Cigarette maker BAT has challenged the Government’s plan to burden tobacco and alcohol companies with more taxes. The firm says the move may be counterproductive.
According to the proposed Excise duty regulations, the State intends to raise more revenue by slapping select manufacturers with more taxes, a move that BAT says will affect its business in Kenya.
“BAT Kenya continues to grow shareholder value despite the difficult trading environment in Kenya and many of our export markets,” said BAT Kenya Managing Director Beverley Spencer-Obatoyinbo yesterday during the release of the company’s half-year financial results.
Ms Obatoyinbo said a predictable and stable tax environment in Kenya is critical for the growth of businesses and the manufacturing sector.
“We are disappointed by the 15 per cent increase in excise duty on cigarettes, wines, and spirits proposed in the Finance Bill 2019,” she said.
Obatoyinbo also said BAT will continue to engage the Government on the matter in a bid to protect consumers and shareholder value, which she said is threatened by illicit cigarettes.
She said latest data on illicit trade indicates that a marginal decline in the last six months has been offset “by a significant increase in the volume of illicit cigarettes coming across the Ugandan border, which now accounts for approximately 70 per cent of all tax-evaded cigarettes in the country.”
As a result, the firm said the illicit business continues to deny the State up to Sh2.5 billion in revenue annually.
“We are extremely concerned that this latest excise shock will exacerbate the problem by increasing the affordability challenges and could even incentivise foreign entrants into the illicit space, undermining Government efforts to address the problem,” she said.
BAT said it managed to post an after-tax profit of Sh2.5 billion due to excise led pricing “which more than offset the higher costs associated with lower sales volumes in Kenya and the Democratic Republic of Congo as a result of the continued impact of affordability challenges.”
The company recommended an interim dividend of Sh3.50 per share to be paid to shareholders by September 20.
“Despite this performance, sales volumes in Kenya have continued to decline owing to the high levels of tax-evaded illicit cigarette sales in Kenya, which stood at 14.1 per cent at the end of 2018,” said Ms Obatoyinbo.
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World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.