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
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