Ruto - subsidies gone

[RV Pundit]

Agreed,

The idea of adjusting excise duty for inflation is the most ridiculous tax policy anywhere on earth. It is the government's duty to control inflation.
1🧵7

— ephraimnjegafan (@ephraimnjegafan) September 14, 2022

[RV Pundit]

For how many more years will developing country government's realise..".you can't tax your way out of poverty into prosperity?"

It's never worked and it will never work. "Insanity is doing the same thing over and over and expecting different results." 🤦🏿 pic.twitter.com/XsTkHtK2sH

— Nom de Plume: Mimi Kijana (@Iangithinji) September 15, 2022

[hk]

Agreed,

The idea of adjusting excise duty for inflation is the most ridiculous tax policy anywhere on earth. It is the government's duty to control inflation.
1🧵7

— ephraimnjegafan (@ephraimnjegafan) September 14, 2022

precisely
KRA inflation adjustment increase on excise duty needs to be repealed by parliament. Kra should be a collecting agent not a regulator adjusting taxes without parliament approval.
 

[hk]

Again the details are too scanty to critique. From what I heard - Hustler Fund - will be available to cooperatives - who will then lend at low interest and assist in collections. That is why Ruto is forming the ministry of cooperatives & SMES. Cooperatives are the real engine of our economy and we are 7th largest in the world. So the details are not there...but proposal is that you go to well run cooperative - get hustler nation low interest loan..and use it. You can use it to buy anything. You repay cooperative as always. Coop is the one to borrow from hustler fund. This will be revolving fund - so gov will inject less and less money because folks will repay.

Of course it would be mistake to use the failed model - of groups - that youth and women funds have become. Coop right now generally lend members money - so this will be big shot in their arms - and they will be able to lower interest to single digit - and Mama Mboga will start to turn profit.

So I think you're focused on private segment - which is okayish but - hustler fund - is focused mostly on SMES - which private banks have priced out of lending business or do so at very high interest. The hustler fund is therefore de-risking this huge segment - everything else applies.

Same with housing - gov is dealing with land, infra and mortgage difference - again de-risking the low cost segment of housing.

We can only go with what has been proposed. Hustle fund its basically government trying to address a problem without addressing the causation. Ask yourself which successful company you know that was initiated by people teaming up to borrow the seed capital? Most likely successful companies raise startup capital before borrowing. The fundamental question aught to be how to raise capital privately, how to incentivize capital holders to invest in risky zero physical goods collateral businesses.  Take something like boda boda, if a group was formed to borrow capital to buy motorbikes, the result would be flooding of the market with motor bikes depressing incomes in the industry, eventually the market stagnates. Capital allocation should be driven by demand and ultimate return on investment.

How do you build capital an the bottom of the pyramid? How is Hustler Fund different from Youth Fund Women Fund etc. Your 2 min primer on #BottomUpEconomicsKE finance #ThePlan pic.twitter.com/hj6aZPXhwp

— David Ndii (@DavidNdii) July 30, 2022

Hustle fund will be lending to banks that extends the loans to saccos, saccos formed for the sole purpose of borrowing from the fund. There's no derisking its only that now the fund will absolve the risk that fintechs now undertake.  The question is why are fintech loans so expensive? I'd think its cause of the opacity of borrowers financial status and obviously lack of collateral.
Details are scanty, I hope atleast they drop the sacco aspect, lend to individuals or entities who are already in business

[RV Pundit]

Why would you drop cooperatives/saccos?
Retail banking targeting smes have failed - equity bank and others receive billions from some donors for onward lending - but they still charge 20% interest rate.
Banks have failed.
Saccos are engine of our economy...
Hustlers are not comfortable working to banking halls...but are at home in saccos.
Sacco ministry will ensure the sacco build capacity - and improve governances.
Sacco can put in collatoral - individuals cannot.
It also become difficult to manage individuals.
Unless we go fintech - and then we get into re-collection problems.
So saccos de-risk the gov losing it's money - as it attempt to de-risk the lower end borrower.
Individuals and business - have banks, fintech, etc.
Mama mbogas and boda bodas is where real work is required.
I imagine Ruto next job will be to go round the country - creating cooperatives - saccos - of all sorts.
After six months - they should be ready to receive hustler fund.
Hustler fund should be exclusively for SMES - lending individuals say max of 200k - otherwise few fatcats will take all the money.
These should target boda, mama mboga, farmers etc

How do you build capital an the bottom of the pyramid? How is Hustler Fund different from Youth Fund Women Fund etc. Your 2 min primer on #BottomUpEconomicsKE finance #ThePlan pic.twitter.com/hj6aZPXhwp

— David Ndii (@DavidNdii) July 30, 2022

Hustle fund will be lending to banks that extends the loans to saccos, saccos formed for the sole purpose of borrowing from the fund. There's no derisking its only that now the fund will absolve the risk that fintechs now undertake.  The question is why are fintech loans so expensive? I'd think its cause of the opacity of borrowers financial status and obviously lack of collateral.
Details are scanty, I hope atleast they drop the sacco aspect, lend to individuals or entities who are already in business

[hk]

Why would you drop cooperatives/saccos?
Retail banking targeting smes have failed - equity bank and others receive billions from some donors for onward lending - but they still charge 20% interest rate.
Banks have failed.
Saccos are engine of our economy...
Hustlers are not comfortable working to banking halls...but are at home in saccos.
Sacco ministry will ensure the sacco build capacity - and improve governances.
Sacco can put in collatoral - individuals cannot.
It also become difficult to manage individuals.
Unless we go fintech - and then we get into re-collection problems.
So saccos de-risk the gov losing it's money - as it attempt to de-risk the lower end borrower.
Individuals and business - have banks, fintech, etc.
Mama mbogas and boda bodas is where real work is required.
I imagine Ruto next job will be to go round the country - creating cooperatives - saccos - of all sorts.
After six months - they should be ready to receive hustler fund.
Hustler fund should be exclusively for SMES - lending individuals say max of 200k - otherwise few fatcats will take all the money.
These should target boda, mama mboga, farmers etc

How do you build capital an the bottom of the pyramid? How is Hustler Fund different from Youth Fund Women Fund etc. Your 2 min primer on #BottomUpEconomicsKE finance #ThePlan pic.twitter.com/hj6aZPXhwp

— David Ndii (@DavidNdii) July 30, 2022

Hustle fund will be lending to banks that extends the loans to saccos, saccos formed for the sole purpose of borrowing from the fund. There's no derisking its only that now the fund will absolve the risk that fintechs now undertake.  The question is why are fintech loans so expensive? I'd think its cause of the opacity of borrowers financial status and obviously lack of collateral.
Details are scanty, I hope atleast they drop the sacco aspect, lend to individuals or entities who are already in business

What collateral would the sacco have if the members aren't contributing anything? The sole purpose of forming the sacco is to borrow from the fund unless I am mistaken. Targeting already existing smes would negate the need to establish saccos. Details is what matters e.g who'd bear the cost of collecting loans? Would the borrows be required to bank with saccos etc . 

[RV Pundit]

I am sure there will be rules that sacco need to meet; banks will be doing risk assessment; I am hoping most of money will go into existing saccos that deal with hustlers; not UN SACCO or Parliament SACCO. In my rural home there are many thriving saccos that lend to tea farmers; those are low hanging fruits; capitalize them; and they will lend to farmers cheaper rate.

SMES - will need to join SACCOs - otherwise it become huge admin overheard - and gov would be forming a bank - not a fund.

I would just channel most of money through COOP Bank - then COOP Bank - will channel to SACCOS - and people can join saccos and apply for the hustler fund. SACCO will demand you bring gurantors.

What collateral would the sacco have if the members aren't contributing anything? The sole purpose of forming the sacco is to borrow from the fund unless I am mistaken. Targeting already existing smes would negate the need to establish saccos. Details is what matters e.g who'd bear the cost of collecting loans? Would the borrows be required to bank with saccos etc . 

[hk]

And the inflation adjustment excise duty increment  nightmare continues https://www.businessdailyafrica.com/bd/economy/inflation-tied-taxes-to-hit-homes-3950356

[Georgesoros]

Inflation is going to get worse before it settles.
This should have been done CAREFULLY, not callously.
How about rents, are they still going up?

[audacityofhope]

I understand that subsidies had to go but they should have been phased out. There is going to be significant inflation near term.
This is the kind of hasty decisions some of us talk about. Its trying to kill beneficiaries of the subsidy but end up destroying the economy.

Anyone thinking hasolas were after cheap fertilizer, when clearly they said they wanted unga @ 70 Bob, better take a look at this.... their actions today were quite clear including that hasola with a double cabin...
Expect more Unga trucks "to flip over" in the coming days and weeks.

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[Georgesoros]

KFA was a great entity that died due to corruption. We used to sell all farming products and they in turn will sell it to others. Same model can be resuscitated. It gives farmers an avenue to sell rather than to the greedy middle men and women.