The World Health Organization has declared COVID-19 novel Corona virus, a global pandemic, meaning that it will have a sustained global impact. The Virus has spread in over 180 countries
The shared brief assesses the economic stimulus measures adopted by different countries to contain the repercussions of COVID-19 pandemic.
Governments and central banks all over the world have enacted fiscal and monetary stimulus to counteract the disruption caused by the Corona virus. It’s on this basis that the Central Bank of Kenya, in partnership with the private sector, undertook the following steps:
1. Free Mobile Money Transfers:
The commercial banks waived all charges for mobile money transactions up to Kshs 1,000 until 30th June 2020. Transaction limits were further increased to Kshs 150,000, the daily limit for mobile money transactions increased to Kshs 300,000 with no monthly limit for mobile money transactions. This was in line with the presidents’ recommendation on the use of cashless transactions such as mobile money and credit cards in order to avoid the risk of transmission through physical handling of money. Source
2. Extension and restructuring of the loans by Commercial Banks
Commercial Banks made provisions to extend relief to borrowers on their personal loans based on their individual circumstances arising from the pandemic and will review requests from borrowers for extension of their loans for a period of up to one year. SMEs and corporate borrowers can contact their banks for assessment and restructuring of their loans based on their respective circumstances arising from the pandemic. Banks will meet costs arising from the extension and restructuring of the loans. Source
3. The Central Bank of Kenya (CBK) released Shs 7.4 billion
From the demonetization excise to support Government efforts to contain the spread of Coronavirus in the country. The government further committed Shs 1billion towards hiring of more health workers needed to increase the country’s capacity to deal with the Coronavirus pandemic. Source
4. The lowering of the Central Bank Rate (CBR)
To 7.25 percent, as a result the commercial banks to lower their lending and deposit rates leading to more affordable credit Source
5. The Government released 400,000 liters of ethanol to support the manufacture and provision of hand sanitizers to the public
The ethanol that had been impounded by the multi-agency team on contraband goods has been released to to oil companies for the blending of hand sanitizers to be distributed free of charge to the public.
Furthermore, in Kenya the president gave the following tax concessions and directives to cushion against economic effects of COVID 19 Pandemic
100 % Tax Relief for persons earning gross monthly income of up to Ksh. 24,000.
Reduction of Income Tax Rate (Pay As-You-Earn) from 30% to 25%
Reduction of the VAT from 16% to 14%
Reduction of Resident Income Tax (Corporation Tax) from 30% to 25%
Reduction of the turnover tax rate from the current 3% to 1% for all Micro, Small and Medium Enterprises (MSMEs)
Appropriation of an additional Ksh. 10 Billion to the elderly, orphans and other vulnerable members of our society
Temporary suspension of the listing with Credit Reference Bureaus (CRB) of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account fall overdue
Settle all Pending bills owed by the National and County Governments: - This money is owed to MSMEs and individuals and will go a long way to improve liquidity in the economy.
Kenya Revenue Authority to expedite the payment of all verified VAT refund claims amounting to Ksh. 10 Billion
Ksh. 1.0 billion from the Universal Health Coverage kitty, appropriated towards the recruitment of additional health workers to support in the management of the spread of COVID-19
Voluntary reduction in the salaries of the senior ranks of the National Executive
This article was written by Ann who is a Strategy and Finance Consultant at Wylde International based here at the SNDBX, Wylde provides strategic planning and business coaching services to ambitious SMEs and people so that you can develop practical steps to unlock the winner in you and achieve your business aspirations.
If you have any feedback or inquiries write to him via this link >> Email Ann