I mean look at the economy situation right now. Very little money in circulashen. You can say its a good thing coz of checking inflashen, but that low currency circulation results to economic stagnashen…
Its soo bad that even ‘birrionaires’ are playing and hoping to win the sportpesa jackpot…!
@uwesmake ambia uncle Mwangi of ikwete tumeinua mikono…
This thing was not well thought out in the first place.
So many decishens were made emotionally, not logically.
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Pesa imefichwa na incumbent politicians kwa nyumba hawawezi weka benki. Wakianza campaign tuombe pesa irudi circulation.
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how did you calculate low currency circulation? au tu-redio hatusongi?
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Too soon to draw conclusions, banks are still in business and they will eventually need to loan out so that they maintain some measure of the previous super profits. Even Equity had stopped the Easy plus loan on Equitel but has reintroduced it silently.
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The Bankers will do anything and everything to prove that capping interest rates was wrong.
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Pesa imefichwo juu ya oncoming elections plus we have the budget coming along besides too much has been looted lazima pesa ifichwo ndio hao ma looters wa release zingine into the economy
Mtu wa turedio, observation umemakia hapo nje ya stall yako watu wakipita are not equal to what all the actuaries and economic experts put into action. Juu hakuna mvua kwako si kumaanisha Kenya hakunyeshi.
Anyway, si I thought the kawaida excuse is usually ‘it’s an election year’.
and the changed school calendar really distorted spending patterns…wale tunafanya biashara ya nguo tunaona extension ya njaanuary…
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Slowly, the banks are coming around.
Capping interest rate is two fold. It means lending money to the worst defaulter and your best borrower at almost the same rate. A thin spread. If none defaults, you are in good shape. If one defaults, its two problems. One, you struggle to recover your principle. Two, the profits generated in interest paid back by all your good borrowers gets anhillated to cover that principle of the one defaulter. In principle this toughens lending to high risk borrowers. And even to decent borrowers. Business will never be the same.
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#COPIED
How the new tax bands will affect your income in 2017
Nation, Saturday December 31 2016
Many readers have asked me this: “Is it true that PAYE tax rates will be reduced by 10 per cent from January 2017?”
The answer is an emphatic NO! The tax rates are not being reduced, but the method of calculation will change and the effect will be a reduction in the amount payable to the taxman.
First of all, let me dispel the common misconception that high-income earners pay 30 per cent tax. That is also not true: there is no individual taxpayer in Kenya who pays that much tax.
The misunderstanding arises from the fact that many people do not know how taxes are calculated — a very sad state of affairs indeed.
How can you not be interested in knowing how the government takes your money? Isn’t it the height of irresponsibility?
TAX BANDS
There are five tax bands in Kenya: 10pc, 15pc, 20pc, 25pc and 30pc.
Currently, the first Sh10,164 is charged 10pc tax; the next Sh9,576 (that is, from Sh10,165 to Sh19,740) is taxed 15pc; the rate for the next Sh9,576 (that is from Sh19,741 to Sh29,316) is 20pc; the next Sh9,576 (from Sh29,317 to Sh38,892) is charged 25pc; after that, any amount from Sh38,892 attracts 30 per cent tax.
So, if you earn Sh40,000 per month, only Sh1,108 (that is Sh40,000 – Sh38,892) will attract the 30pc tax; not the entire Sh40,000.
For this income, the first band attracts Sh1,016.40 tax (10pc of Sh10,164); for the second band it is Sh1,436.40 (15pc of Sh9,576); the third band is taxed Sh1,915.20 (20pc of Sh9,576); the fourth band is charged Sh2,394.00 (25pc of Sh9,576). Finally, the top Sh1,108 is charged 30, that is Sh332.40.
These amounts from each tax band are then added together to get the total tax. The answer is Sh7,094.40. This is much less than what you would get if you simply calculated 30 per cent of Sh40,000 (= Sh12,000).
TAX RELIEF
There is still one more step remaining before getting the final tax payable. Every individual taxpayer (that is, not companies) qualifies for tax relief of Sh1,162 per month.
This is subtracted from the above calculation, bringing the net tax payable to Sh5,932.40.
So what will happen from January 2017? First, the tax relief will be increased to Sh1,280 per month. Next, the 10pc tax band will cover income up to Sh11,180 per month. From there, the remaining bands will increase by Sh10,533.50 up from the current Sh9,576.
Thus, from Sh11,181 to Sh21,714 will be charged 15pc; from Sh21,715 to Sh32,248 will attract 20pc; from 32,249 to Sh42,782 will be taxed 25pc; and any income above Sh42,783 will be charged 30pc.
So, for a person earning Sh40,000 per month, none of that income will fall into the 30pc band. The top rate for this income will be 25pc and only Sh7,751 (= Sh40,000 – Sh32,249) will attract that tax.
The corresponding taxes for each band will be Sh1,118 (for the 10pc); Sh1,580.10 (for the 15pc); Sh2,106.80 (for the 20pc); and Sh1,937.75 for the 25pc band.
Adding all these values makes a total of Sh6,742.65. Deducting the Sh1,280 personal relief leaves a net tax of Sh5,462.65.
This is Sh470 less than the current value. It is certainly not a 10pc reduction.
I hope this helps.
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It was a mistake. The issue on high interest rates should have been solved in any other way.
The government is simply borrowing at very high interest rates which has led most banks to increase their investment in bonds at the expense of the local mwananchi. Massive retrenchments have also been in the works though this was long due as most of the work has been automated by banking software and mobile banking.
The CBK is also in a catch 22 situation. The shilling is crumbling against the dollar which makes things expensive as we import WAY more than we export. Logic would demand that the CBR rate be increased to strengthen the shilling but at the same time this would mean that the economic situation would deteriorate further. And since it is the election year obviously we follow the path with the least public backlash which means keep the rates low to appease the middle class
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Which are these high interest rates that the government is borrowing at?
Banks are only trying to blackmail the country into having the interest rates capping law repealed. I support the government as far as the capping of rates goes. The number of businesses and investments that have a return rate greater than 20% are very few, with most being illegal businesses. (tenderpreneurship, kickbacks, smuggling, theft…). Therefore taking a loan at 20-25% to go and do business that has a return 0f between 7-15% (where most legit businesses fall) is a form of slavery, not smart investment. The law just delivered many people from enslavement by the greedy banks.
When reality dawns on banks that they are commercial enterprises with an objective of making a profit, they will stop whining and actually adapt to the new environment. I just hope that the government stays strong till when this will happen.
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Which are these high interest rates the government is borrowing at?
The 10yr government bond currently has a yield of 14.09℅. http://www.tradingeconomics.com/kenya/government-bond-yield
Why would any reasonable institution give money to a common mwananchi at 14℅ and his/her probability of defaulting are quite high while I can lend to the government at the same interest rate with totally no risk of defaulting?
Remember there are only around 10m Kenyans with good credit according to reports from the CRBs. All the 40+ lenders have to fight for such a small potion of lenders.
If all the banks lend to govt,who will lend to the mwananchi? This means the mwananchi can’t grow because they lack credit to grow their businesses…Remember govt doesn’t pay cash when u supply them…That delay drains mwananchi’s capital
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Not quite.
Lending is becoming lesser and lesser of a priority for commercial banks. Try applying for a loan Today and see the terms you’ll be met with if you do get an approval… a higher processing fee, DSR requirement, shorter tenor etc
The focus for banks has shifted to non-funded income lines.
If they have to lend, the gvt is the best borrower as explained hapo juu.
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But the mwananchi is the one being hurt. KCB and Equity have gone with these short term ‘shylock-level monthly interest rates’ as a means to bend the law which has proven to be their biggest sector of growth.
Shylock businesses are also evolving way faster, e.g. mshwari, Kcb mpesa, equitel loans, Saida, Tala, Branch and a bunch of others which only goes to prove the credit crunch is being felt as the common man is unable to cater for small day to day expenses
Let us wait for 2018 Q1 and we will know for sure whether it was right or wrong. Currently banks are reporting profits as usual boosted by returns on government securities.
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mimi husema na nitaendelea kusema…KAMA WEWE NI MWANANCHI WA KAWAIDA (1000-100000000 Mirrion Kes), then join a good performing and a well managed SACCO especially pande ya financing . Hizi commercial banks takamua nyinyi hadi kwa settings.