This is How Kenya is Going to Be Sold to Chinese

eliakeem · Apr 22, 2019

Kafrican said:
Watu wengi hua mnapenda kutumia mfano wa Sri Lanka lakini hua hata hamjisumbui kusoma vipi walifika hapo.... China did not force Sri Lanka to give up her port, Sri Lanka has more than one port ..........

Alafu hivi unajua Sri Lanka (which has an economy similar to Kenya) iko na external debt ya $53B ?
Wakati Kenya iko na external debt ya $27B ambapo only $5.6B ni kutoka China? WB inadai Kenya $8.9B kuna Japan ambaye ako na kama $3B alafu kina AfDB na wengineo ukichanganya na France,USA,UK ... Ndo inafika hio $27B.....

Kenya haitarajiwi kulipa Hilo deni lite la mchina ndani ya siku moja... E.g deni kubwa la China linachangiwa na SGR, ambayo imepewa miaka 15 kulipwa , hio inamaanisha Kwa hio miaka 15, kila mwaka tutalipa kama $210m. Bandari ya Mombasa pekee huokota Kodi ya $450m kila mwaka, KQ pekee hulipa $600m Kwa serekali kupitia KAA kutumia JKIA..... Mbali na hapo hata kama tukikosana na China Leo na watulazimishe tulipe deni lote Leo, tuko na foreign reserves za $8.5B ambazo zinaweza kulipa Hilo deni Kwa mpigo na bado tubaki na reserves za kulinda thamani ya shilingi..

And FYI, in comparison, Tanzania iko na external debt ya $21B of which ukiangalia in terms of % to GDP ni kubwa kuliko external debt ya Kenya.

Hayo madeni unayosema kutoka nchi zingine, yana tofauti kubwa sana na madeni ya China. China iliwapa commercial loans with commercial terms and conditions. AfDB na hao wengine waliwapeni concessional loan. Which is a loan with a modest covenants. This is why since you started to hear about AfDB advancing loans to many countries, you never heard about attaching or foreclosing (one) countries assets like what happened in Zambia, Sri Lanka etc. No wonder the Washington Concessors and Bretton Woods warned you about taking excesssive loans from China. They are surely know the aftermath of the Chinese loans. But all I can say is that, the country is in a big trouble, coz the Chinese loans are having a scheduling interest rate. When you are borrowing, you think that, you will be capable to repay. But once the due date is around the corner, things become different. Again since the beginning of the operation of SGR, it has never been servicing its opex. The GoK has to take money from her coffers to run the project. And I'm sure, the situation has never changed.

eliakeem · Apr 22, 2019

jebs2002 said:
Was talking to some Kenyan today and he insisted according to IMF and World Bank, Kenya's economy is going to be the biggest in Africa in 2030! Nearly died out of laughing, but the man was dead serious...

Ahaa haaa, le me put aside my comment.

Kafrican · Apr 23, 2019

eliakeem said:
Hayo madeni unayosema kutoka nchi zingine, yana tofauti kubwa sana na madeni ya China. China iliwapa commercial loans with commercial terms and conditions. AfDB na hao wengine waliwapeni concessional loan. Which is a loan with a modest covenants. This is why since you started to hear about AfDB advancing loans to many countries, you never heard about attaching or foreclosing (one) countries assets like what happened in Zambia, Sri Lanka etc. No wonder the Washington Concessors and Bretton Woods warned you about taking excesssive loans from China. They are surely know the aftermath of the Chinese loans. But all I can say is that, the country is in a big trouble, coz the Chinese loans are having a scheduling interest rate. When you are borrowing, you think that, you will be capable to repay. But once the due date is around the corner, things become different. Again since the beginning of the operation of SGR, it has never been servicing its opex. The GoK has to take money from her coffers to run the project. And I'm sure, the situation has never changed.

Can you show me any project above $2B that made profits in the first 5 years?

eliakeem · Apr 23, 2019

Kafrican said:
Can you show me any project above $2B that made profits in the first 5 years?

Bro the thing is, you entered a commercial financial closure for the project which has less Financial Internal Rate of Return (FIRR) compared to the Social/Economic/Political Internal Rate of Return (S/E/PIRR). These kind of project would go for concessional loans and not commercial loans.
Kindly be so guided bro.

eliakeem · Apr 23, 2019

Raila na uhuru wameenda rasmi kuwauzia waChina vizazi vijavyo vya Kenya.

mwaswast · Apr 23, 2019

"if" mchina achukuwe port of mombasa, would they be willing to be in competition with that of Dar or would they make sure that it becomes obsolete?

Kafrican · Apr 24, 2019

eliakeem said:
Bro the thing is, you entered a commercial financial closure for the project which has less Financial Internal Rate of Return (FIRR) compared to the Social/Economic/Political Internal Rate of Return (S/E/PIRR). These kind of project would go for concessional loans and not commercial loans.
Kindly be so guided bro.

The evaluation of FIRR for Kenya's SGR was valued at above the minimum 12%. That single project alone will add 1.5% to the GDP of Kenya each year it runs more than 8 million tonnes of cargo..

eliakeem · Apr 24, 2019

Kafrican said:
The evaluation of FIRR for Kenya's SGR was valued at above the minimum 12%. That single project alone will add 1.5% to the GDP of Kenya each year it runs more than 8 million tonnes of cargo..

Ahaaa haaa haaa
If that is the case. What's the cost of capital?

Kafrican · Apr 24, 2019

eliakeem said:
Ahaaa haaa haaa
If that is the case. What's the cost of capital?

The rate of return estimation for the SGR as a money making business in the feasibility study starts from 2023.
So wake me up when it's 2023 and KRC is not generating any profits.

eliakeem · Apr 24, 2019

Kafrican said:
The rate of return estimation for the SGR as a money making business in the feasibility study starts from 2023.
So wake me up when it's 2023 and KRC is not generating any profits.

Bro le me help you.
When you prepare a financial model for any project you need (but not limited to) the following inputs:
1. Cash flow
2. Appropriate discount rate
3. Cost of capital
4. Capex
5. Opex (both fixed and variable)
6. Time
All these have to be known during the feasibility study.
Now my qn is what is # 3?

Kafrican · Apr 24, 2019

eliakeem said:
Bro le me help you.
When you prepare a financial model for any project you need the following inputs:
1. Cash flow
2. Appropriate discount rate
3. Cost of capital
4. Capex
5. Opex (both fixed and variable)
6. Time
All these have to be known during the feasibility study.
Now my qn is what is # 3?

And in your own understanding, can you explain what the cost of capital means

eliakeem · Apr 24, 2019

Kafrican said:
And in you own understanding, can you explain what the cost of capital means

Bro it's better to be honest if you don't know what is a cost of capital.

Kafrican · Apr 24, 2019

eliakeem said:
Bro it's better to be honest if you don't know what is a cost of capital.

Maybe I do, maybe I don't. Jibu swali alafu unifundishe what was wrong with my answer!

kirk git · Apr 25, 2019

Kafrican said:
Maybe I do, maybe I don't. Jibu swali alafu unifundishe what was wrong with my answer!

Just admit you don't know ndio usaidiwe

Kafrican · Apr 25, 2019

kirk git said:
Just admit you don't know ndio usaidiwe

Hebu nisaidieni jameni mimi sijui kitu!

eliakeem · Apr 25, 2019

Kafrican said:
Hebu nisaidieni jameni mimi sijui kitu!

Thanks for being honest. When we talk about the cost of capital we mean the following.
1. For Borrowed capital we mean interest
2. For Equity capital we mean dividend
3. For combined 1 & 2 we apply WACC

eliakeem · Apr 25, 2019

Kafrican said:
Hebu nisaidieni jameni mimi sijui kitu!

Kwa Kenya huo mradi wa SGR haukuzingatia mambo ya msingi.

Kafrican · Apr 25, 2019

eliakeem said:
Thanks for being honest. When we talk about the cost of capital we mean the following.
1. For Borrowed capital we mean interest
2. For Equity capital we mean dividend
3. For combined 1 & 2 we apply WACC

So since ours is borrowed capital, was this interest supposed to start accumulating from day one after singing the loan agreement? And while you are at it, can you also please explain to me what 'Grace period," means in relation to interest.

eliakeem · Apr 25, 2019

Kafrican said:
So since ours is borrowed capital, was this interest supposed to start accumulating from day one after singing the loan agreement? And while you are at it, can you also please explain to me what 'Grace period," means in relation to interest.

Good.
Now you r coming.
I can briefly and simply attempt like this
1. The loan starts to accumulate the interest immediately after the first draw down.
2. Grace period is normally applied in project financing kind of facility. The project which will service the loan by itself. It has a full to a limited recourse. During the grace period the loan plus the interest is not supposed to be paid but will be deferred payment. Meaning that, the payments which were supposed to be paid when the construction is not due, will be postponed until the project starts to operate. The bottom line is, the grace period also accumulates interest, but the difference is no payment will be done until the facility starts to work.

eliakeem · Apr 26, 2019

After China noticed the possibility of possessing Kenya like Sri Lanka, decided to give a "MAPARACHICHI" deal instead of fund for SGR.

This is How Kenya is Going to Be Sold to Chinese

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