News and Analysis
November 22, 2024
.jpg)
It is that time of the week again when we look at the news headlines over the last seven days and dissect those that can affect your money.
Welcome to yet another edition of Money Weekly.
This week:
Barely a month after President Ruto assented to the Affordable Housing Act, 2023, the law is being challenged once more in the courts.
Affordable Housing is a key pillar in the Bottom-Up Economic Agenda of the Kenya Kwanza government. However, the project has been marred by legal challenges since its inception under the 2023/24 Financial Act.
A group of human rights activists led by Busia Senator Okiya Omtata has gone back to court. Their petition raises three major issues.
1. The Kenya Revenue Authority's (KRA) Commissioner General (CG)
2. Operationalisation of the Affordable Housing Board
The housing board is tasked with approving revenue and expenditure estimates for the fund; therefore, since the board has not been operationalised, funds cannot be lawfully raised from the public - they argue.
3. The setting of 1.5% flat rate
The revenue and expenditure of the housing fund will be managed by the board and will be subject to the Fund’s annual budget; hence according to the petitioners, the tax rate will have to be adjusted annually to raise the required revenue. This, they say, then defeats the logic behind the 1.5% fixed rate.
They also seek the court to provide the following directives:
Furthermore, the petitioners assert that implementation of the Affordable Housing Act will lead to violations of the following parts of the constitution:.
The KRA has raised taxes for the fourth straight quarter on employee welfare support.
The fringe tax has been on a constant rise since 2022, when the taxman increased it from 7%.
In the latest directive by the Ministry of Lands, Public Works, Housing, and Urban Development Permanent Secretary, Nixon Korir, Stamp Duty on Transfer of Land in 83 municipalities is expected to rise to 4%.
The government charges a stamp duty of 4% of the value of the land in urban centres and 2% in rural areas. However, due to the new directive, stamp duty in the listed 83 municipalities will be bumped from 2% to 4% - meaning they are now regarded as urban centres.
Some of these municipalities include Nakuru, Kisumu, Molo, Naivasha, Gilgil, Kiambu, Kikuyu, Juja, Gatundu, Guthurai, Maseno, Ahero-Awasi, Kitale, Nanyuki, Rumuruti, Tala/Kangundo, Mtwapa, Kilifi, Malindi, Garissa, Kajiado, and Machakos, among others.
The rebound in the Kenyan shilling and the improvements in dollar availability are expected to fuel a recovery in imports this year. According to the Central Bank of Kenya (CBK), a jump in imports will expose the shilling to renewed pressure, depending on the performance of exports and remittances.
The apex bank foresees 11% growth in exports to rise to Ksh2.48 trillion ($19 billion) in 2024. This will be growth from Ksh2.2 trillion ($17.1 billion) imported in 2023.
Exports are also expected to grow. In 2023, the export value dropped to Ksh946.8 billion ($7.2 billion) from Ksh968.1 billion ($7.4 billion) in 2022.
In a move to combat the illegal Liquid Petroleum Gas (LPG) refilling stations and the black market, the government plans to introduce automated tracking of gas cylinders starting in July this year. The government is considering tracking using two different types of technology.
The current regulations depend on receipts issued by cooking gas dealers. The law stipulates that the receipt must indicate the serial numbers of the seal, date of sale, cylinder gas container, cylinder brand, contact information of the consumer, and the name and contact information of the seller.
Tea prices at the Mombasa auction had a 29.1% jump to $3.42 (Ksh443) per kilogramme compared to the same period last year. According to the Central Bank of Kenya (CBK), the higher prices are due to a demand increase that is expected to continue throughout the year.
Last year, tea farmers affiliated with the Kenya Tea Development Agency (KTDA) earned a bonus of Ksh44.15 billion in the period to June 2023. KTDA is mandated to share at least 30% of its earnings with the farmers. Inclusive of monthly payments, the farmers earned Ksh67.7 billion.
According to the Auditor General’s latest report on county governments for the fiscal year ending June 2023, 8,444 workers in 28 counties took home less than a third of their salaries.
This is contrary to the law, which outlines that an employee should not be deducted more than two-thirds of their salary. In the worst cases, some county employees took home less than Ksh100. This was noted in Kitui County.
The top counties with employees taking home less than a third of their salaries include:
The Pubs, Entertainment, and Restaurants Association of Kenya (PERAK) wants the government to make public the findings on the vetting process.
On March 6, the government issued a directive to suspend all licences and certifications for second-generation alcohol distillers and manufacturers to allow for a 21-day vetting, upon which the licences of the manufacturers who pass the vetting will be reinstated.
PERAK insists that they have been left in the dark and no action has been taken after the suspension of licences which exposes them to losses as a result of not operating.
Interest on M-Pesa Balances: Why don’t you earn interest on your M-Pesa balances? According to a report by the International Monetary Fund (IMF), the 2014 National Payment System regulations blocked it. Instead, the regulations direct that proceeds from trust funds (M-Pesa Holdings was registered as a trust in 2008) should be donated to public charitable organisations. Hence, M-Pesa proceeds fund the M-Pesa Foundation.
Manufacturers Want Power Costs Slashed: Both the 2024 Manufacturing Priority Agenda and the Agriculture for Industry Reports have power cost reduction as one of their recommendations. Hence, the Kenya Association of Manufacturers (KAM) is asking for a reduction of power prices to Ksh10 per kWh. Currently, the average cost of power stands at Ksh19.86 per kWh.
More Firms Dump Kenya Power: The landscape is shifting as own-source power generation hikes 60% in one year. The self-consumption electricity output totaled 280.76 MW in 2023 but hiked to 449.5 MW in 2023. The increase in own-source power generation is a response to the increasing power prices as firms find alternative power sources to manage their costs. The shift by big power consumers is likely to make electricity more expensive for the normal mwananchi since the base of big consumer firms subsidises the prices.
Sugarcane Farmers Protest: The Kenya Association of Sugarcane and Allied Products (Kasap) has protested against the new sugarcane prices announced by the Agriculture and Food Authority. A month earlier, sugarcane prices dropped from Ksh6,050 per tonne to Ksh5,900 per tonne. The new announcement will lower the price further to Ksh5,100 per tonne. Kasap protests that these prices will hurt the farmers and benefit the millers and need to be reviewed.
Switch to eTIMS Invoice to Bring Losses: Farmers supplying sugarcane to Butali Sugar Mills might incur losses as the miller communicated that it will not be able to honour payments to farmers without an electronic Tax Invoice Management System (eTIMS) generated invoice. The miller had sought an alternative from Kenya Revenue Authority (KRA) but it was not successful. The deadline for eTIMS registration elapsed on March 31
NSE up 70% on Strengthening Shilling: The Nairobi Securities Exchange has staged a bull run in the last two months to increase trading activity by 70%. Capital Markets Authority (CMA) Chief Executive Officer (CEO) Wycliffe Shamiah thanked the government for the following:.
Pastoralists Earn Ksh1.7bn: In a first-of-its kind soil carbon removal through sustainable grazing management project conducted by the Northern Rangeland Trust (NRT), pastoralists in Laikipia, Isiolo, Marsabit, and Samburu counties have earned a total of Ksh1.7 billion in carbon credits over the last three years. They earn by embracing modified grazing practices such as pasture reseeding and rotational grazing.
Global Superfood Market: As part of the Bottom-Up Economic Transformation Agenda (BETA) agricultural transformation deliverables, the government plans to work with local cooperatives to zero in on the Ksh22.3 trillion superfoods market. The targeted super foods include avocados,macadamias and blueberries. The overall agricultural sector is expected to grow by 6.3% this year.
Electric Cars and Motorbikes Uptake: The National Transport and Safety Authority (NTSA) registered 2,694 electric vehicles (EVs) in 2023, a more than 500% increase in EV uptake from 475 units in 2022. The Energy and Petroleum Regulatory Authority (EPRA) has attributed the sharp increase to incentives by the Kenyan government to make e-mobility more accessible.
Motorbike Assembly: According to Kibo Africa CEO Huib van de Grijspaarde, Kenya has the potential to assemble and export motorbikes but the import duties make the motorbikes too expensive to compete on the global market. The motorbike market is booming, with data from the Kenya National Bureau of Statistics showing that Kenya imported 338,701 units between April and June 2023.
Kenya Power Tenders By Youths, Women Up: Tenders awarded by Kenya Power in the 2023/24 financial year to February to youth, women and persons with disability amounted to Ksh609 million. This is a jump from Ksh244 million in the same period the previous year. Youth-owned businesses secured tenders worth Ksh472.9 million, while women-owned businesses and persons-with-disabilities-owned businesses secured tenders worth Ksh135.5 million and Ksh646,700, respectively.
.png){kind=small}
Join 1.5M Kenyans using Money254 to find better loans, savings accounts, and money tips today.
Money 254 is a new platform focused on helping you make more out of the money you have. We've created a simple, fast and secure way to find and compare financial products that best match your needs. All of the information shown is from products available at established financial institutions that our team of experts has tirelessly collected.
