The economy is down and this is not time for blame games.
We need a debate how to revive the economy because, sooner or later, the Kenya Revenue of Authority (KRA) will not be able to collect more taxes. Businesses are down and some entities are relocating to other countries.
The problem is that we are becoming indifferent to a dire state of economic affairs.
Last week, it was reported Kibos Sugar Company was considering relocating to Rwanda. If that happens, more than 500 workers will be left jobless.
As a country, we should choose whether to have an economy that is productive in contrast to development.
We have been borrowing to build railways, roads and infrastructure, and this has spurred growth. It is productivity that pushes up the Gross Domestic Product (GDP) and benefits the citizens.
The irony of Kenya’s economic situation is that we are untimely sacrificing primary activities such as agriculture and animal husbandry to the benefit of tertiary activities.
It is time we prioritise occupational structure because research shows a significant relationship between economic growth and occupational growth. But we are unable to exploit that relationship.
Unemployment translates into low income per person. The key agenda should be to have food on the table by investing in primary industries thus creating as many jobs as possible.
Kenya’s problem is that its primary industries or activities are on the decline while unemployment is up.
It’s time to use the idle labour in our firms. It doesn’t make sense to switch to industry and services sector if our agricultural sector is in distress.
Lets’s think of good returns to maize growers and sugarcane farmers. We are spending lots of money on services yet the manufacturing sector is dented – translating to a huge import bill.
India first talked of the green revolution and then went full blast into manufacturing. It is now putting more emphasis on the services sector. Their service sector is strong to a point that they export it to the US and earn a lot of foreign currency.
We must stabilise the prices of basic goods and services, including unga, sugar and milk to avoid starvation and malnourishment.
In any nation, there is the minimum for each occupation. In other words, how much do we invest in agriculture, industry and services to achieve a balanced economy?
Ideally, we should focus less on agriculture, but for obvious reasons, we cannot. We must first strengthen our primary sectors to allow the manufacturing sector to take off.
The economy will only develop if left to the private sector until it reaches a point where it is driven by over 70 per cent of the population.
The government must be selective in terms of the investments it undertakes.
This will help it have sufficient time and independence to do its supervisory role.
This is the only way to improve GDP. The problem of Kenya’s economy is that its growth is not sufficiently inclusive to many groups.
This explains why according to one World Bank report, 29.2 per cent of Kenyans cannot access basic needs.
We must encourage private investments. In economies where private investment is higher than public investment, growth is faster and citizens can get jobs, have income and save more.
Where the public exceeds private investment, there might be savings that do not accrue to wider citizens.
Furthermore, public sectors remain wasteful to the extent that there are no savings. If that happens, then the burden of maintaining State activities fall on the citizens.
And as the year comes to an end, leaders should focus on increasing income and eradicating poverty by creating employment for the youth.
Since the devastating doctors’ strike, our health sectors were punctured. The education sector, though not badly off, requires improvement – be it in schools, colleges and universities.
The recent floods provide valuable lessons on the urgency to sustain our environment.
The vulnerable in society are exposed, and this ought to be addressed.
These should be our New Year resolutions as a country.
-The writer teaches at the University of Nairobi
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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.