The Hakuna Pesa Phenomenon in Kenyan Economy: Kenyans have been complaining that nowadays, it is extremely hard to get money. This is not so far-fetched. In any given instance, there seems to be a shortage of money supply in the economy. Why is this? Here is Ephraim Njega’s take:
1. Interest rate capping has reduced credit to the private sector.
2. Government spending is reducing / stagnating as focus shifts to debt repayments.
3. Reduced foreign investment as investors exit capital markets.
4. Unstable Government policies are killing enterprise.
5. Over taxation is shifting revenues from households to government.
6. Delayed payments by government to suppliers.
7. Government over borrowing from commercial banks hence crowding out private sector including households.
8. People are being laid off and businesses are shutting down hence declining incomes and aggregate demand for goods and services.
9. Increase in Non Performing Loans are making banks cautious in lending.
10. Reduced consumer confidence makes people spend less and hold onto cash once again reducing aggregate demand