Kenya's unsung economic heroes

If you asked a group of Kenyan intellectuals, elites or even hoi polloi to name their heroes, they will quickly name movie stars, musicians or some rich folks somewhere on this planet.

Others will name CEOs of the most profitable companies, like Apple which made Sh1.7 trillion in three months, earning our entire national Budget in a quarter of a year. Across the political divide, what are our leaders’ thoughts on Apple’s profitability?

But we rarely recognise the world’s greatest heroes — maybe because they are too many to be recognised, or too common and everyone can become one. I’m talking about parents.

Supply and demand

Economics, as you learnt from Economics 101, is about supply and demand. Just find out what people are demanding, supply this at the right quantity and price, and you are in business. At times you create demand, for instance, through advertising or associating the product or service with success or something people value, like youth, and you will make money like Apple.

When you make calls, the person on the other end of the line cannot tell if you are using a ‘Mulika’ or iPhone 6, but you still pay for the high-end phone because it is associated with class.

The same idea applies to services. Why would you pay Sh200 for a soda that costs Sh30 in a kiosk? The high price is not about the product — it’s exactly the same product. The higher price you pay is about the feel-good effect, the ambiance, the location, the reputation and the fact that you can talk about it!

These intangibles can make a huge difference in your business’ success.

Have you noted that one of the most successful food chains in Kenya has made lots of money by riding on Kenyans’ love for showing off? In Java, you can be seen having your meals. Contrast that with five-star hotels.

The heroism of parents comes from the demand side.

You can make or supply the highest-quality gadgets or services, but there must be a demand for them. Parents create demand for goods and services, first by demanding the products themselves, but more importantly, by procreating the demanders, the children.

That night of passion has economic consequences. Consider that most parents will get more than two children, meaning they will create plenty of demand for food, clothing, schooling, housing and other services.

Entrepreneurs and the Government come in to satisfy the demand for these goods and services, and by extension, create a lot jobs.

That is why some countries are worried about the lack of children and a declining population, such as Japan and Russia. The success of businesses in China is about the demand for goods and services from parents and their children.

The market for children’s services and goods is unique and everyone thinking of a start-ups should focus on it — they are very inelastic, in a layperson’s terms, meaning the rise in prices does not affect the demand much, so you make money all the time.

What makes parents heroes

There are two reasons for this. One, children do not make purchases for themselves; their parents do it, which makes it easier to pay higher prices. This is similar to someone asking to be taken to a five-star hotel for lunch because someone else is paying.

Two, their demands cannot be postponed because of their vulnerability. They must eat, be sheltered and educated. Sometimes this backed by law, which, again, ensures there is demand for goods and services.

Think deeper. In a country like Kenya where 42 per cent of the population is aged 14 or younger, children are a big proportion of the population, unlike in Japan where only 14 per cent is 14 or younger.

That is why schools, toys and entertainment are doing so well in Kenya. If you have open grounds somewhere, please start a children’s playground or a baby care or school and you will be in business.

The high proportion of children increases the probability of earning a living through supplying a service or good to a children-related firm.

That is what makes parents heroes — they ensure you got a job and share your earnings with your children.

It gets even sweeter. Most firms are owned by families and their children. They probably employ you. Doubt this? The national and county governments employ only about 700,000 people, including 275,000 teachers, in a population of 40 million.

If you take the tax rate as 30 per cent, it means that 70 per cent of the profits made in Kenya are kept by parents, which makes them more influential than even the Government!

Needless to say, parenting makes people worker harder and become more focused; they start thinking intergenerational. It does not matter whether you are a poor or rich parent. Such thinking makes the economy more productive.

It would not be an exaggeration to suggest that parents run our economy and are our unsung heroes.

Next time you meet a parent, give him or her a seat in the matatu; he is most likely your employer.

One wonders why parents are never recognised on Labour Day, or why we do not have a national holiday dedicated to parents.