T H E E A S T A F R I C A B U D G E T S :
C O M P A R A T I V E A N A L Y S I S O F 2 0 1 5 / 2 0 1 6
P O S T B U D G E T R E V I E W B R E A K F A S T M E E T I N G
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C O U T T S O T O L O , C H I E F E X E C U T I V E O F F I C E R
© 2009 Crowe Horwath International
Audit | Tax | Advisory Exceeding Expectations

© 2009 Crowe Horwath International
Presentation layout
 Overview of Parker Randall Eastern Africa

Introduction to EAC 2015/16 Budget
 An Overview of the EAC Economic Environment
 Priority Sectors Across the EAC Region
 Measures in the Budgets to Facilitate and Sustain Regional
Growth

Potential Business Opportunities
 Contradictions / Issues Arising from the Budgets

Q&A

Parker Randall
 A connected international firm that provides proactive solutions to business at local, regional and global level.
 Global Provider of Assurance, Tax and Advisory Services.
 Presence in over 43 countries,100 offices and 2000 Partners and professional staff.
 Structured into 5 regions; Americas, Europe, Middle East, Africa, and Asia
Pacific.
 Parker Randall Eastern Africa is the Africa Leader.
 Anchor Africa offices in Mauritius, Kenya, Rwanda, Egypt, Botswana,
Sudan and Nigeria.
 Parker Randall Eastern Africa serves the client needs across over 14 countries in the EA region:-
 Established 2014

5 Partners across all the service lines
 Partners, Directors and Managers with big 4 experience
 32 employees and growing
© 2009 Crowe Horwath International

Introduction to EAC 2015/16 Budgets
 Examines four EAC Economies – Kenya, Tanzania, Uganda and
Rwanda

Budget speech and financial period coordinated across the region
 Average EAC projected economic growth is above the global estimate (6.5% against 3.5%)
 The EAC budgets have allocations to enhance regional integration and promote intra trade

Opportunities and challenges for investments in the region
 The table below indicates the overview of EAC economic performance.
© 2009 Crowe Horwath International

An Overview of the EAC Economic Environment
Indicator
Population (Million)
GDP (US $ bn)
Projected econ growth (%)
Inflation (%)
Budget amount(US$ bn)
Domestic revenue (US$ bn)
Domestic financing (US$ bn)
External financing (US$ bn)
Appropriations in aid & grants
(US$ bn)
Kenya Tanzania Uganda Rwanda
42.8
49.6
35.8
11.3
59.2
7.0
6.9
21.0
13.2
2.4
3.5
1.9
36.4
7.3
4.5
10.5
6.5
2.9
1.1*
-
* This represents grants and loans from external sources.
24.9
5.8
5.5
7.7
3.6
2.3
1.5
0.3
9.0
6.5
2.6
2.6
1.5
0.2
0.4
0.5
© 2009 Crowe Horwath International

Priority Sectors Across the EAC Region
Tanzania Uganda Kenya Rwanda
Security – 13% Election and referendum
Infrastructure
(energy & ICT
& transport) –
15%
Agricultural transformation
– 4%
Rural development –
6.2%
Infrastructure & transportation –
15.1
Infrastructure – 18% Infrastructure
& Energy –
16%
Energy – 15% Agricultural transformation
– 7%
Health – 11% Education and health – 38%*
Tap latent talent – 2%
Energy and minerals – 5.7%
Security – 9%
*
Include the other component of EDRS I – Macro Economic stability and Public Finance Support organs.
© 2009 Crowe Horwath International

Measures in the Budgets to Facilitate and Sustain Regional
Growth
 Harmonization of import and export duties and VAT:
 Reduction of IDF in Kenya from 2.25% to 2.0 %
 Export duty rate on hides and skins to 80%
 Zero rating of services in respect to goods in transit. Previously exempted
 Increase of import duty across various products to encourage to local production(Semolina, toothpaste tubes, fishing nylons, sugar)
 Investment in infrastructure to improve connectivity
 Addressing insecurity concerns (tourism, businesses)
 Provisions to enhance the capacity of Institutions mandated to fight corruption
 Intention of developing a framework to facilitate leasing as an alternative financing mechanism for capital expenditure
© 2009 Crowe Horwath International

Measures in the Budgets to Facilitate and Regional Sustain
Growth (Cont’d)
 Implementation of Trade Net System (single window system) i.e. Kentrade in Kenya.
 Establishing fully integrated one stop centre for investors across the region e.g. RDB in Rwanda
 Improving public service delivery examples i.e. Huduma
Centres.
 Rehabilitation and improvements of airports – e.g. Entebbe,
JKIA, Malindi and Kisumu.
 Establishments of industrial parks
 Tax incentives - on-job training for 10 graduates
 Structural reforms in the financial sector
 Core capital of Kenyan banks and Uganda Development Bank.
 Core capital and risk based capital of insurance companies.
© 2009 Crowe Horwath International

Potential Business Opportunities Within EAC
 Pasta manufacturing
 Agricultural sector – value addition, farm inputs, farming
 Construction sector
 293 schools in Uganda
 Industrial parks
 SGR
 Industrial supply chain - 40% local content
 Film industry – exempt WHT for crews and actors, VAT exempt on goods and services; proposed fund for rebating expenses by producers
 ICT sector
 Textile and leather industries
 New investments in water facilities and small holder irrigation equipment – reap on tax incentives.
© 2009 Crowe Horwath International

Contradictions / Issues Arising from Budget
 Requirement of gazettement manufacturers of specific products e.g. pasta manufacturers
 Duty remissions of duties across some sectors/products
 Establishing of a National Construction Company – unfair competition
 Sin tax vis-à-vis illicit brews
 Strengthening of Anti Laundering Act vis-à-vis planned measures to encourage repatriation of wealth held abroad
 Cost burden of infrastructure spending i.e. Kenyan fuel levy
 M-Akiba bond- enhance savings at the expense of discretionally spending
© 2009 Crowe Horwath International

© 2009 Crowe Horwath International