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{
    "id": 1216793,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1216793/?format=api",
    "text_counter": 74,
    "type": "speech",
    "speaker_name": "Kiharu, UDA",
    "speaker_title": "Hon. Ndindi Nyoro",
    "speaker": null,
    "content": "There is another area that I will implore my colleagues to also consider. I am sure we have a Committee in this House that strictly deals with borrowing – Debt and Privatisation. There is a term in borrowing called netting off. A good economy of netting off is Kenya. We are a net borrower but also a gross borrower. There is no economy in the world that Kenya lends money to. When we report Debt-to-GDP ratio, we are reporting both gross and net in terms of our borrowing. Using the same examples that I gave, especially citing Japan, it is a country that is indebted but with low interest rates. Another consideration that we must make is that as Japan reports the Debt-to-GDP) ratio of 250 per cent, it is also a huge creditor of the world. The highest creditor to the United States of America economy is the Japanese Government. When we consider borrowing, it is prudent for us to compare our country to economies that are advanced as the ones that I have tabulated. These are the issues that the Budget and Appropriations Committee considered while undertaking the cuts and other re-alignments which I would be enumerating as we continue. When we consider these Supplementary Estimates, we will look at the conditions that we were relying on in terms of our economy and the prevailing circumstances in our country. We talk about domestic economy but Kenya is also in a global economy. It is intertwined in whatever happens elsewhere. What are the conditions of the global economy? I will cite a few that correspond to our conditions here at home. One of the conditions that we know very well is that the supply chains across the world with regard to food have been hampered by issues, especially man-made, that have been happening in the last many months across the world. Hon. Speaker, one of the conditions is the war that is ongoing in Europe. And for us to even understand how this is affecting the plates of Kenyans, previous to the war, Ukraine and Russia accounted for around 30 per cent of the world’s corn export. Both countries accounted for 20 to 30 per cent of the world’s wheat export. There is another mind-boggling figure that both countries before the war accounted for, that is, over 70 per cent of sunflower oil and sunflower food exports across the world. When you disrupt such kind of supply chain, it boomerangs to economies like Kenya. Some of the conditions that we are facing are premised on those kinds of conditions. Global inflation has hit Kenya and other global economies. The COVID-19 cheques that we were given by the USA Government increased the amount of disposable income to the citizens of the USA. It thus created room for inflation when the same people demanded for the same commodities hence driving the price upwards. What the Federal Reserve System (FED), which is an equivalent of Central Bank of Kenya (CBK), did was to raise the interest rates seven times. That is unprecedented. In terms of the Federal Reserve System raising interest rates to arrest the issue of inflation cuts the other way because every action economically is a double-edged sword. Arresting inflation by increasing interest rates also had another ramification to smaller economies like ours. Majority of the investors found USA, in terms of the fixed investments, being preferred to countries like ours given that investments in the USA is US Dollar denominated. So, whatever you gain, it has no net off in terms of currency devaluation. That is why we are seeing our own Nairobi Securities Exchange performing poorly. Some of the counters like Safaricom, which ordinarily are driven by foreign investors, now have better options by investing in fixed investments in a country like the USA. We have seen devaluation of our local currency, but this is not just happening to the Kenya Shilling. Every other currency across the world has weakened against the US Dollar, Euro, and the Pound for the reason that I gave earlier that majority of investors are trooping to the USA where there are better rates in terms of fixed income. They thus consider it because there is no issue of currency change. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}