01 02 03 Africa Expat Wives Club: Credit Crunch and Living in Africa 04 05 15 16 19 20 21 22 23 24 25 26 27 28 31 32 33

Credit Crunch and Living in Africa

A few weeks ago I was texting my friend in England.

ME: ‘how is the credit crunch going your end?’
HER: ‘OK I suppose, just bought a book on how to be more thrifty.’
ME: ‘Buying book not a good start. Maybe it’s time to dispense with those expensive floor and surface wipes and switch to good old Vim.’
HER: ‘will never give up my wipes!’

It got me thinking about how a move to Kenya/East Africa means being credit crunched on arrival. It is illegal to bounce a cheque and the banks give 0.00 overdraft facility, so you always have to remain in credit. Expat salaries are certainly not sky high these days and for years now big companies have been shaving off employees 'perks', making them responsible for all their own household costs overseas. Presumably this trend will continue in light of the global economic crisis.

For many locally, the loan shark is the only option to get into credit as (perhaps sadly) many employers are unwilling to pay out loans to be repaid by deducting from salaries. We ended up paying off a nasty loan shark for a new staff member who had managed to get into a tangled web of debt before arriving. It was all very 1950s.

Local mortgages (only recently available here) charge from 13-15% interest which makes you think hard before buying property. Any savings that you hold locally will earn you very little or no interest (which is more or less the same as the UK now, but certainly wasn’t the case beforehand). Plus there’s a monthly service charge for the privilege of holding a bank account – that one was hard for me to get used to. When I worked as local hire in the Embassy in Tanzania, a message was sent from above to ban salaries paid in the form of local ‘cash’ cheques as this method of queuing up and withdrawing the monthly wage was dangerous due to the risk of muggings. Management wanted to insist that everyone hold a personal bank account for money to be paid into. There was near mutiny as no local hire staff could afford to lose a percentage to the bank service charge – especially as they were only being paid £400 a month or less as it was. Most people live more or less hand to mouth so saving is near impossible.

In addition, I don’t want to sound derogatory, but frankly compared to any European capital there is little frivolous shopping to be done. Brand names are few and far between. In the main, electrical items and clothes are so much more expensive here than anywhere else in the world (because of vast import taxes) that you just don’t feel tempted to buy. Instead you see expats and wealthy locals hold off until the annual splurge back home/foreign trips. This leaves a rather frugal eleven months of the year remaining. In the past two months I have bought a pair of gym trousers for £10 (from Mr Price) and a few birthday presents.

If you do move to Kenya from the 'developed' world then there are a few things that you will find yourself able to spend big money on, some are necessities, others crazy luxuries. In other ways you will even see yourself making some savings:

Luxuries, if you so desire..:

Necessities I'm afraid...:

Savings - sometimes surprising?:

I read a shocking statistic in the Telegraph Money section (dec 6th 2008 – Ian Cowie). Back in 1997 UK residents saved an average of 10.4% of their household income. In the second quarter of 2008 savings had collapsed to 0.4% of income and in fact at the beginning of 2008 the ratio actually went negative where the average household spent 1.1% more than it earned.

Now I can’t pretend that I am a great ‘saver’ but thank goodness we, as a family, have been severely limited in terms of getting our hands on any credit over the past ten years in Africa. It could have been seriously messy. Thank heaven for small mercies - Given half a chance I would be the worst of them all, I just know it; wanting the latest jacket and winter boots and buying myself a 'treat' every saturday.

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