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Taxed to the max, Kenyans cry foul
Taxed to the max, Kenyans cry foul

The Star

time6 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

Report Suggests Algeria's Hacking Group Targeted Moroccan Notaries Platform, Not ANCFCC
Report Suggests Algeria's Hacking Group Targeted Moroccan Notaries Platform, Not ANCFCC

Morocco World

time6 days ago

  • Politics
  • Morocco World

Report Suggests Algeria's Hacking Group Targeted Moroccan Notaries Platform, Not ANCFCC

Rabat – Hacking attacks against Moroccan institutional databases sparked debate and concern among citizens and experts, especially with the latest wave of reports that alleged a breach instigated by the Algerian group, Jabaroot DZ. Reports suggested that the Algerian group targeted Morocco's National Agency for Land Registry, known as ANCFCC. The reports came after the group claimed to have accessed over four terabytes of land-related data. However, sources from the land registry agency denied that it is the agency's system that was directly targeted, clarifying that the breach involved a notaries' platform, Tawtik, which is managed independently. Le360 quoted an authorized source from ANFCC, who said that no intrusion or data leak has been detected in its information system. Le360 said the Algerian hacking group may have access to data on the notaries' platform by 'exploiting vulnerabilities in inadequately protected computers.' The Moroccan agency sent a letter to notaries warning them about cybersecurity risks, urging them to take all necessary precautions. It also temporarily suspended access to its platform in April and closed the platform entirely to all professionals, reverting to paper-based filling and in-person payments at physical counters to avoid any security breaches. This came when the same group claimed responsibility for the hacking of the National Social Security Fund (CNSS) database. Several documents have gone viral online, with experts warning citizens not to open the files as they could include security threats that could target their data. Earlier this year, the same group claimed responsibility for the hacking of the National Social Security Fund (CNSS) database. The intrusion exposed personal data of nearly 2 million Moroccan employees across 500,000 businesses registered with the Moroccan social security. Morocco has been pledging to strengthen its efforts to ensure strong cybersecurity to tackle similar crises. In April, cybersecurity giant Kaspersky said Morocco ranks among Africa's most frequently targeted countries for digital attacks. The ranking places Morocco third among African countries facing web-based threats, with 12.6 million attack attempts documented in 2024. Kenya tops the list with nearly 20 million incidents, while South Africa follows with approximately 17 million. Web threats targeting African businesses jumped 1.2% compared to 2023, with over 131.5 million total threats detected regionwide this year. In-device threats climbed 4% in African organizations since 2024. Tags: Africa CybersecurityCybersecurity

China, $3.7 Billion Pension Fund Seek to Build Key Kenyan Road
China, $3.7 Billion Pension Fund Seek to Build Key Kenyan Road

Bloomberg

time27-05-2025

  • Business
  • Bloomberg

China, $3.7 Billion Pension Fund Seek to Build Key Kenyan Road

China Road and Bridge Corp. and Kenya's biggest pension fund jointly bid to build a 175-kilometer (109-mile) part of a highway linking the East African nation's capital to neighboring Uganda. The National Social Security Fund, which manages 477 billion shillings ($3.7 billion), will join China Road for the project to construct the road from Nairobi to Mau Summit. The government also received a privately initiated proposal for the project from Shandong Hi Speed Road & Bridge International Engineering Co., according to a notice in the state-run MyGov newspaper.

‘People Who Are Salaried Are Crying': Taxes on Workers Add to Debt Misery
‘People Who Are Salaried Are Crying': Taxes on Workers Add to Debt Misery

New York Times

time04-05-2025

  • Business
  • New York Times

‘People Who Are Salaried Are Crying': Taxes on Workers Add to Debt Misery

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 subtracted 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 — roughly $350 — saw their take-home pay shrink 9 percent, to $262. 'People who are salaried are crying,' said Kennedy Odede, the 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. New excise taxes were put on sugar, alcohol and plastics. A tax on business profits doubled to 3 percent. Government fees for money transfers and for phone and internet data services went up 15 to 20 percent. A tax on every import, including essentials like wheat and cooking oil, to be used for railroad development was increased to 2 percent from 1.5 percent. Some exemptions for retirees were scrapped. The list goes on. Tax increases are never popular. But the impact on countries like 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 $80 billion. Kenya has to use nearly 60 percent 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. But there are limited options to raise such revenue in Kenya, where 40 percent of its 52 million people live in poverty and youth unemployment is estimated to top 25 percent. Small businesses and subsistence agriculture make up much of the economy. According to one estimate, 83 percent of the country's labor 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, the nonprofit organization Mr. Odede started two decades ago. The country's economic crisis has pushed the value of the shilling lower in relation to the dollar, meaning that the cost of imports has soared. Six months ago, a thousand shillings ($7.73) were enough for cooking oil, flour, rice and sugar, said Ms. Okumu, chairwoman 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 $1.24 billion that had been earmarked for debt payments. In March, Ms. Gathungu reported that $64 million worth of government-funded Covid-19 vaccines had never been delivered. Critics have also fumed about 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.' Ms. Gicheru, 21, sat outside Java House, a coffee chain in Nairobi, and sipped a latte with her friend Jewel Ndung'u. Ms. 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 half a dozen callbacks and no job offers. Where is the affordable housing? Where are health services and public transportation? Ms. Ndung'u asked. Ms. Gicheru added, 'Suddenly the system is crumbling.' Ms. Ndung'u said she would rather see Kenyans directly pay off the debt to China, the country's biggest bilateral creditor, by using M-Changa, a digital fund-raising platform, instead of giving the money to the government through taxes and trusting it to do it. As taxes rise, Kenyans have grown angrier about the lack of public services. In November, a crowd of people frustrated about dilapidated roads in Syokimau, a few miles south of Nairobi's main airport, jeered as they forced their council representative to walk through flooded, muddy streets. In the southwestern part of Nairobi is Kibera, considered the largest urban slum in Africa. Its dirt streets teem with shoppers, pedestrian commuters, peddlers, hustlers, students in neat uniforms and residents filling bright yellow jerrycans with clean water from coin-operated taps. They navigate around piles of garbage and occasional raw sewage as well as motorbikes and bicycles hauling oversize loads better suited to a sport utility vehicle. There are no government-funded sanitation services in Kibera. The jampacked skyline features ramshackle homes of plasterboard, rusted roofs, and a forest of haphazard poles and wires on which illegal electricity hookups hang like Christmas ornaments. Benedict Musyoka, a youth community organizer in Kibera, said a young man had told him: 'I won't marry.' Earning enough to support himself is hard enough, let alone with a wife and child. And the man had a degree. 'You are taxing hard, and we have no jobs,' Mr. Musyoka said. With Kenya's level of debt, there are no easy options, said Thys Louw, a portfolio manager at Ninety One, a global investment firm in London. Expanding the revenue base — bringing more businesses and people who are not currently paying taxes into the system — is crucial, he said. And there are too many exemptions. In Kenya, taxes amounted to 16.6 percent of the country's total output in 2022, according to the Organization for Economic Cooperation and Development. The share is not unusual in Africa, but half the amount found in richer industrialized 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 like Ms. Okumu at SHOFCO fear there will be more riots. People work so hard, she said, hoping 'that tomorrow they'll see the light.' 'But when tomorrow comes, it's still darkness.'

Morocco Raises Minimum Wage by 20%, Biggest Increase Ever
Morocco Raises Minimum Wage by 20%, Biggest Increase Ever

Morocco World

time01-05-2025

  • Business
  • Morocco World

Morocco Raises Minimum Wage by 20%, Biggest Increase Ever

Rabat — Economic Inclusion Minister Younes Sekkouri announced today that Morocco has increased the minimum wage in the private sector by 20% – the largest hike ever implemented by any Moroccan government. Historic wage increase announced Speaking as part of May Day celebrations, Sekkouri revealed that the monthly minimum wage has jumped from MAD 2,638.05 ($263) in 2021 to approximately MAD 3,191.85 ($319), factoring in an additional 5% increase set to take effect next January. 'The minimum wage will increase by nearly MAD 600 ($60), a 20% rise that no previous government has ever achieved,' said Sekkouri. According to National Social Security Fund data, more than two million workers will benefit from this measure. Closing the agricultural age gap While agricultural workers currently receive lower minimum wages than other sectors, the minister conceded, the government plans to unify minimum wages across all sectors by 2028. 'We're increasing agricultural minimum wages at a faster rate to close the gap between agricultural and non-agricultural workers,' Sekkouri said. He explained that monthly minimum wages in agriculture have risen from about MAD 1,860 ($186) to MAD 2,360 ($236), including increases scheduled for April 2026. Under the April 2024 agreement, minimum wages in both agricultural and non-agricultural activities will increase in two 5% increments between 2025 and 2026. Agricultural minimum wages will have increased by MAD 540 ($54) from when the current government took office in 2021 through 2026. Pension reform benefits workers Sekkouri also addressed retirement benefits in the private sector. Workers previously needed 3,240 days of contributions (about ten years) to qualify for a pension through the National Social Security Fund. Following discussions with stakeholders, the government reduced this requirement to just 1,320 days (four years). Workers who don't meet the minimum contribution period can now recover both their contributions and their employer's contributions. Additional economic relief measures The minister pointed to the income tax reduction implemented in January 2025 at the request of social partners, noting it has delivered an average increase of MAD 400 ($40) for middle-income families. Regarding the draft strike law, Sekkouri said the current government had shown 'political courage' by tackling this sensitive issue while considering stakeholder proposals and respecting international standards. Tags: minimum wageminimum wage in MoroccoPrivate Sector

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