Business highlights – April 17, 2018

Business highlights – April 17, 2018

Interest rate caps have caused more harm to SMEs and the economy, says CBK

The capping of bank interest rates has failed to achieve its intended objective of increasing credit access to small and medium enterprises. A study on the impact of interest rate caps on the Kenyan Economy published by the Central Bank reveals that interest caps have instead led to a reduction of the number of loans going to SMEs. Reduced lending to the MSMEs contributed to a 1.4% decline in the growth of GDP in 2017 and will shave off 0.40% of the real GDP in 2018. CBK says the number of loans have declined significantly since the coming into force of the Banking Amendment Act in September 2016 that set the maximum lending rate at no more than 4 percent above the Central Bank base rate.

Jambojet cuts airfares in new promotional offer

Low-cost carrier, Jambojet is offering fares for as low as Ksh 2,200 on one-way tickets on all domestic destinations across Kenya. The fares will run from Tuesday to Thursday and cover Nairobi, Mombasa, Kisumu, Eldoret and Ukunda. The offer, which is a 50% discount on 10,000 seats, will also see flights to Entebbe in Uganda cost Ksh7,330.

Jumia posts Ksh14 billion loss

Jumia, the region’s leading online retailer, has posted a Ksh14.9 billion loss before tax and other costs in the year ended December compared to Ksh11.3 billion a year earlier. The loss does not give an indication of the company’s bottom-line as it excludes most of the standard business expenses including finance costs, depreciation and stock-based compensation. The company, which operates in 23 African countries including Kenya, blamed the loss on increased investment in the business.

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