Posted On Monday, 09 September 2019 00:15

By Robert Komu

The world marked the International Day of Cooperatives on the 6th of July this year. In Kenya, the day was not marked with any fanfare or celebration in the sector unlike other parts of the world. This is a sad state of affairs bearing in mind the integral role cooperatives play in the economy. The day was set to remind the public that cooperatives across the world continue to help preserve employment and promote decent work in all sectors of the economy.

Posted On Wednesday, 31 July 2019 14:47

By Oscar Amadi Lusiola

Many governments, especially in Africa, lack resources to sufficiently provide security needs for all, prompting the establishment of private security firms to complement the government exertions in protecting the citizenry. Private security companies make a vital contribution to state security efforts. They are equally a significant employer.

Posted On Wednesday, 31 July 2019 10:50

By Richard Ngatia

In a competitive global market, at a time of dwindling trade barriers and border restrictions occasioned by ubiquitous nature of technology, economic diplomacy has become an all-important tool to secure investment opportunities through bilateral and multilateral trade co-operation.

Economic diplomacy deals with the nexus between power and wealth in international affairs. It not only promotes the State’s prosperity but also, as the occasion demands, and opportunity permits manipulate its foreign commercial and financial relations in support of its foreign policy. Read More>>

Posted On Wednesday, 31 July 2019 10:23

By Donatus Njoroge

Once again, Kenya finds itself in a Catch-22 situation. A food crisis script that has become an annual ritual is slowly unfolding. Plans by the Ministry of Agriculture to import 12.5 million 90-kilogramme bags of maize casts doubts on the government’s commitment to one of the Big Four Agenda: Food security. Many are now wondering what went wrong and whether there could be lessons from neighbouring countries like Uganda and Tanzania.

Posted On Wednesday, 24 July 2019 16:22

By Michael Arum

Kenya’s sugar industry has many natural advantages, almost all of which have been undermined by policy and public mismanagement that has seen its productivity slump. As a result, when import protection ends, supposedly next year, the industry will be immediately undercut by far cheaper imported sugar with huge costs to the country.

A quarter of a million farmers grow sugarcane. Up to six million Kenyans draw a livelihood from Kenyan sugar.

Posted On Monday, 22 July 2019 16:18

By Washington Ndegea

In 2018 June, Treasury Secretary, Henry Rotich strode to parliament carrying the characteristic briefcase with the Kenyan Coat of Arms on the side to read the 2018-2019 budget. That was in the month of June.

Expectations were high, that the prices of various basic commodities would reduce, and that the insurance industry would get much-needed relief creating an enabling environment for business.

Posted On Tuesday, 25 June 2019 11:29

By Nadida Rowlands

Two major seizures of ethanol smuggled into Kenya this year brought to the fore one of the more difficult aspects of the war on illicit trade.

The first was marked by drama: Detectives had seized a truck believed to be loaded with 20,000 litres of ethanol smuggled in through the Namanga border post.

Posted On Tuesday, 25 June 2019 10:22

By Lola Adekanye

Ending corruption should be a major priority to ensure that aid and development finance contributes to improved development outcomes. This requires greater levels of transparency in public financial management, as well as finding new ways of engaging citizens, particularly in the business community, that have for too long been ignored as key stakeholders in efforts to reduce corruption.

Corruption undermines political, social, and economic development, which is a growing concern in fragile economies in parts of Africa. The distorted system created by corrupt interests stifle inclusive economic growth, aggravating problems of economic inequality and injustice, which fuels frustration and violent instability.

Posted On Tuesday, 18 June 2019 14:50

By Jurgen Murungi

The East African Community (EAC) is a regional economic bloc comprising Burundi, Kenya, Rwanda Tanzania and Uganda. Its aim is widening and deepening the economic co-operation between the partner states. The community was created by the EAC treaty of 1999 that set into motion a series of activities aimed at establishing a fully-fledged community with an economic union, monetary union and eventually a political union.

In the EAC treaty, Article 83(2) (e) obliges the states to “harmonise their tax policies with a view to removing tax distortions in order to bring about a more efficient allocation of resources within the community.” In line with this provision a Customs Union was established in 2005. To further this agenda, a common market protocol was implemented from July 1, 2010.

Partner states are obliged to undertake progressive harmonisation of their tax policies and laws on domestic taxes with a view to removing tax distortions in order to facilitate the free movement of goods, services, and capital and the promotion of investments within the community.

Five years since the common market protocol was implemented, not much tangible progress has been achieved in harmonisation of domestic taxes. A case in point would be excise duty. The five partner states in the EAC have quite divergent laws on excise duty. For instance, while Tanzania, Kenya, Uganda and Rwanda have an Excise Act, Burundi uses a ministerial directive to enforce excise duty.

Duty harmonisation

The second example is the disparity of excise tax structure with different partner states adopting a mixture of ad-valorem, specific and hybrid structures interchangeably. The third example is the excise duty remission schemes.

Some partner states have implemented remission schemes that deliberately favour certain excisable products made from local raw materials. The latest entrant in this scheme being Kenya which recently granted 90 per cent excise duty remission on beer made from local raw materials.

While excise duty remission may not be entirely a bad thing, the manner in which the various partner states have gone about implementing their remission schemes has been discriminative, hence not helpful to the course of excise duty harmonisation. Take for example beer manufactured in Uganda using Ugandan raw materials and then imported into Kenya. The product will be subject to the full range of excise duty in Kenya upon importation.

A similar product manufactured in Kenya using local raw materials will be entitled to 90 per cent remission. Given the fact that excise duty forms a significant portion of the price of alcohol products, the Ugandan product therefore becomes exorbitantly expensive and hence unable to compete in the local market. While someone may argue that this promotes local agriculture, it is important to remember that the spirit of the common market protocol is to identify the local market to mean the EAC.

Another example is the discriminatory structure of excise in Uganda with a four-tier specific excise structure that discriminates against imported cigarettes. Cigarettes manufactured in Kenya and exported to Uganda end up attracting as high as 36 per cent more excise duty.

Poultry products

This specific excise duty structure introduced in Uganda in the 2017 budget saw British American Tobacco (BAT) file a case at the East African Court of Justice (EACJ) seeking orders for Uganda to revise the Act on the basis that it was in violation of the EAC treaty and protocol.

The court granted an injunction in January 2018 stopping Uganda Revenue Authority (URA) from collecting the higher rates of excise on imported cigarettes. The case is still ongoing at the EACJ. In May 2019, the EACJ ruled that the actions by Uganda were in violation of the EAC treaty and protocol.

In 2017 Kenya had banned the importation of poultry due to an outbreak of Avian Influenza Virus. Uganda retaliated by banning importation of Kenyan poultry products. Upon the resolution of the outbreak, the countries agreed to allow the resumption in the trade of poultry products. Uganda however has sustained the ban on Kenyan poultry products insisting that they are protecting the local industry. It’s estimated that over 35 tonnes of Uganda poultry are imported into Kenya every week. Given the porous nature of our borders, this figure could be as high as 50 tonnes per week.

Tanzania has also imposed stringent requirements for compliance from the Tanzania Food and Drug Authority (TFDA) which many players in the poultry sector have seen as deliberate efforts to bar them from accessing the market. The most recent impact of such actions by Tanzania culminated in the 2018 burning of chicks imported from Kenya for being deemed non-compliant to the local poultry guidelines at a great loss to the importer. We therefore cannot over emphasise the vulnerability of the Kenyan poultry industry from the regional attacks.

Players in policy formulation in the various countries are most likely resistant to full harmonisation due to, among others, specific considerations around tax sovereignty, failure to agree on a common excise policy, fear of losing revenue, and the reluctance by the partner states to agree on the gradual convergence of excise rates due to differences in Gross Domestic Product (GDP). For full harmonisation to work, partner states will be required to cede principles of tax sovereignty in relation to excise tax.

This will require a regional holistic perspective rather than a nationalistic one in order for the region to succeed. Given the direction in which the various partner states have been moving, the harmonisation of excise duty will remain a mirage for the foreseeable future. Mutual and reciprocal recognition of the standards bodies need to be embraced across the community if the benefits of the EAC treaty and common market protocol are to be enjoyed.

Mr Murungi is a tax and policy advocacy expert. This email address is being protected from spambots. You need JavaScript enabled to view it. This opinion piece appeared in The Standard on 18th June 2019.

Posted On Tuesday, 18 June 2019 11:46

By Samuel Kabara

Countries are beginning to consider decriminalising and legalising cannabis, fuelled by its medicinal and industrial benefits.

In June 2016, the Malawian Parliament adopted a motion to legalise the non-psychoactive industrial hemp, but with emphasis on regulatory measures before the country could cultivate, process and export the hemp variety of cannabis. In its third year of trial cultivation, the crop has shown immense potential with no reported negative incidents.

RELIEVES PAIN

Last year, US President Donald Trump signed the “Farm Bill”, effectively exempting hemp from Schedule I drugs (drugs with high abuse potential with no medical use). American farmers can now produce industrial hemp legally and states can research hemp and set up cultivation programmes.

In April, the South African Health Products Regulatory Authority awarded the first batch of licences for cultivation of medicinal cannabis to local companies, allowing the country to compete globally.

Uganda recently licensed an Israeli company, Together Pharma, to set up a marijuana oil extraction plant in Kampala. It plans to initially invest $5 million (Sh500 million).

All human beings have an endocannabinoid system, which naturally produces cannabis-like compounds, the main ones being anandamide and 2-arachidonoylglycerol (2-AG) that bind to their receptors to produce beneficial effects.

Cannabis has been shown to be beneficial in managing diseases ranging from cancer to epileptic seizures. Hemp, the non-psychoactive breed of cannabis, is the most versatile crop known to humans with thousands of uses in industry. Cannabis oil relieves chronic pain in debilitating illnesses such as cancer in both children and adults. A careful balance of the two main components of cannabis — tetrahydrocannabinol (THC) and cannabidiol (CBD) — has been demonstrated to kill cancer cells in mice.

KILIMANJARO SATIVA

The plant has also been shown to be effective in managing conditions including tumour reduction, epilepsy, Dravet’s syndrome, arthritis, Alzheimer’s disease, glaucoma, multiple sclerosis and anxiety.

Despite foreign cannabis-based medicines in the local market, medical knowledge on cannabis in Kenya is scanty. But a group of Kenyan medical practitioners may undergo a fellowship programme on medicinal cannabis by a US-based medical association.

In 10 years, the global medical cannabis industry is expected to be worth $50 billion (Sh5 trillion). In Colorado, regulated medical cannabis sales topped $6 billion (Sh600 billion) since the 2014 legalisation.

Industrial hemp has had numerous uses — including production of medicines, food, paper products, textiles, body care products, construction materials, livestock feeds, fuel, nutritional supplements, essential oils and, recently, the biodegradable plastic critical in the fight against pollution.

A well-regulated medicinal and industrial cannabis industry can generate numerous opportunities. In his book, The Cannabis Story, lawyer John Ochola observes that 12 seeds of Kilimanjaro Sativa, a strain of cannabis, retail at 75 euros (Sh8,700). One plant can produce 100-1,000 seeds (Sh72,000) on the lowest yield.

MEDCINAL RESEARCH

The Narcotic Drugs and Psychotropic Substances (Control) Act of 1994, which binds Kenya to several international treaties, lists cannabis as a prohibited plant. Engagement with cannabis is only allowed to persons licensed by the board. However, in the 25 years of the Act, this board has never been constituted, hampering any medicinal or industrial research on cannabis.

Kenyan researcher Sammy Gwada Ogot’s recent attempt to have the Senate decriminalise cannabis failed. The MP for Kibra, Ken Okoth, has tabled a Marijuana Control Bill.

Kenyan cancer patients, who are undergoing stressful and expensive medical procedures, can hardly wait to be granted access to medical cannabis — and it is getting too late. Parliament must urgently review the law with regard to cannabis.

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Dr Kabara is a pharmacist, health economist, principal lecturer at Kenya Medical Training College (KMTC) and cannabis researcher. This email address is being protected from spambots. You need JavaScript enabled to view it.. This piece appeared in the Daily Nation on June 3rd, 2019.

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The Pharmaceutical Society of Kenya (PSK) is currently undertaking research on the proposed Marijuana Control Bill. You can read more here.

 

   

Posted On Tuesday, 18 June 2019 08:55
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