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CRA County Money Bills Forum held in Meru

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County Revenue Bills Workshop Held at Alba Hotel in Meru

A forum for counties on county money bills, which held from 17th - 19th November 2014. The CRA led two and a half-day workshop that was held at Alba hotel in Meru county, bringing together County Executive Committee Members of Finance and Economic Planning, Directors of revenue as well as members of the County Assemblies from the Finance Budget and Appropriation Committees. Participants were drawn from 6 counties namely Meru, Isiolo, Garissa, Mandera, Marsabit and Wajir counties. The private sector was represented by KAM, KNCCI Isiolo and Meru, the association of livestock farmers, KENFAP and other independent business people.

The participants discussed, among other things the outcome of the Maanzoni conference, the legal background of the county revenue laws especially the rating bill, the revenue administration bill, the licensing bill, the public participation bill and the finance bill. They stressed the need for cohesive revenue collection in the counties as well as an all-inclusive law making process, especially compliance with the constitutional requirement of public participation. The business community highlighted multiple taxation, especially for livestock moving from one county to another and many other business barriers along the way that delay delivery. They also cited the lack of willingness from the counties to work with the business community manifested by extortion and harassment by the authorities and a lack of proper policies governing the livestock sector.

From the meeting, the need for harmonized licensing, especially the single business permit emerged. The county representative agreed to adopt the CRA model laws after making some modifications and these bills will be reviewed in the next two weeks. They also highlighted the need for counties to introduce incentives to attract investors and a proposal for revenue sharing with the business community. A case in point is Marsabit county which gives back 30% of revenue collected from the slaughter houses to the farmers association for maintenance and other services of the facilities.

Regarding the issue of low turnout during public participation forums, it was resolved that counties set aside a reasonable budget to mobilize the public and exploit various mediums for wider reach like radio, print media, churches/mosques, organized groups, among others.


A consultant has been appointed for each cluster group to collect information that will assist in drafting and/or reviewing County Revenue Laws with an aim to improve on their quality as well as ensure rational revenue laws are in place in the Counties. After this meeting the consultant will be available to all counties to help them draft any of the 5 laws discussed during the meetings. 


CRA County Cluster Meeting held in Mombasa

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A forum for counties on county money bills, which held from 17th - 19th November 2014. The CRA led two and a half-day workshop that was held at Alba hotel in Meru county, bringing together County Executive Committee Members of Finance and Economic Planning, Directors of revenue as well as members of the County Assemblies from the Finance Budget and Appropriation Committees. Participants were drawn from 6 counties namely Meru, Isiolo, Garissa, Mandera, Marsabit and Wajir counties.

 

The Consultant, Mr. Nyamondi, provided a background on Maanzoni and the resolutions from the meeting to partner with counties to ensure that the Revenue laws met the Constitutional and legislative threshold.


The participants were of the view that the counties over projected their revenue collections and the CEC Finance of Taita Taveta, Ms. Flora Maghanga Mtenya spoke of the lack of legislation which has led to delayed collections and demonstrations by business people. This is due to the fact that Counties were unable to implement the necessary laws in time. The forum was therefore important to assist counties to collect revenue.


The business community also made a presentation on their concerns such as a lack of supporting legislation, multiple taxation, a large variety of charges applied in different counties, service delivery for fees charged and lack of adequate public participation. Speaking on behalf of the business community Mr. Shabir Issak and Ms.Monica Solanki (ICPAK& KATO) emphasized the need for the formation of an enabling environment for business and the creation of the County Budget and Economic forum to ensure that the business community is involved in development of the laws.


The county representatives expressed the willingness of County Governments to listen and foster trust between the counties and the business community since a well-balanced and inclusive approach is essential for the proper governance of any country. The difference between council and county government is accountability which is determined by enacted legislation, how these laws are made and public participation at the county level.


Presentations were made by the Consultants on the constitutional and economic basis for Revenue Laws and the emphasis made on the key revenue laws which include the Trade Licensing Bill, Revenue Administration Bill, Property/ Rating Bill, Public Participation Bill and Finance Bill.


Focused group discussions to share and discuss experiences, give a status of the revenue laws, provide an indication of the assistance needed in the various counties and agree on a way forward were held.
Following discussions, the following are the recommendations proposed;

  It was agreed that the participants would share what they have learnt from the forum to all the relevant people in their counties so that the revenue legislation could be fast tracked.

 County participants in the forum would consult with the relevant persons in their counties and provide tentative dates for the consultants to visit their counties and help develop/finalize the revenue legislation.

  The counties would share any laws they already had in draft/committee stage/executive with the CRA Consultants

 KAM would provide the contacts of all their business partners in the cluster counties to facilitate future engagements with counties especially in public participation.

 There was need to have greater inter-relations among the cluster counties as it was noted that some counties were quite behind with their legislation e.g Lamu

 There was need to have the county executive members in the relevant sectors (finance & trade) come together to fast-track the process on legislation of revenue laws. It was proposed that Taita Taveta County would chair the forums.

  It was proposed that in future meetings on legislation, county attorneys or legal officers should get invitations to attend the forums.

  It was proposed that once the TORs for this project are accomplished, there was need to have a forum to brainstorm on other revenue raising avenues for counties.

  It was proposed that the county executive members should send the same people in future forums on the same subject for ease of understanding the discussions and for continuity.  

  It was recommended that CRA, should support another forum that would provide for expertise such as the current forum It was agreed that that there would be another follow up meeting around March to evaluate the progress of revenue legislation in each county.


 

County Money Bills Cluster Meeting held at Vihiga County

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County Cluster meeting held in Vihiga

CRA today (20 Nov) held a county cluster meeting for county representatives drawn from Nandi, Bungoma, Vihiga, and Busia and Laikipia Counties in Vihiga County. The meeting was a follow up for the maanzoni meeting which resolved to have consultants visit cluster counties to assist them to come up with properly drafted revenue laws.

During the forum, a legal background of the county revenue laws was given and the tariffs and pricing policies discussed. Due to the hasty transition from devolution, collection of county revenue has been fraught with issues for most counties. CRA Commissioner, Prof. Kimura  also said gave a background of development in country saying that Kenya was lagging behind countries such as Singapore which also got independence at almost the same time as Kenya. “Sessional paper no. 10 of 1966 created a blueprint for Kenya’s development and it was authored by 2 people one who was Tom Mboya, then the secretary general  and the other who was Mr. Mwai Kibaki. Singapore also crafted a development plan at the same time. 50 years later the GDP between two countries is very big. The reason Singapore was that they kept to the plan," he said and added in public finance a solidly built finance bill is needed otherwise, you cannot do any proper planning. 

According to CRA legal officer, Martha Maneno, “Ideally we should not have repealed the local government Act without transitional provisions, but this was done automatically after the elections. The 3 months provided for by the County Management Transitional Act was not sufficient for Interim laws to be passed,” she said.

Finance Acts have since then been used as a basis for collecting revenue but people are bound to oppose a finance bill without a clear tariff and pricing policy. Counties are using the Finance Act to set these tariffs and prices instead of setting charges while in reality the Finance Act should only be used to amend the revenue laws. The proper way to set up these tariffs and prices is through the use of regulations. Prices for services should be anchored in country regulations. To use the example of Agriculture which is a county function, the CEC of Agriculture can put it in regulations which set the tariffs. If new rates are introduced every year, the end up being problematic, because they have to be ratified through participation. This has led to the finance bills in various counties being rejected.


Finance Acts should just amend the revenue legislation but not to administer or collect revenue. But most counties do not have the necessary enabling legislation to provide a basis for the finance bills. Counties are using by-laws under the repealed local government act. This confusion has led to double taxation and has affected investors and local business people alike in a detrimental manner. Recommendations from the Maanzoni forum included streamlining taxation and licensing regimes. Charges should be pegged to a service delivered by the county so that businesses don’t resist county charges as they have been doing.  Taxes on the other hand do not have to be based on a service. A national forum will be held annually to review these issues and clusters will also meet at least twice a year to discuss the issues that arise. Consultants will also help Counties to attract investments so as to raise more revenue.


Prof. Joseph Kimura spoke of the difficulties that the CRA has encountered to date in the counties especially in encouraging counties in raising their own revenue without counting on revenue from National Government.


Georgina Wachuka, head of regulatory affairs at KAM spoke of challenges faced by business were too many and confusing. Many companies have now removed branding from their transport vehicles so as to stop paying multiple entry levy fees. The cost of Single business permits has in some instances increased by as much at 1000% which has had seriously implications for businesses. 

County Money Bills Cluster Meeting held at Lake Elementaita

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County Money Bills Cluster Meeting held at Lake Elementaita

Africa Industrialization Day

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Statement by Betty Maina, KAM CEO- Africa Industrialization Day 

As the continent observes Africa Industrialization Day today, KAM joins the rest of the African Union in its drive towards industrial growth and economic transformation in Africa.

Manufacturers in Kenya appreciate the good work that the Government is doing in creating an enabling environment in Kenya and I believe that we can work together to create employment and reduce the cost of doing business in the country through partnerships between the public and private sector.

In this industrialization journey, we are going to ensure that we leave no one behind and include, especially, the small and medium enterprises (SME). KAM will be rolling out programmes in the coming year targeted at developing the SME sector.

Manufacturers are keen, to tap into the immense opportunities that are on the African continent. This can only be done if we address economic fundamentals which are key to ensuring that we attract both local and international investors to expand their operations in Kenya and export to the African continent and beyond.

We are grateful that our Government has embarked on an initiative to open new markets in Africa and we are hopeful that as we open the markets and sign the trade agreements these will be followed up by quick implementation that ensures that trade commences to the mutual benefit of all stakeholders.

As we intensify our efforts to create more jobs and improve efficiency in the manufacturing sector we are pleased that we have started making headway with Government on the Buy-Kenya Build Kenya initiative. We also look forward to enhancement of the policy on local content for the Buy Kenyan- Build Kenya to increase patronage of locally produced goods and services. Multinationals in the manufacturing community are also discussing a common policy on how to increase uptake of locally produced products and services in their value chains.

Manufacturers continue to support productivity based wages, increased trade on the African continent, human capital development, reducing the cost of doing business, market access issues in the East African Community and trade with European countries; continuous engagement with the manufacturing sector and promotion of small scale enterprises.

The manufacturing sector currently employs over a million people directly and millions more in downstream activities. There is a drive by the manufacturing sector to create more jobs and reduce the number of jobless people in Kenya. This is in line with the Government’s quest to create 1 million jobs in the next three years.

We may not be where we want to be as a country but we applaud efforts that we are seeing towards achieving our goals as a nation. We as industry would like to empower our local talent and are pleased that there are positive developments in the education sector where Government is aligning the education curriculum to ensure that the skills from Universities and Vocational Training Centres match industry requirements.

 KAM represents a constituency that contributes to wealth creation by value addition through the manufacture of goods that are sold in local and international markets. The over 850 companies which are members of Kenya Association of Manufacturers (KAM) are  keen on spurring economic growth and I must say that we have done the best we can to export despite the challenges that we have in the operating environment.

KAM applauds the Government in its efforts to reduce the cost of doing business. We remain grateful to Government for efforts towards reduction in the cost of power and would like to see the charges going down to below USD 0.10 per kilowatt hour as promised.

 As a country we pride ourselves with a lot of products which by quality and standards can compete anywhere in the world. There is need to protect the local industries from intellectual property right thefts and trade in counterfeit goods which has led to the closure of some industries. Manufacturers would want to see the current investments protected and also attract more investment to complement the already existing industries. To this end we urge Government to maintain policy stability to ensure that investors are not subjected to sudden policy changes.

The African market continues to be the largest destination of Kenyan goods and there is need to guard this market jealously.

Manufacturers do not want to rest on their laurels because of the huge market share that we have in these markets because we are witnessing that the competitiveness of our products is largely being threatened by the high cost of doing business in Kenya.

 As  KAM we believe in inspiring global competitiveness because we believe that for us to tap into the global markets our products need to be able to compete with our competitors from all over the world.

Industrialization will play a crucial role in increasing our exports to the global market.  It is without any doubt that countries that have placed great emphasis on industrialization the world over have done well. No country in the world has achieved prosperity without a vibrant industrial sector. This growth will have to be underpinned by a growth strategy which promotes increased resource-based product range, moving up the ladder in agro-processing and expanding exports of resource-based commodities within regional markets.

 

It is important to mention that EAC with 136 million people, COMESA with 433 million people and USA under AGOA with 400 million people and Europe with 400 million people will continue being important markets for Kenya.

 

We need to maximize our existing market access which we have already created either through entering free trade areas like COMESA or East African Community and the EAC-EU Economic Partnership Agreement- whose negotiations have been concluded and Kenya we are glad that Kenya will be back on the EU Market Access regulations with effect from January 1, 2015 although we had hoped that negotiations would have been concluded sooner.

 

For Kenya to forge ahead in increasing export trade, export diversification will be quite necessary and will require to be sustained by appropriate and coherent policies. This requires a stable macro-economic environment, provision of correct incentives for promotion of primary commodity processing and resource-based manufacturing activities and complementary policies for attracting investments.

On the EAC front, there is need to fast-track, at high level with other EAC Partner States, the realization of  a full East African Common Market or a single market and urge the Partner States to encourage free movement of  goods, services and  persons.

We still call upon the Kenyan Government to consider recapitalization of the Industrial Development Bank or another investment vehicle for financing industrialization projects in the country.

As we seek to expand the manufacturing sector, we continue to plead for a conducive operating environment. We can only be the industrial giants that we dream to be if the operating environment is friendly to our businesses.

We remain committed to working with all stakeholders  to realize a double digit growth in the economy and this calls for removing obstacles in the way which are slowing down growth and industrialization.

In conclusion, it would be a great joy for industry if a percentage of the country’s GDP could be channelled towards industrialization.  We believe that a country is as good as its industry and we can make a difference in this generation for posterity. The main message from manufacturers is that we support Industrialization and would like to continue working with all stakeholders to make Kenya an indomitable industrialized nation in Africa. 

May Africa continue to works towards industrialization!


Closure and relocation of local Industries: Meeting with the Parliamentary Committee on Finance, Planning and Trade

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Closure and relocation of local Industries: Meeting with the Parliamentary Committee on Finance, Planning and Trade 

Members of the Kenya Association of Manufacturers (KAM) today (30 Oct.) appeared before the Parliamentary committee on Finance, Planning and Trade to discuss the recent spate of closure of local industries. Eveready, Cadbury and a number of local companies have recently shifted their operations to other countries and the committee sought to understand the reasons for these closures. 

KAM was represented by the CEO, Ms. Betty Maina, accompanied by board member, Mr. Polycarp Igathe and the CEO of partner BMO KEPSA, Ms. Carol Kariuki.  Representatives of member organisations that are sorely affected by unfriendly regulations were also present such as General Motors and Ndume Agricultural and the Edible Oil Sub sector (EOSS) was represented by Mr. BJK Karingithi, 

Ms. Maina presented the challenges leading to the relocation of multinational companies which included the high cost of production that is hurting industry.
She also talked of the lack of the right infrastructure to support sophisticated manufacturing. "
While the cost of power has started to come down with quantity increasing to 5000 MW, other areas that do not require substantial resources continue to hurt us," she said. The tax administration has been particularly harmful since Tax rates have a differential impact such as the exempt vs zero rated VAT status which has been difficult for certain sectors such as the pharma sector. 

Market access in the region has also been deeply impacted by the delay in signing of EPAs and other hindrances in the East African market such as the duty regime continue to dog exporters. 

She also spoke of substandard, counterfeit and illicit goods which contributed greatly to the departure of Eveready. The failure to fight counterfeits means that these companies can no longer compete in a level playing field.
Mr. Karingithi in addition explained that these same challenges are now affecting the Edible Oil sector that they are no cutting down on their staff while Mr. Igathe added that cartels in the country were selling fake LPG cylinders.

Mr. Benjamin Langat, chairman of the Parliamentary committee, committed to scrutinise factory closures and relocation from Kenya. He promised that the committee will meet with the different regulators and make enquiries to see what is being done to stem this tide. They also promised to engage the Treasury and to make proposals to correct VAT anomalies. Part of the scrutiny will also involve in the long term, an enquiry into Industrialisation as the key to advancing manufacturing in the country. 

KAM hosts the KMJA Annual Conference and unveils Illicit Trade Manual

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KAM hosts the KMJA Annual Conference and unveils Illicit Trade Manual 

Kenya Association of Manufacturers (KAM) partnered with the Kenya Magistrates and Judges Association (KMJA) to host the Annual General Conference 2014 from 6th - 9th November 2014 with the theme: Securing Justice for the Economy: Implication of Judgments. 

The Chief Justice, Dr Willy Mutunga opened the conference and unveiled the 'Enforcement Manual to Combat Illicit Trade in Kenya' which will be launched by the end of the Month. “Illicit trade is very harmful to our economy. Indeed, it is a threat to our democracy as well because it tends to finance retrogressive candidates in our elections and compromise our institutions of governance and accountability–counterfeit goods such as medicine compromise our health,” said Mutunga and called for tougher measures to combat the menace. 

Ms Betty Maina, CEO of the Kenya Association of Manufacturers asked courts to be more innovative and hasten the course of justice so as to reduce the cost of doing business. "A well-functioning court system is crucial for economic growth. Well-designed laws and regulations cannot on their own ensure business rights without an institution that will, through dependable interpretation, enforce those rights and settle disputes," she said. 

There is a strong consensus that the courts have a role to play in the development of economies as the enforcer of business rights. For a country to be successful in playing its part in the global economy, it must have a credible and effective legal system made up of a comprehensive and enforceable commercial code and an independent and experienced judiciary. 

“Delays in the judicial process costs the economy heavily—delayed justice is very expensive it leads to greater costs of litigation, this fictitious litigants are known, and I think the courts should find a way of really handling them because if you look at Kenya today, a lot of things are not moving forward jst because of people who are used to litigation,” said Kenya National Chamber of Commerce and Industry Chairman Kiprono Kittony. 

Independent, fair and efficient courts are an important cornerstone for economic growth. The mission of the Kenyan Judiciary is to‘deliver justice fairly, impartially and expeditiously, promote equal access to justice, and advance local jurisprudence by upholding the rule of law.’

The key areas of discussion included in the program included the      

 Coordination for efficient administration of economic justice

 Resolution of Labour Disputes, Industrial Disputes and Taxation disputes

 Administrative quick wins for business and long term strategies

 Business ADR pilot findings- Challenges and support required from the judiciary

 Capacity needs for players in the administration of commercial justice

For the coordination for the efficient administration of justice it was proposed that a revised and operational integrated case management system needs to be put in place by the judiciary. There is also need for trainings to the judiciary on new emerging issues to enable them understand the issues e.g cyber crime. Businesses should also participate in Court Users Committees in order to identify, discuss and resolve  the challenges affecting business. 

The Labour Institutions Act, 2007 is under review to establish a Mediation, Conciliation and Arbitration Commission as a semi-autonomous agency under the Labour Ministry for purposes of resolving many of the labour disputes through alternative dispute mechanisms (ADR). There is need for this process to be expedited.

The business community proposed that the economic disputes involving Collective Bargaining Agreements to be assessed by the Economic Planning Unit (EPD) at the Labour Ministry before determination by the Court.
It would be appropriate for all economic disputes involving Collective Bargaining Agreements to be assessed by the Economic Planning Unit (EPD) at the Labour Ministry before determination by the Court. The discussions indicated the need for the awareness creation for business on the Labour Laws to ensure compliance when handling employee issues.

Administrative quick wins for business and long-term strategies
i. Cure case backlog by adhering to Order 17 of the Civil Procedure Act and implement the bring up system in our stations

ii. The Judicial officers should make it a habit to take stock, visit the registries frequently and step in and control the number of cases entering the system in the stations.

iii. Automate, integrate and utilize ICT as well as develop reliable infrastructure to support record keeping in our stations.

iv. The judicial officers need to communicate to the court users by improving on the legal language and the nature of approaching the court in the form of pleadings, petitions, applications and overall interpretations is foreign to the court users. There is need for us to build the capacity of the court users including the lawyers.

v. Review the costs of obtaining justice in Kenya. Case filling costs should not lead to investors shying away from accessing the justice system. 

vi. Screening of cases at the time of registration under the principle of fast track and multi-track as provided for in the Civil Procedure rules. 

vii. Increasing individual responsibility for completing registry tasks and processes

viii. Mandatory compliance with order 11 of CPR.

ix. Establishment of mobile courts particularly in marginalised and other counties for easy access of justice. 

x. Monitoring and tracking file movement.

xi. Record management systems by classifying the registries into the following sub-registries:

 Active case file management

 Semi-active case file management

 Re-engineer and reform execution and enforcement of judgments

 We need a fresh approach and a new way of thinking: - put the public first and collaborate and coordinate with stakeholders.

Some resolutions from the conference: 
KMJA resolved to
1.  Partner with NCAJ and other stakeholders in the process of sensitization and implementation of the Illicit Trade Manual.
2. ›To incorporate the Business Community into the Court Users Committee’s across the Country.
3. To partner with the Business Community to ensure that there is sensitization on the Principle of respect for the rule of law.




Some material from the Conference

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High Fees chasing Investors away, county officials told

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October 14, 2014, Machakos: High County fees and poor revenue collection methods are keeping investors away from the counties, county trade executives and finance managers were told in a two-day forum held by the Commission for Revenue Allocation (CRA) in Machakos today.  The officials were drawn from over 30 counties and are responsible for drawing up county finance bills. CRA Chairman, Mr. Micah Cheserem, called for transparency and accountability. ”Can you demonstrate the services you are giving for this taxes?” he asked the participants and also urged them to find a forum where they harmonise some of the common charges to business.

Article 209(5) of the constitution which covers taxation and other revenue raising powers of a county states that this power should not be exercised in a way that prejudices the national economic policies or economic activities across county boundaries and international mobility of good services and labour. But there seems to be confusion in the counties regarding trade licences, single business permits and cess taxes. Trade officials were asked to use the model finance law which exists and covers all revenue raising mechanisms in counties and only allows collection of fees for services not taxes. They were also encouraged to create policies that create a conducive working environment for private sector.

Ms. Betty Maina, CEO of the Kenya Association of Manufacturers, asked participants to improve the methods of revenue collection as it was becoming harmful to business. “We would like to repair this adversarial relationship as a result of your revenue raising measures. If you open a truck carrying flowers to count the number of boxes for revenues collection purposes, you have destroyed that whole consignment because these trucks are not meant to be opened. Revenue collection has to be done in a manner that does not hurt business,” she said.

She also called for a reduction in the multiple costs to business raised by devolution. “The annual tax bill of a local company has risen from Kshs. 5 million to 50 million if the company factors in 2014 county charges,” she added.

Counties were also asked to improve public participation by involving the business community right from the start of drawing up the finance bills and posting the bills in good time on their websites so that people have time to read and respond.


 

CRA holds Doing Business Forum for County Trade and Finance leaders

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CRA holds Doing Business Forum for County Trade and Finance leaders

CRA CEO Mr. Micah Cheserem yesterday called on county governments to be transparent and show how they were using fees to serve the Business community "Can you demonstrate the services you are giving for these taxes?" he asked the County Executives for Trade and Finance Leaders drawn from the 30 counties present for a 2 day forum held at Maanzoni Lodge which ends today (14 Oct).

 

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