The Travails of a Cash Economy-Why Kenyans are financially poor?

I dedicate this article to my sister and all Kenyans and Africans in the diaspora. I trust it will shed some light on why Africa is financially impoverished and in my view will continue to be in the next two decades at the very least.

I am not a pessimist. Despite constant prodding by family and some friends alike on travelling to study abroad in order to escape the financial waste land that is Nairobi I chose to stay and find the analytical and objective standpoint to answer the question why? Why are we financially poor?

A Cash Economy has few advantages

The answer to the above question begins and ends with numbers. Since September of 2011 till this August the 28th of 2012 I have meticulously recorded all my financial transactions as best I can. In fact I have been so meticulous as to unearth glaring pointers as to why Kenyans are generally financially poor. In a word we lack cash. Cash is so scarce here that the apt description of a Kenyan randomly picked on the street specifically male, would be hungry. Kenyan men have hungry looks. Women handle financial destitution differently as far as facial expressions are concerned. I guess they are better liars than men or inherently more optimistic (hence the less haggard demeanors).

In my records some numbers jumped to catch my attention. The first has to do with recurrent expenditure. These are the expenses of life, the ones that determine ones quality of life. This is how you travel, where you sleep, what you eat and how you play. A pattern developed right from September 2011. Of the total amount of money earned an average of 20%+ was dedicated to my living expenses 70% + went to buying of stuff and non-essential buys. My context would shed light on the reason as to why this is so.

First I live with my parents thereby not paying any rent till today (God Bless mum and dad!) This means that evening and breakfast meals are mostly catered for month on month. Yet when I accounted for rent and food my recurrent total would have been 50% of my budget. This means that to live I would have needed only half my income ie. food, shelter and clothing. So where did the rest 50% go? One word-fun

I am all of 29 years old. That should explain a lot. I have earned a constant income for the last year alone. This means that I started working at 28. This gives a good idea of my mental make up as far as decision making is concerned. Yet I consider myself an exception to the rule because at least I know my numbers. And so back to the beginning, why are Kenyans poor?

The first reason is Kenyans and most of Africa are in a cash economy. A cash economy exists only as a black market in the developed world. Prostitution, drugs, animal trade are some examples. Cash economies cannot be regulated since there is no paper trail on the transactions. This means no taxation but also means that if no one is recording anything, then who knows where our money goes.

Exactly 4.2% of my income for the past year is unaccounted for. Gone with no trace of where and how. Keep in mind that I have kept these records daily meticulously for one whole year! Quick math, of the ksh. 1,000,000,000,000budget if 4.2% was unaccounted for that would equal a tidy 42 Billion shillings lost. That is all 494 Million dollars! Just imagine. And Kenyans/Africans do not record anything; trust me I was a Kenyan ( I record things now J).

Any civilization/society that advances has a form of retrieving information stored ages ago. It is the primary means of advancement since the life span of a human currently spans all of 7 decades and thus there is need to store the important lessons from generations long gone. It is the principle reason Africans and all third world peoples are impoverished. Their forms of recording information of importance were not effective. And so it is today that roughly 99% of Kenyans have no distinctive recollection of how much money passes through their hands on the daily and by extension year in year out. The First reason that Africans/third world peoples are financially poor is that they cannot budget and track their expenditure. They do not measure money, income and expenditure.

The second reason we are financially impoverished is as a result of the first. If a man/woman does not record the use of the most important man-made tool which is money then what else of importance will he/she notice. Decisions are choices made when there is lack of information. Conclusions are choices made when there is an abundance of information. Africans are perennial decision makers. We are locked in an information poor environment on the issues and facets that matter to our lives.  We have information but to our lives it is largely irrelevant. The reason being, no one records anything ever.

There is a trend. Asians, South Americans and Africans all share this trait.  They are all seemingly culturally incapable of recording things that matter in today’s world. Their indigenous recording systems are not cognizant of what matter today. Incidentally Eastern Europeans are similar in this way too.

The result is what you see before your eyes. Nothing works ever. If a system works in Africa it is age old and fool proof. If water runs in the city it is because the systems are gear driven and require no intellectual input save for pushing a lever. Anyone can push a lever.

And these are the two principle reasons Kenya is the way it is. It is a culture of irrelevance and myths where no one bothers to check the facts. In my line of work I see it every day. The irony is that most everyone thinks someone else will come and take care of the hard work do the numbers and make the conclusions. The sad truth is that no one will. In the world market third world countries are the fools in the market, the ones you sell your shit tomatoes to, your shit loans, your shit everything. We are blind and shopping like crazy. Countries without numbers, no one records anything with accuracy.

A few examples to underline the glaring system wide deficiencies

The reason Nairobi and most of Urban Kenya lacks coins is because Kenyan retail businesses have denominated their prices by five shillings i.e. Fare is either 20/= A shoeshine is 30/= ad infinitum. Kenyans have then accepted this and thus trashed the monetary system of coins below five shillings. It is hard to see a fifty cent coin in Nairobi save for when in a bank. I once asked for a short term loan facility-check discounting loan- and the lady on the other side insisted I round off my loan to the nearest no. divisible by five; imagine just avoiding the .56’s! Even our banks with all their sophistication do not have a handle on the .46’s and the .37’s. These money guys do not know their numbers after all the sophisticated computing they purchase from abroad!

The reason the next decade will be tough is because Urban Kenya and Africa requires intelligent systems. Get this- if Safaricom all 1.54 Billion USD of market cap cannot easily give you a transaction history dating back five years on your Mpesa account how do you suppose Kenya Power and Lighting can know where their power goes?  Loses account for a huge financial burden as we pay for energy no one uses. There aren’t any intelligent systems here. No levers for sharp minds like mine and many others to actuate. No buttons to push. In an analogy we are all headed to the coast on a donkey cart carrying fancy iphones and tweeting while updating our facebook status. A fucking spectacle this is!

Commuter Rail Concessions taken by RVR have now fallen back to the Kenya Railways. Re-branded armed with a new logo and rolling stock to ferry people from Ruiru to town in the morning, the Kenya Railways sure paints a pretty picture. But what is the point really? The Freight concession remains in the hands of private capital hesitant/unable to invest in new railway gauges and rolling stock. The cost of Freight in Kenya is high because goods mostly move in-land by road. Would you rather pay 20 bob from Ruiru to town or get cheaper imported goods due to cheaper freight costs? I guess we all chose to go to Ruiru with a pound.

A new project is gracing a billboard on Jogoo Road 150 metres as you approach City Stadium. A couple million cubic litres(131 Million Cubic litres to be precise) of water are to be added to the pipeline for Nairobi by the Nairobi Water Company. What is point of this if the Sewerage plant is not upgraded as well? Where will all this water be treated? Why repair the cushion on my chair when I still have one leg missing? System wide thought is missing.

Independent Africa fresh from colonization/war begun with government holding billions of tax bases without requisite billions in intellectual capital to use the money. This is the result. It is a path from a dumb technocracy to a smart one; Dumb politics to smart ones. Slow but sure. I see the process though it is slow. I know Vision 2030 will come though in 2050. That is not the problem. Development happens to everyone sooner rather than later.

The issue is who else share my vision. If you think Diaspora Africans are impatient on Africa’s slow but sure nature of things then look at Resident Africans and see the fidgeting. Gullible and easy to dupe our starry eyed mobs move to every Tom Dick and Harry tune that comes around. 500,000 Jobs this, Konza City that. The question I ask all who read this to the end-Are you patient enough to wait till our slow mo modus operandi gets things done. I am, hope you are too.