Close
The wealth under our feet

News & Analysis

The wealth under our feet

By Anver Versi

I was first introduced to the intricacies of economics when I started my A-levels at the Allidina Visram High School in Mombasa. Our teacher was the wonderful Mr Joseph who looked every inch a professor as he guided us, with infinite patience, into the mysteries of gross domestic product, supply and demand curves, velocity of money supply and other brain-taxing subjects.

He had the knack of making even the most obtuse concepts appear simple and subject to common sense. But, try as I would, I could not get my head around the concept of ‘wealth creation’, once we had been informed that money was nothing more than a generally accepted medium of exchange.

During a break one afternoon, I decided to ask him point-blank how wealth was created, making sure I was well away from my classmates, who might otherwise have thought me silly for asking the question.

He smiled. “Excellent question. Now, what is this under my foot?” I looked and could only see the ground. “Just some sand and soil, sir.”

“Exactly! How much will you pay me if I dig up this soil and offer to sell it to you?”

“Why sir, nothing. I’m sorry, but what would I do with a lump of soil?”

“Good! Now if I was to dig up this soil and shape it into a brick, would you pay me for it?”

“Well sir, if I needed a brick, and if I had the money, which I don’t have, I would pay a fair price.”

“There we are! If you needed a brick, or lots of bricks to build your house, and if you had the money, than this lump of soil and others like it, shaped into bricks, would have a price. They would acquire value. We would have converted this valueless lump of earth into something of value. We would have created wealth, out of virtually nothing! Does that answer your question?”

“Yes sir, thank you sir.” But it took me quite a while before the idea sank in. I had always somehow believed that wealth was something fixed, that came to you from somewhere else. It had never occurred to me that wealth could be created by the simple process of taking something of lesser value and converting it into something that someone was prepared to pay for.

Always fire-fighting

The notion that we could create our own wealth seemed laughable. True enough, people were making food and clothes at home and selling them; others were hawking fruits in handcarts, crafting furniture and even building houses and getting paid. But was this wealth creation? Did you not need to have big factories and offices and sophisticated export and import businesses to create wealth?

It took me a while and many journeys before I realised that the humble cottage industries we were involved with and which we thought so little about, were really what wealth creation is all about. Wealth creation is nothing other than thousands, millions of people beavering away at their own small activities and exchanging their products with one another.

The more countries I visited, the more I realised that what we were and are doing in the informal economy is the backbone of even the richest and most industrialised nations on earth. It is what generates most prosperity and creates most jobs. The only difference is that elsewhere it is venerated as the ‘SME’ sector, not dismissed as informal.

As such, it is as well tended as a flourishing garden and given all the inputs and care and attention it requires.

In Africa, the informal sector is considered an eyesore. It is relegated to the most inhospitable sections of town, it is left without sufficient water or power. It is often dirty, unhealthy and dangerous. It is starved of credit and recognition. It is often raided by police or municipal minders. It is treated like the unwanted stepchild.

As a result, it is stunted, despite its enormous energy. It is constantly fire-fighting. Whenever an enterprise tries to expand, to produce more, it’s cut off at the knees.

I recall Mr Joseph and his illustration of what wealth and value are. I realise it is an attitude of mind. We have wealth hidden under our feet in our informal sectors. All they need is a little tender care – and plenty of credit. We could take on the world and beat it, if that happens. NA

Related Posts

Unmissable Past Stories