Business highlights – Experts expect sharp increase in borrowing in 2017 despite banks’ reluctance to dish out loans

Experts expect a sharp increase in borrowing in 2017

  • Commercial banks have been reluctant to give out loans after a law capping interest rates came into force
  • New data shows that they will be forced to meet the needs of consumers regardless of their current policy
  • Research shows that 2017 will experience a spike in lending as borrowers develop an increased appetite for loans

Research group, Metropol Corporation predicts a historic spike in borrowing this year driven by the government and the private sector as the capping law works itself out.

A report dunned ‘Metropol 2017 Kenya Economic Outlook’, seeks to shed light on the industry and how it is likely to affect Kenyan consumers.

The report will also discuss other factors that are likely to shape Kenya’s economy this year.

Metropol is expected to launch the forecast tomorrow, on February 23, 2017.

Banks slowed down lending operations following a law that forced them to lower their interest rates to 14%. The law was tabled last year by Kiambu Member of Parliament Jude Njomo and came into force in August 2016.

Kenya Bankers Association (KBA) Chief Executive, Habil Olaka says the new law has stood between banks and credit flow to unsecured borrowers.

Njomo has since accused the lenders of trying to discredit the legislation.

READ ALSO: Kiambu MP accuses banks of staging witch hunt to discredit new lending rules

Speaking on Tuesday, February 21, 2017, he added that ongoing sackings of bank staff, coupled with the credit freeze by local lenders, was a scheme to prove that the new regulation is not working. The MP said the banks will be forced to soon resume lending when they see their profits shrinking.

He was speaking after a debate forum organised by the Catholic University of Eastern Africa to discuss the effects of the Banking (Amendments) Act 2016 on the industry.

Jambojet CEO apologises for December flight delay fiasco, promises to do better

  • Willem Hondius, head of the low-cost carrier has apologised for delays suffered over the December holidays
  • Flight disruptions were caused by technical problems on one of the flyer’s planes
  • The airline has promised that its new aircraft will lead to greater efficiency

Hondius attributed the December disruptions to “unforeseen operational challenges”. He vowed that the company would work towards eliminating these challenges.

Thousands of Jambojet customers travelling to destinations at the Coast found themselves stranded over the December holidays amid flight cancellations and delays.

Jambojet CEO, Willem Hondius

Jambojet, which is owned by Kenya Airways, said that the crisis was exacerbated by delays in the arrival of additional aircraft to handle the heavy passenger traffic during the holiday season.

Customers headed to the North Coast destinations of Lamu and South Coast destinations of Diani and Ukunda were especially affected. Some passengers found themselves diverted to the Moi International Airport and were forced to make the rest of their journeys by road.

READ ALSO: Jambojet begins operating all of KQ’s scheduled flights to Malindi, Ukunda, Lamu and Eldoret

Hoteliers facing revenue loss in a peak period for domestic tourism slammed Jambojet for its handling of the situation.

The Kenya Civil Aviation Authority (KCAA) said in a December 30, 2016 letter that it would also look into the matter. Just before the holiday season, Jambojet had increased flight frequency on all its destinations to take advantage of the travel rush.

Last month, Jambojet ordered new aircraft to meet rising demand and to avoid a repeat of the December crisis. The airline received a Bombardier Dash 8 Q400, replacing an older, less efficient plane on its fleet.

Dutch company secures contract to check Kenya seabed for harmful gas leakages

  • Fugro, a Dutch multinational firm, has secured a tender to check for dangerous hydrocarbon gas leaks off the coast of Kenya
  • The exploration company will be looking to prevent possible fires, explosions and environmental contamination
  • The Netherlands-based organisation was awarded a contract by Shell/BG Kenya

Fugro said in a statement issued yesterday that the analysis, known as a ‘seeps survey’, follows a seismic exploration programme that was completed recently off the coast of Kenya.

The company, which provides geotechnical, survey, and geoscience services for clients, mainly serves oil and gas, telecommunications cable, and infrastructure companies.

READ ALSO: Kenya eyes fuel exports for 2017

According to TTK, the leading manufacturer of liquid leak detection systems, it is imperative to integrate an efficient detection system to continuously protect fuel production, distribution lines or storage tanks from leakage.

Peter Boon, Regional Business Development Manager for Fugro in Africa said that seeps surveys are an important part of Fugro’s site characterisation services. The firm is set to reintroduce one of its vessels, the ‘Fugro Discovery’ to African waters. Boon added that seabed surveys like these support the decision making process for drilling operations, especially in frontier regions like East Africa.

Fugro is the world’s leading, independent provider of geo-intelligence and asset integrity solutions for large constructions, infrastructure and natural resources.

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