Otiato GuguyuFor foreign investors looking in, Kenya is contradictory. The economy is projected to grow at 5.4 percent according to the World Bank which looks likely with the Eurobond fully paid for, dollar loan maturities tanking by almost half in 2024 and expected cuts in US Federal rates.
But it gets murky to look beneath into the unreal assault on the formal sector; how the taxation is tapering off predictably along the Laffer Curve like the 16 percent decline in fuel demand. The too much too quickly approach in taxation has hit private sector and will hit Kenya Revenue Authority harder.
The Kenyan shilling continues to drop past the government’s expectations, which also means all the good fiscal consolidation work will simply be overrun by the currency collapse and the government can’t seem to be able to stop it.
A domestic loan market with shorter maturities and higher interest rates is also building up like dammed water, which has gotten regulators meeting with bank bosses to negotiate treasury bidding and forex trading.
“Despite the fact that the shilling is now undervalued, the CBK has raised rates considerably to make it attractive, and a strong flow of dollars from the multilateral lenders are coming in; why aren’t investors rushing in? It all comes down to confidence,” a trader who did not wish to be named told Orals East Africa.
Shooting its foot
The reality is that the government is shooting itself in the foot, discouraging investors with bad policies and scandalous deals.
For investors, the promise for open and transparent financial system built on independent judicial arbitration is integral. When this bedrock of the society is under open assault by the presidency, it sends negative signals.
Even when it would make sense for corporates holding dollars to buy in on the current investment opportunity, a draft law that threaten to grab and seize private sector dollars for staying in a bank for more than a month and a half has set the stage for offshoring.
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Arabian nights
The government is also tied to an opaque dollar debt oil deal with Gulf Country corporates who have locked in supply at high margins squeezing the country out of foreign currency and through inflation in energy prices and import costs.
The new administration has also returned to jubilee era assault on the media, which are an essential component in manufacturing national consent and transmitting state policies.
Return to the Jubilee Playbook
When President William Ruto rose to power, his disdain for media was obvious. They had supported the establishment against him.
Kenya Kwanza administration launched their retribution against the media on President Ruto’s inauguration, cancelling all congratulatory messages that used to run on local newspapers.
The new regime did not need to look too far for inspiration. The Kenya Kwanza administration, just like the Jubillee administration from which it emerged have gone back to their media playbook.
The then Cabinet secretary For Trade Moses Kuria regurgitated his old party politics, threatening to sack heads of state agencies running advertisements with the Nation Media Group.
Today, the government has limited all its advertisements on print media to state-owned MyGov publication which will be printed and distributed by Convergence Media (publishers of The Star newspaper) will serve as the official platform for all public sector print advertisements essentially cutting off other media houses from a crucial advertising revenue lifeline.
But as they plot to bury the media, Kenya Kwanza may find itself in a legal challenge, bad publicity while drowning in a rubble of misinformation projecting policy incoherence. The government is finding it harder to muster the masses and project itself as a recovering economy to foreign investors beyond the endorsement of the International Monetary Fund (IMF).
Part III; The Kenya Kwanza, Jubilee playbook
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Where is the full book? ????
A very strong piece. Keep up with the good work brother.