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Kenya losing African export markets to China as manufacturing shrinks : The Standard

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Export of manufactured goods has declined sharply, with Kenya losing its African export market to China and India.

In the last eight years to 2018, the country has watched helplessly as the market for some its key products including textile, glassware, cement, wood and carbon dioxide shrunk leading to massive job losses.
Struggling cement industry has seriously affected export earnings of the product which dropped by 80 per cent to Sh1.5 billion in 2018 from Sh7.5 billion eight years ago.
Cement manufacturers have been struggling with some of the companies downsizing in response to a turbulent environment. For instance, ARM Cement was placed under receivership then sold to Devki Steel when it fell into financial trouble. East African Portland Cement Company recently sent home most of its workers as it struggled to remain afloat as the cement industry faced headwinds with the slowdown in the construction sector.

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Export of wood products has also suffered, plunging 65 per cent with the country earning Sh225 million a drop-down from Sh648 million earned in 2010.
Other manufactured goods that have been hit include export of textile yarns and made-up textiles, a low-lying fruit under President Uhuru Kenyatta’s job creation ambition, which fell by a third.
And with some glass-making companies shifting base to neighbouring countries, export of glassware reduced by half with the country getting Sh927 million from Sh1.9 trillion eight years ago.

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Export of machinery and transport equipment, aluminium and metal containers have also shrunk as the country continues to lose its competitiveness in manufacturing. Manufacturing sector’s contribution to the economy or gross domestic product has dropped from 10 per cent in 2010 to 7.7 per cent last year.
As a result, Kenya’s export market in the East African region and Comesa, dropped as countries in the trading blocs either found ways to manufacture their products or new trading partners such as China and India that are more competitive than Kenya. Even as exports to African countries have declined, imports have increased with Kenya’s trade surplus narrowing.

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Uganda, for example, has seen its exports to Kenya rise nearly three-fold to Sh49.4 billion in 2018 compared to Sh19.3 billion in 2016.
Other countries that have since brought more goods to Kenya, mostly as a result of being in the same trade bloc, include Egypt.
The loss of export market has also led to job losses, according to Statistical Abstract 2019.
Data from the national statistician sounded a warning bell to those engaged in the manufacture of vegetable and animal oils and fats, as this sub-sector shed a staggering 12,743 jobs between 2014 and 2018. The job losses touched 18 manufacturing sub-sectors in what has been blamed on the increased cost of production, including the high cost of electricity, punitive taxes, bureaucracy and high cost of credit, a big blow to one of Uhuru’s Big Four Agenda.
The affected sub-sectors include textile, manufacturing, fish, vegetable and fruit processing that have been identified as part of Uhuru’s job creation ambition under the Big Four Agenda. Manufacturing is expected to create one million jobs by the time the President leaves office in two years.

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Current figures could even be worse given that the other affected sub-sector, sugar manufacturing, for example, has seen even more job losses owing to the closure of Mumias Sugar, once the country’s biggest sugar miller.
Experts note that one of the reasons Kenya is losing out is because it does minimal value addition. “We do very little value-addition on tea and coffee,” says Timothy Njagi, a research fellow from Tegemeo Institute, a public policy think-tank affiliated to Egerton University. Dr Njagi says that most of the Kenyan tea is used for blending.


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Financial tips couples should never ignore : The Standard

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As unromantic as money may sound, it is impossible to avoid talking about it if you hope to be successful as a couple. Your marriage partner can either be the reason for your success or contribute to your failure.

Therefore, you need to ask the right questions before committing to marriage. Discuss everything, and talk about money as often as possible until you achieve a shared vision.
Here are five ways to get on the same page when it comes to your financial future.
1. Be transparent

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Cultivate openness and transparency in your financial affairs. Know each other’s current incomes, expenses, debts and liabilities.
Come clean on your student loans, credit card debts, child or spousal support and what you send home for your parents or spend on your siblings.
Secrets not only put a couple at risk of not meeting their family goals, but threaten the survival of the marriage.

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2. Make plans jointly
Set long-term goals together. Think about your five, 10, 20, 30-year plans and write them down. There’s something powerful about seeing your dreams down on paper.

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Set retirement goals. Prioritise and work on a joint budget and share responsibilities. Set money aside for shared objectives – such as education, buying land or investing in shares.
3. Don’t rush into setting up a joint account
You don’t have to combine finances immediately you say ‘I do’. Take the time to learn each other’s spending habits to avoid conflict down the line. To start off, you can maintain separate accounts and open a joint account with clear budget lines and agree on how both of you will contribute to the kitty and how the money will be managed.
To build trust, maintain accurate records, including for expenditure that doesn’t have receipts, such as buying vegetables from the estate Mama Mboga.
Operating a joint account should be a gradual process. If one partner is an impulsive spender or hides certain expenditure, it’s not advisable to operate a joint account as it will only lead to conflict.

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4. Respect each other’s diversity
Do not micromanage each other. Everyone has things they do for themselves that make them happy and boost their self-esteem.
This could be a hobby, buying make-up or clothes, or membership in a club or society. Rather than belittling something your spouse considers important, figure out how to work it into the budget.
You can agree to set aside some cash that each of you can spend as you wish without having to account for it.
5. Hold money dates to nurture team work

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Hold regular money dates to brainstorm, share ideas, discuss your goals and evaluate your financial standing. These meetings are important for a couple’s growth.
You’re either growing together or growing apart, so make a conscious effort to grow together. Joint planning is crucial whether both partners are earning an income or not.


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Robust engagement between Kenya & UK expected at London Summit

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Amb. Esipisu said that the summit will provide a forum for the Governments of Kenya and the UK on areas of cooperation/Courtesy

, LONDON, United Kingdom, 18  – The stage is set for robust engagement between Kenyan and UK business people during the forthcoming UK-Africa Investment Summit, the Kenyan High Commissioner to the UK Ambassador Manoah Esipisu has said.

Briefing the press in London ahead of the inaugural conference scheduled for January 20, Amb. Esipisu said Kenya is at the centre of the UK’s engagement with Africa.

“Three billion pounds worth of UK investment is in Kenya while most of our exports outside East Africa come here as well as to destinations such as the US,” Amb. Esipisu pointed out.

He added that the Kenyan diplomatic mission in the UK looks forward to welcoming the Kenyan delegation led by President Uhuru Kenyatta coming to the UK for the summit.

“We do expect robust engagement between Kenyan and UK business people about the areas in which investment is clear,” the High Commissioner assured.

Amb. Esipisu said that the summit will provide an opportunity for a robust discussion between the Governments of Kenya and the UK on areas of cooperation.

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“As you know, Kenya has always trumpeted trade and investment, and we do expect that these are the areas that they will focus on for the prosperity of the people of Kenya as well as the prosperity of the people of the United Kingdom,” Amb Esipisu outlined.

Highlighting the investment opportunities in Kenya, Principal Secretary for Petroleum Andrew Kamau said Kenya will be looking to pursue mutually beneficial partnerships with UK investors in the production of sufficient renewable energy to support the implementation of Kenya’s Big 4 Agenda.


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IMF reveals Kenya debt could be more than Sh6.2 trillion : The Standard

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Former National Treasury Cabinet Secretary Henry Rotich is once again on the spotlight, after the International Monetary Fund (IMF) accused his team of using technicalities to conceal the true position of the country’s debt.
Falling short of accusing the Treasury mandarins of cooking numbers, IMF called out the Exchequer for blindfolding the public by using different debt-ceilings when calculating the sustainability of the country’s debt.
The muddling up of debt figures has left Kenyans confused on the true financial position of the country. This means that it is not possible to tell whether Kenya is able to meet all its debt obligations.

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“While the 2015 Legal Notice sets a maximum debt level of 50 per cent of GDP in NPV (net present value) terms, budget documents instead assess debt to be sustainable — and therefore acceptable — if it is less than 70 per cent of GDP in NPV terms,” reads IMF’s fiscal transparency report released this week.
The law has since been changed, and the ceiling for public debt shifted from being pegged on the national output, Gross Domestic Product (GDP), to a nominal ceiling of Sh9 trillion. IMF joins Central Bank of Kenya (CBK) Governor Patrick Njoroge in accusing former Treasury CS, together with his Principal Secretary Kamau Thugge, of distorting revenue figures.
In a rare bare-knuckle attack on Rotich’s tenure, Njoroge described the Treasury’s budget-making process as “abracadabra”, where revenue numbers were randomly included in the budget books “from thin air”.

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.  

The Fiscal Transparency Evaluation Update lays bare the financial indiscipline at the Exchequer, which was overseen by Rotich and his Permanent Secretary Kamau Thugge, with the country’s debt surging to Sh6.2 trillion as at December 2019.
Austerity measures

SEE ALSO :CBK boss bemused by Rotich ‘abracadabra’ budget figures

This comes at a time when the Treasury, led by new CS Ukur Yatanni, has aggressively moved to contain its spending in what is aimed at slashing further debt uptake.
Ministries and parastatals have been told that such things as tea, training and conferences will be reduced in far-reaching austerity measures that have also seen the Kenya Revenue Authority (KRA) aggressively go after tax cheats.
Kenya’s debt has spiraled to Sh6.2 trillion as at December 2019, and going by IMF’s remarks, the figure could be even higher.
In a new report, IMF has also blasted the Exchequer and the KRA for not making public the tax reliefs it has granted to some taxpayers.
The National Treasury CS has the discretion to grant tax exemptions, a process that the IMF now says has been shrouded in secrecy.

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When reached for comment, one of KRA’s spokespersons said the issue of tax exemptions did not fall within the tax agency’s mandate. Instead, they directed us to the National Treasury.
National Treasury PS Julius Muia had not responded to our text message by the time of going to press.
Tax expenditures
The IMF has also turned the spotlight on the country’s taxes, accusing the government of not publishing any regular reports that comprehensively discloses estimated revenue losses from tax expenditures.
This means that the public does not get to know how much the country has foregone in tax revenues through tax reliefs and exemptions.

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“The Kenya Revenue Authority (KRA) produces a report on annual tax exemptions which is submitted to the Auditor General, but it is not published due to concerns over the reliability of the data,” reads the IMF report.
“Current reporting practices on tax arrears do not comply with the constitutional requirement to publish all tax waivers or the PFM Act’s requirement for publishing an annual report on these exemptions and concessions.”
The IMF capacity development mission came to Nairobi between August 6 and August 19, last year, at the request of the National Treasury. The mission also found out that there was no unit responsible for tax policy issues, either at the National Treasury or KRA. This crippled the performance of KRA, which has been missing its targets.
Already, the taxman has missed its half-year target by Sh88.3 billion, netting Sh857.8 billion.
“Capacity would need to be developed in the KRA and the National Treasury, which still has not created a unit responsible for tax policy issues,” says the report.
The IMF and other development partners had previously provided training on calculating tax expenditures, but most of the government officials involved have left, and the capacity in this area is now low.


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