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Recent Topicals

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Post Elections Economic Focus

Aug 21, 2022

Kenya, like many other countries world over, has faced unprecedented challenges in the recent years which has had a major setback on the economy. One major issue; supply chain bottlenecks remains apparent and continues to worsen with new challenges such as geopolitical pressures and anticipation of increased demand as economies recover. Where we stand, the country is dealing with several issues including a high cost of living stemming from the prevailing inflationary pressures and local currency depreciation, rising debt levels currently at 69.1% of GDP as of May 2022 and a deteriorating business environment as consumers continue to cut back on spending. As such, we expect the incoming government to roll up its sleeves, perform a balancing act, and devise ways to stabilize key macroeconomic indicators while also supporting the ongoing economic recovery. We recently covered a topical on the “Effects of Ele...

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Kenya Retail Report 2022

Aug 14, 2022

In September 2021, we published the Kenya Retail Report 2021 themed “Rapid Expansion by Retailers to Cushion the Retail Sector,” which highlighted that the Kenyan retail sector performance recorded a 0.1% increase in the average rental yield to 6.8%, from 6.7% in 2020. The average occupancy rate and rent also increased by 1.8% points and 2.2% points, respectively, to 78.4% and Kshs 118 per SQFT in 2021 from 76.6% and Kshs 115 per SQFT in 2020, respectively. This was mainly attributed to an improved business environment as well as aggressive expansion by local and international retailers such as Carrefour and...

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Progress of Kenyan Pension Schemes-2022

Aug 7, 2022

In the face of unprecedented economic occurrences such as the resurgence of COVID-19 infections and the persistent geopolitical pressures, the pensions industry continues to feel the impact in terms of both sustainability and adequacy, with the pension schemes registering lower returns hence a decline in their asset value. The economic uncertainties influence retirement benefit schemes through various ways including: i) Increased individuals exiting the schemes ii) A decline in the disposable income hence lower contributions, and, iii) Regulatory compliance challenges due to fair value losses in some of the asset classes invested in. Closer home, the pensions industry in Kenya has experienced steady growth over time, with the assets under management having grown at a 10-year CAGR of 14.4% to Kshs 1,547.4 bn in 2021 from Kshs 403.2 bn in 2011. However, pensions uptake is still low

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Unit Trust Funds Performance, Q1'2022

Jul 31, 2022

Unit Trust Funds (UTFs) are Collective Investment Schemes that pool funds from different investors and are managed by professional fund managers. The fund managers invest the pooled funds in a portfolio of securities with the aim of generating returns to meet the specific objectives of the fund. Following the release of the Capital Markets Authority (CMA) Quarterly Statistical Bulletin-Q2’2022, we analyze the performance of Unit Trust Funds, as the total Assets Under Management (AUM) have been steadily increasing and they are among the most popular investment options in the Kenyan market. We will further analyze the performance of Money Market Funds, a product under Unit Trust Funds. In our previous focus on Unit Trust Funds, we looked at the

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Kenya’s Public Debt 2022; Debt Service Coverage

Jul 24, 2022

Kenya’s public debt has been on the rise, increasing by a 10-year CAGR of 18.2% to Kshs 8.6 tn in May 2022, from Kshs 1.6 tn in May 2012 owing primarily to the government’s significant borrowing to fund infrastructural projects and bridge the fiscal deficit which has averaged 7.4% of GDP over the last 10 years coupled with the increasing debt servicing costs especially for US Dollar denominated commercial loans given the shilling’s continuous depreciation. Additionally, the continued guaranteeing of state corporations that have been performing poorly has placed a burden on the government to support them. The debt mix, as at May 2022 stood at 50:50 external to domestic debt, compared to 45:55 external to domestic debt in May 2012. Notably, Kenya’s debt stock has increased significantly due to advances from multilateral lenders with the debt to GDP ratio coming in at 69.1% as of May 2022, 19.1% points above the IMF recommended th...

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