Category Archives: ECONOMY MATTERS

Effective Response to Climate Change: 3 Economic Changes That Countries Need to Make

One of the most pervasive misconceptions about climate change is that the main effects of an additional unit of CO2 emission today will not be felt until some time in the future, possibly after several decades.

This has led to procrastination of sorts where we as a global community, and as individual countries are unwilling to make the necessary changes needed to slow down, and possibly reverse climate change.

In reality, the increase in global warming has been shown to be linearly proportional to the cumulative CO2 emissions. Even more apparent is the temperature increase with every additional unit of emission is instantaneous and then becomes constant as a function of time.

Climate change is real and has far-reaching negative effects on all human, physical, and ecological processes and properties, and so far, we, as a global community, have been unable to mount an effective response to this impending disaster.

The major stumbling block seems to be an inability to create and merge political and economic policies that have the potential of stymieing the progress of climate change.

Which begs the question; Are there economic changes that we need to make in order for us to have a fighting chance against climate change?

The answer is Yes.

Economic changes

An economically efficient strategy for combating climate change needs to include the following measures:

  1. Implementation of The Carbon tax

A carbon tax is designed to penalize polluters for the carbon emissions they cause through their production processes. The sole purpose of this tax is to incentivize companies to reduce their emissions to avoid paying high taxes.

Most developed nations use cost-benefit analysis to determine the economic cost associated with reducing an additional ton of emissions. Companies are then taxed based on this value and their total emissions annually.

Other than the carbon tax, some countries also use the cap and trade system as a means of pricing carbon. In a cap and trade system, the government sets a limit on specific types of emissions, and the companies that make these emissions have the opportunity to sell off their unused units (within these limits) to others that are facing a challenge in compliance.

In order for the carbon tax to be effective, there needs to be a concerted effort towards standardizing this tax globally, regionally, nationally, and locally.

2. Increased climate change budget

Adequate funding remains one of the toughest challenges facing the push to mitigate climate change and its perilious effects.

Adequate and sustainable finance is critical in combatting climate change, as the measures needed to mitigate this crisis on a global scale require extensive funding from every member of the global community.

There are several international funds and organizations that have been set up to collect finances from member countries and direct these funds towards environmental conservation efforts.

These include the likes of:

  • The Global Environmental Facility that was founded in 1992
  • Montreal Protocol Multilateral Fund
  • The Green Climate Fund
  • Climate Investment Funds

These funds have only been able to achieve minute success against this monumental problem, and countries need to put more resources towards these efforts.

Developed nations need to intensify their spending on carbon-reducing activities within their borders. In addition, these need to assist poorer nations in adopting and sustaining impactful climate change mitigation efforts. This way, poorer nations can be able to play their part in reducing global emissions, and conserving the environment effectively owing to this external support.

Furthermore, nations in the developing world need to direct a healthy chunk of their annual national budgets towards mitigating climate change efforts within their borders. Such nations need to phase out over-reliance on carbon-intensive technologies, which they use in order to be economically competitive with their developed nation counterparts. Instead, they should now start looking towards innovative production/distribution technologies that deliver enormous benefits on both the economic and environmental fronts.

3. Increased Adoption of Proven Carbon-Reducing Technologies in Carbon-Emitting Economic Sectors

Adoption of proven carbon-reducing technologies within borders in different economic sectors will also require intensive funding from individual nations as well as donor support.

The economic sectors targeted in this regard include:

  • Power- countries should aim at producing at least 80%  of their power using low carbon technologies by 2050. Such technologies include the likes of nuclear, wind, hydropower, solar, and biomass. Demand and production of coal should decline gradually as the cost of producing power with these cleaner technologies reduces and their output and efficiency increases.

 

  • Transportation- Electric means of transportation including electric passenger cars, electricity-powered trains, and light trucks, will help reduce emissions significantly and sustainably for nations. Other technologies that can be used include overhead electric lines, batteries, and fuel cells. Transport electrification is a finance-intensive venture, but the environmental pay-off is quite significant.

 

  • Industry- Countries should strive to annually decrease the demand for energy in industry by investing in, creation and adoption of efficient technologies such as process innovations and efficient motors and pumps. Biomass should be redirected towards heat production in these industries to replace the use of fossil fuels.

 

  • Building- improving the efficiency of buildings and appliances will help reduce direct emissions. Heat pumps should also be employed to replace gas and oil heating in rural and suburban areas. District heating and solar thermal technologies can help reduce the environmental load of water heating.

 

 

What other economic changes do you think need to happen in order to mitigate climate change and its effects? Let me know in the comment box below.

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QUESTIONS WE NEED ANSWERS TO: HUDUMA NUMBER

I hate being forced to do things. That’s exactly what I felt was happening when our government started pushing us to register for the mysterious ‘Huduma Number’.

We’d never heard about this number before the beginning of year, and all of a sudden, the government has put registration of all Kenyans as its top priority.

Not the hunger that was ravaging many parts of this country because this same Government didn’t use the data it already has proactively.

Not the spiraling public debt that could throw our economy into turbulence.

Not the surge in mental illness that is turning our men and women into killers.

Nope. Its top priority is getting us registered for God knows what reason.

The government is threatening to deny its services to citizens that do not have the number (which, btw is actually illegal).

This ‘super-helpful’ process is costing us Ksh 6 billion just ahead of an 18 billion shilling census.

Can you imagine that! More than 24 billion spent on collecting citizens’ personal data in a year that the government is supposed to be implementing austerity measures.

This Government is a punishment for our collective stupidity, greed, and naivety as a populace.

Back to Huduma Namba

I and millions of other Kenyans including children had to waste an entire day at least once in the last 45 days, queing in order to register for this supposed elixir for proper service delivery.

We are not even sure as to how this number is supposed to help us.

I have never heard anyone complain that we have too many identification numbers. Each one has a specific purpose, and keeping them separate is ideal when you live in a country run by a government gone rogue.

That aside, I don’t think our government has the capability of delivering to all of us these squeaky clean numbers that are meant to be the gateway to all of its services.

Epic fail best describes this government, and perhaps deployment of the Huduma Namba will be nothing but a pipe dream, and the citizens can rest a bit easy knowing that an incompetent government doesn’t have in its possession all of their data in one centralised location.

Some of the questions I have regarding this number include:

Is it going to improve service delivery?

How is one number the magic trick for fixing everything that is wrong with our government?

How is this unique identifier different to the other unique identifier numbers we possess?

Wouldn’t it be cheaper to declare our national IDs the only identifier?

Do we really need a census after this harrowing experience? Doesn’t this entity already have all the information it needs?

Will corruption holes in government be sealed as a result of this number?

Where did this idea come from?

Did it come from the Chinese?

Which case studies did they use as proof that this will work?

Is our data secure?

Although most of the data we are providing is already in government records, won’t centralising this data make it easy to steal.

If someone stole this information, what exactly would they do with it?

Will this data be used to monitor us as citizens?

We already live in a failed state; we don’t want to live in a police one too where all of your movements are monitored and trackable.

How is a democratic state supposed to run when the Government can monitor, and quell any opposing individuals?

We will be in a lot of shit when our government finally figures out how to control what we do online and offline.

Who stands to benefit from the tenders associated with registration and maintenance of Huduma Namba database?

Some of the companies awarded the tenders were the same crooks that sold us the registration kits for last elections. They did less than a stellar job, so what makes the Government think they’ll do a better job this time?

Will the maintenance of this database be done at the national or county level?

What happens to kids born after the deadline? How will they get registered?

Who should be held accountable in the event that a data breach occurs, and personal data ends up stolen?

Who should be held accountable if the constitutional rights of citizens to privacy, movement, freedom of speech, and freedom of association, are curtailed as a result of this massive collection and storage of citizen data?

Everything is a bit up in the air at the moment, but, soon we’ll know the truth about this number, and who it is truly supposed to benefit.

Let’s just hope the government effs this up like it does everything else so that we don’t pay the harsh consequences of mass registration.

POLITICS, THE CHURCH, AND POSSIBLE CONFLICT OF INTEREST

So, I’m a deacon now…………………………………….

in church!

Gasp!!!!

I and other deacons were ordained last Sunday in front of the entire church (Wahu and Kamande included).

We had to kneel and say vows, and stuff (it was funny… I haven’t knelt in so long, it felt weird).

There was also no lunch or special snacks afterwards, so that kind of sucked. And, I still had to teach Sunday School (a role that I take great pride in, but I thought they would give us a break, seeing as it was such a ‘special’ day).

But, I’m not too bothered by this.

Deaconhood suits me; I wear it well, if I do say so myself. Although, technically, it’s been less than a week, and I actually haven’t done anything deacony yet.

But, I am supposed to do something deacony this Sunday, and it’s making me a bit uncomfortable.

Okay, here goes…

Our church is hosting a super Harambee (fundraiser) this coming Sunday to raise funds for a bigger sanctuary (we congregate in a nursery school; I for one think it’s cute, but you know churches and their expansionist policies)

A very important guest will be in attendance, and I am very conflicted about his possible presence on Sunday.

You guessed it!

It’s our very own deputy president of the Republic. If you’re Kenyan, I’m sure you didn’t have to try that hard to figure it out. His name has become synonymous with church fundraisers lately, so, it’s pretty obvious I was referring to him.

Now, I am not trying to be sanctimonious or nothing, because even I have a past, and the church accepts my offering every single Sunday. So why should she react differently when it comes to the deputy president’s contribution?

Well, for starters, there’s the nagging possibility that the money he’s dishing out to all of these churches is part of his ill-gotten loot (he’s perceived to be one of the most corrupt individuals in the country;- where there’s smoke, there’s always fire, people).

I have heard some of the older congregants brush this off claiming that ‘everyone steals’. I don’t think that’s true, and even if it were, shouldn’t the Church be standing up against this vice.

How?

Not accepting stolen public loot from corrupt politicians seems like a very great place to start, don’t you think?

I mean, how can the Kenyan religious fraternity claim to be admonishing corruption and at the same time be in the front lines when it comes to receiving ‘alleged’ proceeds of corruption?

I have raised this question in regards to the deputy president’s impending visit to our tiny church, and this is the response I keep receiving:

At least he is returning some of the money back to the public. He’s better than those who don’t return anything‘.

Wow!

This is just sad.

We have grown so accustomed to being stolen from as a people that we applaud those who steal from our public coffers and ‘return’ a negligible proportion of it as charity.

And, it’s not like this charity comes without strings attached.

Of course, he’s doing this for political goodwill. He knows with the Church’s support, it’s much easier to win his desired political post. Otherwise, he would have contributed silently without all of this hullabaloo.

And, how can we criticize someone when we have already accepted money from him?

I feel like his (and other politicians’) donations have the potential to gag churches disabling them from ever criticizing bad governance.

Knowing all this, how can I possibly in good conscience, appear on Sunday and perform my deacon duties?

I am so troubled…so, so, so troubled!!

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But, I hear there will be good food. I love food. Food always makes me happy, which can come in handy as I try to grapple with the realisation that we accepted *allegedly* stolen money to build a bigger sanctuary.

And I am also going to need a lot of good food because later on that evening, Arsenal will be up against Tottenham. It’s a scary game!!!

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For those who follow me on Facebook, my new position might come as a surprise to you given the numerous anti-religious posts that I share on the platform.

Don’t be alarmed! I’m not leading a double life. I have very strong criticisms about Christianity as a religion, and I am very vocal about this at home and even in church.

But, I have learnt to separate the religion/theistic dogmas from the faith. I have learnt to focus on the faith aspects of the predominant religion that I have been exposed to, and mix these with my own inherent and acquired values.

In short, I have come up with my own faith, because I feel that’s a right for every human being- to choose or create your own beliefs (sounds ridiculous I know but it works, for me at least).

And what better way to change what I think is wrong with the church than infiltrating (I use this word very lightly) the institution and working on it from the inside. I feel that this is a more effective way of fixing the problem rather than just throwing stones at the institution.

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Anyway, let’s see how Sunday goes…bye for now!!

IS A GLOBAL RECESSION IN THE OFFING?

This post is not meant to alarm you, although to be honest I am a bit alarmed myself.

It seems that a global recession is in the making. This is according to Tiz Gambacorta, an investor, serial entrepreneur, and a reputable digital marketer. I subscribe to his weekly newsletters, and last week’s newsletter was discussing a looming global financial recession.

Tiz is not the only one who thinks like this. Many economists, financial market analysts, as well as big-time investors have been saying the same thing for the last couple of years, but their predictions have not come to pass ‘convincingly’.

Unfortunately, that does not mean that it is not coming. And the way Tiz put it on his website actually had me freaking out.

Here in Kenya, the perception is that the economy is always bad, so most people would not pay heed to alerts over a global recession. Well, maybe until it is about too late, and there is practically nothing we can do (except politicize the matter).

Whether these predictions become actual state of affairs is a matter of time. What I do know is that it is going to hit our country hard, mainly because of the perilous position we have placed our economy in.

For those who do not know, we are in the throes of a Chinese debt trap and IMF has backed us into a corner in regards to increasing the tax on petroleum and other basic goods. The cost of living is absurdly high at the moment, and our country’s economic activity is sure to take a hit as a result.

Let us not forget that just last week, we lost access to the IMF Standby Credit Facility, exposing us to a myriad of risks occasioned by external financial shocks. Our economy could collapse because we do not have protection from global economic shocks.

Yes, we are in trouble, and we are about to be in even graver danger if what Tiz and his fellow analysts are predicting about a looming global financial recession comes true.

There is reason to fear. The signs are there, and they are pretty convincing.

Let us start with an obvious one – the contraction of activity in major markets across the world.

Most markets have seen a reduction in activity for the better part of the year. We are talking about the Asian markets, the European markets, the Latin American markets, as well as the African emerging markets.

Most alarming are the major Chinese markets performing extremely poor this year. Granted, the slipping has a lot to do with US-China trade wars that have continued to take centre stage throughout 2018. However, the poor performance of the Chinese markets could point to a major decline in global economic activity away from its catastrophic side-shows with America.

China’s year to date market indices have continued to drop into double digits. She is currently the world’s largest producer, and its markets’ contraction means that most countries have slowed down their importing activity.

The US could also tip towards recession if it continues to escalate this trade war with China. Most of her imports come from China, and the additional tariffs on Chinese imports could crumble American businesses (it is a strong hypothetical).

The year to date market indices of the European markets is not fairing as well either. Germany is Europe’s main manufacturing powerhouse, and its markets continue to post poor results. This demonstrates that there is a reduction in activity in Europe as well.

The screenshot below shows the major markets’ indices across Europe, Asia, and America. If you look at most of the YTDs across the markets, you will see that they are red in colour, indicating a decline in performance. The Chinese markets are especially doing bad because their YTD performances have slipped by double digits.

According to Tiz, and other like-minded market analysts, the problem began in the Latin American countries, and owing to the contagion effect, the contraction of economic activity has continued to spread throughout the world.

We should also be very concerned at the rate at which global currencies are weakening, some even into double digits. This is a snapshot of some of the worst performing global currencies at the moment based on their year to date percentage change against the US dollar. Majority of the globe’s currencies are sliding in value, and not just the emerging and poor markets captured in the snapshot.

Perhaps one of the biggest tell-tale signs of a looming global recession is an inverting global yield curve. According to several financial publications such as this one, the average global yield curve is inverting, and history dictates that when the yield curve inverts, a recession is in the making.

When a country’s yield curve inverts it means that investors expect higher short term returns on bonds rather than the norm, which is higher returns on long term investments in the bonds.

Usually, long term bonds attract higher interest rates than the short term ones. However, the opposite occurs when investors perceive that short term investments are riskier than long term investments.

The flight to dollar is another clear indication that we are facing turbulent economic times. This characteristic has been a consistent early warning sign of a recession.

Investors, businesses, and other governments see the US dollar and her debt as a safe haven when the global economy is going south. Hence, there is a higher demand for US currency and debt as entities around the world try to brace themselves for an economic downturn mainly by stocking up on dollar reserves.

This flight to dollar is probably the reason the US dollar is still going strong, and its individual yield curve has not inverted yet.

So there you have it. An inverting global yield curve, weakening of currencies’ performances, declining performances in major markets, as well as the flight to dollar are some of the major signals that a global recession is in the offing.

Kenyans, brace yourselves! It is going to be a bumpy economic ride.