How much would an item that was Sh17 in 1955 cost
today?
By MUNGAI KIHANYA
The Sunday Nation
Nairobi,
21 January 2018
Kinyua Nkanata Mburugu came across
his father’s
African Poll Tax receipt
recently. It is dated 1955 and the amount paid was Sh17. Kinyua would
like to know the equivalent current value of this amount and how this
tax was calculated.
The second question
is probably easier. There was no calculation! The poll tax was a fixed
amount decreed by the Governor of the Kenya Colony. It was charged on
all African men above 25 years old at a flat rate. The Sh17 in this
receipt was the prevailing annual rate.
There are two
interesting historical footnotes about this tax. First; some historians
believe that the tax was introduced to force Africans to work in the
settler farms. That way, they earned the money needed to pay the tax!
Secondly, many
African men born in the first half of the 20th century
understated their age in registration documents to avoid the tax. My
father reduced his by three years.
But how much would
the 1955 Sh17 be worth today? Well; there must be something special
about the year 1955. I say so because, three years ago (March 2015), a
different reader wrote to say that his father had won Sh1,200 in 1955!
In the 2015 article,
I explained that the Kenyan shilling we use today was introduced in 1966
to replace the East African currency that was in use during the colonial
period. So, the amount that Kinyua’s father paid in 1955 was EASh17; not
KSh17. Luckily, however, when the change of currency was done, the
conversion rate was one-for-one. Therefore, we can treat the EASh as
equivalent to the KSh.
Now, the best way to
determine the time-value of money is to use the inflation rate; that is,
to find out what one could buy with the Sh17 in 1955 and then find out
how much that item costs today.
It might sound like a
herculean task but there are people in government whose job is track
down prices of goods and services each month. The Kenya National Bureau
of Statistics does this and published the results every month in what is
known as the Consumer Price Index (CPI).
Unfortunately, the
historical data available only goes back to 1961. At that time the CPI
was 0.91 and today (data from December 2017) it is 183.05. To get the
CPI for 1955, we may work out the average annual inflation from 1961 to
2017, and then use it to extrapolate backwards to 1955. Details of that
calculation were given in the 2015 article.
The answer is that
the 1955 CPI was 0.51. Therefore, the things that cost Sh0.51 in 1955,
will cost you Sh183.05 today. So, the Sh17 poll tax of 1955 is
equivalent to Sh6,100 today.
Now imagine if the
government decreed that every adult over 25 years of age must pay a tax
of Sh500 per month… That would start a revolution! Now wonder our
forefathers took up arms to fight for independence.
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