Feature: Kenyan traders feel pinch as fuel tax hike worsens inflationary pressures

Source: Xinhua| 2018-09-18 20:33:27|Editor: xuxin
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NAIROBI, Sept. 18 (Xinhua) -- Jos Maina has been operating an electronics shop in the bustling downtown streets of the Kenyan capital of Nairobi for the last decade and is accustomed to the highs and lows that are a common feature in all businesses.

The middle-aged father of three was in a reflective mood outside his shop as the reality of missing sales targets in the past three days sank.

Maina told Xinhua that sale of electronic merchandise such as phones, still cameras and second hand laptops nosedived early this week when a fuel tax hike imposed earlier by the government was enforced.

"It is not a secret that even our loyal customers are cagey about ordering any gadget whose cost exceeds 50 U.S. dollars because they are feeling the pinch of the soaring cost of living occasioned by the new fuel taxes," said Maina.

"We cannot expect an average Nairobi worker to prioritize buying a new phone when their net income can hardly meet the cost of basic necessities like food and rent," he added.

The former technician at Kenya's public broadcaster left formal employment more than 10 years ago to start an electronics business in downtown Nairobi where a niche market for low income earners is guaranteed.

Maina said that though his business had stabilized a few years ago, it has been experiencing some hiccups linked to rising operating costs, high taxes and staff attrition.

"Initially, we started on a sound footing since I used connections that I generated in my previous work station to secure business deals within Nairobi and elsewhere. I had three employees but can only sustain one as overheads and taxes eat into our profits," said Maina.

He disclosed that he has adopted austerity measures like using a public service vehicle as opposed to driving himself to work given the high cost of diesel.

"As a small and medium sized entrepreneurs, we have no option but to embark on belt tightening since the revenue we are generating from our businesses is shrinking against a backdrop of low purchasing power among clients," Maina said.

He was among hundreds of small-scale traders in downtown Nairobi who looked forlorn outside their business premises as inflationary pressures triggered by a 16 percent increase on value added tax (VAT) on petroleum products, took a toll on their sales.

Kenyan treasury on Sept.1 announced enforcement of the 16 percent hike on fuel levy to help bridge a shortfall on revenue required to finance development projects.

The proposal to hike fuel tax had earlier been rejected by Kenyan lawmakers saying it would hurt low income earners and undermine economic growth.

Kenya's manufacturing and private sector lobbies have also opposed punitive taxation on petroleum products, terming it a threat to industrial growth required to generate new jobs.

President Uhuru Kenyatta has been prevailed upon by lawmakers, consumer lobby groups and investors to postpone appending signature on the fuel tax hike bill until contentious issues were resolved.

Kenyans from all walks of life have in the past three days raised a hue and cry over the increase in the cost of petroleum products that has made them dig deeper into their pockets to meet the cost of transport and consumer goods.

Josephine Wambua, an elderly groceries trader at an open air market in downtown Nairobi, said sales had dipped slightly in the past few days as her regular customers readjusted their spending priorities in the light of rising cost of living.

"Some of my customers have even been purchasing cereals and fresh vegetables on credit alleging that their savings have been affected by the high cost of transport from home to work," said Wambua.

The mother of four who lives in the sprawling Nairobi's Kibera slums told Xinhua that the cost of commuting from home to the open air market had increased by 10 percent.

"I have noticed that my cash-strapped neighbors who eke a living as casual laborers or small-scale traders have abandoned so called luxury items like beer, meat and bread opting for low cost cereals and green vegetables," Wambua told Xinhua.

Gladwell Kahia, a secondhand clothes dealer in her late 30s, confessed that shuttling from home to her business premises in downtown Nairobi has eroded her revenue base due to hiked fares.

"Sometimes we are being forced to wake up at dawn and dash to work before the public service vehicles hike fares by about 30 percent," Kahia remarked, adding that the anticipated hike in the cost of basic commodities like maize flour, kerosene and cooking oil will undermine growth of her business.