Fuel Prices, Carbon Tax, Forex Reserves & Digital Payments-Kenya’s Economic Updates

𝐖𝐞𝐥𝐜𝐨𝐦𝐞 𝐭𝐨 T𝐨𝐝𝐚𝐲’𝐬 M𝐨𝐧𝐞𝐲 N𝐞𝐰𝐬 R𝐨𝐮𝐧𝐝 U𝐩: Monday, 𝐍𝐨𝐯𝐞𝐦𝐛𝐞𝐫 11, 𝟐𝟎𝟐𝟒‍

In today's money news, oil marketers in Kenya are pressing for a revision of the fuel pricing formula, which they say no longer reflects the rising costs of supply. The current formula, unchanged since 2018, could be leading to price distortions, putting strain on both marketers and consumers. As reported by The Standard, the Energy and Petroleum Regulatory Authority (EPRA) is now reviewing a recent Cost of Service study submitted last week to assess the actual costs of supplying petroleum. This review could lead to an increase in fuel prices, potentially impacting households and businesses already navigating the high cost of living.

Kenya is preparing to reintroduce a carbon tax with guidance from the International Monetary Fund (IMF), the BusinessDaily reports. The IMF will help pinpoint which products should be taxed, as part of Kenya's strategy to tackle emissions. In addition to the tax, the country is considering an emissions trading system, allowing high-emission industries to purchase allowances from those with lower emissions. These measures aim to address environmental impact while balancing economic needs.

Read Also: MPs Approve Ksh10 Fuel Levy Increase as Ruto Extends Debt Ceiling

In a positive economic update, Kenya's foreign exchange reserves hit a three-year high of $9.32 billion, rising by $737 million since October 31, according to Capital Business. This increase follows the disbursement of a $606.1 million loan from the International Monetary Fund (IMF), pushing reserves well above the Central Bank of Kenya’s (CBK) minimum requirement of four months' import cover, now at 4.8 months. This boost strengthens Kenya's ability to protect the shilling from market fluctuations, though the currency saw a slight dip against the U.S. dollar this week.

The International Monetary Fund (IMF) is aiming to provide technical guidance on Kenya’s large-scale public-private partnerships (PPPs), which are valued at Sh1.6 trillion, Business Daily reports. This move follows concerns about the transparency, cost-effectiveness, and value of 39 infrastructure PPP deals in the country. By offering expertise on managing fiscal risks, the IMF hopes to help Kenya improve oversight and secure better outcomes in these complex, high-value projects.

Read Also: How I Missed Out on Generational Wealth - The Story of Money & My Grandfather

Finally, Safaricom has raised concerns over a government proposal to convert mobile money paybills and till numbers into electronic tax registers (ETRs), warning it could discourage use of its M-Pesa payment services and hinder the growth of digital payments in Kenya. Safaricom CEO Peter Ndegwa highlighted the company’s commitment to taxation but emphasised the need to protect the gains made in digitising payments. The company is engaging with regulators to ensure that the changes will not negatively impact small businesses that rely on platforms like Pochi la Biashara and Lipa na M-Pesa which helps them separate business and personal funds.

Read Also: I Copied Someone's Business Idea and Lost Ksh400,000. Here's What I Learned