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The Star
7 days ago
- Business
- The Star
Taxed to the max, Kenyans cry foul
THE pay stubs tell the story – hefty deductions to help cover the cost of Kenya's new funds for affordable housing and health insurance, more money deducted for jacked-up contributions to the National Social Security Fund and an increase in the tax rate. In a matter of months, Kenyans with a 45,000-shilling-a-month salary (RM1,474) saw their take-home pay shrink 9%. 'People who are salaried are crying,' said Kennedy Odede, founder of a self-help association in Nairobi's Kibera slum. The increased payroll taxes are one element of President William Ruto's desperate bid to raise revenue to keep the government running and pay off Kenya's staggering foreign debt. Shoppers at the Toi Market in Nairobi. — Brian Otieno/The New York Times New excise taxes were put on sugar, alcohol and plastics. A tax on business profits doubled to 3%. Government fees for money transfers and for phone and internet data services went up 15% to 20%. A tax on every import, including essentials such as wheat and cooking oil, to be used for railroad development was increased to 2% from 1.5%. Some exemptions for retirees were scrapped. The list goes on. Tax increases are never popular. But the impact on countries such as Kenya, with low incomes and crippling debt, is particularly acute. Years of harum-scarum borrowing and spending combined with economic wallops from the Covid-19 pandemic, soaring interest rates and inflation helped drive up Kenya's debt to US$80bil. Kenya has to use nearly 60% of its revenue for paying off its loans. It is a common problem across Africa, where many countries spend more on interest payments than on health or education. At the same time, countries need billions of dollars in new financing for basic medical care, schools, clean water, sewage systems, paved roads and climate-related disaster relief. Getting the country's finances in order is a prerequisite for long-term growth. Residents of the Kibera slum of Nairobi. — Brian Otieno/The New York Times But there are limited options to raise such revenue in Kenya, where 40% of its 52 million people live in poverty and youth unemployment is estimated to top 25%. Small businesses and subsistence agriculture make up much of the economy. According to one estimate, 83% of the country's labour force works in jobs that are out of tax collectors' sight, including as hairdressers, maids, street sellers and drivers. That means the sliver of the population that works in enterprises that record salaries bears most of the tax burden. 'Our buying power has really decreased because of the taxes,' said Elizabeth Okumu, who works at Shining Hope for Communities, or Shofco, a non-profit organisation that Odede started two decades ago. The country's economic crisis has pushed the value of the shilling lower in relation to the US dollar, meaning that the cost of imports has soared. Six months ago, 1,000 shillings (RM32.7) was enough for cooking oil, flour, rice and sugar, said Okumu, chair of Shofco's urban network in Nairobi. Now, she said, she can buy only sugar and flour with that same amount. Last year, proposed tax increases set off deadly riots in Nairobi, the capital. More than 50 people were killed, and part of parliament was set on fire. The government temporarily backed down, only to reimpose many of the additional taxes and fees a few weeks later. The government has been talking to the International Monetary Fund about a new loan package. The fund is likely to ask for additional guarantees that the Ruto administration will cut spending and raise more revenue. But you can't squeeze much water from a wrung-out towel. Behind the widespread discontent with specific policies is a deep cynicism about the government's ability to either pay back the debt or provide essential services. Regular reports from the country's auditor-general, Nancy Gathungu, detail gross examples of corruption or mismanagement. At the end of last year, for example, she said, the government could not account for more than US$1.24bil that had been earmarked for debt payments. In March, Gathungu reported that US$64mil worth of government-funded Covid vaccines had never been delivered. Critics have also fumed over extravagant spending by government officials. 'Ruto says we need to pay our debts, but there are no public services to show for it,' said Tatiana Gicheru, a student at Strathmore University in Nairobi. 'I can't walk into a government hospital and get any services.' Gicheru, 21, sat outside Java House, a coffee chain in Nairobi, and sipped a latte with her friend Jewel Ndung'u. Ndung'u, 25, graduated from Strathmore two years ago and has been looking for full-time work as an analyst or a developer. From September to January, she said, she applied for 73 jobs. She got a half-dozen callbacks and no job offers. A produce market in Nairobi. — Brian Otieno/The New York Times Ndung'u asked: where is the affordable housing? Where are health services and public transportation? Gicheru added: 'Suddenly the system is crumbling.' Ndung'u said she would rather see Kenyans directly pay off its debts, instead of giving the money to the government through taxes and trusting it to do it. In Kenya, taxes amounted to 16.6% of the country's total output in 2022, according to the Organisation for Economic Cooperation and Development. The share is not unusual in Africa, but half the amount found in richer industrialised nations. June will be one year since the riots, and talk of commemorative gatherings and further protests is bubbling. That is also when the government will be finishing a new budget, which could possibly include further tax rises. Many people, including Okumu, fear there will be more riots. People work so hard, she said, hoping 'that tomorrow they'll see the light'. 'But when tomorrow comes,' she said, 'it's still darkness.' – ©2025 The New York Times Company This article originally appeared in The New York Times
Business Recorder
28-04-2025
- Business
- Business Recorder
Revenue requirements of SSGC: Decision delayed by Ogra creates controversy
ISLAMABAD: A delayed decision by the Oil and Gas Regulatory Authority (Ogra) on Sui Southern Gas Company's (SSGC) revenue requirement for the fiscal year 2022-23 has stirred up a storm of controversy, coinciding with a staggering 600% surge in the company's share price, fuelling accusations of favouritism. Ogra approved the final revenue requirement (FRR) for SSGC on October 1, 2024 – nearly a year after it was due. The delay has raised eyebrows, especially considering the subsequent rapid rise in SSGC's share price from Rs8 on October 21, 2024, to Rs42 by January 1, 2025. The stock's dramatic spike was said to be with no significant corporate developments. This unprecedented surge in stock price did not go unnoticed by the Pakistan Stock Exchange (PSX), which on November 13, 2024, issued a notice regarding the unusual activity, asking SSGC to clarify any factors influencing the spike. In its response on November 15, 2024, SSGC responded, claiming no material developments had contributed to the fluctuations in its stock, leaving market watchers sceptical. Meanwhile, Sui Northern Gas Pipelines Limited (SNGPL) filed a writ petition against OGRA's FRR decision, dated June 27, 2024. SNGPL challenged the regulator's methodology in calculating returns on assets and human resource benchmark costs, alleging bias. A copy of the petition is available with by Business Recorder. The controversy deepened when it emerged that although Ogra published SNGPL's FRR soon after approval, it withheld SSGC's decision until after a news report by Business Recorder on April 21, 2025. The FRR was uploaded to OGRA's website the next day, fuelling suspicions of deliberate concealment. In approving SSGC's FRR for 2022-23, Ogra allocated Rs19,659 million for the company's human resource (HR) benchmark – Rs91 million more than the Rs19,568 million SSGC itself had requested. By contrast, SNGPL's HR benchmark request was entirely rejected. Ogra also approved a generous 50% allowance for the Consumer Price Index (CPI) for SSGC, while SNGPL, a profit-making entity, received only a 25% allowance. Moreover, Ogra's decision to include fixed charges – typically levied to tackle circular debt in the gas sector – in SSGC's profit has further fuelled accusations that the regulator's actions undermine the government's efforts to curb mounting debt in the energy sector. Adding fuel to the fire, SNGPL has filed a writ petition against Ogra's FRR decision for the fiscal year 2022-23, claiming unfair treatment. The petition challenges the regulator's decision on the return on assets and HR benchmark costs. SNGPL argues that despite being three times larger than SSGC, it has been subject to biased treatment, citing higher per-consumer, per-kilometre, and per-unit sale costs imposed on SNGPL compared to SSGC. In a December 2024 corporate briefing, SSGC reported a surprising Rs1,474 million gain in its HR benchmark, while SNGPL, by contrast, suffered a loss of Rs6 billion under the same head. SNGPL's legal challenge also highlighted the disparity in CPI allowances, suggesting that OGRA's decisions were unduly favourable to SSGC. Ogra, for its part, has defended its actions, dismissing the allegations as 'baseless.' A spokesperson for the OGRA stated that the matter was currently subjudice before the Lahore High Court (LHC), and it would refrain from commenting on the ongoing case. With regard to the spike in SSGC's share price, the regulator claimed that the figures being circulated were 'significantly exaggerated,' accusing SNGPL of initiating a campaign to influence OGRA's upcoming revenue determination for FY 2025-26. In 2013, an investigation focused on ex-OGRA chairman Tauqeer Sadiq, had revealed how OGRA under Sadiq's tenure had inflicted massive losses on the national kitty. Sadiq was accused of making illegal appointments in Ogra; manipulating the share prices of gas distribution companies; increasing the benchmark of the unaccounted-for-gas (UFG); allowing new CNG stations and relocating existing filling stations which inflicted Rs82 billion losses to national exchequer. Copyright Business Recorder, 2025
Gulf Insider
13-04-2025
- Business
- Gulf Insider
10m Saudis Get Monthly State Aid
Nearly 10 million Saudis have received monthly cash assistance under a state programme aimed to ease economic burdens on low-income brackets, according to official figures. The aid is provided under the Citizen's Account Programme, introduced in 2017 to help Saudi citizens affected by the initiation of energy price adjustments that drove prices up. Saudis constitute around 20 million of the country's total population of 35.3 million, according to recent statistics. The programme has deposited more than SR3 billion allocated for April support, the Saudi news agency SPA has reported. The number of beneficiaries, who met the eligibility criteria, have reached 9.8 million, SPA quoted Abdullah Al Hajri, the head of communications for the programme, as saying. 'The total amount paid by the programme to beneficiaries since its launch is 238 billion riyals,' the official added. The average support per family amounts to SR1,474. Al Hajri said the number of household heads benefiting from the programme in the latest installment of the assistance surpassed 2 million while the number of dependants exceeded 7.4 million beneficiaries. The Saudi government has pledged to protect low-and middle-income earners from any hikes in energy prices through the programme grounded on the idea of offering support in the form of financial compensation instead of subsidising basic items.
