How State House Order For Parastatals To Surrender Money To Treasury Will Cripple Economy – David Ndii
In August this year, State corporations were ordered to surrender cash balances in their bank accounts to the treasury.

The order was meant to reduce government’s cost of borrowing which has ballooned in the last six years during the reign of President Uhuru Kenyatta.

However, most of the money could have been used to pay loans which matured between July and October, with the Treasury indicating that it used at least Ksh276.17 billion to repay maturing loans, a 41.55 percent jump from Ksh195.11 billion in the previous four months.
Debt repayments were the second single largest government spend after recurrent expenses such as salaries, allowances and administrative expenses which gobbled up nearly Ksh306.53 billion.

According to economist David Ndii, the act of government drawing monies from parastatals could adversely affect the economy, and service delivery.

“While the memo suggests that some of this money will settle pending bills, far from solving the problem, it has now transferred it to parastatals whose suppliers will now be at the mercy of the exchequer. Expect some parastatals to default on their suppliers in coming days,” says Ndii.

If the money goes to pay foreign debts, Ndii predicts that there will be little circulation of money in the country, which is important for the growth of any economy.
“Because the key driver of the government’s financial crisis is foreign debt, part of the money confiscated from parastatals is going to pay the foreign debt. Instead of circulating in the economy it is going to China. Another body blow to an already battered economy,” he adds.

Treasury bills (T-bills) maturities between July and September stood at Ksh346.9 billion, with another Ksh222.5 billion due for payment between October and December.

“The confiscation of t-bills/bonds is for all intents of purposes, a default action. It does not matter that these are state corporations, these debt instruments backed by law, and the government/debtor has suspended law. It’s a case of might is right, impunity,” says Ndii.
“When it gets more desperate as it will, what will stop it doing the same to other vulnerable investors eg. public pension funds? By resorting to such a draconian action, it has exposed that its more distressed than its been letting on. Expect investors to take note.”
Kenya’s public debt surged closer to Ksh6 trillion at the end of June after Treasury borrowed an additional Ksh770 billion in 12 months.

Normally, the Treasury banks with the Central Bank of Kenya (CBK) hence the move will see large chunks of money withdrawn from the commercial banks.

Dont run like a coward bradza.
- you didnt have to say it, you have implied that you HATE chinese imports.
- oooo imports are from china
- oooo no local companies because of Chinese companies
- oooo the import export ratio favours China,


My braddah we CANNOT develop without China's expertise and imports.
Look at your friend Ndii. Went alllllll the way to Oxford and instead of bringing home technology to build factories and cars from Britain he came back with miwani ya kamba tu na stori mingi kwa gazeti worth zero.

BURE GHABISA!!!!

How does one immunise their investments, even if partially, from the impending gloom?

The malaise can go on for a long time. Haiti has been at it for 200 years, Argentina has been on burst burst cycles for 50+ years.

The last time GoK did a similar binge on infrastructure was around 1920-1927. The economy never recovered from the debt binge until the 2nd world war. It took the Swynnerton Plan to fundamentally restructure the economy to get things going again.

In between Happy valley manenos happened which was the equivalent of current parte after parte. Bro Enjoy life, plan for retirement-investments wachia wajukuu

Everything ultimately rises and falls on leadership. Britain was on the malaise in 1960's and 1970's till Margaret Thatcher came and took the hard bold decisions.

If you look at the current kenyan leadership no one has the brains or balls to get us out of the quagmire. So for now let's continue with parte after parte

AAK SAYS NO TO THE EXPRESSWAY
After many consultations & presentations, including one from KeNHA; AAK - whose members are planners, architects, QS, Engineers, project managers, landscape arch, etc. have made the informed decision to petition KeNHA to stop the project.

I see you are on a mission to kill the perma-optimists here who keep hoping and praying - but mostly praying - for some kind of economic miracle to surmount the malaise.

I partly disagree on the point of everything hinging on leadership and by extension politics. The social and economic variables always move way ahead of the political situation prevailing at any one point. Politics is a therefore a consequence not necessarily the determinant.

For example, that is why despite the rapprochement nothing changed course including the NSE. Further afield in SA, even after booting Zuma the xenophobia continues and I suspect little to no reform will be acoomplished by Ramaphosa. In Zim, after the departure of Mugabe the monetary experiments and political represssion continue unabated since the social fabric(social psyche/integration) and economic variables haven't changed one bit. On the other end of the spectrum Botswana and Ghana(save for their debt appetite) are chugging along just fine despite the political changeovers. Politics/leadership is just a case of the tail pretending to wag the dog.

The key for KE as is for many African countries is demographics. That is whether they will be able to harness the demographic dividend of a young population or will it turn into a never ending spiral of social upheaval.

Liquidity with minimal risk: Buy USD