Ahhhh, blogging, an art that I often love to indulge in, but more often lack the time for. Yesterday, the Business Daily had an impeccable column from the ever fresh George Wachira. In the article, George Wachira, a petroleum industry analyst did something that a number of economists expressing their views in the media have so far failed to do; explaining what really is ailing our economy. For that; Kudos Mr. Wachira, you have really hit the nail squarely on the head.

To take his points further, I will do what i have developed a knack for; developing analogies. To this end, I write the simple story of a Banker called Ken.

Mr.Ken graduated from high school with some good grades back in 1963. His parents and indeed his whole community had great expectations for him. A man with such undoubted intellect and charisma; a rare mix of resources, would clearly do well in life. Mr. Ken designated himself a career as a banker after some thorough soul searching. Banking, he thought, would be the best way to generate real wealth for himself in the long run.

In his formative years as banker, he caught the common bug that seems to afflict all bankers, the bug is called the "aesthetic fallacy".

The bug works by making the banker think that looking good and working on your appearance are the most critical aspect of making it in the industry. This bug was reinforced into Mr. Ken's mind by his well-heeled superiors from the global head office in London. To this end, Mr. Ken went on a borrowing spree, these loans were taken out so that he Mr. Ken can acquire Italian suits, a German car and hopefully an American wife.

Sappeurs of Congo, dressed to kill, but can't pay your bills.
When it came to his modes of investments, Mr. Ken focused on more exotic investments, he invested in "off-shore equities", "forex" and "global fixed-income" investments. These just sounded sexier at cocktail parties.

His high-school colleagues were mis-informed, they invested in "dumber" investments, his friend Hu, kept chickens. Mr. Saivash on the other hand started a potato farm. Mr. Ken was too good for these, in fact, he had started fiddling in tech stocks. Hu and Saivash were way behind the curve.

However, as time progressed, Mr. Ken found himself in a very compromising situation. His disposable income could barely keep up with his lifestyle and committments, his loans were due and this was exacerbated by the fact that he spent all his credit on consumables and worse still; his investments had all stalled, he was in the red. Meanwhile Hu and Saivash, had simply counted on the tried and tested technique of spending way less than you earn, managing your risks and waiting for compount interest to work its magic.

Mr. Ken then realised in his mid-life, that looking good is not what gets you far as a banker, Indeed it does help to look presentable, but what really cut the grade was hard work and ability. Some of his juniors whilst he was a mid level manager were now senior managers. Now, Mr. Ken was just a very presentable mid-level manager at a local subsidiary of a global bank.

Things didn't turn out well for Mr. Ken, his expenses by far exceeded his income and his investments had backfired. Bank's no longer lent to him and his financial counterparties had lost their trust in him. Hu and Saivash's companies were now global conglomerates, a far cry from their humble beginnings.

Lest I digress further, this is the story of Kenya's current woes and worse still, it's future woes; Moreover, this situation is completely self-inflicted. A look at the 2nd half banking sector report shows that over 44% of all loans and advances were advanced for consumption and real estate. Kenyans are selling their productive land so as to build apartments, the government has totally ignored manufacturing and agriculture and instead, it is focusing on an ICT park in the middle of nowhere "no offence if you hail from Malili". We are Mr. Ken, somehow convinced that external appearance matters more than productivity and work. We are also convinced that "sexy" investments like ICT and "regional financial hubs" are more important than the dull sounding agriculture and manufacturing.

Where has this lead us? Balance of payment woes as our expenditure by far exceeds our income. An 8% trade deficit simply means that we export 8% of our wealth to foreigners each year. This number is growing. Shit stuff has hit the fan!

As a country, we need to focus on agriculture and manufacturing. Simply, there is no other way!