Crowe Horwath
TM
African Footprint
Technical Newsletter of Sub-Saharan Africa
Issue 1 - September 2011
About Kenya
Inside This Issue:
Kenya is located in the southern region of East Africa on a land size of
582,65sqkm with a population of 40,046,566 according to the 2009 census.
The capital is Nairobi which hosts an estimated population of 3,138,369 and
most of the government business headquarters.
About Kenya
1
Floating Back Up
2
Horwath HTL Participates in
World Export Development
Forum for Sub-Saharan Africa
2
Mauritius - International
Financial Centre
3
Investment in South Africa
3
Formation in South Africa of
Horwath HR Consulting
4
It has 42 ethnic groups, each with a unique language, divided into three
major linguistic groups: Bantu, Nilotics and Cushites. Swahili (Kiswahili) is the
national language and English is the official language and the medium of
instruction.
The official currency is known as the Kenya shilling. Between 2003 and 2010
it averaged about 85 to US$1.
The Gross Domestic Product (GDP) is made up of agriculture 16%, industry
22% and services 62%. The GDP per capita for the year 2010 was $1600.
The agricultural sector remains in the forefront of Kenya's economy despite
the persistent drought that has ravaged the Eastern African area for the last
few years, with the Kenyan Highlands comprising some of the most
successful agricultural production activities on the African continent (2010).
The country exports a variety of cash crops like coffee, tea, horticultural
products like flowers, etc. The country has a wide range of tourism
destinations and a unique physiography which adds value to the economic
growth. Tourism is the largest foreign earning sector followed by flowers, tea
and coffee. (Kenya's economy update Dec 2010).
The Kenyan tax system features corporate and personal income tax, value
added tax on goods and services, customs and excise duties, and stamp
duty. There are also a number of statutory levies and social security
payments. Taxes are collected by self-assessment and by withholding tax on
payments to residents and non-residents. Employers are obliged to withhold
and account for income tax on employee remuneration and benefits (the
PAYE system).
Audit Tax Advisory
Crowe Horwath
TM
Horwath HTL Participates in World
Export Development Forum for
Sub-Saharan Africa
Floating Back Up
In the wake of the global financial crisis, business failure
or bankruptcy is still a very real fear for many
businesses and a sad reality for some. In addition to the
unfavourable economic conditions, it is often the
culmination of sub-optimal strategic management, weak
internal controls and poor corporate governance
particularly with regard to fraud and unethical practices.
In addition to evaluating the management's use of the
going concern assumption in the preparation of financial
statements as required of them by International
Accounting and Auditing Standards, auditors and
professional accountants have a key role to play in
helping companies back on their feet.
Companies coming out of bankruptcy or statutory
management require, more than ever, professional
advice on all the five components of internal control as
articulated by the Internal Control Framework issued by
the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The entity's cash
management, debt financing policies, asset
management, transparency and disclosure are also
sensitive and crucial areas that need to be critically
examined.
Similarly, with its pool of professional expertise, Crowe
Horwath EA helps firms exit bankruptcy through
successful strategic reorganisation and reconstruction.
We offer professional advice in the form of due diligence
checks on potential merging partners and
recommendations on suitable divestiture. We also
prepare cash-flow forecasts on the effectiveness of
spinoffs and split-ups which are just what these entities
need at this critical juncture.
Closer to home, Uchumi Supermarkets, a public listed
company in Kenya that became insolvent due to
overambitious expansion and accrued debt, is serving
as an inspirational story after successful implementation
of a sustained recovery programme (Speech by NSE
Chairman Eddy Njoroge, 31 May 2011). At the time of
its collapse, it was the largest supermarket in Kenya
both in the number of retail outlets and capital
investments. Its failure dealt a huge blow to the Kenyan
economy or “uchumi” as it's called in Kiswahili. Thus its
recent relisting on the Nairobi Stock Exchange on
31 May 2011, exactly five years to the date of its
suspension, is a national triumph and solid proof that
recovery from bankruptcy is possible.
Florence Ilovi
Crowe Horwath EA
www.crowehorwath.co.ke
Recently, Horwath HTL South Africa was invited to
participate in a World Export Development Forum
(WEDF) workshop which was hosted by the International
Trade Centre (ITC), a joint agency of the United Nations
Conference on Trade and Development (UNCTAD) and
the World Trade Organization (WTO) which works with
developing and transition countries to develop their
export markets.
With more than half of the world's poorest countries
having identified the development of tourism as a feasible
way to participate in the global economy and thereby
reduce poverty, tourism-led growth and development
should be achievable for Least Developed Countries
(LDCs). For instance, the Maldives, where tourism
accounts for some 30 percent of Gross Domestic
Product, recently graduated from their status of Least
Developed Country.
The WEDF workshop's objective was to bring together
representatives from the international business
community, high-level public sector representatives, and
policymakers of the LDCs in Africa to discuss tourism-led
growth and inclusive sustainable development. Through
the various roundtable discussions, the international
business community engaged with public sector
representatives in order that they better understand the
kinds of issues that are important to international
companies including the biggest impediments and
opportunities to doing business in LDCs.
The outputs of the workshop will inform the framework of
the Fourth United Nations Conference on the Least
Developed Countries (LDC-IV). LDC-IV is the UN's
largest conference, held every 10 years to adopt
measures and strategies for sustainable development.
About Horwath HTL:
Crowe Horwath International's Hotel, Tourism, and
Leisure Group (Horwath HTL) is the world's largest
consulting organization specialized in the hospitality
industry, with 50 offices in 39 countries and 220
dedicated professionals, of which almost 40 percent are
Partners or Directors.
Since 1915 the Horwath HTL Group has been providing
impartial, specialist advice to our clients and is
recognized as the founders of the Uniform System of
Accounts which subsequently has become the industry
standard for hospitality accounting.
The Horwath HTL office situated in Cape Town South
Africa was established in August 2000. Although the
office is located in South Africa, the Horwath HTL South
Africa member firm is responsible for all hotel, tourism
and leisure consulting in Sub-Saharan Africa.
Michelè de Witt
Horwath HTL (South Africa), Cape Town, South Africa
CapeTown@HorwathHTL.co.za
www.HorwathHTL.co.za
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Crowe Horwath
TM
Investment in South Africa
South Africa is one of the major
financial and commercial
powerhouses in Africa and is
being sought more and more
frequently as the country in which
to invest and through which
investments are made into other
parts of Africa.
The advantages to such investors include the following:
1
Stable government and political climate.
2
Extremely well developed tax system. South
African resident taxpayers are liable for tax on
worldwide income and capital gains. There are
however significant exemptions for International
Headquarter Companies situated in South Africa.
Entities not tax resident in South Africa are taxable
only on South African source income and only
limited capital gains.
From 1992 Mauritius evolved into a respectable
International Financial Centre. The country has travelled
a long way in the relatively short span of time to reach
where it is today.
3
The exchange control rules which do exist have
been relaxed continuously over a period of more
than 10 years and have hardly any impact on
foreign owned companies.
The credit for the current state of play goes to all the
stakeholders ranging from the government, the regulatory
authorities, the financial institutions to the operators in the
sector. The declared policy from the beginning was that
the country would follow the best practice and have the
most up to date legislation to be able to compete in the
international environment. The sector is characterized by
the cooperation of all the key players.
4
Well developed laws to combat money laundering
and tax evasion both local and international.
5
Over 70 comprehensive double tax treaties in
force including 19 with other countries in Africa. A
further 20 treaties are in the process of negotiation
including 8 in Africa.
Mauritius International Financial Centre
The transparency with which operations in the sector are
conducted has won the approval of all international
regulatory authorities. The country benefits significantly
through the operation of double taxation treaties with an
ever growing number of countries. Of particular interest is
the emphasis placed by the country on such agreements
and other economic ties with the African continent with
special attention on Sub-Saharan Africa.
The sector is largely influenced by the global economic
trend. The financial crisis of 2008/2009 was followed by a
marked slowdown in the growth of new business. The
current year is witnessing a gradual pick up and the trend
is expected to continue for the rest of the year.
Khemraj Sharma Sewraz
Crowe Horwath (Mur) Co
contactus@crowehorwath.mu
www.crowehorwath.net/mu
In addition, South Africa is negotiating Tax
Information Exchange Agreements with a further
15 countries.
6
A new Companies Act (effective from 2011) brings
our corporate legislation fully up to date.
7
Extremely well developed banking system.
8
Numerous highly qualified and experienced
professional legal, accounting and tax advisors.
9
English is the language of business.
10
Crowe Horwath International member firms in the
two main financial centres viz. Johannesburg and
Cape Town. These firms offer services in the
fields of audit and assurance, tax compliance and
consultancy, risk consulting, hotel tourism and
leisure consulting, forensic accounting, exchange
control advice, business advisory, corporate
finance and advisory.
Kent Karro
Horwath Zeller Karro, Cape Town, South Africa
kent.karro@crowehorwath.co.za
www.crowehorwath.co.za
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Crowe Horwath
TM
Formation in South Africa of Horwath HR Consulting
Horwath Leveton Boner is proud to announce that it has extended
its service offering to its clients and prospective clients, and is now
able to offer expertise in the field of Human Capital. The new division,
Horwath HR Consulting, will specialise in three core business areas of
HR Services, being:
1
HR Generalist Services: dealing with various HR practices
such as HR audits, policies and procedures, job competency
development, recruitment, HR strategy and budgeting;
2
HR Specialist Services: dealing with change management, organisational development, coaching,
psychometric assessments and organisational projects; and
3
Employee Development: dealing with career coaching, seminars and training programmes.
The division will be headed by Luiza Dehrmann. Luiza holds a National Diploma in Business Administration and is
currently in her final year of her Masters Degree in Industrial Psychology. Luiza worked in the investment banking
industry for nine years and has been with Horwath Leveton Boner for the past three years. During her time at
Horwath Leveton Boner, she has established and successfully managed the HR Department.
Luiza Dehrmann
Horwath HR Consulting, Johannesburg, South Africa
luiza.dehrmann@crowehorwath.co.za
Our African Network
Contact Information
Angola
HTW Auditores e Consultores, LD
Tele: +244 2 2233 2039
Email: carlosaflorencio@gmail.com
Kenya
Crowe Horwath EA
Tele: +254 20 2329542
Email: coutts.otolo@crowehorwathea.co.ke
Cape Town
Horwath Zeller Karro
Tele: +27 21 481 7000
Email: hzk@crowehorwath.co.za
Mauritius
Crowe Horwath (Mur) Co
Tele: +230 208 8684
Email: contactus@crowehorwath.mu
Horwath HTL (South Africa)
Tele: +27 21 527 2100
Email: capetown@horwathhtl.co.za
Morocco
Horwath Maroc Audit
Tele: +212 37 77 46 70
Email: benkirane@horwath.ma
Ghana
SCG Audit
Tele: +233 21-251497
Email: george.katako@scgghana.com
Johannesburg
Horwath Leveton Boner
Tele: +27 11 217 8000
Email: info@crowehorwath.co.za
Horwath HR Consulting
Tele: +27 11 217 8000
Email: luiza.dehrmann@crowehorwath.co.za
Nigeria
Horwath Dafinone
Tele: +234 1 545 1863
Email: duvie@dafinone.com
Senegal
FIDECA
Tele: +221 33 821 6387
Email: fideca@arc.sn
Tanzania
Horwath Tanzania
Tele: +255 22 2115251
Email: chris.msuya@horwath-tz.com
Crowe Horwath EA, Crowe Horwath (Mur) Co, HWT Auditores e Consultores, Horwath Zeller Karro, SCG Audit, Horwath Leveton Boner, Horwath HR Consulting, Horwath Maroc Audit, Horwath Dafinone, FIDECA and Horwath Tanzania are
separate and independent members of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal entity and is not responsible or liable for any acts or omissions of
Crowe Horwath or any other member of Crowe Horwath and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member.
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