Why The Kumbafu Hawkers Are Our Best Hope For A Super New Economy
The recent announcement by Safaricom of record unprecedented profits, never before achieved in East and Central Africa has hardly been taken with the impact it deserves.
The leading mobile phone company in the region reported a staggering profit of a whooping Kshs 12.2 billion before taxes. Those earnings for their financial year ending March 2006 were equal to about 63% of the entire profits of the banking industry. In other words the profits made by the big four, Barclays, Standard Chartered, KCB and Citibank put together. Profits rose by a huge 44.6 per cent from 8.4 billion the previous financial year.
This unprecedented achievement by Safaricom proves one thing beyond any doubt. And that is the fact the economy is crying out for a change in direction and a change in policy. For starters the main diving force behind the extra-ordinary Safaricom profits was… you guessed it, the Kumbafu hawkers and small road-side kiosks and small tiny traders. Those are the people who sold the bamba 50 shs airtime scratch card like crazy. The sell phone company openly admits, that it was the bamba 50, more than any other single factor that caused the exceptional financial performance.
This is clear evidence that the country has a large force of persons who do not need to be persuaded to be a working nation. They just need the opportunities.
But Safaricom is not the only company that has been smart enough to see the potential in the mass market. You will have heard of a small bank called Equity Bank (opps it is no longer small, thanks to the Kumbafu riff raff).
When all mainstream banks were behaving the way the government is behaving now and basically saying that they had no time for the kumbafu riff raff. Equity concentrated on serving this ignored sector of the market. The big banks laughed at their stupidity and concentrated on putting all their money in government paper (treasury bills). You know the story, today those same guys who were laughing then are desperately trying to play catch up with Equity.
Safaricom or Equity would have chosen to sing the song I am sick of hearing Kenyans sing and said that growth in profits takes time. And they would have been nowhere today. What we need are government policies that are designed to bring in ordinary Kenyans into the action.
Sadly many readers of this blog do not see any problem in having a growing economy side by side with growing unemployment. I understand these kind of people very well. Empathy is not one of their strengths. They have either been brought up in a life of privilege and comfort and have probably never used a pit latrine in their lifetime. So they would hardly understand that almost half of the Kenyans living in Nairobi do not even have the luxury of a pit latrine. They use paper bags and then dump them where the rest of the garbage is. This blogger uses pit latrines regularly to keep his feet firmly on the ground.
How would such people appreciate the fact that no economic policy that does not have the creation of jobs right at the top of the list will work in today's Kenya? How will they see the grave danger in security and peace when we continue to give only lip service but basically ignore the massive unemployment situation in the country? How will they realize that economic policies that were used in the 60s and 70s when Kenya was a young growing nation will not fly today, at least not for long? How will they realize that the vast majority of Kenyans are crying out for real change and are so desperate that if change does not come soon, something will have to give?
What is urgently required is for us to restore opportunity to the rapidly disappearing middle class and low-income earners in Kenya.
I appreciate the fact that my posts are getting read by people who sound like they are seasoned economists who understand the issues very well. But many of them seem to believe that it is unrealistic and downright untenable for low-income earners to be brought into full participation in the economy so quickly. To them anybody who says they can make an attempt to bridge the widening gap between the rich and poor in Kenya is nothing short of a hopeless dreamer.
Here is what the next government should do as a matter of urgency;
i) Put employment creation at the top of the list of priorities of government policy.
ii) Apportion a certain percentage of all government procurement to small businesses and micro-enterprises. If it was upto me, I would say at least 50% for starters.
iii) Guarantee a hefty amount in small business bank loans with leading banks so that small traders and entrepreneurs can access bank loans to establish and expand small business.
iv) Create small business "incubators" countrywide and identify talented hawkers and small traders who can be assisted to quickly expand their businesses into the next level, thus creating employment.
v) Support the establishment of websites to promote and sell juakali products worldwide.
These are just a few of the many things which can be done, including passing the necessary legislation, which can help boost small business.
It is not a bad idea to encourage many small traders to come together to form things like co-operatives of sorts and lobby groups to fight for better opportunities (as has been suggested), but this will not have a serious impact if these small traders are not coming together from a position of strength.
P.S. We can learn yet another important lesson in the Kencell/Safaricom saga. Early on Kencell (which has now been bought off by Celtel as a result of business policies that did not work out too well) made a deliberate decision to go upmarket where all the money was (exactly the thinking of the current government). Safaricom decided the money was with the Kumbafu riff raff. The results speak for themselves.
P.S. 2: Bill Clinton made the same bet in 1993, the crux of his economic policy was to reduce the government deficit while restoring opportunity for the middle class. The result was unprecedented continuous growth of the America economy for 10 straight years.
To do what must be done, we need a change of government. ODM Kenya can't do it either (it's the same guys). I don't know who can do it yet. But what I know is that the time for change is now, and that person (or group of people) will come forward before election day. Anybody out there whom this blog can support to carry forward this economic policy that is the only chance for Kenya?
I rest my case on the issue of the Kenyan economy.
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Here' one suggestion. Reduce (or even better, eliminate) the bureaucracy and cost involved in setting up a small business in Kenya. Have you ever had to line up for a name search at the Registrars, then several weeks later line up again to pay for the business name, set up an office and pay the City Council fees.... all before you have made an iota of profit! It is a tribute to the micro businessmen and women that they are able to overcome the barriers placed in their way by a government that seems only to serve the interests of the wealthy political class. But then again, why should we be surprised. Many of Kenya's largest companies are owned or controlled by politicians and their families.
ReplyDeleteThanx Gathara,
ReplyDeleteThat's a very important point we had all missed. It is at the heart of this Kumbafu riff raff versus the rest argument.
If majority of the serious businesses in Kenya are owned by politicians and their close associates (which is a fact), how can they be able to see things from the point of view of the small businessperson/hawker?
To them these guys are jokers and kumabfus.
In this blog kumbafu riff raffs are the real heroes of Kenya. They're trying to get rich without being in politics and without having to bribe any politician. That to me should be encouraged with everything that we've got.
Kumekucha.
Kenya is enjoying significant economic growth. President Mwai Kibaki’s slogan and appeal for hard work seems to be yielding fruits finally.
ReplyDeleteHis rallying call has remained 4 years down the road after his election ? a working nation, as he amplified it recently at Uhuru Park, Nairobi during Kenyatta Day celebrations.
This year economic growth hit a record 5.8 per cent, up from 4.9 per cent last year and the highest for more than a decade. There are predictions that next year will even be better.
Last year’s performance would have been even higher had it not been for the serious draught and famine that hit the country. Thirty seven out of seventy two districts were affected, with those in the northern part being hit the worst.
There had been fears of water and power rationing since water levels had reduced so much but fortunately, the government has taken enough precaution and the effects have been largely absorbed without much economic causalities.
The economy withstood the challenge. The government’s election promise of creating more than half a million jobs per year has almost achieved. More than four hundred thousand jobs were created last year. Most of these, however, were in the informal sector.
Tourism marked the highest growth of more than 13 per cent. Enormous campaign to market Kenya in the west takes credit for this. Impact of travel ban to East Africa by USA and Britain has finally fizzled out and the sector has recovered tremendously.
Others include communication 8.3 per cent, building and construction 7.2 per cent, and agriculture and forestry 6.7 per cent .Wholesale and retail trade grew with 6.4 per cent while manufacturing hit a 5 per cent increase.
Mobile telephony and road transport was among the leading employment sector. There was also a significant growth in jua kali sector.
In education, more than 200, 000 students enrolled at schools and colleges but teacher numbers decreased by 7300 owing to resignation, sacking or retirement. There has not been sufficient replacement of teachers when they leave the profession.
Community policing, a joint police and public engagement to eradicate criminals, saw a decline in crime in the past year. The ministry of health was involved in a successful children immunization programme.
Cost of retro-viral drugs went down and free malaria drugs were availed in government hospitals. Trade with East African countries has also increased, taking more than a half of all the exports to Africa.
The government reduced borrowing from public.
This availed more cash to the people since banks could afford loans to more people. Banking and insurance got a boost from this.
The Kenya revenue authority has been very aggressive in tax collection, gathering more money than ever before.
This years government budget, is 95 per cent funded by local taxes, and the government will only need 5 per cent supplementary aid from the donors. Taxes for cigarettes have risen, following the ban of tobacco smoking.
The government prohibited smoking in all public places, including hospitals, learning institutions and public transport.
The ban has temporarily been put on hold by the High Court, following application by tobacco manufacturing companies.
They claimed there was no adequate notice given and if the law came to force they would incur huge loses. They asked to be allowed to first dispose off the stock already in their warehouses.
With the ongoing rains agriculture is bound to do far better this year. Kenya meat commission will be operational this month, with slaughter capacity of more than a thousand cattle a day.
This is certainly going to provide meat market for cattle keepers who have suffered immensely since its collapse more than fifteen years ago. Revival of Kenya Creameries Co-operative, the giant milk market, lifted the earnings and economy of dairy farmers immensely.
Prospects of finding oil in the north coastal town of lamu, and the business opportunities that Southern Sudan region provides will attract more investors in the country.
Some business firms like Kenya Commercial Bank have already started doing business in Sudan. The bank has another branch in Tanzania.
etc ...etc....etc
kibaki building all sectors of the kenyan economy
raila still breathing on all microphones around the country
That apportioning government procurement to microenterprises thing will happen when a distant hell freezes over. They can't let anglo-lease type monies loose all out willy nilly!
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteThat is perfectly true about the economy. I believe that the growth being witnessed in the economic sector is not devoid of political management of the economy. The country has not witnessed such a growth in the past 20 years. What I fail to understand is why you do not attribute the successful economic growth (as many other commentors als intentionally fail) to the current political leadership especially the government. In other words, if it is working it does not need mending. What is required is for the current government to focus more on what it is doing right and try to mend what it is doing wrong. As you say the ODM-K euphoria will not give any serious
ReplyDeleteThat is perfectly true about the economy. I believe that the growth being witnessed in the economic sector is not devoid of political management of the economy. The country has not witnessed such a growth in the past 20 years. What I fail to understand is why you do not attribute the successful economic growth (as many other commentors als intentionally fail) to the current political leadership especially the government. In other words, if it is working it does not need mending. What is required is for the current government to focus more on what it is doing right and try to mend what it is doing wrong. As you say the ODM-K euphoria will not give any serious
ReplyDelete