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29th October Political and Regulatory Round Up

KENYA

BACK TO THE DRAWING BOARD AS TRIBUNAL CANCELS BALLOT TENDER

The electoral commission has suffered a blow in its preparations for the 2022 elections after the Public Procurement Administrative Review Board issued the notice blocking the IEBC from awarding the contract for the supply and delivery of ballot papers and election result forms.

This was after Shailesh Patel T/A Africa Infrastructure Development Company made an application for a review on how the tender was awarded to a Greek firm- Inform Lykos (HELLAS) S.A who beat twelve firms to emerge as the lowest bidder. The commission led by Wafula Chebukati, following an evaluation process, settled on Greece-based Inform Lykos (HELLAS) S.A at 7,172,850 Euros (about Sh925 million) at the exchange rate of Sh129.

In the application to the board, the complainant claimed the award to Inform Lykos was unlawful and did not meet requirements of the Public Procurement and Asset Disposal Act and as such was unfair and uncompetitive.

Africa Infrastructure Development says the respondents provided a grossly restrictive qualification and evaluation criteria in the tender documents, which comprised mandatory requirements to be met by all bidders. The applicant also contends that the respondents contravened section 60 (10) of the public procurement law by failing to prepare clear and specific requirements relating to 40 per cent local content in the tender.

The applicant argues that the respondents failed to give a correct and complete description of application of the 40 per cent local content and that allows for fair and open competition among those who may wish to participate in the procurement proceedings.

Further, the applicant is aggrieved by the respondents’ failure to comply with the obligations under procurement law and the Constitution. Inform Lykos is located in Koropi, Greece and is part of the Printing and Related Support Activities Industry.

YOUTH APATHY HAMPERING VOTER REGISTRATION 

The deadline for voter registration is fast approaching in what will be one of the most competitive Presidential elections in Kenya’s history. 

As at 27th October, the Commission had registered a total of 800,462 new voters out of the Commission’s projected target of 4.5 million. Further, the Commission has serviced a total of 125,266 transfer requests from the existing voters.

According to reports, most youths were demanding handouts before they registered as voters. Lack of National Identification cards has also been cited for low voter registration.

Even as politicians continue to traverse the country calling on citizens to register using different tactics, it is clear that the Commission will most likely not meet its 6 million target by the said deadline. For instance, in the populous Mt Kenya region with over 5 million registered voters currently and now viewed as a swing vote region, new voters have largely shunned the exercise with figures from the IEBC showing that all the counties were below a tenth of the targeted numbers.

Regardless, the Commission has been categorical in its statement that it will not be extending the deadline owing to lack of funds. 

After November 2nd, we will not have money to extend the voter registration exercise. The commission can only afford to conduct mass registration for 30 days,” said Chebukati during a meeting with the Parliamentary Committee on Budget and Appropriations Committee. He further stated that after November 2nd the Commission will be engaged in auditing the voter register which will take up an extra Sh1.3 billion and to meet other expenses.

The electoral body is seeking Sh40.9 billion for next year’s elections with Sh 5.3 billion being allocated to ICT and Sh. 5.9 billion to ballot papers. This is exceptionally high when compared to other countries such as Rwanda which use normal paper for its ballots. 

However, owing to the general mistrust that exists in the electoral process, perhaps this is justifiable. 

That said, many, especially the politicians, will be watching to see IEBC’s final count as they draw up their campaign strategies.

UNPACKING THE PETROLEUM PRODUCTS’ (TAXES & LEVIES) (AMENDMENT) BILL, 2021

To address the concerns raised as pertains the soaring fuel prices, the Kenyan business community submitted petitions to the Government in September 2021 seeking a resolution and aid of some form. The Departmental Committee on Finance and National Planning were directed to consider the petitions and were expected to present a report along with a draft Bill proposing legislative interventions. 

The resulting Petroleum Products (Taxes and Levies) (Amendment) Bill, 2021 has now been published and it outlines the measures recommended to meet the tumultuous situation the country is experiencing. The proposals include:

  • Amendments to the Energy Act by introducing a Sixth schedule to aid in governance of petroleum pricing. Additionally, the Bill amends amends Section 198 of the Act by introducing new subsections which give the Cabinet Secretary powers to regulate the pricing.
  • Revocation of LN 196/ 2010 Energy (Petroleum Pricing) Regulations, 2010 which have now been moved to the Sixth Schedule of the Energy Act, 2019.
  • Amendments to the petroleum pricing formula by:
    • Restricting the maximum allowed margins to KES 9.00 from the current amount of KES 12.00.
    • Restricting the maximum allowed operational losses in the pipeline and the depot to 0.01%. 
      • The proposed reduction of the Oil Marketing Companies (OMC’s) margins by 25% from KES 12.00 to KES 9.00 and the restriction of allowable losses in the pipeline & depots to 0.01% will reduce the price of fuel in the country. On the other hand, however, the reduction of the OMC’s margins by 25% could have a tremendous negative effect on the economy and other players in the industry. This is mainly because, OMC’s use a three-pronged approach which engages the whole chain of the petroleum industry.
  • The Bill proposes to amend Section 10 of the Excise Duty Act providing for inflation adjustment on excisable goods attracting specific rate of excise duty by amending the Excise Duty inflation adjustment period from one year to two years.
  • The Bill also proposes to exempt Motor Spirit (gasoline) premium, Illuminating Kerosene, Gas oil (automotive, light amber for high-speed engines) and Diesel oil (industrial heavy, black, for low-speed marine and stationery engines) from the periodic inflationary adjustments.
  • The Bill proposes to anchor the payment of the petroleum development levy into the Petroleum Development Fund Act on all fuels consumed in Kenya. Currently the Minister levies this charge through an order in the Kenya Gazette. This proposed amendment in the Petroleum Development Fund Act engrains the levy in the substantive Act and necessitate Parliamentary oversight.
  • The Bill also proposes to provide for establishment of the Petroleum Development Fund consisting of moneys appropriated by the Parliament and monies received in respect of the Petroleum Development Levy. The amendment further proposes to set the purposes for which the levy shall be used for. These are;
    • Matters relating to the development of the oil industry.
    • Development of common petroleum facilities for distribution/testing of oil products.
    • Stabilization of local pump prices in instances of spikes occasioned by high landed costs above a threshold determined by the Authority.Furthermore, the Bill also proposes to give the Cabinet Secretary power to request for a draw down from the fund to stabilize local petroleum pump prices where he deems it necessary.
  • The Bill proposes the establishment of a Petroleum Development Advisory Board whose main function would be to regulate the withdrawals from the fund. The Advisory Board shall consist of representatives from offices of the Cabinet Secretaries responsible for Finance, Energy, Petroleum and a representative of the Energy & Petroleum Regulatory Authority (EPRA).
  • This Bill proposes to revoke the Petroleum Development Levy Orders, 2020; Legal Notice No.124/2020 and Legal Notice No. 174/2020 to move them from Subsidiary pieces of legislation and engrain them into the Act. 
  • The Bill also proposes to reduce the levy from KES 5.40 per litre to KES 2.90 per litre
  • The Bill proposes to reduce the VAT applicable to petroleum products from 8% to 4% and the VAT applicable to liquified petroleum gas from 16% to 8%

A majority of the proposals are welcome as they will overall reduce the cost of living. However, they may adversely impact the petroleum and oil industry and as such stakeholders will be keen to see how, if at all, a balance will be struck. 

Highlights of the National Tax Payer Day 2021: “Pamoja Twaweza”
  • During his term as President, ordinary revenue has more than doubled, rising from Ksh.707 billion in FY 2011/12, to Ksh 1.669 trillion in FY 2020/21 which represents a growth of 136%. 
  • The 2021 figure of Ksh.1.669 trillion in FY 2020/21 meant that KRA had surpassed its target with a surplus of Ksh 16.8 billion, representing a revenue growth of 3.9% compared with the previous Financial Year.
  • There are 19.6 million registered voters in Kenya while the number of active individual taxpayers currently stands at about 6 million.
  • Kenyans should take advantage of the ongoing Voluntary Tax Disclosure Programme and benefit from the full waiver of interest and penalties. So far, over 393 taxpayers have applied and through this initiative Ksh. 2billion have been collected.

On Friday, October 29, 2021, the Kenya Revenue Authority hosted President Kenyatta and other dignitaries at Safari Park Hotel to celebrate the National Taxpayers Day 2021. Also present was Commissioner -General Githii Mburu, the Cabinet Secretary for National Treasury and Planning Ukur Yatani and other KRA Commissioners.

In his welcoming remarks, CS Ukur Yatani noted that there are positive signs of economic recovery, beginning with improved revenue performance of above target by Ksh 16.7 billion in the last 3 months translating to annual revenue growth of 26.8 percent.

In his speech, President Uhuru Kenyatta saluted all the taxpayers who have discharged their civic duty by paying their rightful tax dues. He also noted that during his term, ordinary revenue has more than doubled, rising from Ksh.707 billion in FY 2011/12, to Ksh 1.669 trillion in FY 2020/21 which represents a growth of 136%. The 2021 figure of Ksh.1.669 trillion in FY 2020/21 meant that KRA had surpassed its target with a surplus of Ksh 16.8 billion, representing a revenue growth of 3.9% compared with the previous Financial Year.

The President added that improved revenue collection is an integral part of the government’s strategy for building back better and that the Government will spare no effort in facilitating tax reforms geared at mobilizing revenues for inclusive national development. He especially pointed out that there are 19.6 million registered voters in Kenya while the number of active individual taxpayers currently stands at about 6 million. He stated that expanding the tax base is key to bring Kenya to her destiny of a fair, just, inclusive and equitable nation as well as to fuel the nation’s quest to improve infrastructure, service delivery, and access to public goods. 

He urged all Kenyans to take advantage of the ongoing Voluntary Tax Disclosure Programme and benefit from the full waiver of interest and penalties. So far, over 393 taxpayers have applied and through this initiative Ksh.2billion have been collected.

He also stated that Kenya is now benefitting from the Multilateral Convention on Administrative Assistance on Tax Matters, which took effect on 1 st January 2021 which enables Kenya to exchange information on tax with over 130 Jurisdictions, in support of its fight against tax evasion and illicit financial flows. He finished his speech by urging all to embrace the KRA’s motto “Tulipe Ushuru, Tujitegemee”.

ETHIOPIA

According to reports from BBC Tigrinya the latest airstrike on the capital of Ethiopia’s northern Tigray region, Mekelle, has killed six people – including three children – and wounded at least 27 others.

Federal forces have been conducting aerial bombardments on the city for more than a week as part of its year-long war with Tigrayan rebels.

This was the sixth airstrike on Mekelle, which has a population of more than 500,000, since last week.

The authorities in Addis Ababa say they were targeting an industrial plant that’s being used by the Tigray People’s Liberation Front (TPLF) in its war efforts.

The federal government considers the TPLF a terrorist organisation, though the group says it is the legitimate government of the region, having won local elections there in 2020.

Meanwhile, the head of the International Red Cross (ICRC) has called for an urgent political solution to bring to an end the war in Ethiopia’s northern region on Tigray, as heavy fighting continues to be reported near the strategic city of Dessie.

The situation continues to be tense now out of reach by humanitarian agencies as well after the United Nations suspended all flights to the regional capital of the Tigray region after government air raids forced a humanitarian flight to abort landing in Mekelle earlier in the week.

Owing to the continued instability and instances of human rights violations the US International Development Finance Corporation (DFC has delayed the disbursement of a $500million (Sh53.97 billion) loan to finance the entry of the Safaricom-led consortium which received a telecommunications operator licence in Ethiopia in July this year after incorporating a local company, setting the stage for Kenya’s largest telco to start operations in the market of over 100 million people.

The conflict has kept investors on edge, even as it triggered a hunger crisis, leaving millions of people in need of humanitarian aid.

SUDAN

Since the military dissolved the civilian government and arrested the country’s leaders at least 170 people have been injured, and seven persons died following protests that erupted on 25 October, according to the Federal Ministry of Health (FMoH) and Doctors’ Committee.

According to Reuters, Gen Burhan has said Monday’s coup was justified to avoid “civil war” and that the detained prime minister will be returned to his home on Tuesday. Earlier, he sought to justify the takeover by blaming political infighting.

Both domestic and internal flights out of Khartoum have been suspended and roadblocks have been set up across the city limiting movement. Internet networks are mostly down across the country. In other parts of Sudan, the situation is calm, with some reports of demonstrations but no major incidents. One of the main operators, Zain, is working sporadically with most phone lines down.

Central Bank staff have reportedly gone on strike, and across the country doctors are said to be refusing to work in military run hospitals except in emergencies.

The US has joined the UK, EU, UN and African Union, of which Sudan is a member, in demanding the release of political leaders who are now under house arrest.

Gen Burhan, who was head of the power-sharing council, has however stated that Sudan was still committed to the transition to civilian rule, with elections planned for July 2023.

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