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State-owned sugar mills owe KRA Sh17.1bn in tax arrears

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mumias sugar bags
Workers arrange bags of sugar at Mumias Sugar Company store on September 28, 2018. Five State-owned millers owe the Kenya Revenue Authority a total of Sh17.1 billion. FILE PHOTO | NMG 

Five State-owned millers owe the Kenya Revenue Authority a total of Sh17.1 billion whose payment demand may further dent the struggling firms’ financial viability.

Mumias Sugar Company, #ticker:MSC Nzoia Sugar Company, South Nyanza Sugar Company, Muhoroni Sugar Company and Chemelil Sugar Company have been piling up the tax arrears over an undisclosed period, which has put then under pressure from the taxman, who is demanding its settlement even as the millers beg for bailouts from the government.

Acting KRA commissioner for Domestic Taxes Ruth Wachira said the tax bill has accrued more than Sh5 billion in interest, as it has been long-overdue.

“The five sugar millers collectively owed Sh11.8 billion as of the beginning of October 2018 in principal taxes.

The debt stands at Sh17.1 billion when interest and penalties are factored in,” Ms Wachira said.

The millers, whose financial burden has centred on unpaid arrears to farmers, including a Sh2.6 billion debt they were meant to repay before Christmas, also owe suppliers and employees hundreds of millions of shillings, making their mountain of debt a puzzle that will take time to clear.

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The farmers, who had heightened hopes after President Uhuru Kenyatta directed that they should be paid, have, however, had a bitter festive period as it turned out that the Treasury had neither concluded the audit on their arrears nor allocated money to settle the debt.

The tax burden points to a long-running mismanagement of the firms that has left present managers struggling to steer them to the right path.

Some of the managers are hopeful that the government will wipe out the tax burden to give the millers a lifeline to bounce back to business even as they struggle to remain operational against heavy odds, including obsolete machines and stiff competition for cane from private millers.

“We hope they could forgive these old tax because that is one of the toughest ones to settle for now. It would be easier to deal with those accruing now but the historical ones need to be relooked into,” Muhoroni Sugar Company Receiver Manager Francis Ooko said.

KRA does not seem to have any plans to forgive the debt, according to a statement from the commissioner, meaning the millers may have to dig deeper into their dwindling reservoirs to pay the arrears.

“The millers have entered into tax debt settlement arrangements. The respective tax service offices are monitoring their compliance to ensure they continue to execute their tax obligations,” Ms Wachira said.

The government may be forced to waive the tax arrears as it plans to sell them.

The five state-owned millers will be disposed of in a privatisation plant meant to reinvigorate them.

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World Bank pushes G-20 to extend debt relief to 2021

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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.

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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.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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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.

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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.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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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.

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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.

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