Measures provide relief to businesses as part of Kenyan government COVID-19 response

26th March 2020

Ninara31 is licensed under CC BY 2.0

With the Coronavirus (COVID-19) posing challenges for economic growth in Kenya, President Uhuru Kenyatta in a national address put forward a number of interventions for the country’s parliament to consider, focused on reducing the financial burden on the country’s businesses and entrepreneurs.

In addition to encouraging everyone who can work from home to do so (with the exception of personnel in security and essential services), here’s a quick summary of the proposed state interventions and measures put forward by the President to protect jobs for citizens and provide certainty to employers:

  • A 100% tax relief for persons earning a Gross Monthly income of up to Ksh. 24,000/
  • Reduction of income tax PAYE from a maximum of 30% to 25%.
  • Reduction of resident income tax to 25%.
  • Reduction of the Turnover Tax rates from 3$ to 1% for all Micro, Small and Medium Enterprises.
  • Incorporation of additional 10B to elderly, orphans and other vulnerable members of society.
  • Temporary suspension of the listing on the Credit Reference Bureau (CRB) of persons, micro, small or medium or corporate entities, effective 1st April 2020.
  • The National Treasury shall cause an immediate reduction of VAT rate from 16% to 14% effective 1st April 2020.
  • All Ministries & Departments shall cause payments of at least 13B of the verified pending bills within 3 weeks from the date here thereof to improve the liquidity of the economy. The private sector is encouraged to clear outstanding payments within themselves within the same 3 week period.
  • KRA shall expedite the payment of all verified VAT refund claims amounting to 10B within 3 Weeks to improve cash flows for the business.
  • Kes. 1B from the UHC kitty be immediately appropriated to recruit more health workers to support the management of COVID-19.

Additional measures to further curb the spread of COVID-19 were discussed:

  • Mention of the lowering of the Central Bank rate to 7.25% from 8.25%
  • Lowering of the CRR to 4.25% from 5.25%
  • Flexibility requirements for loans that were performing from March 2, 2020, and payment periods extended or restructured due to this pandemic

Announced alongside the financial relief measures, a number of important public health restrictions were put in place to slow the spread of the virus will most likely impact businesses and entrepreneurs. Specifically, starting Friday the 27th of March 2020 there will be a daily curfew in place from 7 pm to 5 am in the morning across all of Kenya, except for essential service providers. Essential service providers include police, media, food, medicine and petrol suppliers, mobile service providers, fire brigade and emergency services, Kenya Power and supermarkets.

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