@BusinessDaily

Shady parallel economy where tax-free billions roam

2 months ago, 10 Oct 10:26

By: Patrick Alushula

Rohinton Mistry an Indian-born Canadian writer may have had Kenya in mind when he wrote in his 2001 novel, Family Matters: “Black money is so much a part of our white economy, a tumour in the centre of the brain — try to remove it and you kill the patient.”

Since the partnering of the Kenya Revenue Authority, the Kenya Bureau of Standards and Anti-Counterfeit agency to stamp out a secret economy run by powerful individuals out to cut corners, a lid has been lifted offering a sneak preview into the shadowy dealings estimated by the Kenya Association of Manufactures at Sh200 billion.

Usually described by government officials as cartels, they are roaming free in almost all sectors of the economy jeopardising the effectiveness of policy planners.

Illegal imports are circulating freely in the economy, many companies are facing survival battles and standards of goods having been compromised as some of the very officials employed to guard against such economic crimes look the other way.

According to Mr Mutua, with many firms bringing in substandard goods and at the same time evading taxes, reviving manufacturing may remain a fanciful hope.

“A lot of local companies both at SME level and even larger organisations have had to either close down or shift manufacturing to other countries and produce at low quantities,” said Mr Mutua.

This, he added, has triggered a negative multiplier impact where job losses not only happen in manufacturing firms but also service providers such as those in transport that serve goods makers.

And the impact of the rot extends beyond the two companies. Commodities such as sugar, maize, water, rice, vehicles, fish, hospital drugs, fuel and fertiliser have all found their way into the country by faceless importers, denying the country revenue and putting the lives of Kenyans at risk.

On September 6, 2018, KRA destroyed 728 bags of illicit sugar that had been intercepted in Wajir. It said the sweetener was part of a larger consignment of 1,584 bags worth Sh2 million intercepted by customs officials at the border.

Officials had also intercepted 30 boxes of milk powder from Denmark and another 30 boxes of cooking oil manufactured in Malaysia valued at Sh180,000 and Sh29,700 respectively.

A businessman identified as Hassan Noor was fined Sh2.2 million for transporting the goods whose taxes had not been paid. But the real importers remain at large.

Parliamentary inquest

This came two months since Interior secretary Fred Matiang’i said 1,365 bags of illegal sugar that had been confiscated from warehouses in Nairobi contained mercury, copper, yeast and moulds.

An inquest by Parliament into this claim has only yielded into another -that of finding out the claim that MPs were paid as little as Sh10,000 to shoot down the report. No one has been arrested over the contraband import.

The unfortunate scenario is that this business has brought aboard employees of the very agencies supposed to protect consumers.

In August, three KRA customs officials- Vivian Moraa Rioba, Monica Waceke Kiarie and Stephen Ochieng Onditi- were charged in court for clearing 500,000 kilogrammrs of substandard sugar. This, added ...
Read More


Category: business markets news lifestyle opinion corporate economy

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@BusinessDaily

Shady parallel economy where tax-free billions roam

2 months ago, 10 Oct 10:26

By: Patrick Alushula

Rohinton Mistry an Indian-born Canadian writer may have had Kenya in mind when he wrote in his 2001 novel, Family Matters: “Black money is so much a part of our white economy, a tumour in the centre of the brain — try to remove it and you kill the patient.”

Since the partnering of the Kenya Revenue Authority, the Kenya Bureau of Standards and Anti-Counterfeit agency to stamp out a secret economy run by powerful individuals out to cut corners, a lid has been lifted offering a sneak preview into the shadowy dealings estimated by the Kenya Association of Manufactures at Sh200 billion.

Usually described by government officials as cartels, they are roaming free in almost all sectors of the economy jeopardising the effectiveness of policy planners.

Illegal imports are circulating freely in the economy, many companies are facing survival battles and standards of goods having been compromised as some of the very officials employed to guard against such economic crimes look the other way.

According to Mr Mutua, with many firms bringing in substandard goods and at the same time evading taxes, reviving manufacturing may remain a fanciful hope.

“A lot of local companies both at SME level and even larger organisations have had to either close down or shift manufacturing to other countries and produce at low quantities,” said Mr Mutua.

This, he added, has triggered a negative multiplier impact where job losses not only happen in manufacturing firms but also service providers such as those in transport that serve goods makers.

And the impact of the rot extends beyond the two companies. Commodities such as sugar, maize, water, rice, vehicles, fish, hospital drugs, fuel and fertiliser have all found their way into the country by faceless importers, denying the country revenue and putting the lives of Kenyans at risk.

On September 6, 2018, KRA destroyed 728 bags of illicit sugar that had been intercepted in Wajir. It said the sweetener was part of a larger consignment of 1,584 bags worth Sh2 million intercepted by customs officials at the border.

Officials had also intercepted 30 boxes of milk powder from Denmark and another 30 boxes of cooking oil manufactured in Malaysia valued at Sh180,000 and Sh29,700 respectively.

A businessman identified as Hassan Noor was fined Sh2.2 million for transporting the goods whose taxes had not been paid. But the real importers remain at large.

Parliamentary inquest

This came two months since Interior secretary Fred Matiang’i said 1,365 bags of illegal sugar that had been confiscated from warehouses in Nairobi contained mercury, copper, yeast and moulds.

An inquest by Parliament into this claim has only yielded into another -that of finding out the claim that MPs were paid as little as Sh10,000 to shoot down the report. No one has been arrested over the contraband import.

The unfortunate scenario is that this business has brought aboard employees of the very agencies supposed to protect consumers.

In August, three KRA customs officials- Vivian Moraa Rioba, Monica Waceke Kiarie and Stephen Ochieng Onditi- were charged in court for clearing 500,000 kilogrammrs of substandard sugar. This, added ...
Read More

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1 hours ago, 21:58
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The number of minutes spent on Internet calls, also known as Voice over Internet Protocol (VoIP) has risen by 25.6 per cent to 857,697 minutes, the highest since December 2016. ...

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LETTERS: Goat farming can help tackle food insecurity

Frequency in drought occurrence and climate change have constrained both agricultural and livestock production sectors exposing many households to food insecurity yearly. ...

Category: business news opinion
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Life after retirement comes with special health-related challenges. ...

Category: business news opinion
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LUESBY: Banks need thorough regulation

My youngest son has a bunch of songs he trots out, each for the right moment. ...

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EDITORIAL: KRA silence worrying

The taxman’s failure to promptly respond to current technology challenges affecting the tax return system, iTax, is to say the least unhelpful. ...

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Nyandarua County has set aside Sh400 million for construction of a potato value-addition plant at Shamata. Governor Francis Kimemia said the project will commence in January with a completion date of ...

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