KRA revenue deficit grows as traders keep shops closed

By Kenneth Kwama

Nairobi, Kenya: The new Government might have to borrow heavily to fund some of its ambitious programmes following a drastic drop in the amount of revenue collections by the Kenya Revenue Authority (KRA) during the weeks leading up to the March 4 General elections.

Highly placed sources at the tax body told The Standard that daily collections by the customs services department, which is the largest of the four revenue departments in the tax agency, have fallen from a high of Sh1 billion collections per day to about Sh700 million.

“Collections have gone down and the figures are not looking good. This is because many businesses closed fearing violence after the elections,” said a source who requested not to be named because he is not authorised to talk on behalf of KRA.

Efforts to reach KRA Commissioner General, John Njiraini, for comment were unsuccessful as he did not respond to our phone calls.

But the shortfall could be bad news for the incoming Government, as it translates to a daily deficit of about Sh300 million, a massive amount that will take a lot of effort to bridge.

Largest department

The customs department is the largest in KRA’s network in terms of manpower, revenue collection and countrywide operational network, with a primary function of collecting and accounting for import duty and Value Added Tax on imports among other taxes.

Most car bazaars in Nairobi remained empty as business owners kept their stocks away fearing potential damages in case of violent demonstrations after the Coalition for Reforms and Democracy (CORD) disputed Uhuru Kenyatta’s victory in the presidential race.

Operations at the Mombasa port have also witnessed reduced activity in the last two months after importers opted to use the Dar-es-Salaam port, with the daily container population moving down from 12,299 Twenty Foot Equivalent (teus) to 12, 068 teus.

“It has made things very easy for those whose cargo is arriving now. A ship docked with my vehicle on the elections day (last Monday) and by Tuesday, I had been cleared and was safe with me in Nairobi. This is a process that takes up to three weeks when the port is clogged,” said Benard Omondi, who imports vehicles for sales locally.

Strategic concern

The Mombasa port serves South Sudan, Uganda, Democratic Republic of Congo, Burundi and Rwanda. While it was operating at its peak, increasing the handling capacity, it was among the strategic concern in the entire East African Community as the country prepared for elections.

 The country has been struggling to position itself strategically as the main gateway in Indian Ocean to serve the region, a position that Tanzania — through its port in Dar-es-Salaam — is also aiming to achieve.

Data from the Kenya Ports Authority (KPA) shows that Uganda accounts for 80 per cent of cargo in the port of Mombasa.

Democratic Republic of Congo, Rwanda and Tanzania each account for five per cent, while South Sudan accounts for 3.5 per cent.