PRIVATE PUBLIC PARTNERSHIP TO CUSHION BUSINESSES

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The year ended May 2020 has been eventful, albeit the global pandemic, a clear indication of changing times and new realities for Kenyan businesses, said Mrs Carol Karuga during Kenya Private Sector Alliance (KEPSA) 16th Annual General Meeting. Kenya Private Sector Alliance (KEPSA) updated their member on the progress the alliance has been making for the past one year, through their Public Private Dialogue platform.

In partnership with the Government through National Development Implementation and Communication Cabinet Committee (NDICCC), four meetings were held, where they resolved long standing issues. These included implementation of the energy rebate program to lower power cost for manufacturers, reduction of Railway Development Levy (RDL) and Import Declaration Fee (IDF) on manufacturing inputs from 2 percent to 1.5 percent and increase from 2 percent to 3 percent on finished goods to improve competitiveness of Kenyan goods.  

We also saw the reduction of the number of agencies at Mombasa Port and Nairobi ICD from 27 to just four for faster clearance of cargo, expediting payment of pending bills and VAT refunds, establishment of Credit Guarantee Scheme for SMEs, consolidation of various enterprise funds to form one Biashara Bank, among others.

  “Three Presidential Roundtables (PRT) two of which in May 2019, were held, to link local producers and traders with policy support from government and the other with European Business Council (EBC). The third and most recent PRT was held in March 2020 over KEPSA’s Economic Management Framework for Covid-19 Response, that led to unveiling of Economic Stimulus Measures for the country’s economic stability” Said KEPSA’s CEO Mrs Carole Karuga.  

Businesses especially appreciated the economic stimulus measures by the government that led to the reduction of VAT from 16 to 14 percent, Corporation Tax from 30 to 25 percent, PAYE from 30 to 25 percent and 100 percent waiver for those earning less than 24,000.   There was also a reduction of Turn-over tax from 3 to 1 percent, expedited payment of pending bills and VAT refunds (Ksh 25 Billion paid by end of June 2020), reduction of Central Bank Rates from 8.25 to 7 percent and Cash Reserve Ratio from 5.25 to 4.25 percent that injected Ksh 35 billion more liquidity to enable banks lend to businesses. Government also followed up with Ksh 56.6 billion budget allocation for different sectors under an 8-point Economic Stimulus Programme and began phased re-opening of the economy from July 2020.

From a KEPSA survey carried out in the second quarter of the year found that 61 percent of businesses had benefited from the reduction in PAYE, 48 percent from the reduction of VAT, 45 percent from reduction of Corporate tax while 11 percent and 6 percent had benefited from payment of VAT refunds and pending bills respectively.  

“This has lessened the expected adverse impact of the pandemic on businesses though we will only know the full impact to our members when the pandemic is over,” said Mrs Karuga during the 16th Annual General Meeting.   KEPSA also formed the Covid-19 Business Response Committee bringing together all key sector leaders and set up a Project Management Office to coordinate response measures by different sectors.

“These consolidated interventions helped develop the Economic Management Framework for Covid-19 Response,” KEPSA Chairman, Nicholas Nesbitt told members.   In January 2020, funded by the Mastercard foundation, KEPSA Foundation partnered with Ministry of ICT, E-Mobilis and Dalberg to roll out the second phase of Ajira Digital Program, aimed at bridging the gap between skills demand and jobs by introducing young people to digital and digitally enabled work provide the tools, training and mentorship needed  for young people to work and earn an income with dignity.   An SME support program in partnership with MasterCard Foundation, Educate Global Rapid Technical Assistance Response Team, to support businesses in Food, Health and Education sectors through financial restructuring, strategy review and addressing critical operational issues was conceptualized as well. Moreover, KEPSA entered into a partnership with Trade Mark East Africa to implement an e-Commerce Booster Programme to train 2,000 SMEs on e-commerce, digital marketing and on-board them onto various digital market places.     

“As the country and world at large battles Covid-19, the year 2020 will undoubtedly be a tough one for businesses; but our commitment is to continue working with government, development partners and other stakeholders to turn the tide, mitigate the negative impacts and make the most of the opportunities that the pandemic has revealed” concluded Mrs. Karuga.

  KEPSA has ensured each Sector Board is active and holding regular meetings to resolve members’ issues. The Agriculture Sector Board for instance brought together all key stakeholders and established the Agriculture Sector Network (ASNET) in February 2020. ASNET has been at the forefront in resolving issues such as movement of agricultural produce to local and international markets during the Covid-19 period, while the Public Finance Sector Board has led in mobilizing KEPSA participation in National Budget making process through Sector Working Groups at Treasury.  

On Business Member Organization’s development, KEPSA incubated Digital Lenders Association, Online Professional Workers Association of Kenya (OPWAK) & International Relations Society of Kenya in 2019. In 2020, we have so far picked Film Exhibition and Distribution Association to incubate.   KEPSA is championing for sustainable development, green and circular economy and is leading the way in shaping private sector to adopt an inclusive green growth pathway and going forward KEPSA will ensure that Public Private Dialogues incorporate green reforms.

By greening its Third National Business Agenda, KEPSA has identified strategies and regulatory reforms that both the government and private sector will prioritize in the next five years in order to catalyse “Inclusive Green Economic Growth” for the country.   KEPSA also Co-Chairs of the Kenya National Platform on Partnering for Green Growth and Global Goals (P4G) and has curated, nurtured and catalysed 15 transformative public private partnerships’ that are leading the way in providing market-based solutions for the implementation of sustainable development goals.

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