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Highlights of KSh3.3Trillion Uhuru’s Final Budget

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National Treasury Cabinet Secretary, Ukur Yattani presented the country’s Ksh3.3 Trillion budget for the next financial year on Thursday, April 7, before the Parliament.

Due to Kenya having General Elections scheduled for August 2022, the budget had to come two months earlier. Yattani noted that Kenya had received approval from EAC members states to present its budget two months ahead of schedule.

During the presentation, Yattani emphasized the budget’s goal to drive speedy economic recovery from the effects of Covid-19. Furthermore, its other goal is to protect low and middle-class earners in the country.

The key highlights from the budget address are as follows;

Expenditure

Healthcare

The government will allocate a total of Sh146.8 billion for healthcare.

  1. Sh62.3 billion for Universal Health Coverage (UHC).
  2. Sh7 billion for the purchase of Covid-19 vaccines.
  3. Sh4.1 billion for maternal healthcare.
  4. Sh5.2 billion for the purchase of equipment.
  5. Sh16.2 billion to fight HIV/Aids, malaria, and tuberculosis.
  6. Sh1.8 billion to provide medical cover for elderly and disabled persons.
  7. Sh5.2 billion vaccines and immunisation programmes.
  8. Sh18.1 billion for Kenyatta National Hospital.
  9. Sh11.7 billion for Moi Teaching and Referral Hospital.
  10. Sh7.7 billion for Kenya Medical Training College (KMTC).
  11. Sh2.9 billion for Kenya Medical Research Institute (KEMRI).
  12. Sh1.1 billion for the construction of paediatrics and burns centre.
  13. Sh1.3 billion for the construction of a cancer centre at Kisii Hospital.
  14. Sh1.2 billion for procurement of family planning.
  15. Sh300 million for radiotherapy equipment.
  16. Sh619 million for procurement of equipment for the blood transfusion centre.

Education

The government has increased allocation to the education sector to Sh544.4 billion.

  1. Pre-primary education will receive Sh12 billion in the proposed budget.
  2. Sh2.5 billion will be used for teacher recruitment.
  3. Sh64.4 billion will be used for free secondary day education and NHIF cover.
  4. Sh5 billion for exam fees waiver for Grade 6 and Class 8 pupils.
  5. Sh1.9 billion will go towards the school feeding programme.
  6. Sh1.2 billion for the training of teachers on CBC.
  7. Sh46 billion for the construction of CBC classrooms.
  8. Sh310 million for the digital literacy programme.
  9. Sh2.8 billion for TVET
  10. Sh294.7 billion for TSC.

National Security

The Treasury has allocated Sh317.8billion for internal security, and national defence the National Intelligence Service (NIS).

  1. Sh128.4 billion will go to defence.
  2. Sh46.4 billion for NIS and Sh102.2billion for police and prison services.
  3. Sh10.7 billion for leasing of police motor vehicles and Sh1billion for the police modernisation programme
  4. Sh1billion for National Communication System.
  5. Sh335 million for the national forensic laboratory.
  6. Sh4.8billion for the insurance of police service and prison officers.
  7. Sh2.3billion for Group personal insurance for police service and prison
  8. Sh1billion for the National Integrated Management System.

Economy Digitization

  1. Sh15.6 billion to fund initiatives in the Information, Communication and Technology sector.
  2. Specifically, Sh620 million for Government Shared Services.
  3. Sh5.2 billion for the Horizontal Infrastructure Phase I at Konza Technopolis City, and Sh3.8 billion for Konza Data Centre and Smart City Facilities.
  4. Sh2.7 billion for maintenance and rehabilitation of last-mile connectivity network.
  5. Sh1.2 billion for maintenance and rehabilitation of the National Optic Fibre Backbone Phase II Expansion Cable.
  6. Sh1.4 billion for installation and commissioning of Eldoret-Nadapal Fibre Optic Cable.

Equity, Poverty Reduction, Women and Youth empowerment

  1. Sh13.1 billion for the National Youth Service.
  2.  Sh2.2 billion for the Kenya Youth Empowerment and Opportunities Project.
  3. Sh175 million for the Youth Enterprise Development Fund.
  4. Sh170.0 million for the Women Enterprise Fund.
  5. Sh92.0 million for the Youth Employment and Enterprise Fund.

Economic Risks

“The economic outlook may be affected by emerging domestic and external risks. On the domestic front, re-emergence of COVID-19 variants and possible adverse weather conditions could reverse the projected economic recovery.”

“On the external front, the ongoing conflict in Eastern Europe has created uncertainties that will affect the global economic outlook through disruption of supply chains, rising global oil prices and increased inflationary pressures.”

Economic Stimulus Programme

“Building on the gains made under the first and second phase of the Economic Stimulus Programme, the government is implementing the third phase which is designed to accelerate the pace of the economic growth.”

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“In the third phase, the government is implementing 13 strategic interventions including the third phase of Kazi Mtaani programme to create employment for over 200,000 youths across the country, construction of additional 50 new level 3 hospitals in non-covered and densely populated areas across the country to enhance medical coverage support the livelihoods of farmers in the sugar belt, provision of fertilizer subsidy to small scale tea farmers and completion of the ongoing interventions in the coffee sub-sector. ”

Fiscal deficit

“We plan to reduce the level of fiscal deficit from 8.7% of GDP in the current budget to 7.5% of GDP in the financial year 2021/22 and further to 3.6% of GDP in the financial year 2024/25.”

Economic Outlook

“In 2022, the economy is projected to stabilise at 6.0% supported by the prevailing stable macroeconomic environment, favourable weather conditions to support agricultural output and drive food processing (manufacturing) and the continued recovery in industry and services.”

“Covid-19 vaccinations, which target 26 million people above 18 years by the end of the year, is expected to allow people greater interactions in business activities.”

Government Bonds

“We shall establish an electronic over the counter secondary market platform for government securities. This platform will help in deepening our domestic debt market. We expect operations of the over the counter to be in place by June 2022.”

Local Manufacturing

“In order to promote local manufacturing of pharmaceutical products, I propose to introduce VAT exemption on inputs used in the manufacture of medical ventilators and breathing appliances.”

Government Debt Burden

“I’m confident we are presenting a budget that is reflective of the current realities.”

Kenya Airways

“Kenya Airways plays an important role in the economic development of this country. The government will allocate funds for its restructuring costs.”

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Three Global Firms Signed By Nairobi Financial Hub On Its Launch

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Three companies were signed by Nairobi’s international financial centre on the day of its launch. The three include Prudential plc, ARC Ride Kenya and AirCarbon Exchange (ACX).

The Nairobi International Financial Centre (NIFC) is a special economic zone for financial firms.

Prudential, one of the world’s biggest insurers and asset managers, became the first firm to formally join the NIFC.

Singapore-based global carbon exchange ACX came along with Prudential. It seeks to set up a carbon exchange in Kenya.

Check out: Why Buyers Are Now Running Away From Popular Used Toyota Cars

NIFC has also admitted ARC Ride Kenya. It is a new start-up that is going to establish an electric vehicle assembly plant in Nairobi. The plant will produce two and three-wheeled electric bikes and scooters.

Also, the Financial Centre is determined to bolster the manufacturing sector in the country. It has signed an MoU with the Kenya Association of Manufacturers (KAM), to help increase financing and investment in the sector.

NIFC authority has hinted at being in discussion with other participants seeking to join it and will give official news soon.

“Last year Prudential Plc, one of the world’s biggest insurers and asset managers, made a commitment to relocating their Africa headquarters from London to Nairobi and join the Centre. Today we are proud to announce that Prudential becomes the first firm to formally join the Nairobi International Financial Centre,” Vincent Rague, Chairman NIFC Authority.

After many years of waiting, the hub will eye large foreign firms, boosting capital flows to Kenya and the region.

The authority has singled-out four sectors that it will prioritise for growth: financial technology, green finance, investment funds, and becoming a hub for regional multinationals.

The NIFC general regulations have been enacted, as the initial set of tax incentive proposals have been passed.

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Certification from the NIFC Authority must be applied by Firms considering conducting business through the NIFC.

A 15% corporate tax will benefit firms operating a carbon market exchange or emission trading system under the NIFC. The 15% advantage will happen for the first 10 years of operation.

Companies certified by the NIFC Authority and have invested a minimum of Sh5 billion will benefit from the certainty that, the Capital Gains Tax applicable at the time they make their investments will remain unchanged during the lifetime of the investments.

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Hackers Make Tactical Change, Now Targeting Small Businesses

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Traditionally, cybercriminals have been targeting big companies with aim of demanding ransoms running into millions. Nonetheless, the trend no longer holds, as new studies have shown the shift in hackers’ interest from big companies to small and medium ones.

Studies have shown that hackers are shifting their focus to small online businesses which they believe are more vulnerable.

Experts have warned that these SMEs and payment portals, especially those relying on mobile payment solutions, are now facing high risks of cyber attacks coordinated by these hackers.

Speaking during the inaugural Africa Cybersecurity Congress held in Nairobi, Hadi Maeleb, Agora Group co-founder and CEO said the threats to online businesses were growing at a high rate.

Further, he stated that more than 90% of business owners are unaware that their enterprises are at risk, despite the high growth rate of the attacks.

“Cybercriminals are now targeting small businesses more as they have realized that these enterprises do believe they would be exposed due to their comparatively low turnovers until they lose their data and payments are compromised,” said Mr Maeleb.

With the adoption of e-commerce platforms, State agencies, financial institutions, healthcare, energy and utilities have persistently faced cyber-attacks in the recent past.

According to CAK- Communications Authority of Kenya’s first-quarter data (between January to March 2022), a total of 79.2 million cyber-attacks were reported. This has prompted the government to issue 28,848 advisories in an attempt to fight the rising attacks.

Invest in Cybersecurity

Mr Maeleb noted that business owners should invest in cybersecurity tools as there is no magical solution to cybercrime.

“This ‘democratization’ of cyberattacks is expected to push losses due to business interruption, financial theft, personal data breaches and even ransom payments over the Sh4 trillion mark by end of 2022,” he said.

At the peak of the pandemic, several states adopted tough lockdown measures such as social distancing, working from home, and online learning.

Also read: Why Buyers Are Now Running Away From Popular Used Toyota Cars

Hackers shifting focus to small businesses.

This adoption of digital solutions such as e-commerce, remote working and banking went up as Kenyans turned to online platforms to curb the spread of the coronavirus.

“Unfortunately for them, the business of cybercrime has evolved to a point where attacks like ransomware are now sold as a service,” he added.

Even though these measures triggered the adoption of digital platforms, they also increased vulnerability such as ransom, data breaches, harassment, cyberbullying, and data breaches.

Kenya’s ICT Policy which came into effect in 2006, is credited for creating an enabling environment for the growth and usage of technology.

Kenya’s ICT Policy which came into effect in 2006, is credited for creating an enabling environment for the growth and usage of technology.

To achieve Kenya’s Vision 2030 goal of a regional ICT hub, the tech sector was expected to contribute directly and indirectly to an additional 1.5% of Kenya’s GDP by 2017/2018.

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Why Buyers Are Now Running Away From Popular Used Toyota Cars

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As it has been noted that Kenyans are now running away from the popular used Toyota car models, contrary to what has been a tradition in the country. The rise in their costs has seen even dealers cut down on imports of these vehicles due to decreased demand.

Traditionally, popular models such as Toyota Premio and RAV4 have been synonymous with middle-income earners over the years. However, this is no longer the trend.

Car dealers say more Kenyans are now going for vehicles such as Nissan Sylphy and Mazda, which cost less compared with popular Toyota models.

Toyota Vs Nisaan and Mazda models

According to Charles Munyori, the secretary-general of Kenya Auto Bazaar Association, Nissan Sylphy and Mazda’s CX5 and Axela, are quickly gaining popularity among Kenyans.

Mr Munyori said the price of a Toyota RAV4 has short up to Sh3 million currently from Sh2.8 million in February while a Premio is going for Sh2.2 million from Sh2 million four months ago.

On the contrary, Mazda Axela is now selling for Sh1.6 million with Nissan Sylphy (Blue Bird) going for at least Sh1.5 million.

Currently, consumers find these brands to be the best alternatives to their preferred models, as they are relatively cheaper and good.

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With the rising household costs, these car prices are making them affordable to most Kenyans as they struggle to balance the high cost of living.

“We are seeing a shift where Kenyans are now moving from the popular brands such as Toyota Premio and RAV4 to other models. This shift has been occasioned by the high cost that these cars are now fetching at the market,” said Mr Munyori.

“In fact, most of the car dealers are hardly bringing in Premio and RAV4 models because they are not moving and they will tie up money that they would need for importation of more vehicles,” he said.

Ex-Japanese vehicles

Ex-Japan vehicles dominate the Kenyan second-hand sector with a more than 80% market share.

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The buyers in the sector prefer these cars as their spare parts are easier to obtain locally compared to other brands. Additionally, buyers believe that the resale value of Toyota vehicles are higher than that of other brands like mazda or Nissan.

Reasons for risisng vehicle cost

The rising cost of vehicles in the country has been linked to the unavailability of dollars locally, a shortage of electronic chips in Japan, and a weakening shilling against the dollar.

The country is currently experiencing extreme dollar shortage, that one has to wait for at least three days to get $20,000 or $25,000 from the banks.

“We have to wait for like nine days in order to accumulate $80,000, and this has seen car dealers delay in making their orders. We are really feeling the impact of the dollar shortage in the market,” Mr Munyori said.

banks have imposed regulations on dollar purchase. This has forced traders to face difficulty in meeting their obligations.

Industrialists are forced to start seeking dollars in advance. The shortage puts a strain on supplier relations and the ability to negotiate favourable prices in gap markets.

On the other hand, Semiconductors are used in making electronic devices. Their shortage has forced the vehicle manufacturers to scale down the production. The quantity and quality cannot be maintained with decrease in one of the crucial raw material.

Finally, the shilling has persistently remained weak against the dollar. this has made it costly for importers shipping in goods.

The shilling has hit a record low trading at of Sh 117.06 against the dollar. This predicts a continued rise in imported goods, and signifies a further dollar shortage crisis.

The continuous depreciation in shilling stability is attributed to increased demand for dollars from importers. This highly arises on importaion of crude oil and merchandised goods.

It should be noted that most external debt is repaid in the dollar. Therefore, a weakened shilling increases prices of imported goods, and puts pressure on the country’s debt repayment.

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