By David Wanjala
Businesses are starting to breathe life once again. In the streets of Nairobi, traffic is almost back to normal as a majority of those who had suspended operations begin opening up shop. Moving forward, these enterprises will have one clear objective, to try and make up for lost time.
However, this is not going to be easy for many. A majority of businesses, for instance, rely on credit for operations and with the pandemic having caused banks to re-evaluate loan strategies, the SMEs, especially, will be greatly affected.
Many SMEs will be forced to cut on operations to reduce expenses and this will have a direct impact on jobs. SMEs create the vast majority of job opportunities. Last year for instance, SMEs were responsible for 91% of the new job opportunities created.
Even though businesses will be scratching their heads on the matter, they can take a bit of the load off as the President recently threw them a bone by extending the business relief measures unveiled to cushion businesses as well as households from the effects of the pandemic until next year. Not only will the value-added tax remain at 14% as compared to 16% before, the PAYE income tax rate will be retained at 25% and the corporation tax will be 25%.
Additionally, President Kenyatta has also advised that persons earning a gross monthly income of up to Sh24, 000 will continue to enjoy a 100% tax relief. The turnover tax has also been reduced as the President proposed it to be 1% as compared to the previous 3% for all SMEs. Most important, the President also revealed that the Government in partnership with other financial institutions had set aside Sh100 million to provide access to credit in these troubling times.
It is our hope that the money set aside will reach the intended parties. We appreciate the ingenuity so far and hope that the Government will do even more to get the economy back to its feet fast enough before we engage the campaign gear for the 2022 General election.
