Thursday, 27 November 2014

Moving from a blame game to panacea based gain approach

The fourth President of the Republic of Kenya Mr. Uhuru Kenyatta  , I would like to share my  positive thoughts of your presidency and how to improve on the various gapping holes in our governance system . Iam neither an  expert  nor am i  trying to seek your attention regarding the state of our nation . Iam going to be brief in my views  like a miniskirt but hope they will be long enough to cover the Subject matter. Here we go :
a)      The slum upgrading programme in kibera may be viewed by many pundits as a political strategy which is not a bad idea at all in so long as its benefiting the locals , that’s the whole purpose as to why we people vote , based on issues and not on genetic allegiances though Kenya railways and the previous grand coalition had such initiatives .My observation would be, spread it across the country via your NYS  strategy and consider floating a housing bond , it has  worked for Kengen and  Infrastructural bonds  and we can see the improvements , there has been an upsurge in geothermal power  generation and roads improvement , I presume  the annuity infrastructure will follow suit and be a great deal to infrastructural connectivity.
b)      The new look NYS  is indeed a fresh breath of air in nurturing our young talents, its paradigm shift in the way are going to define the Kenyan society as it equips and empowers the future generations , from the slum upgrading programmes , vector control , traffic control inter alia. Hats off for the CS devolution may be she is one of the few Wangari Maathai in our midst , my observation; it should be a  mandatory training  for all O – level graduates before joining campuses bearing in mind the ones with medical conditions.
c)      The Huduma Centres are like shopping mall: they’ve  cut out a lot of bureaucracies ,once again your CS devolution carries the mantle , my only observation would be , is to  have an integrated system that’s retrieves one records by a click of button  i.e. is to say  for instance to say the birth certificates, National I/D, Driving Licence, NHIF,NSSF cards and  KRA PIN number should all have one unique number , which number in my opinion should start from the Birth Certificate stage, just have one unique magnetic strip card, here there is still more to be done though it’s started.
d)       Tax incentives for employers offering holiday allowances for its employees : This was a bright move  considering that dependence on foreign tourism does not improve our economy , to borrow from the founder of  Ford Motors  Corp  ( Henry Ford)  who in 1914 , saw the need to increase his factory staff salaries by 5 dollars each per day in order to boast his car revenues and the rest was  history for one of the U.S largest car manufacturer, more staff bought cars from him rather than the competitor.
e)      The Uwezo Funds is another milestone in your tenure : its empowering many youths across all the 47 counties though my take would be why not fund viable start-ups  for instance innovators  like Morris Mbetsa who  has  developed a tablet to be used by students, we could be exporting such items to the great lakes region tablets instead of buying some from the East , The NSEC does a great but for your love of the youth this could unlock more potential if we focused on funding innovators.
f)       Your support for budding artists : As a Kenyan living in Italy I do realize art is big industry  deeply appreciated here , your initiative to allow youths graffiti and artistic work on matatus is more than welcome , you have even gone further a bought your own  portrait from a youthful guy from karachuonyo , people might view it as populism but I view it as leading from the front.
g)      The First Lady Beyond Zero campaign initiative is second to none, if any comparatives were to be done : it has demystified the position of the lady and set a trend for future first ladies , maternal health care is a  universal right ,scrapping of maternal fees was long overdue its these simple things that matter. My take on this would be a benchmark  has been set for the future first ladies.
h)      Your focus an intra-Africa trade is a game changer as reliance on traditional colonial markets limits our potential  and increases dependency: Ethiopia is an 80m market, Nigeria 177M , Angola 21m and DRC 67M , indeed our biggest trading partner is Uganda  but it’s this diversification that will grow our economy , though some may argue that the UK with population of around 64M has greater GDP  but they forget that out of the 20 fastest rising economies worldwide 10 are found in Sub-Saharan Africa, 8 in Asia (2 from the Commonwealth of Independent States), and 2 from the Middle East/North Africa,  why should Nigeria import  over 75%  of  its import milk powder  from New Zealand when Kenya has it in plenty.
i)        My Views on security given the rising terror activities: Mutahi Ngunyi  calls it rented terrorism which in my view holds some  water , though overall it’s a global geopolitical strategy that may range from use of  bio chemical wars  and exploiting ethnic identities  through religious ideologies by a clique of the  arms race warlords and merchants , Syria is good example , the Alawites and the Sunnis division’s  is self-explanatory ; my take is a lot is being done through deployment of military forces to hotspot areas, Safaricom’s yet to be installed surveillance system but hey on second thought  why not
1.    Have all long distance public transport vehicles install Distress  Alert systems that can pick and relay info to the nearest police post incase of danger this reduces response time to security issues instead of having police escort vehicles . my reasoning is based on the recent Mandera bus attacks. if only had the driver pressed the distress alert button and the same picked up by our forces they could have saved a lot of lives and  even for insurance companies
2.  Decentralize the special forces across all the 47 counties , shopping malls are sprouting everywhere in the country hence need for special security teams to handle complex security operations like the Westgate attack.
3.  To reinforce point one above  I have long held the view  that by  making it mandatory for policyholders install vehicle tracking devices it reduces theft ,death ,criminal related claims at large and this can only be done if such devices are zero rated  and  have all tracking devices info lodged with the NIS  plus no insurance issuance to motor vehicles without proof of installation, it will infringe on privacy but it will boast underwriting revenues  for insurance firms and enhance safety of individuals.
4.    Have all key installations, hospitals , schools and shopping malls install chemical detectors , remember terrorist are always ahead , recall what happened in Syria with use chemicals to decimate individuals , all highly frequented places should have anthrax detectors etc.
5.      Immigration policies: Have foreigners declare where they are going to stay , for how long and for what purposes  and for the hosts to declare their visitors within 24hrs  to nearest police post.
6.    For foreigners staying for  more than 6 months or looking for work permit , they should be subjected to A Swahili Test of proficiency before any work permit is renewed.
7. Revamp the financial securities market for commodities market such as introducing livestock futures for pastoralists communities, 
Mr president I could go on and on for iam a patriot that will speak when good things are done and suggest for solutions on areas of improvement even if we do hold divergent opinions.

God Bless you and long live Kenya


Thursday, 18 September 2014

Need to strengthen our reinsurance capabilities in the wake of regional uncertainties.


The recent past has seen Kenya  shoulder  the externalities of  the  terrorist Al shabab group , the unstable south Sudan and the frequent border pastoral communal clashes on the Kenya – Ethiopia border. To wrap it all up it seems we have got issues with  our neighbour’s despite running joint economic  infrastructural projects , from Uganda’s claim on  Migingo Island , South Sudan claim on Ilemi Triangle, Somalia claim on Indian Ocean territorial boundaries , to Ethiopia’s construction of Gibe dam along river Omo the source of Lake Turkana , a major environmental concern to the objection by Tanzania  regarding the construction of an airport by Kenya in Taveta  which was viewed by the former as a direct threat to Kilimanjaro Airport.
From the factors that led to the collapse of the Eac way back in 1977 to a new wider eastern African dream driven by her new found beneath resources , that has seen major projects such as the SGR construction from Mombasa to Kigali via Kampala and the much talked about Lappset project on the northern corridor  a lot is bound to change both economically and politically on the regional front.
To tackle my reinsurance topic one has just to look at the region with a chameleon eye, Kenyan financial institutions have their wings spread firmly from banking, insurance ,manufacturing and educational cum human resource services  however , this  seems not to have gone down well with the respective countries  considering that most are advocating for absorption of local resources which indeed is a reasonable act or rather thing to do . Having said that ,the most  challenging problem is that one of war as experienced in southern Sudan  where foreign business have to be shielded from losses by the parent companies  either through creative accounting and or transfer pricing models and or alternatively close shop as Jetlink Airline  once did due to currency woes  in south Sudan, Kenya Airways on the other hand has been forced to temporarily stop its flights to the Ebola stricken west African route hence loss of business.
The pacmans rule states that the best way to defend is to attack , its high time Kenyan companies form a large pool of insurance fund managed by the Kenya reinsurance corporation to shield them from assorted country risks , this will prevent the government  from bailing out companies  and Kenyan staff held in foreign countries , there is need to develop reinsurance products unique to the regional problems bedevilling financial institutions from the various uncertainties across the region. Yes the Jubilee administration has been on the forefront signing and advocating for special status agreement with Ethiopia, Nigeria and the other African countries at large in the spirit of pan Africanism and intra Africa trade yet no concrete hedging  institutional policies have been formulated to safeguard local businesses abroad from massive local recruitment, Health threats such as Ebola, political uncertainties and environmental concerns. Speaking of environmental concerns ,Ethiopia’s construction of Gibe dam for energy purposes greatly affects lake Turkanas eco system yet the irony of it is that we are bound to purchase power from them.

As local businesses expand regionally there is need to hedge this businesses from external shocks in form of a well thought out reinsurance strategy  that accommodates the peculiar nature of African businesses, local financial institutions with respective regulatory authorities must have some form of enhanced Terrorism and sabotage, Political ,Riots and strike insurance covers  to mitigate their businesses and staff accordingly.

Tuesday, 27 May 2014

Addressing the tribal and ethnic symptom in our Kenyan politics through introduction of Minority Taxes


I know it  may sound a bit awkward but it does as well provide room to critique and synthesize  our problems from a financial perspective in dealing with a social and cultural problem whose genesis lies in unfair distribution of resources compounded by plutocracy, to the externalities of the 1884 Berlin conference where  German Chancellor Otto  von Bismarck  convened a rendez vous of imperial capitalists  to divide Africa and the subsequent lack of belief in established institutions of governance by the native leaders.
Me thinks that the tribalism is not the problem in this country but  rather a tool or platform used by tribal powerbrokers to a mass wealth at the expense of their ethnic identity , the common Luo,Kikuyu,Luhya, Kamba and the rest of the other ethnic formations in the slum areas and other parts of the country  co-exist peacefully  but come the ballot period its ones surname that matters but not what his or her  candidate stands for . Once the powerbrokers get into power they appoint  a few ethnic henchmen usually business associates so as to exploit the goodwill of their blinded supporters.
Many at times have blamed the Kikuyus for being tribal  but what they fail to realize is that even under President Moi, he had his own Kalenjin brothers  and the same would replicate to the various ministries, parastatal appointments. What we ought to realize is that criminal gangs such as Mungiki arose as a  result of historical injustices and further hardened by being misused by politicians who gave false promises, In Luo Nyanza we have seen the occasional clashes between the Chinese and American gangs in Kisumu fighting for the control of the city  at the coast we had the Movements such the Mombasa Republican  with claims of marginalization, Al shabaab a branch of Al Qaeda seems to have sympathisers in the formerly   Northern Frontier district, The Taliban group in Nairobi’s Eastland Area, to the Gusii led sungusungu, chinkororo etc., all the groups have one thing in common they are trying to fill a vacuum  which the government has overlooked , that of suppression which in turn they find solace  in religion fanaticism, criminality due to abandonment by those charged with running the  institutions of governance.


Having said that , As nation we need to  critically address  this issue ideologically rather our usual short term impulse approach to issues , though gains are being made by the current constitution through devolution of resources to county governments, the limit set  on the ethnic composition of public sector employees in various state agencies,the equalization fund under the  current  constitution are  just but just a few measures put in place to curb unfair employment practices and unequal distribution of resources . However the continuous emergence of the private sector which  offers higher incomes should be wrapped in the process . There is need for the government to introduce tax breaks for home grown companies  and provide tax incentives  for Kenyan companies retaining jobs locally, having said that it should be made mandatory for companies to file audited employee reports tallied against Paye As You Earn at the end of the year  , this report would assist in formulating  and  imposing Tax penalties for companies that are ethnically imbalanced , however for this to be achieved a formula for determining the percentage of unfair employment  practices has to be worked out and legislated , however in my opinion this kind of premium penalties will kind of address unfair employment practices  in our private sector that is mainly run by the same power brokers , for public sector we need to have a capping on the procurement of tenders and contracts based on number of tenders issued and the ethnic composition of the stakeholders for the tenders awarded during a particular fiscal year and the magnitude of the tender at hand as Saint Thomas Aquinas once said said  “Justice is a certain rectitude of mind whereby a man does what he ought to do in circumstances confronting him”.

Wednesday, 14 May 2014

Understanding Chinese infrastructural Aid in Africa in the wake of Geopolitics

Flying Geese Model

The recent itinerary by the Chinese premier  to some of the key African economies  namely  Angola, Nigeria, Ethiopia and Kenya  with a combined population of  around 325 million people might have rattled the Bretton Woods affiliates against the increasing presence of  Brics investments and lending  to the African continent led by China in key infrastructural projects. There has been an outcry based on comparisons  between Sino Aid and Western Aid  towards Africa which in my view is based on one hand, the perceived lack of human rights ,substandard products/services,negation of Social and Environmental Impact Assessment and corruption  as  terms and conditions for advancing loans to key African countries  by the Chinese in the eyes of the Bretton Woods wing  while on the other hand, there has been a growing resentment  by the African states on the tough conditions attached to funding of key projects with terms ranging from Privatization, addressing public expenditure through employment freezing and or retrenchment  inter alia. However it must be noted that the west's presence on the continent has been that of exploitation during the colonial days and neo colonialism through major international aid agencies that  mainly practice palliative economics. With the ever rising levels of educated middle income earners across  the African continent there is bound to be great awareness on the type  of diplomatic and trade engagements  that will yield high returns and drive these budding economies into self-sustaining economies. Yes China does realize that it needs  oil from Angola and Nigeria to energize its economy and for the Ethiopians  to leverage on cost of production  while Kenya is seen as source of food and (entry to the landlocked states) for its over one billion people inter alia while Africa needs capital expenditure to spur trade,the trade between these countries is largely skewed in favour of china and more ironically to the west whom they trade with more compared to china  , the trade between Africa and the west  is based on comparative advantage economics with no technology transfer.
China itself  received over  USD200 million in 1978 from Japan in terms of development aid though these was halted twice , first in 1989 after the Tiananmen Square incident, and secondly in response to China's nuclear testing in 1995  and eventually the agreement by Japanese authorities to stop  new soft-yen loans to China from 2008,based on projections that china would not  require any soft loan by then and that it will have come  of age economically, a leaf that African countries can borrow from (Angola has been funding Portugal's banks though through individual capitalism), China has and still is a recipient of donor funding despite joining the big brothers table. The big question is can Africa assume the role of china when it was still getting aid from Japan. Back to Geopolitics as China was signing loan agreement with Kenya totalling over USD 5 billion on key infrastructural projects so was the World Bank advancing over USD300 million to Tanzania to improve and reconstruct its railway line a case of  balancing business foes and friends  in the wake of the rising new business frontiers and realignments hence the emergence of  coalition of the willing  in tandem with the Ethiopian, South Sudan,Uganda, Rwanda and Nigeria approach taken by his excellency Uhuru Kenyatta on the African front while on the International front the West have been busy investing in high end software technology thence the presence of IBM research  centre in Kenya to the hardware infrastructural development in terms of roads, rail , airports to access the markets for raw materials inter alia by the Chinese .

As a cautionary , the Chinese did reiterate that they are not only after minerals but on wider development mission;could this trigger the reduction  of non-governmental organizations ? Moreover African authorities need to understand that Chinese are experts in Escrow Agreements meaning that they would want clear understanding on repayment terms as the loans are managed  by a third party but not the recipient and that they have a lot say on whom the projects will be contracted to  this has its own disadvantages and merits as the funds are kind of tied to the lender and the recipient loses on procurement processes, quality assurance and labour issues.

What African states need to realize now is that opening up infrastructure opens trade to goods and services however a caution has to excised on creating tax haven policies that favour foreign firms when they land into a flying geese economy.

Sunday, 4 May 2014

The Kenyan Security system;addressing patriotism and personnel welfare

The various spontaneous report running in our mainstream media like the recent  High Court orders on KDF to release 26 former soldiers who had been accused of  dissertation of duty in search of  green pastures offered by foreign security firms as reported by the standard newspapers , to the case of the two  police officers arrested with cache of ivory ferrying it to Nairobi from Meru and other undercover cases that go unnoticed by the general public underscores  the need  for the state authorities to revitalize the wheels of justice with an aggressive  but diplomatic Maasai rungu.
Towards the end of last year parliament tabled the Military Veterans Bill 2013  that was meant to establish and institute mechanisms of rewarding benefits to the military war veterans and their dependants there of  , I hope that the National Police Service Commission extends the olive branch to the police force too. However of critical importance is the need to shift away from short term measures  whenever we are struck by war crimes or security disasters; there has been a tendency  to mobilize funds for the fallen victims through Paybill Numbers running on various Telco’s  platforms such as MPESA, it must be noted that  however philanthropic it is , it negates the whole reason why we pay for taxes  for services not rendered. Our men and women in uniform as they often referred to, do deserve dignity and honour in rendering services to wananchi , the cases of  police and military who find themselves  dismembered by acts of war  do not need to be dismembered by the state when it comes to paying their benefits , remuneration  and most importantly their dependants and the methodology of reincorporating and intergrating  returning soldiers suffering from psychological effects in our mainstream society through well thought out counselling plans before reuniting with their families and the general public . In today’s changing African society there is a great correlation between pecuniary motivation and patriotism , for patriotism is being eroded by graft and diminishing  cultural virtues. The externalities we are experiencing today in terms of terrorism are partly due to economic mismanagement of public resources and the effects of Geopolitics driven by resource control.
Though various laws do supplement  the form in which the Military Veterans Bill was intended more needs to be done  , for instance the calculcation of  GPA is usually based on Permanent Total Disability under GPA - Eight Years (Basic Salary + House Allowance + Medical Allowance) x Percentage awarded  as provided for under the Insurance Act cap 487 , what props in any sane  mind is the entry level salaries and the prevailing salary at the time of death  , are they worth given someone’s age and period of service.
The introduction of  medical and life insurance covers by the government last year following upon recommendations  by the task force chaired by Justice (Rtd) Philip Ransley that  introduction of the comprehensive medical insurance cover to take care of the health of the police officers on account of their high-risk exposure was a good step forward however there is need to invest more in security education , better remuneration, new forms of technology   and above cutting of wastage public resources our security spending is the highest in the horn of Africa region  but at the same time it beats the purpose of communities having  to invest and build  police posts yet each and every year we have slightly over $2billion dollars that goes unaccounted for by the government, the Controller of Budget Audit report for  FY 2011/2012 explains it all  where kes 300 billion was unaccounted for. What the government needs to realize that having more police officers and boots on the ground is one thing,on the contrary just use of resources for educating  and empowering the citizenry is a noble solution for our safety building a purely individualistic capitalist society won’t take us anywhere.

Saturday, 15 March 2014

Driving down the cost of motor insurance in Kenya a different perspective


The paracetamol approach that has been used over the years in mitigating claims arising from motor insurance from burglary, theft , Third party injuries  etc. through raising of motor premiums rates by the Insurance Regulatory authority  to cushion the industry players against high and mostly  fraudulent losses arising from motor insurance as evidenced in the  AKI statistics reports on motor class  insurance  losses  calls for a long lasting solution to address  the rather comestic panacea adopted by the authorities.

 The biggest problem has been partly caused by the inability amongst the industry players to share and adopt a centralized database on vehicle particulars  which problem can be attributed to competition for clients even against the cash and carry rules and the fact that many underwriters in the industry preference to leverage losses on motor insurance especially if they have other huge schemes from the same  client that are not loss making  which in my opinion is an affront to risk based management in the long term .

A long lasting solution in  mitigating claims arising from motor insurance does not lie in raising premiums rates but modernising our infrastructure in the manner that use of automated highways will greatly reduce risks of accidents caused by overspeeding , a simple case in mind is use of agencies like  KAPS to manage major highways by issuing cards on entering any highway and on exit - payment for time of use and attach  penalties for arriving the required destination before the stipulated  time through electronic monitoring , this  can greatly reduce the appetite for commercial vehicles e.g bus companies rushing to rake profits by over speeding instead of issuing night travel bans – install some sort of KAPS managed tolls along major roads with a defined set parameters on the do’s and dont's while driving on  highway.
Lastly and most importantly there is need for  Treasury secretary to look into ways of either zero rating and or making importation of Car tracking devices duty free , this will go a long way in addressing theft claims cases and even fraudulent claims, make it mandatory for all vehicles seeking insurance be fitted with such devices . The current practice in the market is that most underwriters have been forced to develop above premium rates motor products to cushion them against motor losses hence a drain on policy holders , there is an urgent need for financial inclusion from both the sectoral players and the concerned government authorities to embrace Telematics Insurance at all costs but these calls for greater investments infrastructure  and strengthens our institutions  morally.

Monday, 4 November 2013

Is Kenya ripe for QROPS based on the Diaspora Remittance trends?


As a reknown safari tourist destination and the gradual increase in Diaspora remittances coupled with the presence of many multinational corporations   in the area of international organizations such UNEP, UNHCR offering employment to different nationalities. Me thinks that there is need for the Retirement benefits authority to be structured so as to accommodate for QROPS an acronym for Qualifying Recognized Overseas Pension Scheme a product or a scheme that enables one to enjoy various  benefits as it’s the case for British Experts working abroad  for instance if you’re planning on retiring to a low tax country or one that does not tax pension income, you could potentially enjoy your entire retirement income free of tax , If you reside in a country with no double tax treaty with the UK, you may even be subject to a higher tax rate on your pension than the top rate of tax in the UK. This is naturally far from ideal – however, if you transfer your UK pension to a QROPS, if tax is due on your pension income it is only due in your new country of residence this is just but a few of the benefits of enrolling for QROPS scheme.

From the late 80s up to late 2000 there has been a considerable surge in Diaspora remittances in the country from Kenyans living and working abroad, sources from the central bank of Kenya indicate an all time high of USD 103.97 million wired by Kenyans living abroad in February 2012 and the trend has remained slightly over USD 100 million with slight variations occasioned by global market forces such the recent US government shutdown amongst other issues. This in itself is an indicator that developing a QROPS regulation to cater for expatriates is one way of enabling the citizens enjoy tax free lump sum payments, offers room for retirees to  enjoy total diversification with this type of retirement savings scheme given the ability to access both onshore and offshore funds .

There is consensual need for the respective government authorities namely the RBA and IRA to come up with criteria for who qualifies to be registered under such a scheme. It’s one area that could easily increase investments arising out of old age benefits being spent in the markets by the pensioners while at the same time cutting down on capital flight funds especially destined for the tax haven islands of Monaco, Gibraltar and Guernsey.

Tuesday, 29 October 2013

Capitalizing on the geothermal water in Naivasha and its environs to boast Health spa tourism in Kenya.


My recent visit to Olkaria Geothermal plant in the Great Rift Valley region of Naivasha, Kenya for a family weekend to experience what the geothermal spa has to offer, reminded me of the many opportunities our country has to offer in terms of balneology to the loved one amongst us suffering from skin ailments such as psoriasis, skin rashes etc in order to stay healthy and tranquil while not only enjoying the steam bath but also get a glimpse of seeing buffaloes and giraffes  graze on the nearby hills , the move by Kengen in diversifying  in health tourism is long overdue for country only considered as a safari destination , it brings new dynamism in the way tourism is looked at with novel ideas like Eco and agro tourism and cultural tourism. Though from what I gathered from the tour guides the rates for locals are kes 300 and another kes 300 for parking fees where as for resident citizens the damage was kes 500 and I guess kes 1,000 for foreign tourists, though the underlying fact is the related amenities are almost complete.
The potential that the Kenyan Rift valley has in terms of offering the world’s best natural health spas is enormous given its geothermal latent and the retirement homes that are being set up in the happy valley of Kenya which is just one hour’s drive away from the capital city Nairobi. The leading countries in geothermal related health tourism like Iceland receive close to over 400,000 tourists per year. In order for the Kenya tourism board to attract more than the 1.2 million tourists who visit the country annually investing in medical tourism is a key priority especially for the pensioners and any other group or individuals interested in natural health cures. However to promote this a lot has to be invested in security and education so that people understand the benefits of the healing powers of geothermal water and even develop regulations that can allow for medical insurance reimbursements for patients seeking treatment in authorized natural health spas in the country .According to the World Travel & Tourism Council (WTTC), in 2011, the total impact of the medical tourism industry contributed 9 percent of global GDP (over $6 trillion USD) and accounted for 255 million jobs in the world. In the next decade, medical tourism is expected to grow by an average yearly of 4 percent, contributing up to 10 percent of future global GDP ($10 trillion). Eventually, by 2022, it is estimated that 328 million jobs will be created in the medical tourism industry: equal to 10 percent of jobs in the world, the report added.

Though Kenya is not considered as a top ten medical tourism destination I believe it has the potential to conquer that particular sector, the recent demonstration by reknown British billionaire Richard Branson to open a luxury safari camp in Masai Mara against a back drop of the Westgate attacks and the subsequent travel bans issued by several western nations is testimony that Kenya is still a preferred holiday destination on any day.

Friday, 25 October 2013

Why county governments should think of issuing municipal bonds to finance infrastructural developments.

Following the promulgation of the new constitution in the year 2010 in Kenya, that gave birth to ‘semi autonomous’ 47 county governments, several challenges and opportunities have since emanated from these devolved units of governments. The commission on Revenue Allocation, the body mandated with ensuring equitable distribution of national revenues plays its role at the national level; however a lot needs to be done by the county government leadership through their governors and respective membership in financing the budget deficit in order to provide for proper and reasonable social amenities, Education, health and other infrastructural facilities i.e roads, rail and air transport.
What are county governments doing at the moment?
Lets kick  off with governor Mutua’s Machakos County which held an investor conference from the 16th -17th  may 2013 that catapulted into signing of a  Memorandum of understanding on investments worth kes 56 billion with various stakeholders, hot on the heels of governor Mutua was Homabay County’s governor Cyprian Awiti unveiling Sh595 billion agro cum infrastructural project, a joint venture between Good Earth Power, Urban Green Energy and the county, to be  rolled out in phases for a period of 30 years, a project if implemented would impact positively on the income per capita for the locals .Last but not least is the recent pledge by China Investment Bank, on the prospects of funding the urban re-generation of the Eastland’s area  in  Governor Kidero’s Nairobi County ,the project also involves face-lifting the dilapidated housing conditions in the city and  the transport system to the tune of kes 80 billion and for sure other county government are likely to  take cue depending on their strength ,priorities and the purchasing power of the county residents.
The challenges from the above scenario?
No investor puts his money into a project and expects dismal returns, they all expect above market returns especially the foreign investors ,in turn what that means is to raise the cost of services and taxes in order to repay the aforesaid loans thence capital flight something which the municipal bonds can easily mitigate. Capital flight in terms of royalties, licence, management fees, supernormal profits deprive the locals the much needed income for affordable livelihood sustainability hence the need to ‘open the front door and block  the back door’ and expand the scope of local government independent bond issuance," a policy  the Development Research Center said in its draft proposal submitted recently to leaders of the ruling Communist Party and published last week on the website of Beijing's Renmin University
Back at home the likely panaceas lie in the restructuring of our bond markets to cater for issuance of county municipal bonds , economists opine  that a real municipal bond market would be key to addressing the local debt issue, with disclosure requirements helping to impose a hard budget discipline on local officials i.e. the governor ,county assembly members and ministers  this will ease the fear of the  rise in local government debt which is  a concern, given the complexity and murkiness of municipal finances where there is no clear transparency in debt levels disclosures a key aspect that can be aptly addressed by the controller of Budget . The use of longer-term  municipal bonds would also relieve the worrying mismatch between infrastructure investments that may take decades to produce financial returns and the short-term loans that are often used to finance such projects for instance construction of major highways, railways or airports may take more than 15 years inorder for the principal and loan interest to be fully repaid where as given the option of borrowing from a bank their payback periods are shorter and expensive usually lesser than six years hence a drain on the locals, therefore the suggested use of a hybrid form of county municipal bond issuance would cut down on borrowing costs for many local counties , given that municipal bonds  are tax free and that the county government is basically guaranteeing that you will receive your full deposit and earned interest back and chances of default levels are extremely low given their long term nature -  repayment spread and contrary new issue stocks that are brought to market with price restrictions until the deal is sold, municipal bonds are free to trade at any time once they are purchased by the investor .In a nutshell there is need for conducting pilot projects for municipal bonds in the country in order to cut reliance on over dependence on donor loans for both national and devolved county  governments in order to avoid being declared a HIPC sooner .

Wednesday, 16 October 2013

Towards an Eco-Friendly Environment with the Green Levies In Kenya

Modern day management calls for the adoption of the triple bottom line approach in dealing with the human capital that is their right treatment, the planet in terms of minimizing ecological impact in all areas and lastly the profit motive which means making honest profits than raking profits , Climate change in developing countries like Kenya is not fully embraced yet since these countries are yearning for industrialization status without having a proper framework for dealing with such an environmental issue. Indeed, regardless of holding vast forestation cover, this is currently affected by pollution as a result of utilizing locomotives shipped from the developed countries when their life span has already expired, hence cheap, but emitting a lot of carbon which is a threat to the human beings and environment at large. This circumstance generates the need to implement eco friendly laws that will protect the planet earth and its citizenry.
Currently in Kenya, there are no sufficient and tangible government laws aimed at safeguarding the eco pureness of our country hence the need to formulate concrete laws that will act as catalyst to the government agencies to devise policies aimed at combating the effects of global warming. Besides capping the maximum age of eight years on vehicles being imported and the zero rating of VAT on bicycles as a way of reducing pollution in the name of roadworthy vehicles and having eco friendly mode of transport, the subject of having a fraud cum an eco friendly free mode of transport has never been fully addressed. Developing countries like Kenya are faced with bottlenecks in embracing global climate change initiatives due to their relatively weak GDP which subsequently affects the purchasing power of the general public who would rather buy aged motor vehicles due to their pricing advantages but discharge high level of carbon emissions as opposed to hybrid, LPG and bio fuel ran motor vehicles which are environmental friendly but pricy.
What has already been done so far?
According to E D S van Vliet and P L Kinney, [1]in their article Impacts of Roadway Emissions on Urban Particulate Matter Concentrations in Sub-Saharan Africa: New Evidence from Nairobi, Kenya, Published on 21 December 2007 they observe that the lack of ambient monitoring data for particulate matter in SSA (Sub-Saharan Africa) cities severely hinders our ability to describe temporal and spatial patterns of concentrations, to characterize exposure–response relationships for key health outcomes, to estimate disease burdens, and to promote policy initiatives to address air quality. For example, we are aware of no routine PM (Particulate Matter) 1.0 or PM 2.5 monitoring anywhere in SSA other than South Africa prior to 2005. Besides capping the minimum age of eight years on vehicles being imported and the zero rating of VAT on bicycles as way reducing pollution in the name of un-roadworthy vehicles and having eco friendly mode of transport, the subject of having a fraud cum an eco friendly free mode of transport has never been fully addressed.
What needs to be done?
Given the increased levels in infrastructural developments across the country there is need for routine PM10 or PM 2.5 monitoring so as to understand the levels of  exposure and disease burdens may be especially great for persons driving, working, or living near congested roadways. Particulate Matter concentrations on and near roadways are especially important in SSA because much transport, commerce, and other pedestrian activity takes place there. Heavy-traffic roadways may create pollution hotspots where health risks exceed those encountered more generally throughout a city, and where risks are borne mainly by the poor Kinney and O’Neill 2006) hence the need to establish air monitoring networks as basis of measuring and ascertaining exposure–response relationships for key health outcomes, to estimate disease burdens, and to promote policy initiatives to address air quality and lastly the need to introduce telematics insurance but this requires government support to Insurance Regulatory Authority  to ensure introduction of green levies on motor and other related policies and the subsequent reinvestment of green levy funds in eco friendly initiatives such as planting of palm oil trees which is useful in production of bio fuels



.