Browsing: Kenya’s banking sector

• Kenya’s banking sector corporate taxes have been on the rise in the past few years.
• A new analysis shows that the contribution of the banking sector towards Pay-As-You-Earn was 7.79 per cent of all PAYE collected in the country.
• The study included 43 institutions—37 banks and six microfinance institutions.

The total tax contribution (TTC) from Kenya’s banking sector reached $1.5 billion (KSh190.26 billion) in 2023, a 4.96 per cent increase from the previous year, the Kenya Bankers Association has said. This marks the highest TTC since the study began in 2017, representing 8.78 per cent of the total government tax receipts for the financial year ending in June 2023.

According to the Banking Sector Total Tax contribution report, the TTC comprised $793 million (KSh102.52 billion) in taxes borne by the participating banks and microfinance institutions and $678.8 million (Ksh87.74) billion in taxes collected.

While the overall tax contribution grew, …

• Kenya’s National Treasury has been forced to rely on the domestic credit market to finance the budget deficit.
• In July 2023, the World Bank cautioned Kenya’s government over persistent crowding out of the private sector from the local debt market due to heavy borrowing.
• In its latest outlook report, the lender says that weaknesses in Sub-Saharan Africa’s biggest economies, Nigeria, South Africa and Angola, will limit the region’s growth in 2024.  

The World Bank has revised Kenya’s growth projection upwards to 5.2 per cent even as it anticipates that in 2024, economic growth will be fueled by a rise in private sector credit in the wake of an expected reduction in local borrowing by the state.

The multilateral lender predicts the country’s growth will reach an average of 5.2 per cent, attributing this positive outlook to diminishing inflationary pressures and improved financial conditions.

This rate marks an increase from the …