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Law Capping interest rates
Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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sparkly wrote:Ngalaka wrote:sparkly wrote:Ngalaka wrote:For me this should have been obvious to all.
Govt poking its nose in free enterprise to control prices and set mark up caps is a recipe for disaster.
Even the common guy knows this.
Imagine if Govt were to dictate to local tomatoes farmers on what prices they should sell their produce.
The next thing would be farmers abandoning tomato farming and doing something else.
Ordinarily the market and its forces sets the prices for tomatoes based on prevailing factors at the time. That is why the price of tomatoes during the wet months is not the same during dry months.
Competition helps natural selection to thrive – as cost of production is never the same for all the players.
Same principle applies to Banking sector too.
I mean prior to this imbroglio, why wouldn’t the Govt have had some banks that it controls charge the favourable interest rates it wishes, then naturally we would've all trooped there. In Months the bank(s) would build the largest client base and thus compel the rest to naturally follow suit.
Even a keen businessman/woman would have seized that opportunity if it existed!
Problem is that you buy the free market fallacy hook line and sinker. Regulation is a fact of life. Free market is only an appearance. Regulation yes, as in moderation. NOT price control per se and mark-up macro management. Me thinks an i spread of 7℅ is modest moderation. No business can grow on usurious rates. In the face of looming famine - faced by millions in the country, the Govt should work out and set the price of Tomatoes. 30 bob per Kg probably. Sounds okay!?!!! Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Ngalaka wrote:sparkly wrote:Ngalaka wrote:sparkly wrote:Ngalaka wrote:For me this should have been obvious to all.
Govt poking its nose in free enterprise to control prices and set mark up caps is a recipe for disaster.
Even the common guy knows this.
Imagine if Govt were to dictate to local tomatoes farmers on what prices they should sell their produce.
The next thing would be farmers abandoning tomato farming and doing something else.
Ordinarily the market and its forces sets the prices for tomatoes based on prevailing factors at the time. That is why the price of tomatoes during the wet months is not the same during dry months.
Competition helps natural selection to thrive – as cost of production is never the same for all the players.
Same principle applies to Banking sector too.
I mean prior to this imbroglio, why wouldn’t the Govt have had some banks that it controls charge the favourable interest rates it wishes, then naturally we would've all trooped there. In Months the bank(s) would build the largest client base and thus compel the rest to naturally follow suit.
Even a keen businessman/woman would have seized that opportunity if it existed!
Problem is that you buy the free market fallacy hook line and sinker. Regulation is a fact of life. Free market is only an appearance. Regulation yes, as in moderation. NOT price control per se and mark-up macro management. Me thinks an i spread of 7℅ is modest moderation. No business can grow on usurious rates. In the face of looming famine - faced by millions in the country, the Govt should work out and set the price of Tomatoes. 30 bob per Kg probably. Sounds okay!?!!! What's the big deal on regulating the price of tomatoes? Petroleum products account for 35% of total imports into the country and the pump prices are regulated. Tomatoes account for a miniscule % of GDP, not worth of regulation by the central government. Life is short. Live passionately.
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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Tomatoes was cited as a random commodity in the market. You can lump all the farm produce together and make the same argument. Take maize for instance – Kenya’s staple, knowing as we do, ‘bread’ matters are no child’s play especially at times of want like we are entering into. To mitigate the grain volatility in price and availability, what the Govt usually does is buy the local farmers' grain at a certain price – thereby incentivising private sector buyers to match that price. In the event supply in the market gets thin – in which case the prices begin going north, the Govt ejects its reserve thereby moderating the price. This is a fair application of inbuilt market tools to moderate pricing. Similar models could have been employed in the Banking sector. But raw and crude price control! Its a No! No! Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Ngalaka wrote:Tomatoes was cited as a random commodity in the market. You can lump all the farm produce together and make the same argument.
Take maize for instance – Kenya’s staple, knowing as we do, ‘bread’ matters are no child’s play especially at times of want like we are entering into.
To mitigate the grain volatility in price and availability, what the Govt usually does is buy the local farmers' grain at a certain price – thereby incentivising private sector buyers to match that price. In the event supply in the market gets thin – in which case the prices begin going north, the Govt ejects its reserve thereby moderating the price.
This is a fair application of inbuilt market tools to moderate pricing.
Similar models could have been employed in the Banking sector.
But raw and crude price control!
Its a No! No!
1. Monetary Policy set by the CBK Monetary Policy Committee. is Interbank rates, Direct market intervention, Repos ... 2. Fiscal Policy i.e. government spending and taxation. Where the two above do not work effectively or if GOK want to suppress market interest rates by force, then you can't fault GOK for introducing caps. GOK is in a fix, ballooning deficit, high debt, unfavourable balance of payments... Interest rates would have gone through the roof if GOK didn't cap the rates. The converse is that the Shilling is going to take a pounding. The only way out is for us to sell oil in the next 5 years or we are forever done. Life is short. Live passionately.
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Rank: Member Joined: 5/26/2009 Posts: 326 Location: Nairobi
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sparkly wrote:Ngalaka wrote:Tomatoes was cited as a random commodity in the market. You can lump all the farm produce together and make the same argument.
Take maize for instance – Kenya’s staple, knowing as we do, ‘bread’ matters are no child’s play especially at times of want like we are entering into.
To mitigate the grain volatility in price and availability, what the Govt usually does is buy the local farmers' grain at a certain price – thereby incentivising private sector buyers to match that price. In the event supply in the market gets thin – in which case the prices begin going north, the Govt ejects its reserve thereby moderating the price.
This is a fair application of inbuilt market tools to moderate pricing.
Similar models could have been employed in the Banking sector.
But raw and crude price control!
Its a No! No!
1. Monetary Policy set by the CBK Monetary Policy Committee. is Interbank rates, Direct market intervention, Repos ... 2. Fiscal Policy i.e. government spending and taxation. Where the two above do not work effectively or if GOK want to suppress market interest rates by force, then you can't fault GOK for introducing caps. GOK is in a fix, ballooning deficit, high debt, unfavourable balance of payments... Interest rates would have gone through the roof if GOK didn't cap the rates. The converse is that the Shilling is going to take a pounding. The only way out is for us to sell oil in the next 5 years or we are forever done. As we wait for oil exports...There are lower hanging fruits. Interest rate cap in itself is populist but coupled with a export mobilization Marshall plan is a golden opprotunity. We need to immediately (short term) reverse balance of trade. We must become net exporters to survive. Let's look at anything we export today and do more of it and better. Instead of giving youths money to start car wash business (so dumb) we should be making every village shopping centre an export processing zone. Added value tea, coffee, flowers, avocado, furniture (strange how we are importers of Malaysian furniture) can be achieved in short term. I was looking at AGOA's list of allowed range and was amazed at how much potential there is...Though today 80% of what we send to kina kiash is apparels. I wish NASA would seize the economic platform. Because, clearly their opposites seem to have been absent the day economics 101 was taught in class 4 business studies.
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Rank: Member Joined: 5/26/2009 Posts: 326 Location: Nairobi
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You-know-who (CA is watching) should have gone to Delhi, not only to ask for more businessmen to come (do we need more of them?) But to open paths for us to export our stuff.
I once went to India, and took with me Out of Africa stuff...Coffee, various nuts and chocolates, gave to staff. They are now asking for container load of Macadamia nuts, chocolates and coffee.
Ditto West Africa.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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wa P wrote:sparkly wrote:Ngalaka wrote:Tomatoes was cited as a random commodity in the market. You can lump all the farm produce together and make the same argument.
Take maize for instance – Kenya’s staple, knowing as we do, ‘bread’ matters are no child’s play especially at times of want like we are entering into.
To mitigate the grain volatility in price and availability, what the Govt usually does is buy the local farmers' grain at a certain price – thereby incentivising private sector buyers to match that price. In the event supply in the market gets thin – in which case the prices begin going north, the Govt ejects its reserve thereby moderating the price.
This is a fair application of inbuilt market tools to moderate pricing.
Similar models could have been employed in the Banking sector.
But raw and crude price control!
Its a No! No!
1. Monetary Policy set by the CBK Monetary Policy Committee. is Interbank rates, Direct market intervention, Repos ... 2. Fiscal Policy i.e. government spending and taxation. Where the two above do not work effectively or if GOK want to suppress market interest rates by force, then you can't fault GOK for introducing caps. GOK is in a fix, ballooning deficit, high debt, unfavourable balance of payments... Interest rates would have gone through the roof if GOK didn't cap the rates. The converse is that the Shilling is going to take a pounding. The only way out is for us to sell oil in the next 5 years or we are forever done. As we wait for oil exports...There are lower hanging fruits. Interest rate cap in itself is populist but coupled with a export mobilization Marshall plan is a golden opprotunity. We need to immediately (short term) reverse balance of trade. We must become net exporters to survive. Let's look at anything we export today and do more of it and better. Instead of giving youths money to start car wash business (so dumb) we should be making every village shopping centre an export processing zone. Added value tea, coffee, flowers, avocado, furniture (strange how we are importers of Malaysian furniture) can be achieved in short term. I was looking at AGOA's list of allowed range and was amazed at how much potential there is...Though today 80% of what we send to kina kiash is apparels. I wish NASA would seize the economic platform. Because, clearly their opposites seem to have been absent the day economics 101 was taught in class 4 business studies. @Wa P well said. Are you into agricultural value addition, can we team up? Life is short. Live passionately.
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Rank: Member Joined: 8/25/2015 Posts: 839 Location: Kite
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ngapat wrote:Ericsson wrote:ngapat wrote:maka wrote:@ngapat please let us know if they paid...this banks are crafty like @AA pointed out. No payment yet. I had been receiving interests on my savings account every year since 2008 and I've not changed my account Forced to transactional account that has no interest Forced transactional account it is. HeH! What the hell!  these accounts clearly indicate they are SAVINGS A/C,they should penalize withdraws NOT force to current A/C
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Rank: Veteran Joined: 11/11/2006 Posts: 972 Location: Home
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Quote:He notes that passing of the interest capping law by Parliament had failed to accrue benefits to the public and businesses. Private sector credit growth retreated from 19.5 per cent to 4.8 per cent late last year, the slowest pace since June 2008. http://www.businessdailyafrica....518272-1lg5gf/index.htmlhttp://www.businessdailyafrica....518278-njabui/index.html
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Rank: Elder Joined: 7/22/2009 Posts: 7,871
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And some fellows imagined we didn't know what we were saying and even resulted to childish insults instead of engaging in an intellectual discourse based on facts. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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