?s=20There is a bit of easing of the dollar shortages as the interbank market slowly reopens. BD reporting how the lines of communication between banks and the CBK have helped reopen the market.
— Mwango Capital (@MwangoCapital) March 28, 2023
"The reopened lines of communication have helped improve the volume of dollars to the… pic.twitter.com/kTI2rrvCPt
CBK was forced to open interbank to ease dollar shortage and squash parallel exchange rate. Interbank was closed to protect the Ksh. or manage depreciation. Just like interest controls, this are short term solution that eventually markets obliterates . Now CBK will be forced to raise interest rates, market has refused to buy 364 days bonds at the rates being offered which means hustler fund has to either raise interest rates or it wont be sustainable.
Ndii has been praising the hustler fund for it's "ability" to hand out low interest loans. Was he not aware this would eventually happen?Its subsidized and Ndii doesn't mind since its regime crowning initiative up to now. If you listen to him closely he has shifted from cheap loans to giving hustlers "dignity".
Ndii said the problem he had was that the government was lending to banks at 8% and banks were lending to hustlers at 20/30% so, he wants the banks to lend to hustlers at the same rates that they are getting from the GOK.
Gov borrows from Banks & rich kenyans - at btw 8% -14%.Government is borrowing at 10% on 91 day Tbill 364 14% so taxpayers are subsidizing the fund 2%minimum plus the cost of running the fund by kcb and family bank. There's no derisking the risk is transferred to the public, its a social fund. What's even worse the savings interest is less than government is paying to borrow. The solution should be to lower interest rates and banks can offer loans at a cheaper rate. Instead of a market sustainable solution government opted for government solution.
Hustlers borrows from Banks - from anyting 20% to 360% (some were quoting daily rate of 1%) - as they are riskier
At such high interest rate - access & cost of credit - hurt hustlers (the poor) even more.
Solution - Hustler Fund - derisking the credit for the poor.
Gov borrows from Banks - hand it over to Hustle 8-10% - and shoulder the risk.
So gov is prepared therefore to take losses - that banks are unwilling.
In hope Hustlers life will dramatically improve with access to cheap labour - and they will eventually grow enough to pay taxes - to be used to de-risk even more credit.Ndii said the problem he had was that the government was lending to banks at 8% and banks were lending to hustlers at 20/30% so, he wants the banks to lend to hustlers at the same rates that they are getting from the GOK.
Government is borrowing at 10% on 91 day Tbill 364 14% so taxpayers are subsidizing the fund 2%minimum plus the cost of running the fund by kcb and family bank. There's no derisking the risk is transferred to the public, its a social fund. What's even worse the savings interest is less than government is paying to borrow. The solution should be to lower interest rates and banks can offer loans at a cheaper rate. Instead of a market sustainable solution government opted for government solution.
?s=20The Central of Kenya [@CBKKenya] raises rates by a whopping 75 basis points to 9.5% from 8.75%.
— Mwango Capital (@MwangoCapital) March 29, 2023
What that practically means is that the costs of loans from banks are about to go up. pic.twitter.com/Z7x2dOIX5m
Government is borrowing at 10% on 91 day Tbill 364 14% so taxpayers are subsidizing the fund 2%minimum plus the cost of running the fund by kcb and family bank. [/quote
hii ni kizungu kubwa. Can you explain to us what this means in simple English? talk to me like I am a hustler in mukuru kwa njenga
?t=9A0TOhG1v1Ng3DJD8RNFZw&s=19Now that the positions have been advertised, some two lucky Kenyans will join Susan Koech [@koech_sk] at the top of the CBK management team.
— Mwango Capital (@MwangoCapital) March 30, 2023
Who do you think will serve as the next CBK Governor and Deputy Governor? #MwangoChat https://t.co/qmZdDdJah0
HK you were right - reality is starting to stare at usIt was inevitable that interest rates had to be raised. CBK is trying to both tame inflation and also shore up KSH. The genesis of all this problems is debt crisis due to over borrowing. The economy needs an impetus to recover, we might as well bite the bullet and seriously slash spending(including layoffs), deregulate and liberalize.?s=20The Central of Kenya [@CBKKenya] raises rates by a whopping 75 basis points to 9.5% from 8.75%.
— Mwango Capital (@MwangoCapital) March 29, 2023
What that practically means is that the costs of loans from banks are about to go up. pic.twitter.com/Z7x2dOIX5m
It was inevitable that interest rates had to be raised. CBK is trying to both tame inflation and also shore up KSH. The genesis of all this problems is debt crisis due to over borrowing. The economy needs an impetus to recover, we might as well bite the bullet and seriously slash spending(including layoffs), deregulate and liberalize.
Pundit always insisted that borrowing is not bad. Even the Eurobonds that were borrowed as infrastructure bonds but ended up somewhere else were titled as necesscity by Pundit. Now we cannot borrow any more and our uncle IMF has to bail us out. Come 2024 and kenya has to cough out US$ 2 Billion. At the current rate Ksh. 260 billion!