Rewind
I have blogged on a number of issues over the last 6 months.Some of them are now being debated in public ,other issues have melted into thin air and others are due to come up.
Safaricom
Safaricom
It turned out that the shareholder structure that we(you and i) hypothesised on this blog turned out to be true.The Guardian newspaper investigated Safaricom's shareholding structure and found the offshore parent of Mobitelea.
cellular-news.com has more on the saga here.
The Minister for Finance gazetted this ammendment and borrowers are soon to enjoy the benefits.
This is one Act that NEMA(National Environmental Management Authority) had to shelve.Inmplementing it would have been an enforcement nightmare .It would have requitred hundreds of Traffic police and NEMA inspectors to implement.It would also have taken out a lot of vehicles off the road.
Lack of adequate resources for enforcement are part of the problem with the new traffic rules.
I am sure it(NEMA Ammendment) will come back someday.
I am sure it(NEMA Ammendment) will come back someday.
The report on which the MPAC post was based is now under scrutiny.Specifically the issue of whether we need a strong shillin or weak shilling.With the shilling at Ksh 67, you can be sure some exporters are crying.
I'm a weak Shilling proponent But most people are for a strong shilling.Their argument is that we import Oil , so a strong shilling will keep the cost down.Consequently,domestic inflation will also be lower as a result.
I'm a weak Shilling proponent But most people are for a strong shilling.Their argument is that we import Oil , so a strong shilling will keep the cost down.Consequently,domestic inflation will also be lower as a result.
They forget that the largest component of domestic oil price is TAX.
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1 comment:
Pesa-tu,
My concern and support is for a strong Shilling. We need it because it makes cross country trading cheaper. When you have to pay fees to professional bodies abroad like AIMR(for CFA), CISA, CISCO, etc, the USD will be you choice of currency and better when its weak as you will pay less..
Secondly, if you are keen in buying shares across border in Tanzania and Uganda, you will note its better sending USD than buying those countries currencies locally and sending them to you broker in UG/TZ because in USD you pay less than what you would have paid using those currencies that have stagnated at 1Ksh to Tsh 18 or Ush 25 since last year yet the dollar has come down to 67 from 71/72 in Jan 07.
I pity the exporters crying out there yet they had and still have a chance to hedge themselves since early 2006 when the dollar was 75/76 from 78/79 and the warning signs came went off (read growing economy). They ought to have got into favourable forward currency contracts, demanded payments in EURO or GBP currency that has stagnated at Ksh. 90 / 140 respectively. Still since they import chemicals and other supplies from Europe/US they can arrange for currency swaps too with there suppliers.
The economy is growing and thus with more exports comes the dollars which the CBK is buying to support market prices and avoid spiraling weakening of the USD. This has built the CBK reserves to all-time highs meaning that we have enough cover for several months of imports (note Kenya is a net Importer). This means also we have a muscle to flex when negotiating grants and loans as happened with the Finance PS demanding a 20 grant component in any lending.
The CBK with right policies can therefore invest in strategic projects just to emulate the Chinese Government that has accumulated enough dollars that it’s buying out a leading US private equity firm. So it is with the government investing exclusively in potential projects like the EASSY project and recovering the cost from onward subcontacting.It will still be able to make sufficient return in 10 years.
On a sentimental note the only cross road we need to navigate as Kenya is that the USD is loosing favour as the leading global currency for international transactions and the EURO is fast gaining dominance. Some global companies (DHL) and governments abroad no longer hold huge USD reserves but have shifted to EURO. This is even going to get worse with the exit of World Bank president and continued war in the Middle East that the US is painfully loosing.
We can debate this further though: email:sanlihp@yahoo.co.uk
Cheers
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