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Why Kenya’s economy is run by 10 players and 45 million spectators

XN IRAKI
By XN Iraki | January 29th 2017

The Kenyan economy mirrors the English Premier League. It has more spectators than players.

Some of the most loyal fans of the EPL have never played football. But they will bet against the winning team, leave home to watch the match in a sports bar and report to work on Monday sad because “their” team lost.

Most football fans can name all team members of their favourite English side and their rivals, including reserves and managers. They have their team’s stickers on their car windscreens, mobile phone screens or key holders.

Our obsession with the English Premier League closely mimics a cult. We laugh and sometimes lose temper while watching footballers making money. Philippe Coutinho has just signed a £150,000 (Sh19.5 million) a week contract with Liverpool for five years. Do you really need to be corrupt to make money?

Key consumers

We lose money through betting, drinking, paying for Wifi and leaving our families at home to join our friends in social places. A few make money selling stickers, showing live matches or winning bets occasionally.

This obsession with the English Premier League and, occasionally, the World Cup closely mirrors our economy. There are too many spectators, cheer leaders and very few players.

One could quickly argue that lots of Kenyans work hard everyday on very difficult jobs in the hot sun just to make enough to earn a living. With no surplus, they remain economic spectators. How much money does Manchester United make per year? How much of it do we share? If we are not spectators, why can’t we buy Man U shares and share the dividends?

On Friday January 20, 2017 Man U’s stock was $15.85, about Sh1,600 per share. How many Kenyans, even the affluent, have invested in other countries either to diversify the risks or take advantage of new firms and innovations. How many Kenyans bought Facebook shares, though we use it every day? Google?

To be fair, some Kenyans have invested in other countries indirectly through funds, but they are very few. Godwin Wangong’u, a prominent commercial lawyer, observes that Kenyans would rather keep money in the bank, where they lose because of inflation, rather than invest it elsewhere. He cites lack of understanding of foreign markets as one of the reasons we rarely invest outside the country, preferring to spectate.

We are spectators even at home. Private equity funds and sovereign funds such Norfund and Helios have been investing in Kenya, with focus on SMEs - what we sarcastically call jua kali. And they are making money.

Not yet convinced we are spectators? Apple Inc. made a profit of $9 billion in the quarter ending September 24, 2016. I leave it to you to convert it into Kenyan shillings and compare it with our current budget. International sales accounted for 62 per cent of the quarter’s revenue.

On the investment side, we are great spectators, often at VIP lounges. In 2014, Africa contributed only 2.4 per cent of global GDP says Organisation for Economic Co-operation and Development (OECD). Africa contributed 2.4 per cent of global trade in 2016.

How many Kenyans have at least Sh100,000 in their bank account?

The global scheme of things seems to support spectation. Some nations focus on high end jobs, leaving low end jobs for us. We can assemble cars but can’t design them. Does foreign aid support spectation?

But in consumption, we are the key players. We love foreign brands, often over priced because the brand owners know they make us spectate at them.

Data from the World Bank shows the extent of “spectation” in a number of selected countries. The measure of spectation is the percentage of income attributed to the top 10 per cent. The higher the percentage, the higher the level of spectation. We assume all money is made genuinely through sweat or inheritance, not corruption.

Reason to worry

South Africa is in a class of her own. Kenya has more spectators than Tanzania, which compares favourably with the US, according to the World bank.

Except for the US, most developed countries seem to have fewer economic spectators. See the table for data for UK, Germany and Norway. China’s is surprising. It seems Communism is dead and the statement attributed to Chinese revolutionary and statesman Deng Xiaoping, “being rich is glorious”, was taken seriously.

In matches, spectators are often the source of trouble. The current political tension in Kenya is partly driven by too many spectators who think the next government will make life easier for them and promote them to goal keepers, defenders, wingers and strikers.

That illusion has been harboured for the last 50 years. Regime changes (elections) often have key players interchange the sides while spectators remain the same. Paradoxically voters think they have replaced the players.

There is a risk that most people will accept their fate as spectators and make no effort to improve themselves. That is common in developed countries with hardened socio-economic classes.

Where do we go from here?

Luckily, innovations keep spawning new players like Mark Zuckerberg (Facebook founder), the late Steve Jobs (Apple founder) and other unsung heroes.

Evidence of a generation resigned to fate is emerging in our schools; students from poor backgrounds are no longer the most hardworking. Do you recall George W Bush talking about “soft bigotry of low expectations”?

Ever wondered why foreign investors do so well in Kenya? Why do we invite people to come and make money as we spectate? Why can’t we make that money ourselves?

Economic empowerment is the route to more players. It starts with a good education, giving citizens skills that make it easier for them to earn a living.

With Education Cabinet Secretary Fred Matiang’i’s proposal to channel more funds to science, technology, engineering and mathematics (stem), the road to economic progress should be supported by all.

But more importantly, schooling and upbringing should raise the expectations, and inculcate the belief that one can be an economic player, not spectator. The tenet that ties homes and schools together is the respect for work, best espoused by protestant work ethics.

Godwin suggests that addressing social pillar in the Kenya Vision 2030 is the first step in turning us into economic players.

The political noise and vitriol from social media leaves no doubt we need social order before an economic take off. The 2010 constitution seems to have underestimated our socio-psychological discord.

So, are you a spectator or player?

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