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.

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.

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 16^th -17^th  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 .

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

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After the Westgate shopping mall attack what next ?

 

As we all know nobody loves death be it natural or artificial as it were  , 21^st September  2013 remains a sad day in Kenya‘s history books, the day when those heinous beings that justifies Karl Marx statement that indeed religion is opium for the poor especially the ones prone to being brainwashed and that some extremist elements can wreck havoc coincidentally on World Peace day by mercilessly executing peace loving Kenyans, out to spend a weekend  with their loved ones grabbing a cappuccino, young children engaging in cooking festival amongst other noble notable reasonable duties.

After the inhumane attack it’s time we as country need to seriously relook at our policies and take stock regarding our Immigration, border and internal security, mismanagement of public offices either indirectly or directly, societal moral decay and reforms in our security agencies geared towards serving the taxpayers safety in shopping places, stadia’s, learning institutions, hospitals, trains, buses, hotels and other social places

The hard questions begin to ponder our souls have we as society becomes so capitalists that we can sell away our sovereignty, patriotism and morality? , is it because of the huge differential gaps in standards of living across the nation solely the  driving factor behind the sprawling young extremist recruitment in the slum areas  by the terrorist groups filling the income void occasioned by unemployment  ? Are we a victim of geo politics driven by resources and control of strategic countries by the so called super powers? Are our priorities as country geared towards elitist cum egoist goals at the expense of a broad spectrum, fortified and unified state, the questions are many but at this point we can only think of developing long lasting solutions which starts with me and you through digital and physical engagements as well through public and private sector partnerships in order to tame this inhuman externalities.

The way forward will involve players such as the insurance industry , lawmakers, Real estate owners, Hospitals , government agencies e.g. registrar of births, immigration, the traffic police , public and private learning institutions, shopping malls, security agencies inter alia. Let’s kick of with the:

Insurance sector ; plays big role in risk management, its one sector through which the various players such as A.K.I, I.R.A and R.B.A play a key role ranging from developing policies meant to prevent major occurrence of risks and imposition of heavy penalties for non compliance on  regulatory requirements through occasional surprise audits and any anomalies found in the regulatory reports for instance it’s high time the industry players adopted a digital platform for sharing information on Vehicles and their owners, adopt new policy clauses on the political, terrorism and sabotage covers requiring  disclosures of security measures put in place such Smoke ,bomb, anthrax and gas detectors for property that have American, British and Israel interests, property that are of economic importance to the government amongst other related institutions e.g. Ports Authority , airports, KRA and CBK however , parliament  needs to enact legislation that will see either zero rating of  car tracking devices and for insurance players to make it mandatory for each  car be fitted with it (form part of the insurance policy clauses), Equip the traffic police  with electronic gadgets that can enable mobile capturing and tracking vehicle details without stopping the said vehicle to supplement the cameras being installed in the city in order to curb crime rates thus reduce claim losses arising out of theft and hijackings .

Hospitals; Upon expectant mothers being blessed with  new born babies in the country they young ones should be assigned unique identity numbers and names allotted by parents electronically stored and shared on daily basis with the register of births and the immigration departments such that by the time one attains the majority age the authorities issuing identity cards have prior knowledge of the persons being issued with various statutory documents i.e. driving license, PIN number, NHIF, NSSF etc in short we should have one document this will curb cases of illegal immigrants, streamline profiling of Kenyans citizens on matters security amongst other issues.

Real Estate Developers and Land Lords; Though a bit complex landlords should be required to ask for employments letters from their tenants, identity cards, colored passports and or their sources of incomes and details of their immediate family members, cell phones however to achieve this, reforms in rental income filing to KRA by landlords such as  capturing  key statutory identity features of the tenants are necessary, it should be a requirement that key buildings associated with highly exposed foreigners and susceptible to terrorist threats deposit  their architectural designs with the NSIS  and subsequent changes and or partitions to the building subjected to same law. However the long term panaceas lie with the government floating a housing bond to supplement REITS and private developers in offering formal settlements country wide otherwise profiling of individuals living in slums areas is cumbersome it requires regular community policing ,another key factor lies in the threshold for approval of residential buildings that have no common areas and or social amenities should be controlled , its only through social places like community social halls, soccer fields that people get to know each other but not in apartments in a nutshell information comes to social places the more they diminish the more difficult it becomes to mine one.

Private Security Agencies; We do know that our G4S guys, Lavington security guards, Radar etc are not authorized gun handlers especially their employees deployed to guard shopping malls, schools, offices, residential houses etc, in my opinion given the sporadic shootings by teenagers in schools especially in the USA, that arouses the questions of gun control, I may be right or wrong but I tend to opine that they should either be absorbed or transformed into a special armed police body meant to specifically offer security in major shopping malls, stadia’s, schools, office place ,hospitals and  placed on a  government payroll and while at the same stakeholders should offer anti terror and safety security measures to its employees on regular basis this should form part of licence renewal requirements but at the same time allow for employers to claim the reimbursement under NITA rules formerly the Directorate of Industrial Training.

Reforming the police sector; The police units should not be seen as a preserve for those who scored low marks in high school and just because I can run faster does not mean I can dodge a bullet, our police force should be properly trained equipped with modern warfare techniques, properly remunerated and above all remain patriotic however iam told you don’t eat patriotism whose deficiency is sometimes as a result of low morale hence prone to bribery. High end terrorists by nature are well schooled individuals iam reminded that Osama was a trained engineer, Khalid Shaikh Mohammed one of the September 11 mastermind was a graduate of bachelor science in mechanical engineering attained from an American university Mr. President Uhuru be bold enough have graduates enroll for military for the sake of peace and stability in our country. Let’s have the SRF forces spread across the country in major towns for now the dissidents are fooling us with Nairobi, Mombasa and Northern Kenya how about the rest of the country, re engage retired military personnel on under cover surveillance .

Lastly this subject is wide we have not even covered schools, hotels and public transport sector remember the London underground transport bombing.  lets not turn a blind eye on the eyesore called terrorism lets  be our brothers keeper just like Abdul Haji during the westgate attacks.

Agriculture insurance in Kenya and the need to develop a commodity based futures market

 

Agro based insurance covers in Kenya are still a new type of risk or rather new class of  agricultural  insurance despite most insurers in the  market developing insurance products ranging from Wheat , sugarcane, sorghum, Greenhouses ,dairy cows , horses  etc  to cushion the farmers against adverse losses that may arise as result of  bad weather, theft , some classified  diseases especially for livestock farmers , arsonists attacks on sugar plantations inter alia. However, since the late 2005 the uptake of the agro insurance covers in the country has largely been driven by respective underwriters creating awareness through broad based marketing campaigns targeting agriculturally rich counties on the merits of insuring crops and livestock to which they have justified the same by electronically settling insurance claims for affected policy holders a case in mind is the Jubilee insurance company of Kenya compensating Sorghum farmers as result of poor rainfall in kibwezi which fuels the need for farmers to engage in value based farming devoid of acts of god.

What most insurance players in the market have been forced to develop products in a way that leverages their premium incomes  from adverse losses by developing key control factors for instance for wheat farmers they have a minimum requirement on the acreage to be insured, maximum guaranteed indemnity should a loss occur;  the regulator in tandem with the government ought to devise policies, create durable infrastructural facilities  and laws that will guide the growth of the insurance sector in the country as whole without burdening the insurers in the market. This will address the need to mitigate insurance costs usually passed over to overseas reinsurers especially for the highly mechanized farm plantations.

Other micro finance institutional players in the market such as KWFT have also partnered with insurance players by offering credit facilities to Sacco’s who in turn invest in dairy cows that are insured against death, theft and or gestation complicated issues in this way the insurance company guarantees to pay the farmer should a loss arise and that the micro lender is guaranteed that the farmer is able to repay the loan taken based on restitutio integrum. Having developed sound insurance base for the farmers opens up the farmers to another war frontier that usually involves exploitation from middlemen and brokers out frustrate their efforts to sell at a reasonable rate their farm produce to the specific industries that need to process agro based produce  hence a disillusioned farmer , though the other factors stem from the inability by the factories to pay the suppliers which arises out of fund mismanagement and or price fluctuations in the global markets .

The way forward to cushion the farmers from exploitation revolves around setting up commodities futures exchange market for products such as maize, wheat, barley, pork, sugar, coffee, tea etc such that   a farmer raising wheat can sell a future contract on his wheat, which will not be harvested for several months, and guarantee the price he will be paid when he delivers; a breakfast cereal producer buys the contract now and guarantees the price will not go up when it is delivered. This protects the farmer from price drops and the buyer from price rises. Speculators and investors also buy and sell the futures contracts in attempt to make a profit and provide liquidity to the system. However, due to the financial leverage provided to traders by the exchange, commodity futures traders face a substantial risk. This will go in a long way addressing the maize, coffee, sugar and other cartels that normally exploit farmers in the country for political and selfish interests.

Livestock Futures as a solution for cattle rustling in northern Kenya and the neighboring countries

 

Over the years cattle’s rustling has been rampant in the arid and semi arid areas of northern Kenya amongst the nomadic communities especially the cushites and the plain nilotes as well extending to neighboring countries i.e. Ethiopia, Uganda and Sudan. The well documented causes of the problem which revolves around some communities being armed “illegally” to fend off cattle rustlers from other pastoralist’s communities for political reasons, communities appetite to replenish lost stock after  harsh weather conditions during wet seasons from their fellow  nomadic communities and last but importantly the lack of proper education and low literacy levels by the pastoralist communities which the main rogue market players take advantage of in terms of buying their stolen livestock at a cheaper price and selling the same to the main urban centre’s at a premium price. This cyclical lifestyle does more harm for an economy that plans to achieve middle income status by 2030.

The political class and the regional leadership only resorts to short term measures such as disarmament of illegal firearms and left it to the N.g.o world to manage state affairs such provision of irrigation and lastly nature to dictate for instance   during dry seasons no rustling occurs due to en masse death of livestock as result of inadequate pasture as well as the famine experienced by nomads hence their inability to steal  and where as during the wet seasons, it’s time to strike for there is plenty within the borders to replace lost stock . During the inauguration ceremony for president Uhuru I saw his Ugandan counterpart Yoweri Museveni accuse the pokots from stealing animals to which the latter’s Kenyan legislators did not take lightly and yet we did not see any constructive solution to the problem at hand.

The long lasting panacea to this problem lies partly with our  regional government efforts to irrigate arid and semi arid areas , have more nomadic communities  enroll for formal education in order to avert this rather perennial problems however, the long lasting solution lies in financial sector deepening which calls for establishment of cattle’s futures market to take care of the harsh weather conditions and political cartels that exploit this nomadic society and as such cattle futures market will enable Consumers and producers of livestock to  manage  cattle price risk by purchasing and selling cattle futures. Cattle producers can employ to lock in a selling price for the cattle they produce while businesses that require cattle can utilize a long hedge to secure a purchase price for commodity they need.

Cattle futures can also be traded by speculators who assume the price risk those hedgers try to avoid in return for a chance to profit from favorable livestock price movement. Speculators when they believe that cattle prices will go up. Conversely, they will when they think that feeder cattle prices will fall. However, to achieve this other related products such livestock insurance must be a prerequisite for one to trade on the cattle futures market ,furthermore it’s high time the government relaxed rules on importation of tracking devices which can be installed on   cattle  horns or hooves and the same should form part of insurance policy so as to mitigate theft claims.

 

 

Taxing the poor to fund the rich in kenya

The last few months, Kenyans have witnessed an ever bulging national debt occasioned by the need to finance the various capital expenditure projects as envisioned in vision 2030 however, I tend to opine that the executive is being held captive by the legislature due to selfish and political interests, the clamor by our lawmakers forcing the Salaries and remuneration commission to award them huge pay perks in country where the GDP per Capita is USD 800 only widens the gap between the have and the have-nots. The president was arm twisted into accepting their salary this would in return mean legalizing VAT ACT NO 35 meant to tax the poor on basic needs, this raises another pertinent question will the taxes be used effectively repay the Chinese loans or shall we as country always revert to soft target taxation groups while major tax evaders and offenders are let loose, the so called fat cats take advantage of the political divisions in the country to advance their imperialist cum capitalist interests.

As a realist accountant I do concur that capital investments in infrastructure and energy have multiplier effects on the general populace; however as country we ought to realize that capital investments only will not spur industrialization unless the government creates an enabling environment that can effectively fend off proponents of the flying geese model, a point in case is the recently completed Thika Eight lane highway  that has seen multinational companies such Pepsi, Foton and the emergence of new Golf Resort Cities e.g. Thika Greens targeting the affluent while the poor can only be offered jobs that are technologically dead and low paying , the current and future governments should devise and give priority to policies that are agro friendly and tech savvy  driven by setting special  investment deductions  incentives for companies and individuals willing to set up novel local  firms with novel ideas along such infrastructural establishments but this  calls for moral respect of intellectual property laws and investing in quality education.

 

Lastly I must commend positively to what our kaka zetu  Tanzania are doing, their resolve to establish new port in bagamoyo and the port of  Dar-es- salam reengineering has given Kenya wake up call to remove trade barriers along the Mombasa – malaba highway and even think of a modern railway inter alia   that in itself has been  demonstrated in the recent meeting between EAC heads of state member but it begs the question do you have to wait for neighbor to wake you up - in a nutshell it’s high time Kenyans stopped reasoning along partisan lines address real issues like the cost of living, immigration, security ,Education ,devolution as opposed to thinking using their surnames when indeed addressing their own personal and political interests.

Combating Terrorism in Kenya

 

Ever since the 1998 bombing of the US Embassy in Kenya which claimed over 225 ordinary lives and left thousands with permanent scars and disabilities  to the surviving victims in country where recourse for Medicare and health insurance is a preserve for those in formal employment , the fight against terrorism  in the country still faces major hurdles  both regionally and internationally mainly driven by the fact the Kenya hosts many international organizations in the Horn Of Africa of strategic interests to the West and also harbors many western related multinational firms hence an easy target for these extremist groupings. The spillover effects saw Kenyan forces wade and fly into neighboring Somalia in October 2011 to stymie their quest for destabilizing the ‘tourism industry’ following the abduction of a French nationality on the northern coast of Kenya as well the murder of the British couple (husband)  and  kidnapping of the wife  acted as a precursor to the  numerous sporadic shooting , placement of IED in northern Kenya and  hurling of grenades in various parts of the country claiming the lives of innocent people in revenge to Kenya’s entry into southern Somalia.

The absurdity in the fight against these terrorist groups is that they continue to attack the same areas repeatedly which raises a concern on our security apparatus either as lacking the will to protect its citizenry or reluctance in continuous monitoring of these criminal gangs, the country’s borders have become porous to attacks and entry of illegal and dangerous immigrants who take advantage of our welcoming hearts. From the bus attacks in Eastleigh, Grenade and club shootings in Mombasa , the arresting  of Iranian nationals with bomb explosives in Mombasa to the heinous church shootings in Garissa it is now high time the government put its feet down to clamp these criminal minds and activities. One may ponder and ask why landlords and real estate developers are not willing to pay taxes on rental income but are better of harboring tenants whom they even have no clue what kinds of jobs they do in as long as they pay and get their rental incomes.

To fight terrorism and criminal gangs the current government should make mandatory for landlords to declare rental income as this will in one way or the other reduce money laundering cases and at same the same time pass a legislation that will see all landlords and real estate developers before entering into tenancy agreements , file information regarding the tenants employment contract, PIN Number and National identity and or their sources of income/means of subsistence  with a designated government security organ  and introduce heavy penalty for defaulters only such approaches could have easily profiled and tracked the Githurai terror suspect who was gunned down last week after months of trailing the suspect. In this country today especially in urban areas, neighborhood awareness and interactivity is extremely artificial - a source of ingredients for any evil minded person. Information sharing and digitizing of the above contents within the various agencies of the state for instance the KNBS, KRA and NSIS can aptly supplement The Prevention of Terrorism Act, 2012 enacted by the last parliament and assented to by the then president Mr. Kibaki in October 2012. My Nairobi governor’s approach of arming private security guard to fend of criminal activities is a good idea but may be in 20 years to come, with the current appalling security guard wages, gun leasing even if they are serialized will be on the rampage just have a look at how Americans with better established security systems are divided on the gun control subject whether to pass it or not. Combating crime in modern day world requires more than community policing but also calls for  investing heavily in information technology and having better trained police officers, the police force should not be seen as reserve for those who earned low grades in their O – Levels but should attract personnel skilled to understand human minds and criminality.

 

The Fight against poverty and wealth inequality in Kenya.

Famous Italian economist Ferdinando Galliani once quipped that from manufacturing you may expect the two greatest ills of humanity and slavery, to be healed (Galliani 1770/1959), since the Narc Government took over the realms of power from the second president of Kenya Mr.Moi way back in 2003 there has been tremendous growth in infrastructure and real estate development  is on the rise ,in the country despite the political bickering  embedded in any political system which normally pits the capitalists against what ails the common mans needs for those who believe in Abraham Maslow motivational theory. Today we are living in country where land that is meant for food cultivation and animal husbandry faces fierce competition from those willing to set up property, Industries and infrastructure without conducting  proper due diligence plans for posterity though Vision 2030 purports to address it. Humanity is playing second fiddle to artificial demands created by economic blocks that are driven by profits a system set up by the proponents of free trade theory who are driven by self interests. In Kenya the expansive Rift valley region often referred to as the food basket of the country you encounter dairy and cereals farmers crying foul of low prices for their farm produce which can be attributed to the global chain trade system of rich countries subsidizing their farmers against the perfect market conditions prevalent in developing countries, the same applies to central, western and parts of Nyanza province where hunger is not priority but finding market for their farm produce is a puzzle , the Economic Stimulus package launched by then Minister for Finance now head of state  Uhuru Kenyatta in 2009 saw many farmers diversify from crop to Fish Farming in order to boast their incomes following the aftermath of 2007 post election Violence effects to cushion them against losses economic but not against the Franz stangel effects.

Come July 2011 the Kenya Red Cross society had raised a red flag that at least 3.75 Million Kenyans in arid and semi-arid lands especially in northern Kenya were threatened with death due to the threat of starvation because of drought to the contrary nature has conspired to bequeath this region with the black Gold. Malnutrition rates in Northern Kenya were at emergency levels with more than 385,000 children below the age of 5 years in 13 districts suffering from acute malnutrition. Furthermore, many schools without school-feeding programmes had been closed. Other visible indicators included increased livestock deaths and erosion of livelihood and survival options available to the affected pastoralists. The worst affected districts included Wajir, Mandera, Marsabit, Turkana, Moyale, Eastern Samburu, and Northern Isiolo although certain districts in rain dependent Lower Eastern Region such as the northern parts of Mwingi and Kitui districts and the Coastal Region, which had also sank into the emergency phase classification of food insecurity. Further, at least 20 people were reported to have lost their lives as a result of drought-related effects. It was at this point that the Government declared drought a National Disaster. This led to birth of local idea by the name Kenyans for Kenya Initiative which saw Kenyans through the mobile payment solutions MPESA and some of the leading corporate firms in the country led by telecoms leader Safaricom  raise charity funds close to over $10 million dollars in a span of one month this goes to affirm that synergies between public private sector partnerships can offer a lasting solution to the health, Nutrition and other related problems that bedevil our economies, it also demonstrates that Africa no longer needs aid but trade ,the initiative is a living demonstration of how PPPS can transform a society, the mid- to long-term plan for the initiative was to focus on integrated food security, water and sanitation, and health with a specific objective of ensuring resilience to the effects of drought for populations in Northern Kenya and its already bearing fruits as result of constructing  various dams, boreholes and the introduction of irrigation in the so called ASAL areas is but a noble cue  to be embraced .The new constitutional dispensation heralds new era in Kenya’s quest for equality and equity in terms of income distribution to the various devolved governments units who can take advantage of the Kenya open data government portal https://opendata.go.ke/ to enhance social justice prosperity inter alia , however the fight against poverty will need more action in terms of having more educated women, statistics have indicated that the more a woman is educated, the less number of children she would bear – which the economy can support , Vision 2030’s main aim is to transform Kenya into a newly industrializing, middle-income country providing a high quality of life to all its citizens by the year 2030, all in a clean and secure environment however as a  society adopting a model similar to the  Chinese model  or rather some western child policy needs take into account the plight of the minority groups and future industrial and economic needs this explains why cheap odd immigrant labour  is rampant in the west against an ageing populace. The level of unwanted pregnancies can be tamed by way of having more women in classes and better equal employment opportunities; with a population that injects over a million newborn babies annually against a GDP per capita of $800 per annum it spells doom on the nation’s ability to achieve the aforesaid vision as my grandmother once told me to share is to care but not necessarily to bear the consequences of our neighbours actions.

The Horn of Africa: The New Hydrocarbons Frontier

Geologists and continental drift theory  led by  Alfred Wegener  believe that the countries in Horn of Africa i.e. Kenya, Ethiopia, and Somalia do not form part of the African tectonic plate they are  just part a small chunk of the continent that broke off from the Arabian plate and trampled into Africa and further believe that the same oil that was found under Saudi Arabia and Yemen is also to be found under East Africa, Madagascar  our Indian offshore  Africa brothers country is also believed to have been attached to the Kenyan  archipelago called Lamu  that was joined to East Africa before splitting apart about 145 million years ago and during the rifting it pulled apart where as those with a religious touch affirm that the fossil fuels beneath our earth are as a result of the decomposition of  aquatic living matter after the settling of the Noah’s Ark  believed to be somewhere in Mount Ararat - following the heavy floods after God  decided to wipe the wicked  mankind from the face of the earth. The diagram below depicts the earth drifts

  

History apart ,Eastern Africa has become one of the world’s most active exploration areas since Anadarko Petroleum made the decade’s biggest gas discovery off Mozambique, followed by  Tullow Oil Uganda’s discovery of oil way back in 2006 in the  Albertine Basin which analyst predict could be holding  3.5 billion barrels of oil. In Kenya Tullow Oil, which holds the most exploration licenses in Africa of any U.K.-based explorers, discovered   the black Gold in the Turkana Basin area  of Ngamia with the energy players Tullow predicting a total combined flow rate of 2850 barrels oil per day for the oil well, our neighbors Somalia are estimated to hold 80 -billion barrels of oil perhaps this explains why two summits have been held twice  in London not in an African city  in a span of less than two years  in the name of  ending the war and militancy that bedeviled Somalia after the fall of Siad Barre's regime way back in the 1990s and the wavering  of the UK stance on the famous  essential  contacts should ICC indictee now President Uhuru Kenyatta win the election  but are now humbled   to co - operate  with Kenya ‘s  electoral choice .These diplomatic and self positioning  challenges explains why any oil, coal and gas discovery by the foreign firms  boasts their share prices  and eventually their economies as they try to fend off Asian and local  Interests .Investors  as well  consumers are turning their attention to East Africa — especially since this region has the potential to be  a major oil and  gas  exporter to hyper-growth countries like China and India.

  

Countries like Kenya, the rest of the IGAD  and the Great lakes region on the other hand want to enhance intra Africa and regional trade as they move away from colonially set up markets, LAPPSET is one major project meant to achieve such goals however, its only imperative to have peace in Somalia to enable such projects take off in a smooth way hence the short term justification of the  presence of the Amisom forces  in Mogadishu and Kismayo , this relative calm augurs well not only for world economic players to take advantage of the beneath resources by offering painkiller panaceas  in the name of humanitarian aid and grants for development but also provides opportunities for the African economies to advance their economies. One may postulate why after 20 years of turmoil brought about by feuding clans and militant groups in Somalia and the intervention of AMISOM in quelling that civil strife - all the major energy players want to have a cake of the region by buying and leasing blocks and blocks of land to prospect for minerals that they do not wish to have the final products processed in the country of origin. Leaders in the horn of Africa must embrace peace and stability, harness and empower their human resources and develop eco friendly and energy laws that will ensure that resources do not become an impediment to economic growth but act as a platform to unique technological advances and value added agro based economy rather than reliance on being commodity based economies.

Towards an Eco-Friendly Environment with Greener Levies

Climate Change or global warming is something that has been caused by humans and it is in our power to put it right. As a result, over a decade ago a large number of countries across the world joined a treaty - the United Nations Framework Convention on Climate Change (UNFCCC). Climate change in developing countries is yet to be fully embraced yet they are the very countries yearning for industrialization status without having  a proper framework for dealing with such an environmental issue regardless of holding vast forestation cover which is now being affected by pollution as a result of utilizing locomotives that are  shipped from the developed countries whose life span has expired hence cheaper but emits a lot of  carbon which is a threat to the human and environment at large hence the need for these least developed countries to develop eco friendly laws that will protect the planet earth  and its citizenry.

According to E D S van Vliet and P L Kinney, Department of Environmental Health Sciences, Mailman School of Public Health, Columbia University, 60 Haven Avenue, B-1, New York, NY 10032, USA, 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 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 PM10 or PM 2.5 monitoring anywhere in SSA other than South Africa prior to 2005. Starting in 2005, collaboration between the US Environmental Protection Agency (EPA) and the United Nations Environment Program (UNEP) has led to the development of air monitoring networks in two SSA cities: Accra, Ghana and Dar Es Salaam, Tanzania. Emerging data from the new monitoring network in Accra suggest that annual average PM10 concentrations may typically be considerably higher than WHO targets and guidelines, and that exposure and disease burdens may be especially great for persons driving, working, or living near congested roadways (Nerquaye -Tetteh 2006).

In his book Plan B, Lester Brown (2003) of the Earth Policy Institute offers a comprehensive systematic summary of the range of policy areas that need to be addressed in order to achieve sustainable strategies for economic development.  He surveys crises in the areas of water and cropland shortages, global warming, and the negative environmental consequences of the growth of grinding poverty and he offers a menu of feasible policy initiatives that have implications for action at the local, national, and global levels.  Public policy and public funds need to support and coordinate investment in environmental assets that do not lend themselves to profitable market investments.  Voluntary initiatives such as the land trust movement have demonstrated that private philanthropy can also play a major role.  Progress in the areas of sustainable energy, agriculture, and forestry is demonstrating that coordinated public, private, and philanthropic investment can create profitable market-based productivity. “Externalities” the name economists give to those costs to the environment, the community, and individuals that are inadvertently generated by market activities and are not included in pricing.  These include pollution and its consequences, such as global warming and acid rain, and the depletion of natural resources including water and soil as well as oil.   A comprehensive program of taxes and fees to recover the full costs of externalities would be fair and conducive to sustainable business practices and personal behavior.  Henry George’s 19th century proposal for land value taxation (the “single tax”) would promote sustainable development and land use by taxing the value added to the land by the collective productivity of society.  (Under George’s proposal, improvements would not be taxed as these represent productive investments by individual landowners.).Therefore there is need for the government to embrace green taxes/levies in order to deal with the costs associated with such externalities arising out of motor vehicle emissions. 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 thus  having an eco friendly mode of transport, the subject of having a fraud cum an eco friendly free mode of transport has never been fully addressed -  though considerable efforts are being made in having more commuter trains - the recent commissioning of syokimau train though using older technologies is a case in point. The world today is facing the emergence of a geopolitics of scarcity, which is already highly visible in the efforts by BRIC developing economies  to ensure their access to oil supplies this already evident in war prone countries like Sudan and other oil producing and emerging oil mining countries, The Brics (an acronym for Brazil Russia India and China) are in constant competition with the so called G 8 Countries and  not forgetting the Asian Tigers as they try to have a fair share of last frontier on the global economy i.e. Africa whose environmental policies are compromised by these established economies.“What brings them together is that they are at the frontier of capitalism,” once reckoned Christian Lohbauer, an international relations expert at the University of Sao Paulo in an interview with BBC.

In the future, the issue will be who gets access to not only Middle Eastern oil but also Brazilian ethanol and North American grain. Pressures on land and water resources, already excessive in most of the world, will intensify further as the demand for bio fuels climbs. Locally sugar firms like Mumias have shown the intent to diversify their risks from domestic production of sugar for basic and industrial use to production of ethanol, Kisumu Molasses plant is also a keen avenue to follow this coupled with growing presence and interest from the Brazilian economy to invest in Kenya a fact that was marked by the recent visit to Kenya by their head of state Luiz Da Silva’s on the 6th July 2010, By deepening its ties with Brazil, Kenya is likely to benefit from bio-diesel technology that is now becoming an option for energy-deficit economies around the world. Kenya was expected to enter the ethanol fuel market in September 2010 following the release of a formula that was to see petroleum blended with ethanol at the ratio of 85:15. Mumias sugar, Kenya’s largest sugar miller is already lining up for the bio-fuel business with the establishment of a plant to produce 25 million litres of ethanol per annum from 100,000 tonnes of molasses that will earn it Sh1 billion in additional revenue annually.“Kenya has a lot of land to support bio-fuels,” the Brazilian President reckoned  during his tour of Kenya - Nairobi, Brazil is a world leader in this field and Kenya stands to gain as we seek ways of becoming more efficient in our management of the energy sector,” President Kibaki said .Source: Business Daily Magazine July 8 2010. Development projects recommended under Vision 2030 will increase demand on Kenya’s energy supply. Currently, Kenya’s energy costs are higher than those of her competitors. Kenya must, therefore, generate more energy at a lower cost and increase efficiency in energy consumption. The Government should stay committed to continued institutional reforms in the energy sector, including a strong regulatory framework, encouraging more private generators of power, and separating generation from distribution. New sources of energy will be found through exploitation of geo thermal power, coal, renewable energy sources, and connecting Kenya to energy-surplus countries in the region while at the same time trigger the relevant stakeholders to devise policies that will combat the effects of global warming as well as charging and introduction of green levies to mitigate against any potential losses that may arise.

Cyber related frauds in our financial sector driving up the cost of doing business in Kenya.

The last 15 years has seen Kenya and the African continent as whole make gradual strides in having its populace achieve tremendous progress in computer literacy, this is attributable to the governments’ initiative of   removing import duty on ICT software’s plus the presence of over four undersea cables players thus making the same cheaper to Kenyans as well as attracting foreign investors. The dividends are already being felt  – the emergence of  ICT incubators such as the  IHUB in Bishop Magua Centre a centre for budding techprenuers, Tech giant IBM is already investing in the countries budding tech savvy innovators amongst other tech players in the market , the increased uptake in ICT related courses across the nation  and the hard efforts of the  information Permanent secretary  Bitange Ndemo of  driving the government effort of ensuring that all the 47 counties have fibre optic connections hence lowering the internet’s costs  and lastly the promise by the current President Uhuru Kenyatta   to provide free laptops to those joining primary schools in  January 2014 – all these is meant to spur economic growth in the country  as Kenya tries to move away from trading in perfect markets to the imperfect markets.

However it must be illustrious that the surge in the uptake of technology related courses due to the conducive atmosphere the government is offering is becoming a breeding ground for externalities that will require both human and technological mitigations premised on John Elkingtons’ Tripple Bottom Line Approach a term coined in his 1997 book Cannibals with Forks: the Triple Bottom Line of 21st Century Business where the model advocates for treating employees right, but furthermore also the community where your business operates. In this part of the Triple Bottom Line model, business not only ensures a fair day's work for a fair day's pay; but also reinvesting back some of its gains into the surrounding community through sponsorships, donation or projects that go towards the common good such as afforestation, supporting clean energy initiatives and recycling of waste products . This reinvestment can usually be written off come tax time as part of business operating expenses. The human spillover effects of cyber related frauds across the banking, insurance and all the other related stakeholders that eventually dents their respective reputational risk, insurance costs and generally the cost of doing business hence affects investor confidence.

With over than 9 years experience in the insurance industry i reckon that most Kenyan blue chip financial organizations in the country are investing a lot in new markets regionally, fending off foreign competition,  product innovations and at the same time falling prey to the ingenuity of the young tech savvy graduate employees  who have knack of understanding their organizational processes and IT systems and using their technical knowledge to engage in malpractices, a major part of these perpetrators  are young graduates with gross  income levels  lesser than  $500  per month  in country with an estimated GDP - per capita (PPP) $1,800 (2012 est.)according to the CIA fact book - where the housing sector players charge exorbitant rental  prices and the mortgage lending institutions charge higher interest rates on credit facilities, which is  detrimental to their income savings -   yet exposed to dealing with huge sums of money   hence the temptations that eventually crop in their minds , this  has forced major banking and micro finance   institutions pay higher premium rates for  bankers blanket, shares  and Fidelity Guarantee Policies to insurance firms who in turn because of the high claims costs opt to reinsurer these policies given their liability effects on their balance sheet.

Way forward for dealing with these cyber crimes will involve top management enroll for refresher courses in ICT related courses tied to cyber risks and their mitigation there off as well as the new emerging forms of white collar crimes ,  better crafted  Escrow agreement with the software vendors to safeguard firms against pronounced hacking malpractices, stricter rules on deregistration of the fraudsters from their respective professional bodies as well  the generational gap issues have to be addressed that is to say top level management  have to nurture these young talents by co-opting  them in their organizational strategies however , this can only be achieved through  better rewards such as better remuneration that can guarantee them better housing and other benefits such employee share option schemes -  financial firms and the economy at large ought to come up with policies that will ensure fair employment practices that are geared towards depolarizing income levels , it must be known income disparities and the cost of one living greatly affects their professional ethics in service delivery.

Is Africa becoming a captive of the Flying Geese Model ?

The last one decade has seen Africa  experience quite a number of foreign firms across the globe ranging from manufacturing firms, ICT firms and financial services discipline either relocate or  shift their global offices or set up what I may term as technologically  dead end  activities  that are  labour intensive thence achieving their economies of scale given that having those functions administered in their home countries is more expensive but cheaper in developing countries due to cheap labour coupled with the tax incentives offered to these foreign firms in the name of “free trade” and subsequently the comparative advantage of countries like Kenya, Ethiopia, Ghana and Nigeria in using  labour intensive technologies that  are industrious  in the global chain of production  one may postulate why speak about this model, my home country Kenya has  seen the entry of Chinese motor vehicle maker, Foton, which is investing Sh1.6 billion in an assembling plant in Nairobi. The budge is set to intensify competition in the new vehicle market among local dealers and has further signed an agreement with Thika-based Kenya Vehicle Manufacturers to assemble for them, according Foton East Africa general manager Calvin Guo said the company sold 1.2 million units worldwide last year. This means the Monopolies and Price Commission will have to cave in to Michael E. Porter‘s five market forces to adapt to these emerging demands, their Asian counterparts Japan through its Brand Toyota Kenya has invested KShs 500 million in a truck and bus assembly plant in Mombasa Kenya’s coastal tourist  city  complete with a new showroom to improve marketing according to their Hino Motors general manager Kazuhiko Wanabe said it expects to produce 40 trucks and buses each month but will increase production to 200 units within a few months of operation. Toyota hopes to sell 1,200 Hino units by 2015 all these Asian Companies are taking advantage of the tax incentives on import of completely knocked down units (CKD) — the parts needed to assemble a vehicle — which are zero-rated in Kenya as opposed to a 25 per cent import duty on vehicle imports - all done and dusted as envisaged in the governments' master economic blueprint dubbed  Vision 2030.

Further in the electronic Industry Korean electronics supremo Samsung is set to unwrap a television, laptop and printers’ assembly plant in Kenya by end of year  - as its gateway to the horn of Africa and the great lakes region according to the firm’s top management the venture is likely to absorb more than 900 locals in terms of employment - the firms overall target is to realize more than $2 billion revenues by 2015 in the great lakes region and  by large the horn of Africa considering the gradual return to normalcy by our neighbors’  Somalia , the firm is also setting an assembly plant in Abyssinia present day Ethiopia to tap into the growing  bourgeoisie  class , bearing in mind its other assembly plants in South Africa , Sudan and Senegal. The recent Jubilee Coalition manifesto on providing free laptops to those pupils joining class one in primary school from January 2014 though ambitious could end unlocking the dormant potential in our youths who get exposed to the digital age in their late twenties - despite its inherent challenges.The textile industry is not worth writing about given the predicaments it has faced from importation of second hand clothes, to the Export Processing Zones  facing industrial strikes, high energy costs inter- alia despite having a 25% tax holiday for 10 years in short you do not expect to compete with countries that are technologically advanced in the textile industries vis a vis the labour intensive ones even in the face of the famous AGOA agreement unless you emulate them.

In a nutshell as we become captives of the flying geese model as a nation we can only diversify our labour markets by offering incentives to those university graduates on internship or in college by subsidizing their study costs especially the ones pursuing the STEM degrees  and urge the government to pursue  Equity banks’  model  of the “Wings to fly “, offer more incentives for those coming up with new inventions and innovations  through their firms or on individual basis  and or further  pursue bilateral engagement for instance the  Kenyan Korean approach on nuclear studies where the country  now has 11 students undertaking master’s courses in nuclear engineering in preparation for 2022 generation of electricity , when Kenya will start using nuclear energy anchored with the likely revenues from the oil in Turkana and  titanium in kwale can be channeled  towards this end  -  in the end transfer  new forms flying geese models to the rest of the world.