If I Were Twenty Years I Would Focus On Investing In Rural Realestate And Tree Planting
The generation Z society , also known as youths in Kenya all want to own a business entity or a property that is located in the city. This revelation was established sometimes before the time of writing this article,when the author carried out a non-obtrusive interview and ethnographic observation among some sample of investment conscious youths from Nairobi, Eldoret, Mombasa , Lodwar, Kitale, Bungoma and Kisumu . The findings of the observation was able to establish that substantial percentage of the youths in Kenya want to own quick cash generating kind of projects in the likee of posho mill, saloon, pub or a motor taxi as well as a motor bicycle taxi commonly known as known as boda boda in Kenya . However the major dream of the youths is to own a residential cum commercial plot in Nairobi or other big cities. The study also revealed that the youths from other countries also yearn to own a plot or businesses as in Nairobi.
These revelations also made the author to have an extensive interaction with the youths to find out primary motivation for these psychological orientation, it was established that these city-focussed kind of social choices among the youths are benchmarked on prevailing success stories among the elderly .
Unfortunately, all these typology of investment thinking is mistaken economic thought process .The fact is that the quick cash businesses that the youths dream to own in the city have negative social as well as economic externalities in form of mushrooming urban slums, urban environmental degradation & pollution, land grapping gone hell set loose, and even urban crime emanating from social depravement among the youths that did not make it in the ever elusive city business.
The primary driving force behind these madcap youthful focus on grandiose city business is the short nature of time taken by these kind of projects to recoup initial capital invested as well as the attractive nature of cash flow from the projects . An alterbative outlook to this perspective is given by some business psychologists who have always pointed out that the visual property in form of cosmetic attractiveness the projects command is also one other factor binding the youths to these type of investments.
The flip side of all these ambitious youthful thinking about business is that the callow mind of the youths makes them only to be focussed on the short run cash benefits without thinking about long term creation of economic utility, social-economic value and economic net worth that have collective effects of improving the general quality of life.
In revolutionary economics of investments , it is often taught that businesses that have high cash flow also have a very high level of destructive depreciation. This is a phenomenal contradiction that has the final effect of destroying man-made capital invested in the high cash flowing projects .Thus, the economic lesson to be learned is that these cosmetic and cash focussed projects that boost circulation of cash without extensive involvement of productive labour does not bring about economic and social development in the long run . This a point at which we are all obliged to appreciate the fact that, for countries like Kenya and as well as any other poor country to wriggle out of poverty , there must be aggregate investment in the projects that create value. The projects that will make Kenya to stop operating on the external curves of production as once argued by Thandike Mkandaeire (2016) in his work on social policy and economic development in Africa .
One way of avoiding the above mistakes is to identify and invest in the projects that create value in the long run. Some the locally viable and geopolitically pertinent and productive projects in the long run sense are rural based agro-forestry and rural based real estate investment. For, example if you are a Kenyan at the age of twenty five years today and then you buy a piece of land Worth Kenya shillings three hundred thousands on which you decide to plant fifteen thousand eucalyptus or blue gum trees, then you do some weeding for one year at the cost of Kenya shillings a hundred thousand then this investment will obviously give you a whopping ! return of a hundred and fifty million Kenya shillings after seven years, when all other unfavorable factors are held constant.
Luckily, this is also the same kind of financial mathematics that apply to investing in the rural real estate. Tellingly, rural areas like Masinga in Machakos County or Chwele in Bungoma County have the same effective demand for commercial houses and rental houses as well as guest house services just as it is in Nairobi and Kisumu. What matters is the level of quality focus and well reasoned customer-centric focus and orientations to be trested as key perspectives to be factored in when establishing the houses . On this account of quality, the investor must focus on affordability , physical security , convenience , access and decency. But above all else, when quality is given a priority in running rural rental house services , then revenues will be realized pertinently just as it would do in the city.
The great secret behind investing in the rural properties and commercial forestry is appreciation of assets to earn profit on revaluation . This is an economic benefit you cannot earn when running a taxi or saloon in the city.
Appreciation means continued but stead non-cash flow increase in commercial value of the assets. Taking the case of the above young person who chose yo buy a cheap piece of land in the rural area to plant trees , this young person will not only benefit from selling trees, but after the assumed investment term of seven years , this rural plot would have also appreciated in value to the market price of ten million Kenya shillings.
There is a guarantee for this valuable appreciation because of phenomenal nature of continued increase in demand for rural land as pushed by geometrical progression in rural populations. Skeptics to this kind of economic projection will possibly allude to arguments against Thomas Malthus's theory of population growth, but the facts is that Kenya as any other African country is not going to get new lands in form of colonies nor is it going to venture in new technology mojo that will work as substitute for unflagging hunger for land ownership in Kenya . Thus, there is a lot of logic for any youth in Kenya of today to angle her investment thinking in tune with rural land based projects and agro-forest for commercial purpose.
Alexander Opicho writes from, Lodwar, Kenya - [email protected]