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2019 Eisenhower Fellowships to be held in Kigali

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For the first time in Africa, Rwanda’s capital will on June 14 and 15 host the annual Eisenhower Fellowships, a global program that seeks to identify, empower and connect innovative leaders across the globe.

This year’s conference themed “One Africa: The Future of Africa Integration,” will focus on the implementation of the African Continental Free Trade Area (AfCFTA) which entered into force on 30 May 2019.

Those expected to attend include leaders and influencers in the area of clean energy and technology. The two day event will be addressed by  Rwandan President Paul Kagame, the African Union Ambassador at the United Nations Ambassador Fatima Kyari Mohammed, Commissioner for Trade and Industry of the African Union; Albert Muchanga, Rwanda’s Minister of ICT and innovation, Paula Ingabire, Minister of ICT and innovation, Rwanda; CEO of Africa Finance Corporation Samaila Zubairu; UNECA regional executive Andrew Mold, Africa Director at Yale University Eddie Mandhry, Africa Director at Yale University; and former Zimbabwe Minister of Industry and International Trade Dr. Nkosana Moyo.

“We are excited that the African Fellows are hosting this historic conference as the inaugural Africa cohort which was received by the outgoing Eisenhower Fellowships Chairman Hon. Gen. Collin Powell (Ret.) and U.S. President Barack Obama,” noted Eisenhower Fellowships-Kenya board Chair Nuru Mugambi.

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Eisenhower Fellowships-Kenya board Chair Nuru Mugambi

The Kenyan chapter of Eisenhower Fellowships has announced that it has secured sponsorship from the Kenya Climate Innovation Center to sponsor delegates from Akili Dada, a non- profit leadership incubator that empowers young women from marginalized communities.

Related; Nuru Mugambi Appointed Eisenhower Fellowships-Kenya Board Chair



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Double-edged tax measures to grow EAC local industries

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By JAMES ANYANZWA
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PATTY MAGUBIRA

By PATTY MAGUBIRA
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East African finance ministers converged on tough taxation measures aimed at protecting local manufacturers from “unfair imports competition,” in their spending plans for the coming year, made public on Thursday.

Most of the tax measures, contained in the budget statements for the 2019/2020 fiscal year, were approved during the ministers’ pre-budget consultations in Arusha in May.

Higher taxation of imports is aimed at driving consumption of cheaper locally produced goods, spurring the growth of manufacturing and creating jobs that ultimately improve living standards.

Proponents of the proposed measures are in line with the EAC Industrialisation Plan that seeks to transform the region into a globally competitive, environment-friendly and sustainable industrial sector that is capable of significantly improving the living standards of the people by 2032.

“The recommendations aim at pushing the regional industrialisation policy, creating jobs and improving East Africans’ living standards,” said Philip Mpango, Tanzania’s Finance and Planning minister.

Uganda, Tanzania, Rwanda and Kenya are focusing on improving the competitiveness of local industries by protecting them from cheaper imports through taxation and other policy measures.

Despite the good intentions, experts have warned that these tax measures — which are also applicable to goods coming from EAC member states — could stand in the way of integration, as each country becomes inward-looking in a bid to build its industrial capacity.

Already, trade spats, especially between Kenya and Tanzania, have seen Dar es Salaam block Kenyan products from its market. The partners have also failed to agree on a reviewed common external tariff, so the finance ministers have used the contentious stay of application window to secure preferential tax treatment on various goods whose production they believe requires protection to grow.

Customs tax measures, which take effect from July 1, target key sectors such as horticulture, timber, metal and allied, pulp and paper, textiles and leather, agro-processing and diaper manufacturers.

In Tanzania, among the measures Dr Mpango announced is abolishing the 10 per cent Customs duty on raw materials for the production of baby diapers, while retaining   the 25 per cent duty on imports of the same to promote local production. He also abolished the 25 per cent Customs duty on tools used for adding value to gemstones and removed the 10 per cent tax on raw materials used in vegetable packaging for a period of one year.

To protect the horticulture sub-sector, the minister increased duty on imported horticultural products to 35 per cent from 25 per cent. 

Tanzania also scrapped the 20 per cent Customs duty on seeds packaging materials and aluminium alloys to improve the quality of seeds, encourage local production of cooking pans and create jobs.

The policy changes are expected to protect Tanzanian manufacturers, attract investors to the local production of packaging materials and promote exports of vegetables to shore up the country’s foreign reserves.

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Tanzania has also introduced a 25 per cent duty on imported paper and a further 10 per cent duty on plastic products used for making door and window frames. Raw materials, spare parts and machines for textile and leather products have been exempted from Customs duty.

In Kenya, Finance Minister Henry Rotich retained the ad valorem rate of import duty on iron and steel products to protect the country’s producers of metal and allied products from continued stiff competition posed by imported subsidised iron and steel products.

Mr Rotich is seeking to maintain an import duty of 25 per cent on paper and paper products for a period of one year to protect manufacturers of these products. CET on these products is fixed at 10 per cent, but Kenya last year sought a stay of application to impose a tariff of 25 per cent for a period of one year.

“On matters relating to Customs, I have proposed measures intended to make our products more competitive while at the same time protecting local industries from unfair competition,” said Mr Rotich.

Kenya has also reduced import duty on raw timber to 0 per cent from 10 per cent to ensure that manufacturers of furniture and other products have adequate supply of raw materials. Nairobi has also retained an ad valorem rate of import duty at 25 per cent on all imported timber products to protect the timber and furniture industry from a proliferation of cheap finished products and to enhance local production.

The Kenya Association of Manufacturers reckons that the country’s industrial growth has stagnated at a GDP contribution of 10 per cent over the past 10 years, with a decline to 9.2 per cent in 2016.

“The growth and development of any country is dependent on the ability of its industries to compete regionally and internationally,” said Phyllis Wakiaga, the association’s chief executive. “Hence promoting the competitiveness of local industries should be prioritised.”

In Rwanda, Finance Minister Uzziel Ndagijimana has   reduced import duty on a range of raw materials used in industry to 0 per cent instead of 10 per cent or 25 per cent, and those used in manufacturing of textile garments and footwear to zero per cent instead of 10 per cent or 25 per cent

Dr Ndagijimana also maintained a 4 per cent duty per kilogramme of second-hand clothes, instead of $2.5 per kilogramme, and $5 per kilogramme for used shoes, instead of $0.4. He also retained import duty rate of 25 per cent for 70,000 tonnes of sugar instead of 100 per cent or $460 per tonne, whichever is higher.

Rwanda has also tried to increase the competitiveness of its industries through provision of basic infrastructure such as the on-going construction of Bugesera Industrial Park.

“We intend to increase the production in different sectors and enforce policies to create additional jobs,” said Dr Ndagijimana.

In Uganda, Finance Minister Matia Kasaija said promoting agro-processing will be the basis for the country’s industrialisation and job creation.

Mr Kasaija said the manufacturing sector can now meet domestic demand for basic products like cement, tiles, light steel and consumables such as sugar and soap, and that the next phase of manufacturing will be to produce goods for exports.

“This strategy is built on the rapid industrialisation of our economy linked to high productivity,” he said.



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Alcohol producers oppose 15pc duty increase

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Alcohol producers oppose 15pc duty increase

Treasury CS Henry Rotich said the higher excise was necessary in order to address the fall in excise revenue. FILE PHOTO | NMG 

Alcoholic beverage makers have opposed the 15 percent increase in excise duty on wines and spirits in this year’s budget, saying it is detrimental to the industry’s growth and will hurt the fight against illicit brews in the country.

The Alcoholic Beverages Association of Kenya (ABAK) said in a statement that such arbitrary tax hikes leave legitimate players in the industry facing uncertainty in their investments and business planning.

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On top of the 15 percent hike, the excise is also due to be adjusted upwards in line with inflation at the beginning of the next fiscal year.

“The proposal by the CS also reverses the desired sense of predictability in taxation for the industry that came about with the introduction of the inflationary adjustment via the Excise Duty Act, 2015,” said Abak chairman Gordon Mutugi in a statement.

Treasury CS Henry Rotich said the higher excise was necessary in order to address the fall in excise revenue as a percentage of GDP from three percent in 2004 to two recent in the 2017/18 fiscal year.

The duty on a 750ml bottle of wine goes up by Sh18 to Sh136, while duty on a 750ml bottle of whisky goes up by Sh24 to Sh182.

He also put up the excise on cigarettes by 15 percent, while introducing a 10 percent duty on amounts staked on bets.



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Uhuru legacy projects get $4.3b despite slow progress

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By NJIRAINI MUCHIRA
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The Kenya government’s pet projects under the Big Four Agenda — critical to President Uhuru Kenyatta’s legacy — were allocated $4.3 billion from the $28 billion 2019/2020 budget.

In his speech in parliament this past week on Thursday, National Treasury Cabinet Secretary Henry Rotich said this year’s budget “lays a strong foundation for achieving the president’s Big Four agenda.” The allocation represents less than 14 per cent of the total budget.

The projects are supposed to ensure universal health coverage, affordable and decent housing, to increase the manufacturing contribution to the economy from 9.8 per cent to 15 per cent and guarantee food and nutrition security by 2022. However, the majority of these projects are behind schedule.

Universal health coverage got $906 million; manufacturing $40.8 million; affordable housing $183 million; and food and nutrition security $177 million.

Despite the increase in allocation, analysts say the amount substantially falls short of the resources required for successful implementation.

In a statement, Layla Liebetrau of the Route to Food Initiative project lead, said Mr Rotich’s budget was not responsive to the needs of Kenya’s smallholder farmers, who despite consistently producing over 70 per cent of its food, are worst affected by poverty.

The government introduced tax measures projected to generate an additional $360 million for the exchequer, but with far-reaching ramifications for poor Kenyans.

These include increasing corporate gains tax from five per cent to 12.5 per cent, expansion of the withholding tax scope targeting people like security guards and those offering cleaning and fumigation services, catering and sales promotion.

The government also once again imposed punitive sin taxes, such as excise duty on betting activities at the rate of 10 per cent of the amount staked and 15 per cent on cigarettes, wines and spirits.

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However, in efforts to ease the burden on manufacturers and enable the country to regain some competitiveness, Mr Rotich reduced the rate of value added tax withholding from six per cent to two per cent to help reduce the build-up of VAT refunds, which have badly affected cash flow in businesses.

“The large accumulation of VAT refunds has impacted negatively on the cash flow and liquidity of our manufacturers and the business community at large,” said the minister.

Other notable measures include the retention of Customs duty for metal products at 25 per cent to protect local companies; extending the 25 per cent duty on paper and paper board products for another year; reducing import duty on raw timber from 10 per cent to zero and retaining import duty for finished timber products at 25 per cent.

Small businesses and traders got an assurance that Treasury would settle verified pending bills of $97.3 million owed by the national government within a fortnight, that inspections of imports will only be done at the point of export and suppliers of goods and services will be paid within a maximum of 60 days.

It was clear that the government is keen to accelerate the implementation of the Big Four projects.

Being critical enablers of the Big Four, the Cabinet Secretary allocated a whopping $3.2 billion to infrastructure projects like roads, railway, ports and energy and $3.1 billion to security agencies.

A major challenge for Kenya will be raising the required funds given its ballooning recurrent expenditure, shortfalls in revenue collections, a huge deficit and widespread corruption.

Mr Rotich said the government will effect austerity measures including rooting out ghost workers, standardised fleet management and renegotiating office leasing contracts.

In the coming financial year, the government projects revenues to the tune of $20.4 billion and expenditures of $27.2 billion, leaving a deficit of $5.9 billion, which it anticipates to finance through external and domestic borrowing.



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