The number of traders selling their goods on credit dropped significantly in June 2023 compared to a similar period leading to October 2022.
The trend in the number of traders refusing to give their goods on loan picked up in the last eight months.
According to data from the 2023 Finaccess MSE Tracker survey by the Central Bank of Kenya, 61.1 per cent of small businesses sold goods to customers on credit by June 2023. That was a drop from 68.5 percent at the end of October 2022.
The reduction in traders selling their wares on credit was attributed to customer defaults accelerated by economic hardships.
Also, the new trend was attributed to increased statutory deductions effected following the implementations of the Finance Act sponsored by Kenya Kwanza side led by President William Ruto.
According to traders interviewed during a survey, most buyers were getting lesser pay due to increased deductions.
One of the tax bands introduced in the contentious Finance Act for employees was that workers with a monthly income of Ksh500,000 and above would be taxed 32.5 per cent.
Similarly, employees earning above Ksh800,000 would incur a monthly deduction of 35 per cent.
Another deduction was on the National Housing Fund, where employees are to make a 1.5 per cent contribution of their basic salary; as the employer was also obliged to make an equivalent contribution.
The government also raised the National Social Security Fund (NSSF) contributions from Ksh200 monthly to six percent of workers’ salaries where they are expected to contribute Ksh1,080 to the fund.
The increased tax measures were aimed at increasing the tax revenue to enable easier implementation of the budget.
