WORLD OF FIGURES: There is a difference between wealth and riches

Reading through the story on the wealth declarations of various public office nominees (Ambassadors and Principal Secretaries) in the Daily Nation of March 1, I got the impression that the writer did not know the difference between income and net worth.

But I suspect the author is not alone in this confusion: many people – perhaps, even the members of the parliamentary committees vetting the nominees – assume that the two are the same.

There is a difference between a wealthy person and a rich person. You are wealthy if you own highly valuable property and you are rich if you have a high income. Being in one category does not automatically place you in the other. You can be poor while having high-value property or be rich but owning very little.

Suppose you earn Sh1 million per month. You can be said to be quite rich, can’t you? What if you are staying in a house where the rent is Sh300,000; you have a car bought with a loan that you repay Sh250,000 per month; and your three children  are going to a school where the fee is Sh500,000 per child per term?

That leaves you with only about Sh75,000 to cater for other expenses, including fueling your expensive car. With such a lifestyle, you are unlikely to have much money remaining in your bank account at the end of each month. You will be a very rich person with very little wealth.

On the other hand, you could be earning Sh30,000 per month. Spending Sh10,000 on rent and struggling to make ends meet with the remainder. But perhaps you are able to save Sh1,000 each month in the Saving & Credit Co-operative (Sacco). That easily makes you wealthier than the one-million-shilling per month fellow; but he is richer than you!

It is rumoured that, at the teachers’ Sacco, those who teach in primary schools have much bigger balances per member than their counterparts in secondary schools.

This, despite the fact that the latter earn much higher salaries than the former.

The wealth declarations of public officers are simply a listing of assets and liabilities of the person. They are not a historical record of their salaries!

Thus; from that document, there is no way of telling how, for example, Dr Cleopa Mailu accumulated his net worth of Sh617 million. The 62-year-old doctor has worked for more than three decades. I am quite sure that, during that time he has bought many assets and sold them at a profit and used the money to acquire others.

It is also grossly inaccurate to state that Willy Bett’s “money has been accumulated mainly from employment, rentals and farming”. Mr Bett’s Sh125 million net worth is not his income! It is not money sitting in some bank account either. It is the value of the rental buildings, the farm, etc., minus any liabilities that he owes to other people and institutions.