From our previous article on using debt to finance business growth, we concluded with the rule of thumb in debt financing: Never use short-term debt to finance long-term capital investments. The reverse is true. Continue reading “Debt Financing: Long-term and Short-term debt”
It is simple. Debt is money you do not own that you can use to grow and expand you business then pay back the lender with some interest on top. Continue reading “Using Debt Capital to Finance Business Growth”
After attending a 3 days African Union Youth Consultations Forum this week, my perception of Pan-Africanism was illuminated and the Pan-Africanism spirit rekindled in me. Different People defined Pan-Africanism differently.
My definition of Pan-Africanism is: The integration of our African cultures and economic systems for improved trade, maximum utilization of our resources for our own benefit, protection of our heritage and claiming of our rightful position in global economic platforms based on our demographic and economic strength.
What is you definition of Pan-Africanism?
On 12 July 2014, the Finance Cabinet Secretary Mr. Henry Rotich will be presenting the 2014/2015 Kenyan Budget to parliament for approval. To many citizens looking forward to this budget reading, the cycle has always been the same over the years till it has lost meaning. But just what is a government and what does it entail? Or put otherwise, why should you even be concerned about the national budget at all?
This is why:
A budget is not merely a list of the government’s expenditures and revenues. In a broader sense, a government budget is the government’s national economic policy document for the next financial year. The documents puts forward what the government expects for the following financial year in terms of expenditure on its economic projects and social programmes and how to raise the money needed to fund all these. It also prioritizes the projects and allocates revenue as appropriate.
From the budget statement, the economic climate of the country for the next financial year can be predicted by other interested stakeholders. The budget therefore advices investors both local and foreign on their next move with regard to investing in the country. To a larger extent too, the budget may influence foreign relations policy when it touches on taxes for imports from its strategic trade partners.The two then have direct impact on economic growth for the country.
As the ordinary citizen that you are, the national budget helps you understand the government plans for the next financial year. You will find out the economic and social projects lined up by the government for you and be in a better position to stand to gain from them. The budget will also help you monitor the performance of the government and ensure there is transparency and accountability in service delivery by the government.
Besides, you will also get to know the taxes you shall be paying for the next financial year and include them in your personal financial planning; since they always reduce your disposable income significantly.
Simply put, the budget is a must read and understand document for every citizen since it directly and indirectly affects your economic standing for the next financial year. This thereby determines the quality of your life for the next financial year based on the vibrancy of the economy as set out in the government economic policy document: the Kenya National Budget 2014/2015.
Just as promised, the government has finally set aside ksh. 6 billion for distribution to various women and youth groups across the country to provide seed capital for start-ups. Big money it is and no one should be left out in this.
The government has further promised that 30% of all government tenders should be allocated to women and youth groups in Kenya. This does not sound tantalizing till you get to know that we are talking of a whooping ksh.200 billion being channeled to our local youth groups and women chamas.
The Uwezo Fund is meant to create the capacity in the youth and women groups to enable them to be stable enough to bid for the government tenders.
The loans from the Uwezo Fund shall carry a one off 3% administrative charge and no other interest shall be charged on it. A group can borrow as much as ksh. 500,000 depending on the size of their business plan.
To access the fund, the group shall be required to write a good business plan and forward it to the constituency committee for vetting and if they qualify, they get the cash.
Compared to what the Youth Fund used to offer; a loan of ksh. 50,000 to a group of at least 12 youths, this seems to be much better considering that the capital base has been widened to a higher limit of ksh.500,000.
However, controversy has been raised on the adoption of the constituency framework to distribute the cash to the youth and women groups’ country wide bearing in mind the height of corruption in those constituency committees. In a show of transformation, the constituency committees shall be having one representative for the youths and women as well as have the MP sitting in them to try and bring in transparency.
It’s time for that business idea you have been sitting on to get some funding and be transformed from just an idea in your mind to an actual running business. Write a business plan; na ujitegemee!
The Good Holy book (Bible) says in some verse that “My people perish due to lack of KNOWLEDGE”; and I say, MOST Kenyan poor people continue and will continue to languish in poverty due to “LACK OF FINANCIAL LITERACY”.
Yesterday I was out and about around campus and its environs with a close friend of mine putting our marketing skills into a test drive. We were working with Old Mutual, an investment company in Kenya in introducing a new product to the students and any other interested parties around campus. Our work station was in the University of Nairobi, School of Business at Lower Kabete Campus.
The product we were introducing to the students is called i-INVEST; which enables the generation-Y folks like me and my schoolmates to invest in money markets and specifically treasury bills through a mutual fund by just using our phones. Sweet as it may sound with even free registration to get an account through their phones; still many of our clients yesterday could not get to understand why they needed to start saving for their future and invest to earn returns in their money at very competitive interest rates that beat any other in the market.
The students had a problem with parting with ksh. 10 from their phone credit to register and try out the new investment vehicle customized to suit their needs. That not being all, most of them could not find sense in investing small amounts in mutual funds and waiting to see their portfolio grow. At that point I realized just how “difficult” the simple concept of compound interest is to many of our students, though it is learnt in primary school. They could not see how the power of compounding working on their money over a long period of time could change what seemed like pea nuts today into millions or even billions in the future. Continue reading “Kenya’s Financial Literacy Deficit”