Leaders should find ways to reduce poverty, raise incomes

The proportion of Kenyan families exposed to "multi-dimensional poverty" has grown. [File, Standard]

Whereas there are many encouraging signals indicating that the economy is rebounding from the slowdown of the last two years, the challenge of depressed incomes at individual and family level remains a serious one.

The problem has been made worse by shortened school terms, which have dramatically increased the frequency with which breadwinners have to pay for their children's education.

For instance, learners will be going back to school for the first term of the new academic year on April 27, three days before majority of workers receive their pay. And with terms lasting about eight weeks and holidays lasting about a week, parents will be expected to again pay fees around July.

It does not help matters that last week, publishers indicated that they will have to increase the prices of books because paper has become expensive as a result of the war in Ukraine, which has reduced the supply of paper. The maritime industry is also yet to recover fully from the aftershocks of the Covid-19 pandemic.

All the goods that were stuck in ports and warehouses are now competing for space in a limited number of ships. And with production resuming, this demand for global logistics services can only increase. Who bears the brunt of such developments? Parents whose incomes are already strained by a plethora of other financial demands, including food.

With rains running worryingly late - and the cost of inputs like certified seeds and fertiliser going up - food will, naturally become more expensive, which in turn means that meals will gobble up ever larger chunks of family incomes.

In a few months, we might have a situation where families are going hungry despite availability of food. When food prices go up, poor and middle class families respond by reducing the number of meals.

Limited remittances

Already, about a quarter of Kenya's population is food insecure and unless it rains, they will be staring at a real possibility of hunger and starvation depending on where they live and how much they earn. At present, three million people are already facing starvation.

In a nutshell, money has become a fast-moving consumer good, or in other words, incomes have become busy. Money is spent even before it is earned and the result, as Mr Michael Joseph, the Safaricom Chairman, said earlier this week is that digital financial platforms meant for savings - such as M-Shwari - have been converted into net lenders.

A related, and equally worrying trend, is the increasing erosion of savings. Rather than take loans, members of Savings and Credit Co-operative Societies (Saccos) have started liquidating their savings, leaving the institutions weakened financially and depleting cash reserves that have taken long years to build. This, again, comes against the background of limited remittances to Saccos.

Even before this trend started, Kenya was performing badly compared to other countries. By December 2020, Kenyans' Gross Savings Ratio stood at 12.8 per cent instead of the recommended 20 per cent. With degraded incomes on the one hand, and increasing expenses on the other, this ratio can only deteriorate in the short and medium term.

When all the foregoing scenarios are combined, they paint a grim economic picture made all the more disturbing by a Kippra study, released this week, which shows that the proportion of Kenyan families exposed to "multi-dimensional poverty" has grown.

That is why it is imperative for political leaders - even as they campaign ahead of the August election - to find ways in which they can reduce the cost of living and extend the shelf life of incomes.

Mr Mbugua is the Deputy Editor, Print at Standard Media Group. [email protected]