Kenya's Slow Slide into Bankruptcy Gathers Pace

When, in 2010, some of us opposed the new Katiba, we were called names. Conservertives. Undemocratic.

Now, sloooooooooooooooooowly, the chickens are coming home to roost. Kenya is grinding into a financial abyss.

You see, a country is basically a business. It must have INCOME and EXPENDITURE. If these are unbalanced too much, the country ecomes bankrupt.

The problem with the New Katiba, which the likes of Michuki and Karume spotted from the word go, is that IT IS HEAVY ON EXPENDITURE AND VERY LIGHT ON INCOME GENERATION. It was written by activists who had the mindset that the government is an enemy, and must be “exploited”.

Thus, the Katiba talks of free education, free health care, and also creates an unsustainable political bureacracy that easily rivals that of the US, which has about 350 million people. To illustrate, Kenya today has only about 100 less MPs and Senators than the US, and just about 5 less governors despite having just 40 million people. We are the most over-represented people on earth - by the greediest reps on earth!

(And for the record, NOTHING IS FREE in developed countries like the US, Britain, and France. Not education, not health, nothing! There’s no free lunch anywhere anyway - somebody always pays)

Now, the situation is becoming bizarre, with Parliament and the Judiciary trying to outdo each other on ways to order Treasury how to spend taxpayers money.

Just today, teachers won an order that will increase recurrent expenditure by about Sh5 billion a month. A month ago another court ordered TSC to pay retirees about 42 billion. Other courts have awarded unsustainable pay rises to other cadres.

Parliament, on its part is saying that, uni graduates should not be forced to pay their HELB loans. The Govt is being required to even buy “free” sanitary towels for students (makes you wonder, is the role of the parent in copulating?) Very populist and misguided. Nobody, for example, is saying where HELB will get the money to lend future students.

Any economist will tell you this is a recipe for disaster. For one, PAYING RECURRENT BILLS FOR THE POPULACE USING THE EXCHEQUER FUNDS is downright stupid. IT TAKES AWAY MONEY FROM INFRASTRUCTURE, WHICH IS WHAT THE PEOPLE NEED (Example: A sugarcane/cabbage/maize farmer does not need any government to pay Sh4,000 per year for their child in primary school; they need cheaper fertiliser, better roads, elec etc. to make themselves competitive and make millions!)

As judges and politicians continue to raid the Treasury, it seems lost to them that their stupidity will simply hurt ALL OF US. Excess liquidity simply promotes inflation - you can bet the price of meat will rise as soon as the teachers/soldiers/nurses/policemen etc etc all get their raises - thats exactly what happened to Zimbabwe.

I, SADLY, PREDICT THAT THE KENYAN ECONOMY WILL COLLAPSE IN THE NEXT TWO YEARS, AND WE WILL ONCE AGAIN BE IN THE CLUTCHES OF THE WORLD BANK AND THE IMF (to their credit, they have already warned that Kenya is on a slippery slope as far as borrowing to meet reccurrent expenditure is concerned).

You think am scare-mongering?

Then ask yourself why THE SHILLING HAS LOST ABOUT 15 PER CENT OF ITS VALUE SINCE JANUARY.

No, it’s not tourism (al Shabaab existed last year, right?)

THE REAL CAUSE IS THE FLIGHT OF DOLLARS FROM THE COUNTRY. Many foreign investors aare starting to see that the economy is headed south, and they are taking their funds with them.

That’s why, incidentally, the NSE is in a slow-meltdown.

IN FACT, THE ONLY THING HOLDING UP THE SHILLING ARE THE DIASPORA DOLLARS - when that inflow starts drying up, shit will hit the fan (Ktalkers, better be more respectful to Kabuda)

Don’t say you were not warned.

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I concur, the government recurrent expenditure is just too too high.

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Somebody prriss summarize this long CAPITALIZED post I cant bother to read through. Looks like something plucked from a page of a naysayer/doomsayer’s diary

With all due respect, this is for people with some intellectual capacity. You may pass:cool:

Please wewe hapa chini, am not in a mood to argue with anybody. You did not have to click on this thread or read it. If you do not have an opinion on the subject matter, please move on, sawa?

Didn’t occur to me that geniuses on this forum would require CAPITALIZATION to understand a post. Btw does it mean you are shouting when you capitalize or what?

I’ve always said that this constitution was economically nonviable yet when it was passed, some people were claiming it was amongst the best in the world. The so called ‘property boom’ is nothing but castles built on sands of speculations and illusions and thus is no indicator of strong, sustainable economic growth. Day by day, recurrent expenditures are increasing astronomically yet we want to convince ourselves that this constitution is one of the best things that ever happened to this country. We ,for instance, don’t need senators and women reps. You know, our problem is that we are forced to match the standards of the west once it comes to democracy, human rights, ‘freedom’ and gender equality yet we’ve got zillions of economic issues to deal with. When you decide to build a house, you don’t start with buying paint and carpets for the yet to be build house. You start with the essentials: bricks, cement, sand etc. The constitution should have been economically oriented not giving everyone meaningless rights and freedom and creating over-representation. We should have crafted a constitution that was geared towards making us a South Korea in terms of economic strength and not making us a US in terms of freedom, gender equality and other liberal BS.
Dont be surprised if 50 years from now, kenyans will start demanding for another new constitution and eventually every shopping center in the villages will become a county and every 10 homesteads will constitute a constituency.
After second world war, most of the countries that achieved fast economic growth were no big fans of democracy.

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There’s is this mistaken notion that government money reserves are endless and everyone is entitled to draw from it, politicians who should know better being in the front line . I concur this state of affairs isn’t sustainable and very soon, something must give.

the worst thing is if we have to borrow more money…the rich mps etc will not feel the pain of paying back the loans on higher interests…but all CAPITALSTS states are due to go this way eventually

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The problem has nothing to do with katiba. Even during the old constitution this country never grew rich. Its all about fiscal management and displine. This country needs a very visionary leadership. One that realises that the only saviour is production and trade. I for example have not seen anything meaningful that the government has done to promote internet access despite the fact that economies are all the more relying on information technology based solutions. By now anything to do with internet provision should be tax free. No vat, no excise duty and minimal corporate tax. Its that crucial as an economic enabler. But the digital government does not know that. You have to pay import duty and vat to import many capital goods. Again making business very expensive. Its easy to see why we all want to get employed by government and ‘eat’. Its because doing business in kenya is getting all the more difficult. Im in business and i know. There is little in way of policy framework changes that are aimed at easing the businessmans tribulations. Like @Luther 12 stated you only need to read our outdated traffic act to realise why traffic police corruption is so rampant. So for us in transport business both goods and passengers we are left to eat with the police/ntsa and to recover we have to cut corners. Yet no attempt to remake the traffic act is in the offing by govt. Infact they do not even notice its that bad. There are so many other areas i can point out. Yet every five years our leaders are elected on a platform of change. But do they know what needs changing? How the hell do we make power(energy) vatable and expect to have economic miracles? Did you see the damage to genuine alcohol businesses due to the euphoria caused by an uninformed presdential directive yet he who has control of govt machinery would easily have done the same in an organised manner and achieved the same results if not better. Can you imagine the number of genuine businesses put in disarray in the resultant random destruction, the loans that will now be defaulted and restructured and the effect to lenders. You cannot blame the constitution.

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As a Jubilee diehard don’t you find it self-defeating to make this bold declaration? Jubilee has majority in bunge and a hugely popular president and can therefore sponsor bills in parliament to address over a representation in elective post. We should trim the number of counties, constituencies and wards.

We have a lot of rot to clear and I really think Jubilee won’t fair any good by the end of this term; corruption is still rife, security is not really assured despite the recent calm= slow recovery of the tourism sector, manufucuring and agriculture sector are still burdened with systemic failures.

We need to sit down and make a new plan.

Stop reading the gutter press. There is a global credit crunch. Over supply of crude due to cracking of shale by Us has led to decline of global prices and also link the devaluation of the yen.

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At last someone said that. I always argue with colleagues about repercussions of current constitution, greed and luck of knowledge among politicians and ignorance among kenyans. Take example of that governor who shouts much about corruption yet he bought models in terms of firefighters. We are so wired on national matters yet within county shit just got real. I hope one day kenyans will wake up instead of going for each others throat.

Dunya, I accept many of your premises. The Government seems beholden to shadowy cartels that, although am a die-hard Jubilee supporter, am starting to think these guys in power are all thugs.

Yesterday, for example, I almost cried when I read in the SN that the reason why the prices of power are RISING AGAIN is that Chumo at KPLC is busy signing power-purchase agreements for thermal (diesel) power for the next 20 YEARS! WHY IN GOD’S NAME WOULD HE DO THAT IF NOT TO FUND-RAISE FOR THE ELECTIONS FOR RUTO who appointed him? Isn’t KenGen investing enough in hydro/geo sources? Wouldn’t it be wiser to slow down on new connections, if we dont have enough power, than to make the poor Kenyans already connected pay Sh2 billion EACH MONTH to foreign pirates (by the way the way the power contracts are worded, the guys are paid whether their power is bought or not, imagine). Cant these guys see that one of the reason Kenyan sugar (and everything else) is uncompetitive is because of expensive electricity?

Another area of cartels is banking. For a long time the banks said their high interest rates were due to poor land records and defaulting. Now we have better records and CRBs, but the rates still remain the same. Yet we know for a country to develop credit must be accessible…but the gava seems content with just banks reporting profits of Sh10 billion each (from less than 5m total clients nationally).

But the Katiba has also fucked us up pretty big - just thing about the over-representation…

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50 years? That’s being a tard too optimistic budah…hii katiba haitalast another 10 years. Ngoja UK amalize what they say will be his second. Glamour to change it has already started with CORD (although this call for change is self serving)

Thats a vague way of explaining your countries large deficit. I wonder if you follow up our market news

Vile @Dunya amesema. Na pia in yhe 3 years that UhuRuto govt had been in power, they have borrowed more money than Kibaki’s 2nd term

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Can we refuse to pay taxes? Our money is being used against us.

I agree with you on all counts. As to me being Jubilee, you forget one small thing; Jubilee came just the other day, but I’ve always been Kenyan.

According to NMG, the teachers ruling means that the Treasury now needs to raise Sh17 billion. There’s only so many ways they can do that:
i) Raise taxes
ii) Borrow from the domestic markets - morgage rate yako ole wako!
iii) Print paper money - remember Goldenberg?
iv) Borrow externally - Shilling ifike 130/dollar.

The money is there, in fact more than enough, first we need to cut down our wage bill
i) women reps/senators are not needed at all esp. women reps - kazi yao ni gani (amend constitution)
ii) a lot of money being lost through corruption but there is no goodwill to recover it. when the eacc or auditor general raises red flags they are the ones threatened or told to go.
iii) the implementation of the itax system means a lot more taxpayers being captured by the taxpayer and also more and more accurate tax disclosure since its interlinked. as of august 2015 no manual filing is accepted. this means more revenue. also over 20000 landlords are being targeted by kra.
iv) counties or governors will have to use the IFMIS system for any cash to be disbursed to the counties. they are being forced to. this will greatly streamline the expenditure of the counties by the governors.

So there is more than enough money in Kenya. this country just needs a smart dictator. and we can skyrocket past Singapore within the next 10 years.

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