2025: A year of premium economic tears all around

The year is ending in economic tears for the ordinary citizens, albeit official statistics show otherwise.

The economy has been growing at about 5.0 per cent per annum. That is far shy of Vision 2030's magical growth rate of 10 per cent. 

Have you noted the paucity of Christmas jokes and forwards this year? A sign of economic distress? 

The popular question on the streets has been: if the economy has been growing, where is the money? The quick answer is, "somewhere!"

Economic fear is making us not spend, which is one possible reason Nairobians stayed in the city during Christmas.

If we have confidence in tomorrow, spending money is easy; it doesn't matter if it’s eating out or making investments, such as buying buildings. 

Money is in a number of places. One is in banks. When citizens live in economic fear, they look for safe havens for their money.

The bank is preferred for security, including emotional security, with interest rate coming second. Could that explain why banks are forever making profits? Do they have our money to make more money?  

The second place is government paper - treasury bills and bonds. Add corporate bonds. Have you noted how corporate bonds like recent Safaricom’s are oversubscribed? We want safe places for our money. 

The third place is money markets. While bonds give us coupons, interest paid half yearly, money markets have the advantage of exiting anytime, giving us extra liquidity. Insurance companies are big on the money markets.  

The fourth place is overseas funds in foreign currency. This protects you from currency fluctuations while investing in diversified securities or stocks abroad.  

The fifth place is real estate. This has traditionally defied economic cycles. The price of land has never gone down, and the real estate bubble has never burst despite all the predictions.

Rent has rarely gone down, even with affordable housing. Speculation keeps raising the price of land, and the simple fact is that the amount of land is limited.  

Sixth is stock and shares. These have not performed well lately but give high returns, with commensurate risk. Do Kenyans own stocks in foreign markets directly? Who owns Google, Meta or Toyota shares?  

Seventh is buying into existing businesses (equity investing) with growth prospects. Add hedge funds, which are less regulated than mutual funds.  

Eight is collectables like art, wine, cars or cryptocurrency.  What would be the price of a 1900 car or a 100-year-old wine? We can’t forget gold and other precious metals. Where else have you invested your money to avoid economic tears? 

Keeping money safe denies us the vibrancy of entrepreneurship. The reasoning is simple: why take the trouble of starting a business?

Why worry over bribes, kanjos (former local authorities, now county governments), Kenya Revenue Authority (KRA), new laws, and policies? Still wondering where the money is? 

By keeping money in safe places, it does not trickle down to the hustlers or hoi polloi. Think of the long-term economic effect of investing Sh100 million in a factory compared with lending the same money to the government through bonds.  

For the majority, the hoi polloi, the tears have been real. They have to work longer hours or get laid off, replaced by technology. Add the fact that the government has taken more of their money through taxes and levies. Still asking where the money is?  

Why else is inflation going down? We are not spending the money; we don’t have it. We should worry over very low inflation, not celebrate.  

Unlike other countries we admire, social welfare is rare. Citizens are on their own. Add corruption, which diverts much-needed resources to luxuries and unproductive investments. Out of curiosity, why are new hotels, not factories, rising in the counties?  

Luckily, natural tears from bad weather, floods, drought, or cyclones are rare in our country. Paradoxically, economic tears of joy are rare even among the leaders. They live in fear of losing power and are guilty of bad decisions that impoverish the majority.  

The year closes with economic tears. The rich, the middle class and the poor all have reasons to cry. Many have pent-up tears hidden in stoicism; they know it will make no difference if others see them cry. 

Even Christmas could not wipe our economic tears. The economic pause during the festive season made us even more aware of the tears. A visit to a crowded Central Business District on Christmas Day left no doubt that the tears are real. Many stayed on in the city. 

It’s envisaged that the road to Singapore will wipe out our economic tears, seen through joblessness, hunger, high rents, school fees and hopelessness.

That is a 30-year journey. What about next year? Will our well of tears run dry or be replenished? Let’s check next week. Happy New years citizens of planet Earth.