Kamami Economics Consultancy Desk-KED

02/05/2019

British colonialist were motivated by the sole objective to extract
the resources and force the indigenous population to work for the colonial elite,
which would, along with the Crown, obtain maximum benefits from it.
Is kenya at it again? But this time round by Kenyan colonialist? Making the society poor and impoverishe in the name of BBI / handshake! We need inclusive institutions but not extractive and destructive institutions. Do we have trust in the political institutions orders and obligations , .

06/11/2018

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19/09/2018

Is this the right time to hike taxes in Kenya?
Consider some historic facts, (1) the amendment of the banking act in 2016 that capped the interest rate and(2) the two general elections in 2017. Fact number one was intended to spur the economic investment by allowing more household to invest domestically. This would have raised the fiscal collections by the revenue authority, created employment opportunities and aggregated the national GPD a notch higher. Instead what happened? , the reversed happened where financial institutions were shielding their books from lending risk by limiting credit accessibility to every jane and harry. Low investment loomed in the nation, and economic performance was low and poor.
Fact (2) two found a bed without beddings. Instead it hurt the economy most due to political uncertainties and investment was on standstill, corporates underperformed, unemployment was witnessed through endless layoff in private sector, draught and famine hit the country more. The nation was in a death bed and nothing was going on substantial. But the government was constituted and economy started recovering.
The key actions by the government could have been to stabilize the economic performance through increased government spending, completing unfinished projects, improving the commercial turnovers, but instead the government started implementing the tax policies that would further discourage investments, demolishing some physical capital. The countercyclical fiscal policy won’t counter the business cycle tide.
The contractionary fiscal policy is wrongly timed. And would bring a spiral effect to the economy, it will negotiate its own position where the public would opt for substitutes, reduce consumption and pay less taxes. The government will fail to meet its financing gap through taxation and will finally result to more public borrowing.
This is not the time for the high taxations!
Boost your strength first before using your energies.
Charge your solar battery first before you start discharging it

18/09/2018

Having financed infrastructural investment through public debt, can Kenya sustain its robust economic growth?
When growth was rated 7% during Narc era, the public debt was very low compared to today, life quality changed through infrastructural extension services such as electrification programs, shortening and widening access to the university programs and job creation through opening boda boda. The marginal “feel expensive” benefit was high since the country experienced the same since independence.
The regime left the nation with a clear focus on how to improve quality of life and grow the entire economy through the vision 2030 and clearly earmarked flagship projects, which would have stirred up the economic performances.
Jubilee regime capital deepening through transport, education, ICT and technological investment is the best for a prospective growth. Why? Through ICT, the government has improved efficiency, i.e E-citizen platforms, NTSA platform, and Information dissemination channels such as Facebook; through transport the government has increased efficiency in cargo and passenger transportation, improved quality road network and SGR. Equal educational (literacy) improvement, has impacted the Kenyan society by a very high margin positively. 70% of Kenyans can operate modern communication gadgets. In terms of capital resources, Kenya is at very advanced stages.
With very high levels of public debt, and all inclusive infrastructures, well informed human capital, physical capital and excellent enabling business, Kenya must grow its GDP to reach greatness. The physical and human capital must produce. The return to capital will be high compared to when we had no infrastructures, technology and education (skills). Anyone between the working age, must consider improving micro-productivity.
With a properly constituted property ownership and contractual legal framework, the government has created an enabling business environment. National security, cheap financial credit access and stable political environment will also foster high levels of economic performance. Kenyans are enjoying a life they would have enjoyed in a future of 100 years. What else do Kenyans want? Kenyans must free themselves off the garden of Aden syndrome.
High level of capital outlay, translates to very high marginal improvement in labor and resource productivity.
The only government flaws are funny decisions in destroying the physical capital such as demolition of commercial building (an informed decision to deter investments such as FDI), wastage and corruptions. These are the mother factors to re****ed economic growth, poor quality of life & inequality in wealth distribution. Otherwise Kenya is very rich country.
The additional output in the economy surpasses the debt repayment installments. The economy will grow and the growth is sustainable. Kenya is a strong country, Kenya is a rich country and its people are hardworking and intelligent. Don’t listen to the pessimist.

13/09/2018

Kenya is among top three countries in Africa where individuals pay more taxes than profit taxes from corporations: South Africa and Swaziland are ahead.

This drives the disquiet from majority of Kenyans terming the 16 per cent Valued Added Tax (VAT) on fuel as punitive, just because the government requires IMF’s precautionary credit facility. If the levy is not reversed, it will increase cost of living and drive inflation high.

Just imagine, a country where more than half the population live below two dollars (ksh.200) a day. A hike in cost of living can trigger unprecedented public unrest as people come alive to the reality of paying higher taxes to keep the government afloat, amid runaway graft and wanton wastage of public funds. If the government shelves the IMF proposal to levy the tax on fuel, it is likely that the commitment to the donor communities could burst.

The country does not need the guarantee of IMF’s standby credit facility. The condition is that if this facility is accessed, the government must enforce the 16 per cent VAT on fuel. Kenya has sufficient dollars to cushion the country against any economic shock. Confirming this, the government should deal with IMF without overtaxing the public.the public is waiting for the treasury directives.

12/09/2018

The government can avoid revenue collection dilemma and avoid overtaxing its citizens by exploring the following avenue (1):
Public-private partnerships is a partnership between a government agency and private-sector company in provision of good and services to the public.Kenya can Avoid direct credit but apply private public partnerships programs (PPP). The government would attract some multinational companies with high capital levels to participate in development projects in all fields: power, mining, transport, health, water and agriculture. By taking a 30% share in the project, the government will have offloaded private partner political risks. The private partner would make sure the projects operation efficiency achieved and the benefits realized. It would operate the project until its able to recover its investment share. By doing this the government wouldn’t go back tax payers’ pockets for extra fund. Eg If a PPP contract was conceived during the construction SGR, the partner would be running the project until it pays back initial capital and handed over to the government. And would consider this the best option since Kenyans would be paying directly to the investment patner. This would seal all HR inefficiencies and graft loopholes and fund misappropriation especially in Kenya. This would even take lesser payback period.

12/09/2018

Retirement is real, has no rehearsal and its guaranteed. Establish a kit for the same solving some key dilemnas: where will you retire to? What will you retire with? & what will you retire to do?
PLAN FOR YOUR RETIREMENT.

Business Youth told to save for successful retirement Fund managers say without this, most of them are doomed to eternal poverty Zachary Ochuodho September 11, 2018 2,675 2 minutes read RBA Chief executive officer, Nzomo Mutuku Kenyans are living longer after their retirement age of 60 years than wa...

06/09/2018

China is right on investments in belt and road projects in third world countries in africa and south asia. Its has realized these countries need railways, roads , machineries and other infrastuctural development. China has ruled the world market by providing funds, expertise, machineries and has all along since 2005 devalued its currency (yuan). Projects done by china looks very cheap than other counterparts but i guess its behind something that also cant tell. Investment banks in china are worried about their assets in the poor states. Why is china much willing to lend to african countries while it has dire need domestically? Its generosity has caused finacial distress to these countries. Malaysia cannot pay its debt. Greece was saved from the situation by european union. China is a disturtubor of the world economy; has diluted European union signaficance and caused Britain to exit the bloc. Does China want to control the world? Someone should tell us. The world should learn a lesson on financial crisis caused by china to the world.

03/09/2018

The cook: cooking public debt crisis:

Hrot debt repayment economic theory and its impacts to the economy.

World Bank and IMF will constantly supervise Kenyan economy by issuing austerity measures for the government to implement. The key intention of this is to make sure the country is able to manage the 5.1trillion debt. Measure number 1, the government has increased the tax base, optimized revenue collection and sealing the leakage loopholes. That’s why time and again treasury is devising new types of taxes and implementing the tax laws. The 2018/2019 budget Robin Hood tax was introduced, implementation of VAT on petroleum products, increase of excise taxes on mobile money transactions among many others. Measure number 2, the government has cut on expenditure on new government projects with a reason of high perpetration of graft.

With KRA unable to meet collection targets and a very ambitious the nation must be working on a high budget deficit by applying contractionary fiscal and monetary tools, to collect more revenue. This is abuse of economic principles

The state organ is getting it wrong with the economy by overtaxing its citizens, especially on the basic production input, i.e. imposing a VAT on petroleum products, why?

The move will shrink the economy considering we are overtaxed and government is only financing infrastructural development projects which are not earning the country any income or other benefits. How will the economy shrink?

a) Production cost will be very high bearing in mind that every household uses petroleum products
b) Rise in retail product prices, the cost increase will be transferred to final consumers, we have seen it in the matatu & transport industry. Expect an inflation of not less than 12% in 3 months’ time.
c) High prices will reduces product demand translating to an overall poor corporate performance. This will be evidenced by reduced disposable income and purchasing power.
d) Poor corporate performance will scare away the investors
e) Low investment will increase the unemployment rate especially for the youths and high levels of retrenchments.
f) High levels of unemployed youths will flock street rioting and destroying more resources, high criminal levels will loom our society. Tough times will set the individuals to stress, to depression and to su***de.
g) The political system will be in upheaval demanding the painless sweet demands they made during campaigns.

The long run impact cycles will result to reduced tax revenues, the government will not meet loan installment from taxing the citizens, unless through government business. The whole cycle of repercussions and impacts is a crisis syndrome: public debt crisis.

17/03/2018

The government has been overstreching the national resources through over ambitious budgets. The economic environment isnt ideal and its normally affected by so many factors, realistic budget is necessary for optimization. President Kenyatta and his economic team, should review the approach to economic management.(link: http://www.ieakenya.or.ke/number_of_the_week/gross-budgeted-expenditure-and-revenue-collection-2011-2016) ieakenya.or.ke/number_of_the_…

What are factors that lead to the government being unable to meet its planned expenditure?  In each financial year the government through ministries, departments and agencies provides estimates of the intended expenditure for the implementation of the programmes and policies within the framework of...

28/02/2018

Food insecurity does not result in hunger or malnutrition.

The President’s administration intends to take action on the National concerns that are healthcare, food security, manufacturing and housing. (Olick & Kisika, 2018). According to the pronouncement, Kenya will be made 100% food secure in 5 years. This is the first in a two part series wherein I exp...