Following Edgar Obare's expose on Wash Wash I thought it might be good to share the adverse effects of the industry to the economy and us the common mwananchi.
Wash wash increases the country's money supply; which includes both cash and other types of deposits that can be used almost as easily as cash.
So you would think CBK releases data on Money supply because of its effect on real economic and price levels? Unfortunately it doesn't. What the CBK releases is the Country's GDP on a quarterly basis. GDP is normaly assessed as a comprehensive indicator of a country’s overall economic health.
How does an increase in money suppy impact on the economy?
1. Increase in asset prices ( housing, land, etc)
2.Effect on small businesses
3.Causes decrease in govt revenue and subsequent increase in taxation.
4.The most ultimate effect is inflation.
To all those saying that the effect of Wash wash is negligible should know that the enxtent of their operations is diverse.
How do you think stolen public funds find their way into bank accounts? Fake arms and Gold deals, inflated project prices?
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