Pundit, HK, What’s happening?

[Higgins the genius]

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Everything is going south

[vooke]

This sounds like apocalyptic headliner

[RV Pundit]

Blame Raila hehehe.Honestly the economy is a confidence game.Its the reason why it tanks every election year.Uhuru has failed to inspire that confidence and folks are worried at the future of the country as we head to another 2007.Therefore there is a lot of uncertainty as Uhuru keep his cards close meaning investment is getting delayed or postponed.Even the Chinese are worried and asked Uhuru as much...and without committment.. that rail to nowhere ends in a maize field in Narok.

[RV Pundit]

Uhuru has to come clear on 2022.

[Nefertiti]

Blame Raila hehehe.Honestly the economy is a confidence game.Its the reason why it tanks every election year.Uhuru has failed to inspire that confidence and folks are worried at the future of the country as we head to another 2007.Therefore there is a lot of uncertainty as Uhuru keep his cards close meaning investment is getting delayed or postponed.Even the Chinese are worried and asked Uhuru as much...and without committment.. that rail to nowhere ends in a maize field in Narok.

[hk]

The jubilee regime has been a nightmare for private sector. I think auctioneers are the leading advertisers on local newspapers.  HF auctioning 2B worth of properties is just an indicator that the private sector isn't producing incomes that can afford decent housing. Its amazing the amount of commercial and residential vacancies in Nairobi.(yet we're being told that we have housing deficit, that might be true but the real problem is income deficits). In retail, the big supermarkets are losing market share to neighborhood kiosks . While manufacturers are busy packaging goods in small quantities i.e kadogo economy.
The forex reserves are shrinking cause CBK is busy trying to defend the shilling. Despite the headline GDP numbers economy is struggling and it'll only get worse after government runs out of the ability to spend heavily and keep economy afloat. Treasury main job now is fiscal consolidation. Its the reason why the treasury is hiring experts to manage debt and spending.   

[RV Pundit]

Not true. Jubilee has doubled the economy in 5yrs. It also doubled gov revenues in 5yrs - while kenya effective tax rate is less than EA peers. It has delivered on huge public investment that should help business do better. It had made serious improvement in reducing gov red tape - as captured by Ease of Doing Business. The failure of private sectors are mostly self-inflicted. Counties have similarly changed the fortunes of rural kenya.

The misfortunes of the private sector are down to crony capitalism(Kibaki era favored companies unable to compete as Uhuru companies take over), corruption and mismanagement.

And the rest is the usual negativism. You don't expect all sectors of the economy to do well all the time. But thankfully because we have a very diversified albeit small economy - nobody has felt the hit. Tourism was down, it's now up. It's time for real estate to feel some pain.

The jubilee regime has been a nightmare for private sector. I think auctioneers are the leading advertisers on local newspapers.  HF auctioning 2B worth of properties is just an indicator that the private sector isn't producing incomes that can afford decent housing. Its amazing the amount of commercial and residential vacancies in Nairobi.(yet we're being told that we have housing deficit, that might be true but the real problem is income deficits). In retail, the big supermarkets are losing market share to neighborhood kiosks . While manufacturers are busy packaging goods in small quantities i.e kadogo economy.
The forex reserves are shrinking cause CBK is busy trying to defend the shilling. Despite the headline GDP numbers economy is struggling and it'll only get worse after government runs out of the ability to spend heavily and keep economy afloat. Treasury main job now is fiscal consolidation. Its the reason why the treasury is hiring experts to manage debt and spending.   

[hk]

Not true. Jubilee has doubled the economy in 5yrs. It also doubled gov revenues in 5yrs - while kenya effective tax rate is less than EA peers. It has delivered on huge public investment that should help business do better. It had made serious improvement in reducing gov red tape - as captured by Ease of Doing Business. The failure of private sectors are mostly self-inflicted. Counties have similarly changed the fortunes of rural kenya.

The misfortunes of the private sector are down to crony capitalism(Kibaki era favored companies unable to compete as Uhuru companies take over), corruption and mismanagement.

And the rest is the usual negativism. You don't expect all sectors of the economy to do well all the time. But thankfully because we have a very diversified albeit small economy - nobody has felt the hit. Tourism was down, it's now up. It's time for real estate to feel some pain.

The jubilee regime has been a nightmare for private sector. I think auctioneers are the leading advertisers on local newspapers.  HF auctioning 2B worth of properties is just an indicator that the private sector isn't producing incomes that can afford decent housing. Its amazing the amount of commercial and residential vacancies in Nairobi.(yet we're being told that we have housing deficit, that might be true but the real problem is income deficits). In retail, the big supermarkets are losing market share to neighborhood kiosks . While manufacturers are busy packaging goods in small quantities i.e kadogo economy.
The forex reserves are shrinking cause CBK is busy trying to defend the shilling. Despite the headline GDP numbers economy is struggling and it'll only get worse after government runs out of the ability to spend heavily and keep economy afloat. Treasury main job now is fiscal consolidation. Its the reason why the treasury is hiring experts to manage debt and spending.   

How do you double economy in 5yrs? It'd mean the economy growing at more  than18% per yr. A lie repeated a million times doesn't make it true. Ease of business, those are processes, while good doesn't mean the economic environment has improved. Crony capitalism affects companies doing business with government like transcenctury or rely on government favours. Check out NSE profit warnings and non performing loans on banks books. Check out PMI index, all those are indicators that points to a very weak economy.

[RV Pundit]

To clarify the nominal GDP has doubled. This probably because Kshs has been strong and we have decent growth rate. Not exactly in five years....and not exactly doubled...bu economy has grown from 55B in 2013 to nearly 100B at end of this year. We are now comfortably at nearly 25B dollars every Q.

Taxes have grown from 700B to 1.5B trillion Kshs.

We have had massive public investment in infrastructure - power, roads, rails, rural roads and such. We are seeing massive investment in social spending - education, health, social safety net and related.

Some sectors have down well  - tourism  has turned the corner  - fintech & whole m-pesa ecosystem is kicking arse - horiculure is doing well - remittance ver great. FDI generally has improved.

Private sector that is struggling - we know Banks ( Interest Capping) - and related take down in Real Estate. I blame Uhuru big 4 for slow down of real estate. Retail is fine - Nakumatt & Choppies - went down - and in came South Africans & local supermarkets.

PMI last I checked is back up -54- yes last year - manufacturing had problems - but he crackdown on counterfeit, cheats and the night electricity tariff maybe turning the fortunes of kenya's manufacturing around.Where we have a problem - KSHS is becoming too strong regionally - and TZ/UGs are catching up with us in Manufacturing - yet if we devalue Kshs we will get into trouble because we import a lot and have external debt to worry abou.

NSE  - was Kibaki and died with Kibaki regime. Jubilee really doesn't care about it. NSE has to wait for Jimnah Mbaru or some of those wizards. Kenyattas have not been fun of capital markets - and really our NSE is small part of the economy.

How do you double economy in 5yrs? It'd mean the economy growing at more  than18% per yr. A lie repeated a million times doesn't make it true. Ease of business, those are processes, while good doesn't mean the economic environment has improved. Crony capitalism affects companies doing business with government like transcenctury or rely on government favours. Check out NSE profit warnings and non performing loans on banks books. Check out PMI index, all those are indicators that points to a very weak economy.

[hk]

To clarify the nominal GDP has doubled. This probably because Kshs has been strong and we have decent growth rate. Not exactly in five years....and not exactly doubled...bu economy has grown from 55B in 2013 to nearly 100B at end of this year. We are now comfortably at nearly 25B dollars every Q.

Taxes have grown from 700B to 1.5B trillion Kshs.

We have had massive public investment in infrastructure - power, roads, rails, rural roads and such. We are seeing massive investment in social spending - education, health, social safety net and related.

Some sectors have down well  - tourism  has turned the corner  - fintech & whole m-pesa ecosystem is kicking arse - horiculure is doing well - remittance ver great. FDI generally has improved.

Private sector that is struggling - we know Banks ( Interest Capping) - and related take down in Real Estate. I blame Uhuru big 4 for slow down of real estate. Retail is fine - Nakumatt & Choppies - went down - and in came South Africans & local supermarkets.

PMI last I checked is back up -54- yes last year - manufacturing had problems - but he crackdown on counterfeit, cheats and the night electricity tariff maybe turning the fortunes of kenya's manufacturing around.Where we have a problem - KSHS is becoming too strong regionally - and TZ/UGs are catching up with us in Manufacturing - yet if we devalue Kshs we will get into trouble because we import a lot and have external debt to worry abou.

NSE  - was Kibaki and died with Kibaki regime. Jubilee really doesn't care about it. NSE has to wait for Jimnah Mbaru or some of those wizards. Kenyattas have not been fun of capital markets - and really our NSE is small part of the economy.

How do you double economy in 5yrs? It'd mean the economy growing at more  than18% per yr. A lie repeated a million times doesn't make it true. Ease of business, those are processes, while good doesn't mean the economic environment has improved. Crony capitalism affects companies doing business with government like transcenctury or rely on government favours. Check out NSE profit warnings and non performing loans on banks books. Check out PMI index, all those are indicators that points to a very weak economy.

Those  numbers are all skewed due to heavy public investment driven by borrowing. KRA collection from $7b to $15b, all government payments are pretaxed which enables collection. What matters is organic revenue increment, if government tomorrow ceased spending those numbers would dramatically reduce. Its like has been on stimulus spending for the last 6yrs.
Horticulture is doing well in terms of volume, increase in tonnage but value isn't keeping pace. Tourism is doing well especially the highend segments.

[hk]

Higgins,
If you wanted any more data how terrible the economy is, here it is https://www.businessdailyafrica.com/news/One-in-five-Kenyans-trapped-by-bank/539546-5237376-ka6q2qz/index.html . Unwinding all this to get consumers to a health thriving trajectory will take some serious economic re-engineering.

[hk]

gloomy economic data keeps trickling in https://www.nation.co.ke/business/Inside-the-shocking-job-losses-Kenya-faces/996-5238502-gb8mty/index.html . The informal sector is eating formal sector clear indication the economy isn't producing decent jobs.

[RV Pundit]

Nice problem to have. I'd be worried if we were talking lack of access to credit. Kenya is slowly getting there...look at the best countries to live..household debt to gdp exceed 100%.

Household debt to GDP ratio by December 2018:
Switzerland 128.70
Australia 120.3
Denmark 115.4
Netherlands 102
Canada 100.72
Norway 99.9

Higgins,
If you wanted any more data how terrible the economy is, here it is https://www.businessdailyafrica.com/news/One-in-five-Kenyans-trapped-by-bank/539546-5237376-ka6q2qz/index.html . Unwinding all this to get consumers to a health thriving trajectory will take some serious economic re-engineering.

[hk]

Nice problem to have. I'd be worried if we were talking lack of access to credit. Kenya is slowly getting there...look at the best countries to live..household debt to gdp exceed 100%.

Household debt to GDP ratio by December 2018:
Switzerland 128.70
Australia 120.3
Denmark 115.4
Netherlands 102
Canada 100.72
Norway 99.9

Higgins,
If you wanted any more data how terrible the economy is, here it is https://www.businessdailyafrica.com/news/One-in-five-Kenyans-trapped-by-bank/539546-5237376-ka6q2qz/index.html . Unwinding all this to get consumers to a health thriving trajectory will take some serious economic re-engineering.

You know very well the interest rates of those countries is well below 5%. Let me guess, you'll pontificate that we have to first work on access before we can worry about shylock rates. Private Credit growth in kenya is about 5% and it should about 12% for the economy to grow organically.  So not only are we not getting there, we are actually regressing.

[MOON Ki]

https://www.businessdailyafrica.com/news/One-in-five-Kenyans-trapped-by-bank/539546-5237376-ka6q2qz/index.html . Unwinding all this to get consumers to a health thriving trajectory will take some serious economic re-engineering.

You know very well the interest rates of those countries is well below 5%. Let me guess, you'll pontificate that we have to first work on access before we can worry about shylock rates. Private Credit growth in kenya is about 5% and it should about 12% for the economy to grow organically.  So not only are we not getting there, we are actually regressing.

According to the article:

One in every five borrowers in the country has defaulted on a loan in the past one year, a new survey has established, revealing tough times for households, farmers, business owners and workers hit by the harsh economy.

One in five.  Wow.  It's hard to see how that is a nice problem to have.  What are the default rates in those "best countries" that Kenya is being compared with?

Also:

Two thirds of borrowers in the country have experienced at least two symptoms of debt stress including default.
...
The CBK data paints a picture of households and small traders who are taking loans that they are unable to service.
...
The report also captures businesses that are struggling to stay afloat and others whose operations have grounded to a halt following failure by the national and county governments as well as private sector customers to settle their dues.
...
The study says about 6.5 million Kenyans are digital borrowers with 31 percent taking the cash to try their luck in betting.

Nice problem to have?   In Kenya, I suppose.

[RV Pundit]

Of course, you first worry about access - to credit - then cost of credit. Obviously when inflation here is around 5% - nobody going to lend you - anything less than 10%. Private formal credit growth has credit-capping issues. But I think Fulizas/Branch/Talas are probably filling the gap.

I will be very happy when we get universal banking - everyone in kenya should be able to save and borrow money - not from friends or dukas or relatives like we mostly do - but from banks & credit institutions. We are getting there.....with mobile money, CRBS, behavioral data and all the innovation going on. I hope CBK doesn't regulate this INFANT SECTOR Yet.

Once we have fixed that - let us have this debate about interest rate, inflation, default rate and all those monetary policies issues.

You know very well the interest rates of those countries is well below 5%. Let me guess, you'll pontificate that we have to first work on access before we can worry about shylock rates. Private Credit growth in kenya is about 5% and it should about 12% for the economy to grow organically.  So not only are we not getting there, we are actually regressing.

[RV Pundit]

It's a problem. But it's a first world problem. If you compare kenya now - where people are able to borrow - to say Uganda or Somalia - then you'll see that 4/5 who have not defaulted - were able to use the money - to avoid financial shocks or to start small business or to buy some asset with.

31% borrowing to bet - is obviously a problem - related to betting - and the need probably for more regulation in betting industry. Although gov should just be smart about it - and tax the betting industry - so they can get all these fools money - and re-invest back in social welfare and spending.

https://www.businessdailyafrica.com/news/One-in-five-Kenyans-trapped-by-bank/539546-5237376-ka6q2qz/index.html . Unwinding all this to get consumers to a health thriving trajectory will take some serious economic re-engineering.

You know very well the interest rates of those countries is well below 5%. Let me guess, you'll pontificate that we have to first work on access before we can worry about shylock rates. Private Credit growth in kenya is about 5% and it should about 12% for the economy to grow organically.  So not only are we not getting there, we are actually regressing.

According to the article:

One in every five borrowers in the country has defaulted on a loan in the past one year, a new survey has established, revealing tough times for households, farmers, business owners and workers hit by the harsh economy.

One in five.  Wow.  It's hard to see how that is a nice problem to have.  What are the default rates in those "best countries" that Kenya is being compared with?

Also:

Two thirds of borrowers in the country have experienced at least two symptoms of debt stress including default.
...
The CBK data paints a picture of households and small traders who are taking loans that they are unable to service.
...
The report also captures businesses that are struggling to stay afloat and others whose operations have grounded to a halt following failure by the national and county governments as well as private sector customers to settle their dues.
...
The study says about 6.5 million Kenyans are digital borrowers with 31 percent taking the cash to try their luck in betting.

Nice problem to have?   In Kenya, I suppose.

[MOON Ki]

It's a problem. But it's a first world problem.

I see.  Of course, to really know that, we'd have to look at corresponding figures in the first-world countries.   Would you happen to have those handy?  (And, no, just looking at household-debt:GDP ratio will not do.) 

Anyways ... last I checked Kenya was still a third-world country.    And it's hard to see how the mere fact of a third-world country creating "first-world problems" for itself is helpful at all.   I'd think it much better to first deal with third-world problems (of which Kenya has no shortage), actually get into the first world, and then deal with problems to go with that status.

If you compare kenya now - where people are able to borrow - to say Uganda or Somalia - then you'll see that 4/5 who have not defaulted - were able to use the money - to avoid financial shocks or to start small business or to buy some asset with.

Where can I find the information that would allow me to make a sensible comparison?   The only thing I can tell from the available information is that the 4/5 have not defaulted in the past year.    As to what they did with the loans, I have no idea.   For all I know, it could have been spent on malayas and pombe, but then "paid back" in a timely manner ... probably by borrowing some more.

[RV Pundit]

I choose to celebrate the fact that as of last year 6M Kenyans were able to borrow money (access to credit is key to become first world) digitally. We are basically leapfrogging - and that is how to become first world quickly.

Usage of loan..

35 per cent of Kenyan digital borrowers use digital credit to meet day-to-day household needs while 37 per cent borrow for business reasons.

On Savings...
The report also shows that 46 per cent of digital borrowers in Kenya also save digitally while 18 per cent have never saved digitally.

It's a problem. But it's a first world problem.

I see.  Of course, to really know that, we'd have to look at corresponding figures in the first-world countries.   Would you happen to have those handy?  (And, no, just looking at household-debt:GDP ratio will not do.) 

Anyways ... last I checked Kenya was still a third-world country.    And it's hard to see how the mere fact of a third-world country creating "first-world problems" for itself is helpful at all.   I'd think it much better to first deal with third-world problems (of which Kenya has no shortage), actually get into the first world, and then deal with problems to go with that status.

If you compare kenya now - where people are able to borrow - to say Uganda or Somalia - then you'll see that 4/5 who have not defaulted - were able to use the money - to avoid financial shocks or to start small business or to buy some asset with.

Where can I find the information that would allow me to make a sensible comparison?   The only thing I can tell from the available information is that the 4/5 have not defaulted in the past year.    As to what they did with the loans, I have no idea.   For all I know, it could have been spent on malayas and pombe, but then "paid back" in a timely manner ... probably by borrowing some more.

[RV Pundit]

As you latch on the few negatives - digital loans are helping kenyans fight poverty.
https://docs.google.com/viewerng/viewer?url=https://s3-eu-central-1.amazonaws.com/fsd-circle/wp-content/uploads/2018/10/23160405/Mshwari-Briefs-10-23-18-1.pdf&hl=en_US