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• Citibank Kenya Refutes Breach of Contract Claims b …

• Finance Bill 2024: Manufacturers, Industry Player …

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Citibank Kenya Refutes Breach of Contract Claims by Client

Corporate lender Citibank Kenya has refuted claims made by a client in letters to the bank and to the Central Bank of Kenya that it breached its fiduciary duties.

• In a letter to CBK dated May 3rd, Adrian Kenya Ltd Managing Director Bernard Wachai Njoroge accused Citi of breach of contract and regulatory violations.

• According to the company, Citibank withheld at least two letters of credit in at least two instances where Adrian had signed contracts worth more than KSh. 100mn.

• Adrian Kenya also accuses the lender of intentionally withholding funds, breaching its fiduciary duty and violating some CBK’s prudential guidelines including data protection laws.

In the letter addressed to CBK and seen by The Kenyan Wall Street, Njoroge says that the two entities entered into a contract in 2018, when Adrian Kenya opened operational accounts at Citi and obtained credit facilities totalling USD 14.7mn. He argues that despite the credit facility not being in arrears, the lender has among other things withheld funds and caused economic losses.

“We acknowledge receipt of Adrian Kenya Ltd’s letter that highlights various concerns they claim to have regarding their banking relationship with Citi Kenya,” A Citibank spokesperson wrote in a response to an email from The Kenyan Wall Street, “Upon careful review, we can confirm that the allegations therein are inaccurate and/or based on the wrong interpretation of facts.”

Adrian Kenya, which was founded in 2013, describes itself as “a leading provider of technology and EPC solutions in Africa with clients in telecoms, ICT, Energy, Olla and Gas Sectors,” according to its LinkedIn profile. The company says that the strained relationship with Citi led to the cancellation of contracts worth KSh 231.2 million, and presents potential losses of Kshs. 229 million.

Finance Bill 2024: Manufacturers, Industry Players, Protest Proposed Taxes Likely to Raise Cost of Living

As the May 28th deadline for public participation for the Finance Bill 2024 nears, more industry players have opposed proposed tax hikes, with the latest being cooking oil and battery manufacturers.

• The bill proposes a 25% excise duty on vegetable oils, which the Edible Oil Manufacturers Association of Kenya terms a “potential humanitarian crisis that Kenya cannot afford.”

• The Associated Battery Manufacturers Ltd (ABM), a prominent battery manufacturing company, said it opposes the ECO tax which it has called “completely unsustainable.”

• Others who have opposed parts of the bill include the Kenya Bankers Association, the Association of Kenya Insurers, and the Digital Financial Services Association of Kenya.

“If implemented, this excise duty will trigger an unprecedented surge in the price of cooking oil, a staple in Kenyan households,” edible oil manufacturers’ said in a statement on May 19th, “The cost of this essential comedy is projected to skyrocket by 80%, rendering it unaffordable for millions of Kenya.”

Among its arguments is that price increases for cooking oil will also have cascading effects on other every day products. “The excise duty will cause a cascading effect on these items, inflating the price of a standard loaf of bread (400g) from Kshs 70 to Kshs 80. The price of a long bar soap could escalate from Kshs 180 to Kshs 270, and margarine (250g) from Kshs 160 to a staggering Kshs 300,” the association said.

Meanwhile, ABM is lobbying against the proposed ECO tax on batteries and dry cells, which would be charged at KShs. 750 per kilo. “A small lead acid battery for a motor vehicle is 12kg, with a retail price of Ksh 8, 500.The Eco tax for this small battery will translate to an additional Ksh 9, 000 plus VAT. Therefore, a small car battery will retail at Ksh 17, 500,” ABM said in a statement signed by its CEO, Guy Jack.

Don't forget to attend these events...

Headlines you might have missed

• The Finance Bill 2024 proposes that if KRA fails to refund the overpaid tax within six months, the amount due shall attract interest of one per cent for each month during which the amount remains unpaid.

• The Office of Data Protection Commissioner (ODPC) has registered a 75% decline in cases where digital lender apps have abused clients’ information when pestering them to pay up mini-loans they received. 

• Co-operative Bank of Kenya has reported its financial performance for the first quarter of 2024 with Profit After Tax (PAT) growing at 7.7% year-on-year to KES 6.6 billion.

Interview of the Week

Moses Muthui, Absa Kenya’s Director of Consumer Banking

Have a Great Week!