Annual Pension payouts:

2008/09: Sh25bn

2018/19: Sh86bn

2019/20: Sh109bn (F)

2020/21: Sh153bn (F)

Civil servants do not contribute to their pension and their benefits are paid straight from taxes.

Actually my mission is to show that at the stage we are in the malaise is curable with minimum pain. The social psyche is not too injured. If not then things can get far much worse and for a very long time.

All it takes is leadership and brain trust to administer the shock therapy and get things rolling again.

If we get the timid half measures like what the Haiti mulatto elite did in Haiti allowing Papa Doc to outsmart them and build a personality cult and the rest is history. In Haiti it was the same dynasty versus hustler nonsense debates that we are having in KE. The problem of ZIM and SA is the same timid half-measures instead of shock therapy. Argentina's Macri also realized gradual reforms don't work.

Whether KE demographic dividend is harnessed is largely a leadership issue. That's why I said in another thread that watching the next 32 months will be interesting. It's important to watch the direction younger voters will take before committing an investment decision.

Not quite. Deferring to leaders/politics in nation building is what is referred to as the messiah syndrome. Nation building is much more complex than that and it barely works without the people's input both implicitly and explicitly. If and when the social and economic glues that hold a people together dissolve or get disorderly then it doesn't matter who is at the helm...they will have a very tough and short ride.

Two cases in point; in Ethiopia despite the credentials and attempted 'shock therapy' by the current PM, it probably won't amount to much. In any case the country is likely headed for civil war or secession. In Lebanon, with a debt to GDP of 150% and bond yields commanding upwards of 100% no leader will last long for the foreseeable future aka if you go the populist way you are doomed coz it will only make things worse, if you go the austerity way the short term pain will likely get you ousted. The latter was the case in Argentina not coz of half hearted measures but economic frustrations and they've now flipped to populism on which the clock is fast ticking. The same country ploughed through 5 presidents in 10 days when they defaulted on a sovereign bond back in 2001.

In the developed world, Italy has had 6 prime ministers since the European debt crisis. For Australia it is six since the GFC. One of the the undercurrents that goes unnoticed in the USA is the building up of social tension towards some sort of crescendo that will implode in a very nasty manner. It is worth noting here that economic trends precede social trends and thereafter political ones.

How for example would you get to raise KE savings rate from the current 11% to the recommended 30% by change of leadership? You can hardly move the needle without a cultural revolution on fertility perceptions. If the current economic malaise is severe( pronounced desperation) for KE then look forward to a radical left leader. If it is mild/moderate then a center right is the likely result. From there onwards, it becomes a rabbit hole of sequential choices that either work in your favour if the underlying economic and social trends are working in your favour or they blow up in your face you are running counter-trend.

THE FINANCE ACT, 2019

Here is a recap of the key tax measures that have now come into force that will soon have a dent on you and your business.

1. Import Declaration Fee (IDF) has been increased from 2% to 3.5%

2. Railway development levy has also risen from 1.5% to 2%

3.Turning to motor vehicles, excise duty on petrol-engine vehicles over 3000 cc as well as diesel-engine vehicles over 2500 cc is now at 35%

4.Excise duty on vehicles over 1500 cc has been raised from 20% up to 25%

5. Excise duty has also been introduced on bottled water, non-alcoholic beverages and cosmetics with the introduction of excise stamps.

6. Excise duty on cigarettes and wines is up 26% while excise duty on spirits is up 44.5%

7. In order to encourage the manufacturing of gas cylinders locally, excise duty on imported gas cylinders has been raised to 35%.

8. Digital transactions will also be subject to value-added tax at the rate of 16%.

9. For micro, small and medium enterprises, the taxman will require you to pay a turnover tax at the rate of 3%

Very conservative but I don't think even a 200bps cut will make a dent in increasing credit growth in this environment of fiscal dominance. Working with the CRR might be a more fruitful venture as it gives banks additional liquidity to grapple with and even then an uptick in lending will be minuscule.

This is a risk off economy and banks have been restructuring loans for the better part of the last five years aka managing the loan book...dont expect them to go gung-ho into new lending which only adds to their already existing headaches.

The CBR at this point is more important in KES management than anything else. It will be interesting to see whether cbk will exercise restraint when KES depreciates vis a vis trying to prop up the economy.