@Phares, I spent the better part of last night looking into my question i.e why govts borrow from World Bank and not local banks and the nearest answers I came across is the fact that govts borrowing from the World Bank do so below market rates as the primary reason. While kenyans are supposed to borrow from commercial banks at 14%-19%, it is possible that the World Bank lends at 4%-7% to the kenyan govt and therefore opens the system to monetary manipulation. I had no idea this is how deep we would end up on a simple thread as this one.
This is probably why you do not see the digitization project sponsered by Kenya Commercial Bank, Barclays, Stanbic and the rest. There is nothing stopping the govt from using local banks to setup the e-govt digitization projects. However, what has been clearly demontsrated by the KICTB ( not sure if they processed the digitization project ) is the complete lack of confidence in our BPO and developer/software local market. And this is exactly what I've been writing all along. As long as we have to "depend" on external loans, they will have pre-conditions that no company locally can fullfill. The only pre-conditions a local company can fullfil are e.g. supply of hardware.
In closing, I still stand by my views that while WB/Google/KE e-govt is a good idea, let those who were involved never use the words like innovation to preach what can be done to develop a high tech sector. Maybe if we look closely at NASA, one may understand what we really want to do in terms of incubation, funds injections by govt, etc.
So we are basically back to square one, which is : empty rhetoric, VCs can save us, Brokers from the WB and many others who are inter-connected. Why did the e-Govt not use the e-govt process to spur local growth of high tech companies?
On Thu, Jun 2, 2011 at 7:38 AM, Phares Kariuki
<pkariuki@gmail.com> wrote:
@Aki
Especially in an economy that's developing like ours, it's not prudent for the government to take loans from the local banks. We have a shortage of credit, if the government borrows it's more attractive than the mwananchi. Reduce loans available to the citizen, and make it more expensive to get the same debt for both SME's and individuals...
And the government does borrow from local banks, when it won't affect the credit available to the nation. The reason mortgages etc are becoming more pervasive is because the banks, to bolster their business are forced to talk to the individual. We now have banks offering pasha loans etc....
At the end of the day, the Government borrowing from the local economy stunts other sectors of the economy that depend on that credit.
My problem with World Bank funding is not the funding itself, it's that historically, the funds were misused....