Category Archives: KRA

Celebrating African Success

There was a dinner last week in Nairobi to toast James Mwangi the CEO of Equity Bank who won the second edition of the Forbes Africa Person of the year award (edging out President Joyce Banda of Malawi, Stephen Saad, Aliko Dangote & Tony Elumelu. In capping off this award-winning year for him, he spoke about the need for Africans, and particularly Kenyans to celebrate wealth and success not to be shy & hide about it.

Forbes cover

This has been something that Ory (@kenyanpundit) has spoken of in the past and a reason that there are few interesting award events to attend – as you keep seeing the same people & companies over and over being feted or speaking at events over and over  –as if they are the only entrepreneurs in town. Yet it if you look at the construction that the construction that’s changing Nairobi from Westlands to Eastlands, with new office towers, hotels, and residential estates, this is all private sector development largely done by anonymous entrepreneurs using vague company names.

You will see a few other magazines like Management, Business Post, CIO, or some local TV shows profile a few new entrepreneurs and CEO’s but nothing like the Forbes List.

The Forbes list of Richest Africans itself may be controversial  – in the region Kenya had Naushad Merali, Tanzania has Salim Bakhresa, and Uganda had Sudhir Ruparelia, and dropping off from last year’s list were Uhuru Kenyatta, Chris Kirubi, Mohamed Al Fayed and Strive Masiyiwa.

For various reasons – modesty, not wanting your rivals to know what you’re up to, fear of revealing secrets and business interests to creditors, or even family members, some entrepreneurs are shy about celebrating their success in public or with the media. But perhaps, the biggest reason for a successful entrepreneur to keep a low profile is because the tax collectors at the Kenya Revenue Authority (KRA) are also avid readers and viewers – and a high profile celebration, with dollar figures attached, is likely to be followed by a friendly visit by tax agents.

Educating Taxpayers

Do you have questions about taxes? How to calculate Value Added (VAT), Withholding, or Pay As You Earn(PAYE) or other taxes? When to assess them, and where to pay them? It’s not just large corporations who are unsure on how much tax to pay, but such questions also apply to small business owners & ordinary citizens who are all taxpayers.

The Kenya Revenue Authority (KRA) has seminars and sessions for taxpayers almost every week. There are two kinds of these, one for their online system held on most Thursday’s in all the major towns (Nakuru, Eldoret, Naivasha, Meru, Kericho, Malindi, Machakos, Embu, Nyeri, Kisii, Thika, Kakamega, Kisumu, Mombasa, Nairobi) and others for new taxpayers held in the same towns as well as Bungoma, Lamu, and Voi with emphasis on introduction to VAT and income tax rights and obligations.

The classes all have Q&A sessions in which many questions are asked. This is very useful as it’s better to ask them there, without consequences, than ask them when you have a tax inspector visit your business premises!

Right now KRA is running dual systems – manual and online with different taxpayers using either method to file various tax returns, monthly, quarterly, or annually. It’s their intention to make more online filing mandatory for taxpayers and this will be done in a phased manner.

The goal of this is to have a more efficient tax collection system and because it’s more effective to get taxpayers to cooperate than to coerce them. Also getting more people to file their tax returns online from cyber cafes or from their business premises, will result in fewer people having to queue to pay taxes at KRA offices.

Business people who bank with National Bank, Cooperative Bank and to a lesser extent KCB also have some filing advantages as these banks have invested in systems that are compatible with KRA’s and so payments made at these banks are automatically reflected as their tax filings.

Queues make you think

This week, I spent a crazy morning at another queue, this time at the Kenya Revenue Authority (KRA) trying to pay a monthly tax. When I arrived there, the line was about 12 people long, which was a relief because sometimes you can find more than 30 people.

However that turned out to be a false hope because there was only one teller counter that was manned and serving customers, and at a very slow pace. We stood there patiently for about an hour, barely moving, as it dawned on us that some things were not right.

One old man in the queue went go get a supervisor since there was none in sight to complain to except a G4S security guard, handing out forms to be filled. He came back after half an hour to find us pretty much in the same position. He had tales of being passed around from supervisor to supervisor’s in the next building but he would not relent until he reached someone ‘senior.’

Willing, but frustrated taxpayers: Kenya is ranked no 162 in this PWC survey on ease of tax payments – a figure I disagree with. KRA has made it simpler for other taxes to be collected e.g. Pay As You Earn (PAYE/payroll) taxes are paid at commercial banks where the employer has an account – the cash goes to KRA’s account instantly (no 4 day wait for this cheque). Today, I wished they would extend the same for other taxes too so that people don’t have to comes to Times Tower (KRA headquarters).

There are similar queues for driver licenses renewals of either 1 or 3 years, though sometimes some of the stickers are missing, so you can only buy the ones available that day. There alao used to be more for annual vehicle license renewals (calculated on a vehicle engine size), but that was changed a few years ago and built into the price of a litre of petrol and diesel.

Staffing: This morning, the sole teller worked for about an hour by himself, next to six empty teller windows (which is a worse display of customer service than a certain large bank). It inspired camaraderie as we all shared battle stories from previous visits to the building.
– ‘This line is nothing, you should have seen the one last month’
– ‘The line was so long yesterday, I walked out and came back today’
– ‘I will train someone else in the office to come here next month’
– ‘There are so many unemployed boys, why not give them these jobs, if KRA is under-staffed’
– ‘They do about seven people an hour, I’ve counted…’.
and
– ‘The reason these guys are slow is women should do the job. Men can’t type into computers & process payments like women. If women were given these jobs, there would be no queues as they’d process taxpayers do fast’.

(So I jumped into Google and found this yahoo thread that answered that very query – and it listed counselors, coders, surgeons, child care, nursing care, as jobs that women can do better than men, but nothing about tax collectors)

Queue management: Banks and the government have data collected by their systems and HR managers to know how many customers they have in any month. It can further be broken down into which days and which hours they get peak customer traffic. Supermarkets know this and match their staff shifts to customer numbers, but it can be extended further. I was also at a bank hall this morning and it was completely empty, with no customers waiting to be served. Why? Probably because it’s the middle of the month and many customers, who are dependent on monthly paycheques have no need for their banks mid-month.

KRA likewise should anticipate dates like the 9th, 20th and 25th of each month will have peak volumes and deploy more staff to man front desk counters on these days, so they end up with long queues of frustrated small business customers and taxpayers.

CBK Profits II


Reading the tea leaves at Central Bank

The Central Bank of Kenya (CBK) FY 2009 (PDF) results are out and, compared to last year, it’s a different story.

Banking on other Income: CBK is another institution that has had other income yield great returns. While net interest income was down from 10.3 to 8.4 billion, and commission income on treasury bills and bonds was flat at 3 billion (investors opting for corporate bonds), CBK booked a forex gain of 13 billion ($173 mullion) up from 54 million on revaluation (a 25,000% gain) and 4.8 billion from the controversial $45 million sale of the Grand Regency Hotel. So profit for the year was 23 billion ($306 million), up from 9 billion in the year before, and CBK paid a dividend of 7.2 billion ($96 million) to the Government of Kenya (GoK) (up from 4 billion). And while CBK is exempt from income tax, KRA (the tax man) is not letting go of a Kshs. 22 million employee tax dispute with the CBK.

Make it Rain: Kenya has Kshs. 108 billion (~1.4 billion) worth of currency in circulation (up from 100 billion in ‘08). Currency costs (sourced from De La Rue) were 1.1 billion (~15 million) to produce new notes (up from 330 m).

Generous Creditor: CBK lends to employees at 3% (perks of banking) and charge the government 3% on their overdraft. In a July 07 agreement GoK agreed to pay CBK 1.11 billion p.a. over 32 years at 3% to settle a GoK overdraft dating back to 1997. The CBK act limits the GoK overdraft to 5% of gross recurrent revenue (so currently this should not exceed 17 billion)

UK assets: CBK has 194 billion in assets held with united kingdom banks, that’s even more than Kenya (66 billion), or the rest of Europe (31), and USA (20) while all their 312 billion liabilities are in Kenya. This was even after they increased euro and dollar assets, and reduced sterling pounds, compared to ’08.

Loans & Rates: CBK loans to commercial banks stood at 15 billion ($200 million), up from 8.5 billion. They lent money to commercial banks at 8% p.a and earned 6.64% on treasury bills/bonds.

No Gold Standard: CBK gold holdings are just 34 million (less than $500,000) up from 28m year before. In comparison, just this week, India pipped China in the gold race buying $6.7 billion worth of gold from the IMF in hard currency (but is still only 10th largest holder)

Delta, Zain and KQ Tweet Around

and other Bank Twits

Twitter is a micro-blogging tool that is really nifty for doing mini-posts, forward and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of the last few days on Twitter:

May 29

  • @MauriYambo Kenya Co-op Bank directors shareholding Stinks http://bit.ly/EvI2d
  • KTN’s Larry … Madowo @larrymadowo on Twitter
  • After a few drinks I discover I may be related to @kafai and @gishungwa! #TIA

May 30

  • Morning traffic jams in Nairobi Kileleshwa. Spy some Apts being built into the river & fear that one day, river will rise & reclaim its banks.
  • Government of Kenya shot itself in foot with punitive alcohol tax. Spirit brewers going belly up, Uhuru should correct.

May 31

  • Happy birthday young @intelligensia

Jun 1

  • @mwaikibaki will launch Kenya’s fibre optic cable this month.
  • @mwaikibaki says Kenya census starts august 24. Ends with his famous phrase, calls hecklers #pumbavu
  • Cadbury seems to have discontinued my fave choc wafer, while alvaro is on sale – buy 5, get 1 free!

June 2

  • Some Nairobi buildings were designed by Mario bros – with secret floors, VIP lifts, hidden entrances, hostile guards to negotiate.
  • Santander Bank may sponsor Ferrari next year – does that also make Alonso their new driver? http://tinyurl.com/mgukmu
  • Does patient capitalist Jacqueline Novogratz @jnovogratz have the answer to the role of aid in development? http://tinyurl.com/q9llxb
  • The African Union wants to set up an African Central Bank http://bit.ly/QcMav
  • @TerryanneC Delta Airlines maiden flight earlier scheduled for tomorrow from Atlanta to Kenya postponed indefinitely
  • If I had to subscribe to one magazine for life, it would be the Economist

June 3

  • @coldtusker even without airport CEO, artur, 1jet1 – US may want more than one airport checkpoint to filter passengers, so non-stop no go.
  • @mamboleo ranneberger welcomed delta in the news and was to officiate today. Mwakwere has been in US for a week waiting to fly
  • @MIMImagazine new Sade album this year http://bit.ly/Ywv14\
  • What’s wrong with Kenya airport Security? http://tinyurl.com/qmmem2
  • Want to speak like Kenyan kids? – try the Sheng dictionary http://www.sheng.co.ke/kamu…
  • Got an accurate shares statement by e-mail from CDSC Kenya – so my stockbroker is still honest

June 4

  • Should companies care about what’s written about them online? http://bit.ly/oiYFw
  • Former ministers and MP’s mentioned in parliament as masterminds of some collapsed Kenya pyramid
  • Michuki and Ruto top a NTV viewer poll of best performing ministers in Kenya. Ok… #Kenya

June 5

  • @alykhansatchu “In September 2008, all hell broke loose, it fell like the Titanic” – Titus Naikuni Kenya Airways CEO
  • @coldtusker Kenya Airways losing 4 billion after Zain’s 7 billion loss, there’s a lot of blood!

June 6

  • Nairobi city council asking 100 shillings ($1.25) to photocopy each 100 words of new laws that will punish residents #FAIL
  • Follow George Ayittey @ayittey for a harsh dose of Afro-reality
  • JKIA arrival lounge – musician Jua Cali and Uganda leader Kizza Besige arrive unnoticed

June 7

  • Button-Brawn wins turkey GP. Kenyan crowds are ABB – Anyone but Button
  • @karuoro does XYZ fail for taking shots at politicos who are too funny to be imitated or is it the poor voices?

June 8

  • Reading Africa confidential to see which way Gabon goes: Lady Senate president should succeed, but Bongo Jnr. is minister of defence.
  • Weekendgossip: Delta planned Nairobi route before they merged with Northwest – who are KLM partners. KLM have invested for many years in Kenya Airways so does it make sense for Delta to fly to Nairobi?

June 9

  • Why would Wanjiku Mugane quit the EABL Board? http://bit.ly/u6a6V
  • R/T @kainvestor @kachwanya Zain looks to close $12bn deal to sell Africa unit – report: http://tinyurl.com/m4wofy
  • Soldiers are not allowed with guns in the room (and other hotel rules) http://bit.ly/BCAV8
  • Time to do the tax return thing – 3 out of 4 years waiting for a tax refund.

June 10

  • How the Lakers won Game 2: I wish Bill Simmons watched Soccer and F1 because there are more conspiracies than NBA http://tinyurl.com/ma2gax
  • The folks at DNA Kenya have published a Promiscuity Index Report: Ave No. of Steady Mistresses! Ave No. of kids per steady Mistress! Ave No. of 1 night stands since wedding! #DNAKenya http://www.dnakenya.com

spot the difference