Here's how you end up buying a book for the price of two lollipops

By Ng’ang’a Mbugua

Part of the reason why Kenyans are paying a pretty penny for basic goods and services has to do with the fact that the middle class has not been innovative in its investment decisions. The first, and sometimes only investment option that most of the people with a disposable income or access to bank loans can consider is buying land. Rather than develop it or use it as a factor of production, they will give it time to appreciate after which they will sell it off at a profit, without adding any value to it by way of development. In fact, the major selling point for land these days is proximity to a bypass, electricity lines and such other social services provided for by the government.

Of course, those who invest this way will make money in the medium and long term but for the economy to grow, and for the cost of goods such as bread, confectionary, fruits and vegetables to significantly go down, there needs to be greater investment in food production and processing, and these are the areas in which the middle class ideally ought to invest more in.

Consider for instance, the cost of watching the UK Premier League matches per person per month. For the middle class, the price is steepest at Sh7,400 per person in the form of a monthly DStv subscription. For the poor, the cost is much lower because they can watch the matches in a bar at the price of a beer or a soda or a video studio for as little as Sh10 per match.

The decision by the middle class to pay such a heavy to watch the UK Premier League is partly inspired by the collapse of Kenyan football on the one hand and the undeniable desire for quality entertainment on the other. Yet, these are both investment opportunities that would have significant returns for those who would summon the courage to start such a venture.

If only 50,000 DStv subscribers were to set aside half what they pay as subscription, in a year or two they would raise sufficient money to build a respectable 40,000-capacity stadium on any of the many parcels of land they own in the city and its outskirts, say in Rongai, Naivasha, Kiambu or Kitengela. In another year or two, they would have a sufficient funds to start a serious football club that would attract young talented players from schools and invariably, from poor neighbourhoods where football talent thrives. And to recoup their investment, they only need to approach the rich to advertise their products, companies and services on the T-shirts of the players and strategically in the stadium. In less than ten years, they will have recouped their investment, created jobs on a reasonable scale and changed the culture of Kenyans by getting them back in stadiums where they can spend their disposable incomes on services like food and beverages and entertainment for their children.

I remember growing up in the 1980s and 1990s, one could buy ten sweets for only a shilling or two pieces of Big G, four pieces of Pussy Cat and three pieces of Goody Goody. The other day, my four year old son picked a small packet of sugar-free Orbit chewing for which I paid, ahem, Sh70. That means that for each of the ten pellets in the packet, I was paying Sh7. A few months earlier, he had picked one lollipop at a Chandarana supermarket and I paid, eh, Sh150. My book, Terrorists of the Aberdare, retails at Sh300; which means that the price of two lollipops or four Orbit chewing gums is equivalent to the cover price of a novella.

Manufacturers have learnt that the middle class will pay any prices for goods and services, so they do not even need a pricing model. Such slap a price of your choice on your product and you will still get takers.

The problem, however, is not with the manufacturers. There is no competition for them in the market because the middle class is not investing in these segments. Yet, if we could get only one locally owned confectionary manufacturer, the price of sweets will go down and parents will not have to make the terrible choice of settling for low quality ones that disintegrate in the mouth the moment a child pops them and which pose all manner of health risk because they conform to no known quality standards.

We can give many examples to make the case for alternative investment by the middle class but we can end it with filming. Despite the challenges caused by piracy, there is still a case for the middle class to invest in companies that can be involved in film production. And they do not have to make money only from distribution, which is the pirate’s strongest weapon against creativity.

Movie makers can make their money from surreptitious advertising and endorsements that form part of the action and props in the films they make so that even when their works are pirated, they can still leverage on the extra revenue streams. What is more, soon, local television stations will be looking for more local shows to air and if the middle class does not take a pro-active stop to satisfy this emerging market, the Chinese will come with their own production house and still the thunder from us as the middle class sits back and waits for the value of land to appreciate.