Good morning,
Have you checked your E-citizen account lately ? Well if you have not, the time is now. Last week, Kenyans realised that some of them had been registered to political parties on E-citizen without their consent.
The Registrar of Political Parties responded by stating that ‘her office was piloting the online service to enable the public to verify their political party membership status.’
The ConverationStarter this week is…
Cytonn.
On Thursday last week, an instagram and twitter post by Lynn Ngugi (@missturu) went viral. Miss Lynn expressed her frustration with Cytonn and specifically with the Cytonn High Yield Solutions. She explained how she had invested in the fund some years back but when she requested for the release of the funds last year, Cytonn explained that they were facing financial struggles hence could not release the funds.
Miss Lynn’s frustration is that a year later, Cytonn still claims that they cannot release the funds due to financial challenges yet it continues to advertise its High Yield solutions on social media as being profitable.
Response to the viral video
The Capital Markets Authority (CMA) released a statement that the Cytonn High yield Solutions was not licensed by it as it was structured as a private offer.
The CMA advised affected investors to report to the Capital Markets Fraud Investigation Unit (CMFIU), which is the Police Unit
Cytonn CEO, Edwin Dande, responded to CMA’s claim as them jumping ship when times got tough. He explained that Cytonn’s investments are safe but illiquid. He described CMA’s statement as a showcase of the poor state of capital markets regulation in Kenya.
Cytonn’s woes stem from way back. Last year, Cytonn was accused of flouting capital markets regulations by disguising funds as private placements to avoid scrutiny by the capital markets authority.
CONVEYANCING
Kenya to roll out a Land value index to make the land market transparent
Currently, Kenya does not have a standardised land value information system. The World bank stated that Kenya had wasteful public project spending due to speculative valuation of land which drives up land acquisition costs when government purchases private land.
Moreover, the lack of a standardised system means that the government cannot efficiently generate revenue from property taxation.
The Land Valuation Act of 2019 provides for the establishment of land valuation systems in all counties. So far, only 6 of the 47 have systems in place. The Rating Valuation Act which provides the legal basis for rating, is outdated.
The loan condition from the World Bank includes the development of a valuation index, reviewed regularly, that will inform the valid market price of land in the Country.
REFUGEE LAW
Deadline moved : The June 2021 deadline for the closure of Kakuma and Dadaab refugee Camps moved to next year.
In our previous post, we discussed Kenya's move to close Kakuma and Dadaab refugee camps by June 30th 2021. This deadline was moved to next year June after an agreement between Kenya’s Cabinet Secretary for internal affairs, Fred Matiang’i and UNHCR boss Filippo Grandi.
The agreement marks the 5th time that Kenya has delayed its plan. According to the agreement, 15000 refugees will be let go every month either back to their home countries or be resettled somewhere else.
Kenya has stated that it has hosted refugees for 30 years and the capacity to hold them under the minimum humanitarian standards is overstretched. Kenya also cites rising insecurity as a reason for the closure. Kenya believes that Alshabaab use these camps to recruit members.
Capital Markets
Asset transfer into the Real Estate Investment Trusts (REITS) and Asset Backed Securities exempted from VAT
Treasury announced the removal of VAT tax charge to assets transfers into REITS and Asset backed securities. The removal is a move to boost the two alternative financing plans which contribute to affordable housing.
Student hostel developer Acorn Holdings (developer of Qwetu hostels) had issued REITS but it resulted in under-subscription. The move by the treasury is an incentive to increase the enthusiasm and participation in the emerging investment vehicles such as REITS.
About 140,000 Private Companies have declared their beneficial owners after the Attorney General Paul Kihara ordered public and private companies to provide personal information of shareholders who own more than 10 percent or exercising control in a firm.
The order was aimed at curbing money laundering, unmasking illicit wealth, revealing corruption and identifying the people who own large blocks of shares in companies.
UNIVERSITIES
Kenya to introduce performance based funding for public universities
As part of the World Bank conditions for its loan, Kenya will adopt performance based funding for its public universities. World Bank stated that this move will help Kenya cut wasteful spending to achieve economic recovery and financial sustainability.
There will be a reform in law through the replacement of the Universities Act 2012. Kenya will introduce an objective, performance-based financing to replace the input-based financing which is based on the Differentiated Unit Cost model (a framework pegged on the number of undergraduate students registered, the courses they take, and the student-staff ratio)
Public Universities have had financial challenges attributed to the decrease in number of self sponsored students, the rise in number of private universities and insufficient funding from the government.
Kenya and Somalia relations slowly being restored
On Monday last week, Kenya’s Foreign Affairs Ministry announced that it was reopening its embassy in Somalia and welcomed Somalia’s ambassador of back to Nairobi. A few days before this, Kenya reopened its airspace to flights to and from Somalia.
The two countries had severed diplomatic ties in December last year, when Somalia expelled the Kenyan ambassador from Mogadishu and recalled its ambassador. However, in May 2021, Somalia announced that it was ready to restore diplomatic ties with Kenya.
KRA (Kenya Revenue Authority) unable to pay the police guarding its offices
KRA’s commissioner told the National Assembly’s Public Accounts Committee that KRA had sunk into arrears from 2016, failing to pay the police Ksh 214 Million for the security services offered by them to guard KRA offices.
KRA was to be invoiced ksh 500 per police officer per day. The commissioner explained that the budgetary allocations to KRA were low making the taxman unable to cater for police expenditure.
Other ConversationStarters
Kenya Airways will resume operations on the Nairobi-London flight on June 26th and will increase the frequency of flights to the United States to 3 every week.
Kenya national treasury raised a 1billion dollar Euro bond. The borrowing has pushes the total Kenyan debt to Sh7.4 trillion, which is equivalent to 69 percent of the GDP from 48.6 percent in 2015. Is this sustainable?