Kenyans hope for better year after tough 2020 - Beaking Kenya News

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Friday, 1 January 2021

Kenyans hope for better year after tough 2020

 

The 2020-21 New Year 'cross over' was different this time.

Unlike the other years where the mid-night is filled with fireworks and cheers, praise and worship in churches, and revelers dancing the night away in their favourite entertainment spots, majority of Kenyans ushered the year 2021 in their homes.

This is on the nation-wide curfew that has been in place for the better part of last year. 

And as 2021 begins, Kenyans are only hoping for better than last year which ended with a spike in the cost of living.

Inflation, a measure of the rate of rising prices of goods and services in an economy, rose to 5.62 per cent in December from 5.33 in November.

The cost of living went up in the last two months of the year 2020, from 4.84 per cent in October, amidst a tough economic environment worsened by the impact of the Covid-19 pandemic on the economy.

Latest Kenya National Bureau of Statistics (KNBS) data shows month-to-month food and non-alcoholic drinks' index increased by 2.45 per cent between November and December, 2020.

The corresponding year-on-year food inflation rose 7.19 per cent.

“This food inflation was mainly attributed to increase in prices of particular food items, which outweighed the decreases,” KNBS director general Macdonald Obudho notes.

In December, a kilo of sukuma wiki, a common foodstuff in many households, rose to Sh50.77 from Sh48.07 the previous month, while that of cabbage went up to Sh37.87 from Sh36.83.

A kilo of wheat flour went up to Sh124.51 from Sh118.87 in November, a month households have traditionally shopped for the commodity in larger volumes for consumption of festive season related delicacies.

Housing, water , electricity , gas and other fuels' index also increased by 0.59 per cent between November and December, 2020.

“This was mainly attributed to increases of 0.76 per cent and 2.08 per cent, in cost of electricity and kerosene, respectively,” Obudho said in a statement released yesterday, the last day of the year.

The increases in the cost of fuel products saw the transport index rise by 1.15 per cent over the same period.

In December, a litre of kerosene, used by poor households for cooking and lighting, retailed at an average Sh84.50 up from Sh82.78 in November.

That of diesel, widely used in the agriculture, industries and transport sectors went up in December to retail at Sh107.69 from Sh106.71, while petrol which is consumed widely by motorists went up to Sh92.75 a litre from an average Sh91.65 in November.

The cost of electricyt equally went up where Kenyans paid an average Sh4,664 for 200 kilowatts compared to Sh4,629 the previous month.

Households however got a relief in the cost of loose maize flour and the sifted one which fell to Sh48.99 and Sh116.80 a kilo, respectively, from Sh49.62 and Sh117.63 the previous month.

The year was marked with massive job losses as companies laid-off staff in cost cutting measures to survive the pandemic.

More than 5.9 million Kenyans lost their sources of income during the year with businesses, mainly SMEs, equally suffering the brunt of the pandemic.

“The year was tough but we hope for a better 2021. I am praying businesses pick up and things normalise from the Covid-19 craze,” Roy Nyagah, a Roysambu resident told the Star.

Peter Kimani, a shopkeeper withing Nairobi CBD, along Tom Mboya Street, is hoping the cost of food commodities and utilities such as electricity comes down this year, to ease pressure in his pockets as he prepares to take his children back to school.

“With school fees on the offing, any relief we get on food and other commodities this year will cushion many of us,” Kimani said.

Arnold Odhiambo, a hawker, is hoping Kenyans get more disposable income this year.

“I have been hustling in this streets, sometimes I don't sale a single item. Most customers I approach keep saying times are tough. I am hoping for a better new year,” he said.

Mercylyne Nyabuti, an NGO employee in Nairobi, however feels 2020 was a mixed bag with its good side, and hopes for a better 2021.

"Personally it (2020) wasn't that bad. I had expected for the worse after the first Covid case was announced in March but we adopted to the new norm and went through the year. It was not that bad for me," she said.

"I am hoping Kenya roars back this year," she added.

Lynda Ogeto, a freelance writer said: "Since i work from home, i was not that affected though many people were. I am praying for a better year as we begin 2021."

The December cost of living was the highest since April where it was recorded at 6.01 per cent.

The highest was however in February, at 7.17 per cent, almost breaching the Central Bank’s 7.5 per cent target ceiling. The apex bank's inflation target range is between 2.5 per cent and 7.5 per cent.

Last January, inflation was at at 5.8 per cent.

Taxation

Despite the wishes for an easier year, Kenyans will however have to contemplate with higher taxes as the government moves to revise, upwards, tax incentives given last year to cushion individuals and corporates from adverse effects of the pandemic.

Starting today, January 1, corporate tax rate reverts to 30 per cent from 25 per cent which has been inplace since April.

Value Added Tax (VAT) reverts to 16 per cent from 14 per cent while income tax rate (Pay-As-You-Earn) goes back to 30 per cent from 25 per cent.

Turnover Tax rate for SMEs is also expected to go back to three per cent from one per cent.

However, the government will continue cushioning individuals earning below Sh24,000 with a 100 per cent tax relief, by exempting them from Pay As You Earn (PAYE) tax.

The government will continue to cushion the low-income earners, by retaining 100 per cent tax exemption/relief for those earning monthly incomes of Sh24,000 and below,” National Treasury CS Ukur Yatani said last month.

Industry players, among them the Kenya Association of Manufacturers(KAM) has however been calling on the government to extend the tax relief measures beyond January, noting that the economy is still recovering from the brunt of the pandemic.

According to KAM, key sectors among them manufacturing yet to recover, hence the need to sustain the tax base at lower rates.

At present, businesses are still reeling from Covid-19 pandemic shocks. We urge government to retain these measures, since businesses, and Kenyans are still suffering from shocks arising from the virus,” KAM chairperson Mucai Kunyiha said.

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