Hello and welcome to the Money Weekly Newsletter, where the World Bank wants the Kenyan government to pause hiring entirely.

NEWS RECAP

Last week, we delved into the process of merging 42 state corporations into 20 entities while dissolving 25 others — a move likely to leave hundreds jobless. During this process, Head of Public Service Felix Koskei issued a memo freezing recruitment, contract extensions, salary reviews, and capital projects in the affected entities.

Earlier this week, the World Bank, in its Public Finance Review report released on May 27, urged the government to suspend all hiring for two years due to the growing wage bill, which is straining the budget. Only the education sector was spared.

“Adopting a temporary hiring freeze can make space for the government to review the compensation structures and assess the efficient allocation of existing civil servants,” the review stated, adding, “As a significant number of civil servants will retire in the coming years, there is an opportunity to reassess staff allocations across institutions.”

This recommendation was among several others, including:

Fuel Tax: The Bretton Woods institution wants Kenya to expand its narrow tax base by introducing a carbon tax on fuel and increasing excise taxes on alcohol, tobacco, and sugar-sweetened beverages.

“Carbon taxation can help Kenya meet its commitments under the Paris Agreement and further curb climate change externalities,” the report notes.

PAYE Review: The World Bank proposed changes to Kenya's Personal Income Tax (PIT) by adjusting tax bands that determine how much PAYE is paid. If implemented:

• Kenyans earning Ksh24,000 monthly will pay 10% PIT

• Those earning between Ksh24,000 and Ksh32,333 will see their PIT reduced to 15% from the current 25% (See the full proposed taxation structure here.)

SHA May Collapse: The World Bank warned that the Social Health Authority (SHA) risks collapsing unless the government reconsiders its current funding approach. The sustainability of the Social Health Insurance Fund (SHIF) is threatened by Kenya’s largely informal labour market, where most people do not contribute to SHIF.

Freezing Land Rates Amnesty: The World Bank also recommended that both national and county governments end amnesty programs typically launched by governors to encourage land rate defaulters to clear their dues. (Read the full recommendations on land here.)

Here is a quick recap of the top money news for the week:

Equity Bank to Fire Staff

• News of employees being sacked at Equity Bank first broke last Tuesday. An internal audit revealed that 200 staff members were let go over irregular payments made to their bank and M-Pesa accounts. (We covered it in a video here.)

• Yesterday, Equity Bank CEO James Mwangi revealed that 1,200 more staff members were issued with dismissal notices on Wednesday in connection with the irregularities. He also advised customers not to pay bank employees for any services rendered.

A Phone Comes With Health Insurance

MONEY TIPS & TOOLS

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That’s a wrap for this week’s Money Weekly!

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