Oh Jesus! This is the epitome of the inexplicable, Kenyan Economic growth has more often been affected by the ICC cum Hague talk, and want to point out here at ECOKE on how Kenyan then opposition party flared emotions for selfish gains. We all know what the imminent indictment by ICC prosecutor Luis Moreno Ocampo is about, to hold those “most responsible” for the PEV” to account and its only befitting that the wheels of justice abound during this festive season, after all the injustices for which we desperately seek remedy were committed during the Holidays. Let me start with the PM, Raila Amolo Odinga; Odinga is a tenacious leader who unfortunately lacks tact and is a victim of his own missteps and impulsions, he has demonstrated over the years, time and time again, that he acts and says things without carefully thinking through first and in his position as a leader with such a national following, is dangerous. There are plenty of examples but for the purposes of the scope of the ICC, let me confine myself to 2007/208 PEV.
It is no secret that PM Odinga played a crucial role in Kibaki’s election in 2002 only to be betrayed shortly thereafter, be that as it may, so is politics. He was and still is a wounded man and when it became clear that the road to State House had narrowed considerably every passing day, he became ever more desperate and sought to whip up public emotions against the Kibaki administration way before the 2007 elections; it didn’t help matters that soon after taking office, Kibaki purged most of former President Moi’s staffers in government- most of them Kalenjin, and replaced them with what appeared to be his tribesmen, the Kikuyus. Subsequently, Odinga saw an opportunity in this turn of events and aligned himself with his erstwhile nemesis of the Moi era (the doctrine of the enemy of my enemy is my friend fit perfectly); this would have been perfectly legit but for the fact that at that moment the foundation for ethnic cleansing in Kenya was born.
Fast forward to the 2007 elections;- Odinga knew the results were a cliff hanger after Kalonzo had peeled away a sizeable number of voters from the original ODM; he had managed to turn a considerable electorate against Kibaki along ethnic lines; for example, William Ruto, clearly led the charge in Rift Valley of instigating prejudice against Kisiis and Kikuyus and so when the election results were announced, this anti Kikuyu/Kisii arsenal at his disposal was activated at a moment’s notice, he used it to his maximum benefit personally but unfortunately to the detriment of the nation as a whole. PM Odinga a.k.a. Arap Mibei explicitly called for MASS ACTION to protest the “stolen election” Odinga knew or should have known that such calls would result in violence but he did it anyway, repeatedly, and for that reason he must share the burden of the outcome of his calls. Paradoxically, the areas most affected by these protests were Rift Valley and Luo Nyanza, areas in which Odinga won handily almost to the last vote and therefore had the least reason or purpose to incite the public against fellow citizens (MADOADOA as they were referred to by ODM during the campaigns) unless of course to make a statement- it is premeditated!
There is clearly, at the very minimum, a case for “implied malice” on his part for which constructive criminal liability attaches for the purposes of the ICC. He and his estranged bed fellow William Ruto were on the same side of the battlefield, they campaigned and planned together, and they conspired together, before, during and after the general elections and I don’t get it now why and how Ruto would bear a higher burden in this than his friend the PM! I just don’t get it. Raila was the man running for President, not Ruto; besides his relatives and friends, the PM is the single greatest beneficiary of MASS ACTION, he wields executive authority; the same cannot be said of the dead, the raped many of whom contracted deadly diseases, the maimed, the displaced, the IDPs, Ruto, the PEV suspects in jail/remand- none of these people has anywhere near the rewards brought about by the calls for MASS ACTION as PM Odinga and therefore, truth be told, in balance and taking into account the Sum Total of his actions, before, during and after, PM Odinga bears the greatest responsibility for the 2007/2008 PEV in Kenya. The Prime Minister’s office in Kenya is drenched in innocent blood and it is a great thing it is going away.
Raila, Ruto, Balala, Kosgey, Kones, Larboso and many others are on record inflaming the public and when the dust settled, they strenuously defended the suspects, they said they didn’t do anything wrong because they were chasing their “stolen cows”, they tried to manipulate the ICC just as they did the Kenyan public; well guys- to those of you still around anyway, time is up- you can’t fool the world all the time. Time to pay is now.
Thursday, December 16, 2010
Monday, December 6, 2010
The Exchequer Robbed of Sh275 billion per year, but the economy is okay.
Ecoke has been looking at official economic data released by the KNBS in the past five years and wondered why they rily do not add up. For instance two years ago, as the bureau of statistics released data indicating that the Kenyan economy grew by a narrow margin of 1.6 per cent, I got even more interested in the art of measuring economic growth and what economic parameters were considered.Sales across our product range grew by more than 20 per cent yet some of the official data was showing that the economy expanded by a thin margin of less than two per cent. “There is certainly something wrong in the way we are measuring growth.” Hundreds of Kenyans have increasingly had to face junior economist predicament after failing to reconcile the level of economic activity they see in their neighbourhoods with what official data says.
Parliament’s Budget Office (PBO) says the answer lies in Kenya’s large and rapidly expanding underground or grey economy that is never captured in official data but now accounts for nearly half of the country’s Gross Domestic Product. Kenya’s underground economy has expanded rapidly in the past five years to become a mammoth Sh825 billion industry that is denying the government at least Sh275 billion in uncollected revenues, the PBO says. This means Kenya Revenue Authority (KRA) is tapping only half of the estimated Sh750 billion tax revenues potential, leaving those already in the tax bracket with the heavy burden of financing public services and ultimately economic growth and effectively means the national economy is nearly twice the current estimate of Sh1.6 trillion.The underground economy – commonly defined as commercial transactions that go unreported or unrecorded for tax purposes – has traditionally been made up of hawkers, small-scale farmers, carpenters, dressmakers, watchmen, construction workers and domestic workers (maids and gardeners).
In the past couple of years however, the real estate and agriculture sectors have attracted big money without a commensurate rise in tax revenues raising doubts on the effectiveness of the revenue collection machinery.
Economists say it is these underground consumers who are driving the growth of sales for companies like ARM without getting captured in the official data. The PBO says allowing millions of people to gain from the economy without contributing to the national revenues has become a major threat to wealth distribution and social stability in Kenya that the country must immediately confront.This is because evading taxes makes it harder for those who are being taxed to compete with those outside the tax bracket besides creating price distortions in the marketplace. It estimated that goods produced by those who pay taxes are, for example, 16 per cent more expensive that that from the tax cheats.
Though workers’ salaries have risen steadily over the past five years, high levels of inflation and the accompanying erosion of purchasing power has effectively offset the gains forcing millions to cut back on consumption.“The size of the underground economy reflects a lack of information by the Government that ultimately hampers policy choices,” the PBO says in a status report published last month. “It therefore becomes easier for the Government to continue taxing those who are easy to get and leaving the formal sector workers with the burden of sustaining the economy,” says the report.Growth in the number and volume of businesses outside the tax net has continued despite KRA’s heavy investment in new structures to expand its reach.
Since coming to power in January 2003, the Kibaki government has applied a mix of enticement and coercion to get the number of registered tax payers needed to finance a budget that has nearly doubled in the past seven years. In January 2008, for instance, the Government introduced a three per cent turnover tax targeting small and medium-sized firms with annual total sales of between Sh500,000 and Sh5 million.But tax experts say revenue leakage remains massive leaving the tax burden on the shoulders of the few players in the formal sector. “The situation is such that small businesses are not registering or the system is so weak to capture and follow them,” Its apparent that chasing small taxpayers is an expensive assignment but maintains that the cost could be significantly offset with the right compliance machinery.Treasury’s latest report indicates that cumulative revenues stood at Sh132.9 billion or 4.9 per cent of GDP at the end of September, against a target of Sh154.9 billion or 5.7 per cent of GDP, putting the government on a tight leash that points to spending cuts or heavy borrowing in the coming months.
It is expected that the resulting financing gap will force the government to scale back some of its investment plans or push Treasury further down the path of deficit financing beyond the Sh105 billion cap set for domestic borrowing the in the current financial year. “If the underground economy remains untaxed, the government will continue losing billions of shillings in revenue and as more people move into the informal sector to escape the burdensome taxation, it will become increasingly difficult for the government to hit its revenue targets,” .
Parliament’s Budget Office (PBO) says the answer lies in Kenya’s large and rapidly expanding underground or grey economy that is never captured in official data but now accounts for nearly half of the country’s Gross Domestic Product. Kenya’s underground economy has expanded rapidly in the past five years to become a mammoth Sh825 billion industry that is denying the government at least Sh275 billion in uncollected revenues, the PBO says. This means Kenya Revenue Authority (KRA) is tapping only half of the estimated Sh750 billion tax revenues potential, leaving those already in the tax bracket with the heavy burden of financing public services and ultimately economic growth and effectively means the national economy is nearly twice the current estimate of Sh1.6 trillion.The underground economy – commonly defined as commercial transactions that go unreported or unrecorded for tax purposes – has traditionally been made up of hawkers, small-scale farmers, carpenters, dressmakers, watchmen, construction workers and domestic workers (maids and gardeners).
In the past couple of years however, the real estate and agriculture sectors have attracted big money without a commensurate rise in tax revenues raising doubts on the effectiveness of the revenue collection machinery.
Economists say it is these underground consumers who are driving the growth of sales for companies like ARM without getting captured in the official data. The PBO says allowing millions of people to gain from the economy without contributing to the national revenues has become a major threat to wealth distribution and social stability in Kenya that the country must immediately confront.This is because evading taxes makes it harder for those who are being taxed to compete with those outside the tax bracket besides creating price distortions in the marketplace. It estimated that goods produced by those who pay taxes are, for example, 16 per cent more expensive that that from the tax cheats.
Though workers’ salaries have risen steadily over the past five years, high levels of inflation and the accompanying erosion of purchasing power has effectively offset the gains forcing millions to cut back on consumption.“The size of the underground economy reflects a lack of information by the Government that ultimately hampers policy choices,” the PBO says in a status report published last month. “It therefore becomes easier for the Government to continue taxing those who are easy to get and leaving the formal sector workers with the burden of sustaining the economy,” says the report.Growth in the number and volume of businesses outside the tax net has continued despite KRA’s heavy investment in new structures to expand its reach.
Since coming to power in January 2003, the Kibaki government has applied a mix of enticement and coercion to get the number of registered tax payers needed to finance a budget that has nearly doubled in the past seven years. In January 2008, for instance, the Government introduced a three per cent turnover tax targeting small and medium-sized firms with annual total sales of between Sh500,000 and Sh5 million.But tax experts say revenue leakage remains massive leaving the tax burden on the shoulders of the few players in the formal sector. “The situation is such that small businesses are not registering or the system is so weak to capture and follow them,” Its apparent that chasing small taxpayers is an expensive assignment but maintains that the cost could be significantly offset with the right compliance machinery.Treasury’s latest report indicates that cumulative revenues stood at Sh132.9 billion or 4.9 per cent of GDP at the end of September, against a target of Sh154.9 billion or 5.7 per cent of GDP, putting the government on a tight leash that points to spending cuts or heavy borrowing in the coming months.
It is expected that the resulting financing gap will force the government to scale back some of its investment plans or push Treasury further down the path of deficit financing beyond the Sh105 billion cap set for domestic borrowing the in the current financial year. “If the underground economy remains untaxed, the government will continue losing billions of shillings in revenue and as more people move into the informal sector to escape the burdensome taxation, it will become increasingly difficult for the government to hit its revenue targets,” .
Friday, December 3, 2010
Kenyas’ Safaricom,A bitter option _Finally I Was robbed
It was on Thursday 2nd dec 2010, i left the office early though with lots of unfinished business, and with lots of phone calls to make before the end of my busy schedule,as usual I bought a 100 shillings scratch card voucher from a nearby safaricom vendor, but to my surprise after topping up the network only updated 10 shillings out of the 100, where did 90 bob go?
For clarity
The Bamba 100 pin no. Was 426983888373 and its serial no. 1004698300057
-Upon petitioning the firm through their customer care executive, he implied that the serial number was for a bamba 100 while the pin number was for a bamba 10, but how is this possible if the two are contained in the same card?
-He further pointed out that the serial no. Had been used on wed (1st dec 2010) by another number, but my question is, how then is it possible for a card with the same serial number to be used twice without the system detecting?
Being a loyal customer for 8 years am rilly disappointed by safaricom antics.
For clarity
The Bamba 100 pin no. Was 426983888373 and its serial no. 1004698300057
-Upon petitioning the firm through their customer care executive, he implied that the serial number was for a bamba 100 while the pin number was for a bamba 10, but how is this possible if the two are contained in the same card?
-He further pointed out that the serial no. Had been used on wed (1st dec 2010) by another number, but my question is, how then is it possible for a card with the same serial number to be used twice without the system detecting?
Being a loyal customer for 8 years am rilly disappointed by safaricom antics.
Monday, November 29, 2010
Playing An Inferior Card in the 8-4-4 System to Keep Dominion
Just because the rich took their kids to Brookhouse doesn’t mean 8-4-4 is inferior, it is a matter of class. We all meet at the Maseno University or Oxford at the end of the day. Why do you think most politicians' kids study in the USA or in the U.K and not at JKUAT
The issue of 8-4-4 being inferior was manufactured by Kenyan politicians(Ecoke-Canaan) and technocrats who feel beseeched by the new wave of university graduates and want to play the inferior card to keep their dominion over us, the masses. Period.
There is nothing wrong with the 8-4-4 system and it is not the issue of money. The same fools will spend over Kshs.20 billion writing a document in the name of the constitution something equivalent to a master’s thesis. Why not spent such on education?
Sunday, November 28, 2010
Definite Demography Disaster!
Institute of Economic Affairs(IEA)Kenya chapter after conducting a nationwide study revealed that Families headed by youths aged 15 to 24 are on the rise in kenya.Will share a few insights of this findings which have raised concern over the modes of parenting being practised in the country that boasts a population of 38 million in Ecoke and further analyse the implications of the same, The study that sampled more than 10 million youths in 2009 attributes this to early sex among teenagers indicating 11 per cent of young women and 22 per cent of young men aged between 15 and 24 had their fist sexual intercourse before the age of 15.
The report says that teenage pregnancy is higher in urban than rural areas, and casts blame on parents over negligence of roles.32 per cent of uneducated teenagers had begun child-bearing compared to 10 per cent of those with some secondary education. This is a nightmare to policy makers, who are forced to change strategies more often to address the rapid demographic changes. From these findings it can be argued that Lack of education and poverty is the lead component behind the rapid upsurge of young families. Other factors responsible for the early marriages according to the report were high unmet need for planning by women, and low use of contraceptives. The underage-led family, according to the study, indicates that young people living in rural areas tend to initiate sexual activity earlier than their counterparts in towns.
More young men than women in all the regions sampled engage in high risk sex with respective percentages in Nyanza 88, Central 86.8, and Western 86.4. Condom use, according to the report, was regarded unpopular among the youths. About 41 per cent of men aged 15 to 34 believed that use of contraceptives among women could lead to promiscuous behaviour with 15- to 19-year-olds believing use of contraceptives is the business of women. Another disclosure shows that more men aged 15 to 49 engaged in transactional sex, which involves exchange of sex for money. Despite the high risk of contracting HIV, men aged 25 to 29 years have an affinity to procuring sex.
Young women aged 15 to 34 in town preferred to have three children whereas their counterparts in rural areas prefer four said the report. The study also showed that spousal violence was common among the young families with more of the women approving of being beaten by their spouses over reasons such as burning food, child neglect, going out without their spouses’ consent, with refusal to have sex taking the lead. In the report, less women feared death than men, but both men and women equally feared failure. Other fears and worries from the report that youth dread are HIV, poverty and rape. Youths aged between 17 to 19 years heavily spent their pocket money on snacks, airtime, cyber café, food, clothing, transport and outings.
Youths drinking alcohol according, to the report, shows that 67 per cent of 17- to 19-year-olds are bought alcohol by other people, and 75 per cent are bought for cigarettes by friends. Self-buying alcohol stands at 33 per cent and that of cigarettes at 25 per cent. Further insight of the study reveal that 31 per cent of 17- to 19-year-olds influenced themselves into drinking and 17 per cent into smoking. This shows that most drinkers were self influenced contrary to mob influence.
The report says that teenage pregnancy is higher in urban than rural areas, and casts blame on parents over negligence of roles.32 per cent of uneducated teenagers had begun child-bearing compared to 10 per cent of those with some secondary education. This is a nightmare to policy makers, who are forced to change strategies more often to address the rapid demographic changes. From these findings it can be argued that Lack of education and poverty is the lead component behind the rapid upsurge of young families. Other factors responsible for the early marriages according to the report were high unmet need for planning by women, and low use of contraceptives. The underage-led family, according to the study, indicates that young people living in rural areas tend to initiate sexual activity earlier than their counterparts in towns.
More young men than women in all the regions sampled engage in high risk sex with respective percentages in Nyanza 88, Central 86.8, and Western 86.4. Condom use, according to the report, was regarded unpopular among the youths. About 41 per cent of men aged 15 to 34 believed that use of contraceptives among women could lead to promiscuous behaviour with 15- to 19-year-olds believing use of contraceptives is the business of women. Another disclosure shows that more men aged 15 to 49 engaged in transactional sex, which involves exchange of sex for money. Despite the high risk of contracting HIV, men aged 25 to 29 years have an affinity to procuring sex.
Young women aged 15 to 34 in town preferred to have three children whereas their counterparts in rural areas prefer four said the report. The study also showed that spousal violence was common among the young families with more of the women approving of being beaten by their spouses over reasons such as burning food, child neglect, going out without their spouses’ consent, with refusal to have sex taking the lead. In the report, less women feared death than men, but both men and women equally feared failure. Other fears and worries from the report that youth dread are HIV, poverty and rape. Youths aged between 17 to 19 years heavily spent their pocket money on snacks, airtime, cyber café, food, clothing, transport and outings.
Youths drinking alcohol according, to the report, shows that 67 per cent of 17- to 19-year-olds are bought alcohol by other people, and 75 per cent are bought for cigarettes by friends. Self-buying alcohol stands at 33 per cent and that of cigarettes at 25 per cent. Further insight of the study reveal that 31 per cent of 17- to 19-year-olds influenced themselves into drinking and 17 per cent into smoking. This shows that most drinkers were self influenced contrary to mob influence.
Thursday, November 11, 2010
A Big Gamble As Kenya Entrepreneurs See Opportunity, Risk In Rapid Urbanization
Producers of consumer goods were are still scouring the Kenya’s census results for new market opportunities or major shifts in demand for specific goods and services with the changing demographics. Top in the radar of many entrepreneurs and companies was the shocking finding that Kenya's urban population had risen by more than eight percentage points in a span of 10 years to hit 32.3 per cent potentially creating a large pool of consumers of essential goods such as maize meal, wheat products, milk, cooking fats, soaps, beef, clothes and footwear.
The newly urbanised population, which the census revealed are aged between 15 and 34 years, is mainly made up of primary, and high school leavers looking for jobs in towns. This is the segment of the population that economists refer to as constituting the "demographic dividend" that will open huge opportunities in the consumer goods and services markets. Though a large segment of this newly-urbanised group remains unemployed for an average of three years, a recent national household survey showed that the highly dynamic lot is able to significantly grow their purchasing power and become active consumers of goods and services produced and priced for the low end market. This means that entrepreneurs and manufacturers of consumer goods must deepen their recent foray into the small economy - the sale of consumer goods such as cooking fats in tiny low priced bits - to capture the 13.7 million market that is mostly made up of people aged between 20 and 35 years.
Essentially, the population figures point to both opportunities and threats for as the opportunities go, the potential benefits of a young and rising population is the possibility of kick-starting a virtuous cycle of rapid industrialisation, increased employment, enhanced productivity and ultimately rising prosperity. Citing the example of populous countries such as China that have benefited from similar demographics moving the economy to the critical point where the maximum number of people are in the working age bracket and therefore reducing the dependency ratio. Kenya’s dependency ratio has consistently dropped over the decades from 115.4 in 1980 to 85 according to the 2009 census. Seizing this opportunity however sooner than later would be critical for Kenya because fertility rates tend to fall as economies grow limiting its use as a driver of human development in the long term. Threshold is fast approaching for Kenya and if managed well could see the emergence of an invigorated and far more competitive economy. Although the last few decades have shown that a large and rising population is no guarantee of success, Africa's pattern of population growth is not the main constraint to the continent's development and could even become a positive force.
"Population growth and urbanisation go together, and economic development is closely correlated with urbanisation," that’s why. "Rich countries are urban countries."As is the case in many developing economies, Kenya's population is a pyramid structure that stands on a wide base of young people and very thin at the top. Nearly 33 per cent of Kenyans now live in the urban areas compared to 23.6 per cent in 1990, meaning an additional eight million Kenyans became urbanites in a decade. An interesting finding of the census is however that Kenya's urban population is wide in the middle with those aged between 20 and 34 as the majority. For the government, rapid urbanisation promises a policy and service provision nightmare that is also potent with risks of mass impoverishment, social tensions and insecurity.
Mass market
But consumer market data shows that Kenyan businesses - from manufacturers of fast moving consumer goods to commercial banks - have seen immense opportunities in the newly urbanised population targeting them with the bottom-of-the-pyramid goods and services. In this segment of the market, the business model is movement of volumes in competitively priced small quantity goods to reach the multi-million customer base that has grown by 25 per cent in the last 10 years.
Equity Bank blazed the trail for banks with its micro-lending business model that has seen it grow from a non-banking outfit to the country's fourth largest bank by asset base in six years. Kenya’s top mobile service provider Safaricom has captured its portion of this market with the sale of small denomination scratch cards that have helped popularize mobile telephony among rural population. These companies have captured the bottom end of market consumers with catchy jingles and witty phrases that target the youth with a large measure of success. Aggressive marketing has, for instance more than doubled the number of youths aged between 24 and 30 years opening a bank account in the past one year, according to a recent banking sector report."This group provides the bank with many years of business with the same customers," said a strategy paper produced by one local commercial bank as it rolled out an aggressive marketing campaign. Expectations are that the purchasing potential of this market will grow as the youth gain employment and seek out business opportunities.
Economists say that compelling drivers for an increase in Foreign Direct Investment(FDI) into the country and region as firms look to tap into the swelling consumer class. The potential of this growth is evident in the rise of telecommunications across East Africa. Despite relatively high levels of penetration, Kenya still offers abundant opportunities for growth in this sector, as well as a variety of others, such as financial services, tourism and BPO.Rapid urbanisation also has the potential to lift overall productivity and shift the economy from its reliance on agriculture to prop up output. According to the official statistics, Kenya is becoming increasingly urbanised .In 1950, less that 6 per cent of the population lived in urban areas. Since then urbanization has increased fourfold to 32.3 per cent in 2009.However, achieving the demographic dividend is not a foregone conclusion. In general, Africa's economic growth has largely failed to generate employment and significantly reduce poverty due in large part to low factor accumulation and low productivity growth.
Economists, however, argue that should Kenya's youthful population fail to find meaningful employment, the thrust of development will be reversed and the potential benefits of such an increased population will convert into an intensified burden on the state to provide support. The UN predicts that by 2050 Kenya will have around 85 million people, with the economically active population swelling to 55 million of 65 per cent of the total. While observers contend that this does provide a unique and abundant opportunity for growth, the critical policies need to support industries with high labour absorption capacities across the region in order to unlock this potential.In this, intensified investment in critical infrastructure is an absolute must, particularly power.
The newly urbanised population, which the census revealed are aged between 15 and 34 years, is mainly made up of primary, and high school leavers looking for jobs in towns. This is the segment of the population that economists refer to as constituting the "demographic dividend" that will open huge opportunities in the consumer goods and services markets. Though a large segment of this newly-urbanised group remains unemployed for an average of three years, a recent national household survey showed that the highly dynamic lot is able to significantly grow their purchasing power and become active consumers of goods and services produced and priced for the low end market. This means that entrepreneurs and manufacturers of consumer goods must deepen their recent foray into the small economy - the sale of consumer goods such as cooking fats in tiny low priced bits - to capture the 13.7 million market that is mostly made up of people aged between 20 and 35 years.
Essentially, the population figures point to both opportunities and threats for as the opportunities go, the potential benefits of a young and rising population is the possibility of kick-starting a virtuous cycle of rapid industrialisation, increased employment, enhanced productivity and ultimately rising prosperity. Citing the example of populous countries such as China that have benefited from similar demographics moving the economy to the critical point where the maximum number of people are in the working age bracket and therefore reducing the dependency ratio. Kenya’s dependency ratio has consistently dropped over the decades from 115.4 in 1980 to 85 according to the 2009 census. Seizing this opportunity however sooner than later would be critical for Kenya because fertility rates tend to fall as economies grow limiting its use as a driver of human development in the long term. Threshold is fast approaching for Kenya and if managed well could see the emergence of an invigorated and far more competitive economy. Although the last few decades have shown that a large and rising population is no guarantee of success, Africa's pattern of population growth is not the main constraint to the continent's development and could even become a positive force.
"Population growth and urbanisation go together, and economic development is closely correlated with urbanisation," that’s why. "Rich countries are urban countries."As is the case in many developing economies, Kenya's population is a pyramid structure that stands on a wide base of young people and very thin at the top. Nearly 33 per cent of Kenyans now live in the urban areas compared to 23.6 per cent in 1990, meaning an additional eight million Kenyans became urbanites in a decade. An interesting finding of the census is however that Kenya's urban population is wide in the middle with those aged between 20 and 34 as the majority. For the government, rapid urbanisation promises a policy and service provision nightmare that is also potent with risks of mass impoverishment, social tensions and insecurity.
Mass market
But consumer market data shows that Kenyan businesses - from manufacturers of fast moving consumer goods to commercial banks - have seen immense opportunities in the newly urbanised population targeting them with the bottom-of-the-pyramid goods and services. In this segment of the market, the business model is movement of volumes in competitively priced small quantity goods to reach the multi-million customer base that has grown by 25 per cent in the last 10 years.
Equity Bank blazed the trail for banks with its micro-lending business model that has seen it grow from a non-banking outfit to the country's fourth largest bank by asset base in six years. Kenya’s top mobile service provider Safaricom has captured its portion of this market with the sale of small denomination scratch cards that have helped popularize mobile telephony among rural population. These companies have captured the bottom end of market consumers with catchy jingles and witty phrases that target the youth with a large measure of success. Aggressive marketing has, for instance more than doubled the number of youths aged between 24 and 30 years opening a bank account in the past one year, according to a recent banking sector report."This group provides the bank with many years of business with the same customers," said a strategy paper produced by one local commercial bank as it rolled out an aggressive marketing campaign. Expectations are that the purchasing potential of this market will grow as the youth gain employment and seek out business opportunities.
Economists say that compelling drivers for an increase in Foreign Direct Investment(FDI) into the country and region as firms look to tap into the swelling consumer class. The potential of this growth is evident in the rise of telecommunications across East Africa. Despite relatively high levels of penetration, Kenya still offers abundant opportunities for growth in this sector, as well as a variety of others, such as financial services, tourism and BPO.Rapid urbanisation also has the potential to lift overall productivity and shift the economy from its reliance on agriculture to prop up output. According to the official statistics, Kenya is becoming increasingly urbanised .In 1950, less that 6 per cent of the population lived in urban areas. Since then urbanization has increased fourfold to 32.3 per cent in 2009.However, achieving the demographic dividend is not a foregone conclusion. In general, Africa's economic growth has largely failed to generate employment and significantly reduce poverty due in large part to low factor accumulation and low productivity growth.
Economists, however, argue that should Kenya's youthful population fail to find meaningful employment, the thrust of development will be reversed and the potential benefits of such an increased population will convert into an intensified burden on the state to provide support. The UN predicts that by 2050 Kenya will have around 85 million people, with the economically active population swelling to 55 million of 65 per cent of the total. While observers contend that this does provide a unique and abundant opportunity for growth, the critical policies need to support industries with high labour absorption capacities across the region in order to unlock this potential.In this, intensified investment in critical infrastructure is an absolute must, particularly power.
Tuesday, November 9, 2010
Most Unequal in the world? – Yes we are!
Talking with my good Kenyan friend on how he was coping with his new employment after campus,I was shocked with the findings cum revelations, as a new graduate employee who is yet to get into the big firms’ payroll, this gentleman survives on 2 bananas which is 10 Kenyan shillings (0.7 dollars) for lunch which is far below the ‘a dollar’ a day for a poor african.Disturbing even most is that his boss uses 20 dollars each day for lunch. I feel like sharing this economic disparity in a third world economy.
Kenya has been ranked among the most unequal societies in the world, indicating that steady growth that the country realized in the past five years has done little to bridge the wide gap between the rich and the poor.
A new report by the United Nations Development Programme (UNDP) on the quality of life across the globe says up to 60 per cent of Kenyans live in poor conditions with no access to quality education and health services, while a further 23 per cent are on the borderline of poverty.
Kenya ranked 103 in the list of inequality out of the total 169 countries surveyed – making it the 66th most unequal country in the world.
Distribution of benefits of economic growth has been one of Kenya’s biggest challenges in its quest for long term prosperity and stability putting the suitability of the trickle-down economics that President Kibaki has used since coming to power under intense scrutiny.
Kenya’s economy expanded from Sh1.17 trillion in 2005 to Sh1.39 trillion last year, but an estimated 38 per cent of the wealth remains in the hands of 10 per cent of the population, leaving 90 per cent of the citizens to share out the rest.
The landscape gets even more skewed when viewed from the bottom end of the pyramid where the poorest 10 per cent of the population control only 1.8 per cent of the national wealth.
This level of income inequality has pushed 86 per cent of Kenyans into poor living conditions while causing serious obstacles to accessing health and education – and ultimately hurting Kenya’s score on key development indicators.
The finding on inequality only confirms the yawning gap between the haves and have-nots across the country linked to high unemployment rates, failed policy interventions, and high of corruption on government that diverts large sums of public resources meant to lift those at the bottom of the pyramid from poverty.
A number of policy interventions like youth empowerment programmes and land reforms that needed to spur growth in key agricultural sector have either failed or are yet to be implemented. More recently, the Kenyan government has responded to mass poverty with the roll out of multi-billion shilling plans meant to create jobs and shield the poorest from mass starvation.
The government spent Sh3.8 billion on small and medium sized firms last year but most of the projects have suffered under the weight of corruption and poor execution.
Large sums of money was also spent in the maize subsidy programme meant to cushion the vulnerable from high food prices but the state is estimated to have lost Sh23.4 billion to bureaucrats and political wheeler-dealers leaving the targeted segments of the population in a neutral position.
Persistence of the high unemployment rates pose the risk of widening the income gap even further.
The government estimates that the youth, in particular, suffer from a 21 per cent unemployment rate, excluding those in colleges.
A large number of people outside gainful employment mean a slide further into poverty while the few who have jobs continue to build mountains of wealth year-on-year. While reducing unemployment is a huge challenge, the government could use the tax system to stimulate job creation. The current tax system is unfair
Kenya has been ranked among the most unequal societies in the world, indicating that steady growth that the country realized in the past five years has done little to bridge the wide gap between the rich and the poor.
A new report by the United Nations Development Programme (UNDP) on the quality of life across the globe says up to 60 per cent of Kenyans live in poor conditions with no access to quality education and health services, while a further 23 per cent are on the borderline of poverty.
Kenya ranked 103 in the list of inequality out of the total 169 countries surveyed – making it the 66th most unequal country in the world.
Distribution of benefits of economic growth has been one of Kenya’s biggest challenges in its quest for long term prosperity and stability putting the suitability of the trickle-down economics that President Kibaki has used since coming to power under intense scrutiny.
Kenya’s economy expanded from Sh1.17 trillion in 2005 to Sh1.39 trillion last year, but an estimated 38 per cent of the wealth remains in the hands of 10 per cent of the population, leaving 90 per cent of the citizens to share out the rest.
The landscape gets even more skewed when viewed from the bottom end of the pyramid where the poorest 10 per cent of the population control only 1.8 per cent of the national wealth.
This level of income inequality has pushed 86 per cent of Kenyans into poor living conditions while causing serious obstacles to accessing health and education – and ultimately hurting Kenya’s score on key development indicators.
The finding on inequality only confirms the yawning gap between the haves and have-nots across the country linked to high unemployment rates, failed policy interventions, and high of corruption on government that diverts large sums of public resources meant to lift those at the bottom of the pyramid from poverty.
A number of policy interventions like youth empowerment programmes and land reforms that needed to spur growth in key agricultural sector have either failed or are yet to be implemented. More recently, the Kenyan government has responded to mass poverty with the roll out of multi-billion shilling plans meant to create jobs and shield the poorest from mass starvation.
The government spent Sh3.8 billion on small and medium sized firms last year but most of the projects have suffered under the weight of corruption and poor execution.
Large sums of money was also spent in the maize subsidy programme meant to cushion the vulnerable from high food prices but the state is estimated to have lost Sh23.4 billion to bureaucrats and political wheeler-dealers leaving the targeted segments of the population in a neutral position.
Persistence of the high unemployment rates pose the risk of widening the income gap even further.
The government estimates that the youth, in particular, suffer from a 21 per cent unemployment rate, excluding those in colleges.
A large number of people outside gainful employment mean a slide further into poverty while the few who have jobs continue to build mountains of wealth year-on-year. While reducing unemployment is a huge challenge, the government could use the tax system to stimulate job creation. The current tax system is unfair
Monday, November 8, 2010
Baringo County to break the poverty cycle with aloe Vera
For long regarded as an irritant shrub, the aloe plant is turning into a route out of poverty for residents of the arid Baringo County.
Aloe sap’s growing commercial appeal in the world market has attracted the interest of the residents with help from the government and other partners. The county has been sleeping on a gold mine for many years, but now they have something to boast of.The project has a website, http://www.baringoaloe.org, through which customers from around the world can contact them.
The project was revived three years ago after it kicked up a storm on establishment in 2004 with a Sh10.5 million grant from the European Union. Then, the local community protested that it was being run by foreigners.
Despite fears on revival that the aloe produced in the area was not enough to support the venture; farmers are now rushing to domesticate aloe because of its high economic value.
The project is being touted as a solution to poverty in semi-arid areas such as Baringo, Laikipia, Koibatek, Mogotio, Marigat, Keiyo, Marakwet, East Pokot, and Rongai districts. An estimated 10,000 hectares of land have been put under the plant.
Aloe’s juice is boiled leaving a dry substance that is used to make soap and other products. The price of aloe sap has increased from Sh35 to Sh50 per litre.
Upon payment on delivery. Farmers can now buy basic commodities like sugar without a lot of hustles. According to the Kenya Forest Research Institute (Kefri),its estimated that Sh6 million is spent on aloe research each year. It can therefore be said that Aloe is a resource with economic value.
Baringo Aloe Bio-enterprise hopes to produce 10,000 tonnes of aloe in a year’s time given that 1,000 litres of aloe sap is processed at the factory each day though its capacity is limited by manual processes.
Demand
The plant also has nutritional value besides being an important component for both pharmaceuticals and cosmetic industries, with this there’s high demand for the product.
The leaves are applied to wounds to assist healing. Its sap is drunk as an appetizer.
Diluted leaf sap is drunk as a cure for malaria, typhoid fever, diarrhea, oedema, swollen diaphragm, nose bleeding, headache, pneumonia, chest pain and as a disinfectant.
The sap is also applied in eyes to cure conjunctivitis and nipples to wean children. The basal parts of the leaves are used in the fermentation of local beer. The leaves are pounded and added to drinking water for preventing or treating coccidiosis and Newcastle disease in poultry.
Two products from aloe can be used commercially in the manufacture of medicinal and cosmetic preparations.
One is the gel from the centre of the leaf, and the other is the exudates from longitudinal vessels situated at the outer sides of the vascular bundles of the leaves.
The plant can grow in poor soils and tolerates drought, making it invaluable in rangelands.
Although farmers are banned from harvesting wild aloe under a 1986 presidential decree, increasing commercial value has exposed the species to over-exploitation.
Aloe sap’s growing commercial appeal in the world market has attracted the interest of the residents with help from the government and other partners. The county has been sleeping on a gold mine for many years, but now they have something to boast of.The project has a website, http://www.baringoaloe.org, through which customers from around the world can contact them.
The project was revived three years ago after it kicked up a storm on establishment in 2004 with a Sh10.5 million grant from the European Union. Then, the local community protested that it was being run by foreigners.
Despite fears on revival that the aloe produced in the area was not enough to support the venture; farmers are now rushing to domesticate aloe because of its high economic value.
The project is being touted as a solution to poverty in semi-arid areas such as Baringo, Laikipia, Koibatek, Mogotio, Marigat, Keiyo, Marakwet, East Pokot, and Rongai districts. An estimated 10,000 hectares of land have been put under the plant.
Aloe’s juice is boiled leaving a dry substance that is used to make soap and other products. The price of aloe sap has increased from Sh35 to Sh50 per litre.
Upon payment on delivery. Farmers can now buy basic commodities like sugar without a lot of hustles. According to the Kenya Forest Research Institute (Kefri),its estimated that Sh6 million is spent on aloe research each year. It can therefore be said that Aloe is a resource with economic value.
Baringo Aloe Bio-enterprise hopes to produce 10,000 tonnes of aloe in a year’s time given that 1,000 litres of aloe sap is processed at the factory each day though its capacity is limited by manual processes.
Demand
The plant also has nutritional value besides being an important component for both pharmaceuticals and cosmetic industries, with this there’s high demand for the product.
The leaves are applied to wounds to assist healing. Its sap is drunk as an appetizer.
Diluted leaf sap is drunk as a cure for malaria, typhoid fever, diarrhea, oedema, swollen diaphragm, nose bleeding, headache, pneumonia, chest pain and as a disinfectant.
The sap is also applied in eyes to cure conjunctivitis and nipples to wean children. The basal parts of the leaves are used in the fermentation of local beer. The leaves are pounded and added to drinking water for preventing or treating coccidiosis and Newcastle disease in poultry.
Two products from aloe can be used commercially in the manufacture of medicinal and cosmetic preparations.
One is the gel from the centre of the leaf, and the other is the exudates from longitudinal vessels situated at the outer sides of the vascular bundles of the leaves.
The plant can grow in poor soils and tolerates drought, making it invaluable in rangelands.
Although farmers are banned from harvesting wild aloe under a 1986 presidential decree, increasing commercial value has exposed the species to over-exploitation.
Saturday, October 30, 2010
KENYAS’ DIASPORA ‘ELITES’ DUPED INTO SUPPORTING A DOCUMENT THAT BAR THEM FROM CONTESTING FOR PRESIDENCY IN THEIR MOTHER LAND
The constitution is passed and promulgamation was conducted. Diapora elites were grinning from chin to chin with a false hope that at long last they can go back home and change Kenya. Many hoped to presidents and others governors and senators. Change was in the air and those who dared question the validity and the mistakes on the constitution were branded pro Ruto or the enemy of the people. Many diaspora elites having failed to read the whole draft because of their so called "busy schedule" blindly followed their kings and said yes! yes! yes! katiba yes. While many of us were busy challenging the government on spelling errors, major mistakes in the constitution, wrong clauses and demanded an amendment before passage, many elites were spending most of their time writting articles on sections that supported the yes position while ignoring the position that concerned them. Indeed many were circulating petitions to shut us down. The elites hid their heads in big hats and immersed their bodies into long robes of academic achievements and consultancies that had to go with the offers of the time. It is amazing that even some thorough diasporans who have fought their way into institution of excellence discarded excellence for quick passage of dual citizenship that was absolutely meaningless. All they read in the constitution was Chapter 3 section 16 that state
" 16. A citizen by birth does not lose citizenship by acquiring the citizenship of another country."
It reminded me of the Nyayo era when everyone supported free school milk without knowing that the free milk was replacing the books and sending money into the pockets of those owning huge dairy farms. When will Kenyans learn to pay attention to details? It appears one can take a Kenyan out of Kenya but will never take Kenya out of us. We still support people or things blindly irrespective of our level of education or status in the society. We are still cows and not bulls when it comes to politics. The diaspora still follow sacred cows my friends. The diaspora in my opinion are still too naive to talk about leading anyone.
Simply put, the constitution allows for dual citizenship but bars everyone with a dual citizen status the chance to become a Kenyan government official. You cannot hold a public office if you are a citizen of Kenya by birth and a citizen of United States by marriage or whatever. If you doubt me then read the section below with emphasis on the red highlight.
Citizenship and leadership
78. (1) A person is not eligible for election or appointment to a State office unless the person is a citizen of Kenya.
(2) A State officer or a member of the defence forces shall not hold dual citizenship.
(3) Clauses (1) and (2) do not apply to—
(a) judges and members of commissions; or
(b) any person who has been made a citizen of another country by
operation of that country’s law, without ability to opt out.
Now it perplexes me that the diaspora did not read this. Now the diaspora elites are telling us that they are mad. They want the constitution to be amended to allow them to be government officials and the politicians are asking them, "do you have the votes to change even a sentence in the constitution". Indeed some politicians have openly told some diaspora beggars that they are "idiots". The diaspora were idiots in the 2007 election by supporting tribalism and they have turned out to be idiots in supporting a constitution that bars them from changing Kenya from within.
As we speak, the Kenyan politicians are very comfortable with many diasporans who could have had a very good shot at the presidency because many of them are citizens of other countries. No more Wajackoya, Matunda, Mwai, Mutua etc etc for president if they are US citizens. Indeed kiss goodbye to even being a technocrat because the current political class are very uneasy with the Diaspora. The clause above was meant to stop you diasporan and you never saw it coming. It stopped you on your tracks and you are left in the cold over what you have fought for over a decade. How did this happen? It is because of your lack of insight and blind following. It is your individualism and thrust of aligning yourself with people in positions of power. It is your ignorance about cunningness of career politicians. Shame on you.
" 16. A citizen by birth does not lose citizenship by acquiring the citizenship of another country."
It reminded me of the Nyayo era when everyone supported free school milk without knowing that the free milk was replacing the books and sending money into the pockets of those owning huge dairy farms. When will Kenyans learn to pay attention to details? It appears one can take a Kenyan out of Kenya but will never take Kenya out of us. We still support people or things blindly irrespective of our level of education or status in the society. We are still cows and not bulls when it comes to politics. The diaspora still follow sacred cows my friends. The diaspora in my opinion are still too naive to talk about leading anyone.
Simply put, the constitution allows for dual citizenship but bars everyone with a dual citizen status the chance to become a Kenyan government official. You cannot hold a public office if you are a citizen of Kenya by birth and a citizen of United States by marriage or whatever. If you doubt me then read the section below with emphasis on the red highlight.
Citizenship and leadership
78. (1) A person is not eligible for election or appointment to a State office unless the person is a citizen of Kenya.
(2) A State officer or a member of the defence forces shall not hold dual citizenship.
(3) Clauses (1) and (2) do not apply to—
(a) judges and members of commissions; or
(b) any person who has been made a citizen of another country by
operation of that country’s law, without ability to opt out.
Now it perplexes me that the diaspora did not read this. Now the diaspora elites are telling us that they are mad. They want the constitution to be amended to allow them to be government officials and the politicians are asking them, "do you have the votes to change even a sentence in the constitution". Indeed some politicians have openly told some diaspora beggars that they are "idiots". The diaspora were idiots in the 2007 election by supporting tribalism and they have turned out to be idiots in supporting a constitution that bars them from changing Kenya from within.
As we speak, the Kenyan politicians are very comfortable with many diasporans who could have had a very good shot at the presidency because many of them are citizens of other countries. No more Wajackoya, Matunda, Mwai, Mutua etc etc for president if they are US citizens. Indeed kiss goodbye to even being a technocrat because the current political class are very uneasy with the Diaspora. The clause above was meant to stop you diasporan and you never saw it coming. It stopped you on your tracks and you are left in the cold over what you have fought for over a decade. How did this happen? It is because of your lack of insight and blind following. It is your individualism and thrust of aligning yourself with people in positions of power. It is your ignorance about cunningness of career politicians. Shame on you.
Monday, October 25, 2010
Kenya’s economic growth is not organic; it is a byproduct of China
Listening to the wave of optimism sweeping through the African continent, one may think we have reached the end of the tunnel.
Last week, the World Bank predicted that the EAC region was set to grow by an average of five per cent over the next year. And who would blame the general public for believing the optimism, adjusted inflation figures that distort real living standards, an expansionary monetary policy, upward corrections in all the major financial markets, and a booming property industry are all positive signals for a change in our fortunes.
But this veil, displaying a new chapter in our economic history only serves to hide a distortion that is perpetuated by ill informed institutional leaders.
The economic gap that exists today between the rich world and Africa is alarming and has only been made more so to me, by the measures developed nations are taking to fix their deficits.
Fiscal consolidation, austerity measures, spending cuts, public wage freezes quantitative easing, tax increases, and double dip recession — these are the economic jargons that are setting the tone for dealing with a post recession world.
The question is what is the big deal?
Unemployment in the rich nations is only 10 per cent, inflation two to three per cent, zero interest rates, there is regulatory reform that is set to pave way for a more efficient rich world.
All this can only be good. But this is where the distortion lies. I recently came to learn that 2.2 million Kenyan citizens make NHIF contributions.
Now, assuming that these are compulsory deductions, it means that only 2.2 million out of a possible 20 million people are legally employed and making enough to make this contribution.
We are miles behind and instead of jolting our economic machine into action so we can move at an electrifying pace into the 21st century; we are content to paint a false picture of economic progress.
Unemployment is at 80 per cent, there are companies in this world, some unheard of that produce more than our national GDP.
Before the powers that be adjusted the way we calculate inflation, we averaged 15 – 20 per cent annually. This picture is not so rosy.
But let us cover ourselves in the veil of positive change for a second and look at why Africa is drawing so much attention.
China, wants more soft power by expanding her political support base on the international scene mainly through the General assembly.
She is hungry for natural resources to feed her double digit growth economy, and she wants to develop a market to export goods from her export led economy for the next 30 to 60 years.
Do not be surprised if after twenty something years, every consumable from undergarments to cars are made in China or even better made in Kenya by a Chinese company.
The point here is our growth is not organic, it is a byproduct of China’s involvement in our economy.
World markets have become saturated and Africa seems like a new place to go.
Returns from highly developed financial markets such as the UK, Japan, US and the Euro Zone are low because their respective governments are busy restructuring, banks have turned off their credit taps, individuals are reducing their debt obligations and companies are hoarding cash.
So it makes sense that Africa has gained some interest from our friends abroad but ironic that they are coming in droves, welcomed by us when we once labeled them neo cons.
I am not saying we are the subject of some post financial crises neo economic exploitation or we should turn our backs on the Middle Kingdom by all means.
Jambo, Karibu Kenya but take a moment and ponder.
Do we have deep fundamental economic issues?
Is all the urban infrastructural activity a good sign?
Are we employing the right economic tools?
Are we employing the right economic tools or structurally adjusting ourselves to fit in the rest of the puzzle that we call the World Economy?
My answer is whatever the case may be; if developed nations are ringing the alarm bell at 10 per cent unemployment and we are employing the same the economic practices that they do, then we should be running around in panic, or at least we should have been for the last 50 years.
I am not advocating a radical Keynesian intervention here, neither am I proposing austerity.
A holistic revision of our economic fundamentals is required and not through development economics theorized by World Bank experts but by Kenyans, by Africans, — an organic, home grown solution that will galvanize the African populace into action.
Economic aid is not going to have a miraculous multiplier effect that will eradicate poverty.
Focusing on Millennium Development Goals which at current rates seem almost unattainable will only misallocate and divert a pool of useful resources.
Red carpet treatment for China and other members of the BRIC fraternity will only make it more challenging to sustainably benefit from our own output in the future.
Paradoxically, all this attention makes this the time to set our own standards.
A high demographic dividend, abundant supply of raw materials like oil, a marginally growing middle class, the information age, a bleak future for the rich world, the list is endless.
The African Union should engage in some transformational paradigm shifting reassessment of the future.
Achieve this now and we cease to be peripheral but at the very heart of this evolving puzzle called the global economy
Last week, the World Bank predicted that the EAC region was set to grow by an average of five per cent over the next year. And who would blame the general public for believing the optimism, adjusted inflation figures that distort real living standards, an expansionary monetary policy, upward corrections in all the major financial markets, and a booming property industry are all positive signals for a change in our fortunes.
But this veil, displaying a new chapter in our economic history only serves to hide a distortion that is perpetuated by ill informed institutional leaders.
The economic gap that exists today between the rich world and Africa is alarming and has only been made more so to me, by the measures developed nations are taking to fix their deficits.
Fiscal consolidation, austerity measures, spending cuts, public wage freezes quantitative easing, tax increases, and double dip recession — these are the economic jargons that are setting the tone for dealing with a post recession world.
The question is what is the big deal?
Unemployment in the rich nations is only 10 per cent, inflation two to three per cent, zero interest rates, there is regulatory reform that is set to pave way for a more efficient rich world.
All this can only be good. But this is where the distortion lies. I recently came to learn that 2.2 million Kenyan citizens make NHIF contributions.
Now, assuming that these are compulsory deductions, it means that only 2.2 million out of a possible 20 million people are legally employed and making enough to make this contribution.
We are miles behind and instead of jolting our economic machine into action so we can move at an electrifying pace into the 21st century; we are content to paint a false picture of economic progress.
Unemployment is at 80 per cent, there are companies in this world, some unheard of that produce more than our national GDP.
Before the powers that be adjusted the way we calculate inflation, we averaged 15 – 20 per cent annually. This picture is not so rosy.
But let us cover ourselves in the veil of positive change for a second and look at why Africa is drawing so much attention.
China, wants more soft power by expanding her political support base on the international scene mainly through the General assembly.
She is hungry for natural resources to feed her double digit growth economy, and she wants to develop a market to export goods from her export led economy for the next 30 to 60 years.
Do not be surprised if after twenty something years, every consumable from undergarments to cars are made in China or even better made in Kenya by a Chinese company.
The point here is our growth is not organic, it is a byproduct of China’s involvement in our economy.
World markets have become saturated and Africa seems like a new place to go.
Returns from highly developed financial markets such as the UK, Japan, US and the Euro Zone are low because their respective governments are busy restructuring, banks have turned off their credit taps, individuals are reducing their debt obligations and companies are hoarding cash.
So it makes sense that Africa has gained some interest from our friends abroad but ironic that they are coming in droves, welcomed by us when we once labeled them neo cons.
I am not saying we are the subject of some post financial crises neo economic exploitation or we should turn our backs on the Middle Kingdom by all means.
Jambo, Karibu Kenya but take a moment and ponder.
Do we have deep fundamental economic issues?
Is all the urban infrastructural activity a good sign?
Are we employing the right economic tools?
Are we employing the right economic tools or structurally adjusting ourselves to fit in the rest of the puzzle that we call the World Economy?
My answer is whatever the case may be; if developed nations are ringing the alarm bell at 10 per cent unemployment and we are employing the same the economic practices that they do, then we should be running around in panic, or at least we should have been for the last 50 years.
I am not advocating a radical Keynesian intervention here, neither am I proposing austerity.
A holistic revision of our economic fundamentals is required and not through development economics theorized by World Bank experts but by Kenyans, by Africans, — an organic, home grown solution that will galvanize the African populace into action.
Economic aid is not going to have a miraculous multiplier effect that will eradicate poverty.
Focusing on Millennium Development Goals which at current rates seem almost unattainable will only misallocate and divert a pool of useful resources.
Red carpet treatment for China and other members of the BRIC fraternity will only make it more challenging to sustainably benefit from our own output in the future.
Paradoxically, all this attention makes this the time to set our own standards.
A high demographic dividend, abundant supply of raw materials like oil, a marginally growing middle class, the information age, a bleak future for the rich world, the list is endless.
The African Union should engage in some transformational paradigm shifting reassessment of the future.
Achieve this now and we cease to be peripheral but at the very heart of this evolving puzzle called the global economy
Thursday, October 21, 2010
Ruto Suspension: Raila’s Political Grave
Digressing from Economic writings to comment on the Kenyan politics, one of my former tutors once argued that you cannot separate Economics from Politics but the vice versa is incorrect..As someone once said; "It’s Politics, stupid!", so is the case of suspension of Hon. William Ruto and former Higher education minister from Cabinet. All indications are that Raila is taking the blame and credit (depending on where one stands). That means Raila will pay political price of that decision and also get political accolades for it. On balance, however, Ruto's suspension may as well mark the end of any hope that Raila and Ruto (Luos and Kalenjins) will form any alliance towards 2012.
Kalenjins knowing this to be a defining moment in their political future, word is that wide consultation is going on between the council of elders, MPs, businessmen, councillors and grassroots leaders on what to do next, with Ruto himself declaring today that an announcement on his next move will be made soon, and the added rider that his Presidential ambitions are very much intact. Indeed, Uhuru was at Ruto's Karen home yesterday at the head of a delegation of Central Kenya MPs to offer support, pointing to the high level scheming going on behind the scenes.
My bet is that Ruto will wait out the outcome of the appeal then quit ODM and parliament altogether to come back on a new party openly hostile to ODM in the august house , and as one of the Kalenjin MPs said today, the aim is to teach Raila a lesson.
Raila need to replace Kalenjin Bloc and that means trying to woo GEMA. The latter is a non-starter as the GEMANS believe they are the natural leaders of Kenya and have the numbers to go for it. Even if a GEMA Candidate is not on the Ballot, it’s unlikely they will vote for Raila, and not say, Kalonzo.
The upshot is that Raila should retire together with Kibaki or vie for Governorship of Nyanza. Presidency is surely becoming an elusive mirage to him ironically through his actions and omissions.
BTW: Ruto does not need Cabinet post to be relevant as he has a solid following, just like Raila or Kibaki never needed Cabinet posts in their Opposition years. I rest my case
Kalenjins knowing this to be a defining moment in their political future, word is that wide consultation is going on between the council of elders, MPs, businessmen, councillors and grassroots leaders on what to do next, with Ruto himself declaring today that an announcement on his next move will be made soon, and the added rider that his Presidential ambitions are very much intact. Indeed, Uhuru was at Ruto's Karen home yesterday at the head of a delegation of Central Kenya MPs to offer support, pointing to the high level scheming going on behind the scenes.
My bet is that Ruto will wait out the outcome of the appeal then quit ODM and parliament altogether to come back on a new party openly hostile to ODM in the august house , and as one of the Kalenjin MPs said today, the aim is to teach Raila a lesson.
Raila need to replace Kalenjin Bloc and that means trying to woo GEMA. The latter is a non-starter as the GEMANS believe they are the natural leaders of Kenya and have the numbers to go for it. Even if a GEMA Candidate is not on the Ballot, it’s unlikely they will vote for Raila, and not say, Kalonzo.
The upshot is that Raila should retire together with Kibaki or vie for Governorship of Nyanza. Presidency is surely becoming an elusive mirage to him ironically through his actions and omissions.
BTW: Ruto does not need Cabinet post to be relevant as he has a solid following, just like Raila or Kibaki never needed Cabinet posts in their Opposition years. I rest my case
Tuesday, October 19, 2010
Weak spending by Kenyans a nightmare to policy makers.
Growth in consumption taxes lagged behind overall government revenue collection in the first three months of the financial year, indicating the economic recovery is yet to translate into increased personal incomes that can boost spending. In results released this month, the Kenya Revenue Authority (KRA) reported an overall 13.2 per cent increase in revenue collection between comparative months of July and September 2010, but Value Added Tax- which is used as a proxy for measuring consumption patterns in the economy- grew at a slower pace of 2.5 per cent.KRA said in a statement that the Sh16.4 billion overall growth in revenues to Sh140.4 billion in the first quarter of the year was powered by improved performance in agriculture, construction, manufacturing and financial sectors of the economy.
As an Economic expert, the subdued growth in VAT collection, which increased by a paltry Sh500 million to Sh20.9 billion, means that current GDP growth is mainly being driven by government expenditure, and is yet to translate into increased household incomes, in other words the slow growth of one could only mean that it is compensated by the other. “It could be an indication that growth is not trickling down, or that VATs are not being paid,”
The KRA revenue collection report did not indicate if the tax man is on course to meeting this year’s total annual collection target of Sh610 billion.
While the first quarter results point to the target being missed by 8.3 per cent, this straight line deduction has pitfalls in that some quarters are more significant than others depending on the business cycle of tax payers. Heavy government spending in infrastructure and construction projects across the country are so far providing the single biggest boost to overall economic growth. The weather has also been conducive and agriculture is recovering, pointing to the heavy weighting of the sector, which accounts for a fifth of Kenya’s total GDP.
Improved weather conditions significantly changed the fortunes of the key agricultural sector that employs more than 60 per cent of Kenya’s workforce and lowered the cost of food, estimated to take up 60 per cent of poor household incomes.
Latest economic growth figures by the bureau of statistics put construction as the fastest growing sector of the economy, having expanded by 18 per cent between April and June.
The sector has recorded a huge jump in uptake of loans, where the CBK says net lending grew from Sh43.3 billion to Sh81.7 billion in the year to June, faster than household lending that rose from Sh84.3 billion to Sh118 billion.
Financial intermediation was the second fastest growth sector, enlarging by 16 per cent while the electricity and water sector grew by 14.4 per cent.
Tax collection on petroleum dropped by 5.5 per cent compared to the three months between July and September last year, in a possible indication of reduced consumption of oil for power generation relative to last year.Trade taxes, which mainly comprise of collections from business licenses, recorded the biggest growth of 25.5 per cent indicating that Kenyans could be opening up new businesses hoping to profit from the ongoing economic recovery.
International trade indicators showed marked improvement in the first half of 2010, with volume of merchandise trade increasing by 16.8 per cent as per the bureau of statistics figures.Direct domestic taxes and revenues from fees and licenses increased by 16.3 per cent and nine per cent respectively.
Kenya’s economy grew at the rate of 5.4 per cent in the second quarter of the year, in what the bureau of statistics attributed to a recovery from internal and external shocks that have pulled back growth since 2008.The second quarter growth was realized in an environment of relatively low interest rates, lower inflation and increased production of cheaper hydro-electricity that kept the cost of borrowing in check and eased the pressure on household budgets.
As an Economic expert, the subdued growth in VAT collection, which increased by a paltry Sh500 million to Sh20.9 billion, means that current GDP growth is mainly being driven by government expenditure, and is yet to translate into increased household incomes, in other words the slow growth of one could only mean that it is compensated by the other. “It could be an indication that growth is not trickling down, or that VATs are not being paid,”
The KRA revenue collection report did not indicate if the tax man is on course to meeting this year’s total annual collection target of Sh610 billion.
While the first quarter results point to the target being missed by 8.3 per cent, this straight line deduction has pitfalls in that some quarters are more significant than others depending on the business cycle of tax payers. Heavy government spending in infrastructure and construction projects across the country are so far providing the single biggest boost to overall economic growth. The weather has also been conducive and agriculture is recovering, pointing to the heavy weighting of the sector, which accounts for a fifth of Kenya’s total GDP.
Improved weather conditions significantly changed the fortunes of the key agricultural sector that employs more than 60 per cent of Kenya’s workforce and lowered the cost of food, estimated to take up 60 per cent of poor household incomes.
Latest economic growth figures by the bureau of statistics put construction as the fastest growing sector of the economy, having expanded by 18 per cent between April and June.
The sector has recorded a huge jump in uptake of loans, where the CBK says net lending grew from Sh43.3 billion to Sh81.7 billion in the year to June, faster than household lending that rose from Sh84.3 billion to Sh118 billion.
Financial intermediation was the second fastest growth sector, enlarging by 16 per cent while the electricity and water sector grew by 14.4 per cent.
Tax collection on petroleum dropped by 5.5 per cent compared to the three months between July and September last year, in a possible indication of reduced consumption of oil for power generation relative to last year.Trade taxes, which mainly comprise of collections from business licenses, recorded the biggest growth of 25.5 per cent indicating that Kenyans could be opening up new businesses hoping to profit from the ongoing economic recovery.
International trade indicators showed marked improvement in the first half of 2010, with volume of merchandise trade increasing by 16.8 per cent as per the bureau of statistics figures.Direct domestic taxes and revenues from fees and licenses increased by 16.3 per cent and nine per cent respectively.
Kenya’s economy grew at the rate of 5.4 per cent in the second quarter of the year, in what the bureau of statistics attributed to a recovery from internal and external shocks that have pulled back growth since 2008.The second quarter growth was realized in an environment of relatively low interest rates, lower inflation and increased production of cheaper hydro-electricity that kept the cost of borrowing in check and eased the pressure on household budgets.
Friday, October 8, 2010
Why It’s Foolish to Weaken shilling to Create Flower Jobs
I keep hearing that the only way we’re going to create jobs in Kenya
agricultural sector is to keep our Shilling weak.
Here’s the theory. As shilling falls relative to foreign currencies
like sterling pound, Euro, everything we export becomes less expensive
to foreign consumers.
So they buy more of our stuff, creating more jobs in Kenya-agricultural sector
. At the same time, everything they make costs us more. So we buy less
from them and more from each other. Again, more jobs here at home.
-That is why imported cars are more expensive than our tea
But using a weak shilling to create Kenyan jobs is foolish, for two reasons.
First, no other country wants to lose jobs because its currency
becomes too high relative to the Ksh.
So a weak shilling policy invites poverty period.
Everyone loses.
Here’s the other problem. Even if we succeed, a weak shilling makes us
poorer. If we keep imports at around 46 percent of our economy, so a
dropping Shilling is exactly like an extra tax on 46 percent of what
we buy.
It’s no big accomplishment to create jobs by getting poorer.
You want to know how to cut unemployment by half tomorrow?
Get rid of the minimum wage , and make everyone who needs a job work
for a negotiated wages.
And my friend Mr Atwoli Cotu secretary need to know this that a
two-tier wage contracts are newest lady gaga in labor relations.
Older workers stay at their previous wage; new hires get lower wages
and smaller benefits.
Even a wage freeze becomes a lower wage over time, as inflation eats into it.
Get it? The goal isn’t just more jobs. Answer-It’s more jobs that pay
enough to improve our living standards.
Using a weakening shilling to create more jobs doesn’t get us where we
want to be.
agricultural sector is to keep our Shilling weak.
Here’s the theory. As shilling falls relative to foreign currencies
like sterling pound, Euro, everything we export becomes less expensive
to foreign consumers.
So they buy more of our stuff, creating more jobs in Kenya-agricultural sector
. At the same time, everything they make costs us more. So we buy less
from them and more from each other. Again, more jobs here at home.
-That is why imported cars are more expensive than our tea
But using a weak shilling to create Kenyan jobs is foolish, for two reasons.
First, no other country wants to lose jobs because its currency
becomes too high relative to the Ksh.
So a weak shilling policy invites poverty period.
Everyone loses.
Here’s the other problem. Even if we succeed, a weak shilling makes us
poorer. If we keep imports at around 46 percent of our economy, so a
dropping Shilling is exactly like an extra tax on 46 percent of what
we buy.
It’s no big accomplishment to create jobs by getting poorer.
You want to know how to cut unemployment by half tomorrow?
Get rid of the minimum wage , and make everyone who needs a job work
for a negotiated wages.
And my friend Mr Atwoli Cotu secretary need to know this that a
two-tier wage contracts are newest lady gaga in labor relations.
Older workers stay at their previous wage; new hires get lower wages
and smaller benefits.
Even a wage freeze becomes a lower wage over time, as inflation eats into it.
Get it? The goal isn’t just more jobs. Answer-It’s more jobs that pay
enough to improve our living standards.
Using a weakening shilling to create more jobs doesn’t get us where we
want to be.
Thursday, October 7, 2010
Young Vs Old
The debate has been here with us for as long as I can remember, and it is not about to stop any time soon.
These are matters to do with LEADERSHIP and who should be at the very top, especially when it comes to matters politics and Kenya in particular.
What I have always failed to understand is the belief that young people can make any good leaders than the old guards. This is because some of the old chaps
got their positions while still young and have never being of any importance to the society.
Friends, I beg not to be misunderstood but all am asking for is for people to be realistic in their arguments which in my opinion should be articulate and precise,
and should not be driven by prejudice, hatred, jealousy and tribal inclination for that matter. I am so passionate about this matter because at no time have I ever imagined throwing out my old mzee(Old man), just because he is old. He is such an integral part of my well being, reason being that I have always run to him for advice on weighty matters that
I would otherwise not be able to handle.
As a young person, I am by no means against the young, but am always left baffled, especially when young professionals, advance their arguments on why
the old guards should be shoved aside.
From my personal experience, and I believe most of you will agree with me, most young people are driven by prejudice, pride, arrogance, just to mention but a few sticky issues.
This forms the basis of my argument that as much as the youth must be given room in matters leadership, some wazee(Old men) must also be there to give guidance to these
vulnerable group.
As young people, we must stand up and prove our worth and mettle. This is because most of the young people in positions of leadership, political leadership for that matter,
have for some reasons proven that they are just a bunch of good for nothing leaders. All they do is run around making lots of noise while doing nothing for their subjects,
to whom they are never answerable to. I am a disappointed young professional because I expected an alternative leadership from my peers who were voted in office but have so far
been a cropper. If we fail even to lead a small group of people (constituency), how then can we be entrusted with the National Leadership????
Just as my old mzee is still and will remain a part of my being, so are the old wazes(men) we are trying to shove aside saying that they are too old to lead.
Since when did your dad become too old to be the man of his boma(Home state)???
In matters Mike Sonko and Makadara, just to illustrate my point, the guy gets elected and even before he gets to parliament, he harasses a fellow young man and warns him to "Chunga maisha unaweza kufa hii Nairobi"(Take good care of your life, you can die in this Nairobi). I have nothing against Sonko but if this is how the young pros. are going to change Kenya, then I'd rather stick with my Old mzee, at least he won,t threaten my life.
If we are serious we want to rise to positions of leadership, let us first of all stop being egocentric towards our peers, rise to the occasion and prove that
we can be entrusted with the delicate responsibility of running this country, and any other positions of leadership for that matter. Other wise we might just have to stick with Wazee(The old) so as to be peaceful and for the continuity of our Nation.
These are matters to do with LEADERSHIP and who should be at the very top, especially when it comes to matters politics and Kenya in particular.
What I have always failed to understand is the belief that young people can make any good leaders than the old guards. This is because some of the old chaps
got their positions while still young and have never being of any importance to the society.
Friends, I beg not to be misunderstood but all am asking for is for people to be realistic in their arguments which in my opinion should be articulate and precise,
and should not be driven by prejudice, hatred, jealousy and tribal inclination for that matter. I am so passionate about this matter because at no time have I ever imagined throwing out my old mzee(Old man), just because he is old. He is such an integral part of my well being, reason being that I have always run to him for advice on weighty matters that
I would otherwise not be able to handle.
As a young person, I am by no means against the young, but am always left baffled, especially when young professionals, advance their arguments on why
the old guards should be shoved aside.
From my personal experience, and I believe most of you will agree with me, most young people are driven by prejudice, pride, arrogance, just to mention but a few sticky issues.
This forms the basis of my argument that as much as the youth must be given room in matters leadership, some wazee(Old men) must also be there to give guidance to these
vulnerable group.
As young people, we must stand up and prove our worth and mettle. This is because most of the young people in positions of leadership, political leadership for that matter,
have for some reasons proven that they are just a bunch of good for nothing leaders. All they do is run around making lots of noise while doing nothing for their subjects,
to whom they are never answerable to. I am a disappointed young professional because I expected an alternative leadership from my peers who were voted in office but have so far
been a cropper. If we fail even to lead a small group of people (constituency), how then can we be entrusted with the National Leadership????
Just as my old mzee is still and will remain a part of my being, so are the old wazes(men) we are trying to shove aside saying that they are too old to lead.
Since when did your dad become too old to be the man of his boma(Home state)???
In matters Mike Sonko and Makadara, just to illustrate my point, the guy gets elected and even before he gets to parliament, he harasses a fellow young man and warns him to "Chunga maisha unaweza kufa hii Nairobi"(Take good care of your life, you can die in this Nairobi). I have nothing against Sonko but if this is how the young pros. are going to change Kenya, then I'd rather stick with my Old mzee, at least he won,t threaten my life.
If we are serious we want to rise to positions of leadership, let us first of all stop being egocentric towards our peers, rise to the occasion and prove that
we can be entrusted with the delicate responsibility of running this country, and any other positions of leadership for that matter. Other wise we might just have to stick with Wazee(The old) so as to be peaceful and for the continuity of our Nation.
Wednesday, September 29, 2010
Building an agro-commodity exchange in Kenya
The government should seriously rethink its strategies for revitalizing agriculture. It is saddening that despite Kenya having an agro-based economy, has citizens who continue to experience food supply shortages.The problem has led to high incidence of hunger, malnutrition and, in some extremes, starvation. While the efforts that have produced the Agricultural Sector Development Strategy are commendable, a lot needs to be done to revamp agricultural production and development.
As part of the efforts to revitalize agriculture, Kenya urgently needs to set up a formal Commodity Exchange.This shall significantly help in the trade and marketing of agricultural products.
What therefore is a Commodity Exchange? It is a market organized to allow for the selling and buying of commodities.
These may be traded in three types of markets: cash, futures and options. Maize, Cocoa, crude oil, and gold are some of the commodities traded across the world. Anybody may trade through member firms. The organisation itself regulates the trading practices of its members while prices are determined by supply and demand.
The organisation provides the rules, procedures and infrastructure for commodity trading, oversees trading practices while gathering and disseminating marketplace information.
Transactions take place on the floor — the pit — and must be effected within certain time limits.
Floor traders, floor brokers and futures commissions merchants working on the floor must be registered by a regulator.
The goal of the exchange would be to promote efficient markets and boost price discovery while enhancing risk management hence protecting players like farmers.
In the Kenyan context, agricultural products to be traded include items like maize, wheat, beans, barley, sugar, cotton and fertilizers.
Contracts based on the same products may also be sold at the exchange.
The concept is not a novelty in Kenya. The Nairobi Coffee Exchange has a long history dating back to the 1940s while the Mombasa Tea Auction which serves East Africa and parts of Southern Africa has gained prominence as a major tea auctioneer and is currently the second largest in the world after Colombo in Sri Lanka.
These two commodity exchanges have not only provided a centralized and organized export platform for the two cash crops but also ensured effective competition among buyers and sellers.
The Kenya Agricultural Commodity Exchange Limited which was established in 1997, is the first major attempt to establish a commodity exchange for agricultural products other than Coffee and Tea in Kenya and in the East African Community (EAC) region.
SAFEX of South Africa is one of the most active commodity exchanges in Africa that deals in grains among other products.
The Chicago Board of Trade in the USA, with its origins in 1848, is perhaps one of the oldest commodity exchanges in the world.
However, for a Commodity Exchange to grow and flourish and serve its purpose effectively, it requires a legal and regulatory framework.
With the implementation of the Vision 2030 under way, the establishment of an effective Commodity Exchange for agricultural products should be made a priority for Kenya and the wider EAC region.
A successful commodity exchange is dependent on the availability of tradable volumes of commodities, a big market, sound infrastructure and an effective telecommunication network.
Financial services
It also relies on sound financial services, the existence of strong players, a network of secure and reliable warehouses and the existence of a sound legal and regulatory framework for a commodity exchange and for warehouses. Most of these building blocks are already in place.
The National Cereals and Produce Board alone has 110 depots and silos with a combined storage capacity of 1,890,000 metric tonnes.
Other institutions including the Private Sector have warehouses mainly located in major urban centres.
A Commodity Exchange will create a market for tradable documents generated by this huge Warehousing Network and their respective derivatives.
It will also attract participants from the region.
The ongoing effort by the Eastern Africa Grain Council (EAGC) for the promotion of structured grain trading in the EAC Region have already initiated the establishment of a Warehouse Receipt System recognized by the stakeholders in the grains industry.
Due to the improved co-operative movement, many Kenyan Farmers, Millers, Traders and other stakeholders have formed associations that advance their business interests.
These structured groups will use the exchange and the Warehouse Receipt System as the best instruments for consolidating their products into marketable volumes and marketing them efficiently and profitably.
Both local and international financial institutions have introduced products that recognize the use of warehouse/warrants as collateral for accessing credit and are ready to support structured trade through regulated exchanges.
There is the presence of internationally recognized and experienced collateral management companies interested in the professional management of warehouses for the Warehouse Receipt System.
The East African Community provides a large population and hence a market of nearly 130 million people.
The grain market in East Africa is ready to support initiatives that would market grain quantities surpassing 10,000,000 metric tonnes, which represents a minimum total production of maize, beans and rice annually.
These commodities are traded at various open markets and across borders within the EAC Region.
The Strategic Grain Reserve function of the Kenyan Government can be well served and managed, for instance by the Government purchasing commodities and holding warehouse receipts while releasing them through the Exchange at an appropriate time.
This gives the Government the instrument and power to effectively intervene during times of shortages and surpluses, thus providing stability
Also, an Exchange provides vital information that assists stakeholders to keep in constant touch with market trends especially in commodity prices through regular publications and dissemination of the information.
Lastly, it regulates trading activities by monitoring performance of authorized players.
Kenya currently needs a vibrant all inclusive Commodity Exchange to improve and promote agricultural trade in domestic, regional and international markets for her commodities.
This will improve agricultural growth and food security, enabling the agricultural sector to contribute more effectively to the success of Vision 2030 for the country.
While stakeholders in the agricultural sector are actively addressing the critical issues that need to be addressed for this noble idea is to be realized, the Government should put in place sound legal and regulatory frameworks in terms of a Commodities Exchange Act to support the initiatives.
As part of the efforts to revitalize agriculture, Kenya urgently needs to set up a formal Commodity Exchange.This shall significantly help in the trade and marketing of agricultural products.
What therefore is a Commodity Exchange? It is a market organized to allow for the selling and buying of commodities.
These may be traded in three types of markets: cash, futures and options. Maize, Cocoa, crude oil, and gold are some of the commodities traded across the world. Anybody may trade through member firms. The organisation itself regulates the trading practices of its members while prices are determined by supply and demand.
The organisation provides the rules, procedures and infrastructure for commodity trading, oversees trading practices while gathering and disseminating marketplace information.
Transactions take place on the floor — the pit — and must be effected within certain time limits.
Floor traders, floor brokers and futures commissions merchants working on the floor must be registered by a regulator.
The goal of the exchange would be to promote efficient markets and boost price discovery while enhancing risk management hence protecting players like farmers.
In the Kenyan context, agricultural products to be traded include items like maize, wheat, beans, barley, sugar, cotton and fertilizers.
Contracts based on the same products may also be sold at the exchange.
The concept is not a novelty in Kenya. The Nairobi Coffee Exchange has a long history dating back to the 1940s while the Mombasa Tea Auction which serves East Africa and parts of Southern Africa has gained prominence as a major tea auctioneer and is currently the second largest in the world after Colombo in Sri Lanka.
These two commodity exchanges have not only provided a centralized and organized export platform for the two cash crops but also ensured effective competition among buyers and sellers.
The Kenya Agricultural Commodity Exchange Limited which was established in 1997, is the first major attempt to establish a commodity exchange for agricultural products other than Coffee and Tea in Kenya and in the East African Community (EAC) region.
SAFEX of South Africa is one of the most active commodity exchanges in Africa that deals in grains among other products.
The Chicago Board of Trade in the USA, with its origins in 1848, is perhaps one of the oldest commodity exchanges in the world.
However, for a Commodity Exchange to grow and flourish and serve its purpose effectively, it requires a legal and regulatory framework.
With the implementation of the Vision 2030 under way, the establishment of an effective Commodity Exchange for agricultural products should be made a priority for Kenya and the wider EAC region.
A successful commodity exchange is dependent on the availability of tradable volumes of commodities, a big market, sound infrastructure and an effective telecommunication network.
Financial services
It also relies on sound financial services, the existence of strong players, a network of secure and reliable warehouses and the existence of a sound legal and regulatory framework for a commodity exchange and for warehouses. Most of these building blocks are already in place.
The National Cereals and Produce Board alone has 110 depots and silos with a combined storage capacity of 1,890,000 metric tonnes.
Other institutions including the Private Sector have warehouses mainly located in major urban centres.
A Commodity Exchange will create a market for tradable documents generated by this huge Warehousing Network and their respective derivatives.
It will also attract participants from the region.
The ongoing effort by the Eastern Africa Grain Council (EAGC) for the promotion of structured grain trading in the EAC Region have already initiated the establishment of a Warehouse Receipt System recognized by the stakeholders in the grains industry.
Due to the improved co-operative movement, many Kenyan Farmers, Millers, Traders and other stakeholders have formed associations that advance their business interests.
These structured groups will use the exchange and the Warehouse Receipt System as the best instruments for consolidating their products into marketable volumes and marketing them efficiently and profitably.
Both local and international financial institutions have introduced products that recognize the use of warehouse/warrants as collateral for accessing credit and are ready to support structured trade through regulated exchanges.
There is the presence of internationally recognized and experienced collateral management companies interested in the professional management of warehouses for the Warehouse Receipt System.
The East African Community provides a large population and hence a market of nearly 130 million people.
The grain market in East Africa is ready to support initiatives that would market grain quantities surpassing 10,000,000 metric tonnes, which represents a minimum total production of maize, beans and rice annually.
These commodities are traded at various open markets and across borders within the EAC Region.
The Strategic Grain Reserve function of the Kenyan Government can be well served and managed, for instance by the Government purchasing commodities and holding warehouse receipts while releasing them through the Exchange at an appropriate time.
This gives the Government the instrument and power to effectively intervene during times of shortages and surpluses, thus providing stability
Also, an Exchange provides vital information that assists stakeholders to keep in constant touch with market trends especially in commodity prices through regular publications and dissemination of the information.
Lastly, it regulates trading activities by monitoring performance of authorized players.
Kenya currently needs a vibrant all inclusive Commodity Exchange to improve and promote agricultural trade in domestic, regional and international markets for her commodities.
This will improve agricultural growth and food security, enabling the agricultural sector to contribute more effectively to the success of Vision 2030 for the country.
While stakeholders in the agricultural sector are actively addressing the critical issues that need to be addressed for this noble idea is to be realized, the Government should put in place sound legal and regulatory frameworks in terms of a Commodities Exchange Act to support the initiatives.
Monday, September 27, 2010
In Kenya And Africa At Large Poverty Rules
 |
| A kenyan mother |
“I know poverty because poverty was there before I was born and it has become part of life like the blood through my veins. Poverty is not going empty for a single day and getting something to eat the next day. Poverty is going empty with no hope for the future. Poverty is getting nobody to feel your pain and poverty is when your dreams go in vain because nobody is there to help you. Poverty is watching your mothers, fathers, brothers and sisters die in pain and in sorrow just because they couldn't get something to eat. Poverty is hearing your grandmothers and grandfathers cry out to death to come take them because they are tired of this world. Poverty is watching your own children and grandchildren die in your arms but there is nothing you can do. Poverty is watching your children and grandchildren shade tears in their deepest sleep. Poverty is suffering from HIV/AIDS and dying a shameful death but nobody seems to care". " Poverty is when you hide your face and wish nobody could see you just because you feel less than a human being. Poverty is when you dream of bread and fish you never see in the day light. Poverty is when people accuse you and prosecute you for no fault of yours but who is there to say something for you? Poverty is when the hopes of your fathers and grandfathers just vanish within a blink of an eye. I know poverty and I know poverty just like I know my father's name. Poverty never sleeps. Poverty works all day and night. Poverty never takes a holiday" (One Poor Kenyan)
Brew-'Natural Family planner Among the Poor In Kenya'
It is indeed ironic that in a country where the population has almost doubled after a decade, there exists a place in central Kenya (Mukurwe-ini) where women are given monetary incentives to give birth; a place where the sound of children playing and laughing is as rare as rain in the Sahara, big padlocks greet one at the gates of primary schools which have been closed down because there are no little ones to teach.
Roles in the families have reversed as women take on responsibilities as bread winners and residents stare blankly into the future, wondering whether there is a future for them as both the young and the old men channel their energy to their now worst enemy, the beer bottle.
While this frothy stuff has always been part of the social life in our country, the renewed enthusiasm with which it is consumed, especially among the youth in Kenya would cause our forefathers to turn in their graves. Sadly, this has brought about scenarios like the one above and much worse. Regardless of its alias - relieving stress, drowning sorrows, passing time and bonding with age mates… the drinking culture in Kenya cannot be ignored or wished away.
The effects of alcohol consumption on the society are far reaching - affecting families’ older and current generations, destroying individuals and draining resources. Just where are we headed if this boozing trend continues? Is there a threat to the future proper functioning and operations of our society as we know it?
“People often deceive themselves that they will walk out of the trap at will. It’s like a self imposed jail sentence,”. “What starts harmlessly as ‘social drinking’ soon turns into an addictive habit that spirals out of control,”, This trend can be attributed to factors such as the level of poverty, high stress levels occasioned by the performance culture at work, peer pressure among the youth and a feeling of hopelessness among both the young and old.
The current generation of young people is cynical, and thus are not keen on saving for the future. Their disposable income is therefore likely to be spent on feeding their drinking habits. “Their interpretation of their surrounding – political, social or economic- seems to tell them that nothing is going to change for the better anytime soon. They thus have a ‘live it best now mentality,”
This addiction to alcohol paves way for other ills such as drug abuse and sexual immorality. “In order to sustain the high that results from alcohol, some will opt for illegal drugs such as cocaine. When under the influence of alcohol or drugs, it is easier for an individual to engage in casual sex, thus risking sexually transmitted diseases such as HIV,”.
One significant result of this drinking culture is the change in society’s dynamics. In areas where the problem of alcoholism has affected many men, women are forced to become breadwinners, and take over the role of men. “Some men abdicate their roles and even fail to fulfil their conjugal responsibilities in favour of the bottle. The continuity of society is thus at risk. The women are not spared nowadays, and the number of women drinkers is steadily rising as they also turn to the bottle to deal with stress,”
The children suffer silently from trauma as they witness the abusive habits that result from alcohol. Children from such family settings are more likely than not to be alcohol abusers later in their lives, in addition to having an aggressive and violent predisposition. The cycle of alcoholism will more likely continue through generations.
So where are we headed as a society if this trend continues?
“Drinking culture is destroying the great minds of this generation who are looked at as the future of the country. Some eventually become a burden to their families and prolong the cycle of dependency. This eventually has an impact on the economic and social development of the country,”,destinies are cut short, individuals live in selfish pursuits of pleasing themselves and suffer from depression when they realize that the problems and pressures they were escaping still exist after their high is over. They then drink again to escape reality and the cycle continues.
“At this rate, I fear that the end result will be an Economic crisis due to breakdown of families and society’s values if this trend is not checked,”.
While this frothy stuff has always been part of the social life in our country, the renewed enthusiasm with which it is consumed, especially among the youth in Kenya would cause our forefathers to turn in their graves. Sadly, this has brought about scenarios like the one above and much worse. Regardless of its alias - relieving stress, drowning sorrows, passing time and bonding with age mates… the drinking culture in Kenya cannot be ignored or wished away.
The effects of alcohol consumption on the society are far reaching - affecting families’ older and current generations, destroying individuals and draining resources. Just where are we headed if this boozing trend continues? Is there a threat to the future proper functioning and operations of our society as we know it?
“People often deceive themselves that they will walk out of the trap at will. It’s like a self imposed jail sentence,”. “What starts harmlessly as ‘social drinking’ soon turns into an addictive habit that spirals out of control,”, This trend can be attributed to factors such as the level of poverty, high stress levels occasioned by the performance culture at work, peer pressure among the youth and a feeling of hopelessness among both the young and old.
The current generation of young people is cynical, and thus are not keen on saving for the future. Their disposable income is therefore likely to be spent on feeding their drinking habits. “Their interpretation of their surrounding – political, social or economic- seems to tell them that nothing is going to change for the better anytime soon. They thus have a ‘live it best now mentality,”
This addiction to alcohol paves way for other ills such as drug abuse and sexual immorality. “In order to sustain the high that results from alcohol, some will opt for illegal drugs such as cocaine. When under the influence of alcohol or drugs, it is easier for an individual to engage in casual sex, thus risking sexually transmitted diseases such as HIV,”.
One significant result of this drinking culture is the change in society’s dynamics. In areas where the problem of alcoholism has affected many men, women are forced to become breadwinners, and take over the role of men. “Some men abdicate their roles and even fail to fulfil their conjugal responsibilities in favour of the bottle. The continuity of society is thus at risk. The women are not spared nowadays, and the number of women drinkers is steadily rising as they also turn to the bottle to deal with stress,”
The children suffer silently from trauma as they witness the abusive habits that result from alcohol. Children from such family settings are more likely than not to be alcohol abusers later in their lives, in addition to having an aggressive and violent predisposition. The cycle of alcoholism will more likely continue through generations.
So where are we headed as a society if this trend continues?
“Drinking culture is destroying the great minds of this generation who are looked at as the future of the country. Some eventually become a burden to their families and prolong the cycle of dependency. This eventually has an impact on the economic and social development of the country,”,destinies are cut short, individuals live in selfish pursuits of pleasing themselves and suffer from depression when they realize that the problems and pressures they were escaping still exist after their high is over. They then drink again to escape reality and the cycle continues.
“At this rate, I fear that the end result will be an Economic crisis due to breakdown of families and society’s values if this trend is not checked,”.
Thursday, September 23, 2010
WHY IS KENYA STILL POOR?
‘Kenya is not poor because its poor’, Kenya is poor and will continue to be poor if we Kenyans are not ready to change and make her rich.
There is poverty and there is hunger everywhere. HIV/AIDs continues to kill Kenyans in record numbers. The question is not why Kenya is poor but may be how we can make Kenya rich. What can we do as individuals or groups to help change Kenya?.
There is abject poverty in Kenya but it’s a country that has almost all it takes to be the richest country in Africa, from its natural resources to human resource . The major problem facing Kenya today is corruption and poor leadership. There are greedy people in Kenya including our leaders who don't care about their poor mothers, fathers, brothers and sisters.
Some people are too greedy and that is why Kenya remains poor. People are killing their own brothers, sisters, mothers and fathers just to make money. People didn't care about yesterday and people don't even care about tomorrow. All they care about is money and money and that is why Kenya remains poor.
All Kenyan leaders I know are corrupt in one way or the other. They come as saints and leave as devils.. A Kenyan president is a president for a few selected people. A Kenyan president is a president for only the educated and a president for only those in the higher class from His community. A Kenyan president sees no poverty. A Kenyan president sees no hunger. A Kenyan president sees no HIV. A Kenyan president knows no orphan.
A Kenyan president shows no mercy. An Kenyan presidents sees only money and money and nothing but money.. Not just the Kenyan president but also the Kenyan prime minister, the Kenyan Member of parliament , the Kenyan Doctor, the Kenyan Judge, the Kenyan lawyer, the Kenyan PC,DC’s,DOs, and even the Kenyan Pastor. And that is why Kenya is still poor and continues to wallow in abject poverty."
Wednesday, September 22, 2010
Greed to amass more wealth through counties
We should be careful on who we elect as our Governors and Senators. The mad rush by current MPs, former MPs and Ministers to abandon MPship and turn to the counties is borne out of greed to control and amass more wealth through the counties' Ksh.1.5-2 billion budget. the future MPs can be left to eat the CDF money which is only 7% of the national budget. With less opportunity to eat through the Parliamentary Service Commission, which MPs controlled and increased their salaries at will, our current leaders and former eaters are dying to be Governors and Senators. What Kenyans need to do is not to elect people who have been MPs/ Ministers before. We look for a new generation of leaders, not recycled old and tired fellows. There is however no guarantee that the new generation will not be as greedy as the old. But what can we do.
Tuesday, September 21, 2010
The Constitutional Referendum was rigged
How can you explain a situation where you are sure you voted a NO in a polling station and your view is not factored in the final tally or Turns out a YES???,there might be ‘errors’ in a system but why the duplication of my case in other different stations all over the country??
We were duped into signing into law a constitution that protects the existing politicians and their cronies, but made to believe that the citizens spoke. They will soon take up all the major seats in the counties and the national government using the same old methods, and wananchi will be made to feel it is right. For now, there is very little to do because all the windows of intervention are already closed. However, there is only one small opening left. This is the opportunity for we as professionals to immediately vie for all the positions of leadership and ensure that none of the current leaders goes back into government. It is hard to do because they are still the ones implementing the constitution, since we trusted them with the task. However, we can try. Do not expect fair elections in 2012 or whenever they happen next, if the same leaders we have now remain in power. Since most of you were not open to contrary opinion, it was hard for me to discuss in this forum how the referendum was rigged. Some of you are so blind as to think that electronic voting is devoid of rigging. As a matter of fact, it is the easiest to rig. My point, though, is that the IIEC is not to be trusted to conduct any more elections. It is constituted as is for a reason and is too protected for audit. Most crucially, brothers and sisters, please ensure that someone (especially you computer experts and university students) query and audit how the tallying was done. You will be shocked. If you still doubt, just check what has happened to other countries that have used electronic tallying in elections. You will remember me one day. Please stick close to the lawyers and look for every opportunity to work with them on dealing with blatant impunity even within the implementation process. Note that most of the leaders know they may be going home. In the real sense of the term, this is really their "turn to eat." In a sense, this implementation process is really the most dangerous in the whole transition, because laws will be abused given the chasm between the old and the new dispensations. Just like Raila was sworn in at the promulgation of a constitution that has no prime minister's post, anything may be defended and justified. This transitional point between the two dispensations is partly what made it possible for El Bashir to be sneaked in and out of Kenya with the belief that everyone is too excited to think that there can be mischief not to mention the two insensitive appointments of the CID boss and the NACADA chairman(refer to the past blog) . We have made this government believe that it is popular in that it has delivered a constitution that evaded us for many years, and that we can trust it. The 27th as a date of promulgation was wrong, but none wanted to hear a contrary opinion. All we wanted was the promulgation. Now, you will see and hear things that will shock you and make you realize that this was not the will of Kenyans; things will unfold before your very eyes(The provincial admistration debate for example), but it may be a little late. The only remedy is to stick with one another and work very closely with lawyers, since we do not want the voice of the clergy.
Monday, September 20, 2010
Don't fix what isn't broken In An Economy
We have an economy marked by faltering growth and mass unemployment. ¾ of Kenyan youths are looking for full-time work. Poverty is rising. Companies are sitting on cash, unwilling to hire with no customers in sight. Families are reeling from the loss of in savings and rising rents. Rising trade deficits sap job growth. There are only four sources of demand in the economy—consumers, business, exports and government. With the first three nearly comatose, the fourth must act.
Everyone agrees that we have an decrepit and aging infrastructure. Leaking sewers, falling bridges, shorted train stations, schools dangerous to the health of the children—we suffer it all around us. Much was built in the 1930s-1980s or earlier and has simply has worn out. There will never be a better opportunity to rebuild. Construction workers are idled and in need of work. Government can borrow at near record low interest rates. Anyone with a whit of business sense would see this is an extraordinary opportunity to rebuild Kenya with the passage of a new constitution which is investment friendly.
But it is critical to focus on what is broken and not on what works. We do not have an "entitlements crisis" despite all blather to the contrary. We have a broken health care system. Virtually the entire terrifying long term debt projections come from soaring health care costs(HIV/AIDS,TB,Malaria drugs etc). If we spent what the Europeans spend per capita on health care (with better health care results), we would project surpluses as far as the eye can see right now. Fix health care, and you fix any long term debt concerns. Fail to fix health care, and you can sack the government, we'll still go bankrupt in debts.
Social Security, on the other hand, isn't broken. It hasn't contributed to the deficits—in fact, it has amassed billions in surpluses to prepay for Atwolis men retirement.
None of this is radical. Even the market fundamentalists at the IMF are warning East Africa against a premature turn to deficit reduction. Any honest investor would agree that this is a great opportunity to rebuild Kenya. No one with any familiarity with the Treasury budget would disagree that it is health care costs that drive long-term deficits and terrifying debt projections.
With the renewed optimism for Kenyans, the belief that we can forge our own future. Have we become so timid or confused that we will now lower our sights, concentrate on balancing our books, and forgo making the reforms vital to creating an economy the works?, only forecasting on the new political dispensation at the county governments?, I don't think so. It is a measure of how distorted our political debate has become that common sense is so so rare. We must all forge a new Kenya and ensure that common economic sense should not be uncommon.
Ecoke: Fiscal Balance path - A painful ‘Capsule’ For Pol...
Ecoke: Fiscal Balance path - A painful ‘Capsule’ For Pol...: "Wyclife kiprutoThere are two alternative paths to long-term fiscal balance in LDC’s, if MDGs and other long term economic goals are to be fe..."
Fiscal Balance path - A painful ‘Capsule’ For Policy makers
There are two alternative paths to long-term fiscal balance in LDC’s, if MDGs and other long term economic goals are to be feasible.
The less desirable path is austerity economics: government sharply cuts spending long before full employment is reached; production stagnates; revenues decline. We might reach budget balance but at a lower level of economic output, with increased taxes on working Kenyans and reduced public services.
The alternative high road path would increase public spending financed by deficits for a year or two, until unemployment is definitely on a downward trend and GDP is rising rapidly. We then collect more revenues from a stronger economy. By identifying investments vital to our future, and paying for them with targeted spending cuts and progressive tax reforms, our country provides the basis for new private-sector investments that help fuel growth, generating greater revenues while reducing the deficit. The benefit of this second path is that government moves towards a reduction in annual deficits and a lowering of the debt-to-GDP ratio, at a higher level of economic output, while building a new basis for long term prosperity.
The less desirable path is austerity economics: government sharply cuts spending long before full employment is reached; production stagnates; revenues decline. We might reach budget balance but at a lower level of economic output, with increased taxes on working Kenyans and reduced public services.
The alternative high road path would increase public spending financed by deficits for a year or two, until unemployment is definitely on a downward trend and GDP is rising rapidly. We then collect more revenues from a stronger economy. By identifying investments vital to our future, and paying for them with targeted spending cuts and progressive tax reforms, our country provides the basis for new private-sector investments that help fuel growth, generating greater revenues while reducing the deficit. The benefit of this second path is that government moves towards a reduction in annual deficits and a lowering of the debt-to-GDP ratio, at a higher level of economic output, while building a new basis for long term prosperity.
Sunday, September 19, 2010
We Are Humans Not Squirrels
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Friday, September 17, 2010
A Truly Rational Person Is An Economist
So yes, we economists always advocate for rationality, and that’s thinking with your ‘HEART’
But by this, I mean the acronym for:
Hard
Equations
And
Rational
Thinking.
A truly rational person wouldn’t be able to decide anyways – they’d get bogged down in multitudes of minor details, trapped in a spiral of intractable calculus, much like those with a damaged orbit frontal cortex.
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