David Ndii Will Be Ruto's Nail in the coffin

[Higgins the genius]

I have a problem buying an argument that an Africa gov that has yet to even civilize the whole of it should spend less.

Kenya gov should match the private sector in public investment of roads, dams, etc.

Until we are developed; there should be no argument; a paved road opens up the private economy.

I only agree that we should be careful on what how we spend - not fancy airports.

I also agree that public sector need to be TRIMMED thro privatization - the 700 or 300 SOES - we dont need them.

Once gov has trimmed all these extra fats - let them focus on BASIC INFRA, SOCIAL UTILITIES like Education, etc.

The problem(disease) with kenya economy is government spending with symptoms being high tax rates, debts, pending bills, huge budget deficits and finally cash crunch. Its a fallacy that if pending bills were cleared cash crunch would be resolved. Demand side policy only offer short term stimulus e.g payment of pending bills. The aggregate demand of kenya economy is distorted by heavy government spending that's now affecting consumption and investment.  Government is single biggest buyer but in aggregate demand government in most healthy developing countries accounts for less than 15%. The rest is private sector, 80% is what needs to be robust to ease cash crunch, create jobs and build wealth.
Basically we're unwinding from LPO driven economy to production to and consumption. The era of supplier who only supply to government or parastals is over, government cant be the sole purchaser of any business. Government paying bills so that to collect taxes amounts to changing money from one pocket to the other.

The question is proportion, Striking the right balance is what ensures that a country actually develops. Mind you there's no government economy and private sector economy. And basic economics is allocation of scarce resources. Its the allocation that determines economic growth.
Privatization would be most welcome but the government only intended to raise 10b in the current round of privatization, 10b and 4tr budget isn't even a drop in the ocean. The best option today for the current economic situation would be to shut down SOEs that're depended on government funding and to starve the government by cutting taxes, renegotiate IMF & world bank loans.

If we are getting 10 Billion and passing on the liability then that's OK.

[hk]

If we are getting 10 Billion and passing on the liability then that's OK.

I'd agree but if the purpose is to raise funds to finance budget, clearly 10b is peanuts. To start with we should stop funding of any organization which can't self sustain. This are the big huge cuts that are necessary. And remove all the more 100 levies applied to different industries.

[gout]

The basics are well basic!

The public debt like Eurobonds which explains government spending contributed 10% of growth but is now taking 70% of everything in the economy. The squeeze on household consumption cannot be solved by X spaces or NADCO.

https://www.economicshelp.org/blog/245/readers-questions/ad-c-i-g-x-m/

Household consumption is the main driver of aggregate demand in Kenya. Between 2005 and 2018, household consumption contributed an average of 62.5 per cent to real GDP growth (Figure 2.18). The contribution increased from an average of 42.1 per cent in 2005-2006 to an average of 84.2 per cent in 2015-2016, before declining to an average 64.3 per cent in 2017-2018. Government
consumption explained an average of 11.3 per cent of the growth in 2005-2006, increasing to 23.7 per cent in 2015-2016 as a result of implementation of the new Constitution which led to roll-out of devolution.

Investments were largely dominated by public investments. Public spending on infrastructure accounted for 10.1 per cent of the growth in the period 2005 and 2018. However, there was a significant decline in investments in 2016 due to substantial decline in investments in transport equipment, civil works and residential buildings. Net foreign demand (net exports) has remained negative. It averaged -18.5 per cent between 2005 and 2018. However, in 2015 and 2016, there was significant increase in exports and decline in imports
growth, resulting in positive net exports. The drop in imports was driven by slow growth in value of imports in 2015 and a decline in importation of transport equipment in 2016.

https://kippra.or.ke/wp-content/uploads/2021/02/Kenya-Economic-Report-2020.pdf