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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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KENYA

Somali refugees in Kenya between rock and hard place

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NAIROBI, Kenya- Around half-a-million refugees stranded in Kenya face an impossible choice: either go home to al-Shabaab-wrecked Somalia under a controversial UNHCR “voluntary repatriation” program or stay and face massive debts accumulated due to food shortages at camps.

The dire situation can be witnessed firsthand at the Dadaab Refugee Complex in North Eastern province where over 486,460 refugees have taken asylum, according to figures released in January by The UN Refugee Agency.

Somalis living at the complex, which hosts thousands of makeshift refugee shelters, told Anadolu Agency the only reason they came to Kenya was because they were forced to flee the civil war back home and the threat of al-Shabaab militants who have killed many in the Horn of Africa region.

Dadaab is located 474 kilometers (294 miles) from capital Nairobi. It is an arid place with no paved roads but just swathes and swathes of barren fuscous-golden brown sand. Usually there is no sign of life en route to the camp except for lizards skittering across the sand. But sometimes people appear out of nowhere who can be seen herding camels. They are locals of the area who are mostly nomadic pastoralists and are always on the move.

As soon as one reaches the refugee complex, the picture of neglect and misery hits in the face as harshly as the scorching heat under which the extremely poor people live there.

Anyone who approaches the K1 block at the camp gets overwhelmed with requests from refugees scrambling over a barbed wire fence, urging for food, water, money or anything that one could spare for them.

Men, women and children can be seen squeezing into any spot that provides them with shade, others stare aimlessly into the distance deep in thought.

Tales of horror are in abundance here. One man said he arrived at the camp after spending three weeks in hiding after his family was killed in Somalia. Many others shared similar graphic realities.

Debts after food cuts

Several people at the camp told Anadolu Agency that after 30 percent food cuts were announced by the World Food Programme (WFP) for refugees living in Dadaab, they were forced to take loans to buy food and ended up accumulating “huge” debts of hundreds of dollars.

Many said it was because of these debts that they were now considering the recently-announced United Nations “Voluntary” repatriation program, which claims “to ensure the exercise of a free and informed choice and to mobilize support for returnees.”

Yassir Zahi said there is nothing voluntary about going back home and added he simply wants to run away from debt like many other refugees like himself at the camp.

“When the food cuts came, we were forced to accumulate debt since October 2017 because even the food was not enough for one person.

“Nothing is voluntary about me going home; I borrowed to buy food on credit and I am not alone; many have done the same, I owe the guy $300.

“All this I did to buy flour for porridge and milk and rice to feed my family; I used to sell flour but I ended up consuming it all with my family; they [money-lenders] came to ask for their money which I didn’t have and they threatened me and my family, especially my 16-year[-old] daughter,” Zahi said.

Through the voluntary repatriation program, the UN has created an avenue for people to clear off their debts “by returning back to my war-torn country,” he added.

In a 2018 report, Not Time to Go Home, Amnesty International also outlined how refugees were being coerced to go back to war at home due to the severe humanitarian crisis.

People left behind

Aamiina Osman, a 75-year-old woman, was found chained to a tree at the camp, attacking anyone who tried to come near her with a handful of sand.

Her adopted grandson Rashid Latif said she used to be happy and jovial but the terrible conditions at the refugee camp had destroyed the old woman.

“Her real family deserted her and went back to Somalia leaving her to fend for herself; they said that because she is too old she would slow them down once they got to war-torn Somalia; being deserted by the six family members made her partially mentally ill,” Latif said.

“On that night [they left], they chained four old women here [to the tree] and their families left; luckily, we found them, otherwise, they would have died; some went back to their homes but I adopted her [Osman] as my grandmother as I am an orphan and I take care of her,” he added.

Lack of funds

UNHCR’s Yvonne Ndege denied that refugees were being coerced to go back home. “The refugees are actually not ‘sent’ — they make a considered and informed decision to return or go to Somalia.

“There is a careful and detailed process that refugees who say they want to return follow before we help them return. That’s accompanied by up to date information from over 30 local organizations on the ground in Somalia constantly updating refugees on the situation back home. There are also what we call ‘go and see’ missions led by refugee leaders who go and see what’s going on in Somalia and come back with info for refugees considering return.”

She also told Anadolu Agency funding had not been adequate to help those wanting to return home.

“75,297 Somalis have voluntarily repatriated to Somalia since 2014, up to Dec 31, 2017; 35,407 returned in 2017 alone.

“There is a funding gap for the whole of Kenya. UNHCR support for refugees is only 32 percent funded, leaving a gap of 68 percent as of the 31st of December, 2017. We need $231.3M but only have $73.1M,” Ndege said.

Marco Lembo from the UNHCR said those who return get a “full package” in Somalia, which consists of conditional and non-conditional cash grants, including one-time payment of up to $1,000 per household and monthly grant of $200. He added that six months of food rations, supported by the WFP, are also given.

Somalia remains dangerous

Somali-based al-Shabaab militants continue to control cities in Somalia amid reports of them terrorizing women, men and children along the Horn of Africa region, which in turn causes massive displacement of people.

Guns have not been silenced in Somalia despite 25 years of conflict in the country. Experts repeatedly warn that going back to Somalia means returning to war and death.

But nonetheless, the Kenyan government has halted any new registration of Somali refugees and recently even disbanded its Department of Refugee Affairs, creating an invisible wall to hundreds of thousands who desperately seek asylum. Kenya had also urged the UNHCR to expedite the voluntary return of refugees after shelving a decision to close the camp due to insecurity.

At Dadaab, most refugees who spoke to Anadolu Agency said al-Shabaab had played a major role in their decision to seek asylum in Kenya to begin with, but now things are so bad at their refugee complex they feel they have no option but to take the hard road back home despite the dangers.

Summing up the sentiments of thousands of refugees like himself, Zahi concluded: “Life here is a hellish nightmare, I tell you”.

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KENYA

Suspected Al-Shabaab militants kill 3 in Kenyan school attack

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WAJIR, Kenya, Feb. 16 (Xinhua) — Suspected Al-Shabaab militants killed three Kenyan teachers and injured one other in an attack Friday on a school in the country’s northeastern county of Wajir, officials said.

The militants in early morning attacked the Qarsa primary school near the borders with Somalia and Ethiopia, in a town about 70 km from Wajir town, the capital of the county, killing three non-local teachers, said Mohamud Saleh, coordinator of Kenya’s northeastern region.

Authorities have been working to find another teacher who was allegedly shot in the hand and escaped with injuries.

Saleh said that ongoing efforts have been made to trace the killers, who escaped soon after the incident.

“This is (a) very unfortunate incident and the first of its kind in Wajir County,” he said, noting that the militants had planted improvised explosive devices (IED) along the route to the school.

Police said the militants seemed to have planted enough IED on roads leading to the school, making it extremely hard for ambulances and reinforcement teams to get to the site on time.

“One of our vehicles that was responding to the attack was partly hit by an IED … but all our officers are in good condition,” said Mohamed Sheikh, Wajir Administration Police commandant.

Local residents said tension and uncertainty remains high in the entire county.

Northeastern Kenya has suffered grenade and gun attacks in recent years since Kenya took its troops to Somalia to fight the Al-Shabaab militia group in October 2011.

Several attacks believed to have been carried out by Al-Shabaab have occurred in Mandera, Wajir, and Garissa and Dadaab districts of northeastern Kenya even as the military reports gains against the Islamist group by capturing their military bases and killing scores of them.

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KENYA

Somalia given greenlight to respond in border case

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The International Court of Justice has allowed Somalia to file a response to a case in which it has sued Kenya over a maritime border.

The move kick-starts a fresh round of arguments, which could determine the final flow of the border.

The court Monday announced that Somalia should respond to Kenya’s claim that the current flow of the border should remain intact by June 18, after which Kenya will have another six months to poke holes in the response.

“The court issued this decision taking into account the views of the parties and the circumstances of the case. The subsequent procedure has been reserved for further decision,” said a statement from the court’s registry.

KENYA’S PLEA

On February 2 this year, presiding judge Ronny Abraham accepted Kenya’s plea to file a second round of arguments, which Nairobi said would take longer to prepare. This means the two countries will have another opportunity to argue before the court.
Somalia sued Kenya in August 2014, saying the border between the two countries should extend diagonally into the sea, south of Kiunga and not eastwards as it is today. But Kenya has argued that this may also affect its sea border with Tanzania. The current border has existed largely as a result of Presidential Proclamation of 1979.

When the case was presented to court last year in February, Kenya’s preliminary objections were dismissed. Kenya had argued that the court lacked jurisdiction and that the two countries had signed a memorandum of understanding to have the matter resolved through the UN Commission on the Limits of the Continental Shelf, something which Nairobi had claimed was not yet exhausted.

AREA IN CONTEST

The area in contest is about 100,000 square kilometres, forming a triangle east of the Kenyan coast

In 2009, Kenya and Somalia had reached an MoU and deposited it at the UN. It proclaimed that the sea border should run eastwards. But the case is also influenced by the suspected oil deposits in the contested area. Somalia had argued that Kenya was prospecting in the area, something that could expose Somali resources to exploitation should it win.

In December, Kenya filed an argument before the Court saying the matter can best be handled through the UNCLOS and insisted its continued exploration, fishing and other activity in the disputed area is based on a bilateral decree issued by the countries’ leaders in 1979.

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