16th December 2022 Trade and Financial Services Round Up

  • 16 Dec 2022
  • 5 Mins Read
  • 〜 by The Vellum Team


KRA in dilemma over Ruto directive on seizing property

The Kenya Revenue Authority (KRA) faces a legal dilemma in the wake of President William Ruto’s directive to the taxman to go slow on issuing distress orders that trigger asset seizures of suspected tax evaders.

Dr Ruto has asked the KRA to desist from seizing the assets of suspected tax evaders and disabling businesses through forcible occupations and blockade of bank accounts.

This has effectively weakened the KRA’s hand in enforcing sections of the Tax Procedures Act, especially on the distress order.

Going hard on tax cheats, especially closure of businesses, in line with the law could drag the taxman into a fight with the President while a softer approach on suspected cheats could abet tax evasion and derail its efforts to raise tax collections from the current Sh2 trillion to Sh3 trillion in an economic setting where businesses are not expected to deliver outsized profits for taxation growth.

The distress order allows the KRA to forcibly occupy a tax cheat’s house or business premises and failure to settle the demanded taxes can lead to an auction of the business premise or goods in the business.

The Tax Procedures Act also allows the taxman to issue travel bans on suspected tax cheats, collect duty directly from suppliers and bankers of defaulters and prosecute those in arrears.

(Source: Business Daily)


NBC’s TSh300 billion goal in sight as bond oversubscribed by 30 percent

The National Bank of Commerce (NBC) yesterday said its bond was oversubscription by 30 percent after the issuance was positively received in the market. The bank is targeting to raise TSh300 billion in the next five years to boost its financing of businesses and other economic activities.

In the first tranche of the bond named Twiga Bond which was launched on November 7, 2022 and traded to December 7, 2022, the bank targeted to raise TSh30 billion.

However, the bond results released yesterday indicate that TSh38.91 billion was raised, representing a subscription of 130 percent, according to the bank’s director of business banking, Mr Elvis Ndunguru.

This is NBC bank’s first public issuance aimed at supporting lending to retail, small and medium-sized businesses, agricultural activities, businesses whose products and services directly impact women and youth, and local and multinational corporations.

Speaking during the announcement of the results, Mr Ndunguru said the bond sold for one month was officially closed on December 7 this year “with great success compared to the bank’s expectations.” “As one of the largest lenders in Tanzania, we are thrilled to announce the success of the first tranche of Twiga bond issued early last month and oversubscribed by 30 percent,” he said.

He said investors in the NBC Twiga Bond will earn a whopping interest rate of 10 percent per annum, payable semi-annually throughout the five years until December 2027. The interest rate paid is free from withholding tax deduction, he added.

(Source: The Citizen)


BoU warns against high cost on digital payments

Bank of Uganda has said the high transaction cost on digital payment remains one of the several barriers to financial inclusion. Speaking during at a symposium about the Central Bank’s role in financial sector development and promoting financial inclusion in Kampala yesterday, Dr Michael Atingi-Ego, the Bank of Uganda deputy governor, said whereas financial inclusion has progressed significantly, several barriers remain, key among which include high transaction costs. 

For instance, he said, on-net transactions for mobile money cost between UgShs30 and UgShs1,250 for values between UgShs330 and UgShs20,000, while payment for utilities costs between UgShs160 and UgShs6,300.  

Such charges, Dr Atingi-Ego said, are regressive, with the vulnerable poor, who constitute the majority of users, bearing their heaviest burden.

“Statistics indicate that approximately 90 percent of mobile money transactions are in the low-value category of UgShs0 – UgShs50,000. We still have a lot of work to bring affordable services closer to the people,” he said. 

However, in a speech read for him, Mr Ramanthan Ggoobi, the secretary to Treasury, said government was implementing a number of programs that will be vital in realigning the tax system to meet the needs of a vibrant financial sector as well as help to build a thriving economy, adding that there has been significant progress in financial sector development, even as significant challenges still exit. 

For instance, he said, although the percentage of adults that were formally included rose from 28 percent in 2009 to 58 percent in 2018, the figure is still low, adding that Uganda also continues to lag behind regional peers in mobilizing long-term savings. 

(Source: Monitor)


Central bank rejects move to ban third party cheques

The Governor of the National Bank of Rwanda, John Rwangombwa, has dismissed claims that there is a ban on third party cheques after a cross section of people claimed their banks refused to encash them. “It is not true. However, banks had written a letter requesting for the ban, which we did not approve,” John Rwangombwa, the governor of the Central Bank told The New Times.

A source who requested anonymity said his cheque was not encashed by Access Bank, and the reason he was given was that there was a central bank announcement the night before informing about the ban. Efforts to reach Access Bank were futile by press time.

For Bank of Kigali, however, the CEO Diane Karusisi said it is true they don’t encash third party cheques.

“You choose to deposit the cheque on your account, and if you don’t have one at our bank, you are requested to open it,” Karusisi said. She indicated, however, that this is in no way related to the Bankers association or the Central Bank, but instead a policy in place to encourage cashless transactions. The Bankers association announced on their Twitter that all types of bankers’ cheques remain valid. “Rwanda Bankers Association would like to remind the public that all types of bankers’ cheques continue to be valid and in use for funds transfer as per the guidelines of the Central Bank,” the tweet read.

(Source: NewTimes)


PM Abiy discusses investment opportunities with US investors

Prime Minister Abiy Ahmed has briefed US investors about the untapped investment opportunities in Ethiopia. The premier has conducted various bilateral and diplomatic meeting on the sidelines of the US-Africa Leaders’ Summit. “With Ethiopia’s historic reform and openings, I encouraged them to step up efforts to invest in our people and economy for shared prosperity,” Abiy emphasized on his official twitter page.

(Source: ENA)


Training on producing and use of natural fertilisers and pesticides

Training on producing and proper use of compost natural fertilisers and pesticides was provided to agricultural experts and farmers with a view to ensure the safety of land and environment and thereby boost agricultural production.

At the training that was provided to 25 agricultural experts and farmers from 9 to 12 December in Keren, Mr. Gebremeskel Tewolde, acting head of Agriculture and Land, indicating on the negative consequence of chemical fertilizers and pesticides, called on agricultural experts and farmers to apply the natural compost fertilizers and pesticides that are being introduced across the country.

Mr. Zenawi Okbeab, head of Seeds Health Protection unit, said that the objective of the training was to boost agricultural production through proper use of natural fertilisers and pesticides.

(Source: Ministry of Information – Eritrea)


World Bank grants $70 million for delivery of water, agriculture, livestock, and environmental services in Somalia

The World Bank approved a $70 million International Development Association (IDA*) grant to develop resilient water, agriculture, and environmental services for rural communities in Somalia’s drylands. The Somalia Water for Rural Resilience Project named ‘Barwaaqo’ builds on the Biyoole project and comes at a critical time when Somalia is facing an unprecedented multi-season drought and worsening food insecurity.

The Barwaaqo project will expand services in Somaliland, Puntland, Galmudug, and the South West States while expanding to include two additional federal member states–Hirshabelle and Jubbaland–where the project will focus on the areas situated away from the floodplains of the Shabelle and the Jubba rivers. This project will provide water to 500,000 people, representing approximately 15% of the rural population, who currently only have access to limited services and unimproved or surface water.

(Source: All Africa)