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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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@mwekez@ji My main point is that we shouldn't expect growth above 5.4% or even 6% because of the factors I have explained. Plans/projects are many but the money is scarce hence stiffling growth Wealth is built through a relatively simple equation Wealth=Income + Investments - Lifestyle
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Ericsson wrote:@mwekez@ji My main point is that we shouldn't expect growth above 5.4% or even 6% because of the factors I have explained. Plans/projects are many but the money is scarce hence stiffling growth You are in for a shock!!! #WatchThisSpace
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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@mwekez@ji I will be waiting to see the space you are talking about. Wealth is built through a relatively simple equation Wealth=Income + Investments - Lifestyle
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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mwekez@ji wrote:murchr wrote:hisah wrote:mwekez@ji wrote:World Bank roots for weaker shilling to boost exports “A 10-per cent depreciation of the shilling will improve the trade balance by 4.6 per cent in domestic currency terms or 5.6 per cent in foreign currency terms,” said the World Bank in the report titled Kenya Economic Update: Time to Shift Gears. “We need to let the Kenya Shilling depreciate gradually, not suddenly as happened in 2011. The fundamentals do not support a strong shilling. When you look at the current account, you find that at over 10 per cent, it is very high,” said Peter Wachira, senior investment manager at PineBridge Investments East Africa, in an earlier interview. “One of the important functions of the exchange rate is to correct trade imbalances. Other countries have devalued their currencies for the purposes of raising exports and curbing imports. We can also correct our trade imbalance by devaluing,” said an economist. http://www.businessdailyafrica....4/-/vmspuqz/-/index.html Yet again this article appears a week later. So a weak KES will boost exports for a net importing nation?! 1+1 = 11 indeed... Debase KES, manufacturers get knocked by a higher import bill, inflation spikes, production dips, econ dips, job cuts, but hey exporters (horticulture etc) save the day... Really?! Zero sum game on that current account deficit issue. Remember that VAT bill has not been factored in i.e. its inflation effects.
What a fantastic idea to devalue the KES instead of coming up with practical fiscal policies and boosting manufacturing, infrastructure as well as agri economy.
Once again this is a hogwash article... Come on mates, currency devaluation will make our good cheaper to foreigners hence encouraging exports. It will also make imports expensive hence reducing import of unnecessary goods and services. This will be good for current account. …. and note the country is not applying currency devaluation in isolation. The country is encouraging local production, check the infrastructure developments and the improving production environment @mweke - Why doesn't gok formulate the blueprint for nurturing of SMEs, expansion of manufacturing as well as agri econ support via subsidies as well as incubation funding via special econ zones plus bank of manufacturers? Also not forgetting infra as well as cheap power distribution. Then once we have the platform up and running, KES can be devalued since KE will have a lot more to export in terms of finished goods. But devaluing now without the basic structures up and running is a zero sum game since to achieve the above importation will sustain until the platform is formed. So I disagree that debasing KES as reco'd by WB is the best prescription for the deficit issue. Sound fiscal policies are the only way out.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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hisah wrote: @mweke - Why doesn't gok formulate the blueprint for nurturing of SMEs, expansion of manufacturing as well as agri econ support via subsidies as well as incubation funding via special econ zones plus bank of manufacturers? Also not forgetting infra as well as cheap power distribution. Then once we have the platform up and running, KES can be devalued since KE will have a lot more to export in terms of finished goods. But devaluing now without the basic structures up and running is a zero sum game since to achieve the above importation will sustain until the platform is formed. So I disagree that debasing KES as reco'd by WB is the best prescription for the deficit issue. Sound fiscal policies are the only way out.
Opportunities are like buses...we need to get the bus fare.
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Rank: Member Joined: 2/8/2007 Posts: 808
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That was Kumbaff thinking by WB. We shouldn't take all what WB says as gospel truth. Anyone remember SAPs etc. Obviously someone just has just been posted looked at historical data and wants to prescribe an economics theory solution in situ!
Kenya's current account deficit is a symptom of a structural problem in the economy and that means we will always struggle to grow beyond 5% without inflation going up unless we address this structural weakness. You don't debase a currency to boost exports unless you have goods for export that are disadvantaged in the international markets because of pricing. Debasing a currency is meant to correct the pricing. The last time I checked I did not see Kenyan goods suffering from pricing in the international markets and if the solution is to ensure that whatever little we export adds up in more Kshs after translation that is very stupid economics. You debase the currency you end up with a huge spike in inflation which you must address by raising rates to discourage imports and repair the currency. The problem with that is that most of our imports are essentials, fuel, drugs, steel, machinery,fertilizer cars, spares etc. So we will just pay more for the essentials and consume less of the non essentials and the end result is a slow down in the economy. My thinking is simple, lets start with our competitive advantages in the global space and optimize the value we get here - there is potentially 30% GDP scope awaiting exploitation and all this would be export. Secondly let's look for sectors that sitting with massive pent up demand and move in to address demand here which would in turn create a quantum leap in domestic consumption and push our GDP up without creating unnecessary inflation. Again we are sitting with about 40-50% scope here. The balance of 20-30% would be an offshoot of the expanded GDP. In other words if we applied ourselves smartly we can double Kenya's GDP in 5 - 8yrs.
Oil is far away we are talking 10yrs out. With the craze of clean fuels and innovation who knows oil may not be as worthwhile in 10yrs time (it may cost $ 40 / barrel or less)
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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symbols wrote:hisah wrote: @mweke - Why doesn't gok formulate the blueprint for nurturing of SMEs, expansion of manufacturing as well as agri econ support via subsidies as well as incubation funding via special econ zones plus bank of manufacturers? Also not forgetting infra as well as cheap power distribution. Then once we have the platform up and running, KES can be devalued since KE will have a lot more to export in terms of finished goods. But devaluing now without the basic structures up and running is a zero sum game since to achieve the above importation will sustain until the platform is formed. So I disagree that debasing KES as reco'd by WB is the best prescription for the deficit issue. Sound fiscal policies are the only way out.
Opportunities are like buses...we need to get the bus fare. mates, of all those things you mention, only bank of manufacturers is not in the pipeline. so, why not implement the debasing of KES concurrently with the said mix of monetary & fiscal policies for more rapid econ growth?
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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mwekez@ji wrote:symbols wrote:hisah wrote: @mweke - Why doesn't gok formulate the blueprint for nurturing of SMEs, expansion of manufacturing as well as agri econ support via subsidies as well as incubation funding via special econ zones plus bank of manufacturers? Also not forgetting infra as well as cheap power distribution. Then once we have the platform up and running, KES can be devalued since KE will have a lot more to export in terms of finished goods. But devaluing now without the basic structures up and running is a zero sum game since to achieve the above importation will sustain until the platform is formed. So I disagree that debasing KES as reco'd by WB is the best prescription for the deficit issue. Sound fiscal policies are the only way out.
Opportunities are like buses...we need to get the bus fare. mates, of all those things you mention, only bank of manufacturers is not in the pipeline. so, why not implement the debasing of KES concurrently with the said mix of monetary & fiscal policies for more rapid econ growth? The issue hisah has brought up about getting the basic structures up and running is something I find crucial.I prefer we invest now even take a few hits but once we start moving we can sustain growth and fund expansion of capacity without so much burden.
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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mwekez@ji wrote:symbols wrote:hisah wrote: @mweke - Why doesn't gok formulate the blueprint for nurturing of SMEs, expansion of manufacturing as well as agri econ support via subsidies as well as incubation funding via special econ zones plus bank of manufacturers? Also not forgetting infra as well as cheap power distribution. Then once we have the platform up and running, KES can be devalued since KE will have a lot more to export in terms of finished goods. But devaluing now without the basic structures up and running is a zero sum game since to achieve the above importation will sustain until the platform is formed. So I disagree that debasing KES as reco'd by WB is the best prescription for the deficit issue. Sound fiscal policies are the only way out.
Opportunities are like buses...we need to get the bus fare. mates, of all those things you mention, only bank of manufacturers is not in the pipeline. so, why not implement the debasing of KES concurrently with the said mix of monetary & fiscal policies for more rapid econ growth? Debase the ccy and the import bill for the platform increases yet you don't have the sufficient USD reserves to foot that bill. I don't see any value in that. The two events are mutually exclusive. Besides it takes a while to stem off the consumerism habit that has taken a while to form. What has led to this consumerism for external imports? Lack of local suitable alternatives. Fix that and the imports get fixed. Form trade ties with your import nations e.g. encouraging them to invest in your country (build manufacturing units for local consumption) which also boosts the local econ, retains earnings (tax revenues) and boosts job creation. $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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Kausha wrote:That was Kumbaff thinking by WB. We shouldn't take all what WB says as gospel truth. Anyone remember SAPs etc. Obviously someone just has just been posted looked at historical data and wants to prescribe an economics theory solution in situ!
Kenya's current account deficit is a symptom of a structural problem in the economy and that means we will always struggle to grow beyond 5% without inflation going up unless we address this structural weakness. You don't debase a currency to boost exports unless you have goods for export that are disadvantaged in the international markets because of pricing. Debasing a currency is meant to correct the pricing. The last time I checked I did not see Kenyan goods suffering from pricing in the international markets and if the solution is to ensure that whatever little we export adds up in more Kshs after translation that is very stupid economics. You debase the currency you end up with a huge spike in inflation which you must address by raising rates to discourage imports and repair the currency. The problem with that is that most of our imports are essentials, fuel, drugs, steel, machinery,fertilizer cars, spares etc. So we will just pay more for the essentials and consume less of the non essentials and the end result is a slow down in the economy. My thinking is simple, lets start with our competitive advantages in the global space and optimize the value we get here - there is potentially 30% GDP scope awaiting exploitation and all this would be export. Secondly let's look for sectors that sitting with massive pent up demand and move in to address demand here which would in turn create a quantum leap in domestic consumption and push our GDP up without creating unnecessary inflation. Again we are sitting with about 40-50% scope here. The balance of 20-30% would be an offshoot of the expanded GDP. In other words if we applied ourselves smartly we can double Kenya's GDP in 5 - 8yrs.
Oil is far away we are talking 10yrs out. With the craze of clean fuels and innovation who knows oil may not be as worthwhile in 10yrs time (it may cost $ 40 / barrel or less) There is also the issue of the US becoming a net exporter of oil.I truly believe Kenya has immense potential but it remains potential until we start applying ourselves like you've said.
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Rank: Elder Joined: 3/19/2013 Posts: 2,552
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hisah wrote:mwekez@ji wrote:symbols wrote:hisah wrote: @mweke - Why doesn't gok formulate the blueprint for nurturing of SMEs, expansion of manufacturing as well as agri econ support via subsidies as well as incubation funding via special econ zones plus bank of manufacturers? Also not forgetting infra as well as cheap power distribution. Then once we have the platform up and running, KES can be devalued since KE will have a lot more to export in terms of finished goods. But devaluing now without the basic structures up and running is a zero sum game since to achieve the above importation will sustain until the platform is formed. So I disagree that debasing KES as reco'd by WB is the best prescription for the deficit issue. Sound fiscal policies are the only way out.
Opportunities are like buses...we need to get the bus fare. mates, of all those things you mention, only bank of manufacturers is not in the pipeline. so, why not implement the debasing of KES concurrently with the said mix of monetary & fiscal policies for more rapid econ growth? Debase the ccy and the import bill for the platform increases yet you don't have the sufficient USD reserves to foot that bill. I don't see any value in that. The two events are mutually exclusive. Besides it takes a while to stem off the consumerism habit that has taken a while to form. What has led to this consumerism for external imports? Lack of local suitable alternatives. Fix that and the imports get fixed. Form trade ties with your import nations e.g. encouraging them to invest in your country (build manufacturing units for local consumption) which also boosts the local econ, retains earnings (tax revenues) and boosts job creation. Using the same principle we should also foster a better relationship with our E.A counterparts as we're in it together.
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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I tend to support the world bank on this one. The Kshs is being artificially propped it should be allowed to get to its true value even if its 107/= but gradually. In the mid 1990's it was at 96 and we still managed. I don't understand why kenya currency is now stronger than it was a decade ago.
If only we had implemented SAPS faithfully like we did in the 1993 and 1994 and promoting the EPZ's like Kitengela as recommended by world bank we would be far. Now we have an economy that is high from punch bowl economics printing money and fake stimulus programs. We are surviving on hot money short term speculation capital
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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mkonomtupu wrote:I tend to support the world bank on this one. The Kshs is being artificially propped it should be allowed to get to its true value even if its 107/= but gradually. In the mid 1990's it was at 96 and we still managed. I don't understand why kenya currency is now stronger than it was a decade ago.
If only we had implemented SAPS faithfully like we did in the 1993 and 1994 and promoting the EPZ's like Kitengela as recommended by world bank we would be far. Now we have an economy that is high from punch bowl economics printing money and fake stimulus programs. We are surviving on hot money short term speculation capital Give me a success story of any nation that has ever implemented WB recommendations and came out as a successful economy.$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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hisah wrote:mkonomtupu wrote:I tend to support the world bank on this one. The Kshs is being artificially propped it should be allowed to get to its true value even if its 107/= but gradually. In the mid 1990's it was at 96 and we still managed. I don't understand why kenya currency is now stronger than it was a decade ago.
If only we had implemented SAPS faithfully like we did in the 1993 and 1994 and promoting the EPZ's like Kitengela as recommended by world bank we would be far. Now we have an economy that is high from punch bowl economics printing money and fake stimulus programs. We are surviving on hot money short term speculation capital Give me a success story of any nation that has ever implemented WB recommendations and came out as a successful economy. Kenya is a good example foreign exchange liberalization- there was a time you could end up in jail for 10 years for being in possession of foreign currency and you used to beg the whole day and obtain 10 signatures at the treasury for dollars. Privatization of KQ, KCB, NBK, Uchumi, Kengen etc all world bank policies
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Rank: Member Joined: 9/27/2006 Posts: 503
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mkonomtupu wrote:hisah wrote:mkonomtupu wrote:I tend to support the world bank on this one. The Kshs is being artificially propped it should be allowed to get to its true value even if its 107/= but gradually. In the mid 1990's it was at 96 and we still managed. I don't understand why kenya currency is now stronger than it was a decade ago.
If only we had implemented SAPS faithfully like we did in the 1993 and 1994 and promoting the EPZ's like Kitengela as recommended by world bank we would be far. Now we have an economy that is high from punch bowl economics printing money and fake stimulus programs. We are surviving on hot money short term speculation capital Give me a success story of any nation that has ever implemented WB recommendations and came out as a successful economy. Kenya is a good example foreign exchange liberalization- there was a time you could end up in jail for 10 years for being in possession of foreign currency and you used to beg the whole day and obtain 10 signatures at the treasury for dollars. Privatization of KQ, KCB, NBK, Uchumi, Kengen etc all world bank policies Those were also called 'Structural Adjustment Policies' which did more harm than good across the world.
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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World Bank emphasis on exports growth is genuine and for the good of the country. I dont see malicious intent in this call. May the government take heed
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Treasury to issue Kenya’s first eurobond in September The money is expected to finance infrastructure projects such as the Lamu transport corridor, which includes new railways and roads, the Economic secretary Geoffrey Mwau said Wednesday. The international bond issue will be at least Sh85 billion ($1 billion), but Mr Mwau hinted at a press conference last week that it could be as high as Sh220 billion.
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Rank: Member Joined: 2/8/2007 Posts: 808
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Mwau should be sincere, Kenya can not be lent 220 billion in Euros, that would be a junk bond! 85B is more like it.
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Rank: Member Joined: 3/10/2008 Posts: 301 Location: Abu Dhabi
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Kausha wrote:Mwau should be sincere, Kenya can not be lent 220 billion in Euros, that would be a junk bond! 85B is more like it.
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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tonicasert wrote:Kausha wrote:Mwau should be sincere, Kenya can not be lent 220 billion in Euros, that would be a junk bond! 85B is more like it. Possible to push it to $2.5 billion. And of course 220B euros would be a junk bond kama hizo za PIIGS na Cyprus.$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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