When we were discussing this topic last time, I emphasized that the economy is skewed in favour of the large players that can dictate the markets. In fact the market forces don't operate in Kenya. What we really needed is a strong fiscal and monetary regime as opposed to increased interest rates (which happens to be one of the tools in monetary regime policy). To tame runaway inflation in a market characterized by monopolistic tendencies, adjusting interest rates was the worst decision from a weak institution (CBK). Thanks to this, Kenyans purchasing power has gone down more than 50%. I am therefore very sure with this stupid decision, less computing devices will be bought, less jobs will be created, more companies will go down in debt, shops will start closing, more jobs will be lost, we will rely more on foreign aid as we will be unable to finance development expenditure due to less taxes, in a nutshell, I can foresee very hard times ahead. These folks just undid 9 years of hard work with a simple stupid decision that could have been avoided had other factors been considered e.g. the high fuel prices, high cost of electricity and the fact that its easier to buy clothing than food. Food just became a luxury. On Fri, Nov 25, 2011 at 1:50 AM, William Muriithi < william.muriithi@gmail.com> wrote:
Was it the same last time around 1991-1992 around the Goldenberg scam?
This
time is it the global economies causing it or just the usual bad practises... The above rates may mean consumer spending will reduce by at least 10% of their earnings so we are almost back to the essential industries that will really do any serious business. This also means watch out for bad payments and reduce risk.