JULISHA MEDIA News Headlines Brief.
Kenyans should prepare for increased taxes in the 2025-26 financial year as the government aims to raise Ksh3.018 trillion, a 14.7% increase from the current year's target.
The National Treasury plans to implement tax reforms, expand the tax base, and enhance compliance to achieve this goal, with a long-term aim of collecting Ksh4.4 trillion annually by 2028-29.
The ambitious revenue target is intended to fund a Ksh4.329 trillion budget, which includes increased recurrent expenditure and development spending.
However, the revenue projection leaves a Ksh759.4 billion deficit, which the government plans to address through domestic and foreign borrowing.
Elsewhere, More than 246,000 students who qualified for university admission after the 2024 KCSE results are facing uncertainty as the Ministry of Education has yet to announce the application process for government-sponsored placements.
The Kenya Universities and Colleges Central Placement Service (KUCCPS) has not provided any updates on available slots or the selection process, leaving students and parents anxious.
The lack of a clear university financing model, compounded by a court ruling that nullified the 2023 funding system, has further deepened concerns.
Meanwhile, Members of the National Assembly are urging the new Salaries and Remuneration Commission (SRC) to implement pay rises that were halted in June 2024 following youth-led protests.
The protests led to the freezing of salary increments for state officers, including MPs, and the rejection of the Finance Bill 2024. MPs, who earn Ksh725,502 monthly, had been slated for a raise to Ksh739,600 before the freeze.
Lawmakers are now demanding a review of public service salaries to ensure fairness and warn the new SRC against decisions that may pit them against the public.
In other news, The National Treasury has raised Ksh48.5B from a heavily oversubscribed bond sale, surpassing its Ksh30B target as CBK reopened its 15-year and 25-year bonds.
The CBK accepted bids worth Ksh23.75B and Ksh24.73B for the two bonds, offering yields of 14.2% and 15.68% respectively, while rejecting Ksh10.5B in high-priced bids to maintain lower borrowing costs.
The auction, conducted amid declining interest rates, aligns with the Treasury’s strategy to extend domestic debt maturity.
Meanwhile, Kenya has ratified the Multilateral Convention to Implement Tax Treaty Related Measures (MLI), targeting multinational companies that shift profits to low-tax jurisdictions, with new rules effective from May 2025.
The MLI will enhance Kenya's tax treaties by introducing anti-tax avoidance measures, aligning with the OECD’s Base Erosion and Profit Shifting (BEPS) goals to curb tax treaty abuse and protect the tax base.
Currently, Kenya has 15 treaties in force and is negotiating 34 others, with the MLI expected to override certain domestic tax laws for aligned treaties, such as with the UK.
Elsewhere, The National Treasury is implementing the Treasury Single Account (TSA) to consolidate all government funds and improve public cash management.
Starting in July, all 47 counties will be migrated to the TSA, aiming to gain visibility of public finances and control to improve budget execution speed and transparency.
The TSA is a unified structure of government bank accounts that enables the consolidation and optimal utilization of government cash resources.
The implementation will be rolled out in three phases, with the first phase involving the migration of all state organs and the second phase involving county governments in consultation with the Intergovernmental Budget and Economic Council.
Across the Boarders.
Somalia and Ethiopia have agreed to restore diplomatic representation in their respective capitals, marking a significant turn in relations following a year-long rift that began when Ethiopia signed a controversial memorandum with the separatist northern Somali region of Somaliland.
The agreement came after Somalia's president Hassan Sheikh Mohamud made an unexpected visit to Addis Ababa, with Ethiopia's state minister for foreign affairs, Mesganu Arga Moach, calling it a "big milestone forward in our bilateral and brotherly relations."
The restoration of ties comes after a period of tension sparked by Ethiopia's agreement with Somaliland for port access and a naval facility along the Gulf of Aden coast, which Somalia viewed as an attempt to "annex" its territory.
The breakthrough was mediated by Turkish president Recep Tayyip Erdoğan and coincided with broader regional discussions involving Somalia's participation in talks with Eritrea and Egypt, both of which have troubled relations with Ethiopia.
While Somalia maintains opposition to Ethiopia's direct engagement with Somaliland without its permission, both countries have now committed to resolving their differences through dialogue and addressing shared concerns.
Meanwhile, The Bank of Tanzania (BoT) purchased gold worth over TZS 400 billion between October and December 2024.
This move comes as part of its initiative to boost foreign reserves and support local miners through market incentives, including global market prices and reduced royalty charges.
The program has particularly benefited women miners, with 1,000 licenses issued during President Samia Suluhu Hassan's leadership and 2,000 additional licenses being processed in Kigosi.
The bank's support includes guaranteeing loans for small-scale miners who previously struggled with collateral requirements, while offering value-addition training through the Tanzania Women Miners Association.
BoT's initiative aims to increase gold production, strengthen the economy, and recognize mining as a legitimate business, with 2,300 licenses allocated despite demand exceeding 4,000 applications.
Still on Africa, Nigeria’s anti-graft agency has arrested 105 people, including four Chinese nationals, for suspected involvement in an Internet fraud scheme targeting hotels in Europe and elsewhere.
The suspects were arrested last Thursday during a raid on an apartment in Abuja, the Nigerian capital, Economic and Financial Crimes Commission spokesperson Dele Oyewale said in a statement.
They are suspected of operating a hotel review job scam, he said.
Oyewale said investigations were ongoing and that once they were completed all the suspects would be sent to court for trial.
Last month almost 800 people, including 148 Chinese and 40 Filipino nationals, were arrested in a raid on a building suspected of being a hub for fraudsters who lured victims with offers of romance, then pressed them to hand over cash for phoney cryptocurrency investments.
Meanwhile, Nigeria and the US signed an agreement on Friday to repatriate about $52.88 million in assets forfeited by former Nigerian Oil minister Diezani Alison-Madueke and her associates.
CRYPTO.
Kenyan firms are increasingly turning to cryptocurrencies, particularly stablecoins like USDT, for foreign supplier payments during periods of dollar shortages and shilling depreciation.
The finding comes from a market survey conducted by a technical working group comprising officials from the Capital Markets Authority (CMA) and Central Bank of Kenya (CBK), which revealed more extensive use of digital assets than previously thought, despite the CBK's prohibition on banks doing business with crypto entities.
The survey found that Kenya ranks 21st out of 155 countries in global crypto adoption, with over 730,000 users, predominantly under 40 years old, investing in Bitcoin, Ethereum, and USDT.
The sector's significance is highlighted by the Kenya Revenue Authority's collection of Sh10 billion in taxes from crypto users last year, with the market reportedly transacting about Sh42.4 trillion between 2021 and 2022, representing nearly 20% of GDP.
While individuals typically invest less than Sh100,000, both corporate and individual users primarily employ digital assets as a hedge against shilling depreciation and for international settlements.
Stablecoins are tied to a reserve asset like the US dollar or gold to sustain value.
In areas or places where traditional currencies are unstable, stablecoins strive to provide a more trustworthy medium of exchange than volatile cryptocurrencies like Bitcoin and Ethereum.
Tether, a stablecoin, is tied to the US dollar, so 1 USDT is worth 1 USD. Stablecoins are tempting for daily transactions, international payments, and currency depreciation hedges due to their stability.
While innovative, their emergence requires strict regulatory control to ensure financial stability.
Kenya's draft National Policy on Virtual Assets and Virtual Asset Service Providers, available for public comment until January 24, 2025, indicates a practical transition towards adopting digital innovation while tackling essential issues related to consumer protection and financial stability.
This regulatory development may establish Kenya as a model for other African countries addressing the intricate convergence of traditional finance and digital assets.