The good old days, from big mugs in villages to five-star hotels

A recent visit to Kaihuri (calabash) hotel in Ndaka-ini, Murang'a County taught me more economics than many textbooks. Two of us took three mandazi and two cups of tea. We used a big cup curiously nicknamed “fifteen.”

I thought it was extinct or only found in homes. The total cost for all that was Sh70! Read that again. Tea goes for Sh20 a cup, andazi for Sh10.

The last time I visited a five-star hotel, tea only cost me Sh800. It’s about the same quantity as “fifteen.”

Taking tea from such a classic cup and andazi held with a piece of paper (from unga ya ngano) instead of washing your hands was the mark of innocence, a walk down memory lane.

Why such a big difference in pricing?

It’s not just about supply and demand. Traditions play a role; prices are sticky in rural areas, and they rise more slowly than in urban areas. The traders in the rural areas are more “considerate.”

Perhaps they know the consumers or customers and want to be seen in good light in the village.

In the urban areas, most consumers are anonymous; you focus on their money, not their sentiments. This explains why the most successful entrepreneurs leave their village or even the country.  

There is no “class” premium in rural areas; no classification of hotels. Urbanites are class-conscious and pay for it. Higher prices are equated with higher class and status.

Most products in rural areas are not differentiated, which keeps their prices uniform and low.

We eat at home in rural areas, which reduces the demand for hotel food and lowers the prices.

The average income is low in rural areas, reducing the demand further. Someone in Ndaka-ini probably thinks Sh70 is a lot. 

Urban areas benefit from more consumers with higher incomes. This raises the price of goods and services. One hopes our leaders and key decision makers understand and appreciate the economic diversity in Kenya. And Ndaka-ini is only 80 kilometres from Nairobi. What of far-flung areas?

The low prices in Ndaka-ini show we need to raise the level of income in rural areas.   Can we industrialise the rural areas?

 How do we attract investors? One less talked-about cause of low income in rural areas is the brain drain; the brightest and most ambitious leave for cities and beyond.

Who do we expect to develop the rural areas? How do we make rural areas like Ndaka-ini flourish economically while preserving their innocence, like taking tea using “fifteen”?