Over the last week, MPs approved several changes to the Finance Bill that are set to affect taxpayers.
Among other things, the legislators agreed to cut Value Added Tax (VAT) on Liquid Petroleum Gas (LPG) from 16% to 8%.
This came just a day before the revised fuel prices left Kenyans scrambling to find a way to survive the cost of living that experts say is set to increase even further.
Let’s look back at this, as well as some of the most significant money news over this period and how they could affect you.
On June 13, 2022 the National Assembly ratified several changes in the Finance Bill 2022 just before they went on an indefinite recess pending the August 9, General Election.
Gladys Wanga – Chair of the Finance and National Planning Committee, amended the Bill to bring down VAT on gas from 16% to 8%. A move that is set to see a drop in the price of cooking gas once President Uhuru Kenyatta assents to the bill.
The legislators REJECTED the following;
The National Assembly APPROVED the following:
Just a day following amendments to the Finance Bill 2022, motorists suffered yet another month of increased pain at the pump as fuel prices rose again.
The monthly review by the Energy and Petroleum Regulatory Authority (EPRA) saw prices of all petrol, diesel and kerosene increase by Ksh9 per litre.
This means that a litre of super petrol will now sell at a record Ksh159.12 in Nairobi over the next 30 days, and over Ksh160 in remote and far flung areas. Diesel rises to Ksh140 and Kerosene Ksh127.94 per litre.
EPRA attributes the skyrocketing prices to the rise in global crude oil prices and the depreciation of the Kenyan Shilling.
In June 2021, Super Petrol retailed at Ksh127.17 in Nairobi. This means that the price has changed by Ksh 31.95 or 25% over the last 12 months, an average increase of Ksh 2.66 per month.
It is important to note that the government has been using a subsidy program since October 2021 to cushion Kenyans from the effects of rising fuel prices.
If the subsidy was not in place during this latest review, Super Petrol would have retailed at Ksh184.68, Diesel Ksh188.19 and Kerosene Ksh170.37.
Having spent over Ksh100 billion so far, Treasury CS Ukur Yattani now says the subsidy is inefficient and would be gradually eliminated in the coming financial year starting July 1, 2022.
This means fuel prices could rise even further even as KRA is now collecting Ksh62.89 from every litre of petrol sold in Kenya, a 39% jump in tax collections over the past two years.
Taxes and levies account for close to 50% of the cost of fuel in Kenya.
In the corporate world, Airtel Africa has relinquished a 25.77% stake of its local mobile money business, a move that saw the company rake in Ksh64.2 billion from 4 institutional investors.
Notably, Airtel Money generated Ksh64.6 billion in revenue across the African markets in the year ended March 2022. Users of the platform stood at 26.2 million.
Over the same period, M-PESA had 47.1 million customers and revenues of Ksh145.6 billion in Kenya, the Democratic Republic of the Congo, Lesotho, Mozambique, and Tanzania.
Airtel Money has struggled in the Kenyan market where it had less than 800,000 active customers in December 2022, compared to over 25 million M-PESA customers over the same period. The service is, however, more successful in other African markets.
According to Airtel Africa, the low uptake of traditional banking services remains the primary driver of demand for mobile money services.
In addition, the telecom operator intends to launch new banking and remittance services in collaboration with London-based lender Standard Chartered Plc.
Still in the world of mobile money, China-based phone maker, Transsion (maker of Infinix Mobile, Tecno Mobile, and Itel Mobile) announced plans to launch a mobile money wallet service in Kenya to allow customers to make payments to small businesses and retailers.
Dubbed Tecno Wallet, the new service is being introduced through strategic partnerships with unnamed third-party financial institutions.
“Tecno will be available for download on selected existing device series and will come pre-installed on new Tecno smartphones, including the upcoming CAMON 19 series set to be unveiled in June 2022,” the multinational said in a statement.
In addition to diversifying into financial services, the phone manufacturer is eyeing the mobile money service to increase device sales.
Aside from shopping, users will be able to use the wallet to pay for data, airtime, and bills.
The Central Bank of Kenya (CBK) has announced that it will begin regulating financial super apps such as Safaricom's M-PESA, claiming that the platforms are handling transactions similar to those traditionally handled by banks.
Banks have been pushing for the regulation of these apps that also include Craft Silicon’s Little, to help them compete better as consumers opt for the multiservice alternatives.
“For banks, this means that an increasing number of users may bypass banking apps and simply use the more integrated super-app.
“The regulatory framework will need to be agile to regulate super-apps offering e-commerce, loans, insurance products, investing platforms, etc. within the same platform. Collaboration among different sector regulators will be critical for a 360-degree oversight of super apps.” the CBK explains in its latest banking supervision report.
While banking apps offer their customers the convenience of remote, 24-hour transactions, the allure of super apps is the combination of banking apps across the industries - such as insurance, entertainment, transportation, and utilities.
Saccos Inch Closer to Lending to Each Other
Kenyan Savings and Credit Co-operative Societies (Saccos) are moving closer to the implementation of an inter-Sacco lending market.
This leaves commercial banks staring at the possibility of a Ksh2.33 billion loss of interest income from loans granted to the co-operative sector.
Under the new regime, Saccos will operate their own inter-Sacco market in which they can lend and borrow at reasonable rates from one another.
So far, 50 Saccos have shown interest in the initiative and are working with Sasra in making it a reality.
The CBK has identified low youth adoption of identification documents and retrogressive cultural practices that restrict women as major obstacles to Kenya's financial inclusion rate rising above current levels.
Speaking in a web forum on June 10, 2022, CBK governor Patrick Njoroge explained that the regulator had anticipated a jump in inclusivity by a bigger margin in the period, but that the impediments facing youth and women slowed this down.
“There are two major impediments in this. The first is social norms, particularly for women who are not allowed to have cell phones or mobile wallets of their own—it’s registered in the name of the husband. That qualifies as being outside of the system because you don’t have an identity of your own.
“This ID issue is significant. During Covid-19, it turns out that the youth were just at home and there was no pressure on them to go get their IDs, hence our numbers were not as significant as we expected.” he detailed.
Prior to 2019, Kenya's financial inclusion had accelerated due to widespread adoption of mobile money.
The 2021 FinAccess Survey found that the level of financial access rose by 0.8 percentage points to 83.7% between 2019 and 2021.
According to a survey by hospitality advisory firm W Hospitality Group, 24 global hotel brands are considering opening new facilities in Kenya this year as the industry recovers from the Covid-19 crisis.
Marriott International and Europe’s biggest hotel group, Accor, are some of the global brands that intend to build hotels in Kenya.
The new hotels will bring to the market 3,155 new hotel rooms, making Kenya the top seventh hotspot for new luxury hotels in the African continent.
Over three-quarters of the planned hotel rooms, or 2,450, are considered "onsite," which means they are currently under construction.
In March of this year, Marriott International announced that it had signed a deal with Baraka Lodges Limited to open its first luxury safari lodge in Maasai Mara, Narok County.
The JW Marriott Masai Mara Lodge in Kenya, which will be Marriott's first luxury safari property in Africa, is set to open in 2023.
Kenya's tourism industry is beginning to recover from its deep Covid-19-induced slump, as local tourists take advantage of lower prices.
Safaricom will charge customers 3.5% of the value of any of their online purchases made using the newly introduced virtual card that was launched in partnership with Visa.
The M-PESA GlobalPay Visa Virtual Card, created by the two companies, allows users to shop and pay for services in more than 200 countries.
Safaricom also explained that the charges would be on the value of the transaction based on the exchange rate at the time of the transaction.
“You will not be charged to make payments for online purchases as there is no transaction cost. However, Safaricom will apply markup of 3.5% on the transaction value at the prevailing forex rate,” reads part of a notice issued by the telco.
Safaricom's earnings from e-commerce payments are expected to increase as a result of the deal.
Data from the Kenya Revenue Authority (KRA) shows that about 41% of targeted taxpayers have filed their returns ahead of the June 30 deadline.
By June 7, 2.87 million taxpayers had filed returns, against a target of 7.1 million.
The taxman extended working hours at Service centres to weekends (9am to 1pm) and 6:30pm on weekdays starting June 2 to June 30, in a bid to help Kenyans beat the deadline.
Huduma Centres however continue to operate from 8am to 5pm Monday to Friday and remain closed on Saturdays.
In the next five years, more than 300,000 youth will receive software development training as part of a program aimed at reducing unemployment in both urban and rural areas.
According to Albert Kimani, the chief executive officer of the Power Learn Project, a technology company that is implementing the project, Kenyan youths will be among the one million African youths who will be empowered through training over the course of the project.
“The training will be conducted virtually in collaboration with mobile phone service providers who shall offer free data for the learners to attend online lessons,” Kimani explained.
On June 9, 2022, Power Learn Project had picked 1,000 developers from Kenya to join its first cohort of one million young developers training.
The initiative, which will be offered on a scholarship basis, began this month with a focus on young Kenyan developers.
After successfully completing the course, learners will receive a certificate and will become part of a community of young skilled Africans ready to take advantage of digital opportunities.