The first victim of my joblessness was Faith Kangai, the mother of two daughters who used to take care of my one-bedroom squat back in the village of Bulanda in Busia. When I called her to deliver the unfortunate news that I could no longer afford her services, she declined to quit, pledging to go through the tempest with me and praying to God that I quickly get back on my feet and bring her with me.

However, after months of trying to keep up with the pretense of sending some money back, she was finally thrown out of her house for falling behind on rent.

As Kenya witnesses a wave of job cuts due to the slowing down of the economy, a second wave of its impact is hitting rural communities that have long relied on incomes made in the diaspora and the cities to make ends meet.

Faith had started as a laborer when we began developing a small parcel of land next to where she resided. A single woman with two children, she worked hard in the male-dominated field of masonry and took care of the tools on-site since she lived next to the site. After the house was complete, she stayed on, helping to keep out the tenacious scrub vegetation from invading the houses in the bush and preventing snakes. Every time I told a colleague about this arrangement, he would say that it is the best demonstration of dead capital.

Building huge mansions in the countryside where we only spend holidays and festivities is at the center of Kenya’s culture. The practice is so rampant that Professor Bitange Ndemo named it Dead Capital and dismissed it as a foolish idea.

However, it stems from an innate need to mark territory and achieve the egocentric requirement of our society, reflecting the desire to have succeeded in life in sub-Saharan Africa. A study of Kenya’s middle class showed that the phrase “mimi niko na kwangu,” translated to mean “I have my place,” is commonly used within middle-class circles, especially when two or more individuals of similar status gather.

Over the last two decades of robust economic growth, a substantial number of people have entered the middle class. According to a 2016 study by the Institute of Economic Affairs (IEA), the number of employees within the middle class increased from 166,515 people in 2009 to 272,569 people in 2015.

This burgeoning middle class has given rise to a small economy that relies on interdependencies to sustain local economies. According to the Kenya National Bureau of Statistics (KNBS), 33.5 percent of households receive cash transfers, meaning that three out of every ten Kenyans depend on their relatives for income. The KNBS household survey indicates that recipients of cash transfers are mostly rural (40.2 percent), and the money is predominantly sent to mothers, who primarily use it for education and food.

Harambee

Kenya’s legendary social networks have remained robust, spanning history and geography, and have driven commercial and political interests for decades. Kenya’s founding President, Jomo Kenyatta, built the country’s motto on the concept of Harambee, a clarion call for self-help and collectivism. The new nation rallied local populations to mobilize resources for building schools and hospitals, sponsoring children to schools, and developing infrastructure.

Over the years of political misrule, Harambee collections were exploited as a means of extraction from the masses and as a tool for political control and corruption. When President Mwai Kibaki took over from two decades of President Daniel Moi, he banned Harambee through the Public Officer Ethics Act of 2003, which prohibits public officials from presiding over social collections. The argument was that the money was being used as a conduit for corruption and money laundering.

Nevertheless, Harambee did not fade away; it remained as the name of the national football team and a crucial link through which Kenyans in rural areas accessed resources generated by their urban counterparts. This culture of giving and support networks has been both beneficial and problematic, contributing to a very low penetration of insurance while fostering the growth of mobile money.

Enter M-PESA

When Kenya’s mobile money made its breakthrough, it exploited a significant gap, as the distribution of the banking system was not serving rural communities. Money was being sent through taxi drivers, traveling relatives, and postal money orders.

Mobile money solved this issue, bringing financial services to the last mile. Today, 43.7 percent of households in Kenya receive cash transfers through mobile money transfer, surpassing transfers through family or relatives (39.8 percent).

Dr. David Ferrand, Financial Sector Deepening (FSD) Kenya’s director from 2005 till June 2019, gave a lecture in November 2019 where he pointed out the origins of M-PESA as a support framework to enable Kenyans to support their families, with a financial system focused on solving real-world problems.

“M-PESA started off by innovating solutions to problems facing their customers. For M-PESA, it was initially to enable Kenyans working away from their families, typically in urban areas, to get money back to support their relatives in rural areas,” he said.

The mobile money revolution then leveraged a rapidly spreading mobile telephone communications network to develop a low-cost payments solution that quickly went viral, with nearly 8 in 10 adults owning a mobile money account in just over a decade since its inception.

FSD’s 2019 Annual report notes that, aside from in-country remittances, digital payments are beginning to make inroads into key transaction use cases such as paying monthly bills, receiving salaries, paying school fees and utilities, and paying for government services.

The growth of M-PESA has propelled it beyond a channel for money transfer into a technology company offering various financial services, including wealth management, savings, credit, and insurance, as well as a digital marketplace through the Safaricom application.

When taps run dry

However, these strong social links have made it difficult for Kenya’s insurance sector to flourish, partly because many rely on social networks during emergencies. Kenya’s insurance penetration stands at 2.24 percent due in part to these social networks.

Social networks play a crucial role in fundraising for funerals, marriages, emergencies, school fees, and mobilizing resilience funds in disasters. Customs like bringing a bull to a funeral after the death of a mother-in-law are now organized through Meta's WhatsApp.

Moreover, expenses related to dowries, weddings, baby showers, and funerals are now funded through groups mobilizing on the messaging app. This practice has become commonplace, with nearly every Kenyan budgeting for philanthropy extracted through mobile money almost every month.

As inflation pushes up the cost of living, most households are cutting down on spending and seeking assistance from family and friends as a coping mechanism. These channels are now coming under strain.

Kenyans losing their jobs are cutting off rural communities from these social networks, slowly altering the fabric of society. People are likely to think more about whether to send money home.

Already, diaspora remittances have fallen by 0.5 percent to Kes287.7 billion ($2.033 billion) in the six months to June from Kes289.2 billion ($2.044 billion) a year earlier, indicating significant shifts. This is likely to result in fewer mobile money transactions or volumes, with a shift towards insurance as social safety nets become less reliable.

I recently learned about an incredible feature on the widely used WhatsApp mobile platform that prevents relatives from randomly including you in groups to 'mobilize funds' for one cause or another.

[email protected]