Kibaki was a Keynesian and lived it throughout his regime. The effects were Great in his early years 2003-2007 but we all know what happened in Q4 2011.
Now that we went begging to IMF, forget the 2% for now,until we chase them away!
IMF = More taxes,more austerity,more pain for the mwananchi,Less Growth!
As for this weeks auction being undersubscribed, this points to coming high yields particularly if the Govt's appetite for domestic borrowing remains the same/increases. The converse is true!

What happened there? Sorry i digress....

They(MPC) are due to meet on Wednesday to set rates and decide how to tame this animal called inflation.
Last week they came to the market to pump in some KES.....how long i ask

The government is finalising plans to issue a diaspora bond before June next year to finance infrastructure development, Cabinet Secretary Henry Rotich said Friday.

Tapping debt from Kenyans living abroad tops the National Treasury's options to reduce borrowing pressure from the domestic market.

Rotich said this is also part of a wider strategy to ease commercial banks' interest rates, presently averaging 16.91 per cent, to single-digit levels.

The diaspora community sent home Sh71.67 billion ($807.2 million) in the first seven months of the year, a 9.6 per cent increase compared to the Sh65.39 billion ($736.5 million) in a similar period last year.

The National Treasury is also working on an Islamic bond, popularly known as Sukuk, to draw foreign investments from oil-rich Gulf and Middle East regions whose participation in the hugely successful debut $2 billion (Sh177.60 billion) debut Eurobond last June was religiously prohibitive.

Why Central Bank Law Should Be Changed

Last year Kenyans transacted Kshs. 2 trillion via M-Pesa alone. That’s more than this year’s record breaking national budget. In addition to using mobile money, we also put our money in banks. Last year we had 1.3 trillion in total deposits in the banking system. The banks, never quite a generous lot, paid us on average, 1.58% interest for that money.


In spite of these impressive numbers, we remain skeptical, or are doubted, of our ability to lend our government. In June when I drafted this bill, the government wanted to borrow 8 billion in 180 days and one year bills, and as is customary, it asked the banks and the super-rich for it. But these guys were in a bad mood and weekly government debt auction only yielded 2.5 billion, at rates of 10%, which the government accepted. In other words, that week of 5th June, government borrowed 2.5 billion from banks and the super-rich and agreed to pay them 10% interest on that borrowing.

At that time, the Government was out in America and Europe to borrow 132 Billion, a small fraction (6.6%) of the value of our last year’s M-Pesa transactions, and only 10% of what we Kenyans kept in bank accounts 2013. Interest rates on this Eurobond are in the region of 6%.

What’s wrong with this picture? We, the sovereigns, give our money to banks in return for 1.58%. They in turn lend it to government for a handsome 10%. Foreigners lend our government (ourselves) @ 6% interest, or mostly above.

Why would the government not be interested in our 1.3 trillion? And if/when it is, it insists on going through an intermediary?

In a country where you pay your utility bills as well as your herdsman by mobile phone, why is the government debt program still run with cave man technology? There are huge barriers that ensure ordinary Kenyan cannot lend our own government. If you want to lend government of Kenya, you can only do so with a minimum of 100,000. In addition, you have to open a CDS account (whatever that is) at Central Bank. “Bids must be in specified format and reach the central bank before 2pm” on the appointed day, the stern advertisement from the director financial markets usual warns. Bids may be paid for in cash, bankers’ cheque or RTGS. This in world’s greatest mobile money economy!

We must open up our economy and all the opportunities therein to sovereigns. Let's widen and grow the middle class. More citizens should access and compete with hitherto untouchables. Financial markets shouldn't be shrouded.

We are digital, or aren't we? Or aren't we thrilled by the ongoing battle for the Sims? If Safaricom wins and Equity Bank triumphs, aren’t we beneficiaries?

So let CBK Act be amended as follows:

ENACTED by the Parliament of Kenya, as follows—

1. This Act may be cited as the Central Bank (Amendment) Act, 2014

2. The Central Bank Act is amended in section 45 by –

(a) re-numbering the existing provision as sub-section (1); and

(b) inserting the following new sub-section immediately after subsection (1) –

“2. Subject to sub-section 1(c), the Bank shall put in place mechanisms to enable the public to participate in Government securities through –

(a) electronic means; and

(b) lower minimum investment denominations”

The CBK Amendment Bill (Kenya Gazette Supplement No. 110, 21st July 2014) went through 1st reading on 12th August 2014. The National Assembly in a public notice carried on page15, Saturday Nation, 20th September 2014 has called for public participation via memos to reach the KNA Clerk not later than Friday September 2014.

Kind regards,

Hon Kabando wa Kabando, MP

(Mukurweini)