Why Aid to the Poor Should Aim At Freeing Them from Poverty

What does it mean to be a Kenyan? And not just any other Kenyan but a poor Kenyan. What chance does a poor person have in life?  Born into poverty, hungry from birth, angry and confused. About 35.5% of Kenyan citizens live below the poverty line. If you are constantly struggling financially, you are not middle class, you are poor. The middle class is not a living condition, not a profession, it is the amount of disposable income, not the income you had before you paid your rent, mortgage, and other utility bills.

Poverty makes one gullible, it robs one of the free wills to make independent choices. It prompts one to make irrational and extreme decisions which may have not been the case if the circumstances were different.  Because of this gullibility, the poor are often used as scapegoats by greedy politicians and corporates to foster their sinister agenda. What if we abandon the habits of reducing the poor into scapegoats and we take our time to find out, which kind of help they need. What if we try to understand their lives, complexity and richness? Is there not an alternative way to approaching poverty without necessarily creating class differences?

The rich play to win, the poor play to survive. The rich amass more wealth by investing more, the poor on the other hand sees surplus as an opportunity for consumption rather than investing. It is not enough to mobilize funds for the poor, we need an economic mindset that emancipates the poor from the mindset that surplus is all about consumption.

We need to find better approaches to solving poverty. Taxing the rich isn’t a solution either, we cannot afford to penalize parts of the society for their efforts in the economic playfield. A tax system cannot be structured around the concept of wealth redistribution alone.

We ought to move from an end in itself to a means to an end. If you want to help a poor person, give him the means to be able to help himself next time without necessarily running to you. ‘Those who come with wheat, millet, corn are not helping us. Those who want to help us should give us plows, tractors, fertilizers, insecticides, watering cans, drills, and dams’  that is how Thomas Sankara defines food aid.  He who feeds you controls you, let’s give the poor their freedom by offering true aid.

Daisy Tum

Writer is an economics student at Kenyatta University | daisytum7991@gmail.com

Opinion Column: Why You Need To Think Beyond Profits

money, profit, finance

Evolution of the world is now being fueled by technological innovations. Firms are realizing huge profits and tech-advanced countries recording a rise in their GDP. Despite the ongoing COVID pandemic, there are some bigtech players who are ripping big from the digital economy. While this kind of industrial revolution is great news to business bigwigs, it remains a threat to lives and livelihoods in so many ways and by so many measures.

Human welfare is directly dependent to immediate offerings of our planet. The downsides of the digitized world are fast endangering the future of human generations. This has instigated active dialogues and heated debates on how we conduct our businesses. Sustainability has become a 21st century defining objective for governments and corporate entreprises.

While good businesses are still in pursuit of profits, great businesses are going beyond profit goals. They are now seeking to address ecological and social concerns in the world around them. They are pursuing sustainability. Sustainability which is not an act of philanthropy nor generosity but about businesses building a growth model that will be effective now and in the long run.

Sustainability is not only beneficial to the society but also to the business itself. For instance, reducing operational losses, supporting human capital and paying attention to employee’s concerns is likely to increase labour productivity and attract more creative minds which can be a big asset to the business. Sustainability calls for more efficient products and services and this can be driven by innovation. Sustainable outlook also plays a role in boosting the company’s brand .A strong brand attracts employees, customers, business partners and investors. This helps the company to stay relevant and competitive. It is why you need to think beyond profits.

‘What matters is not the size of the pie but what is inside of it. It is the set of ingredients used in making the pie and whether these ingredients will continue to be available in the future.’ With regards to building sustainable businesses, it is not only about economic viability but also about sustainability into the future. This kind of sustainability is attained by paying attention to human and ecological concerns.

By Daisy Tum | IGBR Columnist

Opinion Column: Human Behavior That Can Make or Break the Team.

meeting, business, brainstorming

Can conflict be the solution for transformation or is it the problem? What is conflict like to you? Do you feel afraid and freeze? Do you feel courageous and fight?  We can’t ignore conflict as it shows up a lot in our lives. We can use conflict as the energy source for innovation, creativity and transformation at the workplace if we learn from it. Conflict is a human behaviour that can make or break the team.

What really creates conflict? Fast it happens in an organization setting. Organization being a group of more than one person coming together under a set culture to pursue a goal. In such a setting, frictions that build up to conflict are likely to arise from three key factors. First is unmet needs which can be physical, emotional, spiritual or psychological. Second is the difference in value systems as to to how things are done and how people behave. Thirdly limited resources; which maybe be money, time or property.

However we can deal with conflicts. Mostly we find people choose validation than confrontation, our brains take some short-cut unknowingly and we are always wired to favorably judge ourselves and harshly judge others. We need to be vulnerable, question the source, and teach habits for management of differences and understand that there is more than one way that is right.

Emotions, logic and empathy are equally important when we are resolving conflicts at any point of our lives. Emotions helps us identify where our deep value or need arises, logic help us identify the root of conflict and challenges they present and move towards a solution, and empathy ,helps us understand how others are affected and validate them for feeling that way.

Conflict is not the problem. The problem is when people choose to diffuse it rather than use it. In all aspects of our lives we can turn conflicts to profits, learn from it and make it the fuel that will drive change. Learn to handle and resolve conflict as a business leader, employer or employee.

By Effie Odhiambo | IGBR Columnist

Opinion Column: Behavioural Finance

How do you feel when you have money? … and how about when you are broke? Isn’t money emotional? Do with me this survey; who / what influences your buy and borrow decisions? You’ll be surprised to learn that it is your neighbours, friends and social media influencers.

Our environment makes us to develop likes and dislikes. So we spend on our likes. We appeal to our emotions when swiping credit cards, buying holiday tickets, taking loans and spending on luxuries. We are always more ambitious to earn more in less time, so we end up borrowing.

We are a society more than we are an economy. We live in social classes and have social statuses worn as jewelry on our foreheads. So when we spend, we do so like our neighbours. This is called neighborhood effect.  It influences our decisions on where to stay, the hotels to go to and what phones we buy.

If born in a poor family, your mindset takes time to adjust into a flashy lifestyle. Kinds born in affluent homes grow with a taste of affluent things and when they can’t earn enough to sustain their parents’ lifestyle, they remain dependent to them for a long time.

So how do you organize your personal finances in a cash led society? Start by assessing your true social status without extrapolating your income beyond its actual average. Then spend on budget, not on emotions or likes and dislikes. Lead a modest lifestyle and live below your means.

Column by Patrick Okinda

Opinion Column: How To Do Business With Government

The three most prominent business models are: Business to Consumer (B2C), Business to Business (B2B) and Government to Consumer (G2C). These three models are helpful when one is positioning him/herself in the market. There is however a fourth business model that is often not sustainable for reasons that I will highlight in the next paragraph, which is the Business to Government (B2G) model. In a B2G model, an entrepreneur targets government as a major consumer of his goods and services.

Kenya has forty eight governments in total, 47 seven of which as are devolved at county level. This implies that 48 entities plus other government agencies, departments and parastatals that procure supply opportunities every fiscal year. These tenders are awarded on merit, as it should be, and there are certain requirements in terms of regulatory compliance, experience, skills and capability to supply goods and/or services to these governments and their agencies. Therefore, a sales department in B2G model is supposed to be keen about tender openings by governments. This can often be done by checking tender notice websites, daily newspapers, alerts from networks with civil servants and email enquiries. Another important step to winning government tenders is by applying to be pre-qualified as a supplier or contractor or a professional service provider in as many government departments as possible. This increases your chances of winning tenders for recurrent yet short government projects.

Government tenders may however be unstainable due to fluctuations in the government’s demand curve, bureaucratic payment procedures which may lead a business into debts, political influence in winning and executing government tenders, unfair competition in winning the tenders and difficulty in pricing goods and services supplied to government as prices are not set by forces of demand and supply as it should be in a free market. If you want to do business with the government, aim at taking tenders that you are capable to handle in terms of magnitude and working capital requirement. It is advisable not to take a pure B2G model as a way to mitigate the risks that come with doing business with and for the government.

BigTech & Money

The financial industry, once dominated by commercial and investment banks, has undergone tremendous changes, especially in emerging economies as tech companies scramble for a pie of this lucrative venture. Millions of users across Africa and Asia are more likely to pay for services using their phones as opposed to banks. Things have never been easier for these consumers who can now save, borrow, buy insurance, and even invest using tech platforms such as M-pesa, Alipay and WeChat. All these financial tools were thought to be a preserve of the rich and developed world, what made it easier for the underserved communities to easily access these essential financial services? An answer can be found in the short stories herein.

A story is told of a man who wanted to build the largest e-commerce marketplace in the world. This man wanted to ensure that payments were secure and that everybody could conveniently pay upon receipt of their goods. No bank wanted to partner with him, facing such rejection, he set up a financial division which acted as an escrow for holding customer’s funds. The funds could only be released upon delivery of goods. The move built trust in the most populous country in the world and as their business grew, so did the funds in escrow. This forced them to rename their financial division Ant Group which in 2019, facilitated more than $15 trillion worth in transactions, an amount similar to EU’s GDP and way more than what was transacted by MasterCard and Visa combined. With such huge data and financial muscle, the group is eyeing a $32bn dual listing in Mainland China’s Shanghai exchange and the Hong Kong Stock Exchange.

Another story is told of a 20 year old tech company in East Africa which wanted to change its community through mobile money. The firm understood how cumbersome it was opening a bank account which not only required a minimum bank deposit but also knew how expensive it was transaction wise. Their mobile money wallet was launched and its uptake in the first year shocked many. Coupled with violence after a highly contested plebiscite, movement restrictions were imposed and the only way one could send money was through their phones. Over the years, the mobile money segment has increased its offerings from facilitating transactions to savings, loans, and investing. This has been the backbone of the country’s economy forcing all banks to partner with them for survival. As of 2020, the firm’s market share of cashless transactions stood at 85% and it is the most profitable company in East & Central Africa.

Other than filling a vacuum created by the bureaucratic banking system, big tech has also been consolidating its offerings and finance is the last pillar in this system. For example, Facebook has been connecting people over the years and it wants people to send money in the simplest way possible, just like sending a text message. This frontier will help them build on their data about an individual’s consumption behaviour starting from what they buy, at what price and location, not forgetting the time/day they are likely to spend. All tech companies are competing in this frontier with each targeting its largest user markets. For Instance, Facebook is looking to expand its financial services in India and Brazil. Apple is expanding AppleCard in America and Europe while Tencent’s WeChat Money is rapidly expanding in Asia. With such developments, consumers have witnessed a sharp decline in transaction costs with companies such as Ant, through its Alipay, not charging for transactions in Alibaba’s portfolio.

Technology will continue playing a bigger role in the financial sector and with this, there comes more concerns on dominance, data privacy and efficiency. These issues have raised conflicts with commercial banks lobbying for more regulation owing to the fact that their market has been taken over by these firms. A good example is Brazil’s regulator suspending the use of WhatsApp Pay and Chinese regulators delaying Ant’s IPO as they draft new laws regarding online financial services. Kenya has also implemented tougher rules on online lenders to curb predatory lending.

In addition to this, regulators are more concerned about data privacy and competition. This has seen a rise in antitrust proceedings being filed against these tech giants. This is with the aim of ‘leveling the playing field’ which was once abused by banks through predatory lending leading to the greatest financial crash in modern history.

Bigtech in most cases, came to fill certain gaps in the financial sector. These efforts should be uploaded especially in emerging markets where it has promoted financial. Going forward, tougher rules regarding data privacy should be legislated to prevent misuse of personal information. Also, regulators especially central banks should encourage innovations which promote inclusivity as they try to lower transaction costs, which is a business barrier in developing economies.