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KQ Announces Flights to Geneva and Rome

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In a bid to increase its income by capitalizing on business and leisure visitors to Europe, Kenya Airways is set to launch flights to Rome and Geneva this week.

The flights to Rome will be restarting after a seven-year hiatus. This follows a suspension after a 2012 performance review led to the restructuring of flights.

Sebastian Mikosz, the outgoing KQ CEO, highlighted Rome as an important destination when announcing the airline’s new routes. Due to its culture and history, the Italian capital has earned the status of a “global city” – leading it to be among the world’s top tourist destination.

He also pointed out that Geneva, the carrier’s newest route, complements Nairobi, which is its continent’s hub for various international agencies.

As a host to the largest number of international organizations, Geneva is renown as the global hub for diplomacy.

Each of the two routes will be serviced by Kenya Airways’ 787 Dreamliner.

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Banks

Safaricom and Equity in Deal to Offer Loans to Contractors

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Safaricom contractors that may find themselves short on cash will now be able to access as much as Sh200 million in unsecured short-term loans following a deal between the telco and Equity Bank. This will help the contractors to maintain cash flow positions before receiving payment for their services.

The firm wrote a letter addressed to its business partners in which it said that the aim of the deal is the creation of a more procurement-ready business. The main beneficiaries will be Safaricom dealers, suppliers, and agents.

In the fiscal year ended March 2019, Safaricom had 440 dealers, 156,000 M-Pesa agents, and 1,164 suppliers.

“We are pleased to inform you of our partnership with Equity Bank which will offer our partners financing solutions linked to purchase orders and invoices,” said Francis Murabula, Safaricom’s head of supply chain management, in the letter.

He is asking the dealers, suppliers, and agents for consent to share their information including contact details, invoice and purchase order information to enable loan processing for potential firms.

Contractors will be able to borrow from Equity before or after they fulfill their contractual obligations with Safaricom.

The terms and amount of the loan applied for will depend on each company’s credit rating.

Therefore, for a contractor to qualify for an unsecured loan of up to Sh200 million, they have to be using unpaid accounts for goods and services that have already been provided to Safaricom as their collateral.

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Banks

Kenya’s Victoria Bank Appointed to Invest Sh1.5bn in Fin-tech Start-ups

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Victoria Commercial Bank (VCB), based in Kenya, has been appointed to oversee the investment of a Dubai-based equity fund’s kitty worth Sh1.5 billion in African and Asian financial technology startups.

This will see 1.7 million customers hailing from several countries including Bangladesh, Kenya, Ghana, Nepal, Tanzania, Sri Lanka, and India benefit from the Nimai Emerging Financial Services Fund (NESF) facility.

“The markets were chosen based on the existing (fintech) presence and experience. It integrates investment expertise with deep operational capability and resources,” said a joint statement.

According to Yogesh Pattni, the VCB chief executive, the deal presents an opportunity for a stronger partnership with Nimai Capital. The latter recently set up a kitty worth Sh1 billion to fund onward lending to enterprises operated by women.

Housing finance, insurance, microfinance, banking, and retail are some of the technology mobility-enabled emerging financial services opportunities that will receive investment from the fund.

Pankaj Mundra, NESF’s co-founder and managing director, expects VCB’s extensive understanding of the Kenyan market and business experience to be of benefit to the fund.

“We look forward to working with Victoria Commercial Bank to source and develop investment opportunities for the Fund across East Africa,” said Mr. Mundra.

The benefits to be enjoyed by investee firms include expert financial advice from line companies, system integration with Indian fintech firms and access to financial services from the diaspora.

“We have a firm belief that the fund will make a significant and positive impact in the lives of millions of families in addition to generating appropriate financial returns for investors,” the statement added.

A proven track record is a condition for start-ups to access funding.

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Business

SMEs to Pay 3 Percent Turnover Tax to KRA

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Following the Treasury’s review of the 15 percent presumptive tax contingent on county tax fees, Small and Medium Enterprises (SMEs) will now have to surrender 3 percent of their turnover to KRA.

The Finance Bill proposes a re-introduction of the turnover tax since the presumptive tax is static and does not have any timelines for the raising of single business permit fees by counties, resulting in businesses paying the same tax every year.

“The Finance Bill proposes to re-introduce turnover tax at the rate of three percent of the gross receipts of the business payable monthly and is to be paid by any resident person whose business turnover does not exceed Sh5 million annually while the presumptive tax will be maintained as a minimum tax,” it said.

Rose Mwaura, the chairperson of the Institute of Certified Public Accountants of Kenya, doubts the likelihood of the counties co-operating with the Treasury to collect the tax. This is as the Treasury directed county governments to oversee the collection on its behalf in June 2018.

“It was a failure since no harmonization of the national and county revenue collection systems was done. How did you expect county treasuries to succeed in collecting revenue on behalf of the national government where they have failed to meet their own revenue collection targets?” she asked.

As a condition of the renewal of 2019 business permits by counties, every SME was required to pay the presumptive tax through the Kenya Revenue Authority iTax platform.

According to Christopher Kirathe, EY tax partner, the aim of re-introduction of the turnover tax was for the government to collect higher revenues as it will use the data it has on individual earnings by SMEs to compel more of them to pay.

“The proposal this year is because the business license money doesn’t increase year-on-year…but the turnover tax will see more people pay since their records have been already captured,” he said.

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