Misplaced Priorities: Kenya's supplementary budget
14 February 2022
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Supplementary Budget allocations: why the Government’s priorities are misplaced
Treasury’s supplementary budget increased the state house budget by ksh 1.89 billion for undisclosed expenses, purchase of cars and local trips.
Local travel budget - Ksh 965.9 million (an increase of Ksh 205 million)
Car purchase budget - ksh 300 million
The budget signals increased local travel by the president a few months before the August General election.The irony in this is that:
Treasury dropped the plan to allocate Ksh 1 billion into loans guarantee scheme for small businesses.
The loan guarantee was aimed at stimulating the economy post Covid-19.Treasury also dropped the Ksh 1 billion allocation to build locally fabricated desks for secondary schools.
The budget for affordable housing has been reduced to Ksh 5.2 billion from Ksh 8 billion.
However, Kshs 26.5 billion was allocated to the Kenya Airways bailout.
here's our detailed summary of the supplemetary budget 
MARKETS
Central Bank of Kenya proposes the introduction of a Digital Currency
On Thursday, The Central Bank of Kenya invited the public to give their views on the potential introduction of a digital currency. It also published a Discussion Paper on a potential Central Bank Digital Currency (CBDC).
TheDiscussion Paperinvites comments from the public. Written submissions or representations are to be sent to CBK by Friday, May 20, 2022 at 5.00 p.m.
Advantages of having a digital currency
It eases cross-border payments and complements mobile money in the local digital payments space.
It can make the financial system safer by allowing individuals, private sector companies and non-bank financial institutions to settle directly in central bank money.
Disadvantages of having a digital currency
Most times, it leads to a migration of deposits from commercial banks to the Central Bank Digital Currency. This reduces the ability of Banks to continue offering sufficient credit to the economy.
As a result, it eventually reduces the systemic importance of large banks and PSPs [payment service providers].
Ghana and Nigeria have already piloted their Digital Currencies, while Kenya, South Africa, Rwanda and Tanzania are still conducting researchCOMPANIES
Audit firm Ernst & Young to undergo investigations over fraudulent transactions involving Uchumi’s accounts
The Court of appeal gave the Capital Markets Authority (CMA) a go ahead to investigate Ernst & Young (E&Y) over claims that it abetted fraudulent transactions involving Uchumi’s former managers amounting to over Ksh 1.9 billion.
A forensic audit report by KPMG revealed that Uchumi’s accounts for financial years 2010 - 2014, which were prepared by E&Y (their auditors at the time), contained misleading information.
The Institute of Certified Professional Accounts of Kenya (ICPAK) stated that it was investigating the directors at the firm who reviewed Uchumi’s audit reports of 2014 and 2015.
What this could mean for E&Y: The audit firm could face enforcement actions such as Fines, Compensating investors who acquired Uchumi shares based on discredited prospectus & restrictions in auditing listed firms.
NOTE: Uchumi has not released its financial statements since the year ending June 2018TOWNS
Mombasa suspended its new traffic system barely a week after launch.
On Tuesday, Mombasa suspended a new traffic system that was introduced just a week before.
The new system had turned most of the major roads into one-way routes inorder to ease traffic and reduce travel times for motorists.
However, the new system received criticism from citizens and various stakeholders. The major complaint being that the new rule disrupted the lives of many residents & led to rising fares in the city.
TENDERS
Who are the beneficiaries of Huge Chinese Infrastructure contracts?
Parliament has launched an inquiry to reveal the Kenyan beneficiaries of the multi-billion dollar contracts awarded to Chinese firms.
The inquiry will cover all contracts awarded to Chinese State-owned companies as from 2013. The National Assembly Speaker also directed the Transport committee to commence investigations.
Key projects undertaken by Chinese firms
EAST AFRICA
Kenya protests South Sudan’s decision to charge entry and exit fees to all vehicles entering the country
South Sudan announced that it would introduce a fee for all vehicles entering the country as from 1 march 2022: ($100 annual fee plus further $30 for every entry.)
The new fees will be applicable at Nimule-Elegu One-Stop Border Post (OSBP) which is the main border post where goods imported from Kenya through Uganda are processed.
“The entry and exit fee will increase the cost of transport and hamper the free movement of goods along the Northern Corridor.”
INTERNATIONAL LAW
ICJ Ruling : whether Uganda should pay reparations to DR Congo for its role in Congo’s conflicts.
Background:
In 2015, the International Court of Justice ruled that Uganda had violated international law by occupying parts of DR Congo and supporting other armed groups in a war that took place from 1998-2003.
The court ordered Uganda and DR Congo to negotiate reparations.
However, both parties approached the court seeking a final decision on the amount of compensation.
This was after both parties failed to agree on the compensation amount with DR Congo claiming $11 billion dollars as compensation.
Last week’s ruling
The International court of Justice ruled that Uganda should pay $325 million in reparations to the Democratic Republic of Congo for its role in Congo’s conflicts.
The payment will be in five yearly instalments of $65 million, starting September this year.
The award was below the $11 billion reparations that Congo sought.
“Uganda considers the judgment unfair and wrong, just as the previous 2005 judgment on liability was unfair and wrong," - Uganda’s foreign Ministry
WHAT YOU MIGHT HAVE MISSED LAST WEEK
World Bank and Kenya in talks for a Ksh 23 billion loan- a senior agriculture economist with the World Bank stated that the Bank was negotiating with Kenya on a new Ksh 23 billion loan that will be channelled to various agriculture value chains.
The expectation is that the loan will be approved by April this year.
Direct flights from Milan to Nairobi - Kenya Airways will start direct flights from Milan to Nairobi on June 8th as demand for booking picks up ahead of summer.
The Court of appeal allowed the State to prosecute 4 former Britam employees, who later formed Cytonn investments
The criminal case has been instituted against former managing director Harold Dande, Elizabeth Nkukuu (senior portfolio manager), Shiv Arora (assistant company secretary) and Patricia Njeri (head of legal services).
The four will be charged with two counts of theft by servant after allegedly authorising payments of more than Ksh1.1 billion from Britam, in 2014.
Tanzania agrees to sign the European Union trade deal - The East African Community will now sign the Economic Partnership Agreement (EPA) with the European Union after Tanzania changed its stance on the deal.
Background: The agreement was negotiated and agreed on in 2014. However, it could not be signed because Tanzania decided not to sign the agreement.
Tanzania was concerned that cheap goods from EU would affect its locally produced goods.
Judiciary to recruit persons to the Political Parties Disputes Tribunal - The Political Parties Disputes Tribunal determines disputes arising out of electoral processes. This includes political party nominations.
The recruitment will be of 18 persons and they will serve in the tribunal for a year.
Applications are open as from 9th February - 16th February.
Ghana’s national ID receives e-passport status in 44,000 airports - The International Civil Aviation Organisation (ICAO) has recognized Ghana's national ID as an e-passport and can be used for international travel through 44,000 airports globally.
Small-scale Kenyan farmers complete their first direct export of coffee - The export, valued at Ksh103.21 million, was shipped to South Korea directly instead of through the Nairobi Coffee Exchange.
The farmers made double the price they make when they sell through middlemen.
The African Union's Heads of State approved Swahili as an official working language for the bloc.
The announcement was made during the African Union's Assembly in Addis Ababa, Ethiopia.
The United Nations Educational, Scientific, and Cultural Organization (UNESCO) has designated July 7 as World Kiswahili Language Day.