Sometimes ago, matatus went on strike in Nairobi. What followed was a big traffic jam. We realised matatus are not the primary cause of traffic jams despite their affinity to disregard traffic rules. It is private cars.
With matatus on strike, everyone who owned a car placed it on the road. That gave us a possible solution to traffic jams, high occupancy buses. The government attempted unsuccessfully to remove “Nissan” matatus from the road and replace them with bigger buses. By the way, there are Toyota and other brands of matatus, but Nissan pioneered the 14-seater type.
Something else came into play; consumers value for their time. The big buses will reduce the jam but will take too long to fill.
That is why Nissan matatus have flourished. They have more recently taken advantage of consumer’s value for time by introducing shuttles. A matatu strike ended up being a free experiment for us, giving great insights into traffic jams in Kenya.
Will the NASA boycott of some firms’ products and services be another free experiment for economists? Politics aside, this will be interesting to watch. Let us extract the economics behind the boycott and see if it will work.
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I found it interesting when NASA asked its supporters to look for substitutes. What if there are none? What is the substitute for M-Pesa? Do you recall the number porting that failed? Some of these products or services have become so integrated into our lives that boycotting them would be very hard.
Ask Kenyans how long they can be away from their phones. If a product or service is a necessity, it is hard to boycott. It is even harder if the product or service has an emotional component. Do you recall women being requested to deny their husbands sex if they did not register as voters? How many did that?
Will new firms come in to take care of those that heed NASA’s call for boycott or offer substitutes? How soon can we get another Safaricom, Bidco or Brookside? New firms must overcome barriers to entry from high capital to regulations like licencing. It takes time to build a firm even if a market exits.
Milk and cooking oil and related products may have substitutes, but will customer’s loyalty change overnight? How many customers care about the owners of the companies that make their favourite products? What do you consider when buying a product or a service? What of the switching costs? Imagine calling your friends to inform them that you changed your phone number? Ever noted we are all creatures of habit? We go to same pub, same petrol stations, same barber shop, same mechanic, we love the same type of bread, beer etc.
And it gets more interesting. The boycott could help us determine the real consumers of the listed firm’s products and services. Consumers vote with their money. What is the purchasing power those that boycott verse those who don’t? If you looked at NASA’s three listed firms, where are bulks of their services or products sold? Who has the “money” votes?
Let’s get bolder. Which areas have higher purchasing power, NASA or Jubilee strongholds? Is it also possible that consumers might “sympathise” with these brands and buy more of them?
Could these firms shift focus to the export market where there is no boycott? Could they also focus more on high end markets, where affluence makes consumers less political? Will consumers’ rationality triumph over political emotions?
What if these firms cut their prices or make offers like buy one get one free? Will the boycott continue? What of reverberations beyond the borders? Brookside has some French ownership through Danone. Safaricom has British Vodafone stake too. How will the foreign investors react?
What if I am a NASA supporter working in these firms? Should I boycott work and resign?
How will the boycott be enforced? Will distributors be kept off some regions? Will there be an inspection outside supermarkets? Could there be a counter boycott for products and services associated with NASA?
What is the final list of firms whose products are to be boycotted? Shall we be kept in suspense on the next firm on the list, like Schindler’s list? Has such a boycott worked elsewhere?
There was a call for such a boycott in the US city of St Louis, Missouri, by the black community because of perceived mistreatment by police. Economic boycotts were also common during the American civil rights movement in 1950s and 1960s. Martin Luther King talked of “redistribution of pain” through the economic boycotts. Can we also equate NASA boycott to economic sanctions?
Just when we thought politics and economics were getting parallel, boycott has brought them together. Could it be a realisation that political power comes through economics before getting to the ballot box?
The political contest that started on the ballot box has spilled over into the streets and is now being felt on our dining tables. Who will be the winners and losers? Will this contest end with a whimper or a bang to quote poet TS Elliot?