East Africa Economic Report

No longer an effective fighting force EMERGING INTELLIGENCE  suggests that Al-shabaab,the Islamist militant outfit in Somalia, has been effectively defeated. Its top command has been killed and its financial sources have been chocked. The heightened security operations in Kenya are said to be mop up operations  to weed out its operatives and sympathisers in Kenya Since last October, Kenyan defense Forces have virtually obliterated that outfit. A number of air and commando raids by Kenya Defense forces have reduced the outfit to a shell. A large proportion of its commanders are dead and so is a large proportion of its recruits who were killed in an air raid at a camp in hurguur last October. Others have left the unit. The few that remain are however lethal and are believed to be the reason for the heightened security operations on suspected Al-shabaab hideouts in Kenya This raid, the first one by Kenya Air force is said to have killed 400 people including ...

These Goons are used to perpetuate Shabanomics BY  THE LOOK OF THINGS, Shabanomics, or should we say Economics of terrorism, is crumbling. And it will leave behind a string of Orphans.  Shabanomics or Economics of terrorism is a conglomeration of illegal economic activities including:smuggling of contraband goods, piracy; tax evasion and tax avoidance; extortion;recruitment and training of suicide Bombers; recruitment of Scouts; poaching; bribery and kidnappings for ransom.  These activities thrive in failed states. Consequently, such criminal elements fight tooth and nail to sustain failed states in such a condition for once circumstances change; the criminals find no hiding place. This is the prospect facing Al-shabaab, the al-Qaeda affiliated terrorist gang and its “children” in East Africa. It was born and bred in Somalia during the years of lawlessness in that country. In its heyday, the Red sea and India Ocean were dangerous place for shippers due ...

 AFRICA IS STILL POSTING ROBUST ECONOMIC GROWTH. However, the South Africa economy is the drag on an otherwise robust economic growth narrative in Sub Saharan Africa, says the Bretton Woods institutions. In two separate reports released over the last two days, the World Bank and IMF agree that South Africa’s economic growth is cirrhotic and a drag on SSA growth record. Sub-Saharan Africa, including South Africa grew by 4.7 per cent last year. “Excluding  South Africa , average output growth for the rest of the region was 6.1%, second only to developing  Southeast Asia  and Pacific at 7.2% and well above the global GDP growth rate at 2.4%. South Africa  grew by only 1.9% in 2013 says%.”  Africa ’s  Pulse .     The IMF has lowered its growth outlook for the South African economy in 2014 to 2.3%, down from a previous forecast of 2.8%. Similarly, the 2015 outlook was lowered to 2.7% from over 3.0%. T he Bretton woods institutions ...

The pride of Africa:The mother airline KENYA AIRWAYS IS SET TO ROCK THE transport industry in east Africa, and perhaps Africa. By the time you read this piece, Kenya Airways will be three -airlines in -one while its fleet will have grown by one. Jambojet, Kenya airways’ low budget subsidiary will launch on April 1 st . The other airline, Precision Air, is based in Tanzania. On April 4 th the airline will probably have received the first of six Boeing787 Dream liners to be delivered within the next 12 months.  In effect, the airline’s fleet will grow to 51 brand new aircraft by May 2015. It will also have grown to three airlines in one. These developments should sound a warning signal to all players in the transport sector that things have changed.  It is not business as usual for KQ  will give them a run for their money. Jambojet, the no frills subsidiary will initially fly between Mombasa-Nairobi-Eldoret and Kisumu where it expects to ship some 0.6 milli...

 Smiles at last: Following 9 years of blood, sweat and tears  FINALLY! AFRICA’S LARGEST Wind Power project, the Lake Turkana wind power project has been placed on the runway ready for take-off. The firm signed the financial closure for US$687million on March 24 th . This marks the end of “Nine years of studies, negotiations, doubts and hope,” said Kenya’s Principal Secretary for energy, Eng. Joseph Njoroge.  The ground breaking ceremony will be in six weeks’ time during which time the firm expects to have formalized all funding issues and then take off.  According to the PS Energy Mr.Joe Njoroge, the firm should produce the 150MW in 2016. Lake Turkana wind power project is the largest wind power project in Africa. It will generate some 300 MW for Kenya’s national grid. This is 20 per cent of Kenya’s e current electricity output which is growing at a rate of 80 MW every year. The US$763 million project is the largest private sector investment in the cou...

A smoker AVARRICIOUS AND DECEITFUL Anti-tobacco activists have Kenyan tobacco manufacturers laughing all the way to the bank. Their Campaigns are dishonest and hypocritical hence the number of smokers in Kenya has risen if the numbers of sticks manufactured is anything to go by. According to a report titled Exposing the tactics, between 2003 and 2008, cigarette production in Kenya rose 156 per cent to 12 billion sticks from 4.8 billion in 2003. Some estimates place the figure in the upwards of 15 billion sticks. This means that the number of smokers in the country has risen rather declined.   This is despite the punitive regulatory measures in place to tame smoking. Tobacco advertising is banned nor can the manufacturers participate in Community Social responsibility events. Taxes have almost trebled retail prices yet more people light up. And the manufacturers are laughing all the way to the bank. Why? According to the report cited above, the cigarette manufacturers in...

Vimal Shah: an economics hero in Kenya DOES DOMESTIC DIRECT investment (DDI) drive economic development? What is the impact of domestic investment in the development of a country?  Is the impact greater than, equal to or less than the impact of FDI? There are several advantages of encouraging domestic investment. Among these is that domestic investment is neutral on a country’s balance of Payments.  Local firms do not repatriate their profits to foreign owners. And since they do not have affiliates overseas, they do not engage in transfer pricing thus cheating government out of tax revenue. Some reports have it that Africa loses US$4 billion in legitimate taxes through this form of tax-cheating. On the contrary local firms invest in expansion at home thus setting the stage for further growth and hence development. In the long term they contribute to balance of Payment credit by earning foreign exchange from exports and profit repatriation.  Some experts...