Kenya’s Difficult Position as Trump Threatens Trade War on BRICs

𝐌𝐨𝐧𝐝𝐚𝐲, 𝐃𝐞𝐜𝐞𝐦𝐛𝐞𝐫 𝟐, 𝟐𝟎𝟐𝟒

US President-elect Donalt Trump has threatened a major trade war with BRICs, a global body that Kenya recently requested membership. BRICs is an acronym for Brazil, Russia, India, and China - a formation of major emerging economies that has sought to de-dolarrise international trade. Trump said he would require BRICs countries to drop the proposed de-dollarisation policy, failure to which he would issue 100% tariffs on goods coming from member countries. “The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” the US-Presidentelect announced. The move came a month after President William Ruto formally requested to j oin BRICs with China’s help. Kenya, under President Ruto, has also welcomed the move to drop the dollar as the currency of exchange in international trade.

The government plans to introduce a 5% withholding tax on interest earned from new infrastructure bonds, potentially generating Ksh13.4 billion annually. According to Business Daily, the proposal, included in the Tax Laws (Amendment) Bill 2024, seeks to amend the Income Tax Act, which currently exempts such interest from tax. Critics argue the tax could reduce the appeal of infrastructure bonds, which have attracted significant investments, while proponents believe it will not significantly affect demand. This measure is part of the Treasury’s plan to raise Ksh174.6 billion in additional revenue for the 2024-25 fiscal year. 

According to a report by Business Daily, unremitted pension contributions by public universities and county governments rose to Ksh47.16 billion in the year ending June 2024, a 12.3% increase from Ksh42 billion the previous year, according to the Retirement Benefits Authority (RBA). The persistent issue, driven by liquidity challenges, exposes thousands of workers to retirement struggles. Penalties for late remittances have not curbed the trend, as entities like the National Treasury also face difficulties, failing to release Ksh23.78 billion for retired civil servants. With pension coverage at just 26% and low savings rates, the sector faces significant risks, threatening retirees’ financial security.

Capital News reports that the Kenya Medical Practitioners, Pharmacists, and Dentists Union (KMPPDU) has announced plans to issue a strike notice on December 2, citing the government’s failure to honour agreements on doctors’ welfare. National Secretary General Davji Atellah stated that the strike is a response to violations of the Collective Bargaining Agreement (CBA), delays in intern salaries, and unfulfilled promises in the Return to Work Formula (RTWF) signed in May 2024. The union condemned the reduction of intern doctors’ wages to Ksh41,000, calling it a breach of the CBA. This decision comes as the Ministry of Health disbursed Ksh965.9 million to address arrears and stipends owed to health interns, but KMPPDU insists unresolved issues remain critical.

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Safaricom has launched its enhanced 5G for Business service, targeting SMEs with faster connectivity to support operations like real-time collaboration and online transactions, as reported by Capital Business. The revamped service offers speeds up to five times faster than before, with businesses on 10 Mbps plans now getting 50 Mbps at the same price. Similarly, 20 Mbps users can upgrade to 100 Mbps, while 50 Mbps plans now offer 250 Mbps. Safaricom CEO Peter Ndegwa noted that the service aims to boost productivity, improve customer interactions, and help businesses scale efficiently. SMEs signing up by December 31, 2024, can enjoy a 25% discount on all 5G plans. Capital business

Eldoret’s recent elevation to city status has sparked a surge in investor interest, transforming the town into a growing economic hub. In a report by The Standard, Eldohub is set to host the inaugural Eldoret City Investors Forum, showcasing the city’s potential as a premier destination for investment and innovation. Organized in collaboration with the UK Kenya Tech Hub and the British High Commission, the forum will unite investors, entrepreneurs, and stakeholders to explore opportunities and innovations in Eldoret. Themed "Bridging Athletics, Innovation, and Investment," the event will leverage Eldoret's athletic legacy to spotlight its growing tech ecosystem, including launching the Eldoret City Investor Platform, a digital initiative for connecting regional opportunities. 

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