BY DAVID ONJILI
K’Frys Fedha, a medium sized fast food joint in Embakasi’s Fedha estate, employing close to fifteen individuals, has been closed since February this year. Haltons Chemist, just opposite it, was closed in January 2017 rendering 3 staff jobless. Jacknice Supermarket ,a few meters towards Nyayo Estate, has empty shelves and the owner had to lay off six other staff in a cost cutting measure.
Mary, a banker who had taken a Sh300, 000 bank loan to start a milk ATM, closed hers after six months of operation while a Mr Mugambi who has a new flat just around Fedha Estate has not been able to fill his houses with tenants, and most of the occupants have defaulted several month’s rent. Mugambi admits that he no longer insists on house rent being paid by the fifth of each month but rather he has given the tenants breathing space to pay him rent when they can noting that most of them were never defaulters but have been pushed by hard economic times.
This is just a sample of how ordinary Kenyans in the informal sector are experiencing the pinch in these harsh economic times. The ripple effect of one individual losing a job is vast, their purchasing power is dented, they cannot meet their basic obligations of food, clothing and shelter and their dependents are also feeling the pinch.
While the government of the day has continued to boast of jobs creations in the informal sector, the reality is that there is an existing cash flow problem. There is little money in circulation as more and more Kenyans speculate on the current political unfolding yet a deeper look shows that the problem has been there for some time.
The economic survey of 2017 by the Kenya National Bureau of Statistics (KNBS) shows that 89.72% (747,300) of 832,900 jobs created in 2016 were in the informal sector, a drop from a total of 841,600 jobs created in 2015. Despite this drop, there was a rise in the number of persons in employment from 15.16 million in 2015 to 19.92 million in 2016, the total earning in both the public and private sector increased to Sh1.647 trillion in 2016 from Sh1.509 trillion in 2015, a 9%rise.
Worth noting in the report was that tourism, information and communication, real estate and transport were the major drivers of job creations here with numbers showing an increase in international arrivals from 1.18 million in 2015 to 1.34 million in 2016. While the figure is impressive on paper, an interrogation of the same on the ground paints a different picture.
In real estate, for instance, while we pride ourselves in developing high-end real estate that end up lying unoccupied for months as can be witnessed in the many empty office spaces and malls, there is a dire shortage for housing for the low-income earners. While there remains apperception that there exists a house deficit of 200,000 units per year, the type of units must also be categorized to define the current market needs.
Even though more and more people are joining the real estate sector, they are tying huge amounts of money there and since the categorization of needed units is not available, the property remains unsold or unoccupied. A few weeks ago, a local daily ran an advertisement where tenants were encouraged to pay in advance two months’ rent then the third month would be free. Whether it was an advertisement or publicity stunt, this paints the picture of a sector struggling and where the players in it are seeking new ways to outdo one another for tenants.
While the government has blamed the slowing of the economy on the current drought experienced in the country and region and the low uptake of credit from financial institutions on the back of the interest capping rates, the truth is that there are many pointers to a slowing economy.
Petroleum Institute of East Africa (PIEA) data released in early October 2017 show that diesel consumption in Kenya has dropped to 1.24 billion litres in the first six months of 2017 compared to 1.25 billion litres in the same period of 2016. This has been blamed on drought and the removal of trucks from Kenyan roads by Ugandans and Rwandese who are opting for the Tanzanian route but it can also be linked to the many industries that are closing.
The closure of Nakumatt chain of supermarkets also paints a worrying scenario. Take the Nakumatt Mega branch along Uhuru Highway just opposite Nyayo National Stadium as an example. Adjacent the supermarket is an eatery, a coffee house, several stalls dealing in mobile phones and their accessories and there is a business lady who sells flowers too. Outside the supermarket are several entrepreneurs who sell second hand clothes (blazers and coats), there is a cooking gas refilling outlet and fruit vendors. A majority of the above named traders have closed, relocated or downsized due to collapse of the supermarket and this is replicated in other areas where the chain of stores have closed around the country. Uchumi Supermarket, though still putting on a brave face, is surely following suit with same effects.
The story of Mary who took out Sh300, 000 bank loan to start a milk is typical in Kenya currently. Currently Mary is being hounded by her bank to service her loan, which is eating into her salary and putting an economic and emotional strain on her family. Many businesses in Kenya are closing, John Kiarie, a garage operator along Outer Ring Road has been forced to diversify to maximize on earnings. He no longer only repairs motor vehicles; he has partitioned his garage in such a way that he has a paint shop, a wheel alignment area and a carwash all inside his garage.
More and more entrepreneurs like John are now diversifying to cushion themselves as they try to offer clients one-stop services. We now have supermarkets doubling up as food joints for yuppies that pick a take away and go to their offices or homes to enjoy their meals. At Jomo Kenyatta International Airport (JKIA) a few weeks ago, after escorting a friend who was leaving for Europe, a cab guy offered to take us home for Sh100, a distance of roughly 10 Kilometers that would otherwise cost some Sh700. The driver was frank enough to tell us that, as taxi operators, they had resorted to carrying passengers for any amount as long as they just did not stay idle; his reasoning was that he needs to service the car loan after all.
All over the country, businesses are closing and downsizing and salaries are delaying. More and more Kenyans are feeling the economic pinch as depicted recently in the news showing how auctioneers are crying because their yards are full of motor vehicles reclaimed from individuals who have defaulted payments but which no one is offering to buy even at highly subsidized prices. Even the luxury car market has not been left out. Data from the Kenya Motor Industry Association (KMI) show a decline in luxury car sales in the first six months of 2017. Jeep Grand Cherokee dropped 50% to 4 units, Porsche dropped 43.3% to 17 units and Land Rover dropped to 19.4% to 29 units sold in that period.
Wherever you look, the Kenyan economy is doing bad and Kenyans are suffering this brunt.