New Financing to Address Fiscal Pressures and Accelerate Inclusive and Green Growth

Washington, May 30, 2024 — The World Bank has approved new funding to help Kenya address short-term fiscal pressures and simultaneously accelerate a more prosperous, green, and inclusive future.

The new $1.2 Billion Kenya Fiscal Sustainability and Resilient Growth Development Policy Operation (DPO), the first in a series of three, has been prepared under an improved macroeconomic environment following government action to address the challenges that had overshadowed the economy including tight liquidity pressures, depressed investor confidence and limited capital inflows that had resulted in a rapidly depreciating shilling.

“The policy dialogue around this DPO has helped to strengthen the macroeconomic framework, sustain an ambitious fiscal consolidation path, and tighten monetary policy,” said Keith Hansen, World Bank Country Director for Kenya. “After tackling the immediate fiscal pressures, the focus can now shift to addressing the country’s longer-term challenges.”

The DPO will support policy and institutional reforms to (i) address structural constraints in Kenya’s public finances, alleviate fiscal pressures and promote a more efficient and sustainable budget; (ii) foster more competitive and inclusive product and labor markets; and (iii) strengthen climate action, building on Kenya’s strong leadership under the 2023 Nairobi Declaration on Climate Change.

Key reforms include the establishment of a Treasury Single Account, wage bill consolidation, a modernized and enhanced social protection system, removal of county-level distortions through the fragmented licensing systems, opening of the ICT sector for more foreign investment, and provision of better access to services and jobs to refugees. On climate, the DPO will support Kenya’s ambitions on green public transport, increasing forest cover, and leveraging climate finance, including through carbon credits and green and sustainability-linked bonds. 

 “For Kenya to return to moderate risk of debt distress, the government will need to maintain the fiscal consolidation path, promote export growth, enhance the country’s policy and institutional assessment to increase its debt carrying capacity and proactively manage liabilities by focusing on concessional financing to reduce interest costs and repayment pressures,” said Naomi Mathenge, World Bank Senior Economist for Kenya.

Climate is symbiotic with the development agenda promoted in this DPO, as it strengthens adaptation through an improved social protection system, improved public services and jobs for Kenya’s 550,000 refugees, as well as increased forest cover. The DPO also leverages the climate mitigation agenda to support Kenya’s ambition to be a global climate leader, while tapping green financial resources for climate action and development. 

The DPO is anchored in the priorities laid out in the Government of Kenya’s Bottom-up Economic Transformation Agenda and the World Bank’s FY23-FY28 Country Partnership Framework for Kenya and complements the broader World Bank portfolio in Kenya.

This $1.2 billion Development Policy Operation is funded through a combination of financial instruments, including an International Bank for Reconstruction and Development loan of $850 million, an International

Detained Ugandan opposition figure treated in clinic overnight

Detained Ugandan opposition politician Kizza Besigye, on hunger strike for a week, has been returned to prison after being in a clinic overnight, his allies have said.

The 68-year-old was rushed to a private medical facility in a prison ambulance as his his health was deteriorating, his lawyer Erias Lukwago wrote earlier on Facebook.

Besigye was charged in a military court with illegal possession of a firearm, threatening national security, as well as treason, which carries the death sentence. He denies the accusations.

The news about his health came hours after a cabinet minister said he had seen Besigye in jail. He urged him to resume eating and pledged to drop his military trial.

Another leading opposition politician, Bobi Wine, along with human rights activists, went to the prison on Monday to visit Besigye.

But Bobi Wine said that prison officers refused to let them see him as he was very weak.

"This man is actually dying. Dr Besigye is in a terrible state. He cannot leave his bed," Bobi Wine told reporters as he called for his release.

He added that Besigye’s co-accused, Obed Lutale, "told us that Besigye collapsed this morning when they were trying to carry him out of his bed".

When contacted by the BBC, Uganda Prisons spokesperson Frank Baine refused to comment.

"I said no comment, that is enough," he added.

Besigye, who has run for president against long-serving leader Yoweri Museveni four times, has been in detention since he was dramatically abducted in Kenya in November and taken back to Uganda to face a military trial.

• How a Ugandan opposition leader disappeared in Kenya and ended up in military court

Last month, the Supreme Court ruled that trying civilians in military courts was unconstitutional.

The government had insisted Besigye’s military trial would continue and President Museveni dismissed the ruling as "a wrong decision", vowing to challenge it.

But on Sunday, Information Minister Chris Baryomunsi said he had seen Besigye in prison "in the presence of his doctors" and had asked him to end the hunger strike "as the government fast-tracks the transfer of his case from a court martial to a civil court".

Besigye’s wife, Winnie Byanyima, however said the visit was "highly suspicious".

"As a government minister, you are not a concerned visitor - you are his captor," Ms Byanyima, who is the director of the UN’s HIV/Aids programme, posted on X.

"We will hold you and your government fully accountable for any harm that comes to him," she added.

On Sunday night, a lawmaker allied to the detained politician said Besigye had been taken to a clinic in a suburb of Kampala "amidst very heavy security deployment".

Francis Mwijukye added Besigye was "being pushed in a wheel chair".

Wafula Oguttu, a former leader of the opposition in parliament and a Besigye ally, said prison officers around the clinic told him they would take him back to jail after a series of tests had been conducted.

Oguttu told the BBC that he had not been allowed to enter the clinic.

One of Besigye’s political aides, Harold Kaija, said he was now back in prison.

Besigye went on hunger strike a week ago to protest against his continued detention by the military, with his trial yet to start.

He is a former ally of Museveni - who has been in power since 1986 - and was once his personal doctor.

Besigye has previously accused the authorities of political persecution. In recent years he has been less active in politics and did not contest the 2021 election.

Besigye appeared before a court on Friday - in a separate case - looking frail. The Ugandan medical doctors’ association has since called for his "immediate release" on health grounds.

There have increasing calls by the family, opposition and human rights groups for Besigye to be released on medical grounds.

I fairly know many places in Kenya, Ruto tells critics

In Summary

• According to the Head of State, his awareness of the nation’s infrastructure is integral to his leadership and responsibility.
• He added that his mission remains focused on ensuring equitable development for all regions of the country.

Ruto clarified that his familiarity with the roads in Northern Kenya is no different from his knowledge of roads in Central, Western, or other parts of the country.

"I fairly know many places. I would tell you the roads in Northern Kenya the way I would tell you the roads in Central Kenya, the roads in Western Kenya and many parts of Kenya," Ruto said.

According to the Head of State, his awareness of the nation’s infrastructure is integral to his leadership and responsibility.

"This is my job, this is the job I applied for. To think about the country, to know what to do, where and to make sure that no part of Kenya is left behind," Ruto explained.

He added that his mission remains focused on ensuring equitable development for all regions of the country.

During his recent tour of Northern Kenya, Ruto’s announcement of the road expansion project sparked a wave of online reactions.

Kenyans flooded social media with memes, particularly after Ruto named various stops along the stretch in rapid succession.

While speaking Wednesday in Nairobi, he brushed off criticism from Kenyans regarding his promises, asserting that while some may think they are jokes, he remains committed to delivering the 750-kilometre project.

He said the tarmacking of this key road is central to ensuring the equitable distribution of national resources.

“I am committed to delivering the 750km road from Isiolo to Mandera because, for a very long time, we have left Northern Kenya behind,” Ruto stated.

He warned critics who doubt his ability to fulfil his promises, cautioning them not to take their jokes too far, as they might be in for a rude shock.

“Let me tell you, my good people, in this country, we sometimes treat matters of life and death as if they are a joke,” Ruto remarked.

He reaffirmed his administration’s dedication to national development, acknowledging the significant responsibility Kenyans have placed upon him to transform the country.

KRA Warns of Penalties for Kenyans Who Fail to File Taxes by Today

The Kenya Revenue Authority (KRA) has urged Kenyans who are yet to file their taxes to do so before the lapse of the deadline set for February 20, 2025.

In a brief notice on Thursday afternoon, the Authority announced huge penalties for Kenyans who would fail to remit their tax payments by today midnight.

KRA went ahead to list five taxes whose deadlines are due today, including the Value Added Tax (VAT). VAT is an indirect tax that is paid by the person who consumes taxable goods imported.

According to KRA, any person supplying or who expects to supply taxable goods with a value of Ksh5 Million or more in a year is required to pay VAT at the rate of 16 per cent. 

The Authority also called on Kenyans to file their Turnover Tax (TOT) and the Monthly Rental Income (MRI) tax, whose deadlines are also due today at midnight.

Turnover Tax is levied on businesses whose gross turnover exceeds Ksh1,000,000 but does not exceed, or is not expected to exceed, Ksh25,000,000 during any year of income.

As per the Finance Act 2023, which became effective on July 1, 2023, Turnover Tax is payable at a rate of 3 per cent of gross sales and must be remitted by the 20th of every month.

Additionally, Kenyans were urged to promptly remit their Digital Service Tax (DST) and the Value-Added Tax on Digital Marketplace Supply, whose deadlines are set to elapse soon.

Kenyans seeking to file any of the five taxes were advised to visit the KRA portal, where they will be required to log into the system and file the necessary tax returns.

“Today is February 20, 2025, the deadline to file and pay the following taxes: Value Added Tax (VAT), Turnover Tax (TOT), Monthly Rental Income Tax (MRI), Digital Service Tax (DST) and Value Added Tax on Digital Marketplace Supply. Avoid penalties by filing and paying on time! Get started via itax.kra.go.ke/KRA-Portal," KRA announced.

As per the regulations, any Kenyan who fails to remit VAT risks a penalty of Ksh10,000 or 5 per cent of the tax due, whichever is higher. Non-remittance of Turnover Tax attracts a similar penalty.

Non-payment of Digital Service Tax, which is a tax payable on income accrued from services offered through a digital marketplace, attracts a penalty of 1.5 per cent of the gross transaction.