Don’t mention the ‘R’ word: A non-economist’s view

For starters, I am no economist, psychic or aspiring Nostradamus.

However, as a member of what a colleague calls the “real economy” — where people buy and sell actual things like furniture, maize, cars, land and so on, I seem to have less money in my pocket this kalenda than last.

And if you are also wondering why you seem to be poorer lately, just know it’s not you — “It’s the economy, stupid!” to paraphrase James Carville, Bill Clinton’s 1992 campaign strategist.

Ask anyone in business how 2018 has been for them.

Probe a little and you will find that the first half of the year was marked by an upswing of confidence, fuelled by optimism after a turbulent election year and buoyed further by “The Handshake”.

TOUGH

In recent months, however, nine out of 10 times the story changes to “it’s been tough”. And that covers almost everyone — from a hair dressing salon to an insecticide-selling company.

“Release Your Inner Debt Collector” sounds like it should be the title of a self-help guide. But it describes the current fevered and frenzied state of many suppliers as they ceaselessly hound their clients for money.

Again, I am not a macro-economist nor clairvoyant but all I know is that something isn’t right.

“Hakuna pesa!” seems to be the universal cry for a majority of Kenyans.

ECONOMIC GROWTH

The World Bank tells us our economic growth this year will accelerate to six per cent.

The question is whether they have got their statistics for Kenya switched with some other developing country beginning with a “K” — Kiribati, Kazakhstan, maybe even Kuwait? (By the way if you are interested these countries growth rates in 2017 were at 3.1, 4.0 and -2.9 per cent respectively).

So in the Kenyan case these forecasts seem like a reassuring bed-time story whilst the reality is that the ordinary mwananchi has a hard time paying this month’s rent and, God-forbid, school fees come January.

RECESSION?

In my layman’s curiosity, could this be what they call a recession? This is a situation, I understand, akin to stunted growth in humans. In simple terms, if the price of bread goes up by more in percentage terms than my last salary increase, then I will have to consume fewer loaves in the future or have to relook at the household budget.

Word on the street is that county governments are not paying, or at least not when they are reliant for their pocket money on a parent national government so stretched that it has resorted to mass threatening e-mails from the taxman.

Could it be that others more adept than I are taking note?

CAPITAL FLIGHT

It seems there is capital flight from the Nairobi Securities Exchange.

The little dollars, Euros and Pounds Sterling are sprouting wings and flying back to from whence they came.

Standard Investment Bank reports that in the first nine months of the year, foreign investors on the stock market sold a net equivalent of $223.2 million (Sh22.8 billion).

Additionally, basic accounting wisdom dictates that if you had budgeted to spend x and you end up spending 2x, that is as with our double elections last year, then we must be in debt by at least x assuming that we had no savings to begin with.

Not to mention that we had accepted a loan(s) of y which we have only started repaying recently.

For the umpteenth time, I am not a diviner, but common sense tells me that we need to start selling more things to other people who do not report their revenue in Kenyan shillings.

RISK DIVERSIFICATION

In kizungu mingi, it’s called export and risk diversification.

We should sell more green beans to countries in the Northern Hemisphere and invite more tourists to come and lie on our beaches and pay for their air-conditioned rooms in hard currency.

And we need not worry about the little birdies taking flight from the (stock) market. They will be back.

They may not have heard but things are looking glum on the Standard and Poor’s 500 and Nasdaq composite, which comprise some of the world’s largest companies. Apparently, they are moving into bear territory aka significant share loss — and based on the National Geographic, you should be very afraid of bears, especially if you are not Goldilocks.

So, shhh! I think there’s a PR (Personal Recession) issue at least in your and my household.

If I am right, take courage: Brace for a hair-raising roller coaster ride in 2019.

Hang on and be ingenious, and you will experience the adrenalin rush.

The author is the Managing Partner of C. Suite Africa, a boutique management consultancy. [email protected]