MAOSA: Covid-19 reminds us importance of saving

Wednesday June 03 2020

Saving is beneficial to the entire society as it is a prerequisite for boosting long-term economic potential. PHOTO | FILE | NATION MEDIA GROUP


Aesop, that fabulist and colourful storyteller from ancient Greece, in Fable 373, tells a story about savings.

The grasshopper was hopping about in the field on a summer day, chirping and singing to its heart’s content. The ant passed by, bearing along with great toil an ear of corn it was taking to the nest. “Why not come and while away the time with me, chatting, instead of moiling and wearing yourself out to a shadow?” the grasshopper asked. The ant responded: “I am helping to lay up food for the winter and I recommend that you do the same.” 

The grasshopper wondered: “Why worry and bother yourself about the winter while we have plenty of food at present?” 

When plenteous summer finally gave way to biting winter, the grasshopper realised that it had no food and was facing starvation while the ants were distributing corn and grain every day from their stores. It had learnt its lesson.

Here, Aesop demonstrated the importance of frugality and forethought while also highlighting the dangers of profligacy and improvidence. 

Never in the whole sweep of history has the human race faced as potent a threat as that posed by the Covid-19 pandemic. Not only has this deadly disease disrupted our social lives, but also inflicted devastating damage on economies globally on a scale unprecedented in peacetime. The IMF, in its macroeconomic projection, recently forecast that the novel coronavirus would drag the world into a three per cent GDP contraction this year. Its outlook for Kenya was grim as it predicted a slump from the 5.6 per cent growth last year to just one per cent in 2020. 


Kenyans are feeling the economic pinch of the global crisis already. Companies have reduced their workforce, slashed staff salaries by up to half or sent workers on unpaid leave. With bills to pay, individuals without savings will undoubtedly find it rough to survive this wintry period.

Savings constitute the difference between a person’s income and expenditure. Financial experts advise that it is prudent to build an emergency corpus to cater for at least six months of expenses in case of job loss or any other unexpected calamity. 

Kenyan banks have excellent savings accounts that limit withdrawals and earn interest at friendly rates. Customers can also establish standing orders, where a specified amount is automatically deducted from the salary or business account and remitted to the savings account regularly at no charge.

One can also invest in stocks, bonds, certificates of deposit or unit trusts, among others.

Saving is beneficial to the entire society as it is a prerequisite for boosting long-term economic potential. Savings increase the liquidity of banks, which provide stable sources of financing to businesses for investment and expansion, hence stimulating economic growth and accelerating job creation.

Further, high national savings rationalises the needs of the economy for external borrowing, which means less exposure to currency fluctuations in debt denominated in dollars.

Thornton T. Munger said: “The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.”

Mr Maosa, a banker, is a banking and finance expert. [email protected]