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Go slow on use of digital currencies, experts advise





Investors are totally on their own, the Central of Kenya (CBK) governor Patrick Njoroge warned. FILE PHOTO | NMG 

To use or not to use? This is the question that many businesses are asking themselves regarding cryptocurrencies.

Despite this global ambivalence over the adoption of the digital currencies, the fact is that they gradually seeping into the business world as more traders embrace it. For the proponents of the currencies, they are an idea whose time has come and businesses that ignore them can only count losses.

In Kenya, the currencies are beginning to take root and there are now a number of outlets using them as a medium of exchange.

Among the places where you can trade on bitcoin include a lounge at the Kenyatta University, an automated teller machine (ATM) in Nairobi’s Westlands, an electronic shop located on Luthuli Avenue in Nairobi, a hotel in Nyeri, and most recently a supermarket in Mombasa.

“We have received tonnes of requests from our customers to pay using digital currencies,” said Boxlight Electronics chief executive Robinson Murage in an interview in July.

“As a company whose 90 per cent of customers are young, tech savvy and predominantly online, we choose to be all inclusive and adapt to the needs of those that prefer this type of currency.”

The ATM in Nairobi, which is a first in East Africa, makes it possible to buy bitcoins and litecoins instantly in cash. It allows traders to buy the cryptocurrencies in small tokens for as low as $5 (Sh500), and pay for them in dollars or Kenya shillings.

In Mombasa, a member of The Billion Coin (TBC) Kenya, Bernard Wambua who has traded with the currency for about two years, says the coastal town has over 2,000 people using the digital currency.

“You can do big transaction of millions of shillings using TBC. The population of people using the e-money in Mombasa is increasing at a very fast rate,” said Mr Wambua in a recent interview.

He said they are planning to integrate more businesses to use the currency.

In July, the Nyeri hotel — Betty Place Restaurant— proprietor said three customers had paid their bills using bitcoins,a transaction equivalent of Sh4,000.

“We convert the local currency equivalent using the value of the bitcoin. The bitcoin can go up to the eighth decimal place, for instance 0.00000001 of a bitcoin. You can pay a bill of anything from Sh100 upwards,” said Beatrice Wanjiru Wambugu, the hotel owner.

Despite this rising uptake, experts say the digital currencies still have a long way before they attain all the characteristics of an authentic currency. Cryptocurrencies, they say, have limited adoption and they are yet to be universally accepted in the intermediation space.

“Even though they are being used for purposes of making payments, we have not seen savings, loans and transactions of that nature being in this space of cryptocurrencies,” said Jared Osoro, director of research and policy at the Kenya Bankers Association (KBA), last week.


“There is a long way to go for cryptocurrencies to actually make their way into intermediation space, meaning scaling beyond the payment space – what the bulk of financial technology (fintech) firms are helping.”

Financial sector experts aver that a genuine currency is not only a medium of exchange but also a unit of account, and store of value. Although the digital currencies, are a medium of exchange albeit in a limited way, they do not meet the other attributes as a unit of account and store of value.

Mr Osoro’s comments were echoed in a public forum held last week in Nairobi:

“A cryptocurrency does not meet all the characteristics of what a currency is”.

There is also the lingering question of volatility of cryptocurrencies, especially in Kenya where investment on them is no more than a speculative affair. Moreover, they are neither guaranteed by the central bank nor backed by government regulations.

Investors are totally on their own, the Central of Kenya (CBK) governor Patrick Njoroge warned.

The CBK in the latest bank supervision annual report says these emerging disruptive technologies bring with them various forms of risks.

Notably, the report says, among the new digital products is cryptocurrencies that is associated with anonymity, and commonly used by criminals.

“CBK reiterates that it does not recognize cryptocurrrencies as legal tender. CBK is of the opinion that despite the ubiquitous positive influence of technology, there lies a potential of great risk in the event that the technology fails or is misused by unscrupulous individuals. There is thus the need to ensure that robust controls are in place to ensure that the risks and opportunities associated with emerging technologies are balanced,” CBK says in the Bank Supervision Annual Report 2017.

Mr Osoro, however, says although a number of uncertainties surround adoption of cryptocurrencies, they nonetheless hold a promise of opportunities.

“These are the realities that financial institutions must contend with as they embrace these new emerging technologies in a manner that is going to enable them tap opportunities,” said Mr Osoro.

Promoters of the digital currencies in the country, while admitting that insecurity episodes of hacking and stealing of bitcoins have occurred, they are becoming less frequent over time.

Another line of argument in favour of digital currencies is that they are cheaper than many conventional options for remittances or money transfers and can be very convenient for instance for smartphone payments , to the extent that transactions are settled quickly.

There are more than 700 so-called cryptocurrencies out there in the world, but bitcoin is the best known.

Bitcoin started trading in 2009 – exchange rate then, $0.0007 (Sh0.07) per bitcoin. In February 2011, it reached parity with the dollar.

In November 2013, the value of bitcoin peaked at $1,242 (Sh124,200), and it has been trading at about $900 (Sh90,000), rising to about $19,000 (Sh1.9 million) by December 2017, before declining to its current level of about $7,000 (Sh7,000).

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KRA must ease tax filing to boost revenues




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. 


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




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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Sh194m Covid funds misuse cited in Wajir governor ouster




Sh194m Covid funds misuse cited in Wajir governor ouster

Wajir Governor Mohamed Abdi Mahamud. FILE PHOTO | NMG



  • Misuse of Sh194 million meant to combat Covid-19 formed the basis of impeachment of Wajir Governor Mohammed Abdi Mahamud.
  • The Senate Special committee, which upheld his impeachment by the Members of County Assembly (MCA), recommended Mr Mahamud’s removal from office for endangering the health of the people of Wajir.

Misuse of Sh194 million meant to combat Covid-19 formed the basis of impeachment of Wajir Governor Mohammed Abdi Mahamud.


The Senate Special committee, which upheld his impeachment by the Members of County Assembly (MCA), recommended Mr Mahamud’s removal from office for endangering the health of the people of Wajir.

The committee found that despite the Sh194 million allocation to fight the disease, the county government cannot conduct tests due to faulty kits and lack of reagents.

The county got an additional Sh194 million in the 2019/20 financial year.

The MCAs, through witness Hussein Dahir Abdirahman argued the health sector is in deplorable condition despite being allocated a total of Sh2.4 billion since 2018, equivalent to 22 percent of the budget.

The committee chaired by Nyamira Senator Senior Counsel Okong’o Omogeni found Mr Mahamud guilty of gross violation of the Constitution, County Governments Act, Public Procurement and Asset Disposal Act and the Public Finance Management Act.

“The committee finds that the allegation was proved and was therefore substantiated. The committee further found that the allegation meets the threshold for impeachment of the Governor under Article 181 of the constitution,” Mr Omogeni said in the report.

Mr Omogeni said the committee returned a verdict after hearing the charges on the status of health facilities.

“We heard that an ambulance owned by the county broke down but instead of the governor repairing it, citizens were called upon to repair, fuel and buy tyres.

The Senators, however, dismissed claims of abuse of office and gross misconduct against Mr Mahamud saying the allegations were not substantiated.

They also dismissed claims that the county’s First lady was running the affairs of Wajir, saying there was no link and no evidence was tendered to support the claims.

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