Employers might have to match employees contributions to NHIF
24 May 2021
Good Morning, are you an Employer in Kenya?
If yes, you may have an additional liability of having to match monthly contributions made by your employees to the NHIF fund. This is if parliament passes the NHIF bill that amends section 15 of the NHIF act to include this provision. It is important to note that the amount matched by an employer to the fund is not deductible from the salary or remuneration of the employee.
Top contributors to the fund currently pay Ksh 1,700 a month and with the proposed changes, NHIF will collect double the amount. The contributions made by employers for the next financial year are expected to be above 25 billion Kenya shillings.
Some good news for employees : The bill introduces a tax relief of 15% of premiums contributed by workers.
FINTECH
Safaricom to Launch M-pesa “super app”
Safaricom is set to launch an Mpesa ‘super app’ that will allow small and medium Enterprises (SME’s) to create their own business apps within the M-pesa ecosystem. The new app will integrate all products and services offered by Mpesa. Several claims are that the app will include wealth management offerings for its users. This means that users will have the chance to invest money in the capital market through local fund managers in Kenya.
The creation of super apps generally raise competition law concerns since these apps have the potential of monopolising the market through consolidation of several services into a single platform. It would be interesting to see how the Competition Authority of Kenya will respond once the app is launched.
CAPITAL MARKETS
1. CMA admits 7 firms into the Regulatory Sandbox
The Capital Markets Authority admitted seven firms into its innovation hub (the regulatory Sandbox). These firms include Ezesha Africa, Innova Limited, Genghis Capital Limited, the Central Depository and Settlement Corporation (CDSC), Pyypl Group Limited, Belrium Kenya Limited and Four Front Management.
A regulatory sandbox is a framework established by the Capital Markets Authority that allows innovators in the capital markets to conduct live experiments in a controlled environment.
2. Safaricom raises its stake in Global Partnership for Ethiopia
If you are wondering why Safaricom and Mpesa appear in almost every weeks’ issue, well this is clear evidence that the company is rapidly expanding its business and reach throughout Africa.
Last week, it was revealed that Safaricom had raised its stake to 56% in Global Partnership for Ethiopia, a consortium that had placed and has now won the bid for a telecommunications license in Ethiopia. Safaricom, being the leader in the Consortium, is eyeing the telecommunications market in Ethiopia, a country that has a population of approximately 110 million with a mobile penetration rate of just 45%.
Kenya Wildlife Service (KWS) to seek help of private investors to run national parks and reserves
The Tourism Cabinet Secretary announced last week that the state was unable to fund and manage national parks as a result of declining revenues. He expressed that the parks and reserves were in a depressing state and needed upgrading. The lack of funding is attributed to the slump in travel occasioned by Covid-19 restrcitions.
The solution provided was that KWS would partner with private firms in the running of parks and reserves.
How the partnership will work - The private sector will manage park fees, build hotels and lodges, install services like internet and build roads within the park. KWS will then be in charge of security and conservation within the parks.
Has this partnership worked before ?- Yes.The private-public partnership is currently running Ol-pejeta and Lewa conservancies.
TAXES
Non-resident contractors in petroleum and mining sectors to face steeper taxes
The finance bill of 2021 proposes to double the rate of withholding tax upon payment of service fees to non-resident sub contractors working in the petroleum and mining industries.
The rate of withholding tax is set to increase from 5.625% to 10%
This applies to non-resident subcontractors with no permanent establishment in Kenya.
Those with permanent residence pay tax under the self assessment regime applicable to resident companies.
Other ConversationStarters
The Treasury is set to implement a one payroll system for National and County government workers. This is to ensure that ghost workers are eliminated from the system.
Kenya will receive 410 million dollars from the IMF this week as part of the package that the IMF approved to be sent to Kenya to assist in dealing with Covid-19 pandemic.
Chief Justice Martha Koome was sworn into office last week by President Uhuru Kenyatta.
Kenya’s new Indian Ocean port in Lamu began operating on Thursday and it edges the nation closer to fulfilling its ambition of becoming the main shipping hub in East African. The port is expected to serve South Sudan and Ethiopia.
The Government of DR Congo launched evacuation plans in the Eastern city of Goma after the eruption of a volcano that destroyed some homes in the region.
