So, if you’ve been paying attention to the news (or to your pocket book) you’d have noticed that prices on essential goods like food and gasoline are rising worldwide. In sub-saharan Africa, they are finally beginning to feel the pinch. In the Middle East (which is comparatively richer than many parts of sub-saharan Africa) they felt the pinch much earlier and when they couldn’t afford to pay for bread, revolutions erupted.
Now, I’ve been following the debate in Kenya on rising prices and the reactions by politicians are not making sense to me. They are now caught between a rock and a hard place, i.e. if they reduce taxes on gasoline, kerosene, food or whatever, how will they be able to fund this bloated coalition government? On the other hand, if they leave the exorbintantly high taxes in place, it could lead to riots and other disruptive events.
However, the fundamental problem that countries like Kenya are going to face is one I’ve mentioned here before and it is a growing population and a low productivity country. The current population is around 40 million. Now, let’s say in ten years, that number increases to 50 million. How will the country produce the needed 10 million jobs to buffer this population increase? This is exactly what landed Egypt into trouble. It has a population of 80 million and the country really made nothing. Like Kenya, it’s economy was largely dependent on land — On things like tourism and in Egypt’s case the Suez Canal (In Kenya’s case, it would be farming).
A friend keeps telling me that it’s very important to pay attention to the trends because it will forewarn you of trouble in the future and allow you to plan accordingly. So, again, it’s not about democracy and constitutions and all that nonsense. For countries like Kenya, it’s about population growth and the inability of these countries to transform themselves into bastions of productivity. i.e. they have to start making things like cars, drugs, clothes…something! or else, there’s going to be trouble in the future (& no…banks do not make things)