It is time again to reconnect the dots. Tax increases to fund a budget hole that implicitly assumes record revenue collection. A slight lull in the very public war on corruption as cases are presented in court. Heightened and increasingly aggressive political noise that appears to disrespect the “handshake”. A current, and arguably correct, media focus on murder most foul, and suspected murderers ‘most nasty’. These are just Kenyan headline pages.
Then there’s the quiet news. In Quarter 2 (April to June) of 2018, the economy grew by 6.3 per cent, as against 4.7 per cent in our 2017 election year. The big public question remains why everyday Kenyans aren’t feeling it.
The quiet answer reflects what former World Bank Kenya director Harold Wackman once advised the Moi regime: “When you’re flat on your back, the only way to look is up”.
Kenya’s growth is not secular (as in, consistent over time), but episodic (full of hills and valleys). A 6.3 per cent simply returns us to where we should have been without the joke we call elections.
It’s also an average. Like the ridiculing analogy of one having their head in the fridge and feet in the fire and feeling “averagely warm”. Where’s Einstein’s theory of relativity when we need it? If 8,500 people own – basically – the national wealth, and therefore control our income opportunities, we have a “let them eat chapati” French-like Revolution in the making.
It doesn’t help when one of our top political leaders, who apparently hopes to be President pretty soon, was reported last week, not in Nairobi, but addressing villagers in rural Kenya, stating that Kenya’s debt to GDP ratio is 5.8 per cent, and actual public debt is Sh560 billion.
In other words, all official reports about a debt to GDP ratio 10 times as much, and actual debt proportionately similar, have been grossly exaggerated.
This is Mary Poppins stuff, from our childhood, when the world’s longest word for kids was “supercalifragilsticexpialidocious”.
Earlier, on the same day that our eyes were glued to the National Assembly’s hypocritical shenanigans over the VAT on fuel (having earlier approved a Supplementary Budget that increased, not reduced, our budget deficit), the 2019/2020-2021/22 Budget Review and Outlook Paper (BROP) was quietly published amidst more “jobs for the boys” parastatal appointments.
On the BROP, our National Treasury effectively offered a one-day notice for comments (document dated 19 September, loaded onto website 20 September, comments due 21 September).
In perspective, this BROP essentially lays out the Jubilee administration’s fiscal plan – basically President Uhuru Kenyatta’s legacy — to the end of its term, even though the actual economic plan — Medium Term Plan (MTP) 2018-2022 – remains in hiding; probably looking for tenders.
Five big numbers stand out. Our Sh8.8 trillion economy will stand out at Sh 14.7 trillion in 2022. Our Sh5 trillion public debt will have grown to Sh7.2 trillion.
Our Sh1.3 trillion in tax collections (forget this year’s Sh 1.8 trillion projection) will have grown to Sh 2.3 trillion in 2022, yes, a trillion shillings. Expenditure? Last year’s Sh2.1 trillion will be Sh3.2 trillion by then.
Counties? Please don’t cry. Last year’s Sh327 billion slowly creeps up to Sh391 billion.
Looking at the proportionate increases — one doesn’t even need to do a calculation — these are clearly “Alice in Wonderland” projections, probably intended to impress our creditors.
Others have commented far better than I can within this space, but it is important that we ask who is served by these projections?
This brings us back to connecting the dots. Think about the handshake as socio-economic choice, not political battle. Which suggests one of its core aims must be to find new ways to rethink said socio-economy, and grow the tax base we need to viably finance a “fit for purpose” government from our own resources.
Put differently, the handshake should not be a source of political aggravation and panic that affects day to day economic opportunities and expectations.
This further suggests that current referendum calls are misplaced; why mutilate the Constitution when we haven’t yet reformed government?
How do we claim an expensive Constitution that hasn’t been properly implemented?
Who must we blame for the plug-and-play approach we have adopted to its implementation – keeping business as usual, and then moaning about new institutions?
Kenyans are connecting the dots. Watch this space.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.