?t=oWwXyUoXpgojFLN7vX82wg&s=19What did I just read here?!!
— Nderi, J (@nderi_j) October 30, 2022
Greek crisis is a warning against using govt to juice "aggregate demand!"
Jesus Christ!!! We are in serious funk!!! pic.twitter.com/dIBF40ABVl
Ndii is doing the best he can. Wacha upuzi. Give the man space to operate....offcourse everything starts from theory to practical.you vilified him when he opposed sgr. now ruto is running away from austerity
he has had these delusions since his birth. jamaa is unhinged. anyway we dreamt and built sgr. now let us build a spaceship now ..you are a communist, your ideas leak of a man that believes in spending others monies. wewe ni mtu Hatari kama Hitler. your biggest problem is your cognitive dissonance. you now believe since ruto is in power everything will be okay. contrary to you I give people benefit of doubt but once I realize they playing game I can't support them. Ndii means well but his arrogance makes him useless. jamaa ana kiburi kuliko yesu?t=oWwXyUoXpgojFLN7vX82wg&s=19What did I just read here?!!
— Nderi, J (@nderi_j) October 30, 2022
Greek crisis is a warning against using govt to juice "aggregate demand!"
Jesus Christ!!! We are in serious funk!!! pic.twitter.com/dIBF40ABVl
you vilified him when he opposed sgr. now ruto is running away from austerity
there is no magic you do both. bit you must send a clear sign to the markets on what your end goal is. Ndii Twitter trial balloons are failing to inspire confidence in wakora wawili govtWhichever way you looking in this govt utaona "wawili".... so too there is Ndii advising Nabii :zen:
there is no magic you do both. bit you must send a clear sign to the markets on what your end goal is. Ndii Twitter trial balloons are failing to inspire confidence in wakora wawili govt
Your accounting degree is only good for counting beans. Respect proffesionalsthere is no magic you do both. bit you must send a clear sign to the markets on what your end goal is. Ndii Twitter trial balloons are failing to inspire confidence in wakora wawili govt
at least I do not mislead you on bean counting. Your communist riddle mind can't see why capitalism is the answer to the problems in kenya
economic theory around increasing government spending to spur growth in upuzi tupu. it is a devious game by wakora wawili
HK - is pro-austerity. I am glad Ndii has come to realization that starving the beast is going to cause more problems. Austerity is bad. This why IMF is bad. This is why Kibaki did huge social spending including free primary education when country was broke.I believe in stimulating the economy using fiscal policies to increase goods and services(supply side) not government spending (keynesian). Kibaki first cut taxes 18-16 vat, reduced bank reserves, lowered interest rates, broadened the taxbase with etr. After jumpstarting the private sector, the regime then invested in infrastructure and social stuff. David ndii with anyang nyongo wanted social spending first kibaki only agreed to free education.
The thing is if gov spends - more - the economy grow more - and it taxes more - then it's able to spend even more.
If gov stops spending - economy reduces - taxes reduces - everything reduces.
Gov is the trigger - if stops spending - very likely everything else will stopyou vilified him when he opposed sgr. now ruto is running away from austerity
I support socialism - a middle ground btw communism & capitalism.
I believe society is two engine aeroplane.
Gov/public sector - invest in security/infrastructure/social-education/healthcare/
Private/Individual sector - run this through capitalism - remove state capture - make markets works.
What Ruto owes the private sector - stable macro-economics, good infrastructure (electricity, water, roads) & security, predictable tax & regulatory regime.
What Ruto owes me as individual - good roads, piped water, education, healthcare, security
Private sector should work to create wealth and jobs. Individual should do the same.
Where does communism come in?at least I do not mislead you on bean counting. Your communist riddle mind can't see why capitalism is the answer to the problems in kenya
economic theory around increasing government spending to spur growth in upuzi tupu. it is a devious game by wakora wawili
you stated the following
* take all tea farms in kericho and sell them to locals
* you what govt to do big projects this include building houses and get directly involved in the economy
* you believe in big infrastructure projects funded by loans without making any current needs to finance the debt repayment
* you want a heavily indebted govt to spend it way out of fiscal calamity
* you egged jubilee to build sgr and roads. the results are clear
* now you are supportitn overtaxation by ruto to raise additional funds to fund his fantasy projects
you are a communist not a socialist
you also believe in use brute force to rule. run a tractor through your opponents to get thing done.
you and the Chinese are birds of a feathers
I believe in stimulating the economy using fiscal policies to increase goods and services(supply side) not government spending (keynesian). Kibaki first cut taxes 18-16 vat, reduced bank reserves, lowered interest rates, broadened the taxbase with etr. After jumpstarting the private sector, the regime then invested in infrastructure and social stuff. David ndii with anyang nyongo wanted social spending first kibaki only agreed to free education.
Basically an economy led by private sector growth not government spending. Private sector growth is what funds public investment. A simple rule of thumb, keep 4% or below budget deficit. David ndii want to tax everyone to support government spending and maintain fiscal sanity.
I think we have exhausted fiscal and monitary tools to fix the economy. Apart from debt & budget deficit; everything else look good on paper, VAT now is mostly 16 percent, interest rate is single digit (base), commercial loans are going for 15-16%, inflation is single digit; the KSHs is fairly stable in current environment; all look good, stable and predictable.The government has crowded out the private sector both in credit and human capital. There are more people dependent on government from tenderprenurs to consultants. This has deprived private sector knowledge and investment. David ndii in turkana pointed this out, the problem is now, they want to further expand the government.
Yet the private sector is not growing to match public sector appetite for investment (infra+social spending).
Something is broken. When I check - I see gov of kenya that is in private sector space. In 1990 kenya had something close to 250 SOES. They privatize about half - and retained about half. Those they privatized they still retain control - they never really sold out - or the little sold were bought by NSSF - and other public entities.
So we have problem of a small private sector - and large SME informal sector (that doesnt pay taxes) - gov that is HUGE in private space - sometimes they are monopolies. KPLC for example - Uganda Umeme is partly owned by South Africa Eskom.
Way forward gov has to prioritize privatization completely - and use the money to fund public investment. Sell all shares of KCB, Kengen, Safaricom, name them;
Then once the gov control is removed - these 200 plus SOES will become the engine of private sector growth. If I was Ruto I will sell them all - KCC to farmers - name them - fire sale. Get the money - use it to fund the budget - for 3yrs - then deficit will be down/budget will balance.
And the private sector will grow - and gov can survive on taxes & debt - gov should not own anything big in private sector.
And of course focus on SME - that is really bottom up opportunityI believe in stimulating the economy using fiscal policies to increase goods and services(supply side) not government spending (keynesian). Kibaki first cut taxes 18-16 vat, reduced bank reserves, lowered interest rates, broadened the taxbase with etr. After jumpstarting the private sector, the regime then invested in infrastructure and social stuff. David ndii with anyang nyongo wanted social spending first kibaki only agreed to free education.
Basically an economy led by private sector growth not government spending. Private sector growth is what funds public investment. A simple rule of thumb, keep 4% or below budget deficit. David ndii want to tax everyone to support government spending and maintain fiscal sanity.
The government has crowded out the private sector both in credit and human capital. There are more people dependent on government from tenderprenurs to consultants. This has deprived private sector knowledge and investment. David ndii in turkana pointed this out, the problem is now, they want to further expand the government.
Austerity is bad only to government dependent industries but to the rest of us, its perfect allocation of capital to productive and innovative sectors. The idea that a country can grow out of debt and fiscal crises by increasing spending is a mirage.
Interest rate is 15%, KSH. isn't stable that's why kenyans are holding $8b in usd, if it wasn't managed it'd be 130-140, Fix the macros and private sector will be roaring( though we have a big problem of risk aversion. Basically investing in the kawaida stuff).
If you look at what Singapore did in the beginning, they followed a government heavy model and when Lee Kuan Yew was asked about this, he said, they had no choice, but to do it because the private sector was so under-developed.
As the country became richer, Kwan Yew said they would gradually reduce the governments involvement in the economy because private sector growth is always better than government led growth, but even for Singapore after almost 40 years, there is still a very heavy government presence and I think this is the model Ndii is following, but the problem for Kenya is what happens after 10 years when Ruto leaves? Singapore had Lee Kuan Yew for almost 50 years.
Our private sector is too small. Our public sector is big. Our SME space is huge and informal.By private sector we mean all private entities that aren't government owned. SME and MSME are part of private sector even households. The banks are already lending to the bottom of the pyramid but at high interest rates. Banks make money by lending, if government lowered its borrowing appetite , the banks would lend to private sector. This is how in kenya you lower interest rates. The hustler fund wont be derisking it'd only mean the risk is absolved by taxpayers. The government borrows at 14% then lends at a lower rate?
The problem facing our economy are structural; they cant be fixed by monetary or fiscal tools; The problem as far as Ndii goes is MSME sector is dead. There is no SME banking outside the micro-finance and fuliza that is very expensive. The gov has to step in and de-risk it.
The other part of course is lack of infrastructure - especially now water - both for domestic use & irrigation. Electricity is pretty much covered - cost is an issue - but coverage is pretty extensive. The rural roads we are about halfway there - if gov can do another push to get another 10K rural roads done - and PPP for urban roads that will be the magic.
Look at Fuliza - annually it's loaning 5B dollars - private sector even however best it tries - cannot manage such. When I last checked the total private sector credit in Kenya is about there - since I dont know when - Fuliza is doing it in a single year.
So ultimately Ndii is right - the focus has to be on the bottom of the pyramid. They need a little push - and the SCALE they can unleash is enormous. Lowering interest will not make commercial banks lend to SMES. They cant. Gok has to step in and get dirty.
Fiscal & monetary tools are really developed world toolbox. It has almost zero impact in kenya. If you raise interest or low - zero interest. The banks would still rather lend to gov - because the bottom of pyramid is too fragmented, too risky, too comburesome to lend to.
M-pesa just clocked 300B dollars - growing 35% - 3 times the GDP of kenya. That tells you Bottom of Pyramid (not private sector) is where the action has to be in - and gov cannot sit in fancy office and play with fiscal policies - someone has to go to slums - get structures in places - and formalize these people - organize them in groups & saccos - to deal with fragmentation etc.
By private sector we mean all private entities that aren't government owned. SME and MSME are part of private sector even households. The banks are already lending to the bottom of the pyramid but at high interest rates. Banks make money by lending, if government lowered its borrowing appetite , the banks would lend to private sector. This is how in kenya you lower interest rates. The hustler fund wont be derisking it'd only mean the risk is absolved by taxpayers. The government borrows at 14% then lends at a lower rate?
Why's lending to sme and msme expensive? That's what needs to be addressed.
singapore developed by attracting foreign investors in manufacturing. In the 70s and 80s, foreigners owned more than a third of all manufacturing companies. Singapore as a country city had to invest in housing just like Hong kong, this was the biggest government investment apart from education. Kenya isn't a city country, less than 10% of kenya population is in urban areas.
Private sector can further be split into formal (2m plus engaged), informal MSME and individuals(this where 20m people are stuck).
If gov reduces borrowing - banks will lend to blue chip companies like Safaricom - rich individuals with securities - never to the millions at the bottom.
The problem is structural - and gov has to fix it - by first organizing the individual & informal sectors into some formality (cooperative)
Then giving them loans - and the tax payers has to take the risk - because commercial banks cannot shoulder that risk.
If we continue - nothing much will change - private formal sector will be healthy and everyone else poor.
Gov will have to tax the formal sector to death - to sustain social spending.
If we fix the economic structure - to make the informal SME the engine of growth - not formal private sector - we will be somewhere.
And we have technology - fintech - M-pesa is good proof.By private sector we mean all private entities that aren't government owned. SME and MSME are part of private sector even households. The banks are already lending to the bottom of the pyramid but at high interest rates. Banks make money by lending, if government lowered its borrowing appetite , the banks would lend to private sector. This is how in kenya you lower interest rates. The hustler fund wont be derisking it'd only mean the risk is absolved by taxpayers. The government borrows at 14% then lends at a lower rate?
Why's lending to sme and msme expensive? That's what needs to be addressed.
?lang=enBoss in a previous life, I was Chief Economist of Equity Bank. We had a balance sheet of Sh9b and 50k customers. We decided to become a jua kali bank. Rest is history.
— David Ndii (@DavidNdii) March 23, 2020
Banks do lend to informal sector but at a relatively higher interest rates. Equity bank is an example of a bank that has thrived by lending to informal sector?lang=enBoss in a previous life, I was Chief Economist of Equity Bank. We had a balance sheet of Sh9b and 50k customers. We decided to become a jua kali bank. Rest is history.
— David Ndii (@DavidNdii) March 23, 2020
Lowering interest rates means even the informal sector gets reduced interest rates.
Lending to informal sector is more profitable for banks if the risk of default is reduced. Risk of default is premised on the health of the economy, fix the macros and lending to informal sector defaults are reduced. The bigger question is why aren't the formal sector killing the informal sector or rather why is informal not growing to become formal.
Majority of loans by Equity to informal sectors are from donors willing to de-risk the informal sector. Otherwise they cannot waste depositor money. Someone has to de-risk the informal sector. The economy can boom like South Africa did - but for a minority -5% percent. Kenya is not further away from RSA.Equity has 9m accounts, majority of their depositors are informal sector, without informal sector deposits equity would be a microbank. The few billions that IFC lends to equity can't account for their huge informal sector loan portfolio. What needs to be addressed is why jua kali isn't graduating or transitioning to formal sector. That's the structural economic problem in kenya.Banks do lend to informal sector but at a relatively higher interest rates. Equity bank is an example of a bank that has thrived by lending to informal sector?lang=enBoss in a previous life, I was Chief Economist of Equity Bank. We had a balance sheet of Sh9b and 50k customers. We decided to become a jua kali bank. Rest is history.
— David Ndii (@DavidNdii) March 23, 2020
Lowering interest rates means even the informal sector gets reduced interest rates.
Lending to informal sector is more profitable for banks if the risk of default is reduced. Risk of default is premised on the health of the economy, fix the macros and lending to informal sector defaults are reduced. The bigger question is why aren't the formal sector killing the informal sector or rather why is informal not growing to become formal.
What needs to be addressed is why jua kali isn't graduating or transitioning to formal sector. That's the structural economic problem in kenya.