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Traders decry hurdles at Gatuna

by Editor
written by Editor

The business community at Katuna border post in Kabale have appealed to Gen Muhoozi Kainerugaba, President Yoweri Museveni’s son, to further negotiate for the revival of cross-border trade between Rwanda and Uganda.

This comes at a time when a section of leaders from Kigezi, led by the Kabale District chairperson Nelson Nshangabasheija are planning a thanksgiving ceremony to celebrate the re-opening of Katuna border.

The function was to be held at Kigezi High School lower playground in Kabale Town, where Gen Kainerugaba is expected to be the guest of honor.

A truck awaiting clearance to cross Gatuna border. PHOTO : Cyril Ndegeya

Rwanda border of Gatuna, which is adjacent to Katuna in Kabale, was closed for three years as the government of Rwanda claimed that they were working on the one-stop border post, but later claimed that Uganda was hosting its enemies.

Last year in March, the Gatuna border post was reopened for cargo trucks and passenger vehicles after Gen Kainerugaba negotiated with President Paul Kagame.

The chairperson of Katuna Traders Association Franko Korinako said although the border was reopened, Rwandans were not allowed to cross to Uganda to buy household items.ADVERTISEMENT

“Although we appreciate that the border was reopened for cargo and passenger vehicles, as traders at Katuna border post we appeal to Gen Kainerugaba to further negotiate for the revival of cross border trade so that the Rwandan authorities can allow their citizens in the border community to freely enter Uganda to buy household items as it used to be,” Mr Korinako said.

A section of clearing agents at Katuna border post in Kabale also decried the restrictions involved in exporting local goods from Uganda into Rwanda and called up on authorities to intervene.

Vice chairperson of Katuna Border Clearing Agents Association Stephen Kiwanuka, appealed to the Ugandan government to decentralise services of document processing to allow easy exportation of perishable goods.

“Before being allowed to export local produce such as Irish Potatoes and other perishable goods to Rwanda through the Katuna/Gatuna border, a local trader was required to get an export permit and certificate of analysis from Kampala, which are not easy to get.

We appeal for simplified local export entry like it’s done on Malaba and Busia borders for traders that export local produce to Kenya. The single customs tertiary entry demanded at Gatuna border post by the Rwandan officials is not favoring local traders,” Mr Kiwanuka said.

Source; Rwanda today

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BusinessEconomyMoroccoOil & Gas

Morocco’s Gas Stations Experience Slight Fuel Price reductions

by Radarr Africa
written by Radarr Africa

 Morocco’s filling stations experienced slight fuel price reductions on Thursday amid the ongoing inflation and energy crisis.

The National Federation of Owners, Traders, and Managers of service stations in Morocco (FNPCGS) announced that the price of gasoline should witness a new drop of MAD 1.60 to reach MAD 14.50 per liter.

Gasoline, meanwhile witnessed a slight decrease of MAD 0.22, starting today per liter. The prices, however, will differ depending on distributors across the North African country.

The drop came amid ongoing complaints regarding the energy crisis and the skyrocketing fuel prices across the country. Fuel prices were ranging between MAD 14 and MAD 16 compared to initial prices ahead of the Ukraine-Russia conflict.

Morocco’s government has been justifying the increases by mentioning the global context but vowed to take measures to combat rising fuel prices.

ALSO READ: Morocco to Supply European union with Critical Raw Material to accelerate Energy Transition

In response to inflations, Moroccans launched several campaigns, demanding decreases in food and energy prices.
Some online campaigns also called for the resignation of Head of Government Aziz Akhannouch.

Fuel price increases came amid recommendations from the competition council (a Moroccan market watchdog) which recently acknowledged the lack of political will to implement market reforms, stressing that this could be the reason for the skyrocketing gas prices.

SOURCE: Morocco news

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BusinessEconomyFinance & Services

KRA staff face a new graft war purge at the times tower

by Radarr Africa
written by Radarr Africa

Kenya Revenue Authority (KRA) employees face sacking and possible prosecution in a fresh corruption fight at the Times Tower aimed at rooting out rogue officials for defrauding the exchequer hundreds of billions every year.

President William Ruto issued an ultimatum to the KRA commissioner-general Githii Mburu to urgently act on intelligence reports the Head of State shared. Dr Ruto says rampant collusion between KRA and rogue traders has resulted in massive revenue leakages, which could be in the region of Sh400 billion.

Other KRA officials are also facing charges of harassing and extorting traders, pointing to a racket that could be subverting tax administration at the agency, which last financial year outperformed the revenue target set by the Treasury.

“I have given enough information to CG (Mr Mburu) to sort out that mess and I have told him if he doesn’t sort out the mess, I’ll sort it out myself,” Dr Ruto said Friday. “We are determined to effect decisive change in order to reverse this unsatisfactory state of affairs. The practice of citizen harassment as means of tax administration is unacceptable.”

The new purge at KRA follows a similar one ordered in 2015 by the previous administration that largely centred on lifestyle audits of the taxmen.

ALSO READ: Huawei Doubles 5G network in Kenya’s market

The president has particularly singled out corruption in the collection of excise duty, which applies to goods such as spirits, bottled water and cigarettes.

He said it was unacceptable that Kenya was selling a measly 2.9 billion excisable stamps annually compared with Tanzania’s seven billion and Uganda’s nine billion despite the two economies being smaller than Kenya’s. Excisable stamps, Dr Ruto said, were less than a third of Kenya’s potential of 10 to 12 billion stamps.

“There are people who are selling the balance which is approximately seven billion stamps. I have told the Commissioner-General he must tell these people to stop and we have no choice because I do not want to fight with people, but they must stop,” he said.

KRA has outperformed targets in the last two financial years, but the new administration says the tax receipts are still “far short” of potential.

In the financial year ended June 2022, for example, the KRA netted Sh2.031 trillion against an original target of Sh1.882 trillion. “A huge obstacle to the realisation of our national revenue target is that in practice tax administration has traditionally been a repressive, menacing affair which resembles extortion,” Dr Ruto said.

“This extinguishes taxpayer incentive and diminishes the prospect of an expanded tax base pulling Kenyan backwards from its national revenue potential and denying its citizens critical services and development programmes.”

The KRA has in the past come under fire from business leaders who have complained of a tax regime that is largely unpredictable and one that overburdens a few persons and firms in the formal sector with increased taxes.

SOURCE: Business daily

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BusinessKenyaOil & GasUncategorized

UAE topples India in Kenya’s imports race on expensive oil

by Radarr Africa
written by Radarr Africa

United Arab Emirates(UAE) has leapfrogged India to become Kenya’s second largest source market after China on the back of soaring oil prices, official statistics show.

Provisional trade data on Friday showed expenditure on imports — largely petroleum products — from the Middle East more than doubled in the first six months of the year, reflecting runaway cost of fuel, which has hit businesses and households hard.

Kenya traders spent a record Sh177.88 billion to buy goods from the oil-rich country, more than double, or 131.90 percent jump over Sh77.39 billion in a similar period last year, according to the Kenya National Bureau of Statistics.

That has placed the UAE second in Kenya’s top import markets, above India whose consignments in the country shot up 36.61 percent in the review period to Sh150.25 billion.

The data says expenditure on petroleum products was higher than on goods such as pharmaceuticals, vehicles as well as steel and iron which come from India.

ALSO READ: Equity closes deal to acquire Spire Bank

China remained on top with imports growing at a slower rate of 9.12 percent year-over-year to Sh227.95 billion in the six-month period.

The jump in expenditure on goods from the UAE came in a period oil prices hit an all-time high, particularly in the early days of Russia’s assault of Ukraine late February.

The invasion caused oil prices to surge earlier this year, with Brent — the global benchmark— trading above $130 per barrel as western powers retaliated by imposing sanctions on Russia, which last year accounted for 14 percent of global supply. For example, the global cost of Murban oil — whose refined product is what Kenya uses— was about $118.74 per barrel at the end of June, 63. 10 percent climb over $72.80 a year earlier.

Oil prices have since fallen slightly, but not at levels to ease the pain felt by consumers at the pump.

For example, Murban oil last Thursday traded $88.64 per barrel compared with $94.93 for the same quantity a week earlier, largely on reduced demand amid “renewed restrictions in China to curb Covid-19”, according to the Central Bank of Kenya.

The costs of energy and transport have a significant weighting in the basket of goods and services that is used to measure inflation in the country. Inflation, a gauge for the cost of living over a 12-month period, in increased at the fastest rate of 8.5 percent in 62 months.

Producers of manufactured goods, services such as electricity generators as well as large-scale farms factor in the higher cost of petroleum products in their product pricing.

“The ever-increasing cost of fuel has impacted operations. The cost of transporting raw materials and finished goods is also reliant on the cost of fuel,” said Mary-Ann Musangi, managing director of Haco Industries via email.

“Many of our machines are also powered by electricity. If the fuel cost goes up, again, the extra cost shall be transferred to the consumer.”

KNBS data shows traders shipped in fuel and lubricants worth Sh305.19 billion, a 91.86 percent climb over Sh159.07 billion in the prior period last year.

The bulk of petroleum products in Kenya are sourced from the UAE, making it a large source market.

With a significantly smaller value of goods being exported to UAE’s capital, Abu Dhabi, and Dubai, the country’s commercial and trading hub, trade between the two countries is hugely tilted towards the Middle East’s economic powerhouse.

SOURCE: Business daily

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EconomyEntrepreneurshipKenyaMarketsSafaricom

Firms buy Sh9.5bn Safaricom stake as small traders sell off

by Radarr Africa
written by Radarr Africa

Local institutional investors have acquired shares worth Sh9.5 billion in Safaricom following the exit of domestic shareholders and foreigners, reversing the government’s objective of boosting Kenyan retail investors’ stake in the country’s most profitable firm.

Regulatory filings with the Capital Markets Authority (CMA) show that local institutional investors including insurance firms and pension schemes bought 340.7 million shares between August 2020 and July 2022.

This followed the sale of 305.4 million shares by foreign fund managers and 37.4 million stocks by domestic investors, who have continued to exit the telecom operator since its listing in 2008.

July regulatory filings show that domestic investors, including citizens of East African countries, now hold 1.51 billion units of the telco’s stock equivalent to a 3.79 percent stake.

Foreign investors including asset managers such as BlackRock, JPMorgan and Fidelity have meanwhile more than doubled their combined stake to 10.17 percent from five percent over the same period. “Local East African fund managers have picked up from some selling by local individuals as well as the bulk of selling which has been done by foreign institutional investors,” said Eric Musau, a research analyst at Standard Investment Bank (SIB).

Safaricom’s record of paying dividends and the ease of exit from the counter has made the share a favourite with institutional investors and foreigners. It has become a must-have stock for most institutional investors who nowadays transact trades in the telco’s shares worth billions of shillings per day.

ALSO READ: NHIF drops top earners bid to pay more monthly

On Friday, for instance, it accounted for 70.9 percent or 4.55 million of the 6.42 shares that exchanged hands at the Nairobi bourse. Local institutional investors, excluding the Treasury, Vodafone and Vodacom, had an 11.1 percent stake in July worth Sh124.7 billion, up from 6.62 percent in May 2013. Analysts say the local high-net-worth investors have taken advantage of the falling Safaricom share to buy on the cheap.

The share has dropped from Sh44.65 in August last year to Friday’s closing price of Sh28.05, with their eyes on dividends and capital gains.

Safaricom share accounts for 52 percent of the entire stock market value. A minimal fall in the Safaricom share price creates an impression that the market is underperforming despite other counters recording gains.

Already, the Capital Markets Authority (CMA) has flagged the dominance of five companies — including Safaricom — in the 65-stock Nairobi bourse as a big risk, with the performance of their shares dictating whether the market goes up or down on any given day.

Retail investors have been net sellers of Safaricom shares since the telco hit the stock market where its share price initially dropped sharply below the IPO offer price of Sh5 to hit a low of Sh2.50.

Nearly 300,000 retail investors exited before and midway through the telco’s long-term stock rally which gained momentum from December 2012. The government allocated local investors 4.8 billion shares or nearly half of the 10 billion units sold in the IPO as a deliberate policy to help them share in the telco’s prosperity.

“Key among the government’s privatisation objectives is the need to broaden the shareholding of State-owned corporations among Kenyans, as well as to deepen the capital market and raise resources for infrastructure development,” the Treasury wrote in Safaricom’s IPO prospectus.

The government raised Sh50 billion from the IPO by selling 10 billion shares equivalent to a 25 percent stake in the telco to individuals, local firms and foreign investors.

The hype surrounding the offer saw retail investors apply for 22.6 billion shares or 4.7 times the 4.8 billion units that they were ultimately allocated. Retail investors paid a total of Sh24 billion for the shares which would have a current market value of Sh134.6 billion, assuming the investors held on to all the stocks to date.

The investors have, however, sold a total of 3.2 billion shares over the years, leaving them with 1.5 billion units now valued at Sh42 billion. Besides capital gains, those who sold their shares in the early years have missed out on lucrative dividends that Safaricom has paid.

The telco has so far made cumulative cash distributions of over half a trillion shillings in its life as a publicly-traded firm. Some individual investors, including billionaires, have benefited the most from Safaricom as they have continued to accumulate the company’s shares.

Chirag Minesh Solanki and Kalavati Menesh Solanki are top individual shareholders with a stake worth Sh980 million. Billionaire investor John Kibunga Kimani now holds 18.1 million shares worth Sh486 million, according to the July records. He started buying the telco’s shares at the IPO when retail investors were required to apply for a minimum of 2,000 shares.

A total of nine local individual investors hold 122.4 million shares valued at Sh3.43 billion. Safaricom posted a 1.7 percent drop in net profit to Sh67.49 billion in the year to March, the first results that include its Ethiopian operations.

The Ethiopia business reported a net loss of Sh4.8 billion in the 10 months ended March, reflecting the startup costs in a period when it did not have revenue. Safaricom Ethiopia, in which the Kenyan multinational holds a 55.7 percent stake, was issued an operating Licence in July 2021.

The stake held by individuals is expected to continue dropping going forward as local and foreign institutional investors gather more assets and deploy them in buying Safaricom and other stocks.

SOURCE: Business daily

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BusinessEastern AfricaEconomyUncategorized

Somalia Renews Bid to Join the EAC Trade Bloc

by Radarr Africa
written by Radarr Africa

Somalia has renewed its bid to join the East African Community (EAC) trade bloc, after the country’s newly elected President Hassan Sheikh Mohamud arrived in Arusha to attend the ongoing 22nd Ordinary East Africa Community Heads of State Summit.

”I am here to make a formal bid for Somalia to join the East African Community,” Mohamud said. 

The leader had initiated the bid during his first term between 2012 and 2017 together with DRC, but members declined due to war and disorder in Somalia

The inclusion of Somalia in the regional trading bloc will make EAC a plus 300 million population market after the addition of DRC pushed it to 290 million. 

It is also likely to push the region’s combined GDP above KSh30 trillion, from the current Ksh29 trilliom after the addition of DRC.

SOURCES: The Kenya wall street

ALSO READ: First miraa consignment set to leave for Somalia on Sunday
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AgricultureEastern AfricaEconomy

Traders Seek Sh175mn From Govt To Cover Reduced Cost Of Unga

by Radarr Africa
written by Radarr Africa

Traders are seeking more than Sh175million from the government to cover the reduction of the cost of maize flour to Sh100.

In a statement, the traders through the Retail Trade Association of Kenya(RETRAK) said that as of the close of business on July 20, before the cost of unga was reduced, they were holding unsold stocks amounting to more than 750 tonnes.

“While the new price tags are affixed, we have commenced engagements with the respective maize meal suppliers to recover more than Sh175 million, which is a cumulative estimate of the higher price earlier paid to them to facilitate deliveries,” said Wambui Mbarire, CEO RETRAK.

Mbarire noted that fast-moving commodities such as Unga are paid for in advance by retailers or in very thin credit terms which do not exceed 14 days.

President Uhuru Kenyatta on Wednesday announced new stimulus measures to cushion Kenyans against the high cost of living, among them reducing the cost of a 2-kilogram packet of maize flour to Sh100 down from an average of Sh205 following talks with millers.

Many traders including major retailers to shopkeepers were caught unawares by Uhuru’s directive exposing them to losses in the millions of shillings from holding old stocks.

“We are optimistic that our engagements with the government will bear fruit, and retailers will recover these amounts as rebates or credit notes to facilitate smooth service delivery to our esteemed customers,” said Mbarire.

A spot check by Capital FM on Thursday revealed commotions in supermarkets and other retail outlets as Kenyans rushed to purchase the commodity after prices were lowered.

In the capital Nairobi, various supermarkets limited the number of purchases to a maximum of 2 or 4 packets.

“We should be allowed to buy the number of packets we want. Why are they limiting the purchases?” said Tom Otieno, a shopper at Naivas supermarket on Moi Avenue.

In some outlets countrywide, there was a shortage of the commodity.

“I don’t know what is happening because there is no Unga in the shelves,” said Marion Njeri, who spent one hour waiting for the commodity, “the queues are too long and Unga is getting finished as soon as bales are opened.”

Some supermarkets for instance Naivas Moi Avenue opted to assign some of their staff to specifically deal with issuing unga packets to shoppers, as part of measures to limit the number of packets to be picked as well as manage commotion.

SOURCES: Capital business

ALSO READ: Afreximbank, EABC launch trade, investment council
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AgricultureEastern AfricaEconomy

Farmers to pay new tax in fresh Treasury policy

by Radarr Africa
written by Radarr Africa

Small-scale farmers will start paying a presumptive tax if the Treasury’s proposals that seek to recruit more taxpayers to meet revenue collection targets are adopted.

The proposal in the draft National Tax Policy will see farmers join informal traders in paying the presumptive tax— paid by business people as a fixed share of their sales.

The principle of presumptive taxation is usually imposed on those whose income is low or those who are not covered under usual tax coverage.

It is aimed at bringing on board small and medium businesses that are sometimes outside the tax net.

Presently, traders with annual sales below Sh5 million are required to pay a presumptive tax at the rate of 15 percent of the single business permit fee issued by county governments when renewing their permits.

For agriculture, the Treasury is seeking to use cooperative societies, which handle farmers’ proceeds, as units for deducting the presumptive tax.

“To progressively increase tax yields from hard to tax sectors, the government will explore ways of enhancing taxation in the agricultural sector and the informal sector, including use of presumptive tax,” says the draft policy.

“Roll out education programmes to farmers and informal sector groups on taxation and business, including registering with respective sub-sector associations and co-operative societies.”

Currency there is no specific income tax on farmers now and farming income is taxed like any other economic activity Presumptive tax on agricultural produce returns after it was abolished. Previously it was charged at a rate of 3.5 percent before it was repealed.

Agriculture contributes nearly a third of Kenya’s economic output.

Currently, small-scale farmers do not pay income tax on their earnings and the Treasury expects to net thousands of growers, especially those dealing in cash crops like tea, and sugarcane. The taxman will have to grapple with poor record-keeping among rural-based farmers in what looks set to be chaotic tax collection.

“From the indication of using cooperative societies I think the government is targeting cash crops and the tax will be collected at the point of sale,” Partner Kody Africa LLP and Tax expert Nikhil Hira said. Experts reckon that the Treasury would rely on existing law to have farmers pay tax.

They said section 15(7) of the income tax law allows taxation of income from agricultural proceeds, adding that the law is yet to be enforced due to farmers’ lack of awareness.

Presumptive tax is considered an advance duty that is later deducted against the turnover tax, which is charged at the rate of one percent tax on their sales for businesses whose annual revenues are below Sh5 million.

The presumptive tax has allowed the Kenya Revenue Authority (KRA) to gather additional data on small traders, allowing easy implementation of the turnover tax.

The informal sector, popularly known as Jua Kali, is deemed to have limited contact with the taxation system save for indirect consumption levies and the Treasury is banking on the turnover and presumptive taxes to plug the revenue loopholes.

Presumptive tax has been key in collecting data on small traders who largely operate informally for the purposes of enforcing the three percent monthly turnover tax.

The micro- and small-sized businesses remain the backbone of the Kenyan economy and the largest contributor of new jobs despite largely operating in informal settings.

The Kenyan economy is dominated by subsistence agriculture and a large informal sector, which are difficult and uneconomical to tax.

Whereas the informal sector is expanding, its contribution of tax revenues remains low as it is largely cash-based and characterised by poor record keeping.

This has led to overreliance on the formal sector for tax revenue that grew by 21.7 percent or Sh148.9 billion to hit Sh2.03 trillion.

Income tax levied on individuals and corporates constitute 47 percent of ordinary taxes at an average of Sh555.6 billion over the last 10 years.

ALSO READ : kAM Appoints Tobias Alando as Acting CEO

The new policy is meant to expand the tax base, including increasing the number of taxpayers from 6.1 million to 8.2 million by next year.

The proposals include using the Sacco movement to get to the farmers as well as collaborating with county governments to identify the new taxpayers.

“The government will explore ways of enhancing collaborations and exchange of information on taxpayers between the national government and county governments,” says the draft policy.

SOURCES: Business daily

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