Greetings and welcome to the fifteenth Money Weekly Roundup of 2024! 

This week, the government published the Draft Affordable Housing Regulations of 2014 that will govern how President William Ruto’s election promise will be implemented. 

Meanwhile, government data reveals that allowances alone make up about 40% of the salaries earned by civil servants in Kenya annually with the public sector wage bill standing at Ksh1.1 trillion. 

As always, we’ve included some of our favourite personal finance articles in our Finance Tips section below.

Let’s dive in.

NEWS RECAP

What happened this week

🤑 Public Servants Earn Ksh1.25 Trillion as Allowances

In the three years ending June 2023, public servants took home an average of Ksh416 billion per year in allowances alone, accumulating to Ksh1.25 trillion over this period. 

What this means: For every Ksh1,000 that a public servant earned, Ksh400 was in the form of allowances. 

Housing and commuter allowances took the bulk (Ksh600 billion) of the expenditure on allowances;

• Ksh200 billion: Hardship and annual leave allowances

• Ksh125 billion: Travel allowances

• Ksh324 billion: Other remunerative and facilitative allowances

However, during the third National Wage Bill conference held this week, the Salaries and Remuneration Commission (SRC) announced plans to reduce the wage bill to under 35% of the country's annual revenue by 2028.

Currently, salaries paid to public servants gobble up 43% of the annual revenue. Read More. 

🏘️ Affordable Housing Regulations: What You Should Know

The State Department of Housing and Urban Development has published the draft Affordable Housing Regulations of 2024, that will guide the implementation of the affordable housing project - a key pillar of the Kenya Kwanza government’s bottom-up economic transformation campaign promise. 

Here are some of the highlights:

• Housing levy: Every citizen shall be required to pay 1.5% of their salary or gross income as the Affordable Housing Levy.

• Employers duty: Employers shall deduct and match the said amount and remit it to the Fund.

• Levy exemptions: The Cabinet Secretary of the National Treasury has the power to issue exemptions to payment of the Levy where necessary.

• Remittance and penalty: The levy should be remitted to the fund before the ninth (9th) of every month, failure to which a penalty of three percent (3%) per month will be imposed on the amount that remains unpaid. Read More. 

• Affordable Housing Board: The Affordable Housing Fund will be managed by a board whose mandate is to oversee the development of affordable housing and associated social and physical infrastructure.

• County involvement: Every county will also have a County Rural and Urban Affordable Housing Committee that will coordinate with the National Affordable Housing Board.

• Private contractors: The Board can contract with private institutions to develop and construct affordable housing units or supply goods and materials used in the construction.

• Preference to locals and students: While undertaking the construction, the Board has to ensure they use locally available material, ensure labour is sourced from local communities, and prioritise internships for students from a nearby university or technical vocational institution.

• How to apply for a house: To be eligible for the housing, you have to make an application to the Board. The applications should be accompanied by proof of requisite deposit, copy of national identity card, a copy of  Kenya Revenue Authority's (KRA) personal identification number (PIN) and a tax compliance certificate. Read More

• First priority: In allocation of houses, the Board shall give preference to marginalised persons, vulnerable groups, youth, women, and persons with disability.

• Interest on loan: The interest on a loan taken under the Affordable Housing Act is payable on a reducing balance.

• Voluntary savings: One can also make voluntary savings to the Fund to raise a deposit for an affordable housing unit.

• No reselling of houses: Once a housing unit has been assigned to an individual, the individual may not sell or transfer ownership of the property without prior written consent from the Board.

While the regulations signal the final hurdle the government needed to jump towards the project’s implementation, a group of activists led by Busia Senator Okia Omtatah last week went back to court seeking an order to quash it in its entirety.

😃 Relief as Fuel Prices Drop

The Energy and Petroleum Regulatory Authority (EPRA) this week announced a drop in fuel pump prices. This is the fifth consecutive month that fuel prices have fallen. The new prices in Nairobi are; 

• Super petrol: Ksh193.84 (-Ksh 5.31)

• Diesel: Ksh180.38 (-Ksh10)

• Kerosene: Ksh170.06 (- Ksh18.68) 

Reason for Price Drop: The recovery of the Kenyan shilling. Last month EPRA used an exchange rate of Ksh148.02 compared to Ksh133.54 used in this month's calculations.

Cumulative Drop: Between December 2023 and today, the prices of diesel, super petrol and kerosene have dropped by Ksh21.09, Ksh18.52 and Ksh25.86 respectively in Nairobi. 

Electricity Price Drop: Electricity prices also dropped by Ksh3.3 (13.7% drop) for a unit of power to cost Ksh20.96 compared to last month's Ksh24.3. Read More.

🚚 LPG Plants Under Scrutiny

In the period between July and December 2023, the Energy and Petroleum Regulatory Authority (EPRA) conducted routine compliance tests on 18 liquefied petroleum gas (LPG) storage and filling stations.

Of the tested LPG storage and filling stations, only 65.3% of them passed the threshold. One third (34.7%) failed to meet the required standards. Read More.

📈 Bad Loans Soar

Loan defaults soared last year, necessitating banks to increase their provisions for projected credit losses. In the year ended December 2023, Kenyan listed banks set aside a total of Ksh120.8 billion for loan provisions, which was a Ksh46.6 billion increase from the previous year’s provisions, which totaled Ksh74.1 billion.

Reasons for loan defaults:

• Tough macroeconomic environment 

• High interest rates

• Higher taxation

• Inaccessibility of foreign exchange

Other mitigation measures: Banks have also taken the initiative to address the bad loans through write-offs and restructures. Read More. 

Want more details? Check our full weekly update here:

MONEY TIPS & TOOLS

This week’s finance tips

Welcome to Money254's Money Tips! Here, we share quick and easy tips that make understanding and managing your money a breeze. We break down the tricky parts of your finances and the financial landscape, making it simple and clear for you. Stay tuned for helpful tips every week.

MONEY254 #MONEYTOK OF THE WEEK

Comparing Ksh50k Salary Upcountry to Ksh100k in Nairobi

In today's #MoneyTok, we're tackling a thought-provoking question: Is a Ksh50,000 salary upcountry worth more than a Ksh100,000 salary in Nairobi? It's a topic that sparks debate and requires a closer look at the cost of living, expenses, and overall financial impact in different regions of Kenya. Watch Video 

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Is Ksh50K Salary Upcountry Worth More than Ksh100k in Nairobi? #Money254 #Moneytok #Nairobi #Salary #Comparison #Personalfinance #financetiktok #Fyp

That’s a wrap for this week’s Money Weekly!

Remember that we can help you compare over 300 loans, savings accounts, current accounts, and more on our website if you’re thinking about your next product.

Eric and the Money254 editorial team.