Last week Eric Latiff of Spice FM asked me to join his co-presenters, CT Muga and Ndu Okoh to participate in their show as a panelist discussing an earlier article, I had written in the Nation Online about what I had referred to as “dead capital.”
Although I have discussed this article previously, it wasn’t until last week when it struck me that no matter how poor Kenyans are, they will still invest in an unproductive asset. Culture dictates the emotional attachment that Kenyans have to their rural investments that are of practically no productive value at all.
My initial definition of the term, dead capital, was in reference to investments in assets that have no value. However, it was first coined by a Peruvian economist Hernando de Soto to explain capital in the form of unregistered real property, which is considered lost value because the landholder is unable to transfer or leverage his property for capital or capital access.
Investments in shanty areas are largely dead capital since they cannot use the property to raise capital. It is estimated that $93 trillion dollars are invested in such properties across the world.
In Kenya, we have a segment of similar property that falls within realms of dead capital. These are the rural shopping centers that are built for prestige, not as an income-generating asset. Some $20 billion lie idle in the villages. Another $5 billion is buried in second homes of the urbanites who travel perhaps once a year to sleep in their mansions.
I am not against people spending their money in whatever way they choose. It is their choice after all. But there is need for a mindset change because we have invested more than $50 billion in non-productive assets thereby setting ourselves on a destructive path.
Those who’ve had the privilege to have an education should serve as a bridge between the old and new generations. Whereas the old generation considered home to mean the village, in current times home should be where we live. There is a strong argument for reversing such a cultural practice.
First, is the impact of property ownership that is undermining the livelihood of current and future generations by building everywhere even as others move to urban areas. A casual time series review of land usage in my village will shock you.
As a small boy in the 1970’s, we ate wild fruits of all kind and even hunted rabbits. As I write this article, much of the flora and fauna has been decimated. The entire land has been invaded by tin roofed houses (see picture Google Earth aerial pictures below).
My home is at Isecha and as you can see, I contributed to reducing average land size to less than two acres per person. Culturally, my son and nephews are expected to each put up a house since they cannot inherit my house. Clearly, it does make no sense to pile up properties that bring no return. Land is a finite resource that is not just for those living now but also those who will be coming. We can manage this resource better to support livelihood which current practices cannot sustain. Each home requires at least a quarter acre of land. Yet we know it is an investment that will never be optimally utilized.
Above is Farvagny , a village in Switzerland with a population of 2,250. I visited here while studying in Europe. Land use in this rural town with unemployment rate of 3 percent is a serious matter. Although it is rural, people live in an urban setting. Some live in small apartments and when there grown up children come to visit once a year, they stay at a motel, which provides employment for those who remained behind. Their loved ones are either cremated or buried at a cemetery in order to sustainably manage their land resources.
My second point centers around the structure of the local economy to create markets and utilize local resources. The economic structure in Farvagny is such that only 78 people are involved in the primary sector, 250 in the secondary sector and the rest in the service and knowledge sectors.
The aspect of planning even on the number of additional housing to be built and where it will be built is critical to the community’s livelihood as well as cost containment. Infrastructure like energy and water becomes cheaply accessible given that housing is not scattered all over the place.
In contrast, this meticulous planning contradicts our free for all decision making on where to build without any planning. Instead of the big house in the village, we should help structure the local economies such that our folks don’t grow similar produce and cash crops that in the event of crop failure, they all suffer. We should also jointly invest in motels that enhance shared economy and enhanced eco-tourism.
Any future thoughts of a house in the village should be converted into a pool fund to build value adding industries to eliminate waste in the agricultural sector. Such a move, will lead to a multiplier effect that will create jobs, lower incidences of poverty and improve productivity as well as food security.
The change could lead to the creation of large enterprises that will begin to scale outwards. Our prosperity is not in our inward focus but in the ability to seek to conquer the world.
Africa has invested far too much dead capital for cultural reasons. It is time that this wasteful practice stopped. Let people make homes in places where they have settled.
We should work towards enabling those in our ancestral lands to change their lives for better by encouraging planning with a sustainable future in mind.
