•Tuesday, October 10, 2006
there seems to be a lot of cash and liquidity in kenya presently.
the nairobi stock exchange is having a turnover of over three billion a day compared to a paltry three billion realized in 1999 alone. share prices are rising astronomically as demand soars regardless of any underlying market fundamentals.
all ipos that have come to the nairobi stock exchange from kengen, to scanad, to equity have been largely oversubscribed. kenyans are yearning for more. like now, mumias and kenya-re are being awaited for longingly.
the government is chest-thumping to donors that it can confidently finance its budget from internal sources. to hell with donor conditionalities! this is despite government’s wasteful expenditure.
each of the 210 political constituencies is receiving between shs 20-40 million per annum for developmental needs. this is on top of bursaries, road construction money and aids funds. a shs 1bn youth fund has been established with disbursements to formal youth groups expected to start in november.
banks are lowering their lending rates competing for interested loan applicants. even multinational banks are buying space to ask kenyans to borrow as less as shs 100,000 with a repayment period of three years.
the same banks that sent the ordinary mwananchi packing are now wooing that mwananchi with a selection of innovative products.
anti-retroviral treatment is available for free in all government and mission hospitals. so are anti-malarial treatments with free disbursement of free mosquito nets.
the government appetite for domestic debt has significantly reduced too. most companies are reporting profits and business is booming.
a new scheme by the national hospital insurance fund will see five million kenyans get free treatment in hospitals without increasing monthly contributions. this scheme covers aids, cancer and diabetes patients as well as maternity charges including caesarian sections.
the nairobi stock exchange is having a turnover of over three billion a day compared to a paltry three billion realized in 1999 alone. share prices are rising astronomically as demand soars regardless of any underlying market fundamentals.
all ipos that have come to the nairobi stock exchange from kengen, to scanad, to equity have been largely oversubscribed. kenyans are yearning for more. like now, mumias and kenya-re are being awaited for longingly.
the government is chest-thumping to donors that it can confidently finance its budget from internal sources. to hell with donor conditionalities! this is despite government’s wasteful expenditure.
each of the 210 political constituencies is receiving between shs 20-40 million per annum for developmental needs. this is on top of bursaries, road construction money and aids funds. a shs 1bn youth fund has been established with disbursements to formal youth groups expected to start in november.
banks are lowering their lending rates competing for interested loan applicants. even multinational banks are buying space to ask kenyans to borrow as less as shs 100,000 with a repayment period of three years.
the same banks that sent the ordinary mwananchi packing are now wooing that mwananchi with a selection of innovative products.
anti-retroviral treatment is available for free in all government and mission hospitals. so are anti-malarial treatments with free disbursement of free mosquito nets.
the government appetite for domestic debt has significantly reduced too. most companies are reporting profits and business is booming.
a new scheme by the national hospital insurance fund will see five million kenyans get free treatment in hospitals without increasing monthly contributions. this scheme covers aids, cancer and diabetes patients as well as maternity charges including caesarian sections.
|
5 comments:
Two words - Economic Boom. Next time anyone is bashing this government, send them a link to your post and have them reconsider their sentiments :)
There has always been money in Kenya it is only that it was diverted to the pockets of a few greedy.
You might wish to recall
1. Handouts to every tom, dick and Harry who went to statehouse, who only bought mandazi and chips (read school chilren)
That money is in investin hands
2. Money for campaigns etc.
3. Money to finish and build political rivals (Read Professor Mbithi)
4. Guys abroad (the diaspora) to a massive extent are also contributing massively to the stock and property boom. Stocks in Kenya are grossly undervalued anyway, they have been so for many years.
5. People are aware of investing opportunities, are not afraid to invest.
6. Loans! Loans! You can even get one on the street if you so want. Previously you would beg for a loan, now they are beggin you to take it.
7. Taxes!!!! Your ass is being taxed left, right, centre. Karibu hata mama mboga
Shiroh - Have you been to Kenya lately?
Loans - Sure the banks are giving loans BUT it is not as easy as you make it sound! There are more genuine micro-finance institutions as well as banks (Equity & Family) that are making smaller loans available to the Mwananchi but its still a hassle!
Taxes - They REDUCE the spending power of taxpayers. This is a drag on an economy. Lower taxes = higher growth. In many cases the taxes collected are misused, misallocated or underutilised. Ideally, taxes should not exceed 30% (incl; Income Tax, VAT, Sales Tax, Levies) whereas in Kenya the figure is higher. VAT is at 16%!
Diaspora - That's the real income! Funds are "free" i.e. the diaspora does not ask for anything in return. When you export peas, you have to spend to produce them including imported fuel, trucks, planes, fertiliser & machinery. When a Kenyan sends money to his/her cucu, the cucu doesn't have to provide anything in return! The funds go to the "spenders" not the "savers" i.e. the cucu will spend the money whereas an investors funds are "locked" into stocks, T-bonds, etc.
Tourism - Similar to the diaspora but there is a larger cost e.g. imported liquor, caviar, imported cheeses, planes, fuel, cars, vans, etc.
Agriculture - Some good rains (we escaped a nasty drought in late 2006) with corresponding higher tea,coffee & sugar prices (vs 2002) has led to a sustained influx of forex. This is a HUGE boost to the rural economy that drives the urban economy.
Kenya Airways - The "transit" passengers add to the economy around the airport. The KAA has seen good times from this market through airport fees/levies. 2.4 million passengers & counting... Almost double since 2001-2... These are relatively high-spenders.
Kenya Ports Authority- Brown Ondego was kicked out before he could effect further radical changes. The process has bogged down under the current (stooge) ceo. Sad. Brown made the port (more) efficient thus increased throughput which meant more revenues/profit for same investment! This led to more jobs & services for most stakeholders (except the corrupt).
Stolen Funds - The amnesty offered (smart move by NARC but also open to abuse) in 2003 meant stashed funds were brought into Kenya. Other "hidden" funds were also whitewashed into the regular economy. That's what caused the LOW interest rates in 2004 coz there was competition to deposit/lend these funds but no investments/borrowers!
Of course, these funds found there way into the stockmarket which led to the current economic boom.
The term "economic boom" though relative should be reserved for real growth exceeding 7% (India & China)... Kenya needs 8% growth on a sustained basis to grow out of its current "impoverished" status.
- better tax collection (up 4X)
- remittances from abroad (50 billion in 2005)
- more tourists
- lower interest rates means banks are no longer satisfied lending to the government, hence loans to the public
@mimmz, seems like this govt has tried despite its constant image problem. but now kibaki is leading the pack of 2007 potential candidates with 41% ahead of the odm brigade.
@69..,its a possibility there is something good attracting the money to productive or measurable economic centres.
@shiroh, i think it is much more than that money being in some greedy pockets, they never used it?
1)the money in circulation way surpasses the cash handouts. thinking of it, does money get consumed such that it gets to a point and disappears while in circulation? unless the inflation concept?
2)with the referendum and next years elections we seem to have more money than before. no statistics though
3)when i remember of how prof mbithi defied moi and his life was made a living hell till he started seeing ghosts and converted into a prophet, i now understand the gains of democracy and free speech that we enjoy
4)sure, the diaspora has more confidence in our economy thats why they can effect such massive transfers. as for stocks i tend to think most stocks are over valued presently.
5)why the sudden surge of confidence in available investment vehicles?
6)loans come with lots of strings attached one being the viability of the loaned enterprise and ability to pay. if there are more loan offers, it only means that lenders have capacity and loanees have the means to pay. the risk are low, thanks to a factor that is also fuelling the availability of so much money in our economy compared to five years ago.
7)the tax burden is way too heavy for everyone. true the govt has widened the tax base. even with the govt getting all that money kenyans are queuing to get a piece of ipos and the market has failed to absorb over shs 40bn such offers. where is all this money coming from.
thanks for the well raised pointers.
@coldtusker, nicely stated, i have heard that story about funds stashed abroad being sanitized through the stock market. with the current no-goodwill on pursuing public fund theft, don't you think its a good idea that the funds have been brought back to the economy?
i tend to think that agriculture has been a disapointment in this 'economic boom'. if this sector perfomed like previous years, things would be more rosier. but its also good to see the rural economy getting on its feet.
individual tax payers in kenya need a 'tax holiday' we have been footing the public expenditure bill too long.
with good political-economic management kenya will not need a vision-2030 to be knocking the door of the first worlds. but with our selfish morons in office only a generational changeover will help.
@banks, maybe the govt should also consider changing its accounting basis which encourages ministries to overspend their vote. with all the money they are collecting, prudent financial management in govt should be encouraged and rewarded.