The Kenya Revenue Authority (KRA) grapples with formidable challenges as it navigates the economic landscape, striving to meet its ambitious target amidst several adversities.

A critical factor impacting revenue collection is the substantial depreciation of the Kenyan shilling against the US dollar, marking a concerning 24.7 per cent decline in November 2023 and a cumulative 22.0 per cent drop from July to November 2023.

This depreciation, coupled with escalating prices of crucial commodities like oil, has led to a discernible reduction in import demand.

Despite import values displaying growth in Kenyan Shilling terms, the increase in dollar terms for November 2023 was a modest 9.0 per cent, with a cumulative decline of 9.2 per cent from July to November 2023.

Furthermore, a decline in domestic demand, exemplified by a sluggish Purchasing Managers Index (PMI) averaging 47.18 points from July to November 2023 (down from 48.66 points in the same period in 2022), has had a pronounced negative effect on revenue performance.

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This slowdown in GDP growth, combined with tightened financial markets featuring elevated lending rates and interbank rates, has resulted in a contraction of credit extension, particularly to the private sector.

As of September 2023, this has translated into a 4.9 per cent decline in bank profitability.

These challenges cast a shadow on KRA's revenue collection efforts, raising concerns about the attainment of the ambitious target set for the 2023/2024 Financial Year.

The authority faces the uphill task of navigating through economic uncertainties and overcoming the hurdles posed by global economic indicators that are moving contrary to expectations.

The impact is reflected in the figures, with the Kenyan shilling depreciating by 24.7 per cent against the US dollar in November 2023 and a cumulative 22.0 per cent drop from July to November 2023.

Despite a 36.0 per cent growth in import values in Kenyan Shilling terms for November 2023 and an 11.0 per cent increase from July to November 2023, the growth in dollar terms was subdued to 9.0 per cent, with a cumulative decline of 9.2 per cent.

Moreover, the Purchasing Managers Index (PMI) decline from 48.66 points in July to November 2022 to 47.18 points in the same period in 2023 signals a significant slowing of domestic demand.

The resultant impact on GDP growth is evident in the seemingly slow economic expansion.

As KRA strives to overcome these challenges, it remains determined to weather the storm and contribute to stabilizing the country's economy in these challenging times.