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Why The City Dweller is a Tricky Saver



By Silas Nyanchwani

I live in Kitengela, often considered the dust headquarters of Kenya. The Kitengela dust is so annoyingly persistent that even if El Nino rains pounded the area for a week, the dust will be up an hour after they stop.

However, recently, I saw something else that caught my attention. Along Namanga Road, a dozen SACCOs have opened braches, with the hopes of trying to get Kitengela residents to sign up. Most of the mushrooming SACCOs, seem to have come from the countryside, or outside the Nairobi metropolitan area.
A while back, while in Kisii County I noticed that some traditionally Nairobi-based SACCOs are also trying to penetrate the countryside. This is an interesting phenomenon. Those in the countryside want to venture into Nairobi, fervently so. And those in Nairobi are mulling the countryside.

But is Nairobi a good place to try to branch out to?
Most people in Nairobi live pay cheque to pay cheque made worse with the fuel crisis, the high cost of living, and runaway inflation.
Nairobi is a deceptively rich city. What with the many lights, the tall buildings, the big cars? But beneath the effulgence and glitzy, is the stubborn fact that the Nairobi economy is chiefly informal.
This poses a challenge for SACCOs. Informal sectors are traditionally less inclined toward savings and more predisposed to turning to expensive credit options like microfinance, digital lenders, or even unregistered shylocks. Mainstream banks, deterred by collateral deficiencies, often shy away from serving Nairobians, making SACCOs the go-to option for depositing savings and accessing manageable credit.

But for SACCOS that want to try the Nairobi market, what should they be looking at?
In the city, people are more fragmented. SACCOs thrive best where there is some semblance of communal relationships, professional or otherwise, to enable the ease of getting guarantors for credit facilities.
In this challenging environment, SACCOs must rethink their strategies and embrace innovation as they venture into new markets. The fragmentation of the city’s population demands a tailored approach, perhaps focusing on SACCOs for specific employers or communities where communal bonds are stronger. Building trust and credibility within these niches might be the key to success.

In the city, unless it is a SACCO for specific employers or a given community, it is tricky to rally people around and build a credible credit society. Relationships in Nairobi are fluid and ephemeral, and people are always shifting, they hardly stay in the same place or same job long enough to forge a relationship that can warrant one to be a guarantor or a credible borrower. Microfinance, digital lenders, shylocks, and other predatory lenders know these factors, hence their exorbitant and unsustainable interest rates.
With a shrinking economy, many people who guaranteed others loans, have been forced to pay when those who took loans failed to honour their obligations. This has complicated borrowing from SACCOs as individuals become more and more skeptical. With people not able to keep their jobs and businesses taking a beating, SACCOs have to rethink and be innovative to maneuver around, even as they launch into new markets.

The SACCO landscape in Nairobi presents a complex blend of potential and challenges. While the allure of a bustling urban market beckons, Nairobians’ reluctance to save within SACCOs is rooted in the city’s high living costs, economic uncertainties, and a thriving informal economy. These factors, combined with limited access to mainstream bank credit, transient lifestyles, trust issues, and financial literacy gaps, create hurdles for SACCOs. To thrive in this dynamic environment, SACCOs must innovate, offer adaptable solutions, and prioritize financial education. Only by addressing these unique urban intricacies can SACCOs truly unlock the potential of Nairobi’s bustling but cautious savers.

However, some SACCOs have earned the trust of Nairobians through their commitment to financial inclusion, competitive offerings, and adaptability to the unique challenges of the city. As Nairobians continue to navigate the dynamic urban landscape, these SACCOs stand as reliable partners in their pursuit of financial stability and growth.

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Playing Around With A Shrinking Pay Slip



I had an extremely rude introduction to taxation. And I was not prepared at all.

As a swashbuckling young man in college, I moonlighted as a freelance journalist, basically scrounging around Nairobi for stories to sell to the newspapers. The pay wasn’t good, but for a young man, whose needs were limited to a good amount of tipple, buying my girlfriend some ice cream, and buying a good shirt occasionally, it was enough.

One day, I was inspired and worked myself like a horse. We used to be paid per the number of articles published. I had ten articles published and in my head, I knew I had made a kill. My life was going to change tremendously. So, when I went to the ATM expecting a certain amount, only to find about a third of it—a tidy sum, if that—was missing, I was aghast.

Armed with my newspaper clippings, the fury of scorned gods, and the anger of a monster, I stormed the accounts department of the newspaper ready for a war. The man who received me verified my claims and indeed I was entitled to what I was asking for. Then he went through my pay slip in the system (we only received the cash, not the pay slip) to establish the source of the discrepancy.

“You are a freelance, right?”

“Yes, I am,” I said, impatiently.

“And this is the first time you have made more than Sh 24,000, right?”

“Yes!” I said, disgusted at his very personal questions.

“Well, from the look of things, the money you are asking for went to taxes. Once you make more than Sh 24,000, you are eligible to pay taxes…”

That stopped me cold. I felt violated. Insulted. Cheated. I hated it. But then, it hit me I was an adult, and just like death, taxes had become a certainty of life.

Soon, I was to get my first permanent job (are there permanent jobs anymore, really?) and I remember the quiet, almost reticent HR lady giving me some forms to fill in and I was asked who my next of kin was and when I asked why, I was told, ‘just in case you die, someone has to inherit your pension, and of course NHIF is mandatory.” And just like that, I was introduced to ‘statutory deductions’-those payments the government usually taps at the source.

Next, I got a good job with an even bigger salary. When the salary was touted to me at the interview, I was over the moon. I was too financially illiterate to know the difference between gross and net. And I didn’t know how big a bite the government was to make off my pay slip. When the first salary came, I was beside myself with grief at how much the government had taken. And a few months later, NHIF and NSSF rates were ramped up higher for my income bracket. Adding the Higher Education Loans Board deductions, and SACCO subscriptions, I was now earning half my stated gross salary.

That is how I became an adult. I started to understand why the uncles I considered stingy were not necessarily parsimonious. I started to understand why employed people lived a certain predictable lifestyle. Why they saved every coin. On transport, on shopping, on luxurious spending.

Soon enough, my spouse, who was in a higher income bracket became ruthless with the family budget. Out went the superfluous and frivolous supermarket shopping, and in came the bulk buying of domestic goods from Indian or Somali wholesalers upon which she could save up to half what we used to spend while shopping in a supermarket.  

Today, we find ourselves in the same space. As the government sinks its teeth even deeper into our pie, we have to be creative. The housing levy and other tax measures will shrink our income even further. Never before have Kenyans been so taxed to the point they can’t breathe. What is even more galling is that the taxes are coming at so many levels and you see the work of your sweat chip away mercilessly and helplessly. Take fuel, for instance, the most overtaxed commodity and electricity. It gets worse and worse.

So, what are we to do?

We must adopt negative coping mechanisms. That means cutting down on expenditure, more so, on unnecessary goods and services.

Personally, it means I may have to cut down on the streaming services and be realistic on how many TV programs I want, and how many I can watch realistically. I have been spending a fortune on my barber, and now I have to drop the massages and stick to a simple shave and trimming. My leisure budget will be faced with serious austerity measures. If drinking from home and watching football matches from home will help to save, so be it. Luxury foods like meaningless cups of tea, meaningless beer, and meaninglessly expensive fashion have to be suspended.

That is the only way we can give the pay slip some relief and be able to save something for the rainy day.

What is going to be your strategy?


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Do you think about your retirement?



By Silas Nywanchwani

January is usually the worst time to have a birthday. It is worse if it comes the first week of the month. It means that you are reminded so painfully earlier in the year that you are not getting any younger. That is my story.

And man! How fast do the years run? That I am closer to 50 than I am 20 is something that does not sit well with me. I used to judge some of my uncles in my younger years about what they were doing with their lives. And life has an ironic sense of humour. I sort of grew up to be that uncle. Before you know it, you are 50, with a lot of unlived and unrealized dreams.

As I grow old, one thing keeps me awake at night: retirement. I have observed old men and how they handle retirement, and it can be heartbreaking. From those who shouldered the burden of their family that denies them a good retirement to those whose choices contributed to their old age misery, it is never a good sight.

When I was first given my contractual job, the HR lady took me to her office and handed me two forms, one for NHIF and one for NSSF. And she directed me to a spot where I was supposed to sign who my next of kin is. I was 25. And that brief encounter shocked me.

Because when you are 25, you are immortal. Retirement looks far away, and you wonder what NSSF is all about. I was appalled. I was fresh out of college and here was someone reminding me that I was ticking the boxes of life’s inevitable processes pretty fast. I was now supposed to marry, family, have kids, and slave for them and retire.

George Harrison, the quieter and more cerebral Beatle, said that one day you are 17 and before you know it you are 67, and in between, you don’t know where the years go.

Retirement is an inevitable fact of life. And the only choice everyone has is to embrace it. Retirement comes with very unique challenges. And each generation will face its retirement challenges. My generation will be the first one to face an American or generally a European style of retirement. Most men and women will probably be on their third or forth marriage, and in between complicated parenting arrangements. This brings its own pressures seeing as mixed families can be messy. In the past our parents and our grandparents were polygamous, and all these dysfunctions were contained within a family set-up. But here we are. Our current and past lovers will find new lovers. Our children will be raised by others. We will raise other people’s children. And this is something worth pondering.

Another likelihood is the empty nest syndrome. Our children will be so caught up in the rat race to take care of us. Western societies embraced nursing homes where the old are retired to. Kenya will most likely end here. This is not in some distant future. We will be the first generation to be condemned to this kind of life.

Whatever fate awaits, a good pension and personal savings will be your saviour. I have seen men who prepared for their retirement financially tend to have it easy. Whether it is medical insurance to deal with the nuisance of old age, they are ready. Whether it is a retirement home, that they have. And in the event wife and children are not there to take care of them, some can hire a competent helper and security to take care of them.

Better still are those who found a vocation that will keep them going into their old age. Teaching, especially at the university level used to be a vocation that keeps one physically and mentally fit. Now, there are older people into sports, church and other community-related activities that help them share their skills and experience with others. Politics is a good retirement plan for the oiled.

You can retire to misery. Or you can avoid this by starting to make financially sensible choices, where your life in retirement preoccupies you. Start by making living a healthy lifestyle. And then start saving. Build a career that can see you through to retirement. Constantly update your skills. Have assets that you can dispose of or those that can generate income to take care of your many needs as you age.

So, as the year start, as you make resolutions, activate your retirement plan strategy, think about it this year and make smart moves. Time never stops.

Here is to a good year.


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