- President Kenyatta rejects Finance Bill and proposes reduction of VAT on petrol from 16 to eight per cent and a reduction of expenditure by ministries, agencies and parastatals
- The President resorted to what analysts call “short-term measures” aimed at partially appeasing Kenyans without providing any real cure for the effects of fiscal mismanagement
?Kenya has been thrown into a Catch 22 situation with the government struggling to dig itself out of a financial hole, provide services and appease citizens who are angered by the rise in the cost of living.
An opportunity presented itself Friday to President Uhuru Kenyatta to provide answers after his long silence, having rejected a Bill that proposed the removal of 16 percent Value Added Tax (VAT) on fuel on Thursday night.
Instead, the president resorted to what analysts have call “short-term measures” aimed at partially appeasing Kenyans without providing any real cure for the effects of fiscal mismanagement by the National Treasury, a factor that has brought Kenyans the pain they are feeling now.
Friday, President Kenyatta tried too hard to explain why it was necessary to increase taxes due to devolution, an increasing welfare State and the projects being carried out by his government that have become too expensive to implement.
“We have to pay for the new constitutional order, and the public services on which Kenyans depend alike. These cost money. Further delay in the implementation of the tax would compromise our ability to deliver,” he said.
“We will continue to protect and entrench devolution and the new constitutional order, notwithstanding the cost.”
With increased political representation and an ever increasing number of services that the government is providing for free or at subsidised costs, the president made it clear that the State had hit rock bottom on finances and is desperate.
Since coming to power, the Jubilee government whose appetite for politically driven grand projects is huge, has borrowed a staggering Sh3.4 trillion, more than all the previous regimes combined.
While accusing MPs of practising “good politics but bad leadership” the president said his government had managed to achieve all it has without “any substantial increase in taxes”.
With the Big Four Agenda and a legacy at stake, the government’s appetite for huge loans has now come full circle.
Treasury opposes halting of fuel tax
In the current financial year, for example, there is a budget deficit of Sh600 billion and tax revenues are expected to drop to Sh1.8 trillion from Sh1.9 trillion. It remains to be seen where The Treasury will get more money to replace what the president is proposing to lose by halving the tax on fuel.
Still, the halving of VAT from 16 percent to eight per cent as proposed by President Kenyatta depends on whether Parliament will cede to his proposals so that the Executive and Legislature can reach a middle ground.
The National Assembly and the Senate themselves are set to lose Sh5 billion, according to the president’s proposals that hope to save the country Sh52 billion.
Other departments that will lose out in the austerity measures include the Equilisation Fund that will lose Sh3.8 billion while repair of roads damaged by floods will lose Sh8.7 billion.
Further losses will be felt in the Last Mile Project (Sh1 billion), county allocations (Sh9 billion) and domestic travel (Sh4 billion).
Rotich: Man on the spot
And although analysts have said the fuel tax would not have made any significant change on the budget deficit, they say the government is acting as if it has run out of options.
“What the president is trying to do is to appease disgruntled Kenyans, but he has said nothing. The eight percent is nothing better than the 16 percent,” observed Dr Samuel Nyandemo of the University of Nairobi’s (UON), School of Economics.
“There are two sides to this equation. The first side is revenues. Revenues are a big miss. The second side is expenditure. The gap between the two is a yawning chasm. The 16 percent VAT was necessary but by no means the silver bullet,” said Aly Khan Satchu of Rich Management.
Also at stake for the government is a decision on whether to reduce spending and seek more tax avenues in order to appease the International Monetary Fund (IMF) that has been pushing for better fiscal policy.
The IMF has been pushing Kenya to reduce its fiscal deficit without any success, leading to a loss of a Sh100 billion precautionary credit facility on Thursday.
After the loss, an upbeat Treasury Cabinet Secretary Henry Rotich said the government was still in talks with IMF, arguing that Kenya has strong reserves to cushion the economy against external shocks.
“We are able to go into the international markets and get funds because investors can look at us as individuals. We should not continue relying on the IMF programme,” he said.
Analysts have warned that it would be precarious for the government to imagine that the economy will be sound without the support of the IMF.
Already, the shilling had shown some vulnerability by tumbling to a five-month low of Sh101.9 to the dollar on Thursday just after it was announced that the IMF had not renewed its credit facility.
“I appreciate our reserves are at an all-time high but the IMF facility was worth its weight in gold. It was an important signal that kept our yields under control and supported the shilling. Today, the world is a much more dangerous place and policy making missteps are proving very expensive,” Satchu said.
Friday, however, the financial markets showed some recovery immediately after President Kenyatta’s speech, with the shilling closing the week at the psychological 100.9 to the dollar and the NSE 20 Share Index inching upwards to 2993.38. On Thursday it closed at 2990.02, offering relief to investors.
While appreciating the proposed 50 percent reduction on VAT on petroleum products, manufacturers said there is more to be done. The president has asked them to equally reduce the cost of products in tandem with the expected reduction in fuel prices.
“Just as business owners took the new VAT rate as an opportunity to increase the cost of goods and services, I expect them not to take advantage of weary citizens, and to lower their prices commensurately and without delay,” appealed the Head of State.
Kenya Association of Manufacturers (KAM) manufacturing officer Abel Kamau said: “We expect a readjustment of prices downwards so as to reflect the 50 per cent reduction on the newly introduced VAT on petroleum products.”
Former Finance Minister Musalia Mudavadi lauded President Kenyatta for rejecting the Finance Bill and the proposed amendments.
Mudavadi said that the move was that of a statesman’s response Kenyans have been expecting from a listening president.
Uhuru to meet with team over new taxes
“He has heard Kenyans and done one better than Parliament in the reduction of VAT to 8 percent. He even bettered my proposed reduction to either 10 percent or 12 percent,” Mudavadi said.
The Energy Regulatory Commission (ERC), which traditionally sets new fuel prices on the 14th of every month, was thrown into a spin not wanting to contradict their boss who in the late afternoon indicated that he wants the fuel prices to go down.
In the evening, the prices went marginally down (see separate story).
Public transport operators who have welcomed the President’s announcement have said fares will marginally come down.
“We will sit down and discuss on how to bring down the cost,” said Simon Kimutai, the chair Matatu Owners Associations.
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Public officers above 58 years and with pre-existing conditions told to work from home: The Standard
Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.
However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
SEE ALSO: Thinking inside the cardboard box for post-lockdown work stations
Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
SEE ALSO: Working from home could be blessing in disguise for persons with disabilities
Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.
Uhuru convenes summit to review rising Covid-19 cases: The Standard
President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
SEE ALSO: Sakaja resigns from Covid-19 Senate committee, in court tomorrow
Drastic life changes affecting mental health
Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.
Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.
Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.
The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.
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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.
In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020. It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.
A study by Dr. Habil Otanga, a Lecturer at the University of Nairobi, Department of Psychology says that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.
The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.
KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.
Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.
As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.
“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”
Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.
“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.
Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.
“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”
Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.
“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.
Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.
Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.
She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.
Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.
“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added
Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.
“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and also engage in reading that would help expand their knowledge.