Today's Top Stories!

IMF deal behind Kenya’s forest cover drive

As a nationwide tree planting got underway on Monday, President William Ruto was holed up in a meeting at State House with an International Monetary Fund (IMF) mission led by Haimanot Teferra who was accompanied by its Resident Representative Selim Chakir. Dr Ruto’s meeting with the IMF team on the same day Kenyans observed a ‘tree-planting holiday’ was however not by accident according to sources.

Insiders said the ‘tree-planting holiday’ was part of Kenya's strategy to register its commitment to a multi-billion-shilling deal with the IMF about three months ago on climate change mitigation and reduction of greenhouse gas emissions.

“Having the tree planting day to coincide with the IMF mission’s visit was important in terms of registering Kenya’s commitment to a climate change financing deal agreed some months back,” a senior source said. On July 17, the IMF Executive Board announced it had approved Kenya’s request for a facility of about $551.4 million (Sh83.89 billion) to support an ambitious effort to build resilience to climate change.

Under this deal, Kenya committed to increasing its forest cover to more than 10.6 million hectares, up from the current 7.2 million as part of an emissions reduction target. Read More

Kenya’s loans 60pc more expensive than Tanzania, Rwanda

Kenya’s loans from the domestic market are now 60 percent more expensive than its regional peers, including Tanzania and Rwanda, revealing the higher risk investors are attaching to lending to the government at a time when it is desperate for cash. — Read More

An analysis of returns from the one-year or 364-day Treasury bill shows Kenya is now borrowing at an annualized rate of 15.61 percent compared to Tanzania's 9.28 percent, Rwanda's 9.7 percent, and Uganda's 12.85 percent. Interest rates from longer-term borrowing are even higher; for example, the latest 6.5-year infrastructure bond auction is offering investors a return of 17.8 percent.

AI fails basic tests as students using it get answers wrong

Wrong answers from artificial intelligence (AI) products have become a nightmare for learning institutions, where users rely heavily on ChatGPT and Google Bard, among other tools, for academic and content writing.

Technology and AI experts have told the Business Daily that the inaccurate answers, also known as hallucinations in tech, are a threat to education, the reason many universities are against the use of AI.

In various parts of the world, ChatGPT is banned in academia. Hallucinations are specific to large language models (LLMs) like ChatGPT, Google's Bard, Bing, and others. They fall on a spectrum ranging from almost imperceptible inconsistencies to major factual errors and disinformation. Read More.

Here are some of the thoughts shared by Technology and AI experts:

“The concept of AI is learning, and with the wrong feedback from AI models, a young generation heavily reliant on AI tools for learning by the time they join the job market will not survive,” said Mr Sabwa.

“Hallucination is a machine trying to predict the next possible word. Yes hallucinations are a danger to education, and that’s why you’ll see most universities have new standards that limit the use of ChatGPT or have directives on its use,” said Mr Makatiani.

“We need to start training people on how to ask the correct questions and how to verify that these large models are returning the correct word, which narrows down to how you prompt it. There are certain techniques that have come up that you can tune your model to suit your environment, take what the LLMs know about the world and add a new local learning layer,” added Mr Makatiani.

Safaricom now controls Sh273bn in M-Pesa funds

Safaricom's M-Pesa holds Sh273.9 billion in customer deposits, solidifying the telecommunications company as a major player in the financial services market, with a growth of Sh74.9 billion from March to September.

M-Pesa revenue in Kenya grew 16.5 percent to Sh66.2 billion in the half year ended September, dwarfing Equity’s transaction-based revenue of Sh16.5 billion in the six months to June.

For Safaricom, taking control of the M-Pesa cash firm from Vodafone is expected to result in cost savings besides an opportunity to earn interest income from investing part of the deposits in short-term debt instruments like Treasury bills and bank fixed deposit accounts. — Read More

IMF tax measures hand President Ruto a 19.4pc revenue increase in October

Tax receipts rose by nearly a fifth to hit Sh170.48 billion in October compared to a similar period last year as the William Ruto administration started reaping the benefits of increased taxation under IMF-backed measures. — Read More.

The Kenya Revenue Authority (KRA) collected Sh170.48 billion in tax revenue for the month— a 19.42 percent growth over Sh142.775 billion in the month a year ago— data Treasury Secretary Njuguna Ndung’u published showed on Friday.

Inflation — a measure of the cost of living over the past 12 months— edged up for the first time in five months to 6.9 percent in October from 6.8 percent a month earlier. This was the first growth since May’s 8.0 percent.

“Cost-of-living pressures and cashflow difficulties saw customer demand declining, while weaker output and lower workloads led to an increased rate of job cuts,” Christopher Legilisho, an economist with South African-based Standard Bank, the parent firm of Stanbic Bank, wrote in the PMI report.

“Meanwhile, Kenyan businesses reported burgeoning inventories and therefore raised their selling prices in October to protect their profit margins. Input prices and purchase price pressures faced by Kenyan businesses were attributed to a further increase in fuel prices and transport costs.”

Overall, tax revenues for the first four months of this financial year ending June 2024 have grown 12.63 percent to Sh684.75 billion.

Duty-free goods cost KRA Sh30bn foregone tax

The government's duty-free importation of agricultural products, aimed at alleviating steep consumer prices, resulted in foregone taxes amounting to nearly Sh30 billion, as revealed by a Treasury report indicating a threefold increase in tax expenditures from Sh15.6 billion in 2021 to Sh45.5 billion in the subsequent year, primarily due to waiving duties on items like animal feeds, vegetables, wheat, maize, edible oils, rice, and sorghum, with imports surging 209% to Sh68.06 billion in efforts to reduce the overall cost of living. — Read More

Returns on foreign assets rally as Kenya shilling weakens

The depreciation of the Kenya shilling is enhancing the returns on foreign currency-based assets, providing a safeguard for diversified investors amidst local economic challenges, with US dollar and regional currency-linked equities and fixed-income investments outperforming as most stocks on the Nairobi Securities Exchange decline and local bond interest rates offer limited protection against inflation. — Read More

Bond sellers suffer steep discounts as interest rates rise

Bond traders at the Nairobi Securities Exchange (NSE) have continued to mark sharp losses as interest rates continue to rise unabated. According to data from the NSE, investors have discounted bonds sold in the secondary market by as much as 24.4 percent. — Read More

David Gatende’s big search for purpose in retirement

I don’t know what I was expecting but I know I wasn’t expecting David Gatende, the former CEO of Davis & Shirtliff, to look younger. He is 62. He is in a polo shirt, a fedora and shorts. All color-coordinated. The mood board is “contentment with a dash of style." — Read More

What’s the meaning of life?

"People climb mountains just to find that answer [chuckles]. For me, it is to find out why I am here, to find my voice, and then to help others find theirs. I want to find out why I was put here and then to live it out—the sweet spot."

What has been the biggest shift for you so far?

"The lack of stress! Keeping people motivated, $100-million budgets, in 11 countries, 100 outlets — that’s a bucketload of responsibilities. In corporate life, everything is about strategy, customers, teamwork et al. I don’t have weekly meetings anymore. What did I do this morning? I went for a walk with my wife and here I am at 10.30 am having a breakfast interview.

Michael Lusiola: BioVax Institute chief executive on Kenya's quest to make vaccines locally.

The Kenya BioVax Institute, one of the newest State agencies, will be leading the country to realize the dream of locally manufacturing human vaccines.

It is speeding up efforts to have Kenya package vaccines locally in the next four years, the first step to locally manufacturing them.

Business Daily talked with the first substantive CEO of the agency, Michael Lusiola, formerly director of patient safety at AstraZeneca. He spoke on what it will take Kenya in its quest to start local manufacturing of vaccines.— Read more .

What is the role of the Kenya BioVax Institute?

The agency has two mandates: manufacturing and commercialization of vaccines, therapeutics, and diagnostics. We also work with research institutions like universities and the Kenya Medical Research Institute (Kemri) to commercialize research outputs.

What are the current vaccine needs for Kenya annually?

We need about 25 million doses of the essential vaccines, and this is going up considering we have newborn babies every year. Then East Africa needs 200 million doses per year for primary immunisation.

What is the cost of setting up a vaccine production?

From our benchmarking, it will cost about 89 million euros (Sh14.18 billion) to set up a facility with two-filling lines. We will start with two filling lines to adequately support the vaccine needs we have.