Kenya Roundup: Affordable housing bill, fuel prices, Eurobond

Affordable Housing bill

Kenya’s parliament has voted to approve the Affordable Housing Bill of 2023. The bill aims to establish a legal foundation and structure for the collection of the housing levy, as mandated by a court ruling. There were, however, amendments from both sides of the political spectrum. Amendments introduced during the debate in the house included provisions to regularize the already collected housing levy, allow for voluntary contributions, and establish an independent body tasked with administering the levy. Additionally, the sharing of the levy among various program implementers, including county governments and the National Housing Corporation, was incorporated into the bill. However, the proposal to have the levy deducted from the net or basic salary faced opposition. This led to a section of opposition MPs leaving the chambers, vowing to seek legal recourse against the newly approved law, KBC reports. The bill, now with the introduced amendments, is slated to be forwarded to the Senate for concurrence before being presented to the President for final approval.

Exports to Canada

Kenya and Canada are set to strengthen their bilateral trade and investment ties, Trade and Investment Cabinet Secretary Rebecca Miano has revealed. Emphasizing the importance of fostering a robust business environment, Kenya is actively pursuing collaborative efforts with the private sector. Canada stands as a significant trade partner for Kenya, with exports estimated at $18.71 million (Sh2.7 billion) in 2022, based on the United Nations COMTRADE database on international trade, the Star reports. Despite this, the trade value between the two nations has seen limited growth, experiencing a decline in Canadian imports for consecutive years in 2020 and 2021. The Cabinet Secretary, Rebecca Miano, shared that the Ministry of Trade and Investment is currently engaged in negotiations to expand market access. “Kenya is the gateway to Africa, and therefore your choice of Nairobi as the venue for this 2nd Canada-Africa Business Forum is no doubt strategic," she said.

Fuel prices

The Kenyan government has tripled the tax payable to the Energy and Petroleum Regulatory Authority (EPRA) for every litre of fuel purchased. The Ministry of Energy recently raised the Petroleum Regulatory Levy from Ksh0.25 to Ksh0.75 per liter, a threefold increase. This specific levy is one among nine taxes and levies imposed on fuel, and the additional funds generated are earmarked for supporting the operations of the energy regulator. The comprehensive list of taxes and levies on fuel includes excise duty, Road Maintenance Levy, Petroleum Development Levy, Railway Development Levy, Anti-Adulteration Levy, Merchant Shipping Levy, Import Declaration Fee, and Value Added Tax (VAT), the East African reports. Despite the significant hike in the Petroleum Regulatory Levy, the increase went relatively unnoticed, as the energy regulator simultaneously reduced the overall fuel price by Ksh1 per liter.

Kenya’s Eurobond

Kenya’s Eurobond yields have recently entered single-digit territory, signalling a positive shift in investor sentiment after the partial repayment of the Ksh285.6 billion ($2 billion) debut Eurobond. As investor fears dissipate, interest rates on the Eurobond maturing in June have seen a notable decline, dropping to 9.93 percent as of Monday's close, down from a peak of 15.09 percent recorded on February 9, 2024. This trend is mirrored in other Eurobond issuances, with yields on the seven-year sovereign bond maturing in 2027 hitting a low of 8.611 percent, down from 11.64 percent over the same period. An economist at IC Asset Managers, Churchill Ogutu, told the East African that “the risk premium attached to the 2024 Eurobond has eased, leading to the fall in yields. This has had the contagion effect of cutting yields in other issued Eurobonds as investors begin to look at Kenyan assets favorably.” Similarly, yields on the 10-year Eurobond maturing in 2028, the 12-year bond maturing in 2032, and the 13-year bond maturing in 2034 have all experienced declines, settling at 9.475 percent, 9.939 percent, and 9.749 percent, respectively. The move towards single-digit yields reflects a growing confidence among investors, potentially driven by the partial repayment of the debut Eurobond and improving economic conditions.

Online visitor registration fees

The Department of Immigration and Citizen Services has announced that citizens of Ethiopia and several other nations will no longer be required to pay the $30 fee per traveler when applying for entry to Kenya. The fee will no longer be applicable to citizens of Comoros, Congo-Brazzaville, Eritrea, Mozambique, San Marino, and South Africa. The exemption for these countries, effective February 15, is attributed to the visa abolition agreements or bilateral visa waiver agreements they have established with Kenya, the Nation reports. Bacha Debele, the Ethiopian Ambassador to Kenya, expressed gratitude for Kenya's swift decision to eliminate the payment requirement for Ethiopian citizens seeking eTA, the Nation reports. He clarified that while Ethiopian citizens can now enter Kenya without a visa-related payment, the mandatory completion of the eTA form online before arrival remains in place.