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Banks should not own offices

First published on February 26, 2013

If you have been to Upperhill lately, you will agree with me that the local banks are going “head to head” as they compete to have the tallest and most fancy office blocks. Owning high rise office blocks looks like the “in thing” for these financial giants. In fact, there are certain big banks that have their head quarters in Nairobi Central Business District (CBD). History tells me that they will also soon be “pressured” to upgrade to more exclusive locations.


Peter is a bachelor in his late twenties. He works for a multinational company and earns a monthly salary of USD 5000 or about  Kshs 450,000 per month. When I grow up, I want to earn such kind of money. However, I have an issue with Peter, he does the following things.

  1. Washes his car.
  2. Trims his hedge.
  3. Shaves his beard.
  4. Washes his clothes (with his hands, not a machine).
  5. Carries lunch to work.
  6. Runs his own errands.

We all claim that there are no jobs and insecurity is on the rise. This is because we have refused to create the jobs ourselves. If Peter paid someone just USD 4 or Kshs 300 to do any of the jobs above, you would have uplifted them from poverty into a life of dignity. This is the same mindset that I wish to use to defend my case.

These banks have a lot of money and that’s why they are building these offices. They are not meeting a need. They are saving costs. They are like Peter who doesn’t allow his money to circulate in the economy, no wonder the bank’s ever rising profits and ever growing poverty index in the country.

Communication companies are not allowed to own the land where they erect masts (boosters). They lease the land from the owners for a duration of 21 years. They pay the land owner annual rent for using the land. Imagine how much this regulation has helped land owners pay school fees for their children and improve their standard of living.

There is approximately 1.5 million square feet (approx 150,000 Sq meters) of new office space in Westlands alone. The total area is actually more if you consider the many vacant offices in Westlands alone. What about Ngara, City center, Mombasa road, Parklands, Pangani, Thika road etc. My rough estimate is that Nairobi County has more than 3 million square feet of vacant office space. Who will occupy these space if the banks continue building their own offices. What will happen to the investors who have taken loans from these same banks to finance construction of the office blocks. Where will they get money to repay the loans? How about stopping banks from owning any more office space and having them rent from the market?

When construction of TATU city and Konza city is complete, many companies will relocate. What will happen to these many office spaces?

I admire the way supermarkets work. They don’t own the buildings where they have their shops. They lease from the market. The supermarkets concentrate on their core business, which is retail of goods. They don’t concern themselves with buying land and construction.

A certain supermarket is located in a building owned by a cooperative society. At the end of the day, the money you use to buy items from the supermarket comes back to you as dividends  if you are a member of the cooperative society.

This is a capitalist economy but the banks need to realize that when the “mwananchi” becomes poorer, they also become poorer. If our “chama” wanted to invest in office space, I would discourage them because of the reasons I have mentioned above.

Where then should banks invest their monies?

I suggest that they invest it in residential development. There is a demand for 150,000 housing units every year. The supply is about 30,000 units per year. If the banks contracted a Chinese contractor to do low cost housing, then they sell the units at Kshs 1 million for a 2 bed roomed house, then the loan book would be full and the number of people with mortgages would increase 30 times from the current 17,000 to maybe 500,000.


I hope someone out there is listening….


Kariuki Waweru

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