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Fuel Prices Increase for Third Month in A Row

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Kenyans face a higher cost of living following a sharp rise in fuel prices as announced by the Energy Regulation Commission (ERC) effective 15th May 2019.

According to the latest monthly revisions, motorists will now have to dig deeper into their pockets to purchase petrol which is now going for Sh112 per litre, an increase of Sh5.43.

Diesel, an important element in the transport and manufacturing industries, is now retailing at Sh104.37, up Sh2 from last month’s price.

Meanwhile, the price of kerosene, mainly used in homes, has risen by Sh2.24 to retail at Sh104.62 per litre.

In Mombasa, a litre of petrol will retail at Sh109.38 with diesel retailing at Sh101.75. The highest prices of fuel will be in Mandera, with petrol going for Sh124.88 while diesel will be priced at Sh117.24.

In Lokichogio, Turkana County, petrol will retail at Sh120.85 per litre. In Moyale, petrol will sell at Sh121 per litre.

ERC attributed the increase in pump prices to the higher landing cost of oil products.

“The changes in this month’s prices have been as a consequence of the average landed cost of imported super petrol increasing 11.39 per cent to $691.25 (Sh69,100) per tonne in April 2019, diesel increasing 2.75 per cent to $641.67 (Sh64,100) per tonne and kerosene increasing two per cent to $675.82 (Sh67.500) per tonne,” said EPRA Director General Pavel Oimeke.

The price reviews have seen petrol pump prices rise for the third month in a row by at least Sh5 per litre since Sh101 in March.

The higher fuel prices will have the net effect of raising the country’s inflation, which was recorded at 6.58 per cent in April.

Fuel is one of the most heavily taxed products with six taxes for petrol and two for diesel. Consumers of Kerosene, although exempted from road maintenance tax, still have to pay an anti-adulteration levy of Sh18 per litre.

 

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Five Banks and CBK Launch “Stawi” SME Loan Facility

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Micro, small and medium enterprises (MSMEs) will now be able to access unsecured loans valued between Sh30,000 and Sh250,000 from a new loan facility called “Stawi”.

This is after five commercial banks introduced a Central Bank of Kenya-backed loan product aimed at small businesses.

The loans, which will be processed through applicants’ phones, have a repayment period of 1 to 12 months. They also attract an interest of nine percent per annum.

Upon disbursement, other charges shall be collected which include 0.7 percent insurance cost, 4 percent facilities fee and excise duty at 20 percent of the facility fee.

The five banks that will initially manage the loan are KCB Bank Kenya, Commercial Bank of Africa (CBA), NIC Group, Diamond Trust Bank Kenya (DTB) and Cooperative Bank of Kenya (Co-op Bank).

Good borrowers will receive cash on the basis of their borrowing profiles under the scheme.

“Small and mid-size enterprises are the lifeblood of any economy, but many have struggled to secure the necessary financing to continue operations in the current economic climate,” said CBK governor Patrick Njoroge. This was during the launch of the loan facility held at Gikomba Market, Nairobi on Monday.

He added that they are excited to work with the five banks to minimize the complexity of developing new and more accessible loan offerings as they bring much-needed capital to this underserved yet vital segment of the market.

The loan is part of the CBK’s effort to ease the credit squeeze on SMEs.

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New Categorization by Treasury to Ease Tender Allocation

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In an effort to curb bias in the awarding of state jobs to youth and women in government tenders, the Treasury has discontinued the previous categorization of enterprises.

Treasury Cabinet Secretary Henry Rotich said in a circular to all state departments that the enterprises will henceforth be registered under the schemes of Youth, Women and Persons with Disabilities.

The certificates have been issued under five broad categories since 2013 when the Access to Government Procurement Opportunities (AGPO) program was formed. They are General Supplies, Fresh Produce and Agricultural Produce, Professional Services and Consultancy, ICT services and Small works and Engineering.

“In order to ensure that these categorizations (ambiguous) do not hinder the participation of AGPO registered firms in tenders and in order to increase the uptake of the 30 percent procurement reservation, enterprises will now be registered under the schemes of Youth, Women and Persons with Disabilities only,” said Mr. Rotich.

“The AGPO certificates will no longer have a specific categorization as has been the case.”

The Cabinet Secretary, in the circular distributed to the Head of Public Service Joseph Kinyua, all Cabinet Secretaries, Attorney General, Auditor General, and the chief executive of the Council of Governors, directed that it should be enforced by all accounting officers.

“It has been observed that these categorizations have hindered the registered enterprises from taking full advantage of tendering opportunities which do not fall under their registered category but which they have the capacity to undertake successfully,” said Mr. Rotich.

“This has, in turn, hampered the uptake of the 30 percent procurement reservation in some procuring entities.”

President Kenyatta has promised to implement the reservation of 30 percent of government tenders for the youth and women. This is with the aim of encouraging job and wealth creation.

He also added that the current procurement rules would be revised to help the youth currently locked out of public contracts due to lack of funding to compete with established firms.

Should the 30 percent provision be upheld, the youth will be able to benefit from procurement opportunities worth Sh300 billion.

In the last four years, 45,045 public tenders have been allocated to local businesses as shown by data from the Treasury.

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Buying Gold? Here’s What You Need to Know

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Recent news reports have brought to light the prevalence of gold scam syndicates that are defrauding Kenyans of millions of shillings. They are taking advantage of the unsuspecting buyers’ ignorance of the precious metals business and their preference for underhand dealings to avoid taxation. Therefore, it is imperative that every Kenyan know the important facts that go into gold acquisition.

The Merriam-Webster dictionary describes gold as a yellow malleable ductile metallic element that occurs chiefly free or in a few minerals and is used especially in coins, jewelry, and dentures. From recorded history, we see gold being used as a symbol of wealth all around the world.

Ancient civilizations considered it a manifestation of their power and status due to its beauty and scarcity. Some products crafted from gold included jewelry, ornaments and early forms of money.

Over the years, the same fascination with gold has remained strong. Despite monetary systems no longer being tied to the precious metal, it is still viewed as a “safe haven” investment, an excellent hedge against inflation and an ideal investment option.

As an investment option, it has specific and useful qualities that contribute to its value during uncertain economic times and profitability during robust economic times. They include:

  • Production expense. Extraction and development is hard, costly and risky. Therefore, it is difficult to find and dig up. This leads to high demand against its short supply.
  • Rarity. Data from the commodities industry shows that gold comprises only five parts per billion of the earth’s crust. This makes hard to locate and extract.
  • Numerous uses. It can be smelted and then turned into different items including coins, bracelets, rings, and other valuable products.
  • Hard to diminish. It retains its quality and is resistant to decay.

Buying Gold Directly

The first step is knowing the right time to strike. It would be better to exercise patience while keeping a close eye on the markets. Similar to the stocks and funds, its value is derived from buying low and selling high. Generally, gold prices are lower when the stock market is high and economic indicators are pointing north.

This is due to its lower demand when both the economy and stock market are performing at peak condition. Gold tends to be a “go to” commodity when things start going south economically, so it is important to buy immediately the stock market starts declining – not later.

It is also important to know how it is priced before a direct purchase.

With gold being a volatile commodity, prices bounce up and down regularly. Make sure you check the “spot price”, which is a reflection of the average bid price on gold, as cited on global gold exchanges.

It can change substantially with the occurrence of global events such as military conflicts, recessions, economic forecasts, good or bad.

Tips for Buying Gold

Buying the precious metal is not always easy and therefore it is important to do extensive research in order to get the best possible deal. Here are some tips to get you started:

  1. Look around for a good price

The first step before a purchase is knowing the current price per gram. You can do this on by casting a wide net on multiple trustworthy websites to be aware of the price comparisons. A good place to start is visiting dealer websites as well as gold exchanges, which are also found online.

  1. Purity levels

Gold comes in different levels of purity which can affect its price. For instance, the purest form is 24K (or 100%) gold. However, the price of gold also varies depending on the alloy it is mixed with. For example, 22K gold is 91.6% gold as it consists of 22 parts gold and 2 parts alloy. It is important to determine the type of gold you want and the different rates available on the basis of purity levels.

  1. Credible dealers

It is very important to find a licensed gold dealer. Whether you are buying gold for personal use or investments purposes, make sure you buy only after confirming the credibility of the dealer. Avoid dealers offering huge discounts and ask to see the whole consignment you want to buy before purchase.

  1. Genuine certification

Buy gold that has a certificate indicating that it has been tested. The best way to do this is to get the test done in the presence of the seller before buying.

Conclusion

As stated above, there are various ways to purchase gold. However, just as with any investment, diligence and preparation are important things to take into account before putting your money on the line. With its availability from numerous sources, it is best to ensure you buy from a credible source, to make sure it is a genuine product.

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