Kenya Economy is growing - some people won't like this

[RV Pundit]

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http://www.nation.co.ke/news/Economy-is-growing-Treasury-bosses-say/1056-3867518-q9awo3z/index.html

[hk]

[Georgesoros]

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. Just like the USA economy - yes its growing but the 1% are the beneficiaries. The regular guy works 16hrs but is still stuck.

http://www.nation.co.ke/news/Economy-is-growing-Treasury-bosses-say/1056-3867518-q9awo3z/index.html

[MOON Ki]

I dont doubt the economy is growing.

I too can't see where the news is: the economy has been growing for several years, and it is projected to keep growing for the next few years; is there anybody who is wide awake that needs to be told?   (Is the growth  sufficient for what the country needs?   Is the  the "wealth" being felt all around?  Are Kenyans still begging for food? Those are other matters.)

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.

According to Mr. Mwau, Kenyans are shopping at a "mall like Two Rivers" and also going to Dubai in large numbers.   So, there you have it!

Oh, on the Dubai "proof", Mr. Mwau makes a hopelessly wild and fantastic claim that will no doubt be (and apparently has already been) swallowed by some, given its "authoritative" source:

Kenyans are the second largest visitors to Dubai, other than Indians.

A look at the airport there on a typical day should be enough to dismiss that one.   A look at the government statistics of that country shows that Kenya is nowhere to be found in the list of non-trivial suppliers of tourists.  Better go with just the "they are all at this fancy mall!" line.

[Globalcitizen12]

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

[Globalcitizen12]

Here is the explanation of economics ya mawe and government spending expansion

[RV Pundit]

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.

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

[RV Pundit]

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.

[hk]

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.

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.

[Kadudu]

How dare you compare Kenya's economy to a war torn country like S. Sudan? That cannot be Kenya's measuring scale.

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.

[Empedocles]

Pundi, what say thee about this list:

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.

[hk]

Pundi, what say thee about this list:

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.

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. 

[RV Pundit]

Make sense. M-Akiba in 2-3 years should be mature enough to offer some big competition to banks & intermediaries in bond market. Unless of course banks collude and make nonsense of CBR. I need to check CBK monthly report - see if there has been reduced lending to companies & private households - otherwise this doesn't make sense.

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.

[Globalcitizen12]

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

[RV Pundit]

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.

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

[hk]

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.

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

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.

[Globalcitizen12]

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

[Georgesoros]

There are too many who are govt dependants. Stealing to benefir themselves. Such an ecomnomy will never grow to benefit the middle class. Oligarchs will rule, and like Russia they will set the rules. That is Uhurus economy. 

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

[gout]

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.

[hk]

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?
Rotich had a chance yesterday to do something about private sector growth by either lowering taxes, zero rating capital goods, impairment of depreciating capital goods etc. We need less keynians and more milton friedman type of economics.