Doing calculations with large numbers is easy
By MUNGAI KIHANYA
The Sunday Nation
Nairobi,
18 February 2018
I had an interesting discussion with one of my readers recently. He said
that his friends think the Sportpesa betting company is unfair. “Why are
they giving the whole Sh230 million jackpot to one person, it should be
shared with everybody – all the 44 million Kenyans – and give the lion’s
share to the winner.”
Their proposal was to distribute Sh44M to the everyone and the remaining
Sh186M to the winner. According to their calculation, each Kenyan could
get one million shillings.
Well, there is something seriously wrong with that calculation! If you
want to give 45M people one million shillings each, you will need a lot
more that Sh45 million. As I pointed out to the reader, the total sum is
more than all the money in Kenya!
This case illustrates the problems people face when doing calculations
comprising large numbers. In this example, it should have been obvious
that if you divide Sh45M amongst 45 million people, each person gets
just one shilling!
Even though the numbers being divided are very large, you don’t need a
calculator to do the sum. The “million” in the shillings cancels out
with the “million” in the number of people. So, you are left with jus 45
divided by 45. The answer is one; so, every person gets one shilling.
If you wanted to find out how much is required to give each person one
million shillings, you multiply 45M people by Sh1M. Again; you don’t
need a calculator. A million has six zeroes; therefore, the result will
have 12 zeroes.
What is the name of the number with 12 zeroes? Well that depends on
where you come from. The British call it a billion and the Americans
call it a trillion.
In Kenya, even though we were once a British colony, we follow the
American nomenclature. 12 zeroes mean a trillion. So, the answer to the
multiplication is that you need Sh45 trillion!
Do we have that kind of money? The answer is NO! For starters, the total
national budget (that is, what the government plans to spend in one
year) is only about Sh2.5 trillion. But that is not all the money in
Kenya.
The total money supply is regularly monitored by the Central Bank of
Kenya and published in bank’s quarterly reports. The most recent report
is for the period ending on 30th November 2017.
The total money supply (that is, currency notes and coins in circulation
plus all bank deposits) at that time was Sh3 trillion. This is a lot
smaller than the Sh45T that would be required to pay each person in
Kenya Sh1,000,000.
By the way, the same report records that the total currency in all the
banks combined (including the Central Bank itself) was Sh31 billion
while the total value of all bank balances was Sh2.246 trillion. Think
about that. It’s not a typo: Sh31B in notes and coins versus Sh2.4T in
bank balances! Where is the rest of the money?
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