Early this year( or late last year) a talker put a thread for predictions (link below) for the year, and I said a dollar at 140. Wueh this is 3 months tushafika.
Long story short, it’s simple economics. Imports vs Exports. Since the trade currency is a dollar, and we massive export deficit ($22b import vs $11b export) we will continue getting hammered. That deficit is almost half our annual budget of $26b. Can you imagine. The amount of money leaving this country can pay half its expenses ( including loans) for the year. It’s like a man’s net pay with 50% taken for child support before it hits the bank.
Government has shot a series of measures to arrest the dollar eg buying oil on credit. But oil accounts for $2.6B of that import budget. That is about 10%. Can one really arrest a issue by muffling 10% of the problem. And what will happen when those credit letters mature in 6 or 12 months. Suddenly you have a huge margin call, what do u do? It’s not like dollars will appear from the sky.
Simple solution: Start banning imports of basic necessities. Foods, fruits . Do you know Kenya imports coffee and tea? Impose penalties on car imports………Anyway, a permanent fix is required. Once we hit 150, this thing is going to run.
Somehow we need to become a producer economy, not sure why David Ndii can’t tell his boss.
When you say government should impose penalties on car imports, where then are we supposed to get cars from? Ama unataka tuendeshe hizi locally made mabati?
[ATTACH=full]500875[/ATTACH]
Yeah that’s why I said we need to become a Producer economy. Right now we are consumer economy.
There’s plenty of cars on the road, so temporary reducing the flight of Forex may outweigh need to the high importation of cars. And I am not saying outright ban, just discourage through penalties.
Most importers are our leaders and their cronies raising conflict of interest concerns.Our greedy canal of leaders will just not let local manufacturers thrive unless they are part of it.
I started paying for imports in the native country instead of dollars. When I buy cars I insist on paying in Yen. Container from China, Yuan. Cattle from SA, Rand. etc. Most banks support this so long as you are dealing with a major currency. I think this is what we should implement and cut off the trading companies who want to hold dollars.
The problem is not oil importation rather its debt payment. A lot of debts need to be paid this year and they are usually paid in dollars. Therefore the country needs to get their hands on dollars in order to pay up the debts. The cost of dollars therefore is very high as a result of high demand.
Solution is to find a cheap source of dollars for the country. This can be done ideally by expanding the traditional dollars sources e.g. tourism, coffee/tea/flower exports, etc. Another source of dollars is diaspora remittances.