lootalluhurunomics Loan defaults Mount

[RV Pundit]

Countries like Ethiopia have grown due to public sector investments. IMF and WB have berated Kenya for long for running a single-engine growth based on private sector and here comes Jubilee - and they add another engine - and we saw economy grow and transformations. It not true gov has crowded funding - Jubilee borrowed from China and Eurobond. And to their credit - unlike Kibaki who privatize the economy - Jubilee did not sell any public assets.If Kimunya had continued - we would have outsized private sector and small ineffective public sector. Public investment on roads and such are not wasted.

When it comes to politics - people know when economy is being mismanaged like now - and when it doing well. Jubilee grew their support from 50% to 55% because folks could see the economic duo deliver.

We need public investment - more than ever - because at our level of under-development - we need to do BASICS first.

Investing in the small private sector on the marginal gains territory is sure ticket to under-development as the Ethiopians pass us.

All 3 sectors should be firing in all cylinders but since government controls the other 2 when that malfunctions it immediately affects the other 2. The effects of budget deficit start being felt after the credit market freezes(or interest rise), limit on taxation is met or tax collection takes a nose dive. Kenya economy is experiencing all three.  Kenya economy started faltering way back in 2016, that's when government started crowding out the private sector. The economy has been kept afloat by more borrowing and spending but now the bill is due.
Things like universal electricity connections, SGR, fake fertilizers, overpriced rds, dams, huduma number etc are what decimated the economy even before the virus. All this were initiated in jubilee 1.0.
BBI and Raila has had zero effect on the economy, the skunk that's jubilee economy belong to the duo.

[hk]

Countries like Ethiopia have grown due to public sector investments. IMF and WB have berated Kenya for long for running a single-engine growth based on private sector and here comes Jubilee - and they add another engine - and we saw economy grow and transformations. It not true gov has crowded funding - Jubilee borrowed from China and Eurobond. And to their credit - unlike Kibaki who privatize the economy - Jubilee did not sell any public assets.If Kimunya had continued - we would have outsized private sector and small ineffective public sector. Public investment on roads and such are not wasted.

When it comes to politics - people know when economy is being mismanaged like now - and when it doing well. Jubilee grew their support from 50% to 55% because folks could see the economic duo deliver.

We need public investment - more than ever - because at our level of under-development - we need to do BASICS first.

Investing in the small private sector on the marginal gains territory is sure ticket to under-development as the Ethiopians pass us.

All 3 sectors should be firing in all cylinders but since government controls the other 2 when that malfunctions it immediately affects the other 2. The effects of budget deficit start being felt after the credit market freezes(or interest rise), limit on taxation is met or tax collection takes a nose dive. Kenya economy is experiencing all three.  Kenya economy started faltering way back in 2016, that's when government started crowding out the private sector. The economy has been kept afloat by more borrowing and spending but now the bill is due.
Things like universal electricity connections, SGR, fake fertilizers, overpriced rds, dams, huduma number etc are what decimated the economy even before the virus. All this were initiated in jubilee 1.0.
BBI and Raila has had zero effect on the economy, the skunk that's jubilee economy belong to the duo.

Where is ethiopia now? Infrastructure development without increase in productivity of people and businesses isn't sustainable. It's the reason why Ethiopia had to renegotiate debt, seek bailout and promise to liberalize. Public investments don't produce enough proceeds in taxation revenue to pay back debt.  Jubilee government literally doubled local borrowing immediately in 2014 at the same time they doubled kenyan's budget.  Kippra and even treasury showed that government contribution to gdp growth accounted to more than 25%.  No wonder we had asset bubble in real estate.

[KenyanPlato]

You should see those emaciated promos dying trying to trek to Djibouti and saudi arabia ...It is a shame what those trygerian idiots heave done

[Dear Mami]

BBI and Raila has had zero effect on the economy, the skunk that's jubilee economy belong to the duo.

Thank you. I don't know what kanywaji they serve in Mavoko but Pundit should change his fav drinking joint if he thinks any idiot will buy his confused story about how the economy tanked under hawa 'wakula nyama' braggarts.

[Georgesoros]

Jubilee economics plus corona virus effects == recession.  The stupidity of the fiscal irresponsibility under jubilee means the country is ill prepared or capable to cope with external shocks. The only bright spot is low crude prices, but consumers wont get the full relieve cause the sector is highly regulated.

HK. WTF have you been man?
Things will get really bad before they stablize.

[hk]

Kenya looking for a bailout just to stabilize https://www.standardmedia.co.ke/business/article/2001365539/broke-kenya-now-turns-to-donors-for-sh122b , $1.15b.  This money is likely to be wasted on vanity projects.  This would be the time to do painful structural changes in the entire economy. Kenya has to reschedule all its external loans or default. The budget has  to be slashed by half. This is the moment to shut down parastatals and regulatory authority that gobble up taxpayers money. Since most of kenya economy is informal the most effective taxes to reduce would be excise tax and vat.

[RV Pundit]

Who has the money in this enviroment to donate? GoK is joking. Yes debt rescheduling will work - but we aint getting much donor funding. IMF and WB may not be able to bail this out. Time for China to step up. This indeed is time to let those loose making gov owned co-orporation go under..KBC, KQ, Mumias, Uchumi, name them....use this as excuse to let them go...privatize them for a dollar each.

Let pray Kshs:) that will cause chaos.

Tax cuts on some industries like tourism - may make sense.

Kenya looking for a bailout just to stabilize https://www.standardmedia.co.ke/business/article/2001365539/broke-kenya-now-turns-to-donors-for-sh122b , $1.15b.  This money is likely to be wasted on vanity projects.  This would be the time to do painful structural changes in the entire economy. Kenya has to reschedule all its external loans or default. The budget has  to be slashed by half. This is the moment to shut down parastatals and regulatory authority that gobble up taxpayers money. Since most of kenya economy is informal the most effective taxes to reduce would be excise tax and vat.

[hk]

Uhuru's economic rescue plan
1, 100 percent tax relief for persons earning gross monthly income of up to Ksh. 24,000.
2, Reduction of Income Tax Rate (Pay-As-You-Earn) from 30 percent to 25 percent.

3,Reduction of Resident Income Tax (Corporation Tax) from 30 percent to 25 percent;
4,Reduction of the turnover tax rate from the current 3 percent to 1percent for all Micro, Small and Medium Enterprises (MSMEs);
5,Appropriation of an additional Ksh. 10 Billion to the elderly, orphans and other vulnerable members of our society through cash-transfers by the Ministry of Labour and Social Protection, to cushion them from the adverse economic effects of the Covid-19 pandemic;
6,Temporary suspension of the listing with Credit Reference Bureaus (CRB) of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account fall overdue or is in arrears, effective 1st April, 2020.
7,The National Treasury shall cause immediate reduction of the VAT from 16 percent to 14 percent, effective April 1, 2020;

This proposals will have very minimal impact on the economy. Most of kenya economy is informal and the only thing that touches on the informal economy is reduction of vat and tot but by measly 2%. This would have been the appropriate time to go on massive cost cutting of all the unnecessary expenditure, shutting down moribund parastatals, cutting down on regulations and regulations levies. Rescheduling debt repayments and if there's money available to address the demand side of the equation.  The tokenism of  executive taking a paycut yields nothing.   

[RV Pundit]

Chinese need to step up and takes some responsibility for this...and use some of their trillions in savings to rescue the global economy.What is needed is to send anybody identified to be living in a slum or poverty some mpesa every week or day to buy food.300 she per day sent to 10m informally employed  about a billion dollars monthly.... the money should come from taxing the rich more...not less.That billion dollars is cost of keeping 10m households locked down for a month.Without that the poor will continue eking a living and will refuse to lockdown or start looting.

[hk]

Chinese need to step up and takes some responsibility for this...and use some of their trillions in savings to rescue the global economy.What is needed is to send anybody identified to be living in a slum or poverty some mpesa every week or day to buy food.300 she per day sent to 10m informally employed  about a billion dollars monthly.... the money should come from taxing the rich more...not less.That billion dollars is cost of keeping 10m households locked down for a month.Without that the poor will continue eking a living and will refuse to lockdown or start looting.

The problem with the economy is demand, taxing anyone more now would for sure push the economy from recession to depression. Also there's not enough "rich people" to tax to raise enough funds to create a fund to support businesses and poor people.  The few people with disposable income should be encouraged to spend to support the economy.  The only option for government is to crawl back non essential funds allocated to ministries. Also to halt all foreign debt repayments.  Then on the supply side to cut taxes that informal sector pays, i.e vat and excise tax.
Out of curiosity, since Ruto controls parliament with some of his key lieutenants heading key committees(Ichungwa), does he have any plan or is he in agreement with uhuru's proposal?

[RV Pundit]

You're a trickle-down economist dyed in the wool-like Kibaki. I think I am more the pragmatic solution guy. I am interested in solving the problem we have now and dealing with consequences. We have the problem of locking down 10M households -- majority living from hand to mouth. Close home - my sister - just called me wondering what we will do with my father workers who live hand to mouth - when no tea plucking is going.

Once we have dealt with diseases - we can talk about the economy. Dolling out incentive when you're at war with disease is STUPIDITY !01.

Uhuru long lost it.

What is needed as we prepare for lock-down is to think about 10M poor people who need food, shelter, and water?

The problem with the economy is demand, taxing anyone more now would for sure push the economy from recession to depression. Also there's not enough "rich people" to tax to raise enough funds to create a fund to support businesses and poor people.  The few people with disposable income should be encouraged to spend to support the economy.  The only option for government is to crawl back non essential funds allocated to ministries. Also to halt all foreign debt repayments.  Then on the supply side to cut taxes that informal sector pays, i.e vat and excise tax.
Out of curiosity, since Ruto controls parliament with some of his key lieutenants heading key committees(Ichungwa), does he have any plan or is he in agreement with uhuru's proposal?

[hk]

You're a trickle-down economist dyed in the wool-like Kibaki. I think I am more the pragmatic solution guy. I am interested in solving the problem we have now and dealing with consequences. We have the problem of locking down 10M households -- majority living from hand to mouth. Close home - my sister - just called me wondering what we will do with my father workers who live hand to mouth - when no tea plucking is going.

Once we have dealt with diseases - we can talk about the economy. Dolling out incentive when you're at war with disease is STUPIDITY !01.

Uhuru long lost it.

What is needed as we prepare for lock-down is to think about 10M poor people who need food, shelter, and water?

The problem with the economy is demand, taxing anyone more now would for sure push the economy from recession to depression. Also there's not enough "rich people" to tax to raise enough funds to create a fund to support businesses and poor people.  The few people with disposable income should be encouraged to spend to support the economy.  The only option for government is to crawl back non essential funds allocated to ministries. Also to halt all foreign debt repayments.  Then on the supply side to cut taxes that informal sector pays, i.e vat and excise tax.
Out of curiosity, since Ruto controls parliament with some of his key lieutenants heading key committees(Ichungwa), does he have any plan or is he in agreement with uhuru's proposal?

So your suggestion of taxing the rich is the solution? So how are you going to fund the poor 10m people? Your suggestion of taxing the rich is just laughable at this juncture, the economy is in free fall and you want to increase taxes? Its similar to the tokenism in uhuru proposal of cutting executive pay.  The solution is to cut expenditure to get funds to sustain the poor 10m (that's the demand side) and at the same time cut taxes that're paid by the poor 10m that's vat and mainly excise tax (supply side). You have a very pedestrian view of the economy.

[RV Pundit]

How will cut taxes translated to food for kibera residents? How long will you as business man trickle down the benefits. You need to understand we have about 35% of kenyans who are poor - with about 15-17M - extremely poor. The rural farming poor are okay. The urban poor are in serious problem now - and they will cause chaos.

My solution is simple - gov should provide food for them - and how it does it - could literally include trucking food - or somehow finding out how to quickly roll out a welfare system.

Whatever is budgeted and is in account - can be used to fund these urban poor.

Once this war is over - lets talk the economy.

So your suggestion of taxing the rich is the solution? So how are you going to fund the poor 10m people? Your suggestion of taxing the rich is just laughable at this juncture, the economy is in free fall and you want to increase taxes? Its similar to the tokenism in uhuru proposal of cutting executive pay.  The solution is to cut expenditure to get funds to sustain the poor 10m (that's the demand side) and at the same time cut taxes that're paid by the poor 10m that's vat and mainly excise tax (supply side). You have a very pedestrian view of the economy.

[Dear Mami]

How will cut taxes translated to food for kibera residents? How long will you as business man trickle down the benefits. You need to understand we have about 35% of kenyans who are poor - with about 15-17M - extremely poor. The rural farming poor are okay. The urban poor are in serious problem now - and they will cause chaos.

My solution is simple - gov should provide food for them - and how it does it - could literally include trucking food - or somehow finding out how to quickly roll out a welfare system.

Whatever is budgeted and is in account - can be used to fund these urban poor.

Once this war is over - lets talk the economy.

So your suggestion of taxing the rich is the solution? So how are you going to fund the poor 10m people? Your suggestion of taxing the rich is just laughable at this juncture, the economy is in free fall and you want to increase taxes? Its similar to the tokenism in uhuru proposal of cutting executive pay.  The solution is to cut expenditure to get funds to sustain the poor 10m (that's the demand side) and at the same time cut taxes that're paid by the poor 10m that's vat and mainly excise tax (supply side). You have a very pedestrian view of the economy.

100% agreed. I do not understand the notion that cutting taxes for the rich is helpful when the most hard-hit are poor people who rely on daily wages/earnings which have suddenly been stripped away. People without food stocks and sanitizers hoarded in a panic. It's situations like this that expose the sheer immorality of capitalism unmitigated by robust social programs.

The govt can either provide food or end lock-down and replace it with other strategies like no showing up in public without a mask, no entering Mats, markets, etc before washing hands, maintain 1 m distance from others, no public gatherings, and enforce these everywhere with security people like we did when we started checking for terrorists at every entrance. Otherwise, this is a joke and is unsustainable. Where the govt will find the food, I don't care, but they either provide it or end the lock-down. No two ways about it. People have to eat, no buts/ifs/negotiations.

[RV Pundit]

Precisely. Some of these copy-cat measures work well in west - but in Kenya - unless people bail out to rural areas - and then kill the economy - we cannot have a lockdown. I prefer commonsense - than all mumbo-jumbo that idiotic Uhuru is talking about parading CBK governor to talk about interest rates or 4G internet. It akin to French Queen who invited a revolution by asking why the people were not eating cake if bread was not available.

We know people in our families or workplaces who survive hand to mouth - they need solutions - or they will start to loot or steal. The thousands who trek daily from slums to look for jobs that pay 300 shs a day...

We have informal economy - and some people want to talk about tax cuts, interest rates, fiscal policy, monetary policy - or other first-world issues.

This is how out of touch we've become from reality.

100% agreed. I do not understand the notion that cutting taxes for the rich is helpful when the most hard-hit are poor people who rely on daily wages/earnings which have suddenly been stripped away. People without food stocks and sanitizers hoarded in a panic. It's situations like this that expose the sheer immorality of capitalism unmitigated by robust social programs.

The govt can either provide food or end lock-down and replace it with other strategies like no showing up in public without a mask, no entering Mats, markets, etc before washing hands, maintain 1 m distance from others, no public gatherings, and enforce these everywhere with security people like we did when we started checking for terrorists at every entrance. Otherwise, this is a joke and is unsustainable. Where the govt will find the food, I don't care, but they either provide it or end the lock-down. No two ways about it. People have to eat, no buts/ifs/negotiations.

[hk]

How will cut taxes translated to food for kibera residents? How long will you as business man trickle down the benefits. You need to understand we have about 35% of kenyans who are poor - with about 15-17M - extremely poor. The rural farming poor are okay. The urban poor are in serious problem now - and they will cause chaos.

My solution is simple - gov should provide food for them - and how it does it - could literally include trucking food - or somehow finding out how to quickly roll out a welfare system.

Whatever is budgeted and is in account - can be used to fund these urban poor.

Once this war is over - lets talk the economy.

So your suggestion of taxing the rich is the solution? So how are you going to fund the poor 10m people? Your suggestion of taxing the rich is just laughable at this juncture, the economy is in free fall and you want to increase taxes? Its similar to the tokenism in uhuru proposal of cutting executive pay.  The solution is to cut expenditure to get funds to sustain the poor 10m (that's the demand side) and at the same time cut taxes that're paid by the poor 10m that's vat and mainly excise tax (supply side). You have a very pedestrian view of the economy.

If you look above I have advocated for dealing with demand side i.e something along the lines of a rescue fund which in my humble opinion should be aimed at individuals and SMEs. The question is how to fund it? Your suggestion of taxing the rich is what doesn't make economic sense. Because there's not enough rich people to tax to get the kind of money needed. Whether its for food and shelter or to support individuals, MSE and SMEs. The only option is to gut budgets of all ministries except the absolutely  essentials. Then arrange for debt extension repayment program. For the last couple of yrs. I have been indicating the danger of running crazy budget deficits of 7-9%, but you said those are western economic nonsense. Now the government has very little wiggle room to stabilize the economy.   
Cutting taxes which are paid by informal sector means those goods and services become cheaper hence more affordable. This cushions the poor and simultaneously acts as stimulus for the economy(supply side ). 

[RV Pundit]

You're mixing issues. We are here because of exogenous event nobody could have thought would happen. We are not here because of poor fiscal or monetary policy. It appears after tax cuts -  and other such not so practical ideas - gov has decided to deploy police at night the rich from the hungry poor. The western countries are deploying welfare systems - and we are not too poor to do the same. We need to start somewhere. For now, we need to tap into a contingency fund and start with slums and urban poor. I am talking direct support to poor families to buy food - I don't care about business or economy at this moment of war.

Once you understand the role of welfare systems beyond the trickle-down economics then we will progress.

People want to hear how Uhuru will support individuals (not SMES or business) - directly with food or income in these terrible times. Western countries have promised to pay their citizens 80% of income. In Kenya - we have fledging national welfare that supports hunger-stricken, old and orphaned - now is the time to expand it.

If you look above I have advocated for dealing with demand side i.e something along the lines of a rescue fund which in my humble opinion should be aimed at individuals and SMEs. The question is how to fund it? Your suggestion of taxing the rich is what doesn't make economic sense. Because there's not enough rich people to tax to get the kind of money needed. Whether its for food and shelter or to support individuals, MSE and SMEs. The only option is to gut budgets of all ministries except the absolutely  essentials. Then arrange for debt extension repayment program. For the last couple of yrs. I have been indicating the danger of running crazy budget deficits of 7-9%, but you said those are western economic nonsense. Now the government has very little wiggle room to stabilize the economy.   
Cutting taxes which are paid by informal sector means those goods and services become cheaper hence more affordable. This cushions the poor and simultaneously acts as stimulus for the economy(supply side ). 

[RV Pundit]

Now a thinking Mp - Kangata wants gov to give 7M families 10K each.

Kenya need to ask Safaricom and Airtel - to create profile of poor families based on their spending habits - and the lists can be verified somehow. Remove anybody who is salaried obviously or formally employed or whose income makes them rich.

And that should form the start of the national welfare system. Once we have list of poor people - during time of crisis like now - gov can easily send them some money - even 2k is enough for them to buy food.

https://www.the-star.co.ke/counties/central/2020-03-28-kangata-wants-state-to-give-poor-families-sh10000-each/
Murang’a Senator Irungu Kang’ata wants the government to set aside Sh70 billion to help needy families survive the effects of the coronavirus.

He said at least seven million families live from hand to mouth and require urgent assistance.

This, he said, is because the United Nations describes a person living in poverty as someone earning Sh100 everyday.

“The country has a population of 47 million Kenyans. With each household having at least four members, this totals to about 12 million families. If we exclude those in formal employment and the self-employed, the number reduces to around seven million homes,” he said.

[Dear Mami]

Now a thinking Mp - Kangata wants gov to give 7M families 10K each.

Kenya need to ask Safaricom and Airtel - to create profile of poor families based on their spending habits - and the lists can be verified somehow. Remove anybody who is salaried obviously or formally employed or whose income makes them rich.

And that should form the start of the national welfare system. Once we have list of poor people - during time of crisis like now - gov can easily send them some money - even 2k is enough for them to buy food.

https://www.the-star.co.ke/counties/central/2020-03-28-kangata-wants-state-to-give-poor-families-sh10000-each/
Murang’a Senator Irungu Kang’ata wants the government to set aside Sh70 billion to help needy families survive the effects of the coronavirus.

He said at least seven million families live from hand to mouth and require urgent assistance.

This, he said, is because the United Nations describes a person living in poverty as someone earning Sh100 everyday.

“The country has a population of 47 million Kenyans. With each household having at least four members, this totals to about 12 million families. If we exclude those in formal employment and the self-employed, the number reduces to around seven million homes,” he said.

I really pray Uhuru will heed this. We need to start a petition on his Twitter account to push him to do this. Raila too, so he can throw his weight behind it. Beating desperate people up because they can't afford to stay home if they're going to feed their families is barbarism. Instead, govt needs to issue moratoriums on firing and evicting people during crisis, so people can stay home in peace, then deliver this basic amount via MPesa until the crisis is over.

They should also have banned upcountry travel two weeks ago. Young, healthy Nairobians busy taking Corona to the villages where most of our elderly live.

[RV Pundit]

Precisely. The whole night quarantine is to stop the hungry poor from looting the rich.

I really pray Uhuru will heed this. We need to start a petition on his Twitter account to push him to do this. Raila too, so he can throw his weight behind it. Beating desperate people up because they can't afford to stay home if they're going to feed their families is barbarism. Instead, govt needs to issue moratoriums on firing and evicting people during crisis, so people can stay home in peace, then deliver this basic amount via MPesa until the crisis is over.

They should also have banned upcountry travel two weeks ago. Young, healthy Nairobians busy taking Corona to the villages where most of our elderly live.