Category Archives: Nairobi cost of living

Milk Pricing in Kenya

Most supermarkets in Nairobi now have ATM’s/’bars’ which are machines where customers can bring their own containers and buy their own quantities of unbranded milk. Today at one ATM, milk was Kshs 80 compared to about Kshs 110-120 per litre (sold in half litre packs for 55/= or 60/=) for branded milk packs.

Branded milk sachets

But how does milk pricing work? M-Farm tracked a milk trader called Wangondu,  who sells 1 litre of milk at 70/- at his milk bar.

  • Farmers usually use donkeys to transport milk. The wholesaler is introduced into the supply chain at the point which motorbikes transport milk to a center. When there was Mid March scarcity – majority of the milk was sourced from Kinangop at 35 to 37/= per litre.
  • Boda boda people who bring 100 litres to the main road are paid 250/- meaning, the milk bar trader has to add 2.50 per litre bringing the total cost to 40/- per litre. The road is bad; lot’s of push and pull which adds another cost to the milk.
  • Milk is very sensitive and has to be moved quickly. If one is collecting 1,000 litres, it means there will be 20 motorbikes from different sourcing points and have a vehicle using a particular route to collect aggregated milk. At end of day of the day, milk per litre costs a trader about 40/- to 50/- given the circumstances.
  • Pasteurization costs 6/- per litre bringing the total cost thus far to 56/- per litre.
  • Each vehicle collecting aggregated milk has to have 3 people; a driver and 2 loaders. At this point, transport cost of the milk is charged at 6/- per litre. A wholesaler trader calculates his/her profit margin at 3/-.
  • If milk is being sold to a retailer at 65/- they add 5/- margin to retail the milk to 70/- litre. When there’s surplus milk, a trader reduces 5/- per litre by demanding that the farmer delivers the milk to the aggregation center and bears the cost.   Were it not for the rains, the wholesalers had an agreement that on the Saturday before the start of April rains, milk pricing would have retailed from 80/- per litre.
  • When the rains come, they hire an escort to help with the pushing of vehicles who are paid 2/-. “We as traders, take advantage, don’t see the reason why we should sell the milk at 80/- and we see the way farmer and consumers suffer and we have to be neutral. When we have mercy on both the farmer and consumer, the consumer ends up claiming that my milk is cheap because it has been tampered with and therefore, of poor quality.”
  • Bars have lower milk pricing at some supermarkets

    But all the same, the little margins I make are able to pay licenses and pay my handymen in my milk bars. Even after all deductions, I am able to make 1/- or 2/- per litre as profit.

  • When there’s scarcity of milk, we source from Kikuyu and Limuru dairies. Harvesting, transportation to the milk buyer in town, management of milk at the milk bar – this is my business solely. I have to buy from the joint business source,  make sure there are no additives, and we have to be there to make sure the quality you get from the shamba is what we give the customer.

Milk is also being sourced from other countries in East Africa as and there is a butter shortage (affecting bakers like Sugarpie). 500 grams of butter is retailing at Kshs 1,000/- and this is just ridiculous.

$1 = Kshs 103.

Urban Inflation Index: March 2017

Comparing prices and inflation in Nairobi to four and five years ago.

It’s exactly four years since the last election and we are back into campaign mode for an election on August 8. How has life changed since the Jubilee government came to power? There are many reports about economic growth and food inflation, and the budget speech that was read last week had a planned expenditure of Kshs 2.6 trillion (~$25.2 billion) compared to the government’s first budget  that was Kshs 1.6 trillion for 2013/14.

On to the index comparing prices of basic urban commodities.

Gotten Cheaper

Finance: Bank loans are 14.0% due to the interest capping law of 2016. The Central Bank of Kenya’s bank supervision annual report for 2014 notes that the average lending rate was  16.99%  in December 2013 and 15.98% in December 2014.

Fuel: A liter of petrol is Kshs 101 (~$4.41/gallon) today in Nairobi. It was  Kshs. 111.6 per litre in March 2012 and Kshs 117.6 in March 2013.

Cooking Gas: A cylinder of LPG (cooking gas) is Kshs  2,030 today. It was about Kshs. 3,000 ($37) in 2012 for the 13kg cylinder.

Communications: Safaricom dominates. Prices are coming down and both Safaricom and Airtel have combined packages called Flex and Unliminet respectively . With Unliminet, Airtel customers get free WhatsApp, Facebook & Twitter of up to 100MB per day and at Safaricom, every reload of M-PESA  gets someone 3 free FLEX units. On the money transfer side,  Equitel and Pesalink are driving down the cost of mobile money usage.

About the Same

Beer/Entertainment: A bottle of Tusker beer is Kshs 200 at the local pub. This is the same price it was in March 2013.

Utilities: Pre-paid electricity is about Kshs 2,500 per month which is unchanged from the last review. The calculation of pre-paid tokens remains a complicated exercise.

More Expensive

Staple Food: A 2kg pack of (Unga) Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily, costs Kshs. 147 up from Kshs 97 in March 2012 and Kshs 105 in March 2013. But in his budget speech last week, the Minister proposed to zero-rate bread and maize flour to remove VAT. “ Manufacturers, Wholesalers, and Retailers who sell such goods will be expected to reduce the prices of these basic commodities, failure to which, I will reverse the policy. In addition to further lower the cost to Wananchi, the importation of maize during the next four months will be duty free. I expect, therefore to see a reduction of prices for these basic commodities which enjoyed by majority of our people.”

Other food item: Sugar: A 2 kg. Mumias Sugar pack is now Kshs 292; it was Kshs 245 in March 2012 and Kshs 250 in March 2013. It has hard to find Mumias sugar which is going through some issues, so this is the price of Chemelil sugar at the supermarket.

Foreign Exchange: 1 US$ equals Kshs. about Ksh 103 today compared to Kshs 83 in March 2012 and Kshs 85 in March 2013.

Utility: Water in Nairobi is more expensive.

Wadi Degla and Kenyan Clientele

Sports clubs have been in Kenya for over 100 years. The oldest is said to be Royal Nairobi that was founded back in 1906, and many of the other well-known golf and membership clubs, all started back in the 1920’s and 1930’s.

They still rule to this day, many with memberships of a few thousand each, and they are seen largely as the preserve of the very wealthy. Applying to join a club is a formal process, through introduction, approval by other members (a period in which one’s mini-C.V is placed on a wall for others to review) and some applicants even have to be interviewed for suitability.

wadi-degla-tennis-courtsThe clubs started in the colonial era with a focus on activities like golf and hunting and  with the large acreage mostly for male member sports. But today the needs of members have changed.

The clubs are now on modernization sprees to  accommodate the modern needs of their members. Some, which used to have large men’s only bars, are now re-doing club houses to better use the space, buildings and land they have, They have all had to re-invest in new facilities like meeting rooms, indoor sports equipment, gyms, restaurants and kids pools.

Wadi Degla clubs have modern designs that take into account the sports, social and leisure needs of modern families. Today sports club members, both male and female, desire the exclusivity of the clubs for networking and for business. They want facilities to exercise, and also for their children and families to also enjoy and perhaps get specialized sports training. Wadi Degla has a lot of these, with heated swimming pools (iincluding an Olympic-size one), running and walking tracks, and exercise gyms for up to 200 people.  They have business lounges and restaurants, top spas, shopping and kids training clubs to get specialized training in sports like soccer (by Arsenal Soccer), tennis, squash and (in Kenya) athletics – which will be done by Kenyan marathon champion Douglas Wakihuri at a new running school. They will have access to the five facilities in Nairobi including an 18-hole golf course  and the largest gym in East Africa.

Wadi Degla also targets expatriates (expats), and people new in the country.e.g.  all the engineers and managers building infrastructure and running companies around Kenya, They may not know the ropes of the city, or have people to introduce them to networks to get into other other clubs, but they can at Wadi Degla.

wadi-degla-gymThey also have special plans for expats and expat families can pay special fees that match the duration of their stay in Nairobi. For others who travel and live for long periods in different countries in the region, there is a provision for a member to commute (suspend) their membership while they are out of the country .

There are finance plans to ease payments for members, and there’s an ongoing discount on the one-off joining fee of Kshs 923,000 fee (~$9,230) for membership that allow access to all the clubs. They also allow up to 9 family members, and the cost is a total of Kshs 1.2 million for a typical family of four. Each family person gets their own card membership card and can access any of the clubs, and when kids become adults, at 21, they can graduate to full membership at about 1/3 of the cost. The costs are in line with the other top membership clubs in Nairobi where the joining fees range from between 300,000 – 500,000 per person), and while the joining fees are a bit lower, they have more capital raising and additional fees to fund infrastructure modernization projects. The discount on the membership runs through October 13 when the first Wadi Degla facility opens in Runda.

$1 = Kshs 101 

Water Moment: Understanding Nairobi Water Bills

Have you been getting more and more visits from the water meter crews from Nairobi Water (NCWSC), demanding payment?

For years, I’ve been paying every month the same amount of about Kshs 500 (~$5), without seeing my bill, but of late, the bill has always remained over Kshs 1,000 even when I have paid twice within the month. One day they even came around with a bulldozer which they told area people was to yank out meters from people who have not paid.

So I had some tweet chats and went  to the NCWSC offices and found out some stuff:

  • They no longer send out statements or hardly do. They have cut back on mailing statements via the post office. They won’t even issue you with a bill event at the office
  • They increased their rates at the end of 2015. The guy who came with the bulldozer and another at the NCWSC office said the rates doubled at the beginning of the year.
  • They have instituted a charge of Kshs 1,000 on every unpaid or overdue bill. This means even if you’re late on a Kshs 204 bill (the lowest bill you can get), you get charged Kshs 1,000.
  • You can check your bill via *888# on your phone. Sometimes the SMS comes through without information but you still get charged Kshs 10 for the service.
  • They have an online platform for one to check bills but not ready. Alternately there is a There is a Jambopay Water Bill checker that’s  free to check your bill. It is accurate, but often offline.
  • It costs Kshs 33 to pay your water bill via M-Pesa (assuming Kshs  30 goes to Safaricom and Kshs 3 excise tax charge of the financial service.
  • The due dates for bills vary in the month, depending on when the water readers come round to read or estimate the amounts.
  • Water, electricity and other utility companies can now report customers to credit reference bureaus over unpaid bills.. but who is the customer to be reported? The person who pays the bill? This is often a tenant of a house or building. Or the registered owner of a property with a meter? Sometimes this is the landlord or the contractor who put up the building.

waterOther water tales:

  •  A few years ago, IBM Research in Nairobi gave a talk on the water situation in Nairobi. There are 3,000 known boreholes in Nairobi and it can cost $10,000 to drill one as you have to go deeper than 400 meters instead of 200 in the past.
  • IBM also reported that 40 – 50% of water sourced is lost (just doesn’t get to consumers) AND that 50% of hospital visits in Kenya may be water/sanitation related.
  • A feel good story about water supply and the World Bank in Kenya.
  • Are water charges going up again? – Not sure if these are even more new charges from October 2016
  • Adding value to waterHow the business of bottled water went mad ..How did a substance that falls from the air, springs from the earth and comes out of your tap become a hyperactive multibillion-dollar business? (The Guardian)

Even with the new water rates, getting water from the NCWSC is a lesser evil than paying for your lorries, but…

$ = Kshs 101

12 Free Things in Nairobi (Redux)

It’s been a few years since the last list. What can one still get for free in Nairobi?

3. ‘Free burger’: A few restaurants have this on Thursday

4. Free Internet: Most Java, Art Caffee and coffee shops now have free WiFi all day.

5. ‘Free pizza’: (Still around are) buy one get one free on Tuesday at Pizza Inn and buy one get one free on Friday at Debonairs.

7. Free magazines/newspapers: People Daily newspaper has been free for over a year, but you have to be early in traffic or have a spot where you can pick up a copy. There are  lso quality in several free publications like Yummy and Msafiri magazines. free-newspaper

8. ‘Free bank loans’: (Still around are) Use your credit card carefully and pay off the full amount at the end of the month – (some cards give almost two months free).

9. Free money transfer: Equity has said that Equitel money transfer will be free forever. Airtel also has several free payment options, but which it doesn’t really market well. (See how much value Airtel gives away – via Kachwanya)

11. ‘Free calls’: Both Airtel and Safaricom offer you free calls if you reach some threshold of spending in a day, but the messaging is  confusing. Safaricom also offers to reimburse you if a call is dropped.

12. Free investment advice: Now Twitter is the main forum

New

Free Meeting Rooms: Again, coffee shops are pleasant neutral meeting places, You can sit and wait if your guest/host is later. Also it’s much better than visiting anyone’s office where there are hassles of traffic, them being late, having to show your ID, register your laptop, park in inconvenient spaces etc.

Free Parking: The Hub in Karen and Garden City Mall on Thika Road have free parking. At many malls, parking is no longer free, and expect to pay Kshs 50 to Kshs 100 for two hours and it gets punitive if your park for longer than that.

Free Taxi Rides: With all the new taxi hailing apps in Nairobi, there are often free rides for new subscribers, to/from major Nairobi events and for regretting people to the services.

Now Gone

1. ‘Free’ books: at the Book Villa. Become a member and read as many new, best sellers, finbooks, travel non-fiction books etc. No more free books 

2. ‘Free’ breakfast: at Books First/ Nakumatt buy one get one free on Sunday morning no more free breakfast

6. ‘Free movie meal’ (hot dog, soda, popcorn) at Nu Metro on Monday with purchase of a movie ticket

10. Free classified advertising: place a classified ad in the Nairobi Star newspaper; send a text message and it runs on the next day

What other items are free in Nairobi? 

$1 = Kshs 100