Saudi Arabia Emerges as Kenya's Largest Import Market
12 June 2023
Saudi Arabia Emerges as Kenya's Largest Import Market, Fueled by Petroleum Products
In a significant shift, Saudi Arabia has surpassed China, India, and the United Arab Emirates (UAE) to become Kenya's biggest single import market, according to recent data released by the Kenya National Bureau of Statistics (KNBS). This development highlights the significant role of petroleum products in driving Kenya's trade deficit.
In March, goods imported from Saudi Arabia skyrocketed to KES 32.27 billion, nearly three times the previous month's amount. Specifically, the surge was primarily attributed to increased orders of diesel, which amounted to KES 8.44 billion in February. This remarkable increase in imports from the Middle East's largest economy can be mainly attributed to the amplified shipment of gas oil (diesel), previously sourced from the UAE.
It is worth noting that the surge in diesel purchases from Saudi Arabia preceded the arrival of the first consignment under a government-to-government fuel import deal signed between Kenya, Saudi Arabia, and the UAE on March 10. The data from KNBS reveals that diesel, replacing jet fuel, emerged as the top import by value from Saudi Arabia, despite not being among the top three goods bought from the country in previous months.
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International Finance Corporation (IFC) Announces $257.4 Million Investment in Safaricom Ethiopia to Expand Communications Network
The International Finance Corporation (IFC), a member of the World Bank Group, has revealed a significant investment of $257.4 million (KES 35.88 billion) in Safaricom Ethiopia. The investment comprises $157.4 million (KES 21.9 billion) as an equity injection and an additional $100 million (KES13.9 billion) as a loan. The IFC made the announcement on Friday, marking a crucial step towards developing a robust communications network in Ethiopia.
Mohamed Gouled, the IFC vice-president of industries, expressed the organization's intentions behind the investment, stating:
"Through this investment, we hope to help the company create a competitive market for mobile connectivity, reflecting our strategy to increase competition in the digital sector globally and reduce costs for consumers."
The injection of funds by the IFC is expected to facilitate the expansion and enhancement of Safaricom Ethiopia's telecommunications infrastructure, thereby promoting increased access to affordable and reliable communication services for the Ethiopian population.
Safaricom currently holds a controlling stake of 55.7 percent in its Ethiopian subsidiary. In May, Safaricom stated that the IFC's stake would be below 10%. Other stakeholders in Safaricom Ethiopia include:
South Africa's Vodacom Group, which holds 6.19 percent,
Sumitomo Corporation from Japan holds 27.2%
British International Investment (formerly CDC Group) holds 10.9% respectively.
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PUBLIC PROCUREMENT
Public Procurement Watchdog Orders Re-evaluation of KES 10 Million Tender by Kenya Pipeline Company
In a recent development, the Public Procurement Administrative Review Board has directed the Kenya Pipeline Company (KPC) to re-evaluate a KES 10 million tender that was issued for the replacement of tiles at the corporation's Morendat Training and Conference facility in Naivasha. The decision comes after Tarime Trading Limited, one of the bidders, sought a review of the award given to rival Feihab Construction Limited, who emerged victorious from a pool of 30 contenders.
The tender required the replacement of PVC tiles with granite tiles in various areas, including common spaces and offices. Tarime Trading Limited, disappointed by the decision to award the contract to Feihab Construction Limited, lodged a request for review with the Public Procurement Administrative Review Board. The recent ruling by the board has granted them temporary relief by ordering a re-evaluation of the bids.
"The request for review, dated May 3, 2023, and filed by the applicant, is marked as withdrawn to allow the re-evaluation to proceed to its logical conclusion. Each party shall bear its own costs," stated the Public Procurement Administrative Review Board in their ruling
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Kenya Ports Authority Suspends Credit Accounts Amid Syndicate Manipulation Allegations
The Kenya Ports Authority (KPA) recently announced the suspension of payments through credit accounts, effective from the next financial year. The decision comes as the authority initiates an investigation into an alleged syndicate involved in manipulating such accounts. KPA Managing Director, William Ruto, made the announcement, stating that the suspension of credit accounts would put a strain on traders relying on this payment method.
In an official statement addressed to customers, the KPA outlined the new payment procedures, indicating that services would henceforth be rendered exclusively through bank cheques and other bank payment systems, including the real-time gross settlement (RTGS) system. As part of the transition, all customers with guaranteed ledger accounts will be automatically converted to cheque deposits starting July 1.
To ensure a smooth transition, KPA urged customers with ledger-guaranteed accounts to settle all pending or outstanding invoices before June 30.
Following this deadline, the authority will recall all guarantees with banks.
This move is intended to mitigate the risks associated with customers' accounts that have unpaid debts, which are operating beyond the bank guarantee limits. Additionally, some customers have been found to have invoices aged over 30 days, a clear violation of the authority's credit policy, which requires invoices to be settled within six days from the date of issuance.
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INSURANCE
CIC Life Assurance Authorized to Manage NSSF Tier II Contributions
In a significant development for the National Social Security Fund (NSSF), the Retirement Benefits Authority (RBA) has granted authorization to CIC Life Assurance to oversee the management of Tier II contributions. The clearance was announced by the firm on Thursday, marking another milestone in the expansion of private pension providers in Kenya.
CIC Life Assurance plans to handle the deductions through its CIC Umbrella and CIC Jipange Retirement Benefit Schemes. The company aims to support eligible employers in facilitating the opt-out process for Tier II contributions while ensuring the retirement security of their employees.
ACQUISITIONS
Shalina Expands Presence in Kenyan Pharmaceutical Sector with Acquisition of Provexa Pharma
Dubai-based healthcare company Shalina made a significant move in the Kenyan pharmaceutical market with its recent acquisition of Provexa Pharma Kenya Limited. The undisclosed deal adds to the recent wave of acquisitions taking place in Kenya's pharmaceutical sector, showcasing the growing competitiveness in the industry.
Shalina Healthcare received approval from the Competition Authority of Kenya (CAK) on Monday, allowing it to acquire all the issued shares of Provexa Pharma, a local wholesale distributor of affordable generic drugs. This acquisition provides Shalina with a strategic foothold in a sector that is becoming increasingly competitive. The CAK, while granting approval, concluded that the transaction was unlikely to violate antitrust regulations.
In its statement, the CAK emphasized that the approval was based on its assessment that the acquisition would not have a negative impact on competition in the wholesale distribution of pharmaceutical products market, nor would it raise any significant public interest concerns.
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TAX
Kenya Revenue Authority Received Additional Funding to Combat Tax Evasion
In a bid to boost revenue generation and reduce reliance on borrowing, the Kenya Revenue Authority (KRA) has been allocated an extra KES 1.2 billion to recruit additional intelligence and enforcement officers. This move aims to identify and apprehend tax evaders, ensuring compliance with tax regulations and maximizing revenue collection.
The Parliament's Budget and Appropriations Committee, during its review of the upcoming fiscal year's budget, has urged the Treasury to allocate billions of shillings to the KRA for the purpose of expanding its workforce. The additional employees will play a vital role in enhancing revenue collection, particularly from new planned levies, and in pursuing individuals and entities involved in tax evasion.
To meet the ambitious target of raising at least KES 400 billion in additional taxes for the upcoming fiscal year, the committee has increased the budget by KES 81 billion from the initial proposal of KES 3.67 trillion presented by the Treasury in Parliament. This development puts significant pressure on the KRA to deliver tangible results.
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Kenya Revenue Authority Requires Companies to Disclose Non-Resident Transactions on iTax Platform
In a recent public notice, the Kenya Revenue Authority (KRA) issued a directive requiring companies in Kenya to disclose their transactions involving non-resident persons. The KRA emphasized that companies must provide details about the nature of the deals and the amount paid through the iTax platform.
The KRA's announcement comes as part of its ongoing efforts to enhance transparency and promote tax compliance in the country. By implementing this requirement, the authority aims to gain a clearer understanding of related party transactions and ensure that businesses accurately report their gains and profits.
According to the KRA notice, companies will now be able to make declarations regarding related party transactions on the iTax platform.
This provision applies to individuals or entities with related parties, whose assessment of gains or profits from a business falls under the purview of sections 18 or 18A of the Income Tax Act.By incorporating this new feature into the iTax platform, the KRA seeks to streamline the reporting process and eliminate potential discrepancies in the declaration of related party transactions.
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MOBILE LOANS
Central Bank of Kenya Approves Safaricom-Backed Zero-Interest Credit Service, Faraja
The Central Bank of Kenya (CBK) gave its clearance to a Safaricom-backed zero-interest credit service, marking the end of a long wait for regulatory approval. The product, named Faraja, is expected to disrupt the mobile loans market by offering customers the opportunity to purchase goods on credit for amounts up to Sh100,000 without incurring any interest charges.
Faraja is owned by EDOMx Ltd, a Kenya-based financial technology firm, with Safaricom and Equity Bank listed as its partners. The CBK's decision comes after EDOMx was authorized as a digital credit provider in March, operating under regulations introduced last year to regulate fintech companies and combat predatory lending practices and violations of consumer privacy.
Originally scheduled for launch on July 6 last year, the product faced a setback when the CBK intervened just before its planned release, placing it under regulatory review. However, after nearly a year of waiting, Faraja will finally be launched later this month.
The credit service aims to revolutionize the market by allowing customers to make purchases ranging from as low as Sh20 up to a maximum of Sh100,000 with selected retailers, such as Naivas, on credit.
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WHAT YOU MIGHT HAVE MISSED
The Office of the Data Protection Commissioner (ODPC) has issued an additional 680 compliance certificates to data processors and controllers
The registration commenced on July 14 last year following the enactment of regulations by Parliament requiring all entities handling the personal information of individuals in Kenya to register as data processors and controllers.
In January this year, Data Protection Commissioner Immaculate Kassait launched the Data Protection Registration System that gave applicants the latitude to take personal charge of the registration, a move that has speeded up the compliance rates compared to the numbers recorded last year.
Oil marketers have presented a proposal to the Treasury for the conversion of fuel subsidy arrears worth billions of shillings into an interest-earning debt instrument like bonds.
The companies want their arrears estimated at Sh45 billion converted into a three-year debt instrument, offering them an opportunity to regular interest over the period, said sources familiar with the matter.
MPs approved the appointment of Dr. Kamau Thugge as governor of the Central Bank of Kenya (CBK)
Dr Thugge, a former PS at the National Treasury and currently the head of fiscal affairs in the Council of Economic Advisers, will be taking office in a period of elevated inflation, a weakening exchange rate, and concerns over dollar shortages in the economy.
Old Mutual and Zimele Pensions Plans received the approval of the Retirement Benefits Authority (RBA) to handle graduated NSSF contributions.
The pair are expected to handle the contributions known as Tier II through Old Mutual Pensions and Zimele Personal Pension Plan and Zimele Guaranteed Personal Pension Plan.