Prostitution Tax

This story in the Standard made good reading: Peddlers of flesh get a touch of class

My only problem with the story is that it tries to evoke horror and suffering, but evidence to the contrary is present right there in the article:

A college student known by her trade name of Brandy, who plies her trade from a girls’ hostel in the city, confided to us that she makes up to Sh35,000 in a week when business is good.

“It a thrilling business,” she says. “I was forced into it due to hardship and the harsh living conditions, and now I pay my own fee and still have something left over to send to my mother who is a widow.“

Her mother believes that she is the beneficiary of a lucrative internship with an international NGO in the city.

(Nice touch I must say, claiming to work for an NGO)

Apparently it is shocking that the business is a lucrative one:

In a shocking revelation, one of the bureaus alleges to pocket close to Sh300,000 a day from the services delivered by some of the 20 girls in its stable.

A regular office worker earning KSH 30,000 a month pays income tax to the government. A prostitute earning more than the office worker lives on a tax-free salary.

Either way you look at it: there is little incentive for a prostitute to change professions, and the government loses out on tax revenues.

Food Riot – 2

So the World Food Program calls the rising food prices a ’silent tsunami’, and blames various other agencies and factors for this problem.

The problem is, world food prices are driven by commodity price speculation, rising oil prices, the dropping US dollar, and general panic.

Result: Calling it a ’silent tsunami’ most probably fuels more speculation and panic, thus driving prices up even more.

The supply of food itself seems no worse than before, just the prices have gone up.

This is a great time for people like the world food program, now they can make a stronger case for GMO.

Note: bio-fuel is not the cause, but subsidies like this are.

Food Riot

Table stolen from : Kenya Central Bureau of Statistics

Table 1: One Month and twelve months Change in Price Indices
Broad Item Group	% Weights	% Change on Previous month (Mar 08/Feb08 )	% Change on Previous year (Mar 08/Mar07)
Food & Non-alcoholic drinks	50.50	4.3	28.8
Alcohol & Tobacco	2.97	0.7	14.2
Clothing & Footwear	9.00	0.9	4.8
Housing Costs	11.74	0.7	6.2
Fuel & Power	4.18	0.7	15.6
Household Goods & Services	5.82	1.1	7.6
Medical Goods and Services	1.59	0.3	8.0
Transport & Communication	5.75	-0.1	19.1
Recreation & Education	6.02	0.1	6.7
Personal Goods	2.45	0.8	5.7
Average all Groups	100.00	3.1	21.8

See the last column of the above table – compare percentages in black and red, and observe the weightages (2nd column).

Its clear why you and me won’t be rioting for food just yet, because we can always drink cheap beer and smoke our appetites away.

Just like with the election mayhem this will barely affect people leading nice middle-class lives.

My driver bought stocks

My driver took a bank loan to buy Safaricom shares. The bank lends the money to him at about 18%.
There are three scenarios for him:

If the stock value rises by 18% my driver will break even (in reality a loss).

If the stock value rises by 100% (i.e. it doubles) I think he might make some money.

If the stock value instead fell by 18%, then the driver has to sell his home, children and his kidneys, and come up with 36% to pay the loan back.

But my driver, like most individual buyers, intends to sell, the moment the price starts rising. If everyone wants to sell, the only certainty out of this is debt.

Meanwhile the state overdrew from the central bank (the equivalent of the Fed in Kenya). Which means higher interest rates, and hunting season for loan defaulters.

Wouldn’t my driver have been safer betting at the races or hoarding food-grain in his basement?

Tigers and Dragons in Kenya

Interesting article about Chinese and Indian accquisitions in Kenya:

It is has become ironic that while many American and European firms consider their Kenyan subsidiaries to be lemons, Asian firms are making lemonades out of these situations and in some cases turning them into star performers.

These firms are also gaining entry into African markets without stirring as much animosity as the South African continental invasion has attracted.

The key to this success stems from the investment that India and China are making to understand the contours of both political and business power on the continent, taking advantage of the hunger for investment in most African countries.

Is this bad / good ? :

The US and the UK have in particular voiced concerns that the Africa-Asia link could precipitate a new form of neo-colonialism. Critics have also pointed out that most policies for Africa by the fast rising Asian economies are highly flawed; largely driven by lopsided economic gains and tend to ignore the social and humanitarian side of life.

Ironic isn’t it? The US is one country where both industrial and service business activity has been outsourced to China and India. The other thing I believe is that these rising eastern countries have a better understanding of African countries and economies – given that the economic situation in some parts of China and India is not so different from many African countries. There is also the absence of historical baggage like colonialism, slavery and racism, which gives these countries a different perspective to Africa than the West.

Note #1: How come the Chinese or Indian ambassadors don’t make the news as often as the American and the English ones ?

Note #2: A search on google yeilded this interesting article on Kenya by a former Indian High Commissioner to Kenya published in a Indian newspaper. Interesting perspective.