Business News Highlights

Suppliers Association urges supermarkets to clear Sh40 billion debt

Supermarkets owe fresh produce and processed products suppliers an estimated Sh40 billion, the Association of Kenya Suppliers has said. The Association argues that the overdue fees are straining their cash flows and pushing some to bankruptcy. Association of Kenya Suppliers Chairman Kimani Rugendo told a members’ forum Wednesday that Small and Medium Enterprises were being driven out of business due to payments that have been delayed for up to several years while deliveries continued uninterrupted.

The Chairman claimed supermarkets were using suppliers’ funds to finance the expansion across Kenya and into the East African region creating anxiety among suppliers who risk incurring heavy losses if the chains close suddenly. This, he said, called for more information from the chains on mitigative measures put in place to address such closures.

Nairobi youth take lion’s share of Enterprise Development Fund loans

Nairobi County youth are the greatest beneficiaries of the Youth Enterprise Development Fund (YEDF), a new report has confirmed. The YEDF analysis has found that they have received Sh2.3 billion in loan products. Kiambu is a distant second, having received Sh894 million followed by Nakuru (Sh746 million), Meru (Sh690 million), Nyandarua (Sh491 million), Uasin Gishu (Sh452 million), Murang’a (Sh427 million) and Mombasa (Sh410 million).

Youth in Samburu received the least amount at Sh11 million, followed by those in Mandera (Sh17 million), Tana River (Sh22 million), Marsabit (Sh23 million) Lamu (Sh24 million) and Wajir Sh27 million). YEDF Chairman Ronald Osumba said the youth in Nairobi have been receiving the money since its inception 10 years ago. To date, Sh11.9 billion has been lent out to 886,313 people countrywide in various loan products.

Global conferences help raise prospects for local businesses

Global conferences held in Kenya have helped raise prospects for local businesses. A rebound in tourism in the third quarter of 2016 has helped local businesses generate more revenue and reverse declining fortunes from the second quarter, the latest Purchasing Managers Index (PMI) released by Stanbic Bank and market research firm IHS Markit shows. During the quarter, Kenya hosted two high-profile international conferences (the UNCTAD 14 event in July and the TICAD forum in August) that boosted tourism and security in the country.

Businesses surveyed said they saw a rise in new clients, allowing them to expand on their output, new orders, employment and purchasing. There was also little increase in business costs, which allowed a number of firms to lower their charges in an effort to attract new clients, the survey reports. As a result of the new business, the PMI index remained above the September PMI with a slight rise to 53.5 points from 53.3 in August. It had fallen to a 30-month low of 51.5 in June.

Kenatco unveils plans to launch taxi hailing app

The Kenya National Taxi Corporation (Kenatco) is set to launch a ride hailing app named Teke Taxi that will likely spark further competition among other local operators. The state owned taxi service is targeting the mass market, including corporate clients, mainly government agencies and private companies that currently make up 94 per cent of the firm’s total revenue.

Kenatco is 42 per cent more expensive than rival Uber which slashed prices by a third in July to Sh35 per Km and Sh3 per minute but left base charge intact at Sh100. Kenatco offers a tariff of Sh60 per Km and Sh4 per minute and a base fare of Sh100. Receiver manager John Ndung’u said the fare structure is because Kenatco offers a premium service underpinned by safety, security, free Wi-Fi, air conditioned cars, no waiting charges for up to an hour, and experienced drivers who can easily navigate multiple routes.

Express Kenya moves to invest in real estate as firm seeks to raise Sh200 million in latest venture

Clearing and forwarding services company, Express Kenya is set to sell a fifth of its land holding to raise an estimated Sh200 million needed to finance its venture into real estate development. The company is transforming into a property developer to cushion itself from a sharp drop in earnings from the logistics business which took a nose-dive following the loss of its single-largest customer, East African Breweries, in 2011. The firm will seek shareholder approval for the sale of part of its 15-acre land along Likoni Road in Nairobi’s Industrial Area, according to a notice published ahead of the October 27 annual general meeting.

Express Kenya says proceeds from the land sale will partly finance the real estate venture besides boosting the company’s working capital in its warehousing and clearing and forwarding operations. The firm plans to build a shopping mall and 224 apartments on the land.

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