Business

IMF asks KRA to suspend plans to split

NAIROBI: Kenya has been asked to shelve plans to split the Kenya Revenue Authority (KRA) into two semi-autonomous entities — the Domestic or Inland Tax Agency and the Customs and Border Control Agency. Commissioner General of Kenya Revenue Authority, Mr John Njiraini The International Monetary Fund (IMF) wrote a report to KRA last year opposing the plans. Officials aware of the plans say the authority may agree with the IMF recommendations that Kenya currently does not have the capacity to run the two entities independently. In its report, IMF says there is need to strengthen customs’ core functions in the future and in particular on its border protection and trade facilities and modification of the current KRA structure. “There is need for a programme to strengthen the KRA’s capacity to manage taxpayers’ compliance,” reads part of the December 12, 2013 report. The report proposes that given unresolved issues that need to be addressed, a phased implementation that would not adversely affect revenue or trade flows would be the most appropriate approach in Kenya. Yesterday KRA Chairman Marsden Madoka confirmed the report by IMF, saying they were studying it before appropriate decision is made. “We are waiting for a report from the committee that was set up after the President announced creating two agencies and study the IMF recommendation before we decide. IMF can have their own report but this does not stop us from implementing what we believe as the best,” Madoka said. President Uhuru Kenyatta last August said the planned reforms will make KRA more responsive, efficient and effective in revenue collection. He said the move was in line with East African Community agreements and will facilitate trade and enhance security. The development came as lobbying for a major post at the authority went a notch higher amid reports of a split between the Treasury and KRA on who should be commissioner in charge of the Investigation and Enforcement. This follows the retirement of Commissioner of Investigation and Enforcement Joseph Nduati in November, 2013. The retirement of Mr Nduati has triggered internal changes in succession battle. Several names have been mentioned as the possible successors of Nduati as KRA awaits a report from an external human resource firm contracted to conduct initial interviews. Currently, Senior Deputy Commissioner George Muya is holding the position in acting capacity. Muya worked as Nduati’s deputy for three years. A new structure that will come into effect next month will see the position of Senior Deputy Commissioner scrapped. By CYRUS OMBATI and GEOFFREY MOSOKU, The Standard

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YouthConnekt launches Mobile Apps for Human Development Challenge in Rwanda

The Rwanda’s Ministry of Youth and ICT, UNDP in close collaboration with Motorola Solutions will power a Mobile App Challenge that will be implemented by YouthConnekt. The challenge will promote job creation and youth empowerment utilizing mobile technologies.  Recognizing the catalytic natures of mobile technologies in fostering Human Development, UNDP and Motorola have entered into a partnership to address some of these challenges and further stimulate the diffusion of mobile initiatives on a larger scale. In Rwanda, there are many social innovators who are already pioneering mobile solutions for human development. Local social innovators are taking advantage of the lower entry barriers for app development. Solution in the areas of Human Development –Education, Governance, Health, Agriculture and Gender.  The Challenge is expected to help entrepreneurs grow businesses – efficiently and effectively. Providing the winners with seed funding for their successful proposals, we help them to scale and grow successful, sustainable businesses and in turn create jobs for young people and stimulate the local economy. Cash prizes range from USD 1,000 – USD 6,000. In addition to the cash prize, the first winner will receive business training and mentoring by successful entrepreneurs throughout the initial phase of their start-up. The challenge is for young people between 18 and 35 years of age. All applications should be made via the online application. Deadline for proposals is the 25th of February, 2014. While launching the challenges, the Rwanda’s Minister of Youth and ICT, Jean Philbert Nsengimana noted that “We are going to have a challenge to really test your abilities to be able to transform the skills that you have in terms of mobile programming but also our understanding of the development and how we can merge the two, and be able to solve the real life challenges. He added that we all agreed that mobile applications hold a very great promise not only for our social economic development but also for job creation for individual developers. YouthConnekt was initiated by the Ministry of Youth and ICT (MYICT) in 2012 as a platform to connect young Rwandans and increase their participation in the country’s socio-economic transformation. The initiative has since spun off a number of well-established programs such the YouthConnekt Dialogue and YouthConnekt Awards. YouthConnekt Hangout brings together various partners including UNDP, ADMA, Tigo Rwanda, Zilencio Creativo, BSC Ltd and HeHe Ltd to create a platform for youth, government, development partners, private sector and civil society to connect youth to opportunities for their personal and socio-economic development

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Consider an investment club

Investment clubs/ groups have become a formidable alternative to mobilising savings, which are eventually invested to accumulate wealth for members. Lack of savings should not be an excuse to delay your investment aspirations given the anecdotal evidence of well organised groups launching members into investors. Ground rules Despite this rosy picture, do not ignore the fact that the success of an investment group hinges on a number of factors you have to get right at the formative stage. The media has been awash with stories of unscrupulous individuals taking off with members’ savings. To avoid this, the group must have ground rules for such initiatives to have a firm footing. With a number of safe guards, you can benefit from the advantage of numbers to achieve your investment plans faster than the option of going it alone.  However, investment clubs should be one of the several means of mobilising funds. Membership For starters, the calibre of membership is critical in the success of this initiative. Carefully select a group of like-minded people from a cross section of sectors and competencies with a high level of trust as criteria. The selection of membership is also crucial if the issue of commitment is to be considered. Most people’s lives are characterised by busy schedules therefore high level of commitment is crucial in compelling members to allocate time for meetings. Once you have members on board, agree on common goals, risks and rewards associated with such groupings and a name. Agreement Next is dealing with an operating agreement that spells out the governance structure, which is key, if you are to avoid glitches in future. The legal document should spell out how the leadership and supporting roles are appointed and the roles and responsibilities therein. These should also indicate the issue of share holding and membership. It should clearly spell out the rights enjoyed by the founding membership and those members joining at a later stage. This directly relates to the minimum amount to be contributed. Contribution Some clubs set a minimum amount but allow contributions over and above that amount for investors who want higher returns on investment. In addition, members must agree on how they will handle pay outs and exits. Strategic plan Another important aspect is to have a vision and a clear strategic plan that is understood by the members. They should be aware that they are investing for the long-term. That’s why selection of members who share this vision is key to achieving this. You can be ambitious and look towards achieving robust growth, generate high returns for members or even plan to be listed on the stock exchange in 15 years or less. This strategic plan should spell out your investment goals in the different asset classes both locally and abroad. Formalise While the initial stage of formation can be informal depending on the level of income, it’s important that the group is formalised as quickly as possible. This will facilitate the process of opening a bank account with signatories that do not allow a few individuals to easily access the funds. You will need Articles of Association to open an account. There should be about three signatories to the account...

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Uganda: Mobile soil-testing van launched

The agriculture ministry is to start mobile fertiliser clinics which will move in different places assessing soil nutrient deficiencies and supplying the requisite fertilisers. Agriculture minister Bucyanayandi, right, hands over the key of the mobile farmer’s learning centre and soil testing laboratory to Sasakawa country director, Dr. Roseline Nyamutale According to the agriculture minister, Tress Bucyanayandi, the project is currently being piloted in the districts of Apac and Dokolo. He said the use of fertiliser and agronomics is one way Uganda can increase farm yields. He said this during the commissioning of the mobile farmers’ learning centre at the ministry headquarters in Entebbe. Bucyanayandi said Uganda is one of the countries with the minimal use of fertilisers. He said the Government policy now is to increase the use of both organic and inorganic fertilisers to boost crop productivity for commercial and domestic consumption. This, he said will improve the livelihoods of smallholder farmers. After Apac and Dokolo the project will roll out to Kamwenge, Mityana, Mukono, Nakaseke and Ntungamo. One of the reasons for the depletion of soil nutrients is land fragmentation. “The lab on the truck will be able to assist in assessing actual soil nutrient deficiencies and fertiliser requirements,” Bucyanayandi said. The equipment for the mobile fertiliser clinics worth euros 150,000 (about sh500m) donated by K+S KALI GmbH, a German fertiliser company. The project is implemented by Sasakawa Africa Association (SAA), a Swiss registered international agricultural development NGO and the National Agricultural Extension Services of Uganda. He said the innovation will reach out to more farmers and train them on improved agricultural practices, post-harvest handling, agro-processing and storage. The SAA country director, Roseline Nyamutale, said the project has so far reached 25,000 farmers in 11 sub countries. Source The New Vision

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Civil servants’ hefty allowances face the chop to ease wage bill

Hefty allowances to civil servants are on the chopping board as the State seeks to manage the ballooning public wage bill threatening to cripple the economy. A report by Kenya Institute of Public Policy Research and Analysis (KIPPRA) noted the allowances paid to civil servants have made the Government the preferred employer. KIPPRA advocates a radical review of the allowances policy, noting some of them should be scrapped while others redesigned. Currently, allowances have the effect of doubling employee’s pay and in some instances growing it by a factor of 10. KIPPRA recommends capping of allowances such that they account for between 10 and 25 per cent of civil servants gross pay. The report, commissioned by the Salaries and Remuneration Commission (SRC), is expected to partly inform the restructuring and rationalisation of the public service geared towards taming the rising public wage bill. The Government spent Sh464 billion last financial year in paying wages to its employees, a figure expected to increase to over half a trillion this financial year. “There is need to consolidate non-incidental allowances in the public sector into basic salary, address the inefficiencies in allowances and institutionalise selected categories of allowances. The proportion of basic pay should be no less than 75-90 per cent of the total salary (including allowances),” said KIPPRA in the report. “Allowances that are not directly linked to job responsibilities can be merged, redesigned or eliminated.” In addition to basic salary, the report found that government employees also enjoy a wide range of allowances that in most instances end up more than doubling their pay. Some of the allowances paid to civil servants include rental house, special house, medical, hardship, acting ad special duty allowances. Others are transport, commuter, ministerial, extraneous duty, uniform, transfer, domestic worker, leave and telephone calls allowances among others. Public sector workers also get allowances to buy Christmas gifts, transport for deceased and buy lunch during working days. This in comparison to the private sector where companies pay just medical, commuter, responsibility and acting allowances with a vast number of private sector employees having to do without allowances. While on average, private sector pays a higher basic salary, allowances paid to employees are few and far in between compared to the civil service where allowances can significantly increase one’s monthly income. “The public sector workers choose to stay in the public sector despite wage difference. This difference is however, compensated with the state of job security and allowances that they enjoy in the public sector compared to their counterparts in the private sector,” said the report. According to the report, among the government employees that enjoy high levels of allowances include economists. While paid a measly Sh40 000 a month as basic pay, economists can earn as much as Sh400,000 in allowances – which is ten times more than their basic salary.

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Kenya: New directive to curb wastage, underutilisation of public funds

Government ministries, Departments and agencies will be required to present their development plans to the National Treasury for approval before their budget proposals are agreed upon. National Treasury Cabinet Secretary Henry Rotich Cabinet Secretary to the National Treasury Henry Rotich said the move is aimed at curbing wastage and underutilisation of development funds. This is expected to enhance the absorption capacity of government entities and bring development projects to fruition. The move is also expected to contain rising cases of inflated costs of government-sponsored projects and hold cabinet secretaries and their principal secretaries accountable. The government’s uptake of the development budget is currently estimated at 55 to 60 per cent, with the worrying trend partly attributed to lengthy and cumbersome procurement procedures. “Before budgets are passed, we really need to see the development plans of ministries. I think we should make this a condition before approving and passing their budgets,” Rotich told a parliamentary Budget and Appropriation Committee in Nairobi last week. According to the Budget Policy Statement (BPS), total government expenditure recorded an under spending of Sh110.8 billion during the first six months (July-December) of the current 2013/2014 financial year. Total Government spending during the period stood at Sh574.2 billion against an actual target of Sh685 billion. In the last financial year (2012/2013) various ministries and departments failed to spend a total of Sh339.6 billion allocated to them. Out of the revised budget estimates of Sh1.15 trillion for the 2012/2013 financial year, only Sh814.7 billion was spent, despite increased budgetary allocation to development expenditure. It is feared that underutilisation of development funds by various ministries would stall implementation of key flagship projects for Vision 2030 and put the government’s long-term development blueprint at risk. Rotich said a monitoring and evaluation committee has also been formed at the National Treasury to review funds spend by ministries and the their subsequent impact, adding that going forward programme-based budgeting would also cover supplementary budgets to ensure taxpayers get value for money. “I think the problem in budget spending is wastage and corruption,” said Mutava Musyimi, the chairman of the Parliamentary Budget and Appropriation committee and MP for Mbeere South. “So far we are doing well; ministries are responding to our circulars by limiting unnecessary travels,” said Rotich. By James Anyanzwa, The Standard

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Pain at the pump as super, diesel prices go up, kerosene drops Sh2

Retail prices for diesel and petrol will go up starting this morning by  one shilling, while retail price for kerosene will go down. Kenya Petroleum Refineries Ltd (KPRL) The Energy Regulatory Commission increased the prices of fuel by about a shilling for both diesel and petrol mostly due to a slight weakening of the local currency against other major currencies. Kerosene, used by many rural households and urban low-income households for lighting and cooking, will drop by Sh2. Thus petrol will retail at Sh111.55, up from Sh110.59, diesel at Sh105.80 from Sh104.73 retailed in Nairobi. Kerosene will sell at Sh83.07, down from Sh85.07. The increases were despite a decline in the price of crude oil that was going at $109.5 per barrel in January, down from $113 a barrel recorded in December. The cost of petroleum products imported in a refined state also generally went down, save for diesel that went up by 1.6 per cent. The shilling traded at an average of Sh86.18 to the dollar in January, a weaker position compared to Sh86.16 in December. “The average landed cost of kerosene decreased 2.97 per cent in January compared to December… super petrol decreased by 0.69 per cent, while diesel increased by 1.69 per cent,” said ERC in its monthly price capping statement yesterday. Though marginal, the rise in prices of diesel and petrol add another spanner to an already gloomy economic outlook, with many analysts expecting the cost of living to go up in the coming months. “We retain our expectations on inflation for the coming months. Marginal rise in food prices are expected to adversely affect inflation, hence causing food inflation… we expect year-on-year inflation rates to rise in the coming months to 7.71 per cent and 7.89 per cent for February and March respectively,” said AIB Capital in an analysis last week.”

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