Cost of Maize Flour now Ksh 100
25 July 2022
Good Morning. The International Monetary Fund (IMF) set a new loan condition requiring Kenya to drop the fuel subsidy programme by October. Without the subsidy, petrol prices would have jumped to Ksh 209.70 per litre from 15th July, while diesel would be Ksh 193.70.
Govt Lowers Cost of Maize Flour to Ksh 100
Last week, the government subsidised the price of maize flour by Ksh 100 for a two-kilogramme packet in a deal with millers aimed at cushioning Kenyans against the high cost of living.
Flour prices hit Ksh 210 for a two-kilo packet, up from Ksh 120 at the start of the year due to crop failure caused by poor weather and a shift in the movement of Ugandan maize to South Sudan.
By Friday (22nd July), Supermarkets had capped the number of packets of maize flour that customers could purchase. This was after a wave of panic buying witnessed the day before.
The Retail Trade Association of Kenya (Retrak) said that it had opened talks with suppliers to recover the Ksh 175 million they had paid for advance delivery of the commodity.
What’s next for millers ?
The subsidy is not all good news to millers who will require payments from government to cover the shortfall.
BUSINESSES
1 week Deadline for Businesses to install new Electronic Tax Registers
The Kenya Revenue Authority (KRA) offered firms more time to comply with regulations that require businesses to acquire internet-enabled electronic tax registers.
“Kenya Revenue Authority wishes to inform the public that the rollout of the Electronic Tax Invoice pursuant to the provisions of the Value-Added Tax (Electronic Tax Invoice) Regulations 2020 shall commence on August 1, 2022,” - Kenya Revenue Authority.
The new technology will enhance scrutiny of traders’ transactions.
INSURANCE
Britam launches travel insurance
Britam Insurance announced the launch of a new product “travel insurance”. This means that passengers on upcountry bus companies can buy travel insurance from Britam Insurance.
Britam Insurance will provide:
Ksh 50,000 accident and medical expenses cover;
Ksh 15,000 on ambulance services and
Ksh200,000 for death or disability.
ENA Coach, Dreamline, Tahmeed and Randa have partnered with online ticket company Voltic Kenya and Britam to offer the micro-insurance product on ticket sales.
The travel insurance service will only be offered to passengers who buy tickets though Voltic’s i-Abiri booking platform.
What are the chances of success of this product?
Given the prevalence of road accidents in Kenya, the product could end up costing Britam Insurance millions of shilling in claims.
Note: As of May 22, 2022, a total of 1,816 fatalities had been recorded. This is an increase of 9.2% compared to a similar period in 2021.
EAST AFRICA
Somalia to join the East African Community
The East African Community Heads of State Summit, sitting in Arusha on Friday evening, agreed to fasttrack the verification of Somalia’s application to join the bloc.
Somalia had applied, for the second time in 2019, but the EAC never sent a team of experts to the country to determine if it qualified for membership. The decision on Friday means the procedure for joining will now commence.
This procedure could take at least two years.
COMPANIES
Airtel Money is now a separate entity from Airtel Kenya
Airtel Networks Kenya split its mobile money business into a separately run entity known as Airtel Money Kenya Limited.
How this happened: Airtel Africa Plc sold a 25.77% stake in its local mobile money business as part of a continental deal that saw it raise $550 million (Sh65.2 billion) from four institutional investors.
Despite the split, the two companies will continue to share customer data.
The continued use of the mobile money service by customers will be deemed as proof of a customer’s acceptance of data sharing between the 2 firms.
Looking forward: Airtel Money Kenya will now be run and regulated by the Central Bank of Kenya as a standalone business. However, the customer user experience is not expected to change.
WHAT YOU MUST HAVE MISSED
United Nations asks Kenya to tax the cryptocurrency industry
A policy brief by United Nations Conference on Trade and Development (UNCTAD) wants Kenya to enforce mandatory registration for crypto exchanges and digital wallets and tax transactions to make the sector less attractive.
The agency also wants banks and other financial institutions blocked from holding stablecoins and cryptocurrencies or offering related products to clients. It has further urged the government to restrict or prohibit the advertisement of crypto exchanges and digital wallets in public spaces and on social media.
The United States demands that the Kenya Revenue Authority (KRA) spy on American investors for tax evasion and money laundering
The United States wants Nairobi to enforce an agreement signed in 2014 that requires Kenya to share information with it on tax evasion linked to US firms and investors. The US government stated that this was among the conditions for a trade deal between the two countries.
Kenya Revenue Authority will be expected to gather and share information such as income declarations, bank records and data on goods shipment and allow its employees to appear as witnesses in the US courts.
IMF approved the disbursement of a $235.6M loan to Kenya
The International Monetary Fund (IMF) stated that its executive board has approved a $235.6 million disbursement to Kenya.
‘The disbursement is usable for budget support and brings such payouts to $1.208 billion under the 38-month arrangements, which were worth $2.34 billion when they were approved in April 2021,’ - the IMF.
Kenya Airways will Get Ksh103 Billion Bailout from Taxpayers
Kenya Airways will again get financial assistance from taxpayers as the state will pay its Ksh103 billion debt.
According to a country report by the International Monetary Fund (IMF), The move is aimed at helping the airline cruise through its financial turbulence.