State of economy one Dr Ndii

[RV Pundit]

Digital loans are replacing loans from friends, relatives and shopkeeper... and help deal with temporary financial shocks so we should not rush to regulate it.Eventually with good credit scoring the default rate will drop leading to lower interest rate

[Nefertiti]

I agree we shouldn't curtail free flow of capital. But that same freedom apply to bankers going for risk-free TBonds. The runaway rates show the precarious and the paradox in MSME hurrahs about the cap scrap. These lot borrowing at suicidal rates - they are delusional to think banks can lend them at a fraction of that. Tala is fully online credit - no office, no clerks, thin overheads - they are in San Mateo. They could be facing a cliff with reverse of caps - although they operate many countries. Banking is dead. Long live banking.

[RV Pundit]

Fuliza - from Safaricom - in six months - have lend 80B.It's harder for people to default on M-pesa linked - because they have no escape room. For digital loans - I think they need to go for bigger loans - max loan from Branch(Tala) and 50 such - are around 50K (500usd) - so they are micro-loan that are just good for temporary financial stress - but they need to move to say 3-5K usd - and they can challenge the banks.

Anyway all these micro-loans - combined - are lending billions of kshs - possibly 2-3b dollars now - and they just got started.

I agree we shouldn't strangle free flow of capital. The runaway rates show the precarious and the paradox in MSME hurrahs about the cap scrap. These lot borrowing at suicidal rates - they are delusional to think banks can lend them at a fraction of that. Tala is fully online credit - no office, no clerks, thin overheads - they are in San Mateo. They could be facing a cliff with reverse of caps - although they operate many countries. Banking is dead. Long live banking.

[hk]

Gov has no time to really think economics when basics have not be nailed. They need to focus on nailing the basic of what constitutes governance. For instance security is probably top priority investment - otherwise you'll have south africa kind of mess. Obviously most of what gov do is not "economical". The gov should focus on providing governance - and the private sector can grow the profit & the economy.

It a wrong premise to think Gov main job is to grow the economy or provide jobs. It isn't. It citizens job to grow their economies by working harder & smarter - creating SMEs - and eventually big enterprise.

The frustration people have - of current gov - are the same frustration they had in previous gov - because they want gov to do what it cannot do.

That's lovely but this thread is about the economy. We are focused on Ndii's bile and voodoo ideas. Resources are scarce - whether national, county, corporate or personal. So we must flog the strategy horse now and then - hither and thither.

Government cant nail anything without addressing the economy. Where else are you going to get the revenue to "nail the basics"?  At some point loans have to repaid, even if you rollover debt it means you can't borrow more without addressing the economy. By addressing the economy it means not borrowing and spending like drunken sailors, taxing citizen to death and over regulating.

[Nefertiti]

Why the genocidal rates - just cause they can? How do you see reverse of caps impacting Fuliza?

Fuliza - from Safariom - in six months - have lend 80B.It's harder for people to default on M-pesa linked - because they have no escape room. For digital loans - I think they need to go for bigger loans - max loan from Branch(Tala) and 50 such - are around 50K (500usd) - so they are micro-loan that are just good for temporary financial stress - but they need to move to say 3-5K usd - and they can challenge the banks.

[hk]

I agree we shouldn't curtail free flow of capital. But that same freedom apply to bankers going for risk-free TBonds. The runaway rates show the precarious and the paradox in MSME hurrahs about the cap scrap. These lot borrowing at suicidal rates - they are delusional to think banks can lend them at a fraction of that. Tala is fully online credit - no office, no clerks, thin overheads - they are in San Mateo. They could be facing a cliff with reverse of caps - although they operate many countries. Banking is dead. Long live banking.

The dominant players in fintech  in kenya are the banks. KCB, Equity,cooperative and CBA are the main players, actually pure fintech have less than 30% of the marketshare in terms of mobile loan portfolio. Cooperative for example offers 4% month late for up 200k .
Scrapping of interest will ensure SME to gets of between 13% to 20% for sizeable amount from 100k to 1m. The key here is those loans will now be available also the Tbills rates most likely will go up so private sector will soon be attractive customers.

[RV Pundit]

Gov economics should not affect you as private individual beyond the portion you're taxed. How gov borrows or spend should ideally not be our business. Our business should be getting gov services. Assume Gov is Safaricom - you don't care about their internal operations, who and when they borow - all you care about is getting telcom services from them.

And that is where the conversation should start and end. Is gok giving me good roads, electricity, security, education, health and 50 services that both level of gov need to do.

The rest honestly should be finance minister and his team worries - how much debt they need to roll over - when to float eurobond - that is NONE of our business. These technical details about fiscal and monetary policies should be left to treasury wonks to figure out.

Rather than worrying about kenya going broke - we should worry about the very bad roads in your locality. Rather than engaging in pseudo-economics - we should be giving gov hard time because honestly having 20% paved roads is bad - whatever they need to do - I don't care - treasury should figure out - and fund paving of our roads

Once the gov has paved roads, provided me with electricity, water and security - I should no go ask them for jobs. That is not part of 50 gov services - it's not gov mandate to provide jobs - they will employ the civil servants they need to deliver their mandate. Individuals then should till their farms, deliver produces and get paid. Or go to school, acquire skills and look for jobs or start small enterprises.

In short - if you go now and ask people in my county - we will happily vote Jubilee - because we see low seal tarmac everywhere - we see electricity everywhere - we see water (now dead dream) coming - if Rotich overborrowed or didn't stick to fiscal policy or budget deficit mumbo-jumbo is not our business.I also don't care that SGR broke the bank - I care that I am able to travel to Mombasa comfortably and cheaply - and bring my containers stress free.

In short drive conversation from mumbo-jumbo about infrastructure driven economic growth being less optimal - to what do you need from gov? - you need infrastructure - the rest (like underperforming private sector) is our fault. If people are not able to convert all the new shinny roads, electricity to economic benefits and lift themselves out of poverty - the gov cannot do anything.

Government cant nail anything without addressing the economy. Where else are you going to get the revenue to "nail the basics"?  At some point loans have to repaid, even if you rollover debt it means you can't borrow more without addressing the economy. By addressing the economy it means not borrowing and spending like drunken sailors, taxing citizen to death and over regulating.

[RV Pundit]

Rate caps - is only affecting big risky loans- these micro-loans are not kind of loans to be impacted by anything including interest rate - too small. Now rate cap is needed for say someone borrowing 20m to build a flat - that huge risk the bank is taking - so they need to price it at maybe 15-18% - rather than 13% when treasury is borrowing at 10%.

Why the genocidal rates - just cause they can? How do you see reverse of caps impacting Fuliza?

[hk]

Gov economics should not affect you as private individual beyond the portion you're taxed. How gov borrows or spend should ideally not be our business. Our business should be getting gov services. Assume Gov is Safaricom - you don't care about their internal operations, who and when they borow - all you care about is getting telcom services from them.

And that is where the conversation should start and end. Is gok giving me good roads, electricity, security, education, health and 50 services that both level of gov need to do.

The rest honestly should be finance minister and his team worries - how much debt they need to roll over - when to float eurobond - that is NONE of our business. These technical details about fiscal and monetary policies should be left to treasury wonks to figure out.

Rather than worrying about kenya going broke - we should worry about the very bad roads in your locality. Rather than engaging in pseudo-economics - we should be giving gov hard time because honestly having 20% paved roads is bad - whatever they need to do - I don't care - treasury should figure out - and fund paving of our roads

Once the gov has paved roads, provided me with electricity, water and security - I should no go ask them for jobs. That is not part of 50 gov services - it's not gov mandate to provide jobs - they will employ the civil servants they need to deliver their mandate. Individuals then should till their farms, deliver produces and get paid. Or go to school, acquire skills and look for jobs or start small enterprises.

In short - if you go now and ask people in my county - we will happily vote Jubilee - because we see low seal tarmac everywhere - we see electricity everywhere - we see water (now dead dream) coming - if Rotich overborrowed or didn't stick to fiscal policy or budget deficit mumbo-jumbo is not our business.I also don't care that SGR broke the bank - I care that I am able to travel to Mombasa comfortably and cheaply - and bring my containers stress free.

In short drive conversation from mumbo-jumbo about infrastructure driven economic growth being less optimal - to what do you need from gov? - you need infrastructure - the rest (like underperforming private sector) is our fault. If people are not able to convert all the new shinny roads, electricity to economic benefits and lift themselves out of poverty - the gov cannot do anything.

Government cant nail anything without addressing the economy. Where else are you going to get the revenue to "nail the basics"?  At some point loans have to repaid, even if you rollover debt it means you can't borrow more without addressing the economy. By addressing the economy it means not borrowing and spending like drunken sailors, taxing citizen to death and over regulating.

You can't be serious pundit, this is macroeconomics 1:01 , budget deficits and its effects on private sector are real and consequences dire.

[RV Pundit]

Give me road, railway, ports, piped water, modern sewage and f.uck budget deficits & macro-economics. I had rather we became Greece than a poor man worrying about his debt level while living in grass thatched house (micro-economics 101).

Th talk about macro-economics are a conversation to be had in the developed world...where people wait for fed rate like their life depend on it..because they already fixed the basics...and are just optimizing.

Here in 3rd world our conversation should be on infrastructure, housing and all sorts of deficits. We should be angry to about really bad roads.

You can't be serious pundit, this is macroeconomics 1:01 , budget deficits and its effects on private sector are real and consequences dire.

[hk]

Give me road, railway, ports, piped water, modern sewage and f.uck budget deficits & macro-economics. I had rather we became Greece than a poor man worrying about his debt level while living in grass thatched house (micro-economics 101).

Th talk about macro-economics are a conversation to be had in the developed world...where people wait for fed rate like their life depend on it..because they already fixed the basics...and are just optimizing.

Here in 3rd world our conversation should be on infrastructure, housing and all sorts of deficits. We should be angry to about really bad roads.

You can't be serious pundit, this is macroeconomics 1:01 , budget deficits and its effects on private sector are real and consequences dire.

With those budget deficits you are guranteed that the poor man living in thatched house will be in that house for almost entinity with idle electricity connection and tarmacked road which would be underutilized and finally fall into disrepair.  Economics is fickle bitch.

[Nefertiti]

I agree with Pundit about infra - gov should build as much as possible - as frugally or optimally as possible. Private enterprises need to re-invent themselves as the capital market evolves into VCs and whatnot. Tala and Branch are from Silicon or Wadi Valley or London. As MSMEs adapt to new capital models - as the demographic, digital and infra dividends kick in - VCs will pour in. Heck Goldman Sachs is here. Private sector will cry for now but GoK should not dither on laying down steel and gravel.

[Pragmatic]

@Robina, there is someone who agrees with you on the impact of these genocidal rates..... Prof. Bateman holds some very radical views that Mpesa has not really been of benefit to bottom of the pyramid who it was meant to impact... sample this:-

".....Re-evaluating Kenya's M-Pesa mobile money platform

As time goes by, the claims made on behalf of M-Pesa as an innovative poverty reduction and local development engine in Africa, notably by US-based economists Tavneet Suri and William Jack, are now looking rather silly. Though investors and CEOs are beginning to make out like bandits, as expected, we argue that fintech is emerging as a hugely problematic technology for the poor. Unless fintech is brought to heel and embedded in pro-poor structures and institutions, the long-term damage to the poor is likely going to be significant. The rapidly proliferating community- and cooperatively-owned local alternatives to Uber, for example, show why it should be done and how it can be done....."

I have interacted with him, he holds very contrary views on the benefits of Mpesa and especially doesn't believe that it has been beneficial to bottom of the pyramid, especially on the very debilitating rates like the tula's, fuliza's etc.. On the contrary i have argued that the wholesome impact of ease of exchange of money has an enormous positive impact and ripple effect to emerging economies especially where banking was not very well established. He still won't be convinced and i let him be!

You can read more of this article here.... https://africasacountry.com/2019/10/kenyas-mobile-money-revolution

Why the genocidal rates - just cause they can? How do you see reverse of caps impacting Fuliza?

Fuliza - from Safariom - in six months - have lend 80B.It's harder for people to default on M-pesa linked - because they have no escape room. For digital loans - I think they need to go for bigger loans - max loan from Branch(Tala) and 50 such - are around 50K (500usd) - so they are micro-loan that are just good for temporary financial stress - but they need to move to say 3-5K usd - and they can challenge the banks.

[RV Pundit]

Now we are talking - gov should continue with infrastructure-led-jobless-incomeless -growth - once you lay infrastructure - it done and dusted. You just maintain. You don't find a lot of digging around going on in developed world. The expressways built by Eisneguy (forget his name) are still the engine of growth in US. The rail network laid in 17th and 18th century still running. Gok at our level is about steel and cement - the software issues will come later.

I agree with Pundit about infra - gov should build as much as possible - as frugally or optimally as possible. Private enterprises need to re-invent themselves as the capital market evolves into VCs and whatnot. Tala and Branch are from Silicon or Wadi Valley or London. As MSMEs adapt to new capital models - as the demographic, digital and infra dividends kick in - VCs will pour in. Heck Goldman Sachs is here. Private sector will cry for now but GoK should not dither on laying down steel and gravel.

[Nefertiti]

M-Pesa the patform business is excellent multiplier effect. It creates true financial inclusion by banking the unbankable. It's the shylock M-Shwari and Talas that are bad. The M-Pesa ecosystem of Bodas, Ubers,  chamas is marvelous. There has been no grander invention in Kenya. Of course they should hire me and another MJ short of that. The Tusker dwarf I have many doubts over he.

M-Pesa is IaaS - an innovation highway. Zamunda global ambassador you should be proud. In the past you were merely known for Kipchoge - now mzungu hear Kenya and think M-Pesa innovation. Unlocks so many avenues for small man all the way up. With ringtone and cake sellers all over. You cam argue it better or more impactful than Facebook or WhatsApp for local folks. If they had nailed fintial - social fintech - with Zwuup! - they would easily eclipse Libra.

@Robina, there is someone who agrees with you on the impact of these genocidal rates..... Prof. Bateman holds some very radical views that Mpesa has not really been of benefit to bottom of the pyramid who it was meant to impact... sample this:-

".....Re-evaluating Kenya's M-Pesa mobile money platform

As time goes by, the claims made on behalf of M-Pesa as an innovative poverty reduction and local development engine in Africa, notably by US-based economists Tavneet Suri and William Jack, are now looking rather silly. Though investors and CEOs are beginning to make out like bandits, as expected, we argue that fintech is emerging as a hugely problematic technology for the poor. Unless fintech is brought to heel and embedded in pro-poor structures and institutions, the long-term damage to the poor is likely going to be significant. The rapidly proliferating community- and cooperatively-owned local alternatives to Uber, for example, show why it should be done and how it can be done....."

I have interacted with him, he holds very contrary views on the benefits of Mpesa and especially doesn't believe that it has been beneficial to bottom of the pyramid, especially on the very debilitating rates like the tula's, fuliza's etc.. On the contrary i have argued that the wholesome impact of ease of exchange of money has an enormous positive impact and ripple effect to emerging economies especially where banking was not very well established. He still won't be convinced and i let him be!

You can read more of this article here.... https://africasacountry.com/2019/10/kenyas-mobile-money-revolution

[hk]

Now we are talking - gov should continue with infrastructure-led-jobless-incomeless -growth - once you lay infrastructure - it done and dusted. You just maintain. You don't find a lot of digging around going on in developed world. The expressways built by Eisneguy (forget his name) are still the engine of growth in US. The rail network laid in 17th and 18th century still running. Gok at our level is about steel and cement - the software issues will come later.

I agree with Pundit about infra - gov should build as much as possible - as frugally or optimally as possible. Private enterprises need to re-invent themselves as the capital market evolves into VCs and whatnot. Tala and Branch are from Silicon or Wadi Valley or London. As MSMEs adapt to new capital models - as the demographic, digital and infra dividends kick in - VCs will pour in. Heck Goldman Sachs is here. Private sector will cry for now but GoK should not dither on laying down steel and gravel.

Pundit Eisenhower freeway system was self financed by gas taxes and motor vehicle taxes. Actually Eisenhower stipulated that the  freeway funding not to add to budget deficits. If all the roads were being constructed by the ridiculously high taxes we pay for petrol and excise duty on cars and those funds being ring-fenced, that would be perfect. Eisenhower created highway trust fund and the freeways were being built as "pay as you go".

[RV Pundit]

The point is those freeways once constructed will last many years with occasional repair and maintenance.Whatever the financing model we adopt we need to bridge our infrastructure deficit.My proposal is we should not burden the current generation with taxes or levies..we are building for the future...we should borrow 50 or 100 yr century bonds. .and once & for all bridge our deficit.We can borrow 50 or 100B...and go into massive road,rail,power, water, irrigation, schools, colleges and whatever need some cement & steel poured.We then close that chapter and let future generations repay the loan.The short termism of Kibaki that gov should spur the little economy and the growth will trickle down is absolutely cowardly and lack of ambition.We have to dream as big as people who built those huge freeways when US had few cars or what Chinese are doing.. building for the future.

[Nefertiti]

I also see the timing as perfect.. Kenya is approaching the demographic dividend. This infra investment will pan out. Silicon Valley and California must have been here 1930. China 1980. The short term view is cashflow - SMB or private sector capital crunch - long-term looks good. As manpower turns the corner - it a big synergy with the global taps flowing in. Such breakneck scale would have been overkill in the 90s - but now it can be a leapfrog. Big potential - the stars are lining up.

The point is those freeways once constructed will last many years with occasional repair and maintenance.Whatever the financing model we adopt we need to bridge our infrastructure deficit.My proposal is we should not burden the current generation with taxes or levies..we are building for the future...we should borrow 50 or 100 yr century bonds. .and once & for all bridge our deficit.We can borrow 50 or 100B...and go into massive road,rail,power, water, irrigation, schools, colleges and whatever need some cement & steel poured.We then close that chapter and let future generations repay the loan.The short termism of Kibaki that gov should spur the little economy and the growth will trickle down is absolutely cowardly and lack of ambition.We have to dream as big as people who built those huge freeways when US had few cars or what Chinese are doing.. building for the future.

[RV Pundit]

We are alteast 6yrs before we get demographic transition- but well part of the country like central already transition to more adults than kids.

Yes I agree - our private sector need to be as aggressive, imaginative and innovative as public sector in getting capital. We use to berate public sector for lack of investment but ever since China happens, Afdb, Eurobond - there is no shortage of funds - we can borrow or leverage.

The private sector should know there is almost bottomless low interest money available out  there - they just need to borrow. Tech & Energy sectors are doing great - tapping into the money. I don't see the real estate & construction doing the same - plus so many other sectors.We don't have to relie on commercial banks for borrowing.What is stopping say our retail & wholesale sector(super-market) from taping into global finances?

I also see the timing as perfect.. Kenya is approaching the demographic dividend. This infra investment will pan out. Silicon Valley and California must have been here 1930. China 1980. The short term view is cashflow - SMB or private sector capital crunch - long-term looks good. As manpower turns the corner - it a big synergy with the global taps flowing in. Such breakneck scale would have been overkill in the 90s - but now it can be a leapfrog. Big potential - the stars are lining up.

The point is those freeways once constructed will last many years with occasional repair and maintenance.Whatever the financing model we adopt we need to bridge our infrastructure deficit.My proposal is we should not burden the current generation with taxes or levies..we are building for the future...we should borrow 50 or 100 yr century bonds. .and once & for all bridge our deficit.We can borrow 50 or 100B...and go into massive road,rail,power, water, irrigation, schools, colleges and whatever need some cement & steel poured.We then close that chapter and let future generations repay the loan.The short termism of Kibaki that gov should spur the little economy and the growth will trickle down is absolutely cowardly and lack of ambition.We have to dream as big as people who built those huge freeways when US had few cars or what Chinese are doing.. building for the future.

[Nefertiti]

Entitled with low ambition. Many businesses think GoK or banks owe them capital. Which is just silly. It is your business - it is your job to hunt for resources. They also think small - so you see a company like say Virtual City or Seven Seas or Craft Silicon - or even Cellulant - they think $50m is heaven. Of course it isn't - cause you need that size of seed to get off the ground - properly scale fast & furious. They don;t look global. Cellulant you can see is a barely successful business - but they are 15 years old "start-up" only in a handful of African countries. While Uber , Stripe are 10 years old and global - with billions in VC. Folks like Safcom think they are big - with less than a B in the bank. Building tech like satellite or buying out startups is a big deal for them - it out of their small mental box. They are such a tiny company with slow, uninspiring ideas and vision.

If you look at McKinsey reports across the board and  compare - typically if you do an analysis of a SMB in the west - you find there is about 5 to 10% headroom for optimization at best. In Kenya - the KQ report made my jaw drop - with 200% room for improvement. Very inefficient business. Safcom would think you're crazy if you ask them to do an external SWOT. They are so successful, right?

GoK borrowing big and beating private sector is good - even Safcom should be declared monopoly for their own good. These spoilt brats need tough love.

We are alteast 6yrs before we get demographic transition- but well part of the country like central already transition to more adults than kids.

Yes I agree - our private sector need to be as aggressive, imaginative and innovative as public sector in getting capital. We use to berate public sector for lack of investment but ever since China happens, Afdb, Eurobond - there is no shortage of funds - we can borrow or leverage.

The private sector should know there is almost bottomless low interest money available out  there - they just need to borrow. Tech & Energy sectors are doing great - tapping into the money. I don't see the real estate & construction doing the same - plus so many other sectors.We don't have to relie on commercial banks for borrowing.What is stopping say our retail & wholesale sector(super-market) from taping into global finances?