Here is what the Kenyan rich, poor worry most about

The poor live one day at a time with a huge chunk of their income going towards ensuring their stomachs are full and a roof remains over their heads [Courtesy]

Musician Julius Owino, popularly known as Juliani, in one of his hit songs, sang: “Msee msoto analia njaa, sonko anacomplain na obesity” (The poor is crying of hunger, the rich is complaining of obesity).

In Kenya, just like in many other societies, what gives the poor sleepless nights is not necessarily what the rich are worried about.

As Juliani puts it, while the rich are grappling with effects of overeating, the poor are racking their minds on how they will put a plate of food on their tables.  

While this might sound cliché, an analysis of the weightings of all items that go into the computation of Consumer Price Index (CPI), or the cost-of-living index, shows priorities between the two income groups in Nairobi goes beyond food.

The weightings created by the Kenya National Bureau of Statistics (KNBS) amplify the fact that the poor live one day at a time with a significant portion of their income marshaled to ensure their stomachs are full and a roof remains over their heads.

On the other hand, the rich - and the middle class - invest heavily on their future, pumping a lot of money in education, health and recreation. The rich are not bothered about missing the next meal, but missing the next flight. 

The reason - at least partly - is obvious. With enough cash, the rich can afford to go beyond simply settling their rent, buying food, paying electricity, buying clothes and shoes. For them, it is not just about education for their children, but a good education. They have to ensure their children access better healthcare, so they invest in expensive medical insurance.

Data from the national statistician shows the poor, or low-income earners in Nairobi, earn a monthly income of Sh23,671 and below. Those in the middle-income category earn between Sh23,671 and Sh120,000 while the high-income take home more than Sh120,000 a month.

And so, for every Sh1,000 that the poor earn, almost Sh700 is for survival. Over 60 per cent of this, Sh425, is gobbled up by foodstuff- bread, milk, and sugar, maize flour, tomatoes, cooking fat, potatoes, and food from kiosk.

The other Sh275 goes into rent, electric bills, matatu fares and kerosene stove. A paltry Sh56 goes into education, recreation and health for the poor in Nairobi. 

That is not the case with the rich. Only a third of their income goes into food and non-alcoholic beverages.

Another third of their income goes into transport (car, car insurance, petrol, parking charges and taxi fares).

The rich will also spend as much of their fraction of their income on international flights, 4.3 per cent, as the poor would on spend on both education and health with the latter putting four per cent on the two services.

Another 20 per cent of wealthy people’s income is spent on housing, water and electricity. And, unlike the poor, they will dig deeper into their pocket to invest in education, health and recreation, pumping Sh140 for every Sh1,000 earned into these consumer products.

In fact, the rich in Nairobi spend more of their income on clothes and shoes (7.7 per cent) than on food and non-alcoholic beverages (seven per cent), according to the Statistical Abstract 2017.

The rich, and the middle class, are more conscious about their health, cautious of what they eat and drink.

Mineral waters

They procure the services of specialist doctors; receive surgical, dental, delivery, optical services; as well as do X-ray and lab-tests.

But it goes beyond that. The rich try as much as possible to stay away from hospitals.

The poor in Nairobi spend more of their income, 1.6 per cent, on alcohol than either those in the middle-class (1.4 per cent) and the rich (1.3 per cent). Is it to drown their sorrows that in Sh1,000, the poor will spend Sh6 on beer, compared to a rich man’s Sh4? But in the battle of beer-taking among the residents of Nairobi, the middle class wins it, putting Sh7 for every Sh1,000 they earn.

While the poor spend more of their income on sodas and squashes, the rich spend more on mineral waters. From an income of Sh1,000, a poor man will put Sh6 on sodas, compared to Sh2 for a rich man. A rich person will spend more on preserved fruit juices and mineral water, beverages that are not taken by the poor (Of course, this is not to say that poor people don’t take water).

A poor man will use Sh6 to buy cigarettes, compared to a rich person who will only use a shilling on cigarettes. A middle class will use Sh3.

Moreover, the poor in Nairobi take traditional brew and chew khat, activities that do not interest both the middle class and rich.

The gap between the rich and the poor in Kenya has been growing, with the latest report by charitable organisation Oxfam showing that about 8,300, or less than 0.1 per cent of Kenya’s population owns more wealth than the bottom 99.9 per cent, or more than 44 million people.

To address inequality, Oxfam proposes what it calls “fiscal justice” – progressive taxation to redistribute and raise revenue for essential public services. This money would then be used in such public services as education, healthcare and sanitation.

Moreover, for those who are formerly employed, less than three per cent of employed Kenyans took home a monthly salary of Sh100,000 in 2016.

Data from the Statistical Abstract 2017 shows that only 74,293 of employees took home a six-figure salary, pointing to a tiny disposable income in the country.

Over half of the employees, both in public and private sectors, earned a monthly salary of between Sh30,000 and Sh99, 999 a month.

This is even as 26 per cent of the 2,554,320 employees on wage went home with less than Sh25,000 every month, a fact that might have seen them grapple with a rising cost of living.

Majority of those earning over Sh100,000, about a fifth of the workers, were in the education with 16,196 workers in this sector taking home more than Sh100,000 in a month.

This was followed by the financial and insurance sectors (11,606), and those in the wholesale and retail trade/repair of motor vehicles and motorcycles (10,260).

The rich in Nairobi spend about 18 per cent of their income on buying and maintaining their cars, the poor spend as much fraction of their earning to ensure they have a roof over their heads and they have eaten.

Increase tax

Generally, 28 per cent of rich people’s income goes into transport with 4.3 per cent going into international flights. For the poor, and by extension those in the middle class, as much fraction of their income (4.7 per cent for the poor and 4.3 per cent for middle class) goes into matatu fares.

To address inequality, Oxfam recommends for the introduction of more tax bands for the rich, a situation that might see the rich taxed as much as 45 per cent.

Oxfam also wants the tax on transfer of wealth, known as capital gains tax, to be extended to listed companies; that it should be restricted to the transfer of immoveable property such as land and buildings, and unquoted shares alone.

“Capital gains tax is set at only five per cent and is applied solely to the transfer of immoveable property (land, buildings) and unquoted shares,” read the report, noting that there was also a need for the introduction of inheritance tax or net wealth tax.

Increase tax transparency in the country so as to deal with the problem of transfer pricing- a situation where a subsidiary company sells goods to a parent company. It normally results into shifting of profits in a jurisdiction where the tax rate is low.

“We need more robust transfer tax system. We need more data for companies in Kenya to compare their own transactions,” said Joy Ndubai, tax dialogue programme officer at Oxfam.

Yet, after all is said and done, the poor lead a stress-free, or so it seems. They spend no money on hypertension drugs.