Kenya; Bradley Ziff is the Senior Risk Advisor for New York-based Misys Global Banking. He has served at top-level management of several global financial institutions including the International Swaps and Derivatives Association, Arthur Andersen and Oliver Wyman Financial Services. In his duties Mr Ziff visits clients in US, UK, Latin America, Asia, the Middle East and Africa and provides input and counsel on the developments in risk management, regulatory oversight, capital guidelines and business investments that have evolved over the past several years. His twenty five years’ experience in the industry has provided him with a wealth of knowledge ranging from geo-politics to risk and competition analysis both at macro and micro levels. Frankline Sunday caught up with Mr Ziff (pictured) on his visit to Kenya and had a chat about Kenya’s financial sector, the country’s risk profile and the impact of the on-going security and political tensions.
Q. The global economy, Kenya included, is still reeling from the 2007/2008 financial crisis. What have we learnt from this crisis and what should we be doing to stimulate economic growth?
There have been a lot of initiatives most of them in the financial sector and one of this is the Know Your Customer, KYC policy. Banks today are being encouraged to take a more engaging approach with their clients. For example those people who lost their houses, how much do we know about them?The lack of adequate consumer information has been identified as one of the factors that led to the sale of bad loans and going forward, financial institutions worldwide are building more robust customer databases.
Q. Kenya is currently suffering on the security front. What does this mean for our risk profile?
Well, stories about bombings and the politics are definitely not doing well for the country’s image. There will be sectors like tourism for example which will get an immediate backlash from the bad press. However, for the most part, I believe that the economy is resilient and investors remain confident for the most part. However, there needs to be a conviction that authorities are doing something to remedy the situation and those instances of insecurity and terrorism will not persist any longer.
Q. Kenya’s economy is connected to the international economy as we saw during the 2007/2008 financial crisis. Will the on-going upheavals in the Middle East and Eastern Europe have any impact on our economy?
The fighting in Gaza, Ukraine, Syria and other parts of middle-east is a concern to the global economy and everyone wishes that the violence we have been seeing in the news each day would cease. However, even as the global economy is getting jitters I don’t believe that the impact will reach this far.
Q. There has been a lot of debate on whether Kenya, like other African countries should be cozying up to China and what this means for the future of its traditional sources of foreign direct investment like the US and Britain. What is your take?
The question as I see it is not about the West v/s the East but more of how is Kenya as an economy positioning herself to benefit from this competition. Sure you can have interest from China, the US or other BRIC economies but are you getting more of your exports out for example or are you getting a wider variety of imports at a better price. These are some of the questions that we need to ask ourselves when looking at the re-alignment of super-power economic interests. Opportunities for FDI do exist from various sources but the level of preparedness in the country to take advantage of these opportunities and improve the local economy should be the determinant.
Q. So what does this mean for Kenya’s and other developing countries future sources for developing finance? The BRIC economies are certainly a force that is growing. In fact the push by these countries to start their own fund away from the Bretton Woods development financial institutions as that there were a lot of conditions that came with them.
However, China has been referred in some quarters as the 800 pound gorilla and there are concerns that with the country being the second largest economy in the world, it will end up calling the shots in this new BRICs fund.
Q. Transfer pricing has become a hot topic in many African countries Kenya included, what do you think the country should do policy wise in order to stop the bleeding?
There will always be those that are bent on paying less and one way that developing countries looking into combating transfer pricing can tackle this issue is by reducing the incentive that encourages corporations to cheat. The government should seal the corruption loopholes where they exist so that attitudes like ‘why should I pay taxes while it is only getting misappropriated’ should stop.
Q. Kenya’s tax regime has been criticized for being prohibitive for business and at the same time the Treasury states that it needs more money for development. Where does the balance lie?
Developing economies have been looking for a supply of capital for years and taxes is clearly one of the easier ways out. However, policy makers and the government should be careful to ensure that there is a balance in the taxes that are levied and what the tax-payers can afford to pay. At the same time, which brings me back to corruption, tax payers need to be given a reason to pay their taxes and this can only be done by showing the results in terms of development that their tax dollars are going towards. Taxes impact heavily on the cost of doing business but if investors can see infrastructure coming up, hospitals, schools and the like, then it becomes easier to reach a fair balance.
