{"id":463785,"date":"2011-07-19T07:52:07","date_gmt":"2011-07-19T07:52:07","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/07\/19\/stability-of-the-shilling-deserves-full-attention\/"},"modified":"2011-07-19T07:52:07","modified_gmt":"2011-07-19T07:52:07","slug":"stability-of-the-shilling-deserves-full-attention","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/07\/19\/stability-of-the-shilling-deserves-full-attention\/","title":{"rendered":"Stability of the Shilling Deserves Full Attention"},"content":{"rendered":"
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Business Daily<\/a> (Nairobi)<\/p>\n

19 July 2011<\/p>\n

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opinion<\/p>\n

Given the high level inflation that has characterised life in Nairobi since January, many Kenyans would be rightfully surprised at the favourable ranking their capital has received in the just released list of the world’s most expensive cities.<\/p>\n

Against all expectations, Nairobi’s ranking improved 20 places – meaning it became more expensive to live in 20 other cities than in the Kenyan capital between June 2010 and June this year. No ordinary Kenyan who has lived in Nairobi during the same period would agree. Since June last year, Kenyans have experienced an unprecedented level of consumer goods price surge that has resulted in double digit inflation from a low of five per cent in January.<\/p>\n

During the same period, the shilling came under massive pressure, ceding significant ground to nearly all hard currencies such as the dollar, the euro, the sterling pound and the yen.<\/p>\n

And therein lies the answer to Nairobi’s favourable ranking in the list of most expensive cities, according to Mercer, the firm that conducted the survey. The catch is that when the local currency weakens against hard currencies, there is a segment of the population – most of them residents – that actually gets it easy and loves it that way.<\/p>\n

These are people whose salaries are paid in dollars or euros and to whom any depreciation of the shilling amounts to an unofficial wage increment. An international civil servant living in Nairobi, for instance, on a salary of $4,000 would have a Sh40,000 pay increment with the movement of exchange rate from Sh80 to the dollar to the current average of Sh90 to the dollar or a 12.5 per cent wage increment against an average inflation rate of seven per cent.<\/p>\n

In reality, it means that such a person actually acquires higher purchasing power while everyone else’s is getting eroded. The result is that the dollar and euro earners can compete better on key fronts such as house rents, food, transport and even the nice things in life such as holidays in better hotels, top of the range drinks and luxurious pampering.<\/p>\n

To enjoy the same level of comfort, the locals who are paid in shillings have to dig deeper into their pockets, adding to the pressure of inflation. Though the Mercer survey also looks at other indicators such as the cost of securing one’s self and property in every city, these come with less weighting on the index.<\/p>\n

The critical thing though is to remind those whose task it is to ensure currency and price stability to do their job – lest they make Kenya the foreigner’s paradise even as the natives suffer under the weight of runaway inflation and a dicey currency.<\/p>\n

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Business Daily (Nairobi) 19 July 2011 opinion Given the high level inflation that has characterised life in Nairobi since January, many Kenyans would be rightfully surprised at the favourable ranking their capital has received in the just released list of the world’s most expensive cities. Against all expectations, Nairobi’s ranking improved 20 places – meaning it became more expensive to live in 20 other cities than in the Kenyan capital between June 2010 and June this year. No ordinary Kenyan who has lived in Nairobi during the same period would agree<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-463785","post","type-post","status-publish","format-standard"],"yoast_head":"\nStability of the Shilling Deserves Full Attention - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2011\/07\/19\/stability-of-the-shilling-deserves-full-attention\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Stability of the Shilling Deserves Full Attention - Ghanamma.com\" \/>\n<meta name=\"twitter:description\" content=\"Business Daily (Nairobi) 19 July 2011 opinion Given the high level inflation that has characterised life in Nairobi since January, many Kenyans would be rightfully surprised at the favourable ranking their capital has received in the just released list of the world's most expensive cities. 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