Much Know wrote:The example of distributors troubles in today’s Daily Nation is a good example of decline in spending at micro-economic levels. To impute that spending does not spur economic growth is absurd. To say that money “saved” from reduced demand driven spending on mobile calls from a bustling sturdy Kes 150billion industry and economic arm will automatically be directed to another (make me buy more tomatoes, sodas, beer e.t.c) is simply nonsense and quite dim-witted. As Kenyatta said, ignorance is anyone’s principal foe as it is clearly being illustrated here. This is a huge industry with a huge economic impact if you have ever bothered to listen to any recent report on Kenya’s economic growth.
Note, apart from distributors, agents, retailers (shopkeepers)and so on, there will be a knock on effect to advertising, then to media, newspaper vendors, gamblers (who see sense in sending 70/- sms’s to 6969 but not in buying airtime to communicate), to internet and I.T, electronics and many other areas. The funny thing is within a country; all economic activities are somewhat interconnected, that’s why tourism growth/fall for example affects all and sundry not just hotels. Add this to reduced taxes then you might get a clearer picture of what is unfolding, then add the drought to this and the back office jobs (from accountants to hawkers) that airtel has transferred to India (which some here celebrate) and maybe the blind might begin to see what is ahead. Battles for economic survival have to be fought from all fronts.
What of investment and interest rates, which affect economic growth, what does this drop in spending portend? When people demand stuff (100 Billion in airtime), someone has to stock this airtime, distribute e.t.c. These people several times need financing for stock, vehicles, salaries, which banks give, because it will be easily recovered, but because of the high demand for credit by these investors (traders/distributors/advertisers), the rates fall as banks compete, the banks make money. But when the 90billion spending slows, borrowing drops, banks raise rates, more people default banks put their money in government securities and government starts cutting rates to spur spending which has been reduced by a major drop in economic activity, to dot. Economies do not grow out of a vacuum, this one will hit all. Ndemo is right, Muganda is right, Chaliwong is right, Collymore is right (ni masomo).
What a load of CRAP...
1) Safaricom/Airtel/Orange/Yu is NOT Kenya... Kenya is NOT Safaricom/Airtel/Orange/Yu... [Kenya's largest 'earner' is agriculture. I would rather give a farmer a minimum price before anyone else]
2) Yes, the cash I save NOT using safaricom WILL go to other uses including savings, investments or expenditure. I do NOT keep cash under my mattress so this 'saved cash' is circulated.
3) Many businesses in the 'sales' industry can expand their reach with cheaper calls. Airtel has cut prices to UK, USA, India & China. All these are either import or [even more important] export markets for us! Using clear calls by Airtel is much better for our BPO firms! Many (better) paying jobs there! Plus value chain.
4) KRA/GoK is NOT a REVENUE GENERATOR. Heck, most GoK owned businesses LOSE money! Have you seen how many mercs & 4-wheel drive cars with GK plates around Prestige, Junction, Westgate, Sarit Centre & Village Market? Telkom/KPTC was a shithole...
5) Bob-call-me-more says Safaricom's Kenyan jobs will be lost. Ask him how much these employees are paid vs MJ+BC salaries+bonuses? [The top execs make millions at Safaricom. Many are expats.] Let's in-source BC's job!
6) I know how to spend my 1/- better than ANY government employee. If Safaricom is supported then every firm/shop/factory/farmer in the country can say 'we want minimum prices no matter how crappy our product is'
7) I see 'free' calls in the future. What I mean is unlimited calls for a Fixed Fee. It has happened in the USA. Yes, Kenya is not the USA but they are very innovative.
For that idiot claiming Kenya will catch up with the USA soon... I love Kenya but I am a realist. The USA has far better infrastructure than we do. It will take us 25+ yrs to get to the level they have in 2010.
Most people in the USA do not starve like they do in Kenya. Heck, they are FAT... but not stick thin! Have you ever heard of 11% of the USA population starving in the past 50 years?
For all their faults, I admire the American spirit. It is a can do spirit. Very few (as % of the population) have the 'tunaomba serikali' attitude.
Finally, the internet [gasp, what you are using], many of the computer technologies/firms [Intel, Apple, ARM, Windows], phone chips[ qualcomm], phone technologies/firms [Motorola, Apple] etc were designed/invented in the USA. And they continue doing so!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett