Monthly Archives: April 2006

Introducing Pork Politics?

A BIS Post a.k.a blogger in shags.

After the fireworks of the Sexual Offences Bill passes, the next bill to read carefully through is the fiscal management bill 2006 – a well meaning bill that will allow parliament greater scrutiny of the country’s budget and spending operations through the creation of a budget office and a fiscal analysis & appropriations committee in parliament.

My main concern is a clause which requires the minister of finance to incorporate comments and recommendation of the committee in preparation of the budget which may amount to the formal introduction of pork politics to Kenya in which case bills will be held up at the whim of an MP so that a need of his constituents may be satisfied. i.e. extra unplanned projects are added to bills at the last minute so it may be passed . While the committee of 17 members has 8 government and 7 opposition representatives, parliamentarians always come together across party lines whenever their welfare is at stake as was demonstrated last week.

misuse of dividends

One stumbling to wealth accumulation by local retail investors is in the way they use their dividends.

While some companies and cooperative societies pay healthy dividends each year (or even each quarter), many investors use the cash to meet a variety of expenses – foodstuffs, school fees, credit cards, gifts, holidays – all except reinvestment in shares.

Dividend reinvestment is key instrument of accelerating investor returns. Without it, one’s investment only grows as a stock price appreciates or as one directly increases their investments.

The lag in time between dividend announcement and payments is probably a factor. Dividends arrive long after they have been forgotten about and provide an unexpected cash bonus in the middle of the year – and end up being used to meet urgent household bills e.g. most NSE firms pay 3 months after announcement ( and KCB is 4 months this year).

The financial cost of dividend payments by cheques is also expensive for both the companies (e.g. KQ will mail out almost 80,000 cheques a year) and investors (bank charges to clear cheques).

The new CDS system can help solve this problem in that dividend payments can be credited to one’s account – and then can be reinvested later in same stock or other company at the advice of a stockbroker. However, there have been some payment errors, and many investors may still prefer to see and verify their dividend cheques and then bank them and use the cash as they see fit.

the world economy at large

New media
The Economist takes a look at the relevance of blogs and other new media in the world today.

Oil wars
There’s a war of words between oil companies and car manufacturers over who is less greedy. Here, in a third world country overrun by small-engined, used Toyota cars, I have to side with car companies.

Wrong kind of exports
Kenyan should be processing and adding value to her products and not celebrate the export of rawlivestock and fish.

On the other hand, exporting Mercedes and BMW cars to America tends to violate the spirit of the AGOA partnership.

Telkom’s Revenge?

Small piece in the Thursday Daily Nation about how Telkom Kenya will soon introduce CDMA mobile landline phones (made by Huawei of China) and these will work within 120km of one’s Nairobi home – and enable calls to be made to other landlines at about 4/= per minute, well below mobile rates of 20/=. So instead of carryting two phones (one safaricom, one celtel), some pople will carry one mobile, one landline and use whichever is appropriate or convenient