http://www.nation.co.ke/news/Economy-is-growing-Treasury-bosses-say/1056-3867518-q9awo3z/index.html
I dont doubt the economy is growing.
At the same time we have to ask the regular guy, whether he/she is getting any benefits or just crumbs from the big fish.
“You can see people spending on the weekends, they are going to Dubai in huge numbers. Kenyans are the second largest visitors to Dubai, other than Indians.
Government spending.. Kenya inflation on Food is about 15% meanwhile our Chief Economist Pundit claims economy is expanding .. it can expand all it wants but inflation is making nonsense of this growth.. I give you 2 bucks to buy milk from me and then I hike the price to 2.30.. you will still have to borrow .30 cents to drink my milk
TRICKLE down economics will never ever work even if we repeal laws of nature
“If you look at it from the expenditure side, expenditure is growing. In fact, it’s driving our GDP." Dr. Mwau. But the expenditure is government driven. The private sector small and big corporations aren't spending. Dr. Mwau actually confirmed this when he appeared on NTV.
Interesting - is this related to credit squeeze from Banks post interests rate capping? I think banks are conspiring to undo that cap. Parliament should let this go on for sometime.“If you look at it from the expenditure side, expenditure is growing. In fact, it’s driving our GDP." Dr. Mwau. But the expenditure is government driven. The private sector small and big corporations aren't spending. Dr. Mwau actually confirmed this when he appeared on NTV.
That is just due to seasonal rainfall patterns - unreliable rains in Q1 - now that rains have come - food inflation will be fine. our underlying and overall inflation are single digit. South Sudan are doing 800% inflation rate. :o
Out of 29 companies that have released results so far 21 have reported reduced or flat profit after tax. Government's narrative of a growing economy does not hold water.
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Pundi, what say thee about this list:Remove the financials which have been affected by capping of interest rates spread. EABL in the 2015 it booked sale of land which padded its profit . Car and general business of importing motorbikes, tuk and industrial equipment is being decimated by chines companies that have setup in kenya but the overall industry is growing. Portland and bamburi , this is cause strictly competition and poor management(portland), there are many cement companies now. The bellwether is safaricom that would be a better indicator on how economy is doing.QuoteOut of 29 companies that have released results so far 21 have reported reduced or flat profit after tax. Government's narrative of a growing economy does not hold water.
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I think part of it is the capping of the spread and already CBK is indicating that the cap will be scrapped maybe after elections http://www.businessdailyafrica.com/markets/news/CBK-probe-economic-downturn--slow-credit-growth-/3815534-3868276-6dnvcxz/index.html . I believe this is one of the reason the M-akiba was introduced though it was in the works for some time. That way the government can gradually lower the CBR which will be determined by market forces. Without expansion of credit to private sector and households it means our growth is mainly being driven by government expenditure and FDI. This explains the reason why the effects of economic growth aren't being felt by regular mwanainchi as it would normally be in an economy growing at 5.5%-6%.
There's a great opportunity that's coming up for banks that have investment banking units. That's junk bonds that can be pegged to M-akiba prevailing rate. This would mean that private sector can go to debt market raise money at rate that's higher than M-akiba and the kawaida mwananchi would scoop it up to get better return. This would be an effective way for private sector to get credit now that banks are shying away from lending to risky investment.
Pundit
Hk gave a very well thought answer on why micro economics is not trickling down to grassroot..The growth being experienced is being driven by gok spending in infrastructure and high wages. if you look at retail all supermarket chains are having serious cash flow problems .It is being reported that most are unable to pay vendors
Why is 6% not failing to trickle down. Not 6% in 70 billion USD economy - means we created 4.2B usd or nearly 420B kshs.Because the growth isn't broad based . Government including counties though the biggest single buyer of goods and services only represents about 10% of overall economy. So while there's growth driven buy government expenditure its only being felt by few people unlike private sector growth which would be felt by many more people. BTW credit expansion started slowing before capping of interest rates, the capping has only made it worse. Our problem is lack of growth in productivity.Pundit
Hk gave a very well thought answer on why micro economics is not trickling down to grassroot..The growth being experienced is being driven by gok spending in infrastructure and high wages. if you look at retail all supermarket chains are having serious cash flow problems .It is being reported that most are unable to pay vendors
Pundit
You need to take macro and micro economics classes on line for free. I recommend Khan academy...I always learn a lot by studying or self studying economics to understand the theory and then tie it to practice..USA during great recession worked on all fronts ..They poured funds giving consumers money to spend and expanding government spending on infrastructure..This helped the economy stablelize now this year it is companies working on growth from operations ..In Kenya we need to privatize all sectors that gok is conducting business trim public wages and then pour money to help private sector invest in durable equipments and innovation to increase productivity
The young guys who were having a ball with Kibakinomics have been forced to tighten their belts. The young families needs are rising faster than the 6% growth impact on household incomes. Given we used our boom time incomes on beer, choma, bouncing castles every weekend with little or no savings. We now have to look for bigger house, school fees thus the gloom in the feel good index and contention on trickle down effects.How come there are no young guys having ball with uhurutomics?
hk,At least now the real estate income is being taxed at a flat rate of 10% and now kra is collecting a lot more than before when it was 30% of net income.
I just do not understand Kenya economic policy.. How do you tax real estate heavily for example and expect full compliance? it makes sense why capital goods cannot be zero rate for a decade until we achieve some sort of industrial growth momentum
By Matina Stevis | Photographs by Nichole Sobecki for The Wall Street JournalThis is a good thing. There was alot of hype early on with number of companies getting awards and ngo money. At least now start ups are focusing on solving problems and making money.
NAIROBI, Kenya -- After a decade of buzz that brought bold headlines but few profits, Kenya's "Silicon Savannah" technology hub is retooling to put income before activism.
A homegrown African tech community is rising in this city: bootstrapped but profitable businesses using technology and the internet to solve commercial problems connecting the biggest names in tech and finance.
International Business Machines Corp. is training hundreds of Kenyan coders in Nairobi each year; Visa and Mastercard are turning to Kenyan fintech companies to crack the local market.
Last month, Facebook Inc. and Alphabet Inc.'s Google started a strategic alliance with the iHub, an incubator and co-working space at the heart of Kenya's tech scene, to reach and train app developers there. The Silicon Valley companies will tap local talent for coding and product development; they also will train Kenyans in artificial intelligence, cloud computing and machine learning -- reinforcing the region's role as the center for technology in Africa.
"It is true we had some companies that were more excited about headlines and about what new widget would solve the problems of the world," said Patrick Njoroge, Kenya's Central Bank Governor, in an interview last month. "What we've been pushing is for companies to focus on a particular problem. It's more sustainable."
Since the late 2000s, the startup community in this sprawling East African city welcomed top U.S. and European graduates, who were lured by adventurous opportunities and millions of dollars in no-strings-attached grants from Western donors. Newspapers queued up to profile startups using technology to spur African development in sectors as diverse as farming and transportation. Luminaries including former U.S. President Barack Obama and Facebook CEO Mark Zuckerberg visited the hub to trumpet its potential.
But beyond the buzz, few companies turned a profit and many died a quiet death, investors say. Funding has plummeted, with the total raised by Kenyan startups falling to $10.5 million last year from $47 million in 2015, according to data-collection platform Disrupt Africa.
Now, in the wake of the bubble, a less flashy but more successful model is emerging for startups in Silicon Savannah.
The iHub in Nairobi began as a social movement in 2010 and is now transforming itself into a for-profit company that collaborates with the likes of Facebook, Google and Microsoft. The U.S. companies will use the iHub as a center for their training and talent spotting. The recognition caps a long journey for the incubator founded by the group of activists behind Ushahidi, a platform created during riots in 2008 that collected testimonies, recorded incidents over their phones and geo-located them using Google Maps.
Both Ushahidi and the iHub were largely funded by grants from foundations such as the Omidyar Network. For the iHub, the model became increasingly unsustainable last year as it faced cash flow problems, said its former Chief Executive Kamal Bhattacharya, who took it over after a career at IBM and became chairman of iHub board this month.
The incubator last year received $2 million in funding from Invested Development, a U.S.-based fund, that allowed the company to reorient its business. Mr. Bhattacharya raised prices for services and added multi-month contracts to the firm's revenue stream. The company has posted $1.5 million in annual revenue on average for the last three years.
Data collection remains patchy in Kenya, but the iHub reckons more than 100 startups have used its services over the past seven years, and more than 1,000 people have worked at startups during the same time. It now employs about 30 people full-time and has handled more than 50 projects in the last 12 months.
Kenya last year was the second-biggest tech hub in Africa in terms of the number of startups that secured funding, trailing only South Africa. But the average amount raised per startup last year declined by 85% compared with the year prior, Disrupt Africa data shows, from $2.6 million in 2015 to just $10,500 in 2016, relegating it to sixth place by this criterion behind Nigeria, Ghana, Egypt, Morocco and South Africa.
One fundamental change here is the type of investor attracted to Kenyan tech businesses. Angel investors -- often themselves successful businesspeople or returned from the Kenyan diaspora -- private equity and specialized technology funds are becoming more involved, just as Western donor agencies and charitable foundations are becoming less active, according to investors and technology entrepreneurs.
"The Peace Corps volunteers of the past came back to Kenya as impact-tech investors," says Agosta Liko, founder of the profitable fintech company PesaPal, in describing Kenya's tech scene during the initial years.
Mr. Liko, who avoided taking donor grants for his business that helps people pay for anything online using mobile money or credit cards, is hopeful that experienced entrepreneurs and homegrown startups will have more of a role.
"Many of us have been working hard and quietly for many years," Mr. Liko said. "The most important thing is that a number of Kenyan technology businesspeople are now becoming mentors and angel investors for new startups here."
Write to Matina Stevis at matina.stevis@wsj.com
This is bellwether of kenya economy http://www.businessdailyafrica.com/corporate/Safaricom-net-profit-rises-18-3-per-cent-to-Sh45bn/539550-3920732-jyy6ol/index.html its interesting how data is growing as the overall economy becomes digital.
Maize and Sugar farming in kenya is hopeless; It need to be fully liberalized; let the chips fall wherever but all duty free imports of sugar and maize. I am sure our maize and sugar farmers can find something else to do.I am glad you have embraced my point of view. When I said this you were up in arms.
That is one sector that is screwing the poor people hard.