For most Kenyans, 2024 was a year to forget. The year was characterised by economic hardships that were compounded by higher taxes and statutory deductions, which culminated in widespread protests that forced the government to withdraw the Finance Bill 2024.The economy grew at its slowest pace in four years at 4.6 percent in the second quarter of the year—compared to 5.6 percent in quarter two of 2023—and is projected by the Central Bank of Kenya to record a full year growth of about 5.1 percent, down from 5.6 percent in 2023. Sectors such as construction, mining and quarrying saw a contraction in the period, while agriculture, electricity and water supply, transport and storage, accommodation and food services, finance and insurance marked a slowdown in growth compared to the corresponding period in 2023. Real wages also continued shrinking, with the private sector recording the first drop in average monthly pay for the first time in 30 years.Kenya Revenue Authority (KRA) data showed that in the quarter ending September, average private sector pay stood at Sh75,781, compared to Sh78,034 a year earlier.In 2025, the CBK is projecting the economy will grow at 5.5 percent, while the International Monetary Fund (IMF) has a more conservative growth target of 5.0 percent.It was not all doom and gloom however, as the country’s inflation rate fell significantly to a 17-year low of 2.7 percent by October on falling food and energy prices, offering relief to cash strained households. The shilling appreciated against the dollar by 20.9 percent in the year, offering relief to consumers through lower costs of imported goods and fuel. In February, the shilling had depreciated to an all-time low of Sh161 to the dollar, before gaining to end the year at Sh129.29. Investors in the financial markets also had a good year, with the Nairobi Securities Exchange (NSE) recording its best performance in years and bonds continuing to pay double digit gains. In the New Year, Kenyans will be hopeful of a continuation of the revival of the economy, but some pain points remain on the horizon.Some of the key economic events and trends to look out for in the new year include:New taxes in Finance Bill 2025The 2024 Budget Review and Outlook Paper (Brop) outlined government plans to raise an additional Sh343 billion in tax revenue in the 2025/2026 fiscal year, signalling additional taxes that risk a fresh round of social unrest.The 2024 Finance Bill was withdrawn by the government after widespread protests led by the youth, but the government brought back a large number of the rejected clauses through the Tax Laws Amendment Act 2024, which was signed into law on December 11. These revived measures included higher excise duty on alcohol products, internet data, imported ceramic tiles, glass products and washbasins and betting. Additional tax measures loom in the new Finance Bill which is set to be tabled before the end of April. This bill will underpin the KRA’s mammoth task of raising Sh2.732 trillion in tax revenue, an increase of 14.4 percent from the Sh2.389 trillion that is projected for the current fiscal year that ends in June 2025. This could well see the government revive yet more clauses that were in the rejected 2024 Bill, as well as ramping up efforts to bring more Kenyans into the tax net.According to the projections, the Treasury is eying an increase in income taxes by 11.9 percent to Sh1.32 trillion, Value Added tax (VAT) by 13.3 percent to Sh820.3 billion, excise duty by 20 percent to Sh389.6 billion and import duty by 25.8 percent to Sh201.3 billion.Agoa expires in SeptemberThe African Growth and Opportunity Act (Agoa) pact, which provides eligible sub-Saharan African countries with duty-free access to the US market for more than 1,800 products, expires in September 2025. (ICE NAIROBI)

Fonte notizia: Business Daily