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..:
1) Weekends away at terribly posh safari lodges or beach houses designed for rich Americans (ie $1,000 per head per night)
2) Furniture – made by white/long term expats, always prices in thousands and made of old railway sleepers, dhow wood and cedar.
3) There’s a very nice Italian shoes and bags shop that I sometimes dream about. Everything in there is around £100.
4) A swanky hairdo (if you are lucky).
5) Gold and silver Jewellery – ditto made by white long term expats who occasionally get things photographed in Tatler.
6) Club membership. Hugely expensive, unless you are v. Lucky that your company pays.
7) Glossy magazines. You won’t get one here for less than £10.
Necessities I'm afraid...:
1) Cars - they are comparatively very expensive due to import taxes. People prefer to by big 4x4s just because the roads are crazy here and you are more likely to survive in one than a Toyota Corolla.
2) School fees – ouch. Think UK Private school costs and you are paying from aged 2 onwards.
3) A mortgage (13% - 15% interest charged as explained above) – and houses in Nairobi are up to a level with UK property prices now.
4) Rent – shooting up all the time.
5) Security – you do need to pay for night security plus backup response units, whether it is via firm or by your own arrangement with employees, but it’s expensive.
6) Members of household staff. You might rather put this in the luxury category but they more people you employ the better as it means cash filters down to those who most need it.
7) Drinking Water (you can’t just drink it out of the tap). You will spend a fortune on this every year. Plus it’s not uncommon to get water delivered in a truck as the mains supply is often unreliable.
8) Local flights (no ‘Easy Jet’ in Africa so hopper flights for weekends away are hundreds of pounds a throw).
9) A work permit costs a couple of thousand pounds and you need one of those to be able to live here – it must be renewed every two years.
10) Imported food. All taxed so horribly expensive – unless you work for the UN and have a pass for their ‘duty free’ supermarket.
11) Electricity – this has just doubled in the past year.
12) Going to visit family – this usually involves a long haul flight.
13) Health insurance (no state healthcare)
Savings - sometimes surprising?:
1) Frivolous purchases can be kept to a minimum as temptation is not nearly so strong due to lack of media pressure or availability. There are no ‘seasonal fashions’ here.
2) No need for any form of heating, except maybe an occasional open fire.
3) Vegetables and fruit are reasonably priced and delicious.
4) Meat – a leg of lamb or a beef fillet is a fraction of the price of that in UK, but don’t ask me where it comes from.
5) Beauty treatments. Waxing, eyebrow shaping, pedicures all a snip compared to England!
6) Public transport - if you are brave enough.
7) Clothes and shoes - with a samey year round climate you just don't need very many clothes, especially if you are an not so glamorous expat housewife who tends to live life in jeans/shorts and flipflops.
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.