PRIVATE sector associations and corporates in the East African Community (EAC) have called upon partner states to take action to mitigate the impact of the COVID-19 pandemic on the business sector.
Under the umbrella of the East African Business Council (EABC), the associations and corporates have asked for interventions in that the central banks in the region to lower the rates so as to incentivize commercial banks to lend at lower rates to the private sector.
The business community has also asked the central banks to consider lowering the reserve requirement ratio as that would allow commercial banks to have more liquidity and enough lending capacity.
Central banks, it is pleaded, need to extend lending facility to commercial banks by releasing special fund that would enable commercial banks to have sufficient funds for lending to the private sector.
They have been asked also to review existing treasury bonds/securities rediscount - open market operations through buying back bonds at the prevailing market rate so as to provide liquidity to the economy through commercial banks and other entities.
EABC Executive Director and Chief Executive Officer (CEO), Dr Peter Mathuki summed some of the deliberations as asking the central banks to restructure loans by allowing a considerable period for non-performing loans to give relief to both lenders and borrowers at the time of COVID-19 pandemic.
He said the fraternity has also asked the governments of Tanzania, Kenya, Uganda, Rwanda, Burundi and South Sudan to prioritize payment of domestic debts as that will inject liquidity in the market and enable businesses, especially Small and Medium Enterprises (SMEs) sustain the businesses.
EABC has asked the EAC governments to increase minimum taxable salary income to at least 250 US dollars so as to increase the disposable income of low earning workers to enable them to mitigate the impact of COVID-19 pandemic.
"There is also a need for reduction of income tax rate for companies to 20 per cent as this will increase the net salary of employees to enable workers to have extra money to spend on the advent of COVID-19 pandemic. Reduction of Corporate Tax Rate to 20 per cent will enable businesses/companies have cash that can be invested back to the businesses to boost the working capital in order to sustain businesses," said the former East African Legislative Assembly.
Dr Mathuki noted that the private sector has also pleaded with the governments to consider temporary removal of employment taxes and levies (Skill Development Levies) so as to encourage employers to retain the existing workers and do away with downsizing in the midst of COVID-19 pandemic.
EAC governments are asked to allocate enough funds to cater for outstanding Value Added Tax (VAT) refunds, paying all outstanding VAT refunds will give businesses the needed liquidity to boost their working capital during the COVID19 period.
"There is a need for removal of all other charges of equivalent effects, such as Import Declaration Fees (IDF) and Railway Development Levy (RDL) for imports of raw materials, capital goods, intermediate goods and essential goods. This will provide relief to manufacturers/producers and make such goods available at affordable prices," noted the CEO.
The associations and corporates further want partner states to reduce standard VAT rate to at least 12 per cent at this stint so as to protect consumers across the EAC against high prices and enable them to access consumable goods and services at affordable prices.
They have also asked for a zero-rate VAT for all essential products such as staple food items, soaps, disinfectants, sanitizers, water and electricity.