Kenya and Jersey sign agreement to send seized funds back to Kenya
4 April 2022
Good morning,
Just how bad is Kenya’s debt problem?
Well, debt repayments will overtake the national government’s recurrent spending in the financial year that starts in July 2022.
According to estimates,
a) Recurrent expenditure is placed at Ksh 1.34 Trillion in the coming year, up from Ksh 1.27 Trillion currently.
b) Annual debt repayment has been placed at Ksh 1.36 Trillion in the coming year, up from the current Ksh 1.15 Trillion.
Kenya and Jersey sign agreement to send seized funds back to Kenya
Ksh 450 million seized from former Kenya Power Managing Director Samuel Gichuru and former Finance Minister Chris Okemo will be repatriated to Kenya from the United Kingdom after the 2 countries signed an Asset Recovery Agreement (ARA).
Okemo and Gichuru are facing charges of money laundering in the United Kingdom’s Jersey Island. It is alleged that the two defrauded millions of shillings from KPLC (Kenya Power and Lighting Company) between 1998 and 2002 and hid the proceeds in offshore accounts in the United Kingdom.
The funds will be used to support Kenya’s covid-19 pandemic response.
MARKETS
Central Bank of Kenya temporarily blocked Eco-bank from trading in Forex
Kenya’s central bank barred Ecobank from foreign exchange transactions between March 29th and April 4th as part of regulatory action for unsafe trading practices.
According to the Central Bank of Kenya, Ecobank did not have sufficiently robust risk controls to prevent breaches of its foreign exchange exposure limits, or the inaccurate reporting of its position.
The CBK gave the bank till 31st March 2022, to put in place remedial plans to ensure operational lapses are addressed.FINANCE
Safaricom partners with Gulf African Bank to introduce Halal Pesa
Halal Pesa is a Shariah-compliant mobile finance serviceHalal Pesa will empower M-PESA customers who have previously been unable to access financing due to barriers such as the lack of Shariah modeled mobile facilities in Kenya.
According to Safaricom, customers will initially be provided with a personalized facility limit based on their M-Pesa usage. The disbursement will have a 30-day repayment period at a 5% Murabaha margin.
How to access Halal Pesa;
On your M-Pesa Super App, it is available as a Mini App under the Grow Section
You can Dial *334# and find Halal Pesa under Loans and Savings
ENERGY
1. Lamu oil basin declared commercially unviable
Mlima-1, (the well in the Lamu Oil Basin) off Kenya’s Indian Ocean coast was declared commercially unviable by Italian energy group Eni.
The well in the Lamu Basin lies within the disputed territory with Somalia and has been the cause of diplomatic conflict between the two countries.
Early data had indicated the existence of oil reserves which would offer Kenya another chance at becoming an oil producer.
2. Fuel shortage hit parts of the country
Last week, An unexpected fuel shortage hit Western Kenya, the North Rift, and many parts of rural Kenya.
Eldoret town, towns in Uasin Gishu county, and North Rift counties were among parts of rural Kenya hit by the severe fuel shortage.
The oil dealers blamed the shortage on a mismatch in oil pricing and wholesalers who had stopped supplying to them.
Officials at the Energy and Petroleum Regulatory Authority (Epra) estimated that the Treasury would require at least Ksh 15 billion in April to compensate oil marketers in order to keep local pump prices unchanged.
Via press release, EPRA stated that the country is sufficiently stocked with petroleum products but a number of oil marketing companies were holding back sales to the local market. EPRA then directed all Oil Marketing Companies to immediately release supplies to the local market.
LEGAL DECISION
1. The Supreme Court ruled that the Building Bridges Initiative was unconstitutional
In a majority judgment, the Supreme Court, whose ruling is final, upheld a finding by the lower courts that the initiation of the Building Bridges Initiative was unconstitutional.
According to the court, the president had initiated changes through a constitutional provision that is exclusively reserved for ordinary citizens.
Another element deemed unconstitutional was the plan to create an extra 70 seats in parliament - which critics of the Bill view as a self-serving attempt to reward loyal politicians.
2. Withholding tax is not applicable to professional fees paid to French entities
Last week, the tax appeal tribunal delivered a judgment on whether withholding tax is applicable to professional fees paid to French firms. the Kenya/France double tax agreement.
The judgment: According to the Kenya/France double tax agreement, business profits and withholding tax only apply if the entity from the other contracting state has a permanent establishment in Kenya.
This means a Kenyan company that has contracted a company in France for management services will not be required to pay withholding tax.
WHAT YOU MUST HAVE MISSED
Microsoft accused of Bribery in Africa
A whistleblower, the ex-Microsoft Director for Emerging Markets, alleged that Microsoft takes over $200 million annually in bribes in Africa and the MENA region.
He stated that he believed employees, partners, and government officials with connections to tech companies have been funneling money from Nigeria, Ghana, Saudi Arabia, Qatar, and Zimbabwe.
Agriculture Ministry will allow the importation of maize with minimal GMO content.
The Agriculture Ministry changed the GMO (Genetically modified organisms) Policy in response to the ongoing drought and shortage of feeds. As a result, animal feed importers can import maize with minimal GMO.
The level of yellow maize purity has now been reduced to 99.1% from 100%Nairobi Metropolitan services (NMS) to relocate Matatus from the city center starting this Month
The NMS announced that the relocation of PSV Matatus from the city center would begin this month.
The first group to be affected will be Matatus from Ngong, Langata, Argwings Kodhek Road, and those from the Mnt Kenya region.
Parliament cut the Huduma Namba budget by half
Parliament reduced the budget for the roll-out of Huduma Number ID cards to Ksh 500 million from Ksh 1 billion.
The major reason for this is that Kenyans have failed to take up biometric identification cards.
Government bans feeding bottles for infants
Kenya will ban baby feeding bottles from May 28 of this year. This is after The BMS (Breast Milk Supplements) general regulations came into effect last week.
In these regulations, bottles, teats, pacifiers, and cups with sprouts will not be allowed as containers for use when it comes to feeding children.
Moreover, the manufacturers of baby foods will be expected to comply with the standards and general regulations outlined in the law including;
The manufacturer must indicate in the packaging: "WARNING: Breastfeeding is best.”
The use of any graphic representation other than that illustrating cleaning and the maker's logo on the packaging is prohibited.
Ministry of Energy began negotiations with Independent Power Producers to review Power Purchasing Agreements
The negotiations are aimed at lowering Kenya Power’s Costs and reducing retail tariffs by 15%. The reduction is expected to boost social-economic growth by reducing the cost of living, putting more money in Kenyans’ pockets, and reducing the cost of doing business.