Cheaper fuel from Saudi Arabia
4 July 2022
Good Morning.
Kenya may need to find alternative sources to finance the current budget due to delays by the IMF in approving a Ksh 28 billion loan.
National Oil Corporation will start shipping fuel from Saudi Arabia at lower prices
State-owned National Oil Corporation of Kenya (NOCK) will start shipping fuel from Saudi Arabia at lower prices than the global rates as from August 2022.
This is the latest push by the government to lower pump prices.
The shipping is a government-to-government deal that will see the State-owned Saudi Aramco supply National Oil Corporation of Kenya with refined fuel at ‘exclusively’ lower prices than the global costs of crude.
Specifics of the deal
National Oil Corporation of Kenya will import 30% of the country’s monthly petroleum requirements.
Saudi Aramco will finance the shipments or provide the product with an extended credit period.
National Oil Corporation of Kenya will pay within a period of 60 and 90 days.
TAX
All VAT-registered taxpayers are required to install and use new Electronic Tax Registers
Kenya Revenue Authority announced that all VAT registered taxpayers will be expected to install and use new Electronic Tax Registers by July 31.
Failure to comply with the regulations will attract a fine of Kshs 1 million, or imprisonment of a term not exceeding three years, or both, as specified in Section 63 of the VAT Act, 2013.
The Electronic Tax Register will facilitate electronic tax invoice management by standardizing, validating, and transmitting invoices to KRA on a real-time or near real-time basis.
The Kenya Revenue Authority has approved 16 suppliers to sell the new registers.
FINANCE
Wins and pains of The Finance Act 2022
The Finance Act received Presidential assent on 21st June 2022. Most of the changes will be effective from 1st July 2022 and others will be effective from 1st January 2023.
Wins
Re-introduction of a 150% investment deduction in counties outside Nairobi and Mombasa.
VAT and Excise duty exemptions on locally manufactured passenger motor vehicles.
Tax exemptions to vaccine manufacturers who invest at least Ksh10 billion.
The Commissioner will refund overpaid tax within 2 years from the time an application is made. Failure to do this will attract an interest rate of 1% each month.
VAT on liquefied petroleum gas (LPG) has been reduced from 16% to 8%.
Pains
Capital Gains Tax rate has been increased to 15% from 5%.
Increase of Excise duty on fruit juices from Ksh 12.17 to Ksh 13.30.
Increase of Excise duty on cosmetics and beauty products from 10% to 15%.
Imported SIM cards will be charged Ksh 50 per card.
Fees charged by digital lenders subject to a 20% Excise duty.
IMPORT AND EXPORT
1. Export of khat to Somalia set to resume on July 5
Agriculture Cabinet Secretary Peter Munya announced that the export of khat to Somalia will resume on July 5.
Traders have been relying on the local market for the last three years after Mogadishu banned the export of the stimulant following a diplomatic row between the two countries.
Kenya has also been scouting for a new market in Djibouti to save farmers who rely on the crop as their main income source.
Djibouti gets most of its khat supply from Ethiopia, however, there is a huge deficit for the stimulant as Addis Ababa is unable to meet its total demand.
2. Port of Mombasa faces threat from South Sudan
The Port of Mombasa has been the main route for all consignments destined for South Sudan. However, South Sudan now says that the distance from the Port of Djibouti is shorter and would be efficient.
“We are in talks with Djibouti authorities so that we can connect Djibouti, Ethiopia, and South Sudan to use Djibouti port through Ethiopia," - Deputy chairperson for Chamber of Commerce in South Sudan Lado Lukak Legge.
South Sudan is second after Uganda in the use of Mombasa port, accounting for 9.9% of transit volumes.
Uganda accounts for 83% of all throughput cargo.
The Democratic Republic of the Congo accounts for 7.2%
Tanzania accounts for 3.2%
Rwanda accounts for 2.4%
3. Tanzania doubled the cost of acquiring export permits
Tanzania has doubled the cost of acquiring export permits from Ksh 27,000 per truck to Ksh 52,000. This move will drastically increase import costs for millers banking on Tanzania imports to counter the current maize shortage in the country.
The only reprieve for millers is that the government of Kenya placed 6th August 2022 as the deadline for importing maize under the current tax waivers.
Agriculture Cabinet Secretary Peter Munya stated that the tax waivers on maize imports will ensure there is enough maize supply in the country which will in turn lower the cost of flour production.
MOBILE MONEY
Telkom to link mobile cash platform to banks
Telkom Kenya is in the process of integrating its mobile money service, T-Kash’s systems, with local commercial banks to allow customers to send and withdraw money from their accounts.
Telkom Kenya seeks to increase competition in the mobile money service.Telkom Kenya chief executive Mugo Kibati said the technology company is working with Integrated Payments Services Limited (IPSL), a secure electronic payment company owned by Kenya Bankers Association (KBA) to link T-Kash and bank accounts.
Linking of T-Kash to local banks will see the mobile money service offer broader services apart from withdrawal at agents, sending money across different operators, and payment of commodities and services.
COMMERCE
Jambojet made Ksh 11 Million in sales from Cargo Operations in Goma
Jambojet made Ksh11 million in sales since it launched cargo operations in Goma in January.
The carrier stated that some of the cargo it had flown on the route included fresh produce, flowers, vegetables, farm inputs, and machinery. A large volume of the products is normally flown from Kenya to Goma, the capital of North Kivu province.
The airline stated that it charged Ksh 294,125 to ferry a tonne of cargo from Nairobi to Goma and Ksh 411,775 per tonne in the opposite direction.
WHAT YOU MIGHT HAVE MISSED LAST WEEK
World Bank to provide 390 Million for solar projects
World Bank has extended a Ksh 390 million facility to 14 firms in 14 counties, seeking to use solar energy to light up areas not on the national grid, and benefitting close to 1.3 million people.
Kenya Bureau of Standards (KEBS) has cleared six firms to undertake pre-export verification of conformity (PVoC) services for general goods.
The six firms include Bureau Veritas Kenya, China Certification & Inspection Group Company (CCIC), China Hansom Inspection & Certificate, Societe Generale de Surveillance (SGS), TUV Austria Turk, and the World Standardization Certification & Testing Group (Shenzhen).
The six firms, contracted for the next three years to June 2025, will assist KEBS in verifying the standards of goods meant for the domestic market at their source markets.
All consignments shipped after July 1 from countries where KEBS has appointed inspection companies should be accompanied by certificates of conformity (COCs) from the respective inspection companies
- KEBS
Where investors made money in the first half of 2022
Analysis of the different asset classes in the six months to June shows that the highest available returns locally came from offering loans to the government.
Returns from bonds auctioned this year averaged 13.06% whereas Treasury Bills offered rates of between 7.2% and 10%. The equities market had returns of 11.91%
10 startups join iBizAfrica incubation program
Standard Chartered Bank in partnership with iBizAfrica has unveiled the ten startups that will be joining a 12-week incubation program and a chance to secure $10,000 seed capital.
At the end of the program, the top 5 startups will each be awarded $10,000 in seed capital. The program, now in its fifth cohort, targets women-led startups looking to scale their businesses through technology.