Finance Act 2023 Kenya Pdf Download
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This is a welcome move considering that the Finance Bill had only proposed to exclude microfinance institutions from the interest restriction provisions. It is laudable that the Act has broadened the exemptions to include other key players in the economy whose ratio of EBITDA to interest expense would naturally violate the threshold set out for thin capitalization purposes.
This brief provides a summary of the technical assistance, key progress, and results thus far, and lessons learned and recommendations for expanding access to finance for water service providers in Kenya.
The UK and Kenya have agreed to fast-track six projects worth KES 500 billion to accelerate the flow of climate finance into Kenya after the UK Prime Minister and President Ruto met at the COP27 climate summit in Sharm-el-Sheik, Egypt.
The UK Government will commit KES 2 billion to a new guarantee company that will lower investment risk and unlock KES 12 bn of climate finance for Kenyan projects over the next 3 years, through collaboration with CPF Financial Services and other private investors.
But the UK recognises that there is further work to do. During his recent visit to Kenya, COP President Alok Sharma reaffirmed the need for progress on access to finance and transformational adaptation action by COP27.
Guarantees: The UK Government, through the Private Infrastructure Development Group, is collaborating with CPF Financial Services and other private investors, including Cardano Development, to launch a new guarantee company that will de-risk investments and unlock private finance from pension funds and insurance companies for projects in Kenya. The UK government will commit KES 2 billion to the company, which will mobilise KES 12 billion of new climate finance for Kenyan infrastructure over the next 3 years.
Increasing funding and launching UN work for dealing with climate impacts: record amounts of adaptation finance have been pledged to the Adaptation Fund and the Least Developed Country Fund under the UK Presidency. In addition at COP26, countries agreed to double 2019 levels of adaptation finance by 2025, the first quantified adaptation finance target.
Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries. SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. They represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included. According to our estimates, 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world. In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs. However, access to finance is a key constraint to SME growth, it is the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries.
In Nigeria, the Development Finance Project supports the establishment of the Development Bank of Nigeria (DBN), a wholesale development finance institution that will provide long-term financing and partial credit guarantees to eligible financial intermediaries for on-lending to MSMEs. The project also includes technical assistance to DBN and participating commercial banks in support of downscaling their operations to the underserved MSME segment. As of May 2019, the Development Bank of Nigeria credit line to PFIs for on-lending to MSMEs has disbursed US$243.7 million, reaching nearly 50,000 end-borrowers, of which 70% were women, through 7 banks and 10 microfinance banks.
In Morocco, the MSME Development project aimed to improve access to finance for MSMEs by supporting the provision of credit guarantees by enabling the provider of partial credit guarantees in the Moroccan financial system to scale up its existing MSME guarantee products and introduce a new guarantee product geared towards the very small enterprises (VSEs). As a result of the project, the number and volume of MSME loans are estimated to have increased by 88% and 18%, respectively, since the end of 2011. Cumulative volume of loans backed by the guarantees during the life of the project is estimated at $3.28 billion. With significantly increased lending supported by guarantees, PFIs were able to continue building their knowledge of MSME customers, refining their systems to serve them more effectively and efficiently. Owing to guarantees, many first-time borrowers were able to generate credit history, which made it easier for them to obtain loans in future.
In Ethiopia and Guinea, the World Bank Group is supporting the local governments in creating an enabling framework which is conducive to launching and growing leasing operations, as well as attracting investors, to increase access to finance for SMEs. It is doing so by working at the macro, mezzo, and micro levels, supporting the governments with legal and regulatory reforms, and working with industry players to create technical partnerships and increase market awareness and capacity. In Ethiopia, the project generated a $200 million credit facility supporting 7 leasing intuitions and introducing 4 new leasing products into the market: hire purchase, finance lease, microleasing and agrileasing. As of June 2019, 7,186 MSMEs have accessed finance valued at over $147 million. The project in Guinea supported the adoption of the national leasing law and the accompanying prudential guidelines for leasing, which in turn, have helped 3 companies to launch leasing operations. To date, these institutions have supported 31 SMEs through the disbursement of leases valued at $25 million.
Blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development. Blended finance has mobilized approximately $200 billion to-date based on Convergence data.
Housing Finance Company Limited is a large mortgage finance company, serving the mortgage needs of the Kenyan population. As of December 2020[update], the company's total assets were valued atKSh55,445,249,000 (approximately US$497 million), with shareholders' equity of KSh8.562 billion (approx. US$76.8 million).[2]
How health facilities are financed affects their performance and health system goals. We examined how health facilities in the public sector are financed in Kenya, within the context of a devolved health system.
The national and county government should consider improving health facility financing in Kenya by 1) standardizing budgeting and planning processes, 2) transitioning public facility financing away from a reliance on user fees and donor funding 3) reforming public finance management laws and carry out political engagement to facilitate direct facility financing and financial autonomy of public hospitals, and 4) assess health facility resource needs to guide appropriate levels resource allocation.
Public healthcare facilities are not only a major avenue for the delivery of key healthcare interventions, but also consume a substantial amount of health sector resources. For instance, public hospitals are said to consume between 30 to 50% of health sector budgets in low-and-middle income countries [1]. A key determinant of the performance of public health facilities is the healthcare purchasing arrangements, and specifically the mechanisms used to finance their operations. How public healthcare facilities are financed can affect health system goals in several ways. For example, the reliability of sources of funds may influence achievement of financial risk protection goals. Under-resourced healthcare facilities are likely to deliver poor quality services and outcomes of care. Resource allocation mechanisms for public healthcare facility resources may influence the efficiency and equity of their operations, as well as affect the quality of services provided. Payment mechanisms, the efficiency of their disbursements, and the autonomy healthcare facilities have over their finances may generate unintended incentives to healthcare providers as well as compromise the operational efficiencies of healthcare facilities. Understanding how public healthcare facilities are financed is therefore an important research question.
In contrast, health centers and dispensaries faced funding flow challenges because centrally held funds meant for their operations often failed to reach these facilities [8]. For instance, an assessment found that almost a third of allocations approved were not received by these health facilities in the mid-2000s [8]. To address this funds flow challenge at the primary healthcare facility level, the government established the health sector services fund (HSSF) in 2010 to reform funding flow arrangements of primary healthcare facilities by facilitating the direct transfer of funds to bank accounts operated by health centers and dispensaries, the Ministry of Public Health and Medical Services further issued legal notice 79 (2007) and 155 (2009) that allowed revenues for health facilities not to be transferred to the consolidated fund account at the District Treasury, and setting up health facility committees (HFCs), comprised of facility leadership and community representatives, to oversee the management of these funds at the facility level [8]. HSSF was financed by the government, and development partners (the World Bank and the Danish International Development Agency (DANIDA) [8]. This reform ensured that primary healthcare facilities had the financial autonomy needed to operate effectively.
In 2013, just as the transition to a devolved system of government was commencing, the newly elected national government abolished user fees completely in public health centers and dispensaries. The government set up a user fee reimbursement fund to replace user fees forgone and structured this as conditional grant to county governments, ringfenced for use by primary healthcare facilities. Public hospitals continued to charge user fees. The country also implemented a new public finance management (PFM) law (PFM act 2012) that among others set up a centralized county revenue fund (CRF), where all county revenues are to be operated from [9]. The centralization of county financial management usurped financial autonomy from public hospitals [10]. In 2014, a special purpose account (SPA) was introduced to channel conditional grants from donors and government. The SPA facilitated the ringfencing of donor and government funds for specific use, in contrast to the CRF which was for general use.
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