Over the past 10 years mobile-based lending has grown in Kenya. Some estimates put the number of mobile lending platforms at 49. The industry is largely unregulated but includes major financial players. Banks such as Kenya Commercial Bank, Commercial Bank of Africa, Equity Bank and Coop Bank offer instant mobile loans.

These lending services have been made possible by the ballooning financial technology (fintech) industry.

Since the early 2000s, Kenya has been touted as a centre of technological innovation from which novel financial offerings have emerged. Mobile company Safaricom’s M-Pesa is a well-known example. It is no surprise, therefore, that technology and unregulated lending have developed together so strongly in Kenya.

The digital loan services appear to be bridging the gap for Kenyans who don’t have formal bank accounts, or whose incomes are not stable enough to borrow from formal financial institutions. These services have improved access to loans, but there are questions about whether the poor are being abused in the process.

Who borrows and why

A survey released earlier this year showed that formal financial inclusion – access to financial products and services – had increased from 27% of Kenya’s population in 2006 to 83%. M-Pesa was launched in 2007.

Mobile money services have benefited many people who would otherwise have remained unbanked. These include the poor, the youth, and women.

The next logical step was to make loans available. The first mobile loans were issued in 2012 by Safaricom through M-Pesa.

In 2017, the financial inclusion organisation Financial Sector Deepening Kenya reported that the majority of Kenyans access digital credit for business purposes such as investing and paying salaries, and to meet everyday household needs.

Some of their findings are illustrated in the figure below.

Unpacking the digital lending story

The implications of these findings are two-fold. Digital credit can help small enterprises to scale and to manage their daily cash flow. It can also help households cope with things like medical emergencies.

But, as the figure shows, 35% of borrowing is for consumption, including ordinary household needs, airtime and personal or household goods. These are not the business or emergency needs envisaged by many in the investment world as a use for digital credit.

Only 37% of borrowers reported using digital credit for business, and 7% used it for emergencies. Many in the development world thought this figure would be much higher.

Second, the speed and ease of access to credit through mobile applications has caused many borrowers to become heavily indebted. In Kenya, at least one out of every five borrowers struggles to repay their loan. This is double the rate of non-performing commercial loans in conventional banking.

Despite their small size, mobile loans are often very expensive. Interest rates are high – some as high as 43% – and borrowers are charged for late payments.

The mobile-based lending business model depends on constantly inviting people to borrow. Potential borrowers receive unsolicited text messages and phone calls encouraging them to borrow at extraordinary rates. Some platforms even contact borrowers’ family and friends when seeking repayment.

It’s not always clear to customers what they will have to pay in fees and interest rates or what other terms they have agreed to. The model has been accused of making borrowers unknowingly surrender important parts of their personal data to third parties and waive their rights to dignity.

Concerns and remedies

There are concerns about how the business model may make people even more vulnerable.

The most prominent is the debt culture that has become a byproduct of mobile-based lending: borrowers fall into the trap of living on loans and accumulating bad debt.

So, what can be done to improve the system so that everyone benefits?

First, even though digital loans are low value, they may represent a significant share of the borrowers’ income. This means they will struggle to repay them. Overall, the use of high-cost, short-term credit primarily for consumption, coupled with penalties for late repayments and defaults, suggests that mobile-based lenders should take a more cautious approach to the development of digital credit markets.

Second, some digital lenders are not regulated by the Central Bank of Kenya. In general, digital credit providers are not defined as financial institutions under the current Banking Act, the Micro Finance Act or the Central Bank of Kenya Act.

Mobile lending platforms are offered by four main groups: prudential companies (such as banks, deposit-taking cooperatives and insurance providers), non-prudential entities, registered bodies and non-deposit-taking cooperatives as well as informal groups such as saving circles, employers, shop keepers and moneylenders.

Under current law, the Central Bank of Kenya regulates only the first two members of this list. So they should both be subject to the interest rate cap that was introduced in 2016. But some of the regulated financial institutions that also offer digital credit products have not complied with the interest rate cap, arguing that they charge a “facilitation fee”, and not interest on their digital credit products.

Third, and closely related to the point above, is the issue of disclosure. Borrowers often take loans without fully understanding the terms and conditions. Disclosures should include key terms and all conditions for the lending products, such as costs of the loan, transaction fees on failed loans, bundled products (services offered and charged for in tandem with the loan) and any other borrower responsibilities.

Fourth, with 49 digital lending platforms it is imperative that the lenders are monitored and evaluated for viability and compliance. Many mobile lending platforms are privately held (and some are foreign-owned) and are not subject to public disclosure laws.

Finally, changes to the current digital credit system across all the lending categories – prudential, non-prudential, registered and informal entities – are needed. An obvious failure of the system allows borrowers to seek funds from several platforms at the same time, creating a “borrow from Peter to pay Paul” scenario. At the same time the country’s Credit Reference Bureau has been faulted for occasionally basing its reports on incomplete data.

Credit reporting systems need to be stronger. They should get information from all sources of credit, including digital lenders, to improve the accuracy of credit assessments. Efforts to make the system work better should consider whether digital credit screening models are strong enough and whether rules are needed to ensure first-time borrowers are not unfairly listed. There could also be rules about reckless lending or suitability requirements for digital lenders.The Conversation


Victor Odundo Owuor, Senior Research Associate, One Earth Future Foundation, University of Colorado Boulder

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Kenyan judges have stopped plans to construct the country’s first ever coal-powered plant near the coastal town of Lamu, a UNESCO World Heritage Site.

The tribunal ruled that the National Environment Management Authority had failed to do a thorough environmental assessment. The Conversation Africa’s Moina Spooner asked David Obura to give some insights.

Why did the Kenyan government opt for a coal-powered fire station given the global move away from coal?

The government’s justification for the coal plant came from its “Vision 2030” goals for development, launched in 2008. Under this strategy, adequate, reliable, clean and affordable energy was highlighted as key to meeting the country’s growing demands.

The government anticipated that over the 20 years of the plan demand for energy would increase six-fold from about 1 800 MW to 15 000 MW peak load in 2030. About a quarter (26%) of the final installed capacity was expected to be obtained from geothermal, 19% from nuclear, and 13% from coal. Coal was seen as a cheaper substitute for more expensive oil, and to provide consistent baseload power.

However, cleaner fossil and non-fossil fuels are fast gaining advantage because of their improving cost to the user, measures of energy efficiency, reliability, stability of supply and low environmental impacts. And energy demand hasn’t risen as expected, remaining below 2000 MW.

Given all the above, it’s believed that vested interests are likely to be playing a role in Kenya’s push for the coal plant. The plant is owned by Amu Coal – a consortium of Kenyan and Chinese energy and investment firms. There are reports that China has positioned itself to help drive Kenya’s energy market while, in its shift to cleaner domestic energy, the country is moving its existing stock and labour abroad.

What are the particular environmental challenges that a plant like this presents?

The burning of coal will cause massive pollution to the air, fresh water and ocean.

Contributing to this is the fact that the coal intended for use, from South Africa and Kitui in Kenya, is bituminous – this means that it burns poorly and has particularly high levels of pollutants. South Africa has one of the highest emissions from coal power plants in the world, with widely documented effects on people and nature.

The plant will also dramatically increase Kenya’s national contribution to global carbon dioxide emissions.

On top of air pollution, coal leaves behind residue ash when it’s burned. The Lamu Coal Plant proposes a yard that will hold about 26 million cubic metres of ash and stand 26 metres high, in places less than three metres above sea level. This may remain as a permanent mound of waste – until eroded by the rising sea. This is a huge concern on the low-lying coastline – until recently sea level was projected to rise almost one metre by 2100, but new evidence including recent ice melt in Greenland, suggests this rate could be much higher.

The judges ruled that the environmental impact assessment was bad. How are they carried out in Kenya. Who is responsible for them?

Environmental Impact Assessments in Kenya are implemented by independent experts accredited through the Environmental Institute of Kenya. They are commissioned by project developers to carry out assessments.

The National Environment Management Authority is responsible for reviewing assessments for their content and quality. It has the power to approve or deny an environmental license for operations.

A portion of responsibility therefore lies with all three – environment management authority, the experts who are paid to carry out the studies and the project developers who commission and pay for them. But ultimately the buck stops with the national authority.

What went wrong?

The court case highlighted that the environmental challenges listed above were not adequately covered by the Environmental Impact Assessment. These include:

  • Detailed insights into how much pollution from coal, dust and ash the plant would produce, and how this would affect people, plants, animals and marine life;

  • How much and in what directions pollution would be spread by wind and water currents;

  • The impact of a changing climate, like rising sea levels, on the plant and the coal residue that it will leave behind;

  • sufficient and credible mitigation actions for all these impacts.

The court’s decision shines a light on these deficiencies and calls into question the fundamental role played by the environmental authority. It’s job is to review and maintain quality control over assessments. It clearly didn’t do that in this case. This mirrors an earlier case in which a High Court decision stopped dredging for the new Lamu port, adjacent to the coal plant.

For now, the court order has given the project proponents a clear directive to do a new environmental impact assessment if they want to go ahead with the plant. It could take a year or two to complete for a project of this scale. Many Lamu residents and environmental groups hope that the project will be shelved. Even if that doesn’t happen, at least a signal has been sent that future Environmental Impact Assessments must meet necessary standards, and will face critical scrutiny to ensure they do.The Conversation


David Obura, Adjunct Fellow, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Budget Statement for the Financial Year 2019/20 was read on 13th of June 2019 by the Cabinet Secretary for the National Treasury, Hon. Henry Rotich.

The theme for this year’s Budget Statement is: Creating Jobs, Transforming Lives – Harnessing the “Big Four” Plan. This theme is probably befitting an economy that faces a paradox of high unemployment among the youth, low income and high economic growth.

Over and above that, The Government of Kenya has been on a relentless drive to rein the runaway recurrent expenditure, embezzle and fleece of public resources. The International Monetary Fund and The World Bank have been piling pressure on the government to institute reforms that require a reduction on the recurrent expenditure which have translated to government audits that have recommended a reduced size of government, recurrent expenditure on wages and salaries as well recommended monitoring of public resources to reduce misuse.

This year’s budget chose a route to achieving this uphill quest of taking expenditure to endurable limits which will in turn reduce the government borrowing. Kenya’s economy grew by 6.3% in 2018 compared with 4.9% growth in 2017 with a forecasted growth of 5.8% in 2019/2020 when the Big 4 Agenda gains momentum.

 Kenya Expected Growth

The 2019/2020 budget then in a nutshell seeks to address the following;

  1. To create an enabling business environment especially for the micro small and medium enterprises and this will lead to job creation
  2. Sensible and systemized spending to curb misuse of public funds
  3. Priority spending on key projects to be funded by domestic resources
  4. Reduction of the fiscal deficit to reduce the national debt
  5. Implement reforms that will enhance efficiency thus making Kenya more competitive

To review the budget, we shall briefly delve into the raft of proposed tax measures and emerging challenges to achieving the goals envisioned in the budget statement.

A Highlight Of The Tax Measures

Capital Gains Tax

  • The rate of Capital Gains Tax is set to be increased from 5% to 12.5%. There is no indication that indexation or some form of cataloguing will be introduced to take into account the effects of inflation over time.
  • Property transferred by corporates as part of group restructuring to be exempted from Capital Gains Tax to allow for seamless restructuring for operational efficiency and encourage business growth. Corporate Tax
  • Framework on the implementation of the 30% rebate on total electricity costs by manufacturers introduced through the Finance Act 2018 has now been developed.
  • Investors operating plastic recycling plants to enjoy a reduced corporate tax rate of 15% for the first five years.
  • Introduction of amnesty covering penalties and interest, on any outstanding tax for two years prior to listing, for SMEs under the Growth Enterprise Market Segment program at the Nairobi Securities Exchange.
  • The Cabinet Secretary indicated that measures aimed at the taxation of income generated from the digital economy would be introduced. The measures were not specified by the Cabinet Secretary.

Personal Income Tax

  • Exemption of Income earned under Ajira Program: The Government through the Ministry of Information, Communications and Technology in partnership with academia, civil society and the private sector has set up a program known as “Ajira Digital Program” whose aim is to bridge the gap between skills available and skills demand. A major objective of the program is to enable over one million youths annually to be engaged as digital freelance workers.
  • The Government has proposed that the youth registered for the program pay a registration fee of ten thousand Kenya shillings for the next three years in lieu of income tax with effect from 1st January 2020.
  • The Cabinet Secretary has proposed to amend the Income Tax Act to exempt registered members from regular taxation for the specified period.

Turnover Tax

  • Turnover tax, which was replaced by Presumptive Income Tax in 2018, is to be reintroduced.
  • Turnover tax will apply to taxpayers whose business income does not exceed KShs 5 million per annum.
  • Tax rate of 3% on the gross turnover accounted for every month.
  • Turnover tax will apply in addition to presumptive income tax, which was introduced through the Finance Act 2018.

Withholding Tax

  • The scope of qualifying services subject to withholding tax set to be expanded to include:
  • Security services;
  • Cleaning and fumigation services;
  • Catering services offered outside hotel premises;
  • Transportation of goods excluding air transport services;
  • Sales promotion; and
  • Marketing and advertising services.

Value Added Tax (VAT)

  • Reduction of the withholding VAT rate from 6% to 2%.
  • The Cabinet Secretary for The National Treasury to constitute a taskforce which will validate outstanding VAT refund claims for settlement within the next two months.
  • Adjustment of the VAT refund formula introduced through the VAT Regulations, 2017 to ensure a full refund of input tax credit relating to zero-rated supplies.
  • Zero rating of denatured ethanol.
  • Introduction of VAT exemption on the following:
  • Locally manufactured motherboards and all inputs used in their manufacture
  • The supply of machinery and equipment used in the construction of plastic recycling plants as well as all services offered to these plants.
  • Agricultural pest control products.
  • Electric accumulators and separators used in the manufacture of automotive and solar batteries.

Customs Duties

  • Extension of stay of application of the Common External Tariff rate on a wide range of iron and steel products at 25% or the corresponding specific rates.
  • Application of 25% import duty on paper and paperboard instead of 10%.
  • Reduction of import duty on raw timber from 10% to 0%.
  • Proposal to retain import duty on finished timber products at 25%.
  • Detailed Customs measures to be communicated through the East African Community (EAC) Gazette effective 1 July 2019.
  • Kenya Electronic Single Window System Bill to be tabled in Parliament.

Excise Duties

  • Introduction of excise duty on betting activities at 10% of amounts staked.
  • Reduction of excise duty on fully-powered electric motor vehicles from 20% to 10%.
  • Increase in excise duty on motor vehicles of engine capacity exceeding 1500cc to 25%.
  • Increase in excise duty rates on cigarettes, wines and spirits by 15%.

Miscellaneous Fees and Levies

  • Manufacturers of paints and resins to receive a refund of anti-adulteration levy paid on kerosene used as their input.
  • Reduction of Import Declaration Fee on raw materials and intermediate goods from 2% to 1.5%.
  • Increase in Import Declaration Fee on finished goods from 2% to 3.5%.
  • Increase in Railway Development Levy on finished goods from 1.5% to 2%. Remission available for approved manufacturers.
  • Introduction of export levy on tanned or crust hides and skins at 10%.
  • Continuation of Revenue Enhancement Initiatives such as:
    • Scanning of containers to detect concealment;
    • Regional electronic cargo tracking system;
    • New debt collection strategy;
    • Resolution of tax disputes; and
    • Enhanced investigative capacity

Emerging challenges: The Realities of Playing the Balancing Act

Deficit and Resource Mobilization: One of Kenya’s recurring challenge is the growing budget deficit which forces the country to borrow internationally. In 2018 for example, Kenya recorded a Government Budget deficit equal to 6.70 percent of the country's Gross Domestic Product. This has been noted to be very alarming.

Currently, there is an estimated deficit of Sh607.8 billion, an increase from Sh562 billion. The government is likely to borrow more in the next fiscal year to bridge the deficit as Kenya Revenue Authority (KRA) is expected to miss this year’s revenue collection target by Sh118 billion, a move likely to plunge the country into further debt. Treasury Cabinet Secretary Henry Rotich has set a revenue target of Sh2.2 trillion while KRA is expected to collect approximately Sh1.9 trillion. The government might also heighten the tax regime to fill this budget deficit. 

Kenya Budget Deficit                                                                                                           

Tax Efficiency and Public Participation

Kenya’s tax efficiency and universal suffrage in the tax policy making process has been routinely tested and shows that not much is being achieved. An example can be drawn on the presumptive tax issue.

Finance Act 2018 replaced turnover tax with presumptive tax to persons who are issued with a single business permit by a County Government applicable at 15% of the single business permit fee in a move to widen revenue collection in the informal sector.

The Finance Bill 2019 however, proposes to reintroduce turnover tax for businesses whose turnover does not exceed KES 5 million citing, the revenue collection will not be commensurate to the revenue earned by the business. It is however worthy to note that, presumptive tax will still be maintained as minimum tax. The lack of coordination between the local governments and national governments in tax collection and administration as well as failed tax measures shows that there is need for a policy on public participation in the tax policy making and administrative process.

New Frontiers: Taxing the Digital Space (e-commerce)

Kenya has experienced a surging growth in e-commerce. This is not only evident from the major e-commerce trading platforms, but the number of individuals selling goods and their services on social media platforms such as Instagram, Twitter and Facebook.

In a public notice, the taxman said it had noted that some taxpayers carry on online business but they do not file returns or pay taxes on the transactions. It is however important to note that the Kenya Revenue Authority has not developed rules to guide the taxation of e-commerce.

The rules will be interesting to watch due to the challenges the digital space offer in terms of jurisdiction. e-commerce makes it easier for businesses to be conducted without having to create an entity which would otherwise be subject to tax. Thus, will the taxman tax the entities based on the presence of their servers to determine tax residence or place of actual sale? The rules will be interesting to watch.

Conclusion: Most Kenyans felt a disconnect between their experience and the growth in the economy in 2018. This is mainly because a significant portion of growth arose from government spending and initiatives and capital intensive sectors including large scale agriculture, forestry and fishing, transport and storage and wholesale trade. This led to a disproportionate change in employment. Further, constrained access to credit experienced by the private sector led to SMEs borrowing at very high rates outside the banking system and poor performance by firms led to thousands of job cuts, resulting in a reduction in consumer spending.

This informed the theme of the budget. It will be interesting to see the effects of the budget on common citizens as well as Medium and Small enterprises. A judgment as to whether the taxman’s obligations and the entrepreneurs rights to associate in business can only be properly arrived after the end of the financial year. Taxation has to have a cause and its consequences may be far from the cause.


By Edwin N. Kimani

*The writer is a Lawyer and the managing partner at Avikele Services, a professional services firm offering legal, tax, accounting, business development and consulting services to enterprises of all sizes and industries.

Contact: This email address is being protected from spambots. You need JavaScript enabled to view it. / Tel: +254727363338

The second largest Ebola virus disease outbreak on record is currently raging in the Democratic Republic of the Congo (DRC) with over 2,000 cases and more than 1,400 deaths recorded. Uganda, which shares a long and porous border with DRC, registered its first confirmed cases and two deaths and, earlier this week, a suspected case in Kenya fortunately turned out negative.

While the epidemic has been mostly contained in the DRC, the potential and risk of spread is high. Given that Kenya shares a porous border with Uganda – and is a busy international travel hub – is Kenya ready to handle an outbreak? The Conversation Africa’s Moina Spooner asked Abdhalah Ziraba to share his insights.

How prepared is Kenya to handle an Ebola Virus Disease outbreak?

We saw Kenya’s Ebola response spring into action when there was a suspected case in Kericho, western Kenya. The patient was quickly isolated, samples were taken, and all potential contacts were traced. Major health facilities in the region were alerted and prepared to handle any reported cases. Kenya’s Health Cabinet Secretary was quick to issue statements to reassure the public. These actions show that all players are alert.

Kenya has been preparing for this. There’s a national ebola preparedness and response contingency plan tasked to monitor the situation, make sure enough personnel are trained and respond to suspected cases. Under this plan, there’s a rapid surveillance and response team who get dispatched to support health facilities that report any suspected Ebola case.

There are also experts on the ground. During the 2014 outbreak in West Africa, a Kenyan team of 170 people was dispatched and they spent about six months helping to bring down the epidemic. These individuals are part of Kenya’s Ebola mitigation teams that have now been mobilised to all major entry points.

Kenya appears prepared, but a lot more can be done.

There needs to be more awareness messaging for the general public – like Uganda has done in its border districts. Tighter screening at all borders (especially along the border with Uganda) is crucial, too. Primary health care workers – even those in private facilities – need to be able to pick out suspected cases. It is not clear to what extent low level health care workers have been sensitised on managing and reporting suspected cases.

All health facilities also need to be provided with a minimum of supplies to help them manage suspected cases. And in the event of a confirmed case, the ministry should consider providing an experimental vaccine to all front-line health care workers, as the DRC and Uganda are doing. That’s because health care workers are at a higher risk of exposure to the virus in any outbreak.

Who are the main players involved in managing the risk?

Healthcare providers are key. How quickly an outbreak is spotted and controlled depends on their ability to identify a case and manage patients while protecting themselves, and others, from infection.

The general public is vital too, especially when it comes to reporting cases early and managing the crisis. But they need to be equipped with the right information. In the past, in places where epidemics were poorly understood, they quickly flared up due to misconceptions about where the disease came from and the mode of transmission. People also continued with cultural practices that increased exposure – like the washing of dead bodies before burial.

Political leadership is critical in making decisions regarding resource mobilisation, distribution and to maintain order. A serious outbreak can lead to panic and the breakdown of security. This would affect those seeking health care; hinder service provision; and fuel misinformation.

Other leaders – community, cultural and religious – can also play a critical role in educating the public, and clearing up misconceptions that often fuel the spread of an epidemic.

International players – like the World Health Organisation – give vital support when it comes to technical and financial resources. Without these an outbreak could quickly become an epidemic. These actors must be engaged with from the planning stage.

What are the biggest risks Kenya faces?

The spread of the Ebola virus is made worse when there’s a lot of movement of people within – and between – countries. Kenya has wide and porous land borders with its neighbours. Many people cross the borders without being formally screened and documented.

Read more: How Africa's porous borders make it difficult to contain Ebola

Also, while there are thermal cameras at all official border points, there is a small risk that infected people would come into the country before getting the first symptoms. The time-lag between getting infected to showing symptoms ranges between two and 21 days.

Has Kenya had outbreaks before? How well did it manage them? What lessons were learnt?

While Kenya has never had a confirmed Ebola virus case, there has always been a risk. And so Kenya has taken proactive measures, including maintaining some form of surveillance.

The problem has been the consistency with which these measures have been applied. For example, the thermal cameras haven’t always been active or passenger travel history questionnaires consistently collected. As long as there’s an outbreak nearby, the country should always be alert.The Conversation


Abdhalah Ziraba, Associate Research Scientist, African Population and Health Research Center

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Kenya’s Treasury Secretary has tabled a budget that is aimed at addressing five challenges. These are the creation of an enabling environment for businesses, the prudence and efficiency of government spending, the mobilisation of domestic resources, the reduction of the fiscal deficit and stabilisation of debt and the implementation of reforms to make the Kenyan economy more competitive.

The Conversation Africa’s Moina Spooner asked Tim Njagi for insights into whether it’s achieved this.

How well does the 2019/20 budget address these challenges? Please give details.

To some extent the Treasury Cabinet presented a budget that tried to address the challenges listed above. Kenya needs to be competitive to continue to attract investments.

Key proposals in the budget aimed at improving competitiveness included the 30% rebate to manufacturers on the cost of electricity, reduction of VAT withholding tax (from 6% to 2%), expediting VAT refunds and pending bills (and ensuring that suppliers to government are paid within 60 days), facilitating faster clearance of cargo at ports, and some protection measures for manufacturers – like increases in the railway development levy. The government also plans to prioritise locally manufactured products in its procurement.

But some areas of concern remain. These include the mobilisation of local resources, reduction of the fiscal deficit and stabilisation of the national debt.

As at December 2018, the Kenya Revenue Authority missed the revenue target by KSh61 billion (about US$598million). This deficit will likely double by the end of the financial year, later this month. The National Treasury has proposed a number of strategies to try to contain expenditures, including adopting zero-based budgets (a fresh budget with each cycle), a freeze on new projects, restructuring and realigning externally funded projects with the national agenda, and reducing the recurrent expenditures.

It is likely that the government will have to borrow more to address the increasing fiscal deficit, currently at 5.6% of the GDP.

The National Treasury has tried to suggest measures that will reduce recurrent expenditures – like reducing the increasing government wage bill, domestic and foreign travel expenditures. But this is unlikely to work. The wage bill has increased by an average of Ksh 46 billion (about US$450 million) over the last six years due to an increase in the number of employees and salaries.

The government must increase human resource planning and management and implement other recommendations proposed in the comprehensive public expenditure review report – like implementing a robust payroll system to prevent leakages and ensure better forecasting.

In addition to this, measures to improve fiscal responsibility should be cascaded to county governments where there’s a lack of fiscal discipline and wasteful expenditure is high.

How well does the 2019/20 budget speak to the country’s economic development agenda?

It speaks to it very well. The 2019/20 budget prioritised the “Big Four” – the economic agenda of President Uhuru Kenyatta’s administration – manufacturing, housing, health care and food security. About 15% of the total budget was allocated towards these.

On food security, the allocation to the agriculture, rural and urban development sector increased from 1.6% of the total budget in 2018/19 to 3%. A significant rise.

On universal health care, the allocation rose by 0.3% to 3.1%.

The government also made a significant allocation (about US$174 million) to housing for its employees and partnered with other stakeholders – like the World Bank – to make mortgages affordable for other citizens through the Kenya Mortgage Refinance Company.

As mentioned earlier, the budget has good proposals for improving the business environment and competitiveness. But, it’s important to verify whether the government is implementing measures to make spending more efficient. For instance, a low hanging fruit would be to further develop agro-based industries – which Kenya has already done quite well – a model which was successfully implemented in Ethiopia.

Of the various measures announced in the budget, what stood out for you? And why?

I have a keen interest in food security so was watching out for those.

There are a number of familiar proposals – like bailing out the sugar industry and monies for crop diversification. There are also a number of unclear programmes – like the National Value Chain Support Programme whose details are vague, and whose functions are now said to have been devolved to county governments.

While the intention is not bad, these expenditures have a low return on investment.

For example, studies have shown that the government sugar mills would be better off if they were privatised.

The Coffee Cherry revolving fund – set to provide an advance payment to coffee farmers at a modest interest rate – is another expenditure that is unlikely to lead to the revival of the coffee industry. The coffee industry has performed poorly over the past 20 years, current production is the same as it was in the 1970s. Some farmers are now abandoning the crop for other profitable commodities.

I commend the zero-rating of agricultural chemicals, reducing the price of agro-chemicals, but more incentives are needed to enhance productivity within the agricultural sector. Allocations should be based on efficiency. For example, the country spent an average of 22% of the agriculture budget on input subsidies, but only 2% of the agricultural budget on extension (farmer knowledge and skills) between 2013 and 2017. Providing inputs at low prices has not translated into any significant improvement in yield performance.

As an alternative, more spending on extension services will mean that farmers have more knowledge and can better use the inputs (like fertilisers) that they have access to.

Government has adopted zero-based budgeting. What are the expected benefits of zero-budgeting for Kenya? And what are the risks?

Zero-based budgeting means making a fresh budget with each cycle. This implies that there are no incremental/carry over costs. Everything is assessed afresh and justification for resourcing made.

One of the immediate benefits is that budgets will be evaluated in line with proposed activities. This works very well with programme based budgets – which the government is trying to implement – as the budget has to be justified for each project. This improves efficiency since funds will only be requested for activities that ministry departments and agencies will implement. The traditional approach has sometimes led to lobbying for funds, even when the justification for the funding is weak.

It will also help to weed out ineffective programmes and activities and allow the government to channel funds to efficient areas.

But a zero-based budget needs careful and detailed planning. This means that the ministries and agencies must allocate human resources to devote time to planning and budgeting. Missed activities would imply missed budgets and gaps in service delivery and performance. Kenya has the human capacity to do this. But it needs to be committed to it.The Conversation


Timothy Njagi Njeru, Research Fellow, Tegemeo Institute, Egerton University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

International mobile phone call traffic fell by 3.4 per cent in 2017 to 437.8 million minutes last year — the lowest since 2010.

International mobile phone call traffic from Kenya hit an eight-year low on increased use of Internet-based platforms like WhatsApp and Skype, fresh data shows. 

Official Economic Survey data shows that the traffic fell by 3.4 per cent in 2017 to 437.8 million minutes last year — the lowest since 2010.

Internet-based platforms are gaining popularity as subscribers turn to affordable and quality options to the traditional mobile calls.

“The total international traffic has been declining in the last three years partly due to availability of Over the Top (OTT) communication platforms that allow users to make free voice and video calls, following the removal of regulatory barriers,” the report says.

OTT are platforms that rely on the internet to make calls, videos and texts offering, which many callers find affordable. Mobile phone subscribers can make international calls through WhatsApp using 50MB that costs Sh20 ($0.20c) on average and can last nearly 10 minutes.

Sh5 ($0.05c) per minute

Calls from Nairobi to the US, China and India remain the cheapest, with rates of Sh5 per minute, putting the cost of a 10 minute call at Sh50($.50c).

International calls to Germany, Switzerland, France and Italy range between Sh40 ($.40c) and Sh50($.50) a minute, making WhatsApp a cheaper calling option.

International calls made through the fixed telephone, however, nearly doubled in two years from 2017 to hit 15.8 million minutes last December, the report further shows.

Short Messages Services (SMS) sent outside the country fell to a six-year low of 35.9 million texts. In 2013, subscribers sent a total of 49.4 million SMSs, which was the highest in the period.

International SMSs received rose by 11 per cent to hit 45.9 million last year, up from 41.3 million in 2017.

Stiff competition for the local Internet market between telecoms operators has led to reduced cost of data bundles, making Internet-backed calls outside the country cheaper.



The problem of irregular migration from the East and Horn of Africa to southern Africa presents a formidable challenge for countries along this route.

As they device ways of managing the flows while at the same time ensuring that the human rights of migrants are respected and protected, Ethiopia, Tanzania and Kenya, held a three day high level inter-governmental consultative conference which was expected to deliver a final comprehensive roadmap to address the situation of stranded migrants on the Southern route.

It was against the backdrop of this challenge that the three countries affected by the flux, namely The ‘Southern Route’ – as this migration route has become known – is reportedly used by scores of irregular migrants journeying southward in the hope of reaching South Africa.

A release from the International Organization for Migration has indicated that the consultation involved was held in partnership with both the International Organization for (IOM) and the European Union (EU). Running from Tuesday to Thursday, (April 2-4, 2019), the meeting takes place with the support of the EU-IOM Joint Initiative for Migrant Protection and Reintegration in the Horn of Africa. The programme, backed by the Africa Trust Fund, covers and has been set up in close cooperation with a total of other 23 African countries.

According to the IOM, the initiative is motivated by the desire to strike that delicate balance between managing the movement and ensuring appropriate human rights consideration in the treatment of the migrants. It follows several bilateral and trilateral technical meetings between the abovementioned countries, since 2014.

Technical experts from the three countries, with the support of IOM, were scheduled to develop a draft outcome document to be adopted by the states at senior political level on the third day, which was this past Friday.

In light of the above, chief of mission of the IOM in Tanzania, “Dr. Qasim Sufi, had expressed optimism that the donor community would continue to step forward to support efforts for the safe return and reintegration of vulnerable migrants.” He did in the same vein acknowledge the efforts of both the United Republic of Tanzania and Ethiopia to jointly assist migrants who are stranded in Kenya.

A key priority of the Joint Initiative, according to IOM, was to support partner countries in the region to develop capacities for safe, humane and dignified voluntary return as well as sustainable reintegration processes. In that regard, a roadmap aimed at addressing issues pertaining to the trafficking in persons and smuggling of migrants in the region, as well as the sharing of good practices and developing holistic approaches in tackling irregular migration on the Southern Route is reported to have been crafted at the consultation conference.

Other issues to be addressed by the proposed roadmap include considering alternatives to detention practices and exploring better coordination mechanisms to protect vulnerable migrants and as well improving existing voluntary return and reintegration processes and policies.

This publication made efforts to obtain comments from Wison Johwa, the IOM East Africa Regional communications officer regarding the outcomes of the EU-IOM sponsored Tri-nation initiative, which also linked me with both Alem Makonnen and Abbibo Ngandu, both based in Pretoria. The effort notwithstanding, hit a snag.


Source: Sunday Standard

An e-commerce platform, Jiji has announced the acquisition of OLX in Ghana and four other counties in Africa.

The details of the deal was made available via a statement by Naspers on Wednesday.

Consequently, OLX users in Ghana would be directed to Jiji marketplace in a transaction backed by one of Jiji’s cornerstone investors, Digital Spring Ventures.

According to the statement, both companies have also reached an agreement to acquire the other OLX businesses in Nigeria, Kenya, Tanzania, and Uganda, subject to regulatory approvals.

The statement noted that all users of the sell-and-buy classifieds websites of OLX Nigeria, OLX Ghana, OLX Kenya, OLX Tanzania, and OLX Uganda would be redirected to Jiji.

The Chief Executive Officer and co-founder of Jiji, Anton Volyansky, while making comment on the deal, said, “Users will always come first for us. We warmly welcome OLX’s customers to the Jiji family and we look forward to our new customers joining Jiji on its …online shopping experience.”

OLX shut down business in Nigeria last year February while it maintained its online marketplace as workers were laid off.

Kenya wants the entire population of elephants in Africa afforded the strictest possible protection.

Currently, only elephants in East Africa are placed under Appendix I of the Convention on International Trade in Endangered Species (CITES), a listing that gives them absolute protection. This means that their parts can only be imported or exported for scientific research.

Elephants in southern Africa, on the other hand, are listed in Appendix II, which allows limited trade in their specimens. However, this could change if the Kenya Wildlife Service (KWS) submission to CITES to place all elephants under Appendix I is approved. Appendix I lists species that are the most endangered.

KWS Spokesperson Paul Gathitu says that the current diverse tiers of protection that allowed Southern African states to trade in selected elephant products have hindered efforts to control the ivory trade that decimated African elephant populations in eastern Africa before CITES members placed them under the most stringent protection.

Kenya’s proposal pits it against southern Africa countries that want restrictions slackened. South Africa, Botswana, Namibia and Zimbabwe have proposed an amendment that will remove restrictions and allow for international trade in registered raw ivory from elephants from their countries. But Kenya’s conservationists worry that this might drive demand for ivory from across the continent when it needs to be eliminated.

“We are asking for a transfer of the populations of Botswana, Namibia, South Africa and Zimbabwe from Appendix II to Appendix I. We want them to stop trading in specimens of elephants,” says Mr Gathitu.


In their submissions to CITES, South African countries have argued that their populations are relatively stable. However, Mr Gathitu says that in the absence of a total ban, elephant parts are being moved from countries with unsustainable populations, to those with sustainable populations, before being shipped to markets overseas.

“The black market has continued to thrive because some countries are allowed to sell, complicating the poaching crisis for the rest of us,” says Mr Gathitu, adding that CITES needs to come up with ways of dealing with ivory stockpiles.

But the proposals to CITES are only a fraction of the battle, with the real battle awaiting East African States at the 18th meeting of the Conference of the Parties (CoP) in Colombo, Sri Lanka, where the African elephant range countries will battle it out for a position, between 23rd May and 3rd June, 2019.

At the same conference, Kenya, together with 30 other African states, will also push for giraffes to receive special protection.

According to the African Wildlife Foundation’s Vice President for Species Protection Philip Muruthi, the reticulated giraffe, one of Kenya’s signature wildlife species, has declined steadily and is now considered endangered. Maasai and Rothschild giraffes make up the remainder of Kenya’s total giraffe population, which has declined by up to 67 per cent since the 1970s.

Already, in a new report by the International Union for Conservation of Nature (IUCN), the giraffe has been moved from the list of “Least Concern” to “Vulnerable” in its Red List of Threatened Species.

Around the continent, two sub-species of the giraffe have been reclassified as “Critically Endangered”. Despite their decline, hunting remains legal in countries such as South Africa, Namibia and Zimbabwe, with tourists from Russia, the US and European countries such as Germany paying thousands of dollars for hunting safaris.

“It is a fierce battle,” says Mr Gathitu, adding that Kenya is calling on the EU to back its proposal.


- Daily Nation Kenya

The borderlines separating Kenya and Somalia were first drawn in the late 19th century. Like everywhere else on the continent, this was the work of cartographers working for European colonial powers. Across the continent they replaced porous spaces in which people engaged openly across culture, language, religion, kinship, and ethnicity with straight-line geometrics.

East Africa was no exception. For ages, the borderlands in the Horn of Africa conformed to the adage:

Wherever the camel goes, that is Somalia.

Colonial border lines met with fierce resistance. In Kenya the line delineating the Northern Frontier District produced an immediate reaction, sparking the Shifta War soon after Kenya’s independence in 1963. The area is ethnographically dominated by Somalis.

The legacy of that unfinished business has now migrated to the Indian Ocean.

Kenya and Somalia are at loggerheads about the location of their maritime boundary. The claim that Kenya is making cuts off Somalia’s claim. And Somalia’s claim cuts off Kenya’s claim.

At stake is control over a 100,000 square kilometre triangle in the Indian Ocean proven to contain large deposits of oil, gas and tuna.

Legacies of imperial line drawing

Lord Salisbury, the three-times British Prime Minister who presided “over a vast expansion of the British Empire in Africa”, once noted the absurdity of the line drawing undertaken by Europeans to accomplish the scramble for Africa. Colonial powers ceded

mountains and rivers and lakes to each other, only hindered by the small impediment that we never knew exactly where the mountains and rivers and lakes were.

Lord Curzon, Queen Victoria’s Viceroy of India and the man who in 1905 split Bengal into hugely contentious and imperfect Muslim and Hindu areas, called the resulting cartographic Githeri

the razor’s edge on which hang suspended the modern issues of war or peace.“

European line drawing accomplished a kind of economic efficiency in pursuit of colonial administration. But it was indifferent to the huge diaspora and human drama provoked by bisecting and trisecting East Africa.

Winston Churchill as a British parliamentarian and before becoming Prime Minister, justified it in terms of Europe’s civilising mission. In 1907 he rode the 600-mile railway that had been built as part of Britain’s efforts to consolidate the East Africa Protectorate by connecting the port of Mombassa to Lake Victoria Nyanza. He marvelled in his 1908 travelogue,My African Journey, over the engineering masterpiece, which signalled to him

a slender thread of scientific civilisation … drawn across the primeval chaos of the world.

In fact imperial line drawing minted another kind of chaos. This chaos would pit Kenya’s post-colonial state building against Somali’s self-determination and identity politics while spreading tendentious seeds of division across the map of East Africa. Frontier fighting took hold in the Northern Frontier District, and has followed every kink and turn in the borderland, which now finds expression in a simmering dispute out into the sea.

Somalia versus Kenya at the World Court

In 2014 Somalia took Kenya to the Word Court after Kenya failed to attend a third round of delimitation talks.

Somalia wants its sea border to extend the frontier line of its land border in a southeast direction. It bases its claim on the equidistance principle derived from the United Nations Convention on the Law of the Sea.

Kenya claims the border follows along the parallel line of latitude directly east of its shared land terminus with Somalia. The claims overlap contested legal regimes involving the continental shelf, the Exclusive Economic Zone, and extended continental shelf claims beyond 200 nautical miles from the coast.

Kenya has regarded the line parallel to the line of latitude as the border demarcation for almost 100 years. The line mimics the sea border maritime demarcation separating Tanzania and Kenya.

Kenya argued that the two countries had agreed in a 2009 Memorandum of Understanding to settle this dispute outside of the World Court, once the United Nations Commission on the Limits of the Continental Shelf had concluded its examination of separate submissions made by each coastal state.

Counsel for Somalia argued that the memorandum of understanding never created a binding commitment to an alternative method of dispute settlement.

In February 2017, the Court agreed with Somalia and proceeded with the case. Counsel for Somalia claimed that the court has never delimited a boundary on the basis of Kenya’s approach, nor are Kenya’s arguments supported by decisions of other international courts or arbitral tribunals. Rather, owing to its lack of confidence in the merits of the case, Somalia claims

Kenya is looking for a way to avoid the Court’s exercise of jurisdiction.

A few weeks ago, Nairobi abruptly recalled its ambassador to Mogadishu and sent back the Somali ambassador. Kenya’s claim: Somalia purportedly auctioned off shore oil blocks in the disputed sea region to European energy companies.

Diplomats are now working to describe the incident as something of a misunderstanding. European oil companies have also disputed the procurement of such licenses, fully aware that the case is sub judice and the outcome is anything but determined.

A deeper subtext

The bottom line is that Kenya and Somalia are intertwined and need one another.

Some analysts attribute the current diplomatic row to short-term political posturing as Somali regional and presidential elections approach in 2020. However, the longstanding tension over terrestrial divisions bodes ill for a settlement of the sea dispute as long as the adjoining states overlay the problems of colonial cartography with a firm commitment to eating their sovereignty cake and having it too.The Conversation


Christopher R. Rossi, Lecturer in international law, University of Iowa

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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