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Contract for Implementation of Sh5.8bn Likoni Cable Car Project Signed

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Trapos Limited and the Kenya Ferry Service (KFS) have signed a contract that will see the Likoni Cable Car project implemented. The contract will see the consortium, Trapos Limited and Australian company Doppelmayr Garaventa Group, “design, construct, finance, operate and maintain the Cable Car Facilities over the Likoni Channel on a Public-Private Partnerships (PPPs) model.”

The consortium will run the project for 25 years after which the operations and revenue of the Likoni Cable Car express will shift to KFS.

The signing of the contract now means that Doppelmayr Garaventa Group can finalise the financial arrangement in order to facilitate the implementation of the project.

“Through the novel PPP model, we not only attract private capital to the development operation and maintenance of our infrastructure, we are also able to tap into private sector efficiency and innovations, resulting in better value for money in our projects and ultimately improved service delivery to our citizens,” the acting PPP unit director Judith Nyakawa said.

The Likoni Cable Car Project

The Likoni Cable Car project is expected to serve 187,000 passengers per day and 5,500 passengers per direction for every hour.

KFS managing director Bakari Gowa said during the contract signing:

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“Currently, 350,000 commuters cross the Likoni Channel daily. This puts a strain on the vessels we already have. With the growing population, we are happy to increase the alternatives and capacity of transporting our people across the channel in a safe, efficient, reliable and secure manner.”

The cable car, which connects South Coast mainland to the Mombasa Island, will increase efficiency, reliability, safety, and boost tourism. The cable express will act as an alternative to the ferry crossing along the channel.

“What we are offering is a modern and efficient aerial cable connection between the Island and the mainland with spectacular views on that short journey. We are bringing in superior technology in running cable cars and so Kenyans can look forward to quite an experience in the cable cars,” said Gerald Muigai, the Executive Chairman of the Likoni Cable Express Ltd and the Trapos Ltd Director.

Pre-engineering works for the project began in July and this involved survey of land where the landing stations and masts will be built on the two borders of the Likoni Channel. The landing station will be built over the road and all cable cars will come under the landing station.

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Lights, camera, action! Artistes brighten economy

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Covid-19 had negatively impacted entertainment revenues.

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KRA must ease tax filing to boost revenues

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Nikhil Hira Independent tax consultant and Director Bowmans Coulson Harney (law firm). [Courtesy]

Anyone who has been following Kenya’s budgets over the last few years will recall headlines each year saying that the country has set its largest-ever budget. 

The upcoming 2021/22 fiscal year is no exception, with Treasury Cabinet Secretary Ukur Yatani announcing a budget of Sh3.6 trillion – yes, the biggest ever! A little over Sh2 trillion will come from government revenues, with approximately Sh1.8 trillion of this from tax revenues. 

The balance will be borrowed – another common feature of the last few years. 

This year’s budget comes amidst an economic crisis brought on by the Covid-19 pandemic, with the inherent assumption that the pandemic will come to an end before the start of the next financial year. 

Given surges in infections that are being seen globally, and indeed in Kenya, this assumption may well be the deal-breaker. 

The Ministry of Health has already said that Kenya may see another wave of infections in July, fuelled by the Indian variant. This could result in more lockdowns with the associated impact on the economy and indeed revenue collections. The lack of vaccines is an issue that the government must address as a matter of great urgency if the country is to get through the pandemic without further economic woes. 

While deficits in government budgets are not uncommon, Kenya seems to be annually widening the gap between expenditure and revenues. 

If one applies this model to their household budget, the upshot will almost certainly be bankruptcy. 

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What is actually required is curtailing recurring government expenditures, which is something that the government has acknowledged in the past with proposed austerity measures. 

The reality is that Kenya has not succeeded in doing this, and the pressure on revenue collection is exacerbated. 

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When you add to the high level of wastage and corruption we are witnessing, the deficit will almost certainly continue to widen. 

The responsibility for tax collection and enforcement lies with the Kenya Revenue Authority better (KRA). 

There is no doubt that the authority has improved significantly in this task since it was set up in 1995. 

The taxman estimates that 4.4 million tax returns were filed by June 30 last year, up from 3.6 million in the previous year.  While this is a significant improvement, when compared to the country’s population, this number of returns seems unusually low. 

The increase in the number of tax returns, is to a large extent, due to the online reporting system, iTax, and a major push by KRA through taxpayer education.

There is no doubt that the online system has made filing tax returns significantly easier and gone are the large queues of people witnessed at Times Tower on deadline day. 

That said, there is still much to be done to make filing returns a seamless and painless exercise. 

System downtime during filing periods is something that all of us will have experienced, although, in typical Kenyan fashion, we inevitably wait until the last day to file our returns as we do with most things! 

The spreadsheet that one uses to file a return is by no means the simplest to use.  One key issue seems to be that taxpayers are not alerted to changes in the model until they try to upload a return. 

The spreadsheet does not allow one to make it more relevant to their sources of income – in essence, it is too rigid and inflexible. KRA should be able to rectify this without too much effort.

Last year was unusual in that different rates of tax were applicable in the first quarter as compared to the rest of the year.  This followed the Covid-19 relief measures that were introduced in April 2020. 

There was much debate about whether the changes were meant to apply for the whole year or whether some form of apportionment was needed. 

In the end, the decision was made for apportionment. One can argue about what the correct treatment should be, but the issue was how long it took for the decision to be made and, indeed, to amend the iTax system. 

The age-old notion has always been that the more complex and difficult it is to file a tax return, the more likely it will be that taxpayers simply won’t file their returns. While the issue with the system has been resolved, there is an inherent administrative issue here that must be addressed. 

KRA has to be significantly more proactive in dealing with changes in rates and law to ensure the least inconvenience to taxpayers. 

The writer, Nikhil Hira, is the Director of Bowmans Kenya.

The views expressed in this article are the author’s and not necessarily those of Bowmans Kenya  

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The age of gentrification is truly upon our country

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Never mind the businessmen outside Nairobi could be richer. Rural folks aspire to one day moved to a new county (city).

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