Festive season needs planning

As consumers enter the holiday season expecting to indulge in heavy spending, there will be a shadow looming in the background. An update released last week by the World Bank shows that while the economy has crawled from under the effects of a crippling global recession, post-election violence, food shortage and drought, it is still deep in the woods.

Although expected to manage 3.5 per cent in Gross Domestic Product growth next year, this is not enough a momentum to feed a population that is adding more than one million people a year.

This bleak outlook should, therefore, provide an opportunity for a cold analysis of what lies ahead as Kenyans close the year.

Although the ‘Still Standing’ report says economic conditions may be improving, this does not mean that consumers should go on a mad spending spree over the Christmas break. While some spending is good to get the retail sector going, too much conspicuous consumption will limit the amount of money available for savings and investment — better ways to build national wealth.

While the economy has gotten over the worst of the doom and gloom of a global recession, consumers won’t be marking it with a well-earned holiday travelling around the country or abroad.

While confidence remains relatively high despite high food prices, household bills and travel expenses, more Kenyans have begun thinking about staying at their workplaces for the break.

SHORT HAUL

Unlike in the past when transport companies made booming business as Kenyans rushed upcountry, fares have remained relatively stable. This could be a reflection of the fact that Christmas travel, which tends to be ‘short-haul’ trips to rural homes, are somewhat less favourable.

Pushed up the wall by declining or flat profits, most companies have shelved plans to host lavish staff end year parties, print calendars and diaries or even issue bonuses to senior employees. There are those firms, which have cancelled staff parties or reduced expenditure on these functions as the global recession bites.

That January could be a difficult month is not in dispute. This is based on a weather forecast, which shows that there could be a delay in the onset of El-Nino rains. What this means is that the price of food and electricity could remain high in the first quarter of next year. The World Bank projects that the agricultural sector, which declined by five per cent last year, is expected to contract a further 2.4 per cent this year.

The sector continues to face the most difficult policy challenges, says the report. It highlights the fact that maize prices in Kenya are double the international prices and also substantially above the prices in Uganda and Tanzania. The high maize prices benefit less than two percent of maize farmers, who capture half of the gross revenue from maize trade, while the majority of the urban and rural poor continue to pay high prices.

It is during these tough economic times that Kenyans should begin thinking about planning and putting away cash for end year holidays, well in advance. For instance, there are those who only think of Christmas when it is a week away. But with forward planning, one can make a decision on what to buy, where to spend the holidays, who to invite for the holiday.

This is to avoid last minute rush for any available public transport, hotel accommodation, shopping space and time to enjoy oneself. Better yet, it will be good for the economy to have predictable spending patterns.

Good planner

Planning four months ahead ensures that one has enough time to make travel plans, where to visit, gifts to buy and make all arrangements associated with the season.

But most important, one can estimate what the holiday package would cost and then make an effort to begin saving early.

Perhaps, an opportunity exists for financial institutions to also offer vacation products, including holiday savings accounts, to meet this demand. Going on holiday does not need one to be super-rich, just a good financial planner.