Michael Mundia Kamau
                        P.O. Box 58972
                        00200 City Square
                        Nairobi
                        Kenya

                        28th April 2007

50 Cent

The Kenya Revenue Authority (KRA), has lately been making impressive returns on tax revenue collections on both a quarterly and annual basis. The KRA has been managing tax collection rates of up to 98% of targeted figures stipulated by the Finance Minister in his annual budgets. What is not clear at all, is whether tax collection rates on a quarterly and annual basis are inclusive or exclusive of the foregoing figures of 50 billion Kenya shillings (approximately US $ 714 million) or 21.4 billion Kenya shillings (approximately US $ 306 million).

This country is in a terrible state of disrepair and it is extremely tragic that we still allow ourselves to be governed by assertions as nonsensical as the Diaspora making annual remittances home of 50 billion Kenya shillings (approximately US $ 714 million). It does extreme injustice to the large numbers of individuals in this country who now hold high school certificates, college diplomas, undergraduate and postgraduate degrees, and all manner of professional qualifications and/or proficiencies. It also raises begging questions on whether we have evolved the competencies required to run our affairs and the affairs of this country.

50 billion Kenya shillings (approximately US $ 714 million), is a very large sum of manner by any measure, and if we cannot appreciate and grasp this, there is little else we can.

The Kenya Government through the Kenya Cabinet, has just approved payment of 20 billion Kenya shillings (approximately US $ 285 million), to the National Bank of Kenya, being part repayment of long outstanding government guaranteed loans. The amount is considered large enough to destabilize the financial and capital markets, and a committee has therefore been constituted and given a two month mandate, to oversee the gradual injection of the 20 billion Kenya shillings (approximately US $ 285 million), into the economy. The key strategy in the matter, is the issuance of a long term non-redeemable government bond with a maturity of 20 years, for the near absolute amount of the 20 billion Kenya shillings (approximately US $ 285 million), clearly demonstrating the limited extent to which our young, growing and fragile economy, can effectively absorb an immediate unregulated injection of 20 billion Kenya shillings (approximately US $ 285 million), let alone 50 billion Kenya shillings (approximately US $ 714 million).

It brings memories of the 1992 general election, and the accusations then made against the ruling party, the Kenya African National Union (KANU), of money they “printed”, to fund their high profile campaign of 1992, that included the high profile and now defunct Youth for KANU ’92 (YK ’92), which seemed to have endless financial resources.

Almost no veracity of these claims of excess liquidity is required, given the events of the following years, beginning with 1993. Interest rates and inflation soared to troubling highs last experienced in Kenya during the oil embargo of the 1970s instituted by the Organisation of Petroleum Exporting Countries (OPEC). Government Treasury Bill rates on which banks peg the interest they charge on loans, soared to rates as high as 70%. Prices of basic commodities such as maize meal and bread doubled, trebled and even quadrupled, yet inflation rates came nowhere close to what is currently being experienced in Zimbabwe (inflation rates of over 2,000%), or what was experienced in Mobutu Sese Seko’s Zaire.

The exchange rate of hard currencies to the Kenya shilling hit unprecedented highs, with one US dollar exchanging for 83 Kenya shillings, at one stage, 100 Kenya shillings on the black market. Even condoms, then fast rising on the list of necessities, were not spared. The “Rough Rider” brand of condoms for instance, overnight rose from about 25 US cents per pack, to US $ 1 per pack, causing mass hasty retreats to “Sultan”, then the free standard condom issue given by the Ministry of Health.

Several individuals have never recovered from the inflationary trends of the 1990s, and several individuals have indeed lost assets by way of public auction, because of the high interest rates and defaults in loan repayments linked to those times. A big portion of the bitterness against the past KANU regime is associated with those times.

It took the Central Bank of Kenya (CBK), over ten years to mop up the excess liquidity associated with the general election of 1992, and bring interest rates to the current low levels which the present regime seems determined to maintain. It took over ten years to mop up excess liquidity whose exact figure is yet to be known and which legend puts at between 2 billion Kenya shillings (approximately US $ 28 million) and 10 billion Kenya shillings (approximately US $ 142 million), yet there are continued high profile claims that the Kenyan Diaspora remits 50 billion Kenya shillings (approximately US $ 714 million) on an annual basis. How irresponsible and reckless.

The Minster of Finance has just gotten Parliamentary approval to draw 28 billion Kenya shillings (approximately US $ 400 million), from the Consolidated Fund, to cater for expanded recurrent expenditure not catered for in the 2006/2007 budget. One could easily reprimand the Finance Ministry for this, because the Diaspora should by now have sent the quarterly remittance of 12.5 billion Kenya shillings (approximately US $ 179 million), for the year 2007, meaning that the Finance Ministry would only have needed Parliamentary approval to draw 15.5 billion Kenya shillings (approximately US $ 221 million), from the Consolidated Fund.

In a most embarrassing, humiliating and peculiar yet little noted incident also, auctioneers on 10th April 2007 moved in and attached movable assets of 11 branches of Standard Chartered Bank Kenya Limited, over a 15 year old civil suit involving a relatively small amount of 420 million Kenya shillings (approximately US $ 6 million), which Standard Chartered Bank Kenya Limited, the Kenyan operation of global blue chip Standard Chartered Bank PLC, failed to pay to the plaintiff in the time stipulated by a Court of Appeal Ruling (page 20 of “The Standard” of 12th April 2007). Just how well is our economy doing……..? This incident didn’t even affect the share price of Standard Chartered Bank Kenya Limited on the Nairobi Stock Exchange (NSE), raising further questions about the parameters we use to measure economic performance in this country. Standard Chartered Bank Kenya Limited has been declaring annual profits in the billions of Kenya shillings for several years now, yet on 10th April 2007 the reputation of the entire organization, both here and globally, was put into serious question, because of their inability to effectively deal with and handle a 15 year dispute involving a small sum of 420 million Kenya shillings (approximately US $ 6 million). Public attention is drawn to the very, very disappointing fact of Standard Chartered Bank Kenya Limited’s inability to deal with issues revolving around small sums of 420 million Kenya shillings (approximately US $ 6 million), despite their long standing and reputation, in the midst of which we continue being fed with garbage that the much less prolific, much less experienced and much less skilled Kenyan Diaspora, remits home 50 billion Kenya shillings (approximately US $ 714 million), on an annual basis.

50 billion Kenya shillings (approximately US $ 714 million) per annum is power and substance, power and substance to justify the granting of recognition and privileges to the Diaspora, such as dual citizenship, tax concessions/holidays, nominated Members of Parliament specifically addressing the needs and interests of the Diaspora, a Ministry specifically catering for the needs and interests of the Diaspora, roving ambassadors specifically catering for the needs and interests of the Diaspora, and most certainly, the immediate establishment of apparatus that will ensure the Diaspora votes in all elections and/or referendums. Ironically though, the annual cost of Kenyans studying abroad, about 14 billion Kenya shillings per year (approximately US $ 200 million per year), is amongst the highest in the world. We certainly help build outside economies, at the expense of our own.

The Diaspora and it’s supporters back home here in Kenya, are hardly able to justify it’s continued existence, embarking instead on expanded meaningless, inexplicable, ridiculous and peculiar campaigns of self-glorification. What this is intended to accomplish, remains to be seen.