The Policy Issues with the Kenya Revenue Authority.

IS KRA KILLING KENYAN BUSINESSES?

I wish to speak as one who has and still works with the Kenya Revenue Authority closely for the last 8years or there about. Especially the Customs Services Department (CSD) which as many don’t know, is the main wing of the authority that deals in imports, exports, and all freight handling activities within the country and licenses Clearing and Forwarding Agents, Importers, Container Freight Stations, Warehouses and all other such organs that deal in freight handling.

It also manages the whole world of freight handling by applying the EACCMA (East African Community Customs Management Act) and other regulations and acts, specifically Cap 472 of the Laws of Kenya. From my close work with them I commend them for the job they do. Apart from a few rogue officers (of course no organization lacks those) the rest are doing well in their chores. But there is one aspect about Customs that really makes me wonder if they have any consideration or portfolio of `STAKEHOLDERS’ in their policy and strategic plans. For they sit in a boardroom with few people who have never been on the ground to understand the dynamics of cargo handling and come up with laws and regulations that are more of what we call NTBs (Non Tariff Barriers) than to safeguard the flow of cargo around.

Who, for instance crafted and has been over time pushing for the implementation of the directive that all motor vehicles of over 2000cc and on transit to other East African Community countries be put under a cash bond of the equivalent taxes payable in Kenya  were it to be imported? This law also adds that goods like sugar, rice, cooking oil, powdered milk and the ilk deposit the equivalent of the bond amount in cash to be allowed to transit through Kenya. This is preposterous, and you will agree on me if you know how freight logistics works. One, KRA didn’t consult the stakeholders on this for if they did, no one who has been on ground in freight handling would consider this. Two, there are other many ways of ensuring cargo on transit is safely delivered to the respective borders after dispatch from the port of Mombasa and they include but not limited to; Border Control officer escorts, Police escorts and patrols, use of ECTS (Electronic Cargo Tracking System) which KRA pushed transporters to install on all trucks ferrying Transit Goods in the last year, among others.

Three lets look realistically at what that directive means: say a Ugandan Importer imports 200 bags of sugar in 50 kg bags and in 1x20 foot containers, they have to be put on transit bonds so they can transit through Kenya to Malaba border. This is done via a customs SED (single entry document) called CB17, formerly C36 under the CPC (Customs Procedure Codes) T810. The importer has to engage a Customs Agent to undertake this transaction. Now if the directive applies, sugar pays 100% duty, that is if you buy a kg of sugar abroad at Ksh100,add freighting costs etc you get the FOB value of say Ksh120, then you have to pay to KRA Ksh120/kg as duty. So after importation, the cost of the sugar will be Ksh240. Now for the case of transit goods in case of this Ugandan trader, it will be that: if he has his 200bags, and each cost him Ksh6000 (@120 per kg) then the total cost for the whole consignment will be Ksh1, 200,000. Applying the new directive, this trader will have to deposit an equivalent amount with KRA in cash! So if he has 1000MT he has to make a cash bond of a whooping KSH 120,000,000 to KRA! And if we have 50 such traders with equal quantities, then it will be Ksh6, 000,000,000! Where on earth will KRA keep such cash and I have not considered the cash bonds on the hundreds of thousands of motor vehicles going through the country daily! Hey! Come on is someone trying to raise cash for a short time project here?!

Lastly, considering the slow way KRA deals with refunds, what guarantee will be given to the trader that after a truck leaves the port of Mombasa and is driven overnight, and it crosses to Uganda, for the border works 24/7, the trader will get his refund the next day. For it takes roughly one and a half days to transit from the port to Malaba , Busia, Isebania etc, that means, if you deposit your cash bond today, you need a refund tomorrow, is KRA ready to deal with the avalanche of refunds? Me thinks it’s a big No! So where are we? In spirit of the EAC of facilitating trade, and in line with the Mission –Vision statement at KRA ,this directive should be Withdrawn ASAP and other cargo monitoring systems be embraced to avoid creating an NTB that is to the benefit of none but a detriment to trade with our partners. Lastly, the last time I checked, Dar Salaam is upgrading its port and Tanzania is also modernizing their Tanga port plus a neo - railway line to link Mutukula (the Tanzanian – Uganda border). We will be the ultimate losers here, but the boardroom policy makers at KRA don’t have this foresight or they just don’t care.

Jumbah Amaheno

Bungoma County.

Monday 17^th September 2012.

Thoughts for the leaders of MRC.

Thoughts for the leaders of MRC.

Many a time we have been treated to the theatrics of this organization going by the acronym MRC standing for Mombasa Republican Council. The very first time we heard seriously about it a few years ago was when it was banned by the GOK for allegedly perpetrating terrorist agenda and abetting terror activities within the coastal region of Kenya. The real manifesto or blue print of this organization and its clear goals and objectives have never been clearly explained or forwarded to us to examine and upgrade ourselves with its intention. Rather we are treated to theatrics in court and TV of youth and kanzu wearing, bearded men shouting themselves horse and wearing shirts with the inscription that ‘PWANI SI KENYA!’

This I would say is good for the show and being on TV and the subject of prime time news, but never for the amelioration of any cause. All over the world, we have had pressure groups and lobbies that lobby, coerce even petition the governments that be, on certain issues that are of importance to a certain group of people. These could include matters of marginalization, racial discrimination, historical injustices, environmental awareness etc. Going by the turn events have taken and particularly the agenda that the MRC has taken, whether seriously or as an ad hoc default objective, is detrimental to their very existence, legitimacy, if not their capability to attract exterior international, regional and internal much needed support from fellow Kenyans who share in their genuine grief.

Seceding has never made countries better, consider the Basque Movement in Spain for example, they have been engaged in an unending war or secession with their central government for ages with little success, just depleted resources and wasted generations of unproductive men who wont go to school or work, invent and develop because they are fighting to break away to make their lives better. But they don’t live at all! This is replicated across the globe in Chechnya, India, China, etc. But consider the great success of pressure groups that operate without the fetters of the security arms of government since they have articulated their motives and objectives/ modular operandi within the confines of the constitution and rule of law. We even have very successful pressure groups that operate internationally and help a great deal in pushing international agenda and the promotion of equality and justice for all.

At this point in time, and with the court ruling, The MRC has been given a lease of fresh air, a new opportunity to reinvent itself into a law abiding organization with well stipulated concerns, objectives, road-map and tenets that conform to the new constitutional dispensation in Kenya. This should be the rebirth of MRC that will propel it to the respected and accredited organization it strives to become. The coast region is truly marginalized, it has a legion of problems that range from land, sanitation, education, health, drug abuse, unemployment, child trafficking & prostitution etc, etc. These problems are a result of years of neglect by the regimes that have ruled this nation from independence. But to address them needs a more organized, objective, informed and expert approach with a clear road map of the timelines within which specific goals in specific areas are to be achieved, and the resources available. In other words, it needs a group that will demand accountability from the current and subsequent leaders in various leadership positions on matters that touch on the lives of the people of this area.

Court cases, picketing, interrupting elections, secession messages, youth mobilization and misuse will only attract the wrong attention and action from government and other organs of state including the citizens that you sort to help. This will in turn elicit ramifications that we all know that the MRC leadership will not be in a position to deter. It’s high time to use your creativity, resources, good rapport you currently enjoy with the coast denizens and turn a bad situation to your advantage and that of the population you profess to represent. This is my thought and free advice to the leadership of the MRC. Anyone with me?

By Jumbah Amaheno,

Email: jumbah.lordaj@gmail.com

Bungoma County.

The Fetters of African Growth

The Fetters of African Growth

Many people, governments, charity organizations and sundry have for a long time tried with little tangible success though, to jump start the sleeping giant that is Africa. This I call a sleeping giant for that is exactly what it has turned out to be, what! With the huge untapped human and natural resources that are only available in the continent and nowhere else in the world. From the recent discoveries of large resources of fossil fuels in the great lakes region; natural gas in Tanzania, oil in Kenya, South Sudan, Somalia, DR Congo, Uganda, coal in Kenya, gold in Tanzania etc, the list is inexhaustible. The vast tourist attraction sites and wildlife. Combined with the huge trained and untrained human resource both abroad and at home, I believe we can awaken up this giant by igniting every sector from irrigate-able farmlands, untapped natural minerals and fossil fuels, flowing rivers with great hydro-electric energy potential, geothermal green energy, solar energy that is available all the year round name them! We have to put an impetus into this growth agenda, more like igniting a hot air balloon. Yet this is the wish and desire, hope of all. Some even go the hard next step of implementing the set goals and vision. But to a great extend the rest & best has never taken off the ground. Why so? One would ask.

I will tell you why. Many a time we have always attributed- incorrectly though- all the setbacks and troubles of Africa on the bad governance we receive from our skewed, good for nothing, greedy, self seeking politicians. In so much as this is true to a greater extent and occurs over vast territories, it’s not entirely the sole cause of the growth failure syndrome we languish in generation after the other. To me depending on the politics of a state to determine other growth sectors is a gross mistake that needs serious reconsideration. Many well off people in Africa who didn’t get their wealth through political favors and handouts- and they are legion- rarely care of the politics of the day. They continue growing their empires, exploiting the loopholes available and with the huge financial support of the banking system, they access desired credit and grow and grow and grow again! By this I wish to unpeg the tenet, mistakenly believed, that all our problems are a product of our skewed politics and tie it heavily on three aspects.

The first and most non influential is the cultural social life Africans live. Most Africans spend a lot of their time on substance abuse and prostitution. Though not in all parts, but it squarely affects all, negatively though, on the brain power and efficiency of the key economy would-be drivers who wallow in the substance consumption dens and brothels at the expense of a huge development energy system that if put to use, would be of great productivity. No wonder many tourists troop to Africa for ‘holiday’ since they find cheap substance and sex with little fetter legislation. This is a factor that has slowed down and almost put a halt to development in many areas of this continent. The second aspect I point a stern finger to is neo capitalism. This was a good idea at some point in human history, but only in well developed states like Europe where u find the near equality or the lack of disparity between the damn rich and the damn poor. Capitalism works well is stable societies with systems and laws that are almost against any reproach from any member of the society notwithstanding their current standing in the same. It’s a terrible dilapidating instead of ameliorating idea that ought to be done away with pronto!, especially in our fledging nations. Capitalism is what makes the rich richer, and the poor damned by poverty to the grave. This is very manifest in Kenya and its one of the root causes of the instability we witness here, due to the resentment that is deeply rooted -though often ignored- in the denizens for over half a century. A balanced system like that applied in Tanzania is ensuring that there are structures in place that don’t deter or stop the upcoming small trader from perfecting and growing his trade and hence the witnessed growth and improvement of lives and economies of the countrymen of that state. In Tanzania, they embraced socialism first, then capitalism but not to its entirerity. That hybrid system has proved over time to be the best environment to bring in a young economy. It is government, organization and individual business friendly and a great ingredient for growth. I recommend that African states examine it and seriously consider aping it with adjustments of course where applicable.

The last aspect with a greater magnitude of sway on growth in Africa is access to credit. This is the cancer that bites Africa like no other. Many foreign banks made incursions into this continent decades ago and have continued to have a great impact on the way our young economies are run and perform. Banking policies have ensured that there is more for them and less for their customers and have put in place stifling conditions to those wishing to access credit to my great chagrin. Credit is what drives economies and the huge multinationals we see flourish everywhere in the world. None could be what they are today without outside funding. To the surprise of everyone with sound knowledge of business management, banks finance huge businesses easily than they do to small upcoming ones. I know of innovative young people with great potential and noble ideas that have remained on paper for lack of funding in Africa. This is the crux of the whole jumble. We have denied our young people credit to finance their ideas and industrialize our rural economies by applying credit conditions that are akin to prison sentences. The paradox is that the same banks and financial institutions finance ideas in the west! Now you see my point. If our governments and indigenous banks could change the mode of credit access for the youth, we will be on the verge of achieving our vision 2015 believe me. For we have many endowed young people wasting away with their ideas alike for lack of access to even the start up credit. Halo, is anyone out there in the loaning institution’s boardrooms listening?!

Amaheno Jumbah

Bungoma County

The Ravages of Capitalism in the Third World.

The Ravages of Capitalism in the Third World.

Long ago when I was in school, I took a keen interest in the system of governance that was in place in Kenya for I saw a lot of dangerous disparities that as a boy I couldn’t help but notice how there were terribly rich people in a society of a terribly poor majority. Back then, my unschooled mind couldn’t get the act together for I wondered where wealth comes from and what formula was used to allocate it for if it was a just system then why allocate others more than they will ever need in one lifetime and four subsequent generations or so and deprive another same being even a morsel a day?

As I grew up, I acquired a keener interest in the ways of wealth creation that exist for our family as too poor that we called the family hoe an asset. Latter in my early teens and my love for reading, I came across a book called ‘The Godfather’ by Mario Puzzo. This book gave me an insight into wealth creation methods and of the most fascination was its opening quote that “behind every great fortune there is a crime”. I went and searched and eventually landed on writings about capitalism, how it works and how its been opposed by many a scholar in the middle years of this century.

Despite its successes in making up billionaires, capitalism has ensured that like the Indian caste, money defines your opportunities and association in life and the very heights you can go to. Children raised in moneyed families go to better schools, get better jobs, have many links with the political and business elite and travel more abroad and earn great experience unlike those from poor setups. This works o classify people technically into two caste. The have’s and have not’s. To break this wall like the Berlin wall is an insurmountable task that only a handful has done without blood shed. This is a major cause of the conflicts you see in Africa. This is a situation where the haves live in a closed society with little or no association with the other world so to break the barrier they go into gorilla warfare for it’s the only language the rich and mighty understand.

Economically, this ensures that all business deals are sealed in hotels and boardrooms with little notice or consideration of the poor majority even if they qualify to run for a section of the deal. The rich grow richer with a multitude of opportunities and the poor grow poorer with ninety percent of their time and resources spent on basic life. So generations remain impoverished, unable to take their kids to better schools hence the perpetration of the poverty down generations.

Capitalism bites with keener fangs when it comes to credit, and this one is one of the greatest fetters to growth in the third world. Banks and lending institutions especially in Africa don’t finance ideas, they finance personalities. A boy from a reputable family walks to the bank manager and is handed $5m in just 48hrs! Without much ado as to how he is going to spend the money on and his repayment plan and his security for the loan. Yet another intelligent boy with a revolutionary idea will be turned away by the same bank manager without giving him a hearing for he is a nobody. What is the result? The poor boy looks out of the country for work or aid, joins a guerrilla movement, goes into depression and drugs or still becomes the street robber hitting back at society for neglect.

This accounts for the great un employment evident in most of the third world, the Diaspora brain drain where all our professionals from the lower caste families leave the state to work in Europe, America etc for better pay leaving behind the poor performers to run our institutions hence the poor state of infrastructure and public amenities in the third world.

What can be done? One would ask. In my view and from my work with youth groups in western Kenya, and parts of South Nyanza and Northern Tanzania, these people whether learned or not don’t need aid as many foreigners assume, rather they need structures that will empower them in the simplest ways. I saw young people who wanted to be enlisted as viable borrowers by the government in South Nyanza. And when their Member of Parliament facilitated that, the results are tremendous.

Sometimes we don’t need the many NGOs to bring effect, its just the change of the capitalistic policies, although not in their entirerity for some are great for any economy, but to make sure that balance is struck on the access to credit and opportunities. This is to say that instead of the closed economy where insider trading is the norm, open procurement and loaning processes should be put in place to ensure people from all carders of life know when and where, plus the how to access credit and trade opportunities. This can only be achieved by the change in the capitalistic norms that most African economies adopted or were made to adopt that hold them back n abject poverty even in the 21^st century. Isn’t it a disparity closest to sin, that two citizens from the same country live two lives worlds apart?! That one can charter a dream liner and a fleet of security yet the other can barely find something to cover his nakedness!

Amaheno Jumbah,

Bungoma, W. Kenya.