Kenya Political & Economic Intelligence Series – Month of July 2023 Outlook

POLITICAL

ISSUE STATUS IMPLICATION COUNSEL

Anti- It would appear that the At least some 27 Avoid
government Opposition-led protests against people have been unnecessary
demonstrations government policies - framed as the killed in the exposure of
Finance Act and high cost of living - protests. employees
have found new momentum. on the days
The Government of protests in
The latest preference is for three- has been cracking hot spots,
day consecutive protests. In the last down on which have
two weeks of July, there were Opposition since
protests on July 12, July 19 – 21, politicians and increased.
while July 26 has been announced those close to
by the Opposition as a day of prayer Azimio leader Optimize on
for the departed. Raila Odinga, virtual
including his means of
For the first time, the Azimio bodyguard and engagement
protests were joined by other spokesperson. and work.
agitators, including drivers of HCV
(Heavy Commercial Vehicles) and Among the MPs
PSVs (Public Service Vehicles, who arrested was Babu
were protesting against the Owino of
introduction of mandatory retesting Embakasi East,
for driving licenses. whose production
in court past
The latter seem to have been largely working hours,
successful with the Transport CS after the legally-
suspending implementation of the allowed 24 hours
compulsory retesting of drivers to and an
September to allow for consultation inexplicable
with stakeholders. detour to
Kirinyaga County
The protests on July 12 affected has been
operations of the Nairobi Commuter interpreted in
Rail which were suspended, while some circles as a
access to the SGR was curtailed. return to some of
the practices of
the Nyayo Era of

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the late President
Daniel arap Moi.

Other leaders
arrested and later
released include
Mathare MP
Anthony Oluoch,
Kilifi South’s Ken
Chonga, Kilifi
Speaker Teddy
Mwambire,
former Mungiki
leader Maina
Njenga, Vihiga
Senator Godfrey
Osotsi, Jubilee
blogger Pauline
Njoroge and
several Nairobi
MCAs, among
others.

Heightened
condemnation of
police brutality
and a call for the
revival of talks
between Azimio
and Kenya Kwanza
coalitions by
various groups,
among them
religious leaders,
the UN and
foreign envoys.

Raid on the home

of former
President Uhuru
Kenyatta’s son by
unidentified
persons,

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 ostensibly to look
for guns triggers a
bitter exchange
between him and
some regime
leaders.
Suspension of Interior CS announced that the Development Avoid
the reopening Government was reviewing afresh shows that operations
of Kenya’s the reopening of the border with Kenya’s border that require
border with Kenya’s North Eastern neighbor. with Somalia and physical
Somalia even the latter presence
This followed a series of attacks on have not been near the
Kenyan soldiers and civilians in adequately restive
Northeastern and Coast regions, pacified as to border and
attributed to the terror group, Al justify the neighboring
Shabbab, which operates from reopening of the regions,
inside Somalia. border. unless
advised to
The CS said the suspension was Al Shabbab the contrary
necessary to deal with the recent remains a by security
spate of terrorist attacks. constant and live personnel
threat in the war and only in
theatre that is the presence
Kenya’s border of armed
with Somalia. guard.
Chairperson, Mary Chebukati was sworn in as the This means that all Follow
Commission on Chairperson of the CRA on July 17, the key activities at
Revenue by the Chief Justice. constitutional the CRA
Allocation committees are under the
(CRA) takes This follows her appointment by now fully new
office. President Ruto on May 23 and constituted and leadership as
successful vetting by the their leadership in a matter of
Parliamentary Committee on place. The CRA is a public
Finance and Planning. key commission in record.
the management
of the country’s
finances,
especially the
division of what is
due to the 47
counties.

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Africa On the The Chinese Embassy, in An opportunity to Should be
Move. Africa collaboration with the Africa Policy showcase the part of fete
On Tracks. Institute, will in August hold a two- impact of railway as presenter
day conference in Nairobi. infrastructure on or
development participant.
Part of events to mark the second
'Peaceful Development Initiative in Curate and
The Horn of Africa', courtesy the storify
Chinese government. Event brings relevant
together scholars, businessmen, knowledge
governments, diplomats and media.
It will focus on the role of railway
infrastructure and how it has
impacted development in Kenya.
Keynote speakers from China, Kenya
and the African Union (AU)

Sh184 billion The dualling of the 233-kilometer China gets a Leverage

Mau Summit tolled road from Nairobi – Nakuru – window to new
Road Presented Mau Summit is understood to have continue its engagements
to Chinese been presented to a high level dominance in to fast-track
Investors Chinese Communist Party investing in huge existing
delegation for consideration during infrastructure MoU,
a meeting at State House as a key projects in Kenya, especially on
pending infrastructure project. with a strong the proposed
signal from the expansion of
The tender was originally won by a Kenya Kwanza the SGR line
French consortium, but the two Administration between
parties did not agree on the pricing. that it is ready to Naivasha and
do business with Malaba,
China. through
Kisumu.
Possibility of an
increase in
Chinese project
finance to Kenya.
This follows
concerns over a
decline after only
Sh1.74 billion from
China was budgeted
for during the
2023/24 Financial

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Year - the lowest
since 2008 and a
material reduction
from the Sh29.5
billion that Kenya
received from China
in 2021/22 and
Sh71.2 billion in
2017.

Scales up the
possibility of the
Chinese trumping
the West in the
quest for big
infrastructure jobs
in Kenya.

Chinese firm CRBC

(China Road and
Bridge Corporation)
gets another chance
to bid for the
project, having done
so and lost. CRBC
has a distinct
advantage given its
experience with the
construction and
management of a
tolled road (the
Nairobi
Expressway),
besides other mega
infrastructure
projects in Kenya.

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ECONOMIC

ISSUE STATUS IMPLICATION COUNSEL

Revert of all port New report shows Strengthens case Good news for
operations to that importers for the viability of the SGR -
Mombasa still prefer SGR the dry ports e.g. continue to offer
freight services to at Naivasha. good services to
convey their sustain importers’
goods to and from It will be confidence in the
the hinterland. interesting to see SGR.
what policy
reaction the Amplify the
government success of the
makes – move SGR using data to
means the new all stakeholders.
policy direction
has not been
accepted by the
key stakeholders.
The Nairobi The elevated road Time to reflect Communicate
Expressway @ and the tolled and take stock of successes,
One service it offers the service, one achievements and
mark one year year later. challenges.
since their launch
on July 31, 2022. Frame and
amplify the next
At least 50,000 frontier for the
vehicles use the Nairobi
27.1 - kilometer Expressway –
road daily, which USSD and App.
translates into 10
million people
since launch
Finance Act Still in With the Court Government may Risk mapping of
Court having miss out on tax relevant projects,
temporarily revenue, which especially those
injuncted the was to come from pegged on
implementation some of the projected tax
of the Finance measures revenue during
Act, 2023 the proposed in the the 2023/24
Government is Act. Financial Year.
stuck in

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 operationalizing The
this year’s budget, Administration
especially in may have to come
raising tax-based up with
revenue. alternative ways
of raising
The case is budgeted
currently sitting revenue, including
with a three-judge new tax
bench appointed measures.
by the Chief
Justice, but is yet
to be determined.

Inflation Inflation fell Inflation, going Monitor inflation

marginally to 7.9 forward, will be keenly – it
percent in June, dependent on the determines
from eight fate of the discretionary cash
percent in May, Finance Act, for households
with the biggest which is now and how it is
influences being before a three- spent, which has a
exerted by the judge bench. bearing on
cost of Transport, consumer spend,
Housing, Water, Equally important including on SGR
Electricity, Gas is the current passenger
and other Fuels. food harvest, transport services.
especially in
Food prices rose Kenya’s
largely on the traditional bread
back of a 58.1 basket regions.
percent hike in
the price of sugar.

Following the
enactment of the
Finance Act and
the doubling on
VAT on fuel from

7
 eight to 16
percent, EPRA had
announced a
major rise in the
price of fuel to
Sh195.53 (petrol),
Sh179.67 (diesel)
and Sh173.44
(kerosene). But
following and
injunction by the
court, these had
to be stopped.

Latest prices are

petrol at Sh194.68
and kerosene at
Sh169.48, while
kerosene was
unchanged at
Sh179.67

Petition alleging Filed by a Latest There is need to

that the taxpayer controversial development communicate to
paid Sh700 billion Nairobi lawyer gives the SGR deal all stakeholders
more for the SGR and made public a clean bill of the integrity of,
on July 18. health. and the facts
about the SGR
Allegations have deal. For instance,
since been while it was
dismissed by mooted during
those familiar the reign of
with the SGR deal President Kibaki,
at Treasury and it was
KRC as untrue. implemented
during the time of
President
Kenyatta, from
2014 and
launched in 2017.

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Setting by the This has been The Government Monitor the
Government of announced by the is committed to process of re-
December 31, International the conditions classification of
2023 as deadline Monetary Fund given by the IMF SOEs and policies
for Re- (IMF) as a key for continued formulated to
classification of step in the budget support. guide parastatal
State-Owned restructuring of reform to
Enterprises (SOEs) parastatals. IMF will have a determine how
greater say in the they will
Already, the way Kenya runs determine the
Kenya its economy on future of Kenya
Development the back of Railways
Corporation (KDC) existing programs Corporation (KRC)
has been formed it has with Kenya. and its
out of the merger stakeholders.
of IDB (Industrial Possibility of job
Development losses
Bank) Capital,
ICDC (Industrial
and Commercial
Development
Corporation), TRA
(Tourism Finance
Corporation)

Change in policy While importers The policy shift Monitor the effect
from use of initially paid and a weak of the policy shift
weight to value of Sh200 per shilling have on import
goods for kilogram of made imports volumes being
appraisal of tax imports, they now expensive. transported to the
liability on have to pay tax Northern Corridor
consolidated based on the This has created a countries through
imports value of the shortage and a the SGR.
goods, upon 100 hike in prices of
percent some goods in the Is Mombasa Port
verification. local market e.g. likely to lose to
smartphones. Dar es Salaam?
Kenya Revenue
Authority (KRA) Small traders who
changed the thrive on imports’
policy, which consolidation and
requires 100 the uniform tax

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percent regardless of the
verification of value of imports,
imports and value may have to
determination, as discontinue
it felt the previous business.
policy was being
abused. Some businesses
may move their
import business
to low tax regimes
e.g. Tanzania,
Nigeria etc.

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