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Tax-free motorbike imports roar

As of July, according to official data, Kenya had imported 146,757 motorcycle units, up from 86,286 during the similar period last year



Boda Boda riders. With over 500,000 machines across the country, motorcycles are deeply entrenched in the lives of Kenyans and the economy, according to the Kenya Boda Boda Association.

Kenya is set to record the highest motorbike imports this year as use of the vehicles for employment and to ferry people both in urban and rural areas soars.

Registrations have surged by about 80% in the first seven months of this year, data from the Kenya National Bureau of Statistics (KNS) shows.

As of July, according to the data, Kenya had imported 146,757 motorcycle units, up from 86,286 during the similar period last year.

The rise is unprecedented in the country as the machines swamp roads and alleyways in villages and urban areas.

During the period, the bulk of the machines, 19,875, were imported in July. Kenya has been importing an average of 16,500 units every month since January.

The high imports are attributed to the removal of a Ksh 10,335 (US$100) excise duty.

The duty, imposed in December 2015, was lifted in September 2016 following lobbying from dealers and manufacturers.

The excise duty, according to dealers, shook the motorcycles’ market, forcing a sharp decline in sales and risking jobs as prices went up.

The price of motorbikes has fallen to as low as Ksh 58,910 (US$570), from at least Ksh 184,170 (US$1,782) per piece years ago following the setting up of several motorcycle plants by Asian manufacturers.

Some of the firms that have plants or distribution centers in Kenya include Beiqi-Foton, Sky Go, Fly Boy, Honda, Bajaj and Yamaha.

Kenya in 2007 exempted motorcycles below 250cc from a 16% value added tax to spur job creation.

The move paid off.

The sector has enabled thousands of youth operating low-cost motorbike taxis known as boda bodas across the east African nation to earn a decent living.

“We are so many of us and more are still coming into the sector but I cannot complain because the machines have offered me and others a job I could not get elsewhere,” said Moses Otanga, an operator in Kitengela, a suburb on the outskirts of Nairobi.

Like many others, he charges an average of Ksh 50 to ferry people to different places in the town making at least Ksh 1,034 daily.

With over 500,000 machines across the country, motorcycles are deeply entrenched in the lives of Kenyans and the economy, according to the Kenya Boda Boda Association.

The association notes that the machines have created jobs for thousands, improving standards of living for many households, besides easing transport challenges.

Related: Major tax break for low income earners

“We promote the 24-hour economy. We are the people who ferry many home even past midnight enabling them to work as long as they want without worrying about how to get home. We operate long after the passenger service vehicles have gone home,” says the association.

The motorbikes have also reduced the crime rate since many youths in the Kenyan society now have a way to earn a living.

“We drive huge fuel sales. We are estimated to be over 500,000 Boda Boda operators and with each of us fueling an average of fuel worth of Ksh 517 per day, we inject into the economy some Ksh 248.04 million every day,” says the association.

Out of that, an average of Ksh 84.3 million goes to the government in road levies and other charges the taxman imposes on fuel.

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Drawn-out vote increases risks for investors, IMF says

Bretton Woods institution avers prolonged election period has increased risks for investors and traders, in turn leading to a slowdown in economic activity



 Kenya’s election rerun is raising the country’s risk profile among investors and weighing down already sluggish economic growth, the International Monetary Fund says.

“The prolonged election period has increased risks for investors and traders,” Jan Mikkelsen, the Washington-based lender’s new resident representative in Kenya, said in an emailed response to questions. “This in turn has led to a slowdown in economic activity.”

The IMF has lowered its 2017 economic growth forecast for Kenya, the largest economy in East Africa, to 5% after expansion slowed in the first half of the year due to a drought that led to a contraction in farming output and pushed up food prices. That would be the lowest growth rate since 2012. Rain-fed agriculture in Kenya, which supplies about a third of the flowers sold in the European Union, contributes about 30 percent to the country’s total output.

ALSO SEE: Prolonged campaigns fatigue Kenyans

The Supreme Court last month overturned President Uhuru Kenyatta’s win in an Aug. 8 election, citing “irregularities and illegalities” by the nation’s electoral body. Opposition candidate Raila Odinga, who has been demanding changes at the electoral commission, threw plans for a rerun on Oct. 26 into disarray when he withdrew from participating in the vote, saying the management of the vote “would be worse than the previous one”.

Economic growth may pick up in 2018 “assuming a return to a more normal, predictable political environment after the forthcoming elections and a modest improvement in agriculture production,” Mikkelsen said.

The IMF will hold talks with the Kenyan government on a $1.5-billion standby facility that’s meant to buffer the nation from excessive external shocks after elections are concluded. The facility ends in March and “Kenyan authorities are not expected to draw on the resources,” Mikkelsen said.

 Story Credit: Bloomberg

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Private sector growth slowdown continues in October

Rates of expansion in output and employment were only marginal, leading to the weakest overall improvement in operating conditions in the survey’s 22-month history



Private sector growth remained at its lowest during the month of October, similar to the trend seen at the end of the third quarter of this year, the atest Purchasing Managers’ Index data released by CfC Stanbic Bank shows.

Rates of expansion in output and employment were only marginal, leading to the weakest overall improvement in operating conditions in the survey’s 22-month history.

Growth of the sector as a whole was undermined by a slower expansion in output at the start of the fourth quarter. Activity increased at a marginal rate that was by far the weakest in the short series history. Some companies raised output in line with extended product ranges and new contract wins, whereas others blamed falls in activity on low customer turnout.

Commenting on October’s survey findings, Jibran Qureishi, an economist at CfC Stanbic Bank said: “The headline PMI nudged down to a survey-record low of 51.7 in October, as CfC Stanbic Bank output dropped despite new orders rising which is probably a reflection of firms remaining cautious in their purchasing activities due to higher interest rates. Price pressures eased, while job creation remained sluggish.”

Mr Qureishi further noted that the directional bias for headline inflation will be to the upside towards the end of the year mostly due to base effects. Indeed, the trend of the PMI over the last two months suggests to us that GDP growth will probably be lower in the third and fourth quarters.

“Sure, public investment in infrastructure will continue to underpin GDP expansion mostly via higher construction output; however it’s imperative to ensure that this doesn’t come at the expense of a stable macroeconomic environment,” Qureishi added.

ALSO SEE: Elections dampen business, survey reveals

However, data for new business offered a rare bright spot, signalling that growth accelerated to a robust pace overall. On the price front, currency weakness remained a key source of inflationary pressure, as both input costs and output charges increased.

Overall, private sector growth was supported by a sharp rise in new orders during October. The pace of expansion accelerated since the prior month, helped by another solid increase in new export work. New product launches and better marketing had reportedly helped to strengthen demand both domestically and abroad. That said, the rates of growth were still subdued in comparison with their respective series averages.

According to panelists, a further depreciation of the Kenyan shilling against the US dollar led to a marked rise in purchasing costs during October. As a result, the rate of total input price inflation remained sharp, despite easing to a four-month low. Charges rose for the seventh successive month, as firms were able to pass through their higher input costs to clients.

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Relief for Kenyans as inflation drops to 7.06%

Fall attributed to decline in the cost of some food items which was mainly attributed to a relief from a situation of depressed supply of goods and services as experienced last month



Overall year year on year inflation stood at 7.06% in September down from 8.04% recorded in August on account of reduced food prices, according to latest statistics from the Kenya National Bureau of Statistics (KNBS).

According to KNBS’s data for the monthly Consumer Price Indices (CPI) and rates of inflation, between August and September this, Food and Non-Alcoholic Drinks’ Index decreased by 1.28 per cent.

“This was due to fall in the cost of some food items which was mainly attributed to a relief from a situation of depressed supply of goods and services as experienced in August 2017. As a result, the year on year food inflation dropped to 11.50% in September 2017,” it said in a statement Friday.

During the same review period, Housing, Water, Electricity, Gas and Other Fuels’ Index, decreased by 0.16%. This was mainly due to notable decrease in the cost of electricity which outweighed observed marginal increases in the cost of house rents and cooking fuels.

The Transport Index recorded an increase of 0.70% over the same period, on account of increase in pump prices of petrol and diesel.

The survey shows that the price of a one kilogramme of maize flour, a staple food in Kenya, dropped by 3.96% in September to sell at Ksh 59.27 down from Ksh 61.71% last month.

One kilogramme of loose maize grains, on the other hand, fell by 1.88% to sell at Ksh 57.84 down from Ksh 61.71 in August.

According to the survey, one kologramme of sugar was selling at Ksh 142.42 down from Ksh 145.10 last month – a marginal drop of 1.85%.

Sukuma wiki, a favourite dish for low income earners, was this month selling at Ksh 41.48 per kilogramme down from Ksh 42.19 last month while a kilogramme of spinach was selling at Ksh 52.48 an increase of 3.17% from last month’s price of Ksh 50.86.

Similarly, the price of a kilogramme of beef rose by 3.46% to sell at Ksh 406.04 as compared to last month’s average price of Ksh 400.48, according to the KNBS survey.

The price of onions also shot up by 4.09% with a kilogramme selling at Ksh 132.58 up from last month’s price of Ksh 127.32 while that of tomatoes rose by 4.79% to sell at Ksh 103.45% up from Ksh 98.72.

The price of carrots dropped by 31.88% to sell at Ksh 67.55 per kilogramme down from Ksh 99.16 in August while that of cabbages shrunk to Ksh 46.58 from Ksh 53.54 in August representing a 13.01% drop.

Four kilogrammes of charcoal were selling at Ksh 81.86 up from last month’s Ksh 81.61, representing a 0.30% increase while a 13-kilogramme LPG gas-filled cylinder was trading at Ksh 2,094.22 compared to last month’s Ksh2,080.10 representing a 0.68% increase.

The price of kerosene, on the other hand, went up by 1.45% to sell at Ksh 65.34 per litre compared to last month’s average price of Ksh 64.41.

Related: Honey, will you marry me? and other fun jokes about high flour prices

The price of one litre of diesel rose to Ksh 87.81 from Ksh 86.84% last month, a 1.15% hike while that of petrol increased by 2.29% to sell at Ksh 99.20 up from Ksh 96.98 last month.

However, the cost of electricity decrease with 50 Kwh costing Ksh 581.79 in September, a significant drop of 10.70% from last month’s cost of Ksh 651.47. On the other hand, 200 Kwh of electricity costed Ksh 3,665.54 down from last month’s Ksh 3,944.26, a 7.07% drop.

Rent for a one room residential house, however, rose to Ksh 4,177.08, an increase of 1.666% from last month’s Ksh 4,108.70

KNBS says the prices were obtained from selected retail outlets in 25 data collection zones spread across Nairobi and 13 other urban centres. Overall, the CPI decreased by 0.57% from 184.72 in August to 183.66 in September.

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Prolonged campaigns fatigue Kenyans

Henry Wandera, an economics lecturer in Nairobi, noted that elections tend to cause fatigue as they slow down all the other sectors




A prolonged campaign period following the order by the Supreme Court for fresh a presidential election seems to have tired many Kenyans as the date for the new election got postponed.

Many of the electorate are eager to see the campaign period end so they can move on with their lives, but a political standoff among key parties, the opposition National Super Alliance (Nasa) and the ruling Jubilee is unlikely to end soon.

Kenyan politicians have been on the campaign trail since March, and on August 8, Kenyans went to ballot to choose Members of County Assemblies, senators, woman representatives, governors, MPs and the president.

Many thought the ‘election madness’ was over until the Supreme Court nullified President Uhuru Kenyatta’s victory and ordered for fresh polls.

The electoral commission on Thursday pushed the date for the fresh presidential elections to October 26 from its earlier set date of October 17, citing the need to be fully prepared to deliver free, fair and credible elections.

Previously, Nasa leader Raila Odinga dismissed the idea of holding election on October 17.

“There would be no elections on Oct. 17 until the electoral commission is reformed,” he maintained.

Meanwhile, Kenyatta and his party Jubilee insisted that elections would be held as scheduled on October 17, noting that the country must move on.

Some of his supporters have threatened to swear him into office if polls delay. The talk on the streets, on radio and social media show many citizens are tired with the seemingly unending electioneering period.

“I am tired with the campaigns and I want them to end. Does it mean this politicians have nothing else to do?” posed Classic 105 breakfast show host Maina Kageni.

On the streets, frustrations about the lengthy electioneering period is evident in peoples’ talk and faces.

“I’m exhausted of the elections, I’m completely tired of them that I may never vote even if they come on October 17 or November 1,” said Antony Kioi, a cooking gas seller.

Kioi noted that the country has seemingly been on campaign for the last four years, with the blitz heightening only close to elections.

ALSO SEE: IEBC sets new date for presidential re-run

“Leaders have been holding rallies for many months that one cannot remember when the campaigns started or ended. We can not live politicking, elections must come and go,” he said.

Beatrice Mulundi, an insurance agent, said elections had even derailed her sales, as her many potential clients hoped to wait until the polls are over to consider her products.

“In fact when I hear that the new polls may not be held as scheduled, I get angrier.

“How do I earn a living if political uncertainly hangs over the country?

“For the last two months, people have simply been not taking insurance,” she lamented.

On social media, election talk is prominent but opinion is divided on the lengthy electioneering period, with some noting the country should get it right with elections for the things to go right.

“We better politic for 90 days, reform the electoral commission and elect the right people than have bad leadership for five years,” said one Twitter post under the hashtag ElectionsKenya.

On the other hand, other citizens are complaining of how politics has clouded all the other sectors of life.

“The health sector is literally on its dead bed, politics has taken over nothing is moving.

“This is frustrating,” said Sylvia Nyaboke.

Companies too are feeling the pinch, with many complaining about losses related to the lengthy elections.

“We lost approximately 3.8 million U.S. dollars during the election day last month due to closure of M-pesa businesses,” leading Kenya’s telecom Safaricom CEO Bob Collymore said at the company’s Annual General Meeting recently, adding that uncertainty over the new polls is having huge negative impact on business.

Related: Raila now threatens to prosecute Chebukati, top IEBC officials

Henry Wandera, an economics lecturer in Nairobi, noted that elections tend to cause fatigue as they slow down all the other sectors.

“From education to the economy and sports, nothing moves.

“Even people tend to marry less during electioneering period when tribal hatred rises,” he said.

However, he observed that while citizens may get tired, it is important that the country gets it right in the elections.

“Countries have plunged to war because of polls, so to me there is nothing alarming with what Kenya is facing now.

“The Supreme Court was right in its ruling.

“What Kenya needs to go after the next elections is to enforce electoral laws so that campaigns do not start early as it happened before the August 8 polls.”

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