Of dead capital palatial homes in remote rural villages
Two years ago, Professor Bitange Ndemo caused a storm after sharing his thoughts about why building huge mansions in the countryside where the builder hardly spends time in--only during festivities and holidays--as opposed to where the builder actually resides and carries out day-to-day economic activities is a foolish undertaking.
In his article, Prof Ndemo argued that such investments offer little or no economic value where they are built and are more of show-off than worthy of any returns of the money invested to put such units up.
“I am not against people spending their money in whatever way they choose. But there’s need for a mindset change because we have invested more than $50 billion in non-productive assets thereby settling ourselves in a destructive path,” said Professor Ndemo.
“..No matter how poor Kenyans are, they will still invest in unproductive assets. Culture dictates the emotional attachment that Kenyans have with their rural investments that are practically of no value at all.”
Two years down the line, and just around festivities as many retire to their rural homes to spend time with their families and relatives, the discussion on dead capital has resurfaced with those opposed and those supporting drawing heat in equal measure.
In what is now popularly known as dead capital, what Professor Ndemo was inferring to is a term that was first coined by Peruvian economist Hernando de Soto to explain capital in the form of a property which is considered lost value because the owner cannot be able to transfer or leverage the property for capital or capital access. BY DAILY NATION
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