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In denial? Middle class borrows to fund expensive lifestyle



The measure of a robust economy is defined by a growing middle class, the aspirational citizens.

According to the Kenya National Bureau of Statistics (KNBS), a middle-class Kenyan is anyone who spends between Sh23,670 and Sh199,999 a month. All indications are that Kenya’s middle class is made up of big spenders.

One only needs to take a stroll through the malls in Nairobi and major towns to witness the spending habits of this class. They also drive big cars, eat expensive food and still have enough to go on holiday. In addition, their children go to expensive private schools and attend after-school extra-curriculum activities. The question is: Where is the money to fund this social status coming from?

The most recent economic survey by KNBS (2019) states that loans and advances from banking institutions increased by 12 per cent to Sh442.3 billion in 2018 from Sh358.6 billion in 2017.

At the same time, total liabilities by Savings and Credit Cooperatives (Saccos) increased by 11.5 per cent from Sh307.0 billion in 2017 to Sh342.3 billion in 2018. Meanwhile, loans and advances increased by 12 per cent from 320,494 million in 2017 to Sh358.6 billion in 2018.

Clearly, Kenyans are borrowing as fast as they are saving, indicating that the middle class is borrowing to fund its lifestyle.

Dr Gladys Nyachieo, a sociologist and senior lecturer at Multi-Media University, says that where one lives, where one’s children go to school, and what car one drives determine their status.

“Many Kenyans are living a life they cannot afford, this is why you have children in a school bus at 4am to get to a particular school in the suburbs. There is too much societal pressure to maintain the status quo attached to being middle class, forcing people to trap themselves in a cycle of unending debt, even with a reasonable salary. We end up hustling and struggling harder than those who form the lower classes just to dress, look or own certain things. Credit is supposed to facilitate development, not cripple you,” she says.

Dr Nyachieo adds that although socially, change must occur for people to evolve, today’s society has moved away from the communal space to an individualistic one.

“As we seek a certain lifestyle, we are all in competition with one another and the family unit is crumbling as a result. Corruption will get worse, there will be more cases of crime, stress-related diseases, violence, suicide and increased vices. These are some of the social outcomes of being stuck in the continuing cycle of debt.”

At the beginning of last month, the Organisation for Economic Co-operation and Development (OECD) released a report titled: Under Pressure: The Squeezed Middle Class. It states that in most OECD countries the middle class has shrunk since it has become more difficult for younger generations to make it to the middle class, defined as anyone earning between 75 per cent and 200 per cent of the country’s median national income.

Although Kenya is not part of the OECD concentration, one can argue that we are facing the same predicament. On a global scale, middle incomes are barely higher today than they were 10 years ago, increasing by just 0.3 per cent per year, a third less than the average income of the richest 10 per cent. One of the best routes to get to the middle class, says XN Iraki, an economist, is a good education, justifying the chase for expensive schools or taking a Helb loans for university studies.

“Education is how the sons of the peasants become CEOs. Education should be accessible to all citizens irrespective of their family background. That’s why free primary to high school is important.

But it is not just general education, skill matters. What can you give the market? There is a good economic case to subsidise education. On taking up Helb — it’s an egg and chicken situation. We need to grow the economy to create jobs so that we can pay Helb loans.”

Financial capital is another key indicator of a healthy economy, and the need for credit cannot be diminished.

Addressing the burden of lower disposable incomes, Iraki says; “Unfortunately we learn to spend money before we learn to earn it. We need to reduce the cost of capital. One simple way is to have more banks so that competition reduces the cost of borrowing. The interest rate cap has not worked. As a country, we must learn to save. We need savings to facilitate investment and avoid (impractical) borrowing. That is how China and Korea developed.”

In an ideal scenario, Dr Nyachieo says, a healthy middle-class Kenyan can afford their basic needs, lives within their means and has money left over after all arising monthly expenses for savings. It is from these savings that investments which lead to wealth can be made.

“There is a need to address this unhealthy aspirational culture most of us are stuck in. Self-awareness is the key at the end of the day. There is nothing wrong with being aspirational, but our society needs to move away from glorifying the ‘quick-fix’ route to making it in life. The other day we were talking about the issue of betting. Borrowing is highly addictive, something people don’t realise.”

She concludes, “We need to start teaching these lessons from the base family level. Teach children that what you have is yours, that they need to work for their own. And that it is okay not to have all the shiny things the neighbour has today — they can work towards them slowly. Our education curriculum also needs to be looked at. We are not realistically equipping children for the future. Are they learning the value of financial literacy or community?”

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Death of festivals dims Lamu hope to revive ailing tourism



Maulid. Food and Expo. Art, yoga and kite festivals. These are just a few of a slew of art and culture experiences that Lamu County used to dish out to the world and which boosted its tourism profile.

Lamu Old Town, also known as “the island of festivals”, had a splendid array of events and festivals ranging from Eid-Ul-Adhar to the Lamu Fishing Competition, Lamu Art Festival, The Lamu Cultural Festival, Lamu Yoga Festival, the Kite Festival, Shella Hat Contest and the Lamu Painters Festival.

But these events were put on the back burner as the tourism sector took a nosedive.

Coming on the backdrop of the Mpeketoni terror attacks in 2014 that also hit tourism hard, hospitality industry players say the vital sector is in the doldrums and want the festivals reinstated. Speaking during a forum in Lamu at the weekend, hoteliers and other players questioned why the county government has not been keen in reviving the events.

Hotelier Salim Abubakar said the county’s tourism sector was on the decline after the festivals were lifted. He urged Governor Fahim Twaha to restore the events and revive the sector.

“All the festivals that were introduced in the calendar of events are crucial. They served to attract visitors, both domestic and international, to Lamu. We need them back so that the tourism sector can be improved,” he said.

Marketing strategy

Former Lamu Tourism Association (LTA) deputy chairman Ghalib Alwy said the body, in partnership with the county tourism office started the festivals to attract more tourists. Mr Alwy said it is important that the events are retained.

“We launched those events as a marketing strategy for Lamu tourism. Through them, we were able to attract tourists from Kenya, East Africa and the world. This is after the terrorism attacks led to an almost 90 percent decline of the sector. It’s only through the festivals that tourists got the confidence to visit Lamu again. The events must be reinstated,” said Mr Alwy. Mr Mohamed Hassan noted that local tourism was still doing badly, attributing the situation to a section of foreign countries that are still having active travel advisories against their citizens visiting Lamu.

“The travel advisories still play a big role in scaring away tourists. We want as many festivals as possible as they have the ability to ensure the tourism climbs back on its feet,” said Mr Hassan.

Some of the festivals known and which are still being celebrated by many in Lamu includes the annual Lamu Cultural Festival that is marked between November and December, the Maulid Festival marked every January, New Year’s Dhow Race marked on January 1 and Eid Ul-Fitr marked every July.

The festivals are said to attract more than 30,000 visitors from around the world.


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Drama as delegates heckle DP Ruto during BBI launch 




Delegates heckled Deputy President William Ruto during the launch of the Building Bridges Initiative (BBI) report at the Bomas of Kenya over his remarks on the report

The DP was forced to pause his speech after the delegates started booing him after he appeared to express his dissatisfaction at the Youth leader Trans Nzoia County Alex Matere’s remarks about his wheelbarrow donations.

Ruto said by saying that Kenyans should not adopt 16th-century technology, Matere was referring to the wheelbarrows he has been supplying to Kenyans.

However, Ruto noted that the discussions Kenyans should have is why a 16th-century tool has millions of citizens still dependent on it in the 21st-century.

The DP’s remarks didn’t sit well with most of the delegates, which resulted in them openly expressing their displeasure and forcing him to stop talking.

Mbita Member of Parliament Millie Odhiambo appeared mainly pissed by Ruto’s remarks as he stood and jeering Ruto, drowning his speech.

He went on to ask for a minute to conclude his speech but the crowd couldn’t hear of it as they continued to jeer him after he appeared to hit out at the former Vice President Kalonzo Musyoka.

Ruto concluded his speech by calling on leaders to refrain from contests pitting the rich and the poor by quoting former US President Abraham Lincoln.

DP Ruto then proceeded to welcome his boss President Uhuru Kenyatta to make his remarks with the delegates still shouting “respect the president,” as he took his seat.

Former Prime Minister Raila Odinga also hit on the DP for engaging in early campaigns instead of supporting the President in delivering the Big-4 Agenda.

Raila said that Kenyans expect to be united for now but not campaigns of who will be the President in 2022 as they will handle that when the time comes.

The ODM Party leader noted that Ruto and President Uhuru Kenyatta should be working as a pair to bring a difference in the country.

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Uhuru maintains Raila is not government




President Uhuru Kenyatta on Monday 26 October 2020 made it clear that Orange Democratic Movement (ODM) party leader Raila Odinga is not in the government.

Speaking at the Bomas of Kenya during the launch of the Building Bridges Initiative (BBI) report, the Head of State explained that when he decided to come into an agreement with Raila, the mission was to find a way to healing this country.

“When we sat down to talk, something that was very difficult, for him and also for me and my team, very difficult. But when we got through to it and we spoke and we spoke again, we agreed that we are not here to share positions and we should put our various positions aside,” he said.

He mentioned that the two agreed to come together with a common agenda of ensuring that what the people of Kenyan have witnessed in 1992, 2005, 2007, and 2017 Kenyans shall never witness again.

He went on to make it clear that Raila Odinga never made any demands from the government.

“We did not talk about sharing government and as we stand today, he (Raila) is not in government. He is not in government; he never made any demands for the government. He never made any demands for a share of government,” he added.

The President pointed out that Raila Odinga asked for the two opposing sides to come together and fix what has been ailing the country.

He explained that this would allow the country in the future to be able to compete without the need for the innocent Kenyans blood being shed.

He went on to that the ODM leader for showing his patriotism and looking for a solution because he did not have to do it.

Uhuru also gave special thanks to his Deputy William Ruto for being part and parcel of the handshake and making the BBI report.

He revealed the three agreed that they would never talk about elective posts as they aimed to unite Kenyans.

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