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First in 7 years, Kenya increases interest rate by 0.5% to curb inflation

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In the bid to curb inflation expectations as concerns about commodity prices build, Kenya has raised its interest rate.

The increase is the first in almost seven years in the East African country.

According to Kenya’s central bank governor, Patrick Njoroge “inflation quickened to 6.5% in April, edging closer to the central bank’s 2.5% to 7.5% target band. A separate Bloomberg survey of 10 economists projects annual inflation will average 6.5% this year, compared with a previous forecast of 6.2%.”

Njoroge further revealed that the monetary policy committee increased the rate by 50 basis points to 7.5%, the first increase since July 2015 based conducting a survey that revealed that “respondents remained concerned about rising inflation, the impact of the war in Ukraine on commodity prices, supply chain disruptions, and increased political activity,

The governor explained that the decision was taken because of elevated risks to the inflation outlook due to increased global commodity prices and supply chain disruptions.

 “Elevated credit risk and mounting price pressures due to a prolonged drought in parts of the East African country, a shilling that’s trading at record lows and choked supply chains prompted a bankers’ lobby group last week to urge the central bank to hike the key rate,” Njoroge said.

Interest rate is the amount a lender charges a borrower and is a percentage of the principal—the amount loaned. The interest rate on a loan is typically noted on an annual basis known as the annual percentage rate (APR).

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Binance vs Nigeria: Court adjourns hearing on right abuses 

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The office of Nigeria’s National Security Adviser and an anti-graft agency— the Economic and Financial Crime Commission (EFCC)— have been sued by two executives of Binance, the biggest cryptocurrency exchange in the world, for allegedly violating their fundamental rights following their recent arrest.

Following Nigeria’s decision to outlaw several cryptocurrency trading websites, United States citizen Tigran Gambaryan, who oversees financial crime compliance for Binance, and British-Kenyan Nadeem Anjarwalla, regional manager for Binance in Africa, took a plane to Nigeria on February 26 and were arrested upon arrival.

Anjarwalla may now be subject to an international arrest warrant after reportedly escaping Nigerian custody last week.

Last month, Nigeria’s central bank governor revealed that Binance is under investigation in Nigeria due to “suspicious flows” of cash through Binance Nigeria in 2023. Government organizations such as the Securities and Trade Commission of the nation are already wary of the cryptocurrency trade.

In a court appearance on Thursday, Gambaryan asked Judge Iyang Ekwo of the Federal High Court in the country’s capital, Abuja to rule that the National Security Adviser and the Economic and EFCC detention and seizure of his passport “amounts to a violation of his fundamental right to personal liberty” as stipulated by the Nigerian constitution.

The Binance chiefs also demanded a public apology, a restraining order to prevent them from being detained any longer, and an order to be released and return their passports. They said they had not been told of any offences.

Due to the absence of attorneys from the EFCC and the Office of the National Security Adviser (ONSA), the judge adjourned the hearing till April 8 without rendering a decision. Nigeria is currently struggling with ongoing dollar shortages, a situation that has made several cryptocurrency websites become the go-to venues for trading Nigerian currency.

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Kenya, Uganda settle oil import dispute

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In an effort to patch things up between the two neighbours, Kenya will permit Uganda’s landlocked state oil company to import petroleum products through its port of Mombasa, the country’s energy ministry said on Thursday.

After decades of receiving their cargo through affiliated firms in Kenya, Uganda has been looking for alternative ways to import petroleum products, including through a port in Tanzania. According to Solomon Muyita, a spokesman for Uganda’s ministry of minerals and energy, the first shipment under the new arrangement is scheduled for May.

“Kenya has agreed to give us a licence, UNOC (Uganda National Oil Company) is now free to import through Mombasa,” he said.

According to reports, UNOC would use the Kenya Pipeline Company to transport the goods, so Kenya would still profit from the agreement, according to Kenyan Energy Minister Davis Chirchir.

In 2022, Uganda imported petroleum products valued at $1.6 billion, the majority of which came from the Gulf. Kenya serves as the import gateway for about 90% of the goods.

It declared in November that it would transfer all exclusive petroleum product supply rights to a division of the international energy trader Vitol, which would subsequently supply UNOC.

According to what the government said at the time, using Kenyan companies to import oil had “exposed Uganda to occasional supply vulnerabilities” whereby Ugandan retail companies were viewed as secondary whenever there were supply disruptions changing retail prices.

The two African nations that make up the Great Lakes are partners in a variety of fields, including trade, infrastructure, energy, education, agriculture, and military security.

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