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Toxic regulation harming Covid battle


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Toxic regulation harming Covid battle

Nairobi City skyline. FILE PHOTO | NMG

Summary

  • One of the main indicators of a healthy economy in today’s liberalised world is a country’s ranking as an attractive investment destination.
  • This is one thing Kenya is losing fast despite the government’s rhetoric of working on its profile as an investment destination.
  • Kenya has choking bureaucratic regulatory regimes that do more harm than good.

One of the main indicators of a healthy economy in today’s liberalised world is a country’s ranking as an attractive investment destination.

This is one thing Kenya is losing fast despite the government’s rhetoric of working on its profile as an investment destination. Kenya has choking bureaucratic regulatory regimes that do more harm than good.

TAX ADJUDICATION

To start with, for an extended period the Tax Appeals Tribunal had not been fully constituted until around May last year, occasioning much anguish to investors seeking various forms of tax adjudication against the Kenya Revenue Authority (KRA).

When the tribunal was constituted, floodgates of rulings caught investors and the government flatfooted amid the negative effects of the pandemic — confirming the need to have such a body in place for quick and smooth alternative dispute resolution.

Second is the handling of the importation of the Sputnik V vaccine.

The Pharmacy and Poisons Board approved the vaccine albeit for emergency use but the Ministry of Health days later went ahead to ban the vaccine, saying it was not officially registered in Kenya, demonstrating a poor regulatory regime that leaves a bad taste in the mouth of investors.

SPUTNIK V

This indictment worsened further last week when the company that imported the Sputnik V vaccine into Kenya was reported to have written to the Ministry of Health begging to be allowed to re-export the merchandise to Lebanon or Pakistan.

The bureaucracy is not only dampening the country’s investment profile — Kenyans are bearing a heavy cost of it too. Our lives are placed in jeopardy by the sheer administrative negligence and co-ordination.

Recently Health Cabinet Secretary Mutahi Kagwe sounded the alarm on the medical oxygen supply crisis, with Kenyatta National Hospital, the biggest referral facility in the country, suspending elective surgeries due to a biting shortage.

Kenya has 50,000 medical oxygen cylinders but only 60 percent of them are in circulation.

The cost of a single cylinder is about Sh80,000, making it capital-intensive to invest in new additional cylinders to ease the supply crisis.

Coincidentally, the crisis comes at a time when Kenya’s main medical oxygen manufacturer and supplier is caught in a shareholder fight that has clouded its plans for new investment to upgrade its air separation unit and transport fleet.

BOC Holdings had hoped to raise capital for the upgrade through the sale of shares to Carabcid Investments PLC, a locally listed investment company as a shareholder.

TRANSACTION GROUNDED

The whole transaction, however, stands grounded after BOC Kenya’s former chairman Ngugi Kiuna, who holds a 7.6 percent stake in the company, filed an appeal at the Capital Markets Tribunal on March 2 objecting to the buyout which he says undervalues the Nairobi Securities Exchange-listed firm.

Following the step, BOC Kenya has told its shareholders to stop sending in forms committing to sell their shares to Carbacid Investments, which has offered to acquire the company at Sh63.5 per share or a total of Sh1.2 billion.

The Capital Markets Tribunal is yet to rule on the matter.

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