Why the Cost of Living in Kenya is DAMN too High

Cost of living is high in Kenya because of high levels of taxation. The taxes are high because of the heavy debt servicing burden. All these are problems caused by Uhuru.

Something like Airtime and internet are taxed at 40%. Fuel is also taxed at over 40%. How are these global issues?

We are importing food worth over KShs 270 Billion yet the Galana-Kulalu 1.75 million acre land lies idle due to corruption and incompetence of Uhuru’s government. Are Zambia and Tanzania from which we are importing maize not part of this globe?

Uhuru’s government has killed our manufacturing sector. In 2012, manufacturing contributed 11% to GDP. Now it is contributing a mere 7%. Yet as per the big four agenda it is meant to be doing 20% by now.

The death of manufacturing is causing us to import almost everything. As a result, the shilling has depreciated a lot leading to imported inflation.

Fuel prices are high globally but we have Turkana oil which is being sat on by Jubilee thugs. We even have coal in Kenya which can be turned into diesel and petrol.

We have abundant electricity. The KShs 21 Billion being spent monthly on fuel subsidy is enough to import 4,000 electric buses. This would permanently resolve the fuel issue as far as commuter fares are concerned.

Only a visionary leadership can make such decisions. An incompetent leadership specialises in passing the buck.

 

The GOOD, the BAD, and the UGLY of KENYA KWANZA MANIFESTO

DP and Kenya Kwanza Presidential Candidate William Ruto at a previous rally

I have finished reading the Kenya Kwanza Manifesto. The document is wordy and poorly edited so it takes a lot of patience to go through it.

As far as the content and the details are concerned I will begin with the good. The document makes a good attempt at understanding the issues at hand and does so using statistics. It also avoids making lofty promises which requires huge financing. While it makes an attempt at financing its promises, the estimated funding is based on guesswork. It is also unclear how the funds will be raised.

As far as the bad is concerned;
1. Overall the document is still very qualitative. While it mostly quantifies the challenges it fails in quantifying the solutions. Sectors such as manufacturing, tourism, water, energy, aviation, ICT have zero quantification when it comes to solutions and financing. One would have expected to get clarity on the much hyped Bottom Up economics but the document offers nothing

2. The manifesto does not identify corruption and looting of public funds as a challenge facing the country. It is silent on how this issue will be tackled. The people behind KK are known to be incredibly corrupt. It is no wonder that they make no attempt at tackling corruption. A KK government will certainly continue the current looting menace. At least that is the message I get from the document

3. The document identifies the issue of public debt but fails to offer even a single solution on how it will be dealt with. While it commits to reduce the budget deficit to 3% of the GDP by 2026/27 financial year, no clear detailed are provided on how to go about it. Anybody who promises you any economic progress without clarity on debt stabilisation is simply lying

4. On the agriculture sector the proposed solutions are underwhelming. It fails to appreciate the fact that rain-fed agriculture is no longer sustainable. To make matters worse a KK government will no longer invest in large scale water projects such as dams. Shift will focus to community water projects. Large projects will be done under PPP model. This would amount to privatisation of water which ought to be a non-negotiable public good. The promise to commit KShs 50 Billion annually to the sector is good but there are no details on how such funds will be deployed. The proposed Minimum Guaranteed Returns is utopian and there are no details on how it will be achieved without making the cost of food expensive

5. The much hyped KShs 50 Billion per year Hustler’s Fund is also not detailed. It is unclear how the cash will disbursed

6. The proposal to increase housing supply by 250,000 annually is overly ambitious and vague. Even at a cost of KShs 3 million per house, this would amount to KShs 750 Billion annually. There is no possibility of raising such funds either privately or publicly. The government needs to invest in public housing for renting at affordable rates. Saying that funding for this will come from pension funds doesn’t make sense because the government cannot direct them on how to allocate funds

7. KK promises to hire 116,000 teachers in two years. No cost has been provided. The average pay per teacher in Kenya is KShs 741,823 per year. KK will need at least KShs 86 Billion to achieve this goal. The Alliance promises nothing in reducing the cost of education in the country. There is nothing even about the HELB loan reliefs something they have been promising in political rallies. They don’t mention CBC despite promising to scrap or reform it in rallies. They only talk about reforming the exam based system

8. On ICT they promise to lay 100,000 km of fibre optic cable. They forget that over 95% of broadband internet in Kenya is accessed via the mobile phone. They don’t even mention the word 5G. A promise is made to lower the cost of data and calls but nothing specific is mentioned especially with regard to the heavy taxation on these items

9. There is nothing revolutionary in the document about the healthcare sector. The proposal to raise KShs 200 Billion annually for universal healthcare lacks clarity because it is unclear how the informally employed will pay up. Besides, if all the funds in NHIF, MoH and County government health budgets were combined we could easily setup an organisation to run all public hospitals and offer free healthcare to all

10. The document says nothing about the extractive sector in the country. Nothing is said about the oil and gas sector or the mining sector. This sector carries the potential to double or even triple our GDP. How it can be omitted in a manifesto beggars belief

11. Regarding the energy sector, the document fails to make any tangible promise on how to lower the cost of power or by how much. The only positive thing here is the promise towards fast-tracking the electrification of our transportation system as a way of dealing with high petrol prices. Their proposal to set up infrastructure for Liquefied Natural Gas for power generation makes no sense since we have enough geothermal power generation capacity. No mention is made of the exploitative IPPs or the huge system losses which have made power unaffordable

12. While the document deeply reflects on the potential of our tourism sector, it falls far short in proposing how this vast potential will be harnessed. No funding commitments are made especially towards marketing

13. The document also does not mention anything about parastatal reforms or how the privatisation initiative will be accelerated. This is a critical cog in generating government revenues in view of diminishing taxation capacity. It should have been addressed in details

14. Not a word has been spared for our capital markets. Capital market reforms are needed to provide a cheaper way of financing enterprises and enhance wealth distribution

The ugly thing about the KK manifesto is mainly about the people behind it. These people have no known history of running public affairs with integrity. They have perfected the culture of lying to the public such that it is impossible to believe any promise they make.

The 2022 election makes for a hard choice. None of the two major political formations understands the burning economic issues of the day. None has a clue on how to stabilise the public debt and revive the economy. Stabilising the debt and reviving the economy are more important than any promise any politician can make. We are in a deep economic crisis. Nothing much will happen unless this is tackled deliberately and decisively.

© Ephraim Njega

 

Why MITUMBA DEBATE is MUCH ado ABOUT NOTHING

The value of clothing related items we imported in 2021 was as follows;

1. Textile fibres and their waste – KShs 8 Billion
2. Second-hand clothing/mitumba – KShs 19 Billion
3. Textile yarn – KShs 6 Billion
   Total KShs 33 Billion

The mitumba is worth just KShs 19 Billion out of a KShs 13 Trillion economy representing 0.15%.

The value of clothing related items we exported from Kenya in 2021 is as follows;

1. Textile yarn – KShs 1 Billion
2. Articles of apparel and clothing accessories – KShs 43 Billion
   Total – KShs 44 Billion

The story being pushed that banning mitumba can eradicate poverty through domestic consumption is absurd. When you start discussing policies without evidence you end up making a fool of yourself. This is the danger I have always warned about.

We should be more concerned about the KShs 273 Billion we spent importing food in 2021. We imported cooking oil worth KShs 121 for example.

People don’t wear mitumba because we don’t produce new clothes in the country. People wear mitumba mainly because of poverty. There are a few who wear them because of fashion but those are in the minority.

Export oriented textile manufacturing can create employment but those jobs are usually poorly paying. We also have to look for a market where we will be competing with those Asian sweat shops. Given our high costs of doing business our textile products might not be competitive.

© Ephraim Njega