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Massive job losses loom in Kenya as US Dollar shortages persist

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Workers in the private sector in Kenya are on the verge of losing their jobs following an acute shortage of the dollar which could trigger manufacturing firms to shut down or suspend operations as they try to navigate cash flow problems.

The fears were raised barely a week after the Kenya Association of Manufacturers (KAM) warned that most of its members are facing challenges accessing the dollar.

According to the KAM, firms like Pwani Oil, the manufacturer behind the Salit Oil, Mpishi Poa, and Fresh Fry cooking oil products, has announced a temporary halt of its operations, citing dollar shortage which has hindered it from sourcing key commodities.

KAM Chairperson Mucai Kunyiha on May 30, had said manufacturers have been forced to plan for foreign currency payments by purchasing foreign currency in advance resulting in an increase in working capital.

A foremost Kenyan economist, Ken Gichinfa who spoke on a radio programme on Wednesday, said with sufficient dollars in reserves, the shortage is being occasioned by pent-up demand for the dollars which has led to the depreciation of the Kenyan shilling.

“The worst-case scenario is that many firms will shut down resulting in job losses escalating due to manufacturers struggling to meet their obligations.

“If the situation remains unresolved, the business community involved with importation, like manufacturers and car dealers, will be largely affected and might lead to further closure and job losses,” Gichinga said.

But in response to the fears, the Kenyan Central Bank (CBK) accused the manufacturers of causing the scarcity of the dollars.

“The manufacturers should understand that they are small in that sense and sort of go to the market like everyone else. There are no favorites in the market. Follow the rules of the market and everything will be okay,” the CBK head, Patrick Ngugi Njoroge had previously remarked.

Kenya is already battling rising inflation which has heightened the cost of living with fuel and food prices rising.

The costs of producing goods and services remained at an 8-year high driven by rising fuel prices, higher taxes, and input shortages which forced many firms to scale back on output and employment levels.

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Kenya, Uganda settle oil import dispute

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In an effort to patch things up between the two neighbours, Kenya will permit Uganda’s landlocked state oil company to import petroleum products through its port of Mombasa, the country’s energy ministry said on Thursday.

After decades of receiving their cargo through affiliated firms in Kenya, Uganda has been looking for alternative ways to import petroleum products, including through a port in Tanzania. According to Solomon Muyita, a spokesman for Uganda’s ministry of minerals and energy, the first shipment under the new arrangement is scheduled for May.

“Kenya has agreed to give us a licence, UNOC (Uganda National Oil Company) is now free to import through Mombasa,” he said.

According to reports, UNOC would use the Kenya Pipeline Company to transport the goods, so Kenya would still profit from the agreement, according to Kenyan Energy Minister Davis Chirchir.

In 2022, Uganda imported petroleum products valued at $1.6 billion, the majority of which came from the Gulf. Kenya serves as the import gateway for about 90% of the goods.

It declared in November that it would transfer all exclusive petroleum product supply rights to a division of the international energy trader Vitol, which would subsequently supply UNOC.

According to what the government said at the time, using Kenyan companies to import oil had “exposed Uganda to occasional supply vulnerabilities” whereby Ugandan retail companies were viewed as secondary whenever there were supply disruptions changing retail prices.

The two African nations that make up the Great Lakes are partners in a variety of fields, including trade, infrastructure, energy, education, agriculture, and military security.

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No plan to increase taxes, Nigeria’s revenue chief says

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The head of Nigeria’s revenue agency, Zacch Adedeji, has reaffirmed that there is no plan for the introduction of new taxes in the country.

Adedeji, who is the Chairman of the Federal Inland Revenue, made the position known when the Chief Executive Officer of Guinness Nigeria Plc, Adebayo Alli, led the management team of the company on a visit to the Revenue House in Abuja.

He was quoted as saying, “the President gave a directive that he wants a single digit tax in the country, meaning that the maximum number of taxes we will have after the work of the Presidential Committee on Fiscal Policy and Tax Reforms will be nine taxes,” in a statement signed by the Special Adviser on Media to the FIRS chairman, Dare Adekanmbi.

“For us at FIRS, we have responded to that directive. We want to grow the pie such that even if we are taking the same percentage of the bigger pie, the result will be huge.

“By God’s grace, we will not introduce additional taxes nor increase any form of tax. We are only determined to increase the pie. We have restructured our operations at FIRS in such a way that we are now effectively carrying out our duty of assessing, collecting and accounting for taxes. We used to have functional types of taxes, but we have identified that the only customers we have are the taxpayers.”

He stated that by restructuring “our operations based on our customers, using their turnover as the basis to categorise them into large, medium, and small,” FIRS has enhanced its customer relations. He continued by saying that President Bola Tinubu wanted to increase Nigerians’ purchasing power in order to promote growth and increase businesses’ capacity for productivity through the recently implemented consumer credit scheme.

The Nigerian government has been working to overhaul the nation’s monetary and fiscal policies since the start of the Bola Tinubu administration. This has resulted in the central bank and the Oyedele-led tax advisory council implementing daring new policies.

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