percent in August, from 9.9 percent in June, the central bank said, jumping into double digits for the first time since 2007.

Felix Apollo, chairman of the Association of Auctioneers, said banks were moving much faster to seize property from defaulters since the cap was put into place. There was a glut on the market of repossessed assets, he said.

“The banks have become more aggressive,” he said, noting one person was killed in a fight to repossess a vehicle a couple of months ago.

But the economy retains stable macroeconomic fundamentals like slow inflation and a stable foreign exchange rate, leading Apollo to believe seizures will ease next year.

“Probably after the elections, people will go back to their normal status,” he said.

Editing by Katharine Houreld and Peter Millership

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Africa

A borderless Africa? Some countries open doors, raise hopes

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AP — For years African leaders have toyed with the idea of free movement by citizens across the continent, even raising the possibility of a single African passport.

Now some African countries are taking bold steps to encourage borderless travel that could spur trade and economic growth on a continent in desperate need of both.

Kenyan President Uhuru Kenyatta announced during his inauguration last week that the East African commercial hub will now give visas on arrival to all Africans. That follows similar measures by nations including Benin and Rwanda.

“The freer we are to travel and live with one another, the more integrated and appreciative of our diversity we will become,” Kenyatta said.

The African Union has cheered such steps, calling it the direction the 54-nation continent needs to take. “I urge all African states that have not yet done so to take similar measures,” AU Commission chairman Moussa Faki Mahamat said on Twitter after Kenya’s announcement.

Trade among African countries is at just 16 percent, while trade among European Union states is at 70 percent, Mahamat told AU trade ministers on Friday.

For a continent whose leaders often speak fondly of “African brotherhood” and once pondered the idea of a United States of Africa, the visa policies of many countries for many years suggested little progress in implementing the continent-wide, visa-free ideal advocated by the AU.

Africans can get a visa on arrival in 24 percent of African countries, yet North Americans, for example, have easier access on the continent, according to a 2017 report on visa openness by the African Development Bank. African Union figures show Africans need visas to travel to 54 percent of the continent.

Free migration of people across the continent would help in talent exchange as well as trade, said Ali Abdi, the Uganda chief of mission at the International Organization for Migration. Countries may have to invest more in border patrols but “the benefits far outweigh the costs, in my view.”

Kenya’s decision is a “good move and it’s progressive,” said Godber Tumushabe with the Uganda-based Lakes Institute for Strategic Studies. “It should have been done a long time ago.”

Change is coming, and not just in East Africa. While visiting Rwanda last year, Benin’s President Patrice Talon said his West African country would no longer require visas for other Africans. He said he was inspired by Rwanda, whose government started issuing visas on arrival to Africans in 2013 and recently announced that in 2018 citizens of all countries will benefit from the policy.
“We are happy that other African countries are opening their borders up for Africans to increase foreign investments,” said Olivier Nduhungirehe, a deputy foreign minister in Rwanda in charge of regional integration. Opening borders will spur economic prosperity for the entire continent, he said.

Some African countries are going visa-free by region first. Weeks ago, the Central African Economic and Monetary Community removed visa requirements for citizens of its six members.

Many African countries rely heavily on tourism for foreign currency. Kenya’s new visa policy was welcomed in a country where the threat by Islamic extremists based in neighboring Somalia has deterred some international travelers.

Offering visas on arrival to all Africans could attract the continent’s small but growing middle class.

“Visa-free travel for Africans into Kenya is a great move by the president and a strategic one for the tourism industry,” said Bobby Kamani, who runs the popular Diani Reef Beach Resort and Spa in the second-largest city, Mombasa. “The president’s bold move couldn’t have come at a better time when the tourism sector has experienced uncertainty and is now on recovery mode.”

Conflict and sharp income disparities in many countries are among other factors slowing the adoption of visa-free policies. Even the African Union passport, launched in July 2016 and given to some heads of state, is yet to be offered to citizens.

Some North African countries, notably Libya, struggle with a flow of impoverished African migrants trying to make their way to Europe. South Africa, one of the continent’s top economies, has seen a sometimes violent backlash against African immigrants amid fears about crime and the taking of jobs. Nigeria, Africa’s most populous country and another of its strongest economies, maintains visa requirements before arrival for many nations across the continent.

Still, many are hopeful for a borderless Africa and urge those regional leaders to follow Kenya’s lead.

“Is a new wind blowing across #Africa?” Wolfgang Thome, a tourism consultant who once led the Uganda Tourism Association, tweeted. “When will the last walls fall? #Nigeria we are waiting!”

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KENYA

Spotlight shifts to ICC referral and Somalia border case

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The spotlight is expected to temporarily swing from politics as the government focuses on two events regarding the International Criminal Court and the country’s maritime border dispute with Somalia at the International Court of Justice.

From Monday, the Assembly of State Parties — the management oversight and legislative agency of the ICC — will be meeting at the UN headquarters in New York for the 16th session, which will end on December 14.

As the session opens, two events will be of focus to Africa and Kenya in particular.

ASSETS

In the provisional work plan of the ASP, cooperation with ICC has been listed as an item for discussion on December 11. It is understood that the referral of Kenya to the ASP by ICC could come up at that point.
In September 2016, trial judges Kuniko Ozaki, Robert Fremr and Geoffrey Henderson found Kenya to have breached the Rome Statute in the case of President Uhuru Kenyatta by failing to produce information requested by Ms Fatou Bensouda, the prosecutor.

Failure to reveal Mr Kenyatta’s bank accounts, assets, ownership of companies and financial transactions in the lead-up to the 2007 elections and early 2008 was cited by Ms Bensouda as one of the reasons the crimes against humanity case flopped.

“Noting that the case against Mr Kenyatta has already been terminated and considering the relevance of the materials sought in the prosecutor’s request to current or future investigations, Trial Chamber V considered a referral to the ASP appropriate for the purpose of fostering cooperation more broadly,” the court said.

The subject of cooperation could also be interesting for other African countries, which have in the past accused ICC of targeting their leaders.

NEW JUDGES

Along with cooperation, the ASP will be electing six new judges to replace among others, Kenya’s Joyce Aluoch and Botswana’s Sanji Mmasenono Monageng.

Both would have served their nine-year non-renewable terms on March 10, 2018. Since the positions are rotational, neither Kenya nor Botswana has candidates.

African countries that have candidates are Benin, Ghana, Uganda and Lesotho.

The election of judges will take place on December 5 and 6 while cooperation will be discussed at the plenary on December 11.

Meanwhile, Kenya also has a date with the UN’s principal judicial organ, the ICJ, in the dispute between Nairobi and Somalia.

After ruling on February 2 that it had jurisdiction to adjudicate the dispute between Somalia and Kenya concerning maritime delimitation in the Indian Ocean and that Somalia’s application was admissible, ICJ fixed December 18 as the time-limit for the filing of the counter-memorial of Kenya in the case.

The counter memorial should have at least three parts namely statement of relevant facts, statement of law and submissions, and will be Kenya’s official response to the maritime dispute case filed by Somalia.

“Kenya’s counter-memorial will be filed on or before December 18,” Attorney-General Githu Muigai told the Sunday Nation, adding that the response would be a “bulky document”.

Somalia’s memorial, which is in four volumes, was filed on July 13, 2015. It sought the maritime boundary redrawn to extend diagonally to the south at Kiunga into the sea, and not eastwards as it is.

“The court is asked to determine, on the basis of international law, the complete course of the boundary dividing the maritime areas appertaining to Somalia and to Kenya in the Indian Ocean, including the continental shelf beyond 200 nautical miles. Somalia also requests the court to determine the precise geographical co-ordinates of the single maritime boundary in the ocean,” Somalia said.

If granted, Somalia’s prayers could also affect Kenya’s sea border with Tanzania.

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KENYA

Kenya elected to International Maritime Organization Council

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CAPITAL FM — Kenya has been elected to the Council of the International Maritime Organization under category C, which is reserved for 20 member states which have special interests in maritime transport or navigation.

Other African Countries elected are Egypt, Morocco, South Africa and Liberia.

The Kenyan delegation was led by Nancy Karigithu, Principal Secretary for Maritime & Shipping Affairs and Amb. Lazarus Amayo, Kenya’s High Commissioner to the United Kingdom and Permanent Representative to IMO.

The IMO is a specialized agency of the United Nations, with global standard-setting authority for the safety, security and environmental performance of international shipping. Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.

International shipping transports more than 80 per cent of global trade to peoples and communities all over the world. Shipping is the most efficient and cost-effective method of international transportation for most goods; it provides a dependable, low-cost means of transporting goods globally, facilitating commerce and helping to create prosperity among nations and peoples.

The world relies on a safe, secure and efficient international shipping industry and this is provided by the regulatory framework developed and maintained by IMO.

Kenya’s has been a member of the Council IMO since 2011 and has been a member of the Organization since 1973. The Port of Mombasa serves a number of countries in a region that hosts a combined population of over three hundred (300) million people.

Over 90 per cent of Kenya’s foreign trade is dependent on maritime transport and therefore cargo handling, marine services and other maritime related services touch the very heart of the country’s national economy. Based on Kenya National Bureau of Statistics Economic Survey 2015, Kenya imported goods worth Sh1.57 Trillion.

Enabling Kenya’s participation in and benefit from the regional and global maritime transport value chain can yield thousands of jobs in the medium term, make imports cheaper and exports more competitive, as well as establish the Kenyan coastline as a major logistics and transportation hub on the eastern seaboard.

Currently all maritime transportation is in the hands of foreign companies and this comprises the biggest exposure and weak link to the national economy.

The Blue Economy (BE) has recently become the 8th sector under the Economic Pillar of Vision 2030, and is now part of the soon to be launched Medium-Term Plan III, 2018-2022.

Kenya hosts the office of the IMO Regional Coordinator for Eastern and Southern Africa sub-region as well as four regional organisations important to the maritime states in the region.

In 2016, Kenya was elected to host the Regional Maritime Technology Cooperation Centre (MTCC) for the African Region, which will enhance the capacity for the Africa region in the promotion of ship energy efficiency technologies and operations, as well as the reduction of harmful emissions from shipping in Africa, thus mitigating the harmful effects of climate change.

The Government of Kenya has maintained a forefront position in the suppression and prevention of acts of piracy and armed robbery against ships and has played a major role in this regard.

The direct involvement of the Kenya Defence Forces (under AMISOM) since October 2011 has been significant since there has not been a single successful incident of piracy within waters off the Coast of Somalia / Indian Ocean.

Kenya is a major proponent of the Djibouti Code of Conduct (DCoC), the regional IMO supported initiative for the Repression of Piracy and Armed Robbery against Ships in the Western Indian Ocean and the Gulf of Aden.
Kenya also hosts the Regional Maritime Rescue Co-ordination Centre (RMRCC) in Mombasa, covering on behalf of the international maritime community, the maritime search and rescue region of Somalia, Kenya, United Republic of Tanzania and the Seychelles.

The RMRCC serves as a point of contact for ships to seek advice or assistance when sailing in waters of the coast of Somalia and also report security concerns about other ships movements or communications in the area, all of which has proved invaluable in monitoring of piracy and armed robberies in waters of the Coast of Somalia.

The Mombasa RMRCC is ready and poised to play an expanded role in achieving the new mandate of the Jeddah Amendments Code that now includes information sharing on other maritime crimes.

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