News Column

NDEMO: Africa's Poverty Contradictions and Dead Capital

January 19, 2014

Bitange Ndemo -1

In 1993, I quit my $60,000 -a-year job in the United States of America as a Senior Financial Systems Analyst to come home. The 1992 elections had just ended and the country was grappling with hyperinflation as a result of too much money chasing too few goods. It was rumoured that cash had been printed to bribe voters. Central Bank , in an effort to mop up excess liquidity, raised interest rates to 70 per cent. This meant that banks had no motivation to lend to consumers since Treasury Bills paid more than they could earn anywhere. My more than five years savings of $160,000 (about 20 million in today's exchange rate) went up in smoke. My saving grace was a ten-acre piece of land I bought in Kajiado. The rest was converted into dead capital in form of a small rural home. Broke, jobless and just married, I found myself hustling as a real estate agent until a relative asked me to join her in exporting horticultural products to Europe. I drove her three-ton canter into Murang'a and Kirinyaga in search of French beans, passion fruits and snow peas. INTERNATIONAL STANDARDS Some days I drove to Matuu in Eastern Province to fetch okra. This gave me sufficient income to pay rent, buy food for my family and socially contribute to the usual harambees for funerals, education, weddings and other community requirements. I was beginning to settle into the business and started a plan to effectively address some of the problems the farmers faced, like productivity. The horticultural industry was facing real problems as Europe was beginning to impose the ISO 9000 (international standards). I had some knowledge of how these standards could be implemented. I began to juggle as a consultant as well as an exporter of horticulture. At my rural home people started to whisper that I was selling vegetables (koonia emboga). In Kisii language, this is derogatory and in actual sense means I was like some old woman selling vegetables on the side walk. Although initially it did not bother me, it became too much when everybody began to doubt if I ever went to school while in the US. While doing my vegetable research at the Uchumi Super Market, Aga Khan Walk, I bumped into Hon. Jimmy Angwenyi then Chairman Department of Business , University of Nairobi and now Member of Parliament Kitutu Chache where I was born. He startled me. Don't tell me that it is true that you sell vegetables. He asked. And before I replied and standing by the vegetable section, he said "Bogonko oonie emboga"? (Astonishingly asking - Bogonko you really are selling vegetables). Bogonko is our great grandfather and the pride of the Kitutu people. "Did you not go to school in the US?" he asked. "Yes I did, and after my graduate school I worked as a financial systems analyst," I said. "Did you say systems?" he asked. "Yes, systems," I replied. "Can you teach a course called accounting systems?" he asked. I responded, that is my forte. DEAD CAPITAL Two months later, I was in class teaching an Accounting Systems course as a Tutorial Fellow. Starting salary, KSh7000. My monthly rent was KSh12000. I had just been impoverished by pressure from society. I began to regret why I put up a house in my rural home while I suffered in the city. The house was dead capital. I could not rent it to anyone yet I had to pay somebody to take care of it. In fifteen years I have used it twice. This is not just my story. It is the story about Africa's investment decisions and mixed priorities. Although no one has ever established how much dead capital there is, it runs into billions of dollars. Kenya alone is dotted with village shops that are hardly used with zero financial return as well as zero payback yet even in today, people are taking loans to build shops at village market centers. People are taking loans to build double storied homes in places out of this world. Reason. The society demands it. It is a home where you will be buried. It is said that you will embarrass the clan were you to die and you have no home. Africa is preoccupied with death when the living cannot feed themselves. Of what sense is it when someone puts up a KSh20million home in a rural area only for the relatives to raise money to pay school fees for children after his death? These are houses that no one will buy, sell or rent because graves dot the home. What is the value of culture? At the turn of 20 th Century, Africa's culture was more like socialist societies embracing use of resources communally. This is how former Tanzanian President Julius Nyerere created Vijiji vya Ujamaa. People lived together in small villages and left much of the land to grazing and farming such that large scale commercial activity can thrive. In Kenya , the Swynnerton Plan of 1954 changed both the land use as well as the African culture resorting to subdividing the land. EXCESSIVE SUBDIVISION Although the Swynnerton Plan's main objective was to create family holdings large enough to keep the family self-sufficient in food and also enable them to practice alternate husbandry and thus develop a cash income, it was meant to secure settler community with large tracks of land ownership. It introduced agricultural land ownership. Today we are slaves to the plan as land subdivision has become excessive and in essence undermined the livelihood of the people. It is why we are building haphazardly to the extent that we may never benefit from common infrastructure like energy, water, and sewerage that minimizes cost and ensures disease is kept at bay. Our culture must be looked at from a future sustainability point of view. We must plan for the future generations by provisioning land for agriculture and build communities around urban set ups with proper property rights. Property that can be useful now and in the days to come and is transferrable. Hernando de Soto said, "When you look at 19th century America or 18th and 16th century Europe , all of a sudden it'll become clearer that the thing that broke the back of poverty and privilege in developed countries in the past was when property rights came around and destroyed feudal title." This therefore will mean that we do away with much of the current cultural practices on land. Create a common cemetery and all other common infrastructure. This is how we can sustainably deal with poverty by reducing the cost of dead capital and our own contradictions. On Vegetables, I will soon start helping farmers with productivity measures. It is absurd when Israel harvests between 100 to 150 tons of tomatoes from one hectare of land when we do less than 1 ton from the same. Dr. Ndemo is a senior lecturer at the University of Nairobi , Business School , Lower Kabete Campus. He is a former Permanent Secretary, Ministry of Information and Communication . Twitter: @bantigito


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Source: Sunday Nation (Kenya)


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