Parliament Thursday passed President Uhuru Kenyatta’s austerity and tax proposals in a chaotic sitting characterised by claims of irregular voting, jostling and name calling.
Leader of Majority Aden Duale had to physically pull out ruling Jubilee Party MPs after the lawmakers voted by acclamation to defeat the President’s memorandum that – among other things — imposed an eight per cent value added tax (VAT) on petroleum products.
Mr Duale, backed by Kipipiri MP and former Finance minister Amos Kimunya, pulled MPs from the debating chamber effectively leaving the House without the 233 MPs needed to overturn the President’s memorandum on the Finance Bill.
Mr Duale instructed them to walk out of the debating chamber.
That action allowed the chair of the committee of the Whole House to declare that the “Ayes” had it, meaning the vote could not proceed to the next stage.
“We have 215 MPs present in the House and therefore the “Ayes” have it,” Ms Soipan Tuiya, who chaired the committee of the Whole House ruled.
That effectively handed Mr Kenyatta victory and the legal mandate to levy the new taxes he hopes will raise the Sh130 billion he needs to keep his spending plans on track while protecting the integrity of the country’s fiscal integrity.
Mr Kenyatta intends to raise Sh17.5 billion from eight per cent VAT on petroleum products, Sh9.8 billion from the “kerosene adulteration” tax while imposition of Sh20 per kilogramme of sugar confectionery, including white chocolate, will raise Sh473 million. He also succeeded in pushing through the 1.5 per cent levy for the National Housing Development Fund that is expected to generate about Sh57 billion a year.
Under the Housing Development Fund plan, an employer and employee are separately required to contribute 1.5 per cent of the monthly basic salary so long as the sum of the employer and the employee contributions does not exceed Sh5,000.
The 12 per cent excise duty on fees charged for mobile money transfer services, the 15 per cent excise duty on telephone and internet data services and the 20 per cent duty on fees charged for money transfer services was also passed and is expected to generate Sh20.2 billion. Treasury secretary Henry Rotich told Parliament that Mr Kenyatta’s proposed reduction of gaming tax from 35 per cent to 15 per cent and introduction of a 20 per cent tax on winnings was expected to raise Sh25 billion up from the current Sh8.7 billion.
Imposition of the controversial 16 per cent VAT on petroleum products kicked in on September 1 – and could only to be overturned by a vote supported by not less than 233 MPs. The controversial tax has significantly increased transport costs and is expected to increase inflation in the coming months.
Mr Duale’s decision to send out his troops angered opposing MPs who called for his ouster and that of Minority counterpart John Mbadi.
It took the intervention of Speaker Justin Muturi to return calm in the House moments after Mr Duale had allowed MPs to sneak out of the chamber to further reduce the numbers.
There was a standstill in the House after MPs left their seats chanting ”zero! zero!” to taxation on petroleum products.
A section of the ruling Jubilee MPs also joined opposition lawmakers in the chants putting temporary Speaker Ms Tuiya at a difficult position as she tried to calm down the unruly MPs.
When she put the matter to vote, those who opposed Mr Kenyatta’s proposal carried the day in acclamation vote.
The MPs started chanting ”Duale must go!, Duale must go!,” as Ms Tuiya pleaded with them to slot in their cards to vote in a physical division. Mr Duale was present in the House during the aborted second physical voting.
The Jubilee side was full at the beginning of reconsideration of the President memorandum.
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.