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Law Capping interest rates
Rank: Veteran Joined: 7/3/2007 Posts: 1,635
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aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. "The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth." (Niels Bohr)
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Rank: Elder Joined: 12/4/2009 Posts: 10,808 Location: NAIROBI
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Wakanyugi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. The only way out for now is GoK to reduce it's spending by cost cutting measures so as to reduce the fiscal deficit. The exercise might be painful for about 2,3 or so years after which now proper policies can be put into place to have a better and sustainable growth of the economy without having to put an interest rates cap law. Diaspora bonds that will be adding more debt to our already unsustainable debt levels Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 7/3/2007 Posts: 1,635
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Ericsson wrote:Wakanyugi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. The only way out for now is GoK to reduce it's spending by cost cutting measures so as to reduce the fiscal deficit. The exercise might be painful for about 2,3 or so years after which now proper policies can be put into place to have a better and sustainable growth of the economy without having to put an interest rates cap law. Diaspora bonds that will be adding more debt to our already unsustainable debt levels The problem is not actual borrowing per se. At 57% debt to GDP we are still in fairly good shape. The problem is borrowing locally, which pushes up interest rates and prices out Wanjiku. Diaspora bond is a good interim measure, especially if it can be denominated in local currency. Think of it as Eurobond without the attendant political noise or the currency risks. "The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth." (Niels Bohr)
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Rank: Elder Joined: 12/4/2009 Posts: 10,808 Location: NAIROBI
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Wakanyugi wrote:Ericsson wrote:Wakanyugi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. The only way out for now is GoK to reduce it's spending by cost cutting measures so as to reduce the fiscal deficit. The exercise might be painful for about 2,3 or so years after which now proper policies can be put into place to have a better and sustainable growth of the economy without having to put an interest rates cap law. Diaspora bonds that will be adding more debt to our already unsustainable debt levels The problem is not actual borrowing per se. At 57% debt to GDP we are still in fairly good shape. The problem is borrowing locally, which pushes up interest rates and prices out Wanjiku. Diaspora bond is a good interim measure, especially if it can be denominated in local currency. Think of it as Eurobond without the attendant political noise or the currency risks. 57% for a country like kenya is dangerous since our exports are weak. Our debt level is past 60% and I guess approaching towards 70% since the total debt has clocked sh.5 trillion Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. This is already happening via M-Akiba. The only limitation is that Wanjiku is not liquid enough to take up the entire issues as demonstrated last year. GoK should continue doing this like in every quarter and slowly build up this financing avenue. Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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Ericsson wrote:Wakanyugi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. The only way out for now is GoK to reduce it's spending by cost cutting measures so as to reduce the fiscal deficit. The exercise might be painful for about 2,3 or so years after which now proper policies can be put into place to have a better and sustainable growth of the economy without having to put an interest rates cap law. Diaspora bonds that will be adding more debt to our already unsustainable debt levels These are great points. However thinking like a politician, you will note that it takes 5 years to complete one term. Spending 2-3 years reducing debt via decreased development, lay offs on public sector and less support to parastatals will definately achive that. The only problem is that this will be unpopular to the electorate and your opponent will use this avenue to unsit you in next contest (unless you are in your final term). The new leader will then use the low debt base you created to borrow more and please the electorate with better infrastructure and public sector jobs and most definately earn a second term. That is why world over politicians prefer the adeage "kicking the can down the road". Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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Rank: Elder Joined: 6/23/2009 Posts: 14,223 Location: nairobi
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Gatheuzi wrote:Ericsson wrote:Wakanyugi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. The only way out for now is GoK to reduce it's spending by cost cutting measures so as to reduce the fiscal deficit. The exercise might be painful for about 2,3 or so years after which now proper policies can be put into place to have a better and sustainable growth of the economy without having to put an interest rates cap law. Diaspora bonds that will be adding more debt to our already unsustainable debt levels These are great points. However thinking like a politician, you will note that it takes 5 years to complete one term. Spending 2-3 years reducing debt via decreased development, lay offs on public sector and less support to parastatals will definately achive that. The only problem is that this will be unpopular to the electorate and your opponent will use this avenue to unsit you in next contest (unless you are in your final term). The new leader will then use the low debt base you created to borrow more and please the electorate with better infrastructure and public sector jobs and most definately earn a second term. That is why world over politicians prefer the adeage "kicking the can down the road". @Gatheuzi soo true, but this kind of can will not be kicked down any road, this government promised single digit lending and they have not delivered, though they have tried to bring the rates down.. By reversing the rate cap law, it would be a blot on the legacy of this regime. Why would we have total annual profit before tax in excess of KES 100B for the top six Kenyan banks in a struggling economy. Fact is, even with the rate cap, banks continue to post significant profits
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Rank: Elder Joined: 12/4/2009 Posts: 10,808 Location: NAIROBI
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Gatheuzi wrote:Ericsson wrote:Wakanyugi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. The only way out for now is GoK to reduce it's spending by cost cutting measures so as to reduce the fiscal deficit. The exercise might be painful for about 2,3 or so years after which now proper policies can be put into place to have a better and sustainable growth of the economy without having to put an interest rates cap law. Diaspora bonds that will be adding more debt to our already unsustainable debt levels These are great points. However thinking like a politician, you will note that it takes 5 years to complete one term. Spending 2-3 years reducing debt via decreased development, lay offs on public sector and less support to parastatals will definately achive that. The only problem is that this will be unpopular to the electorate and your opponent will use this avenue to unsit you in next contest (unless you are in your final term). Uko dunia gani,the incumbent is on his final termThe new leader will then use the low debt base you created to borrow more and please the electorate with better infrastructure and public sector jobs and most definately earn a second term. That is why world over politicians prefer the adeage "kicking the can down the road". Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Member Joined: 12/1/2007 Posts: 539 Location: Nakuru
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Gatheuzi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. This is already happening via M-Akiba. The only limitation is that Wanjiku is not liquid enough to take up the entire issues as demonstrated last year. GoK should continue doing this like in every quarter and slowly build up this financing avenue. And probably bump up the rate just above the risk free rate to attract investors For investors as a whole, returns decrease as motion increases ~ WB
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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Ericsson wrote:Gatheuzi wrote:Ericsson wrote:Wakanyugi wrote:aemathenge wrote:What would happen if the government were to borrow from Wanjiku directly, through mobile phone, completely by-passing the banking industry?
During the initial days of the HE Kibaki Era, the then Finance Minister, Mwiraria reduced government reliance on borrowing by accentuating tax collection.
He further reduced the amount of money banks had to deposit with Central Bank.
The result was that banks started hawking loans on street pavements, offices, and in the villages.
As such, should an initiative to convince the Class of 2013 Mpigs to do away with the Capping, why not by-pass banks altogether and instead borrow from Wanjiku directly.
Just a thought. Just a thought. It is a good thought. Two problems: 1. Kibaki did the right thing, but soon after the Garment started spending like a bunch of drunken sailors. It has not stopped since. 2. As for tax, the low hanging fruit (mostly catching crooks and forcing them to pay) has long been picked. Since then KRA has missed almost every target. 3. Reducing the reserve ratio will will not fly, not when Opus Dei stands between the Fiscal goal posts. One word: inflation 4. Borrowing directly from Wanjiku will become an important avenue for government borrowing one day. But not today. Pesa onge. 5. Uhuruto might do well to consider Diaspora bonds. After all Ethiopia used this avenue to great effect when lenders refused to finance their Millennium damn project. The only way out for now is GoK to reduce it's spending by cost cutting measures so as to reduce the fiscal deficit. The exercise might be painful for about 2,3 or so years after which now proper policies can be put into place to have a better and sustainable growth of the economy without having to put an interest rates cap law. Diaspora bonds that will be adding more debt to our already unsustainable debt levels These are great points. However thinking like a politician, you will note that it takes 5 years to complete one term. Spending 2-3 years reducing debt via decreased development, lay offs on public sector and less support to parastatals will definately achive that. The only problem is that this will be unpopular to the electorate and your opponent will use this avenue to unsit you in next contest (unless you are in your final term). Uko dunia gani,the incumbent is on his final termThe new leader will then use the low debt base you created to borrow more and please the electorate with better infrastructure and public sector jobs and most definately earn a second term. That is why world over politicians prefer the adeage "kicking the can down the road". But his ticket must be handed to Arap Sigh intact. Sigh will only look good if he gives more free education, health cover to high school kids, free fertilizer etc. He will then have an easy run in 2022. Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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