Monetary Easing in Kenya: Interest Rates Cut to Spur Growth
The Monetary Policy Committee (MPC) of Kenya’s Central Bank reduced the Central Bank Rate (CBR) to 12.00% in its October 2024 meeting to stimulate economic growth amid signs of a slowdown. Inflation eased to 3.6% in September, thanks to stable food supplies, falling fuel costs, and a steady exchange rate. However, the economy expanded at a slower 4.6% in Q2 2024, down from 5.6% in the same period last year, with credit to the private sector also declining.
Despite easing inflation and better global prospects, the MPC acknowledged challenges such as subdued consumer demand, high business costs, and ongoing geopolitical risks. To maintain stability and support economic activity, the committee emphasized the need to monitor both domestic and international developments closely. The next MPC meeting is scheduled for December 2024, where further policy adjustments may be considered if necessary.
SHA Rollout: Navigating Kenya’s New Healthcare Framework
Kenya has officially transitioned from the National Health Insurance Fund (NHIF) to the Social Health Authority (SHA) as of October 1, 2024, introducing a new healthcare framework aimed at enhancing service delivery. However, the rollout has faced operational challenges such as delayed system access, issues with claim processing, and preauthorization bottlenecks, particularly for non-renal services. Private hospitals have reported financial strain and difficulties aligning with SHA’s new billing procedures, raising concerns about service disruptions and creating uncertainties for corporate healthcare partners
Public sector unions initially threatened industrial action over increased contributions (now 2.75% of gross salaries) and fears about job security for NHIF staff, but these were resolved through negotiations with the government. As part of the agreement, the Ministry of Health extended comprehensive public servant coverage under SHA until November 21, 2024, with further promises of seamless healthcare access thereafter. Businesses should monitor these developments closely as the new system stabilizes, ensuring uninterrupted healthcare access for employees. The government has emphasized collaboration with healthcare providers to streamline processes and maintain service delivery during this transition
Fuel Price Drop Brings Relief to Kenya’s Logistics Sector
The Energy and Petroleum Regulatory Authority (EPRA) announced a fuel price reduction starting October 15, 2024, to remain effective until mid-November. In Nairobi, the price of Super Petrol decreased by KES 8.18 per liter, Diesel by KES 3.54, and Kerosene by KES 6.93, following a drop in global oil prices and stabilization of the Kenyan Shilling. With Super Petrol now retailing at KES 180.66 per liter and Diesel at KES 168.06, the reduction brings some relief to businesses and logistics firms that rely heavily on diesel-powered vehicles and machinery
These adjustments are crucial for the logistics sector, as diesel is a key input in transportation. Lower fuel costs reduce operational expenses for 3PL providers, enhance profitability and offer potential savings to their corporate clients. The EPRA linked the price drop to a decline in international crude prices and falling landed petroleum costs. With the next fuel review scheduled for November 14, 2024, businesses should stay informed to anticipate further changes that may affect supply chain costs and planning
