Ruto’s Punitive Taxes Threaten Namibia’s Close Trade With Kenya
President William Ruto’s finance bill 2024, which was tabled in parliament for passage yesterday, includes punitive taxes that threaten to undermine the progressive strides made toward boosting much-needed intra-Africa trade.
More specifically, it jeopardizes efforts to improve and strengthen trade and investment between Kenya and Namibia.
According to new data from auditing firm KPMG Kenya, the bill, which is expected to be signed into law by Ruto and take effect on July 1, will affect both Namibian and Kenyan importers and exporters, manufacturers, air travelers, banking and money transfer chains, and digital marketplaces.
For example, the bill proposes to raise the rate of import duty from 2.5 percent to 3% of the customs value of imported goods, payable by the importer at the time of entering the goods for home use.
This comes just one year after the rate was reduced from 3.5 to 2.5 percent. The increase is expected to drive up the cost of importing Namibian goods into the country.
The bill also proposes imposing an eco levy on certain locally manufactured and imported goods.
This is yet another levy imposed following the introduction of the export and investment promotion levy by the Finance Act of 2023.
When locally manufactured goods are removed from the excise stock room, the manufacturer must pay the eco levy to the commissioner.
However, the majority of the goods subject to the levy are not excisable, so implementation may be difficult.
The importer pays the levy when the goods are entered for home use.
It is unclear whether or how the funds raised will be used to address the stated negative environmental impacts.
The levy primarily targets technological infrastructure, products, and services. It is likely to result in an increase in costs.
It could harm Kenya’s reputation as ‘Africa’s Silicon Valley,’ which sister countries like Namibia have been looking to collaborate with to gain knowledge and skills to advance their own information and communication technology (ICT) sectors.
Concerning the export and investment promotion levy (EIPL), the Finance Act of 2023 imposed an EIPL on certain goods imported into the country for domestic use.
The levy’s stated purpose was to provide funds to boost manufacturing, increase exports, create jobs, save on foreign exchange, and encourage investment.
However, the 2024 finance bill proposes to remove the entire third schedule introduced by the Finance Act and replace it with a new schedule of items subject to an export and investment promotion levy.
Namibians working or buying remotely on Kenyan infrastructure would also be affected, as the bill proposes a digital marketplace fee.
According to an opinion poll conducted by Infotrak Research between May 25 and 29, 77% of Kenyans believe the finance bill will not benefit the economy, while only 13% believe it will.
Ruto’s Punitive Taxes Threaten Namibia’s Close Trade With Kenya
