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Uhuru’s new tax measures set to inflict more pain




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For 41-year-old Jane Wangeci, a resident of Kibra, Nairobi, the high price of charcoal and kerosene has in the recent past meant changing cooking habits for her young family of four.

“We stopped preparing three meals a day because the cost of charcoal and kerosene has risen beyond our reach,” Ms Wangeci said on Wednesday when the Nation visited her. “It is becoming unbearable.”

The squeeze on low income families like that of Ms Wangeci’s is likely to worsen after President Uhuru Kenyatta introduced new and higher levies on a wider array of goods and services.

The price of kerosene will touch a new high, after Mr Kenyatta proposed a new levy. Kerosene is relied upon by low income homes for lighting and powering cooking stoves, to be charged at the rate of Sh18 per litre of kerosene

The tax will lift kerosene price above the Sh100 per litre mark for the first time and have it retail close to diesel and petrol, which are currently selling at Sh115.4 and Sh125.5 per litre respectively in Nairobi.

Nairobi’s Kariokor-based small-scale trader John Kimani knows too well that he is set for a tougher ride.

This is because the cost of sending money through mobile services such as Safaricom’s M-Pesa is set to increase further after the President proposed to raise tax on the services from 12 percent to 20 percent.

“Excise duty on fees charged for money transfer services by banks, money transfer agencies and other financial service providers shall be 20 percent of their excisable value,” the President said in his memo.

Mobile phone subscribers are also set to pay more for airtime and data services as the government intends to increase excise duty on airtime from the current 10 percent to 15 percent.

“Telephone and internet data services shall be charged excise duty at a rate of 15 percent of their excisable value,” the President recommends.

This means that Sh100 airtime that currently attracts Sh10 tax will now see the Treasury earn an extra Sh5.

The increase in excise duty may prompt telecommunication operators to pass on the burden to subscribers, leading to increased prices. Mr Kimani says he makes about 30 calls a day tracking the sale of his goods to his customers.

Civil servants like 47-year-old Joseph Kamuto, who earns a basic salary of Sh50,000, are also set to dig deeper from their pockets.

Mr Kamuto will be deducted 1.5 percent of his gross pay monthly to create a fund to finance a low-cost housing project after President Kenyatta reinstated the levy that will chop salaries by up to Sh5,000.

Mr Kenyatta’s proposal is higher than the Treasury’s suggestion of 0.5 percent of the gross pay per month matched by employers, which was rejected by MPs last month.

“An employer shall pay to the National Housing Development Fund 1.5 percent of the monthly basic salary,” Mr Kenyatta said in the memo to MPs.


The costs of bank charges like ATM, account fees and over-the-counter withdrawals will also increase after President Kenyatta proposed to double the taxes to 20 percent from the current 10 percent.

On Wednesday, public outrage and disaffection greeted President Kenyatta’s fresh tax proposals.

“The cost of living will go up significantly,” Consumers Federation of Kenya (Cofek) secretary-general Stephen Mutoro said.

“The implications are dire for consumers,” Mr Mutoro said, adding that the President was relying on “wrong advisers”.

Economic analyst Aly-Khan Satchu said the new taxes would cripple ordinary Kenyans.

“The cost of living increases are falling hardest on ordinary Kenyans. In fact, the ordinary Kenyan has been finding themselves worse off practically every year,” Mr Khan said.

“I would have preferred for the VAT to have remained at 16 percent because it was a democratic tax and everyone pays it defined by usage. I am now alarmed that our tax and spend model has run out of road.”

Manufacturers also weighed in on the tax increases and warned Kenya’s business environment is increasingly becoming “cost disadvantaged and a great disincentive for Foreign Direct Investment”.

“The increase in the cost of doing business goes against all the efforts made towards the attainment of the Big Four Agenda and improving the livelihoods of our citizenry,” said the Kenya Association of Manufacturers (KMA) in a statement.

The lobby singled out the proposal to introduce a special “anti-adulteration” tax of Sh18 per litre of kerosene, which it said will negatively affect the manufacturing sector, particularly paint, resin and shoe polish manufacturers who use kerosene as a raw material.

Kerosene comprises 40 percent raw materials in alkyd resins production.

The lobby also warned that the increase in taxes on money transfer services will raise the cost of doing business as manufacturers and other businesses transfer huge sums of money in their day-to-day operations.

“The increase in overhead costs in communication will further hurt SMEs who at times operate using mobile platforms to cut on fixed costs,” it said.

The Kenya Bankers Association (KBA) chief executive Habil Olaka warned the introduction of the higher taxes on financial services as well as mobile money transfer services will hurt the country’s efforts to promote financial inclusion.

“Financial inclusion drives by the country may be hampered by the fact that if the consumers are feeling that banking services are expensive, they may opt for alternatives,” Mr Olaka said.



Sordid tale of the bank ‘that would bribe God’




Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –




Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

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William Ruto eyes Raila Odinga Nyanza backyard




Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

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Won’t bear fruit

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