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Recent Topicals

Debt Relief Amidst the COVID-19 Pandemic

May 3, 2020

Introduction:                Kenya’s public debt continues to be a topic of discussion in most macroeconomic outlook discussions, with global credit rating agencies such as Fitch Rating expecting the pandemic to halt the country’s fiscal consolidation and increase its financing needs. Most recently in December 2019, Fitch affirmed Kenya’s B+ rating owing to the country’s  strong and stable growth outlook, however, they cited failure to stabilize government debt to GDP levels could lead to a negative rating action. In the wake of the Coronavirus pandemic, economic effects of the virus continues to increase with the number of cases rising and the number of deaths escalating. As such, risks abound on revenue collection and increased expenditure resulting from capital required to control the pandemic leading to increased fiscal pressure given the existing hug...

Nairobi Metropolitan Area (NMA) Commercial Office Report 2020

Apr 26, 2020

In 2019, we released the Nairobi Metropolitan Area (NMA) Commercial Office Report 2019, which highlighted the state of the commercial office market in terms of supply, demand, performance, and investment opportunities within the sector. According to the report, the sector recorded a 0.2%-points and 0.7%-points y/y increase in average rental yields and occupancy rates, to 8.1% and 83.3%, respectively, on account of an improved macroeconomic environment and the continued positioning of the Nairobi Metropolitan Area (NMA) as a regional hub, thus attracting investors who require office spaces. This week, we update our report based on research conducted in 9 nodes in the Nairobi Metropolitan Area Commercial Office Market by looking at the following: Overview of the Commercial Office Sector, Commercial Office Supply in the...

Cytonn Note on the Monetary Policy Committee (MPC) Meeting for April 2020

Apr 24, 2020

The Monetary Policy Committee (MPC) is set to meet on Wednesday, 29th April 2020, to review the outcome of its previous policy decisions and recent economic developments, and to make a decision on the direction of the Central Bank Rate (CBR). In their previous meeting held on 23rd March 2020, the committee decided to reconvene within a month for an early assessment of the impact of these measures and the evolution of the COVID-19 pandemic. In the last sitting, they lowered the CBR by 100 bps to 7.25% from 8.25% and reduced the Cash Reserve Requirement (CRR) to 4.25% from 5.25% citing that the Coronavirus pandemic was expected to adversely affect economic growth and as such, the need to cushion the economy against the effects of the pandemic and whilst preventing the COVID-19 health crisis from becoming a severe economic and financial crisis. This was in line with our expectations as per our ...

Kenya Listed Banks FY'2019 Report

Apr 19, 2020

Following the release of the FY’2019 results by Kenyan listed banks, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed banks and identified the key factors that shaped the performance of the sector, and our expectations of the banking sector for the rest of the year. The Banking sector witnessed a number of consolidation activities in FY’2019 as players in the sector were either acquired or merged. We still maintain our view that Kenya remains overbanked as the number of banks remains relatively high compared to the population. Increased consolidation will reduce the number of banks in the country which currently stand at 38, thus reducing the commercial banks to population ratio from the current 0.8x. We expect an increase in consolidation activities going forward which will lead to the formation of relatively larger, well-capitalized and possibly more stable entities. As such o...

COVID-19 Pandemic Economic Containment Policies

Apr 12, 2020

Introduction:                                                    The effects of the COVID-19 pandemic continues to increase with the number of cases rising and the number of deaths escalating. According to the World Health Organization (WHO), as of Friday, 10thApril 2020, the figures stood at 1,521,252 infections and 92,798 deaths. Closer home, Kenya’s numbers continue to grow with 184 confirmed cases and 7 deaths as at 10thApril 2020.  Below is a summary of what we have written so far on the COVID-19 pandemic:  Impact of Corona Virus on the Kenyan Economy: We analyzed the result...