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Kenyans need to scale up personal finance skills

  Jun 20, 2013
 

By David Mugun

Kenyans have more recently spent a lot of time focusing on the challenges that the various institutions face executing their mandate and managing their finances. But little has been said of the many challenges that individuals face managing their personal affairs, especially their finances.

Addressing personal finance challenges is important because it is individuals who run government and businesses and more often than not, their personal situations end up magnifying the problems of the institutions they lead.

Take the case of my friend Mike, for instance, which I believe resonates with many quiet Kenyans. Mike came over to see me for some advice on how to get out of what he termed “a financial hell on earth”.

He was forced into single parenthood a year ago when his spouse got tired of the stories of a better life in future and left all together. He was left to fend for his kindergarten-going four-year-old son single handedly.

Of late, all his problems have arrived in one bus and like extremely demanding passengers, a humiliated Mike has found it almost impossible to resolve them. First, his salary is barely enough to pay his rent and meet his family’s needs.

He has a bank loan he took to invest in a side business that is meant to augment his meagre income.

The business is some bar and butchery outfit that receives good traffic but profit remains modest mainly because his dishonest employees take advantage of his absence and stock up their own meat and drinks then only sell Mike’s stocks after theirs is done.

The business is simply not serving the purpose for which it was founded. Just the other day, the Kenya Revenue Authority passed by to demand for their pound of flesh and Mike has to find money from elsewhere to fulfil this obligation

The school has asked that his son should not report next Monday due to fees arrears. He has received a demand note from the Higher Education Loans Board to update his university education payments.

What drove Mike to see me was the recent demand by the National Social Security Fund to remit his house help’s contributions. His house help will not accept a single deduction.

‘‘What other demand will the government bring my way?’’ Mike asked me.

He is a man under siege. Such is the case with many tax payers today. Despite being well educated and in gainful employment to the extent of creating jobs for others in their own small businesses and at home, pressures brought about by the need for more money, ought to be attended to in a meaningful manner.

Financial illiteracy is not a preserve of the uneducated or unschooled. Everyone is good at something and very bad at other things. In Mike’s case he is good at entrepreneurship and very bad with money.

Every single obligation must be paid for if the country must attain its goals. For many people it is not about Vision 2030 but about Vision yesterday and next week.

Financial difficulties kill any hopes of long term planning and thinking and too many times, remaining in this state can make the entire nation rudderless. Mike’s case clearly puts us on notice to step up our financial literacy levels and decision making abilities.

Proper employee recruitment and working procedures are what Mike needs most and so he must change his business team so that he generates more money and in the process solves his problems.

In our lives, we need to have the kind of knowledge that can undo our life’s airlocks.

In my view, there is need for a compulsory Private Public Partnership (PPP) initiative for anyone coming into the job market, either by employment or through entrepreneurship. A financially conscious nation can nip many problems in the bud and improve their lot.

Our government should take advantage of new technologies that allow people to learn through business simulation tools that mimic real life companies where participants can take decisions in a web-based platform and run virtual companies. These experiences will help in eliminating trial and error approaches such as in our friend Mike’s case.

There are consultancy firms that help companies using such technologies to get their staff to better understand how their respective businesses work. The end result is, of cause, a better experienced team.

Given that our economy is not producing abundant opportunities for all as is evidenced through our high rate of unemployment, we must do all that is possible to make all our economically productive citizens financially literate. This is the one part of ignorance that must be eradicated.

Seeing that the responsibility to govern has been taken to the people through devolved governments, it is critical that we have depth in financial literacy among as many citizens as possible.

That way, we shall be able to hold everyone to account including county and national governments.

Source: Business Daily



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