Kenya will not develop with stories...it will develop by building stuff

[vooke]

[Nefertiti]

vooke - manufacturing is DoA in Kenya with the unions and labor courts. That and the new last-miles to nowhere that ensure power will remain uncompetitive for a decade is toxic combo the Dangotes won't touch with a 10ft pole. Even the Merali Yana Tyres bolted from the Mombasa Road SEZ to Pakistan.

[MOON Ki]

The Kenyan SGR is definitely good for bringing in the results of Chinese productivity etc.   What it has to do with production of anything in Kenya is unclear.   As far as I can tell, what we have that are of interest to others are tea, wild animals, good runners, and perhaps flowers.   I don't see how the SGR will help with any of those.  Perhaps our resident Chief Economist & Developer can give examples of how the shiny SGR is unleashing (or will unleash) hitherto unknown powers to produce anything useful ...

[Nefertiti]

The Kenyan SGR is definitely good for bringing in the results of Chinese productivity etc.   What it has to do with production of anything in Kenya is unclear.   As far as I can tell, what we have that are of interest to others are tea, wild animals, good runners, and perhaps flowers.   I don't see how the SGR will help with any of those.  Perhaps our resident Chief Economist & Developer can give examples of how the shiny SGR is unleashing (or will unleash) hitherto unknown powers to produce anything useful ...

It is whispered in certain western and Sinosceptic quarters that the intent is colonial. To a) easy extract of raw materials for Chinese industry and b) what you point out as easy transit of Chinese imports to Africa - and the Latin Americas plus some Asian countries. Basically Chinaman is the new missionary in the 3rd world.

[MOON Ki]

And we are luckly we have western world with a lot of wealth (debt market is huge) willing to lend as well as Chinese will also to lend.

Really?  Last I heard, Kenyans---and none other than their "leaders"---went to Beijing with an "it's in the bag" attitude and papers ready to sign (according to the Transportation CS) for yet more SGR nonsense.  I understand they were sent home empty-handed and told that even Kung Fu is not that keen on throwing good money after bad.    The luck ran out or what? And is the "western world" now going to step in there?   (I might have missed the news.)

And more important - we do not need to re-invent the wheel - just borrow and build - and then pay slowly for 50-100yrs.

African countries should be thinking of ways to get out of economic enslavement by others, not eagerly rushing into another 50-100 years of it.   

And borrow from who and for what?   A two-billion $ bond, but nobody can tell you what it was used for.  Solution?  Borrow some more.   How dumb can people get.

Once you've build infrastructure - all you do for next 20 - 50 - 100 yrs is to maintain. US electrified in 1930s. They built express ways in 1950s - and all that basic infrastructure still exists. Just few maintenance here and there - for wear and tear.

If so, then Kenya has already failed (and for 60+ years has been failing) Infrastructure 101.   

How long do roads last in Kenya? 

Japan, when it could afford to do so, built SGR lines for "bullet trains" for passengers.   The old narrow-gauge lines, which of course were properly maintained, were simply refurnished and are now used for cargo.   And guess what ... the trains on those are faster than the ones on Kenya's new-and-shiny, debt-inducing SGR.   When the EAC Railway Consortium, which seems to be slowly disintegrating these days,  was coming up with the Grand Plans, their Japanese consultant told them that they didn't need new lines ... just spruce up the old ones and change a few things.   But stupidity or eating opportunities---I still can't tell which--seem to have won.

Before the building of the SGR started, we were endlessly told that using it would be so cheap that everyone and their mutt would willingly rush to use it (over road) and it would also make money.   (The archives of nipate.org has a whole bunch of its share on this, including cost figures that, as I pointed out, were no more than admitted wild guesses by GoK's Canadian consultants.)   Well, here we are today: people are being forced to use it, and there is still no sign that it will make money.

[MOON Ki]

Nobody is dying to go to DRC Congo despite all that wealth buried there. They need to fix their infrastructure first...

Nobody is dying to go DRC for any reason.  Nor should (or will) anybody in his or her right mind ... because people in the DRC are already dying from wanton murders, rapes, larceny, ... whatever "war-time" atrocity  you can think of.   Has been going on for years, with no end in sight.   But, of course, those in power there (the Africans) can always manage to get at some of that wealth and use it to buy whatever they need to continue the mindless mayhem.   Their problems, my friend, have little to do "oh, if only we could borrow some money and have some spanking new roads and rails!".  That's how I see it.   But if you have some ideas on how roads and rails would turn them around, then let's have them.

There is alot of wealth buried underneath 3/4 of kenya that is semi-arid and arid - but nobody will be going to turkana - or mandera - unless we build the roads, the electricity, improve the security, provide water and towns...and then watch investors troop

No shit.   And no SGR to Turkana and Mandera yet?   Can you provide details on this "a lot of wealth"?

By the way, if there is indeed "a lot of wealth" there, but for all these 60+ years Kenyans have been begging abroad and handing themselves over to economic slavery, instead of going to grab that "a lot of wealth", then they are even dumber than is suggested by some of the "development" theories being promoted to justify the SGR.   

[Nefertiti]

Japan, when it could afford to do so, built SGR lines for "bullet trains" for passengers.   The old narrow-gauge lines, which of course were properly maintained, were simply refurnished and are now used for cargo.   And guess what ... the trains on those are faster than the ones on Kenya's new-and-shiny, debt-inducing SGR.   When the EAC Railway Consortium, which seems to be slowly disintegrating these days,  was coming up with the Grand Plans, their Japanese consultant told them that they didn't need new lines ... just spruce up the old ones and change a few things.   But stupidity or eating opportunities---I still can't tell which--seem to have won.

A link to this might convince Pundit, seeing the empirical evidence of the SGR's actual performance won't move him. I'm not holding my breath.

[MOON Ki]

It is whispered in certain western and Sinosceptic quarters that the intent is colonial. To a) easy extract of raw materials for Chinese industry and b) what you point out as easy transit of Chinese imports to Africa - and the Latin Americas plus some Asian countries. Basically Chinaman is the new missionary in the 3rd world.

Both, I think.   With (a) more important than (b), because on a global scale China exports "peanuts" to Africa and does not think Africans have (or will any soon have) the financial capability to change that any time soon.   To my mind, more important than (a) or (b) is the issue of geo-political power for its own sake, something that is really, really important for the Chinese given the way they were in the past brutalized by Western powers and even more by the Japanese.

[MOON Ki]

A link to this might convince Pundit, seeing the empirical evidence of the SGR's actual performance won't move him. I'm not holding my breath.

All in the nipate.org archives.  RV Pundit should easily remember them, because he was the one peddling GoK's financial figures, and I was the one pointing out---with links and what-not----that the base figures were only a "reasonable" guess from the Canadian Consultants.    In any case, one of the things I "admire"about RV Pundit is that he won't allow facts and empirical evidence to get in the way.   That's exactly what is needed for the first rank of cannon fodder ... the clueless "avant garde" ... interesting debate.

Another "famous" bogus "figure": For quite a while there was this claim that the SGR would account for 1.5% annual GDP growth (i.e. almost one-fourth of the annual 6-7%) in perpetuity.   That was another case of an enthusiastic GoK type "misunderstanding" (actually just promoting a questionable/eating venture) and running away with statements from IMF/World-Bank types, which simply had something to do with the loan amounts relative to GDP.  Then, after some feedback, it got dropped from "in perpetuity" to "during construction".   Then it just got totally dropped after the first year of construction. 

Here's why GoK dropped such statements after the first year of SGR construction:   Look at the annual figures from KNBS.   They won't tell you where SGR comes in precisely, but they will tell you it's under "building and construction", which includes a whole bunch of stuff.   For simplicity, just assume that the SGR during construction was 100% of "building and construction" in Kenya.   You will still have serious problems getting to the 1.5%.  Gok types quickly dropped that figure, but they were thrown around on nipate,org for quite some time.   

So, what exactly---as in concrete figures---does the SGR contribute to the economy.   Nobody has a clue.  And, this time, nobody is willing to look silly.   Best guess ... it will pay off in 100-200 years. 

P.S:   While writing the above, I thought I' take a look at latest reports on onwards-and-upwards, as given by the KNBS.   You will find some under the "leading economic indicator reports", here: https://www.knbs.or.ke/data-releases/

In the March 2019 (monthly report), for our latest progress on "Manufacturing, Building, and Construction", we have these highlights (page v):


The quantity of cement produced increased from 470,146 MT in February 2019 to 507,037 MT in March 2019.  Consumption of cement rose from  469,809 MT in February 2019 to 505,465 MT in March 2019. Sugar production decreased from 53,060 Metric tonnes in January 2019 to 46,139 Metric tonnes in February 2019. Production of assembled vehicles decreased from 476 units in November 2018 to 327 units in December 2019. Milk uptake in the formal sector dropped from 46.55 million litres in  February  2019 to 44.03 million litres in March 2019.


A bunch of cement, some assembled vehicles, sugar, and milk.  Sugar and milk.   That's our sort of big-stuff in manufacturing?  And didn't Moi already give us all the  milk---free--that we need?  Still, if people aren't buying more locally produced vehicles, they are at least drinking more milk.   Milk is health is prosperity.  And love, peace , and unity.

And, no, looking at other, earlier, KNBS reports won't yield much happier fare to support anything to do with the SGR ... You will look at the stuff for which "increases"/"decreases" are considered worth reporting, and you will think "Seriously? What the blank! And the story about industrializing or whatever by 2030... The Vision?"

[vooke]

The Kenyan SGR is definitely good for bringing in the results of Chinese productivity etc.   What it has to do with production of anything in Kenya is unclear.   As far as I can tell, what we have that are of interest to others are tea, wild animals, good runners, and perhaps flowers.   I don't see how the SGR will help with any of those.  Perhaps our resident Chief Economist & Developer can give examples of how the shiny SGR is unleashing (or will unleash) hitherto unknown powers to produce anything useful ...

If he was talking of rail lime to Turkana to help convey our tiny oil reserves he'd make  some sense. But the amounts are so small that for once I support Jubilee for not bothering with a pipeline. The truckers probably do just as fine.

If we had good trade surplus like China we could fund all our fantasies debt free. In this case there would be minimal credit risk and zero interest obligations. But we have to borrow in USD finite amounts of expensive credit that are dwindling. Who wants to squander more of their 'last bullet' on nothing but hope that somewhat bogus investments will magically yield returns?

[Kadudu]

Pundit is just living in his own world. If you borrow, you have to pay back. How will Kenya pay back the loans without having the means of production to be able to make revenue to pay back the loans? A classic example is the SGR. Now the government has to come up with terms that reminds people of socialist regimes.

[RV Pundit]

It very silly to imagine that gov exist to make profit or invest like private sector with an eye on productivity and making money. Gov invest in roads so people can drive comfortably - because gov get taxes.

The discourse is simple. Gov can wait to get money from your taxes - and build the roads slowly - like it's doing - now . Or they can leverage - borrow - and build the road now - and pay using your taxes - the debt over a long period of time.

The problem is our gov is borrowing short term - when it can borrow tonnes of money from debt market long term.

We are now in Eurobond - I am saying we need to start going Century Bonds. Ghana is thinking of floating 50B dollar century bond to fix their infrastructure deficit.

If we borrow 100B dollars - for 100yrs - that is merely 1B per annum to be repaid plus interest. Very little money for kenya. SportPesa taxes alone can fix that.

What kind of roads will bomet need - basically tarmac in all the road network - low seal mostly - and I expect to have express way from bomet to Nairobi - I don't expect to stay in jam - I also expect rail line in bomet - I expect a oil pipeline in bomet - I want all schools, hospitals and name them to look like what you have in developed world.

[RV Pundit]

Gov is not like you or me or private sector. Kenya gov will exist for many centuries. There is a lot of free money....see how we get Eurobond without much of a sweat....all we need to do is ask. Ghana are thinking about borrowing 50B Century Bond. Germany build it's infrastructure from such long term debts.

If we borrow 200B - dollars - it mere 2B dollar principal per year - using simple interest...even if you load interest...and compoud it...it not alot of money.

SGR that you're complaining now will still be alive in 2150 or and BEYOND.

Stop thinking SMALL like typical african. Stop thinking SHORT TERM like typical african.

Pundit is just living in his own world. If you borrow, you have to pay back. How will Kenya pay back the loans without having the means of production to be able to make revenue to pay back the loans? A classic example is the SGR. Now the government has to come up with terms that reminds people of socialist regimes.

[RV Pundit]

We cannot start trashing IPP - and international contracts. You're being very very silly. We need to be in good books. That is why we paid Angloleasing to unlock Eurobond. Because we are in good books - we can now borrow century bond like Ghana are thinking.

The issue of power has been dealt with here....we had a problem of access....we need to fix that. There is a lot of upfront investment needed to build the distribution network and make sures that everyone has electricity everywhere.We do not want manufactures in one small corner of the country....we want them everywhere.

Now that we are nearly sorting that problem....we will focus next on COST of POWER....we have excess capacity that we can now sell cheaply....and that is what is happening already with night time tariff.

If you prefer ethiopia - where everyone else is in darkness - a few chinese factories are consuming cheap power - then something is wrong with you. everyone in kenya deserve power...before we go to manufacturers.

[RV Pundit]

You have two options. Use your own money (equity) or leverage someone money & pay interests. If you use your own money - then you'll be building 1km a time...if you borrow...you can fix the issues...enjoy the benefits now.

Please please gov does not exist to make profit. Public investment are for public good. If SGR has for example saved time, energy, accidents, or any other esoteric benefits....it already achieved it's objective. There are more than 3M passenger rides already..zero accidents..zero delays...zero stress...that enjoy air conditioned stress free travel btw nairobi and mombasa. You see tourist lining up in those trains. Life btw Nairobi & Mombasa has become very easy breezy. SGR therefore is already a huge sucess.

Private sector thinking when we have having public investment debate. If gov went around thinking of what is profitable..it would never build anything...because most public investment ROI is doubtful.

Kenya gov owes me a good road, water, electricity and all the basic services. I work hard, make profit and give them % of the money for that.

If he was talking of rail lime to Turkana to help convey our tiny oil reserves he'd make  some sense. But the amounts are so small that for once I support Jubilee for not bothering with a pipeline. The truckers probably do just as fine.

If we had good trade surplus like China we could fund all our fantasies debt free. In this case there would be minimal credit risk and zero interest obligations. But we have to borrow in USD finite amounts of expensive credit that are dwindling. Who wants to squander more of their 'last bullet' on nothing but hope that somewhat bogus investments will magically yield returns?

[RV Pundit]

SGR is great. We have threads to debate that.

All in the nipate.org archives.  RV Pundit should easily remember them, because he was the one peddling GoK's financial figures, and I was the one pointing out---with links and what-not----that the base figures were only a "reasonable" guess from the Canadian Consultants.    In any case, one of the things I "admire"about RV Pundit is that he won't allow facts and empirical evidence to get in the way.   That's exactly what is needed for the first rank of cannon fodder ... the clueless "avant garde" ... interesting debate.

Another "famous" bogus "figure": For quite a while there was this claim that the SGR would account for 1.5% annual GDP growth (i.e. almost one-fourth of the annual 6-7%) in perpetuity.   That was another case of an enthusiastic GoK type "misunderstanding" (actually just promoting a questionable/eating venture) and running away with statements from IMF/World-Bank types, which simply had something to do with the loan amounts relative to GDP.  Then, after some feedback, it got dropped from "in perpetuity" to "during construction".   Then it just got totally dropped after the first year of construction. 

Here's why GoK dropped such statements after the first year of SGR construction:   Look at the annual figures from KNBS.   They won't tell you where SGR comes in precisely, but they will tell you it's under "building and construction", which includes a whole bunch of stuff.   For simplicity, just assume that the SGR during construction was 100% of "building and construction" in Kenya.   You will still have serious problems getting to the 1.5%.  Gok types quickly dropped that figure, but they were thrown around on nipate,org for quite some time.   

So, what exactly---as in concrete figures---does the SGR contribute to the economy.   Nobody has a clue.  And, this time, nobody is willing to look silly.   Best guess ... it will pay off in 100-200 years. 

P.S:   While writing the above, I thought I' take a look at latest reports on onwards-and-upwards, as given by the KNBS.   You will find some under the "leading economic indicator reports", here: https://www.knbs.or.ke/data-releases/

In the March 2019 (monthly report), for our latest progress on "Manufacturing, Building, and Construction", we have these highlights (page v):


The quantity of cement produced increased from 470,146 MT in February 2019 to 507,037 MT in March 2019.  Consumption of cement rose from  469,809 MT in February 2019 to 505,465 MT in March 2019. Sugar production decreased from 53,060 Metric tonnes in January 2019 to 46,139 Metric tonnes in February 2019. Production of assembled vehicles decreased from 476 units in November 2018 to 327 units in December 2019. Milk uptake in the formal sector dropped from 46.55 million litres in  February  2019 to 44.03 million litres in March 2019.


A bunch of cement, some assembled vehicles, sugar, and milk.  Sugar and milk.   That's our sort of big-stuff in manufacturing?  And didn't Moi already give us all the  milk---free--that we need?  Still, if people aren't buying more locally produced vehicles, they are at least drinking more milk.   Milk is health is prosperity.  And love, peace , and unity.

And, no, looking at other, earlier, KNBS reports won't yield much happier fare to support anything to do with the SGR ... You will look at the stuff for which "increases"/"decreases" are considered worth reporting, and you will think "Seriously? What the blank! And the story about industrializing or whatever by 2030... The Vision?"

[vooke]

It very silly to imagine that gov exist to make profit or invest like private sector with an eye on productivity and making money. Gov invest in roads so people can drive comfortably - because gov get taxes.

The discourse is simple. Gov can wait to get money from your taxes - and build the roads slowly - like it's doing - now . Or they can leverage - borrow - and build the road now - and pay using your taxes - the debt over a long period of time.

The problem is our gov is borrowing short term - when it can borrow tonnes of money from debt market long term.

We are now in Eurobond - I am saying we need to start going Century Bonds. Ghana is thinking of floating 50B dollar century bond to fix their infrastructure deficit.

If we borrow 100B dollars - for 100yrs - that is merely 1B per annum to be repaid plus interest. Very little money for kenya. SportPesa taxes alone can fix that.

What kind of roads will bomet need - basically tarmac in all the road network - low seal mostly - and I expect to have express way from bomet to Nairobi - I don't expect to stay in jam - I also expect rail line in bomet - I expect a oil pipeline in bomet - I want all schools, hospitals and name them to look like what you have in developed world.

[vooke]

We cannot start trashing IPP - and international contracts. You're being very very silly. We need to be in good books. That is why we paid Angloleasing to unlock Eurobond. Because we are in good books - we can now borrow century bond like Ghana are thinking.

The issue of power has been dealt with here....we had a problem of access....we need to fix that. There is a lot of upfront investment needed to build the distribution network and make sures that everyone has electricity everywhere.We do not want manufactures in one small corner of the country....we want them everywhere.

Now that we are nearly sorting that problem....we will focus next on COST of POWER....we have excess capacity that we can now sell cheaply....and that is what is happening already with night time tariff.

If you prefer ethiopia - where everyone else is in darkness - a few chinese factories are consuming cheap power - then something is wrong with you. everyone in kenya deserve power...before we go to manufacturers.

[RV Pundit]

Dude you're giving fake examples. We have INFRASTRUCTURE DEFICIT as of now. Yes we need rail to moyale - because trade with Ethiopia - will bring in lots of cheap stuff.  We have LAPSET 22B dollars worth of deficit to plug. We needs rural tarmac roads. We need roads in urban areas.

Our infrastructure deficit is well studied. Google around. I think annually we have about 2-4B dollars of deficit to plug. Borrow 100B dollars..and you plug huge deficit.

[RV Pundit]

But when we want to put in cheap coal plants...enviromentalist go gaga. Our electricity is expensive because we are using expensive sources. Coal is cheap...about 1-2 cents...hydro is cheap..at 3 cents..but we are just in semi-arid region with few rivers..so hyrdo is out.

Anyway this conversation to have now. Put up Coal and Natural Gas plants.....and lower electricity. But first let thermal power IPP run out.

And you cannot just fix power - you need to fix the infrastructure - bad roads, lack of rail, and lack of water & sewage - will make manufacturing impossible.

In short you need to tick many boxes.