Learning from Kenya

A friend asked a question today:

How come Kenya is able to manage its FX situation much better than us?

He was in Nairobi in 2018, and noted that their system works quite well. The Kenyan Shilling has hovered around KSh103 to US$1 for the past 5 years or so.

The answer is quite simple: They don’t have oil to wreak havoc on their economy. As Feyi Fawehinmi says, Nigeria has signed a blood oath with oil. We get blood money but the downside is never knowing peace

You see, the “free oil” has made us an abnormal economy.

Kenya relies on tourism for jobs, tax revenues and FX. Do you know how hard it is to make a dollar in tourism?

Nairobi is competing for the same tourist dollars as Rome, Paris and Dubai, so they have to up their game. Abuja just sits down and oil credits dollars into the account. And it shows. Each time I’ve been to Nairobi, I’m always intrigued by the number of Europeans and Americans I see at their airport. It is proof that they are doing something right. For us here, the vast majority of foreigners in Nigeria are either in the oil sector or in construction. Unless you’re into extreme living, Nigeria is no tourist destination.

Here is the thing: oil is not a high employing sector. It employs a small sliver of people and pays them well and that’s it. Things like tourism, on the other hand, have a multiplier effect on jobs. Tourism employs so many people, even to remote villages, once you get it right. Imagine crowds of people going to Yankari to see the beautiful wildlife and landscape. Then they read that a lawmaker was killed, in his own home, and his wives and kid were taken away. Will you want to go to such a country?

Back to Kenya and all of their forex earnings are from hard work. Kenya is, for example, the fourth largest exporter of flowers in the world. For a people that spend a lot on weddings, can you imagine how lucrative the flower market is?

The underlying thing is that all of their export earnings are the result of hard work. In Nigeria, it is remittances and oil which generate a tsunami of dollars every year without us doing any hard work.

We don’t see what the people in the abroad go through to get the forex that they remit, and we don’t see how the oil is gotten. So we refuse to adjust or work even when our earnings can’t support our lifestyles