Questions on Fate of Adani-SHA Deal, and the Cost of Cancelling Contracts 

‍Friday, 𝐍𝐨𝐯𝐞𝐦𝐛𝐞𝐫 22, 𝟐𝟎𝟐𝟒
In today’s news, the ramifications of President William Ruto’s decision to cancel two contracts awarded to the Adani Group dominated major news headlines. The Business Daily reported on the cost that the country would incur as a result of cancelling the two contracts awarded by the Ministry of Transport for the renovation of JKIA, and the Ksh96 billion tender to upgrade Kenya’s electricity transmission lines under Ketraco. The details on the cost of cancelling the two tenders remain unclear but past media reports have indicated that the contracts were hugely loop sided in favour of Adani. In one contract, Kenya agreed that disputes on the contract would be handled by Singapore International Arbitration Centre (SIAC) and that arbitration would be mutually agreed for either for Singapore, UAE or London. 

The Nation also reported on the post-Adani indictment, focusing on a third contract between the Ministry of Health and the Adani Group for technological support to the Social Health Authority (SHA). It remains unclear what would happen to the contract valued at Ksh104 billion. President William Ruto did not make mention of the SHA contract when he announced that the government would cancel contracts awarded to the Adani Group in light of corruption allegations and evidence provided by Kenya’s partner nations. The President made the directive during a State of the Nation Address on Thursday, November 22. The Nation, however, quoted an anonymous State House official who claimed that the SHA deal would be unaffected since the purported Adani firm was “independent”.

PwC has raised concerns about the potential negative impact of proposed tax changes in the Tax Laws (Amendment) Bill, 2024, and the Tax Procedures (Amendment) Bill, 2024 as reported by Capital Business. Key amendments include new employment tax reliefs, the introduction of a significant economic presence tax to replace the digital services tax, and increased withholding taxes on goods supplied to public entities. The audit firm also highlighted risks to taxpayer rights and privacy due to enhanced powers for tax commissioners and system integration requirements. These changes have been criticised for seeking to re-introduce parts of the controversial Finance Bill 2024, which was withdrawn following nationwide protests. 

Elon Musk's Starlink faces accusations of predatory pricing in Kenya, with claims that it offers internet services at unsustainably low rates to attract customers from competitors as per the Business Daily. Jamii Telecommunications and Safaricom have formally protested to the Communications Authority of Kenya, warning that such tactics could harm competition in the internet market dominated by local players. The complaints come as Starlink, leveraging its global reach and Musk’s financial clout, seeks to disrupt Kenya’s internet landscape with aggressive pricing.

The Standard Kenyans have borrowed over Ksh300 billion from Tala over the past ten years of the lender’s operations. The company has reached 10 million customers in the course of its operation - 3.5 million of them being in Kenya. The growth highlights the continued impact of digital lending platforms in addressing financial needs.

The US Department of Justice has called for Google to sell its Chrome browser and possibly its Android operating system in a landmark antitrust case. The Standard reports that the proposed measures aim to curb Google’s dominance, ban exclusive search engine deals on smartphones, and prevent leveraging Android for competitive advantage.

East African tax authorities have flagged smuggling, tax exemptions, and informal sector growth as key hurdles to revenue collection and economic stability. At a meeting held in Nairobi, they called for unified valuation procedures, better information sharing, and a new Intelligence and Surveillance Fusion Centre to combat cross-border tax evasion. Capital Business reports that the discussions also highlighted the urgent need for operationalizing the EAC Double Taxation Agreement (DTA) to ease trade and investment barriers, with some nations committing to fast-track ratification. Authorities stressed leveraging global tax forums and domestic legislation to boost compliance and recover arrears.

Tatu City, in partnership with the National Construction Authority (NCA), has certified 500 skilled workers, including masons, electricians, and plumbers, to enhance compliance with construction safety standards in Kenya as reported in Capital Business. The program aims to tackle issues like noncompliance and unqualified labour, which contribute to frequent building collapses, as seen in Nairobi’s Uthiru and Kahawa West areas. Tatu City’s initiative emphasises quality and safety in construction, setting a precedent for the industry while ensuring long-term structural integrity.