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World Bank commends Kenya tax reforms

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The World Bank has commended Kenya’s effort to expand its tax net, reiterating that the measures are a step further in the country’s quest to widen its tax base.

The multilateral body also said the new revenue drive would bolster domestic revenue mobilisation when raising financing from external sources proved challenging.

The World Bank says by 2024, 0.7 percent of GDP and $665.25 million more tax revenue could be generated thanks to the implementation of Value Added Tax (VAT) on digital suppliers and the introduction of a withholding tax on financial derivative gains by non-residents, among other measures.

“The government issued new VAT regulations on supplies through the digital marketplace (Electronic, Internet Digital Marketplace Supply) by providing the interpretation, scope, simplified registration framework, appointment of tax representatives, place and time of supply, accounting for and payment of tax, claim for input tax and penalties,” the World Bank states.

“The government has also issued EGMS regulations to amend the provisions concerning excise stamps on excisable goods, exemption from excise stamps, and disposal of forfeited and seized goods. To streamline implementation, excisable goods required to have excise stamps are now listed in the first schedule of the EGMS regulations.

The amendments will promote fair administrative justice by introducing a new provision for a notification to the owners of seized or forfeited goods before disposal, as well as widen the provision on the application for licence or registration and the minimum specifications for metering, measurement, and monitoring devices,” the bank says.

With a national debt of 65 billion dollars, or 67% of GDP, Kenya is facing some financial difficulties, and the cost of repayment is growing as the value of the Kenyan shilling drops.

Despite its financial stress, however, the World Bank said the recent progress in the agricultural sector would likely lead to Kenya’s economic growth at a slightly faster pace than last year. The international lender, in its latest biannual Kenya Economic Update report, said the economy would expand by 5.0% in 2023, inching up from 4.8% last year.

Musings From Abroad

US wants UAE, others to cease support for Sudan’s warring parties

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The United States wants all countries, including the United Arab Emirates, to stop helping the warring sides in Sudan, the U.S. ambassador to the UN said on Monday, warning that a “crisis of epic proportions is brewing.”

A year ago, there was a war in Sudan between the Sudanese Army (SAF) and the rebel Rapid Support Forces (RSF). This caused the biggest refugee crisis in the history of the world. In the past few days, the U.N. has been worried that the RSF might soon attack al-Fashir in Sudan’s North Darfur area.

The US continued to put sanctions on people who are linked to the Sudan issue. In September, the US also put sanctions on two companies, one of which was based in Russia. Washington has always said that the groups are making things less stable in Sudan, even though the war has killed thousands of civilians and forced millions to leave their homes.

In the same way, the UK has punished at least six businesses related to the fight between the army led by General Abdel Fattah al-Burhan, who is also the head of Sudan’s transitional government’s Sovereign Council, and army troops loyal to General Mohamed Hamdan Dagalo, who is the deputy leader of the council and is in charge of the paramilitary Rapid Support Forces (RSF).

Experts, residents, and aid groups say the fight for al-Fashir, which has a long history as a power centre, could go on longer, make race tensions worse in the area that began 20 years ago, and spread to the border between Sudan and Chad.

“As I’ve said before, history is repeating itself in Darfur in the worst possible way,” U.S. Ambassador to the U.N. Linda Thomas-Greenfield told reporters on Monday, adding that al-Fashir was “on the precipice of a large-scale massacre.”

The U.N. says that around 300,000 people were killed in Darfur in the early 2000s when “Janjaweed” militias, from which the RSF grew, helped the army put down a revolt by mostly non-Arab groups. The International Criminal Court wants to bring charges against Sudanese leaders for crimes against humanity and murder.

This month, top U.N. officials told the Security Council that the lives of about 800,000 people in al-Fashir are in “extreme and immediate danger” because violence is getting worse and could “unleash bloody intercommunal strife throughout Darfur.”

In the huge western part of Darfur, Al-Fashir is the only big city that is not controlled by the RSF. Last year, the RSF and its partners took over four more Darfur state capitals. They were blamed for killing non-Arab groups based on their race and other wrongdoings in West Darfur.

“We do know that both sides are receiving support – both with weapons and other support – to fuel their efforts to continue to destroy Sudan and yes, we have engaged with the parties on that including with our colleagues from the UAE,” Thomas-Greenfield said.

It is said that the conflict has forced more than 3 million people to leave their homes and that thousands have died.

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Musings From Abroad

W’Bank chief Banga expects rich nations to meet Africa’s donation expectations

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Ajay Banga, President of the World Bank, has said that he thinks donor countries will follow through on African leaders’ desire to make record-high contributions to a low-interest facility for developing nations.

He explained that these were not gifts but investments in the future of those countries.

Ahead of a World Bank conference scheduled for later this year, African leaders on Monday called for rich countries to commit to record contributions to a low-interest World Bank facility for developing nations. At a meeting in Japan in December, African heads of state asked rich countries to help raise at least $120 billion for the International Development Association (IDA).

That would be a record for IDA, which gives poor countries long-term loans and works in cycles of three years. The most money was raised in 2021, when $93 billion was raised.

For funders to reach the goal of $120 billion, they will need to come up with about $30 billion, since the World Bank can borrow $3 for every dollar raised.

“There is no doubt that all the donor countries have their challenges and their fiscal responsibilities. But I think they all value the effect of contributing to IDA,” Banga said in an interview on Monday.

More than half of the 75 countries that use the IDA site are from Africa. A lot of people are dealing with big debts and natural disasters, but it’s hard for them to get cheap loans on foreign markets.

The African leaders said that this makes getting IDA loans very important.

Banga said that wealthy nations should understand that helping others is good for them. He used China and India as examples of countries that used to be poor but now have big economies after getting help from IDA.

“I think the most important message is actually that this is not a handout,” he said. “If Africa develops well, Africa has a lot to offer the world.”

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