Blog Archive

Monday, December 29, 2008

Mauritius - A rare bird in the African Union

Mauritius is a small island with almost 'zero' natural resources except its beaches & human resources BUT the progressive government(s) have done relatively well compared to its peers.

Here is an example of how the Mauritian government while recognizing the Global Financial Turmoil is much bigger than they can handle... they are trying to take PREEMPTIVE measures to mitigate the fallout as much as possible! Not burying their heads in the sand!

Sithanen (the Finance Minister) said the forecast for economic growth in 2008 had been cut again to 5.1 percent from 5.4 percent, and warned that while the economy was a long way off entering into recession, the island was not immune from the global slowdown.

In Kenya the CBK governor told Kenyans 'all is normal' and to expect 7% growth in 2008... and this is a crock of shit considering (1) post-election violence destroyed swathes of crops (2) the GFT & (3) soaring inflation.

There are 2 other countries I consider 'models' in Africa... Botswana & Rwanda. Both have challenges but they practice fiscal management. Botswana is a net creditor nation & Rwanda's Kagame has shown leadership in a country that was decimated in 1994.

Saturday, December 27, 2008

Kenya Government to blame for fuel shortages

George Wachira of the Petroleum Institute of E. Africa gives the reasons for the fuel shortages.

I have echoed what he says through my sources & interest in the workings of the sector. BTW, I do not work for any of the Oil Marketers in any capacity incl PR.

1) The silly rules which 'protect' the extremely inefficient Kenya Petroleum Refinery (KPRL) are the start of the problems.

2) The favoritism shown by Kenya Pipeline Company (KPC) to 'favoured/connected' entities like Triton Petroleum (now in bankruptcy/receivership) adds to the problems.

3) Poor information (truth) management by KPC causes disruptions. The upgrades were NOT ready but KPC never told the Oil Marketers the truth so they could plan accordingly.

4) Ministry of Energy's comments on having enough fuel stocks... but WHERE are these stocks? 60% consumption in Nairobi so what use are the stocks in Mombasa?
And the PS blamed the consumers of panic buying! This is after consumers could not buy the product just days BEFORE (& during) the X-mas period which is the most heavily-travelled period for umpteen years!

5) Off-loading problems/delays due to congestion at Kenya Ports Authority (KPA) facilities.

6) Kenya Revenue Authorities (KRA) delays in verifying cargoes for quick release. Furthermore, they refuse to process refunds on a timely basis thus hamstring Oil Marketers ability to 'move' more product.

7) Kenya Power & Lighting (KPLC) did not supply 'consistent' power to KPC's fuel transfer/pumping stations. KPLC argues that KPC should have mitigated against the endemic problem like private firms do.

8) Triton was allowed to bid (& win) the OTS tender when it was financially weak. Didn't the Ministry of Energy take the safeguards to prevent this?

KPA, KPRL & KPC are all government owned entities.
KPLC is controlled (& majority owned) by the government.
KRA is a government entity.

Triton is private but the Oil Tender System (OTS) is run by the Ministry of Energy. Many strong firms e.g. Total & Kenol often opt out since the rules are onerous to the importers. This leaves 'shady' firms OR politically connected firms... and guess what happens?

Friday, December 26, 2008

Merry X-mas

Ironically, the problems should make us realize the true meaning of Xmas...

No fuel (most of the country)
No food (especially among many of the poorer sections of our communities)
No shelter (some IDPs)

Well... I know Kenya is a contrast... The lines at Nakumatt & the 'frivolous' X-mas items on sale while we have numerous folks who have hardly anything to eat....

It is these times that will show what we are as a Nation.

Monday, December 22, 2008

Idiots at Kenya Pipeline Company exposed

Many Kenyans are plain ignorant (or plain stupid or worse)...

Whereas the KPC has been denying it is at fault for the recent fuel shortages... it turns out they are largely to blame... but the average (stupid?) Kenyan would rather listen to officialdom...

Here are links: BD editorial blaming KPC (& about time... I preceded them by a few days!)

KPC's 'fake' upgrade commissioning (KPC invited his kibziness for no good reason)

Sunday, December 21, 2008

Kenya Pipeline Company - Fishy dealings

I recently advocated the complete privatization of KPC since the management at KPC in collusion with the Ministry of Energy is definitely incompetent & probably corrupt.

Why would they allow a (almost) bankrupt firm (see story here - Triton) to import oil products under OTS?
Why do they allow a single firm to hold stocks/ullage in excess of their market share?
(The government through KPC allows for storage/ullage in proportion to the market share. The Oil Markerters - Shell, Kenol, Kobil, Total) have been complaining that some 'politically connected' players routinely exceed their storage capacity).

KPC's idiots blamed everyone else but themselves since KPC's managers were protecting their own. So they invited kibaki to 'commission' a facility that was non-operational & not expected to come online till early 2009.

The Oil Marketers have made multiple suggestions for changes in the Oil Tendering System (OTS) among other structural problems facing the industry BUT the incompetent (or maybe just plain corrupt) mandarins refuse to make the changes.

Another group of idiots reside at the Ministry of Finance & KRA... who refuse to expedite the refunds of taxes, duties and levies thus creating a strain on Oil Marketers.

Of course, the public at large are like sheep. They believe whatever alfie mutua says... or some incomptent (&/or corrupt) government bureaucrat.

It is so easy to blame BUSINESSES (they are not perfect) for the problems whereas dig a little deeper & its STUPID, CORRUPT, INCOMPETENT government functionaries who push retrograde policies OR are simply in it as rent-seekers!

Saturday, December 20, 2008

Zimbabwe - Gone to the dogs...

mugabe & his ilk are killing (killed?) the Zimbabwean economy with ongoing ridiculous actions...

Are many of the Zimbabweans too stupid not to see what he is doing?

Why don't they assassinate mugabe or at least have a mass revolution to kill mugabe & his cronies?

Thursday, December 18, 2008

Fuel Shortages in Kenya

On 26 Nov 2008, the pumbavus at Kenya Pipeline Corporation (KPC) made a huge deal of ‘commissioning’ the expansion (double) in pumping capacity by spending scarce state resources & inviting Kibaki & his entourage to the ‘commissioning’ in Makindu…

So… what really happened?

The bloody pipeline is NOT ready since it was but a scam for political mileage! Cut a few ribbons, cakes, drinks & cash all around. And all this wining and dining while the ‘expansion’ will not be ready until early 2009 at best!!!

Most towns in Kenya are facing fuel shortages as (1) Kenyans gear up for the holidays & (2) the reduction in fuel prices spurred consumption but the idiots at KPC claim that the shortages are the Oil Marketers fault while its KPC who can’t pump the required demand!

Though KPC has argued that it has enough fuel, and that it is the oil marketers who have not adjusted their volumes in line with the increased demand, the oil merchants are placing the blame on the pipeline operator.

Any wonder why I don’t believe the drivel KPC spews?

“Can some one explain why the Head of State was made to commission a project that is not complete?” asked Jacob Segman, the group managing director of Kenol. “Are we not deceiving the people of Kenya?”

Many ignorant (or stupid) Kenyans blamed Oil Marketers since the ‘government’ informed them that Oil Marketers were to blame!

There seem to additional problems at Kenya Refineries Ltd & Kenya Ports Authority since even many coastal towns don’t have enough fuel...



Thursday, December 11, 2008

What is jimnah smoking?

I need me some of what jimnah mbaru is smoking... Did he write this article or was it ghost-written for him?

It started off well but as the effects of whatever the writer was chewing or smoking got hold of him...

GoK - Government of Kenya
CBR - Central Bank Rate. Rate at which the CBK lends KES to Kenyan banks.
CR - Cash Ratio. % of customer/bank deposits that have to given (interest-free) by banks to the CBK. It also acts as a brake on lending but increases lending rates.

1) Lower Interest Rates & Cash Ratio:
I agree a lower CR will increase lending as banks will have "more" funds to lend as they can go after additional deposits. As interest rates for loans fall, firms can take on additional risk/investments due to lower project costs.

Lowering the CBR will encourage 'cheaper' lending but this is dicey in that banks often have to be 'forced' (after adjusting for default & borrower risk) to lend at cheaper rates unless there is sufficient competition.

In my view, its better to privatize - or transfer the management to professional hands - additional government owned/controlled institutions e.g. KPA, KPC and KAA then lend them 'cheaper' funds - with private sector oversight - for big-ticket items. This is a long-term view but worked well for the USA during FDR's time with the New Deal...

KPA - A 2nd port + better facilities at Kilindini + new bulk grain handling facility.
KPC - Longer & larger fuel pipelines to Kisumu then Uganda & all the way to Rwanda.
KAA - A 2nd runway is desperately needed + new terminals + FAA Category 1 certification for N.American flights + upgrade existing terminals.

2) Buy SafCon (& other shares) from the market to inject liquidity:
The Hong Kong government did that successfully but HK ran a surplus (GoK has a deficit) & HK's gov't financial dealings are considered relatively 'clean' whereas 'GoK' & 'clean' are not in the same dictionary let alone sentence!

Unless the buying process is managed independent of any political influence, buying shares opens up multiple avenues of insider trading and corruption e.g. merali (a pal of dan moi's) can influence the government to buy shares in his shitty firms (eveready, sasini and sameer) which are among the NSE's worst performers!
Or the GoK buys shares in Tea firms to 'support' the tea industry whereas tourism might be a better investment.

It is short-sighted & stupid to bar Kenyan Fund Managers from investing off-shore. A Fund Manager's job is to get the best returns for his clients NOT support Kenya's economy! What next? Ban forex transactions to 'save' forex? Ban foreign travel to encourage domestic travel?
Just was we want foreign money (FDIs & stock-market investments) we have to allow foreign investments or how different are we from the Tanzanians?

BTW... mbaru was intimately involved in selling SafCon at a preferred price to 'hidden' foreigners who were supposedly 'long-term investors' but these mbaru-supported foreigners were the first to cash out.

3) Borrow to Lend to other countries- Great in theory but not smart in practice... not for Kenya. How will the GoK control - with minimal bureaucracy (read corruption) - that the funds lent are spent on Kenyan goods?
At what interest rate does Kenya borrow & lend?
Will some firms be favoured exporters (esp those connected with politicians)?
How will the minimum 'local' content be regulated so its not just mere trans-shipment of goods?

The only way out is to create an EXIM bank run on a PROFESSIONAL & COMMERCIAL basis which also provides sustainability.

These countries already buy Kenyan, the problem is INFRASTRUCTURAl DEFICIENCIES to deliver the goods. The Rwandese complain about delays in transporting goods. Kenyan exporters have to bribe the Kenyan customs so the trucks are allowed through without inordinate delays. Building a railway to S.Sudan will do more for them & Kenya than lending S.Sudan money. As is... they might just buy more T-72 tanks!

(BTW... who was that idiot wentagula think he was fooling when he said the T-72s were for the Kenyan armed forces?)

Solution is to cut down on spurious customs & inspections when goods are exported to our neighbours. Yes, watch out for smuggled ivory, sandalwood, etc but not the hassles with exporting locally produced goods.

Instead of the GoK borrowing money... how about reducing taxes? Almost the same difference regarding 'deficit' but a much faster way of getting liquidity into the economy... and its also egalitarian!

4) Building Sewers:
Isn't this a job for municipalities?
Why were houses allowed to be built without sewers?

How do cash-strapped consumers build ditches or pay to be connected?
Unlike MPs, the Kenyan taxpayer does not get subsidized housing mortgages or tax-free allowances.
Shouldn't other municipalities be included in the programme?
What happens if a home-owner (with a mortgage) can't afford to be 'connected'?

It's better to have a comprehensive New Deal rather than simply building sewers in Nairobi!

5) Sale Lease-backs:
The chances of buying the properties back at a reasonable price is almost zero... unless the economy is in the gutter... in which case the situation would be similar to what it is now...

And the corruption involved would be phenomenal!

It is more efficient and cheaper to (a) outsource most government functions (b) issue long-dated bonds than sell and lease back properties (c) encourage private entrepreneurship (d) fire 70% of the cabinet.

Tuesday, December 09, 2008

Michelle Obama vs Lucy Kibaki - Salaries

Michelle Obama (as well as other First Ladies in the USA) will earn NOTHING for her 'job' as First Lady. USA - Per Capita Income = $46,000. GDP = $13,800,000,000,000.

Yes... but in Kenya (an IMPOVERISHED country by any standard) the First Lady earns earns $8,000 a month in (tax-free?) allowances!
Kenya - Per Capita Income = $850. GDP $30,000,000,000.

No wonder Kenya is & will remain a 3rd world country for many years to come...

P.S. Michelle is an intelligent, articulate, educated (Harvard Law School) woman who held a high-profile position prior to Barack being elected to the Office of the President....

Lucy Kibaki - erm, please help me out... what is her education? Her professional life? Her achievements?

*** Here is an interesting link on the US Cabinet appointments regarding salaries. Note that a lawmaker is prevented from taking up a job in government if they voted for an increase in compensation/salary for that job in the current term!!!

Of course, the thieves in our 'government' would vote themselves extra perks!

Monday, December 08, 2008

Back to the Future - Traditional Crops

I have argued that we need to move back to TRADITIONAL crops that are better suited to our environment, soils, climate...

Please click on the following links for some great info...

Lost Crops of Africa
Timbuktu Chronicles

Sunday, December 07, 2008

Safaricom - Quality & Service problems

I hope Micheal Joseph reads my blog coz SafCon is going to the dogs...

I have (almost) given up using SafCon's pre-paid voice service since Zain introduced Vuka.

In addition, for Kes 65/day I have 12 hours talk time between 6am-6pm. This is great since it can be used during peak hours. For 20/- (club 20) I get 'free' talk time from 10pm-6am & unlimited 'free' sms for the whole day!
(BTW, all the 'free' stuff is only Zain-Zain).

I sorta like the pre-paid Bambanet (internet) service since I can use it almost anywhere in Kenya (urban areas) & it is relatively fast BUT the service has been spotty of late.

1) I keep on getting disconnected after 2-3 minutes of use. Very frustrating especially when I am sending e-mails, posting on blogs or downloading.

2) I need to try 2-3 times before I am connected to the network. This really pisses me off.

3) 10 days ago, I could not get my balance on the Bambanet account. I was checking to see how much unused MBs I had as well as the expiry date but I kept on getting 'blank' replies to my enquiries. I had to spend an inordinate amount of time to visit a retail location to sort it out!

4) SafCon (see 3 above) charges 8/- per MB if you exceed the limit/package but they will not tell you the balance. What conmanship. I was a victim of the scam.

Pre-paid Voice service:

1) The employees at the retail center were unaware of when the "Jimbambie" promotion ends. I was told "December" but not 1st or 15th or 31st December!

2) I tried to call customer service on 100 but as always no luck. Why do they even bother to tell us there is a pre-paid customer service?

3) Unlike Zain, there is no indication of the cost of the call or balance after each call. I really like the feature on Zain. And when the Jibambie tariff shows up... it does not clarify which 'level' thus I could be conned & not know it!

If Zain introduces a 3G internet product... I will vuka over asap on that too... For those who have safcon shares... beware coz the competition is far better than SafCon... Don't be conned that SafCon's lead is unassailable. GM used to be the world's most profitable automaker. GM may be the largest BUT for investors... it has been a loser over the last 5 years!!!

Thursday, December 04, 2008

Kenya - Pull up the bootstraps or else...

Kenya has always had 'potential'... but a lot needs to be done. Soon. And most of it does not require much money!

Tax Simplification: There are too many different taxes in Kenya. The confusion & complexity of the myriad fees/taxes/duties - as well as collection agencies - leads to corruption as the rent seekers are out in force.

Debt Levels: The gov't needs to scale back on its public debt or it will crowd out the private sector. Or if it takes on debt, it should be focused on INFRASTRUCTURE in partnership with private firms.

Inflation: I fear that inflation will be stoked by the recent actions since corrupt deals abound when subsidies are introduced as well as excessive borrowing OR printing of money.

Subsidies: Bad idea.

Moral Hazard: By selectively forgiving debt, the gov't is favoring those who were not either prudent or borrowed beyond their means. I think the bankruptcy laws need to be simplified & allow people to go 'bankrupt' rather than mass forgiveness of loans to specific groups. This opens channels for corruption & tribalism.

(Lack of) Property Rights: Why I do not invest in properties in Kenya.

FDI: Court the Chinese (warily), Indians, Arabs, Libyans, etc BUT do not give the family jewels for free or give monopolies!

Bastion of Peace: Remain a peaceful island that allows all to come to trade. It will provide jobs & economic diversification. Kenya needs to improve its infrastructure from the port to the railways to encourage other countries to trade with Kenya.

2-party system: I think this will stabilize our politics and force Kenyans to choose parties without being overly tribalistic. No more PNU for kikuyus, ODM for luos or ODM-K for kambas!
Or a no-party system like Rwanda! (There are many downsides to a no-party or 2-party system as well).

Security: A terrorist attack would devastate us. Let's make peace with our neighbours BUT carry a big stick. Look at the Dec 2008 Mumbai Bombings. India has a much more diverse tourist industry vs Kenya yet they expect to suffer a huge tourist drop-off.

Tuesday, December 02, 2008

Kenya - Voodoo Economics - Disaster

Kenya's economy is headed for a collapse unless the politicians get out of trying to run the economy!

Price Controls: These are always short-term and hardly work except under rare circumstances.

Food Prices: The farmers (producers) have little incentive to produce unless they get a fair price. Since the GoK restricts the purchase price of maize to KES 1,750 per bag, the farmers will stop producing.

Fuel Prices: In the case of remote locations, many firms will withdraw leaving the market open to black-market gouging. Since the GoK refuses to refund VAT among other duties/levies on time to the Oil Marketers, the costs will either be passed on to the consumers or the Oil Marketers will close up shop.

Subsidies: These are politically popular but ultimately hurt the consumers. How?

- Taxes will be raised (except for the MPs) to fund the extra spending
- Deficit will grow which means that GoK has to raise taxes or take on additional debt.
- Interest rates will rise to match the deficit (gov't borrowing) which crowds out the private sector.
- Corruption will increase as politically-connected firms/persons will "eat" the subsidies e.g. firm/person buys subsidized maize from NCPB & re-sells it back to NCPB at higher prices (a feedback loop).
- Subsidies create inefficiencies that are very difficult to root out.
- Kenya shilling will depreciate rapidly which will create imported inflation since Kenya is a net importer. Subsidies create an unfair playing field.
- Creating a larger gov't bureaucracy (bureaukrazy) will create additional avenues for corruption & inefficiencies.

Inflation: Folks will buy forex, gold and property (read: Why I don't invest in property in African countries) to hedge against inflation BUT this starves the REAL economy of investable funds e.g. investments in factories, farms, etc.

Remittances: The diasporan 'investing' cash will disappear as will any FDI if GoK can't guarantee a stable economic environment. There are always opportunities for a few rent-seekers but the economy as a whole will suffer.

Brain Drain: Kenya will experience a brain drain to other African countries, Middle East & of course... Europe & the USA even with the increasing level of unemployment there. Why? These economies still believe (for now) in keeping away from nationalization.

I have discussed in previous blog entries what measures need to be taken to right the economy. They may not be popular but need to be implemented. If Kenya loses its private sector, then Kenya is in huge trouble.
- When banks withdraw lending to businesses since its more profitable (& less risky) to invest in Treasury Bills & Bonds.
- When most Kenyan businesses become traders not manufacturers/producers.
- When Kenyan businesses compete against government subsidized businesses (e.g. Oil Marketers compete against a subsidized NOCK).
- When farmers decide its more lucrative NOT to farm since there are gov't handouts.
- Kenya has almost zero 'natural resources' that can produce income without much work e.g. oil. This means we need to work harder & smarter.

Kenya was unfortunate to have presidents like the jomo 'the land grabber' kenyatta (or as he is better known... crooked wa ngengi), dan 'steal all I see' moi and myriad other politicians whose sole interest was their own enrichment. Singapore had a brilliant benevolent dictator (Lee Kuan Yew) who transformed Singapore into a bastion of prosperity & stability in S.E. Asia.

Most of the current political class needs to be PURGED. They are thieves, idiots & greedy bastards. Most have been implicated in scams or have stolen fortunes. How do we expect them to lead us in these trying times?

Kenyans are also to blame. They vote for tribes NOT character. They have the world's highest population growth rate. They sway to the winds created as the politicians blow hot air. They want freebies without considering the after-effects.