Kenyan job creators need the right attention from the government

PHOTO | FILE President Uhuru Kenyatta (left) receives Mr Wan Exiang, special envoy of Chinese President Xi Jinping, and vice chair, Standing Committee of the National People’s Congress of China.  NATION

In Summary

• Projects like the Uwezo Fund, or the film fund are well intentioned, but bound to work in a poisoned environment that will choke their potential and hamper their ability to deliver jobs.
• Is research by the Kenya National Bureau of Statistics being leveraged to see just how well our economy is doing? 

By Steve Biko
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As a country, we have been at each other’s throats when it comes to creating employment for the youth, and in the process we have managed to perfect the art of blaming any party but the one responsible for this mess, which is the government.

I say the government is responsible for this unemployment mess for one reason; it has failed to harmonize all policies, legal frameworks, registration processes and simplify the tax code to create an environment that will spur growth of the economy and emergence of urgently needed job creators.

This government began with a charm that we young people found hard to resist, with the promise of big projects that would benefit us. I lauded this as a good move, but looking back it was like putting the cart before the horse.

Projects like the Uwezo Fund, or the film fund are well intentioned, but bound to work in a poisoned environment that will choke their true purpose of growth and hence not be able to solve the problem they are intended for, which is job creation.

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MILLIONS OF ENTREPRENEURS

For entrepreneurs to succeed in creating jobs, they need credit and transparent processes in business registration and licensing. They need affordable energy to ensure that the cost of production does not lock out more hiring. In my view, millions of entrepreneurs are struggling with licensing, business registration and a complicated tax code that is turning away great business.

The government’s focus on key projects in infrastructure is laudable and good for the overall economic growth in the long term. However, if the million or so entrepreneurs had the right support in terms of accessible credit, a transparent licensing and registration environment,  and each entrepreneur employed four people, that would be almost 4million jobs injected into the economy directly. This would have significant impact in terms of pushing up the GDP, improving the purchasing power of Kenyans and most important, in creating capital liquidity for more businesses to grow.

AFFORDABLE LOANS

In 2014, information technology, banking, agriculture-related businesses, transportation, education and micro-manufacturing will be among the key job creating sectors in Kenya. Are they getting the support they need to ensure job creation? Is research by the Kenya National Bureau of Statistics being leveraged to see just how well our economy is doing? How many jobs are created or lost per quarter and from which sectors?

Concerning access to credit, the Central Bank needs to enforce the Banking Act and force commercial banks to follow the law and reduce the lending rates to be in tandem with the Central Bank rate. Public education on the tax code, especially the new VAT law, is key to ensure entrepreneurs are on the right side of the law and can operate without fear.

Since our economy retains a good mix of organized and unorganized, large corporate and small enterprises, a large number of people in rural Kenya are dependent on agriculture and agric-related business and tertiary industries. This variety has inherent strengths which come handy when the chips are down. Tax incentives are key here, especially on agricultural produce so that the cost of production is low.

In my opinion the rich do not create jobs. They create their own wealth, and should be taxed more. Key sectors with high potential for job creation should however be given tax incentives and subsidies to ensure that they meet the set target of job creation.

Agri-based industries are expected to do better in 2014 on the back of renewed calls for the country to embrace irrigation and stop depending on the weather. This, coupled with research into better, drought-resistant crops, with increased awareness of agriculture- related products, will spur the sector. The positive spin-offs would be evident in a whole lot of related industries such as tractor and farm equipment manufacturers, transportation, irrigation, and the development and sale of seeds and fertilizers.

BRICK AND MORTAR

For the private banking sector (read the capital markets), the new licenses which are likely to be given to SMEs to list on a second bourse will throw up new job opportunities. This will definitely have a serious impact on increased investments as the SMEs will have an easier platform to raise capital for their operations and hence more jobs.

While the banks will leverage technology as we have seen with the launch of several mobile platforms, job opportunities will arise both in brick and mortar as also in development and implementation of technology solutions, but at the behest of a better working environment, which the government needs to focus on more than anything else for now.

The much talked-about Uwezo fund would be able to create 3million permanent jobs with an impact of 2.3 per cent to our GDP if the government was to focus on the light and micro industries across the country to ensure that they can hire better and produce cheaply. Most important the government should give them tax breaks and incentives.

Job creators in Kenya are the millions of entrepreneurs that this government seems to have forgotten as it deals with the Chinese. The focus of the government needs to change from that of an employer to one that creates the right environment for jobs to be created.

Twitter: @sokoanalyst