Wakuna Sunshine? Kenya Has a Ways to Go, with a New Bill Offering Bright Hope
Published October 7, 2018 by Lee R
Concerns about effective distribution and competitive freedom need to be resolved swiftly with new legislation.
The regulation debate has turned into quite a tug of war in Kenya over the last couple years.
Bringing it Down
The latest turn in the drama came with last Monday's memo from President Uhuru Kenyatta requesting parliament to redraft the 2018 Finance Bill to reflect a reduction in the proposed uniform tax rate from 35% to 15%.
About Face?
This is the same President who boosted the rates in the first place, seeking to bring up tax rates that had bottomed out at 5% for certain categories of gambling to the 35% in he proposed in June 2017.
Ever since the 35% tax rate came into effect on January first of this year, prominent Parliamentary factions representing the gaming sector have campaigned for a review, saying the healthy 35% levy was denting trade and stultifying free market competition in a rapidly growing market.
Sustainable Solution Needed
After two earlier attempts to overthrow this year already, many are hoping that the third time is the charm, with President Kenyatta's request taken as a positive sign for the nation's growing but still struggling gaming industry.
Amid fears the current rates are discouraging growth and investment, a tax increase of 10% still looms unless the Finance Bill is amended.
Barely the Half of It
It turns out the whopping 35% rate was itself a compromise, from an unsightly 50% proposed by Kenya's Treasury Secretary before President Kenyatta compromised it down to 35% to begin the year 2018's proceedings.
The steep hike was suggested by the government in the interests of raising rates from the previous low in decrease the availability of gambling to Kenya's youth.
Bad Response
Early evidence of market slowdowns were revealed when local sports operators such as SportPesa began canceling sponsorship deals in response to the tax rate increase.
There were also immediate distribution concerns, with local sporting bodies promised a share of the increased tax revenue not seeing their returns dispensed to them.
Odd Rationale
The government tried to explain this away by saying it was still awaiting parliamentary approval of their disbursement, but the delay in implementation flies in the face of the greater movement, with governing bodies across the continent increasing tax rates to capitalize on the rising popularity of gambling.
The 35% settlement looks like the President's best solution on the fly, with a more sustainable and equitable arrangement begging to be achieved.
Hope on the Horizon
Some hope for unified response and negotiation is emerging in the form of ICE Africa, where local stakeholders will convene in Johannesburg to unify the adaption and support network for respective jurisdictions across Africa.
