Tax on betting firms death knell for sports

President Uhuru Kenyatta has just announced a “record-breaking” new Sh15 billion investment in Kisumu that will reportedly generate 110,000 jobs.

This would be good news, no doubt, were it not for the irony of the move, given the current state of affairs in the country.

First of all, it is still not clear how long it will take to generate these jobs and when the investor in this case will break ground for the new project.

Allow me to point out the irony in this issue. Several companies have closed their production lines in Kenya in the last two years rendering thousands jobless and hundreds of thousands of families destitute.

Also top media houses, several commercial banks and a string of other companies in our country have shed thousands of jobs, thanks to a tough business environment.

The number of new investors and jobs vis-à-vis those that we have lost is not proportional. Kenyan businesses are suffering under the weight of unpredictable policies, high cost of doing business and corruption.

This is why State House’s announcement must be taken with a pinch of salt.

After all wasn’t the investor in focus – Kenya Breweries Limited – a victim of unpredictable policies just the other day? Between 2013 and 2014, the company went through one of its hardest moments when over 3,000 of its Senator Keg outlets and by extension over 6,000 jobs including in these outlets and at the KBL plant, had to be shed following a punitive tax by the government then.

Fortunately, sense prevailed and the tax was later rescinded given the importance of properly manufactured beer for the low-end market in fighting the rise of illicit brews.

During the period the draconian tax was in place, the consumption of illicit liquor was at its peak which forced the President to lead a nationwide campaign to flush out the illegal brewers with the help of politicians and the provincial administration. 

Sadly, history is now repeating itself but in this case not in the alcohol industry.

The President signed a law recently to tax companies in the gaming industry 35 per cent on gross revenue from next year.

The industry is the biggest investor in sports industry, supporting teams, sports unions, federations and by extension hundreds of thousands of families.

Many players are now being paid allowances on time, their clubs have functional offices employing hundreds and the opportunities in terms of talent growth extended to these sports men and women are immense.

The ripple effect of these sports sponsorships on the overall economy cannot be overlooked.

Yet at the height of the success of such partnerships, the gaming industry has been slapped a high tax that threatens to reverse the gains made in the sports industry.

It is sad, if not infuriating.

The sponsorships from the gaming companies, if cancelled, will affect at least 4,000 players directly and over 100,000 beneficiaries indirectly.

These are established businesses working to uplift the sports industry. They have already created jobs and are increasing employment opportunities frequently.

Why then would a government that prides itself in creating a conducive operating environment for the private sector move to kill one industry only to turn around the next day and chest-thump about creation of over 100,000 jobs? Isn’t this akin to giving with one hand and taking with the other?

For Kenya’s economy to thrive we need to create more jobs in other industries not just agriculture.

The sports industry is a latent giant that was only starting to be awakened by the gaming industry.

The 35 per cent tax is uncalled for and retrogressive for a government that wants to create a thriving 24-hour economy and one million jobs per year.