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

It’s February already and as the excitement for the month of love begins, so does the kick off of the new higher National Social Security Fund (NSSF) deductions.

With the Court of Appeal’s go-ahead, the government’s intention to make the Social Health Insurance Fund (SHIF) contributions mandatory is reflected in the draft regulations that provide for loans to non-salaried Kenyans unable to afford the annual premiums upfront. 

We explore how this will play out in today’s newsletter. 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

🪪 Govt’s Plan to Implement Mandatory SHIF Membership

According to the draft Social Health Insurance (General) Regulations, 2024, non-salaried Kenyans unable to pay for the compulsory social health insurance will be provided with loans by the government to cover their premiums.

The amount to be contributed is equivalent to 2.75% of the proportion of household income as determined by means testing. 

Here are a few things to know:

• Lump Sum Payment: While salaried Kenyans will contribute monthly, non-salaried households - “hustlers” - will be required to pay an annual contribution in a lump sum. This amount is to be paid at least 14 days before commencement of cover. 

• Premium Financing: The government says it will, in partnership with financial institutions, offer premium financing to non-salaried individuals. The loan amounts will be directly remitted to the Social Health Authority (SHA).   

• Households in Need of Financial Assistance: Through means testing, the SHA will identify such households for whom the National Government or County Government is liable to pay contributions. 

• Enter Private Insurers: Private medical insurance providers and claims settling agents to be contracted. They will review and process claims, forwarding approved ones to the authority for payment. 

NHIF Comparison: NHIF currently handles premium collection, claim reception, and settlement for national health cover. Outsourcing aims to enhance efficiency and address delays. Read More.

🏥 Are Hospitals Ready for SHIF Reforms?

Prior to the draft regulations, in August 2023, the Ministry of Health (MoH) and the Kenya Medical Practitioners and Dentists Council (KMPDC) had conducted a study to investigate the state of hospitals in the country.

The findings cast doubts on whether Kenyans will enjoy SHIF’s promises if the government doesn’t invest heavily in the healthcare system.

• Service accessibility - only 2% of surveyed health facilities offered all 16 basic outpatient services, including minor surgical services, immunisation, and basic laboratory tests.

• Maternity Services - Less than half of the hospitals provided maternity services and only a third offered emergency obstetric care. Read More.

• Emergency Services - 60% of hospitals lacked blood transfusion services, only 54% had oxygen sources, and only 49% had access to functional ambulances. Only 5.8% had an accident and emergency unit.

• Newborn health services - Access to newborn health services was at 12%, hindering maternal and newborn health outcomes.

ICU and HDU services - only 1.8% of the surveyed health facilities offered High Dependency Unit (HDU) services, while just 1.3% could help patients requiring Intensive Care Unit (ICU) services. Read More.

💸 Higher NSSF Deductions Take Effect in February

Starting this February, your payslip will see a higher deduction going to the National Social Security Fund (NSSF). The new rates involve adjustments to the lower and upper earnings limits, gradually increasing contributions over a five-year period.

New Deduction Rates:

• Lower earnings limit raised to Ksh7,000 (from Ksh6,000). Employees in this category will contribute Ksh420 (up from Ksh360).

• Upper earnings limit increased to Ksh29,000 (from Ksh18,000). Employees in this category will contribute Ksh1,740 (up from Ksh1,080).

Implementation Background:

• NSSF Act in 2013 mandated a 6% monthly deduction.

• Court battle delayed the new rates until a September 2022 judgement.

• Deduction plan initiated in 2023, with rates set for another upward review in January 2025.

🌱 Horticulture Earnings Grow 6.5% on Higher Volumes

Horticulture export earnings in Kenya increased by 6.5% in 2023, reaching Ksh156.69 billion, compared to Ksh147.1 billion in the previous year. The growth was driven by a 19.6% increase in export volumes.

• Major Horticulture Markets: Netherlands (Ksh42.78b), UK (Ksh22.41b), France (Ksh20.24b), UAE (Ksh9.14b), Germany (Ksh7.91b).

• Product-wise Earnings: Cut Flowers were the largest contributor, earning Ksh73.45 billion. Vegetables earned Ksh50.87 billion. Fresh Fruits earned Ksh32.37 billion.

Mango Export Situation: Kenya is yet to export mangoes to the EU, citing low demand for locally grown apple variety mangoes. This is despite the lifting of a self-imposed export ban in September 2021 after controlling fruit fly infestations. Read More.

🏦 NCBA, Co-op, Stanbic Win Ksh100 Billion State Pensions Deal

NCBA, Co-operative, and Stanbic banks have secured a deal to manage over Ksh100 billion in pension contributions for the Public Service Superannuation Scheme (PSSS).

The three banks outbid eight other registered custodians for the contract, including Bank of Africa, Equity, I&M, KCB, National Bank of Kenya, Prime Bank, SBM, and Standard Chartered.

• PSSS assets under management have reached Ksh105 billion

• The scheme has over 422,000 members

• Civil servants contribute 7.5% of their gross salaries, matched by a 15% contribution from the government.

The custodian banks will provide services for three years, renewable for an additional three years, based on mutual agreement and performance. 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

Money and Friends

We're diving into the realm of friendship and finance – a topic many of us can relate to. In this week’s video, we're talking about lending money to friends and exploring the types of friends who might make your lending radar go haywire.

@money254hq

If you want to lose a friend, lend them money, the old English idiom goes. It may seem rather harsh, especially in the African context whe... See more

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

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Eric and the Money254 editorial team.