Unless you win the lottery, marry into a wealthy family or rob a bank, the surest way to financial security entails consistently saving a portion of your income and perhaps investing thereafter.
As simple as it sounds, it’s hard and complicated for a majority of working-class Kenyans. Most working-class Kenyans live from hand to mouth and can barely save Sh1,000 from their monthly income. Oftentimes, this has been attributed to the high cost of living, low wages and indiscipline. However, there is one unspoken challenge—black tax!
This colloquial term is often used to describe a portion of income that mostly black people give out each month to support extended family members. It can take the form of paying school fees for siblings, settling emergency medical bills or contributing towards the upkeep of orphaned or jobless family members.
Kenyans sense of responsibility towards their extended families stands in the way of saving and investing. It’s a tough juggling act that many have to contend with since Kenya does not have a strong welfare system to cushion citizens against the vagaries of life such as loss of employment, sickness, disability or the death of a breadwinner.
Consequently, this perpetuates a cycle of dependency as the burden shifts to a few individuals who have to suppress their aspirations in order to take care of others.
What if we had a strong and well-functioning social welfare system? We would have a more empowered and financially secure citizenry who are not one funeral away or medical bill away from poverty. We would be able to save more, perhaps invest and boost the economy. But as it stands, it is difficult to save.
While it is important to have boundaries and sometimes say “no” to those who demand more than we can afford to give, sometimes we just can’t look away. Perhaps our strong sense of community and personal responsibility is our Achilles heel. Or maybe the foreboding sense that if misfortune strikes, we will bear responsibility. What if we shifted this responsibility to the State? Shouldn’t the government that we pay taxes to be providing education, affordable healthcare and an allowance to facilitate the upkeep of those who need help instead of leaving this responsibility to individuals already burdened by the high cost of living? As evident in Nordic countries, it is possible to have a strong social welfare system and still have a flourishing economy.
Although healthcare and education are free in these countries, the government still provides benefits and cash incentives to cushion retirees, orphans, widows, unemployed, or those living with a disability. As a result, the vast majority of the population have disposable income that enables them to save, invest and spend—a boost to the economy. It may not be fair to compare Kenya to countries with bigger economies and different history, culture and population size. But one thing we can learn from the Nordic Model of Social Welfare is that protecting the most vulnerable is a worthwhile investment.
If we don’t invest in protecting our most vulnerable, it comes to bite us in the back. We will grapple with high crime rates, insecurity, low purchasing power and weak economic performance.
Strong social welfare enhances the resilience of citizens and ability to cope with shocks. It empowers citizens to save and invest in the future thus breaking the cycle of intergenerational poverty. We will be unable to save and invest in the future.
But can Kenya afford a social welfare system? Yes, considering the billions of shilling we lose each year to corruption and the hefty salaries and perks we award to our MPs and senior government officials, we can afford to have a well-functioning system that sufficiently takes care of the most vulnerable. It is not a matter of cost, it’s a matter of priority and the citizenry opening its eyes to the fact that we don’t have to shoulder this burden alone.