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February 20, 2019

Kenya Is Still An Attractive Investment Market - UBA

Jayendra Malde
Jayendra Malde

The push by the government to introduce electronic tax machines thirteen years ago was initially met with opposition due to the tendering and procurement of the machines. This led to the birth of the United Business Association which has since developed into a strong lobby group which takes up various issues affecting business people.

Elizabeth Were interviewed the chairman Jayendra Malde

1) What is the mandate of the United Business Association?
 Well, we established our organization in the year 2000. The association was born because of the Electronic Tax Registers machines. At the implementation stage of ETR machines, the government wanted to bring two people for tendering or to monopolize the supply of the machines. But we thought that was not a good idea and we needed the supply liberalized. And at the end of it, we managed to have it effected and that also marked the birth of the association.

2) What is the specific mandate of the association today?
UBA acts as a mediator between the government and the business community. We act as a mediator between the investors and the government.  If the government wants to implement something, then we act as a link between it and the business community particularly those who are our members.  What the country now needs is a one stop shop if one is to do business well. It is our duty to support both micro and macro enterprises in Kenya, liaise with business enterprises including seminars to advance knowledge to the business sector on issues like how and where to get affordable loans.

3) Government has been striving to attract foreign investment, do you have any role in this?
The country cannot move forward without foreign investment.  Our strategic plan is to involve all investors across the world, we invite all investors to come and join us and assure them Kenya is the best place to invest since it has a good environment, good infrastructure good human resources and good brains.

4) Kenya recently conducted elections peacefully. Has this had any positive effect in regard to foreign investment?
We have a lot of positive signs so far, we had a meeting with this Moroccan investor recently and another one with investors from the United Emirates and I can tell you things are positive. We have also been liaising with investors from India, Taiwan and South Korea. We will be contacting a lot of embassies to tell them that Kenya is the best place to do business.

5) Did elections fever affect the business environment generally?
Ordinarily business cannot be separated from politics. Everybody was waiting for elections to end and things started moving again. Kenya is located at a very strategic place in East Africa and the Comesa (The Common Market for Eastern and Southern Africa) region.

6) In regard to Comesa, is Kenya ranked any better in terms of doing business within this region?
Among the Comesa member States, Kenya is one of the most favored countries by investors especially because of the issue of taxation. The advantage of Kenya is that there is no taxation in East Africa if you do business and within Comesa region so a lot of investors want to come to Kenya to invest. So it is a favoured country within Comesa region.

7) Do you think the cases facing President Uhuru Kenyatta and Deputy President William Ruto at the ICC will negatively affect business especially in regard to foreign investment?
I don’t think so. One thing, until you are proven guilty, we cannot judge you. So let the law take its course. We should not comment anything before the judgment, let us do the business, grow the economy, create employment, have good security and let people move in the good direction. For the cases affecting the business environment, I should say no.

8) Recently President Uhuru Kenyatta’s government read its first budget, what do you think of it?
To me, this is a very expensive budget that needs a lot of resources to finance it. But where do we get these resources from? The budget is very difficult to maintain and tough times lies ahead. We have to Governors, Senators, Women representatives who we did not have before and all these require money. In their new offices, you require people. So the amount of resources we will be spending on salaries is unbelievable. For us to achieve that, we must create a conducive environment for business which in turn means higher collection of taxes. That is why people should from all over the country to invest and create employment and build a good relationship for our international investors to do their business freely in order to achieve our goals.

9) Do you see the government resorting to much domestic borrowing?
There is a huge gap between the available resources and what the government wants to spend. This may lead to domestic borrowing by the government which in turn may lead to the government borrowing. This I know will affect the business.  If the interest rates go up, then it will negatively affect business.

10) From a business perspective, is Kenya on the right path in the realization of Vision 2030?
Yes, we are heading in the right direction, but implementation is a bit slow. If we don't pull up our socks, I do not think we can achieve our goals in the year 2030, it might have to be extended. So we have to be very serious each and every member of this country has to put his or her input in order to achieve our goals. It is everyone’s responsibility not only the government.

11) Do you think Kenya has fully taken advantage of the African Growth and Opportunity Act?
I think Agoa is a fortunate thing and which relies on the good will of America.  But we have to do a lot of hard work and do more things under Agoa. I believe we can do much better. We have to educate people because a lot of people are not aware of Agoa .There is a lot of potential under Agoa but they do not know about all this. So if we can educate them on Agoa then a lot of people will invest and open up industries and we can export more to the United States of America.

12) US President Barrack Obama recently said talks are on to see if Agoa will be extended, do you think it should be extended?
Yes, it should be extended and they (America) should help Africa and we do not want to be told we are a third world country. We are competing with the first world and soon we will be achieving our goals because Africa has a lot of resources only that these resources are in some cases not utilized in the right way.On matters of taxation, there is VAT Bill which is before Parliament which seeks to tax basic commodities, what is your position on it?

13) Our citizens are already over taxed, we should request the government to please exempt basic commodities from taxation like flour, milk, bread and the like. At the moment many Kenyans cannot afford a proper meal for a day. So it is our humble request to the government there is a lot of opportunities they can tax from like luxury things. There are many other channels you can bring in the required tax.  A hungry man is an angry man. You have seen what has happened in some African countries like Tunisia and Libya. We do not want to replicate in our East Africa region such things. Let people earn their proper meal a day.

14) What do you think of the 1.5 per cent tax on all imported goods which the government outlined in the budget?
That is a good idea by the government. The money collected is meant for infrastructure development and I believe Kenya needs that most.  If you compare other countries like China and India they have the best rail network in the world.  If we have good rail transport, transportation of the goods can go half of the price being charged at the moment.  This in turn will lower cost of production.

15) Don't you think that the 1.5 bill per cent tax will affect the prices of the imported goods?
It is a win win situation, yes the prices will be affected but at the same time we will lower the cost of transportation once we have good infrastructure.  When we have good railway transportation we will create more income to run the country.

16) The issue of interest rates, we have seen the Central Bank of Kenya lowering the base lending rate but most of the commercial banks are still charging as high as 18 per cent. How has that affected the business and what can be done to improve it?
Ordinarily in the international market, when the Central bank charges let’s say 5 per cent, the commercial banks charge 6 per cent which a very little different.  That way, people can  afford to borrow. But today here, the interest rates are so high such that not many people can afford to borrow. There is excess money with the banks as we speak now.  And mind you this money is idle and it does not generate anything for the banks. Banks should lower their rates and probably charge 10 percent. This will unlock borrowing and expand business. People will have money to invest thus generating a lot of activities in the economy.  This will in turn reduce the unemployment. I think the banking sector should be more liberalized.

17) What is the role of government in this?
Let the government talk to the banks on how to compete in the market without just setting targets and profit maximization. But I think soon these rates will come down, banks will realize that the monies they are holding is not helping them.

18) Many traders complain about the delay of tax refunds, is the problem serious and what should be done?
It is a serious problem. Our members are complaining a lot every day.  The issue of tax refund is a big challenge to us as business people. There is a need to come up with a framework on how this problem can be addressed. There should be specific targets on tax refunds and what is targeted is not achieved, then we look at where it went wrong for a rectification. We should not have any red tape in government offices. People should be able to walk in freely and talk to the government officials on these problems and help in coming up with solutions.  Without public private partnership, the government will not proceed well with its business.

19) Recently the president proposed that goods on transit should be taxed at the port of Mombasa. What is the significance of this?
That is a very good way of ensuring the goods being imported and are supposed to go to other countries are not dumped in Kenya. This has been a serious problem.  It Is a good idea because when the goods leave Mombasa port, we are normally not sure whether they are reaching Uganda or only the papers will reach the boarder. We need more regulations to ensure goods reach the intended destination.

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