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Meat costs rise as virus bites key suppliers : The Standard

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A man roasts meat at G8 Resort in Embu. The price of meat has started going up due to a strain on supplies as demand dips. [File, Standard]

The sound of knives being sharpened at the country’s many nyama choma joints is almost absent as Kenyans keep off entertainment spots following government directives on social distancing.

These nyama choma outlets have long doubled as bars and night clubs, entertainment spots that have been forced to closed their doors owing to measures to contain the coronavirus pandemic.
Eateries and butcheries in neighbourhoods have also been ravaged by the disruption, recording fewer customers.
The average Kenyan’s consumption of livestock products is estimated at 16 kilogrammes of meat. But Covid-19 is now threatening the livestock industry, whose turnover hit Sh146 billion in 2018, an 8.3 per cent rise from the previous year, according to official data.

SEE ALSO: China virus cases spike, 17 new infections reported

Due to the disruption in demand caused by the pandemic, meat prices at Nairobi’s Dagoretti slaughterhouse, one of the cheapest sources of meat supplies in the country alongside Kiamaiko also in the capital city, have started going up by Sh100.
A spot check by The Standard found that a kilo of goat meat was retailing at Sh370 up from Sh270, while a kilo of beef now costs Sh350 from Sh250.
Neighbourhood butcheries sell a kilo of beef at an average of Sh400 and a kilo of goat meat at Sh550. Consumers who want large amounts of meat or prime cuts, and those in the food industry source their meat from abattoirs due to the pocket-friendly wholesale costs.

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Now, with most barbeque grills lying idle, numerous dependents who made their daily wages from the spots along the country’s major highways and by-pass towns, such as Ruiru and Ruaka, like many parts of the country, have been rendered jobless.
They include meat dealers, musicians, hawkers, vegetable sellers, water vendors and cleaners.

SEE ALSO: China confirms virus spreading between humans

And for almost two weeks since the State instituted tough measures to curb the spread of Covid-19, including a dusk-to-dawn curfew, social distancing and stay-at-home orders, only a few bar owners are keeping nyama choma joints open for takeaway orders.
Even the popular Kamakis along the Ruiru bypass now has only about two meat dealers open to cater to the few customers. Mwaura, a meat dealer in the area, said they have scaled-down meat buying owing to reduced demand.
“We are hanging on by a thread here,” he said.
He sources his meat from Kiamaiko, and says supplies from pastoralists has gone down.
The livestock bred for meat is largely procured from arid and semi-arid areas whose economies are set to be hit even harder by the continued ravaging of the coronavirus.

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SEE ALSO: Factbox: What we know about the new coronavirus spreading in China and beyond

Mwaura says the abattoirs that normally source their goats from Kajiado and Narok have had to find alternatives from Laikipia and Nyahururu.
Njenga from the Dagoretti abattoir said they barely slaughter 100 goats a day now compared to a previous average of 500.
Data from the Kenya National Bureau of Statistics (KNBS) shows that the number of livestock being slaughtered has been increasing in the last few years. Beef tops the list of meat most consumed in a year in Kenya.
According to KNBS, the number of cattle slaughtered rose by 7.4 per cent from 2.6 million heads in 2017 to 2.8 million heads in 2018.
The goats and sheep delivered to slaughterhouses rose by 11.3 per cent to stand at over one million in 2018, while the number of pigs slaughtered was over 388,000 in 2018, an increase of 7.8 per cent from 360,000 in 2017.

SEE ALSO: Travelers to be screened for ‘Chinese’ coronavirus- Government


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New tax on beer, water, fuel delayed to next year

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New tax on beer, water, fuel delayed to next year

East African Breweries Limited (EABL) plant in Ruaraka
East African Breweries Limited (EABL) plant in Ruaraka, Nairobi. FILE PHOTO | NMG 

Price increases for a wide range of goods, including fuel, bottled water, juice and beer, have been delayed by six months, offering reprieve to consumers already hurt by job cuts and unpaid leave in the wake of the Covid-19 pandemic.

This follows amendments to the Finance Act, which moved the imposition of a new tax on at least 31 goods from July 1 to January 1 next year.

The adjustment is in line with the law that demands that excise duty be revised upwards in tandem with the cost of living measure or the average rate of inflation in the 12 months through June.

The delay in increasing the tax will benefit households and traders reeling from the impact of the coronavirus, which has reduced shoppers’ purchasing power due to job cuts and low business activity.

“Annual inflation adjustment is effective from January, 2021,” says the Kenya Revenue Authority (KRA).

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The taxman was from this week expected to increase excise duty chargeable on the goods by about 5.5 percent, triggering higher retail prices.

Other items that are set to attract higher taxation are cigarettes, cigars, fruit juices and motorcycles.

Now, the KRA will be required to seek the approval of the Treasury Cabinet Secretary before making the specific excise rate adjustment, and thereafter the legal notice will be taken to Parliament within seven days of publication for consideration.

Parliament will, within 28 sitting days of receiving the notice, decide whether to approve or reject the inflation adjustment.

This is a departure from the previous law that only required the KRA Commissioner-General to issue a legal notice stating the adjustment for it to become effective.

Super petrol is expected to increase by Sh1.16 at the pump as dealers’ inflation adjusted excise duty rises to Sh22.07 a litre from the current Sh20.91. Kerosene and diesel prices are set to increase by Sh0.60 a litre.

Fuel prices have a big effect on inflation because Kenya’s economy depends heavily on diesel and petrol for transport, power generation and agriculture, while kerosene is used by many households for cooking and lighting.

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Last year, the taxman adjusted excise duty by 5.17 percent on inflation, from 5.2 percent in 2018, and the Treasury expects the levy at about 5.3 percent.

The average inflation for the 12 months to June stood at 5.51 percent. This will see the excise duty on beer increase Sh6.10 a litre, with the tax currently at Sh110.62 a litre or Sh55.31 a bottle, making Kenya’s one of the highest tax rates on alcohol in Africa.

The excise on spirits is set to go up by about Sh13.40 from Sh253 a litre, while wine will attract an additional Sh10.41 tax from the current Sh189 a litre.

Firms like East African Breweries Limited (EABL) have been raising beer prices by Sh10 per bottle in response to the inflation adjusted tax.

The listed brewer has issued a profit warning for the year ended June on reduced sales following the closure of bars to limit the spread of Covid-19, and had previously warned of a tax-induced drop in beer demand.

Before 2018, the affected goods had fixed excise rates, and the new inflation adjustment is seen as a means of protecting the government’s spending power from being eroded by the rising cost of living.

Nikhil Hira, a tax consultant at Nairobi law firm Bowman’s Coulson Harney LLP, said July was not the right time to implement the inflation tax.

“The subdued consumer demand will lower its impact on KRA collection,” said Mr Hira, citing the need to limit tax increases in an effort to kick-start the economy after the pandemic.

Economic growth is projected to drop to 2.5 percent this year, from a pre-pandemic forecast of 5.4 percent.

The Treasury hopes the excise duty and the removal of a range of tax exemptions, including for oil and gas exploration, hiring of helicopters and purchase of planes as well importation of car and tractors, will help make up for revenue lost to the impact of the coronavirus crisis.

As well as a drop in tax collection caused by reduced business activities, Kenya also cut the corporate and personal income tax rates in April to boost demand and help firms keep workers on payrolls.

Manufacturers affected by the excise taxes have opposed the annual inflation adjustments, arguing that it will lead to price instability and distort the overall inflation.

They have proposed that the increment be spread over three years to give them enough time to adjust. The firms have also argued that uncertainty around the rate of annual changes would make it difficult for them to make long-term investment decisions.

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Safaricom reveals investors’ stake in new M-Pesa firm

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Safaricom reveals investors’ stake in new M-Pesa firm

A Safaricom shop in Nairobi
A Safaricom shop in Nairobi. FILE PHOTO | NMG 

Safaricom #ticker:SCOM has disclosed a 50 percent ownership of M-Pesa after the firm and South Africa’s Vodacom acquired the mobile money platform from Britain’s Vodafone for Sh2.14 billion.

The Nairobi bourse-listed telecommunications firm says in its latest annual report that the two partners split the acquisition costs equally, earning each of them a 50 percent share in the newly created joint venture M-Pesa Global Services Limited.

The two companies partnered to acquire the M-Pesa business from their parent company Vodafone Group Plc, which held the intellectual property to the lucrative financial services platform.

“M-Pesa Global Services Limited is registered in Kenya. Safaricom Plc owns 50 percent of the issued share capital of the joint venture with Vodacom Group Limited owning the remaining 50 percent,” Safaricom says in its latest annual report for the year ended March.

The ownership structure gives Safaricom an equal say in the direction of the M-Pesa business, just like Vodacom, unlike before when the UK multinational fully owned the brand.

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“Decisions by the joint venture to declare and/or pay any dividends or make any capital distribution to shareholders must have prior written consent of the existing shareholders,” notes Safaricom.

Safaricom recently appointed the head of its financial services division, Sitoyo Lopokoiyit, interim CEO of the M-Pesa joint venture.

Vodacom and Vodafone own a combined 40 percent stake in Safaricom, which pioneered the M-Pesa service in the local market.

The service has evolved from a basic mobile money transfer application into a fully-fledged financial service platform, offering loans and savings in partnership with local banks, plus merchant payment services and is eyeing the unit trust business.

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It has grown to become the largest payments platform in Africa, with 40 million users and processes over a billion transactions every month, according to Safaricom and Vodacom’s joint statement.

M-Pesa is now available for subscribers in Kenya, Tanzania, Lesotho, the Democratic Republic of Congo, Ghana, Mozambique and Egypt.

Safaricom and Vodacom — which operates in South Africa and other markets in the region, including Tanzania — plan to grow the platform globally.

Vodafone, which owns five percent of Safaricom, will continue to earn royalties from M-Pesa.

Safaricom said the joint venture will allow the parties to consolidate M-Pesa platform development, synchronise more closely product road maps, and improve operational capabilities into a single, fully converged unit.

“The joint venture will drive the next generation of the M-Pesa platform — an intelligent, cloud-based platform for the smartphone age,” Safaricom said.

Safaricom booked a one-time gain of Sh3.3 billion in the year ended March in relation to the M-Pesa buyout.

The telecoms operator said the gain is attributed to the intrinsic value of the M-Pesa brand previously unrecognisable due to the ownership structure.

M-Pesa, which started as a person-to-person money transfer service in March 2007, recorded a 12.6 percent growth in revenue to Sh84.4 billion in the review period, accounting for a third of Safaricom’s annual sales.

In the short term, however, Safaricom is losing billions of shillings from the waiver of fees on transactions of below Sh1,000.

The relief is part of measures aimed at easing financial pressure on citizens in the wake of the Covid-19 pandemic.

Safaricom is currently eyeing the Ethiopian market that has for long operated with strict regulations, locking out foreign companies.

The Ethiopian government recently came up with new regulations which essentially say that only majority Ethiopian-owned companies can offer mobile money services. This deals a blow to Safaricom’s prospects unless the regulations are changed.

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Jambojet maintains ticket prices ahead of flights return

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Jambojet maintains ticket prices ahead of flights return

Passengers will pay Sh4,800 on a one-way ticket to Kisumu, Mombasa, Eldoret and Malindi from Nairobi following the lifting of restrictions on movement
Passengers will pay Sh4,800 on a one-way ticket to Kisumu, Mombasa, Eldoret and Malindi from Nairobi following the lifting of restrictions on movement in and out of the capital and resumption of air travel. FILE PHOTO | NMG 

Jambojet has revealed ticket prices for flights to Kisumu, Mombasa, Eldoret and Malindi from its Nairobi hub as it prepares to resume flights on July 15.

Passengers will pay Sh4,800 on a one-way ticket to Kisumu, Mombasa, Eldoret and Malindi from Nairobi following the lifting of restrictions on movement in and out of the capital and resumption of air travel.

The budget carrier, a subsidiary of the national airline Kenya Airways, will charge Sh6,800 for one-way ticket from Nairobi to the tourist hotspot Diani.

Domestic passenger flights are scheduled to restart on July 15 while international travel will resume from August 1.

This a boost to Kenya Airways, which had lost an estimated Sh10.6 billion in revenues in the six months to June.

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Jambojet stopped operations on April 7, after President Uhuru Kenyatta’s ordered for the cessation of movement by road, rail or air in and out of Nairobi, Mombasa, Kilifi and Kwale counties to curb the spread of coronavirus.

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“Jambojet, is set to resume flights to five local destinations on July 15. We will operate three daily flights to Mombasa, and two to Kisumu,” said the airline’s acting managing director Karanja Ndegwa in a statement yesterday.

The low-cost carrier will also operate two daily flights to Eldoret, one to Malindi and four weekly flights to Diani, he added.

Mr Ndegwa said the frequencies will be reviewed regularly to respond to the changes in demand across the markets.

“We want to assure our customers that we will follow the safety guidelines put in place to offer our customers a safe and pleasant flying experience,” said Mr Ndegwa.

The aviation sector has been one of the hardest hit industry, taking a brunt of the economic meltdown brought by the coronavirus.

Airlines across the world have suspended flights, sent workers home and asked governments for bailouts.

Kenya Airways said it would reduce its assets and network and layoff an unspecified number of workers to limit losses from Covid-19.

The coronavirus disease, which originated in Wuhan, China in December 2019, has infected more than 11 million people worldwide and resulted in over 540,000 deaths.

The World Health Organisation declared it a pandemic on March 11, 2020.

By Tuesday, Kenya had confirmed 8,250 cases and over 164 deaths. Recovered stand at 2,414.

The resumption of air travel is welcome news for domestic carriers who will not be compelled to keep some seats empty in line with public health regulations.

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