Oral East Africa>President Ruto hikes cost of all government services At the hut of the story

Written by Otiato Guguyu

The Kenya Kwanza administration plans to increase school fees, public servants rent, ID cards, marriage certificates, work permits, licenses, and penalties to increases collections from the state bureaucracy by up to 70 percent by the next financial year.

The government has planned to increase Appropriations in Aid A-I-A from Kes319.4 billion to Kes541.1 billion in Financial Year 2025/26 as the government moves to update levies for various government service.

This year the government is targeting Kes488.9 billion from these collections which has seen several state agencies sneak out notices revising the cost of government services upwards.

Posta Kenya Corporation (PKC) announced it will hike charges on MPost 2,200 per cent for corporates and 400 per cent for individual box holders while Immigration announced Kenyans will be required to renew their National ID Cards every 10 years at a cost of Kes2,000, up from the previous Kes100.

The Move is in line with IMF and World Bank push to raise revenues over and above tax increases targeting service fees that had not been reviewed for a while.

The push to make state services more expensive is expected to gain momentum to replace forgone revenue after the government was forced to drop the Finance Bill 2024 which had sought to collect over Kes340 billion from taxes.

IMF/World Bank push

Under a World Bank-backed revenue expansion plan, Treasury had sought to review some fees which the government has failed to update over the years which is resulting in huge hikes across sectors of the economy.

The Kenya Ports Authority (KPA) has reviewed the current charges levied on its services to capture changes such as increased inflation and weakened shilling, signalling a possible rise in costs for importers.

The government is also plotting to collect about Kes500 million annually from contractors and businesses that supply it with goods through the proposed Public Procurement Capacity Building Levy, gazetted by former Treasury Cabinet secretary Njuguna Ndung'u

Recently Treasury approved the Ministry of Lands' request for a review of land rates in Nairobi, Mombasa, Nakuru, Kisumu, Eldoret and Kiambu in efforts to raise an extra Kes8 billion.

The government also reinstated the search and registration fees waived in 2020 as it seeks to draw more revenues from land deals.

The State Department for Higher Education, under which public universities fall, is expected to collect an additional Kes17.5 billion from the State Department for Higher Education and Research whose target for fees m the current financial year is Kes60.7 billion largely due to increase in fees by the 32 public universities.

Multiple hikes

Some sectors have been hit by multiple hikes in separate fees like the transport and energy sectors.

Kenya Pipeline Company is planning an increase in transport charges per cubic metre by 6.75 percent to Sh5.44 from Sh5.12 while storage fees at KPC's four depots increased by up to 7.95 percent to Sh4,175 per cubic metre.

The same fuel will be subject to additional charges from doubling the Energy and Petroleum Regulatory Authority (Epra) levy to 1 per cent from the current 0.5 per cent.

Fuel uses driving on Kenyan roads will also face new National Transport and Safety Authority (NTSA) service charges that have gone up by up to 3,900 percent on what one would pay for the approval of a change of colour of a motor vehicle from Sh500 currently to Kes20,000.

The NTSA has also introduced new revenue streams including inspection of accident vehicles that will done for Kesl,500, inspection centre licence (Kes200,000 annually) and motor vehicle licence (Kes3,000).

Fines and penalties

Besides services, the government also wants banks to pay heavier penalties in infractions to earn more money from offences.

Commercial banks will be fined kes20 million for flouting set regulations if the new Central Bank of Kenya (CBK) law review is adopted.

While making submissions to the Senate Finance and Budget Committee, Central Bank of Kenya Governor Kamau Thugge said that apart from reviewing the penalties, the regulator plans to set up a real-time system that will also monitor transaction fees and interest rates charged by all the commercial lending institutions.

As the state begins review of old fines and penalties in push for higher revenues, the cost of compliance and business is bound to increase even as government surveillance in business goes up a notch higher.