Last night Finance Minister Amos Kimunya was interviewed on the NTV On The Spot show hosted by July Gichuru. The usual sms survey during the show must have brought wide smiles to President Kibaki's handlers because it revealed that a whooping 79% of those who were watching the show believe that the economy has grown by 5.8% and have actually felt the impact.
I do not want to pour cold water on this survey for no reason but the truth is it is a reflection of the kind of audience a show discussing the Kenyan economy is bound to attract. Company CEOs and generally the top 1% (to borrow from a fascinating new book about the widening gap between the rich and the poor worldwide and the dangers this poses.). These are the sort of understandably selfish Kenyans who speak the language of the Kibaki administration. Many play golf regularly at the Muthaiga Golf club (not far from starving Kenyans living in the most appalling conditions which few can imagine, in the nearby sprawling Mathare slums). These people (a significant percentage of them are not even Kenyans) are fully in support of the idea of getting the riff-ruff (hawkers) off the streets and as far as possible from the city.
What came out of the Amos Kimunya TV interview is the thinking at the heart of the Kibaki administration. The minister kept on repeating the same message over and over again during the entire duration of the interview.
The message was simply this;
The government wants to see many small independent traders merging to form bigger entities, which will have a bigger impact in the economy than many small micro enterprises. In the minister's book, "big" means more efficiency and more profits.
At first sight this may appear to be very sound and solid thinking. Except for one problem. An aggressive promotion of such a policy over the next few years will result in only one thing. It will sink the country into chaos and anarchy.
This is the thinking of the 70s. Modern management and economies are thriving on micro enterprises. It has been proved over and over again that the fastest and surest way of creating employment is to promote small business not encourage mergers that will form big enterprises that will use technology to limit their staff numbers.
The Kimunya interview proved conclusively that this government is only paying lip service to the creation of jobs.
We are fooling ourselves big time if we think that we can continue to ignore the growing gap between the poor and the rich in Kenya. We are being blind if we think that we can push job creation down the list of priorities and expect crime not to escalate beyond the current levels.
We must also bear in mind that the reason why most Kenyans live below the poverty line today is because of massive corruption and the implementation of policies that have always been designed to maintain the status quo. To keep on heading up the same beaten track will only lead to disaster.
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i think hawkers and juakali artisans need to form guilds for collective bargaining and self regulation - thats the history of capitalism and thats a step that seems to have been missed in africa
ReplyDeletehttp://rationalrevolution.net/articles/capitalism_wages.htm
The last time i was on this blog you were in denial that the economy was growing. now since the truth has been established you claim that this government has no place for small traders .when will you propaganda stop! kenya's economic growth is being felt everywhere from the manyattas od lotoktok to the tents of gabatula.-wacha siasa za pesa nane and start contributing to the gowth of out country
ReplyDeleteSeriously... we should quit complaining and send lobbyists to the finance minister and other relevant people in government. Go tell them where you see small traders fitting in, since they obviously have been unable to stretch their minds that far. Until you've done that (i.e. been proactive), DON'T COMPLAIN!
ReplyDeleteKazi ya kupiga-domo hailipi jamaa .wacha siasa mingi chukua jembe ukalime -the agricultural sector has grown by 4%.
ReplyDeletelol
I don't see a problem with the small traders merging into bigger organizations. We would expect the value of the whole to be larger than the sum of its parts due to economies of scale and scope and elimination of duplication. It's a difficult task to carry out but one that is necessitated by the current state of affairs.
ReplyDeleteEconomic growth is not necessarily tied to income disparity. Though India and China continue to post enviable economic growth rates, they still face debilitating and deteroriating poverty levels in most provinces. That doesn't change the fact that they are growing.
What suggestions do you have about reducing this income disparity in the country?
Do you wonder?
ReplyDeleteWhy Kenya economy is huge than Uganda but Uganda has 35% people under poverty line and Kenya about 50%!.
Why People want to run to TZ while we have 50% of Kenyans with no purchasing power?
Why Kenya inflation is 10% while TZ is 5%.
Kenya gvt need to understand that their main objective is to help Kenyans and not just companies, but everybody and the best way to do that is to invest on the small mom and Daddy business. TZ is not going to help regular people but just few companies. Its a matter of time people are going to be fed-up and kick the gvt out. Real people need real result, regular people need to enjoy the economy not just few rich people.
Most certainly small scale growth from the ground up is the best way of solidifying the economic strides that have been made so far. Economic growth must nurture at the lowest common denominator which includes Hawkers, Riff Raff & Co.
ReplyDeletePreach!
I fundamentally disagree with your observation(s) Chris.
ReplyDeleteIt is evident that a turnaround has happened (and hopefully continues). Any objective analyst would first accept this fundamental fact. Our emergence from 20 or so years of wanton and immoral economic mismanagement cannot be instantaneous.
Subsequently equitable distribution of the national cake cannot take place overnight. This is the second fact we need to appreciate.
Kenya is a capitalistic nation. It is imperative that our formal sector is assisted to re-gain their individual competitive edge and re-focus on their core competencies. Frameworks to revive the informal sector and small businesses are been undertaken and will assist them realise their potential. These gains will closely follow the formal sector.
But remember that small firms are initially dependent on formal companies for business. When these small firms have reasonably matured they are then able to compete at par with their larger competitors. Small businesses cannot, by themselves, be a harbinger for economic equitability and prosperity. This is an obvious economic fact.
All these components cannot click and mesh at the same time. They need to be nurtured and gradually streamlined, not to mention maintained. It is therefore erroneous to contend that the government of Kenya is solely pro-big business. It has got the basic aspects right, let us not deny that. The argument might be on the prioritization of further steps.
Finally the laissez faire economic policy been practised by the govt means that the free market is left to its own devices. It is this market that will determine the existence and speed of equitability, or lack of it.
Others contend that Kenyans should be given the credit for the economic advances made so far. Indeed they should, and that is why we should continue encouraging the goverment to further withdraw from the market. Eventually credit should then be given to all Kenyans, be they citizens, the govt, businesses people, farmers, teachers etc.
Four years down the road and we have just pulled ourselves out of the swamp. Don't you think it takes more time than that to create a truly equitable society, if possible???
@ annonymous said;
ReplyDelete"What suggestions do you have about reducing this income disparity in the country?"
There are so many ways of doing this and I will dedicate my next post to covering this in great detail. It includes small business incubators, policies and legislation that favor small business, government changing their procurement policies to favor small business etc.
But my point is that the golf-playing crowd can never hope to view things from this point of view of the common man. All they do is give lip service to it.
But let me assure you that in a year or two, if we continue the way we are, you will not be able to play a round of golf in peace. It does not matter how many policemen you hire.
Kumekucha.
Chris is right in this issue, you need to find a way to stimulate small firms, and the best way is by using small loans. We should all remember that even in US we have SBA(Small business Administration) which gives loans of $5000-$50000 to small business, but you need to qualify and go though training. This loans are provided by banks but goverment is just a co-signer to secure the loan incase of default, due to the fact loans are goverment secured the interest rate of the loans are lower. For some reasons if the goverment does not have the funds for that insuarance they can ask for foreign aid specific for that project like what TZ did , some countries can help you if you have a plan, we should not blame everything on money. I am Tanzanian for the record living in US but from my heart i think that should be the best way for Kenya to solve this issue of split economy.Kenya at the current setting is a timing bomb regular people are not going to stand and watch other Kenyans be rich and richer while nobody give them the break, thats why in US we have special funds for minority and all goverment contract 11% must go to minority, but in Kenya issue it should be Mom and Dady business. Be positive
ReplyDeleteto makanga
ReplyDeleteMost certainly small scale growth from the ground up is the best way of solidifying the economic strides that have been made so far. Economic growth must nurture at the lowest common denominator which includes Hawkers, Riff Raff & Co.
Preach!
if it wasnt for your name i would procede to give you a lesson in trickle down economics but i doubt a guy calling himself makanga can understand the basics principles of capitalism and economics. and what do you mean "Economic growth must nurture at the lowest common denominator" what in the would is the lowest common dinominator-i really want to know i have heard you and alexcia use this term could you care to explain it to me .(coz to me it sounds like one of those terms poorly educated people use to look educated).maybe if you swing through the doors of a grad school instead of matatus i would understand what you are on about.
Kenyans and Tanzanians need each other for example, here in US most kenyans are trying to go to school as their primary goal, and some Tanzanians but not as much as Kenyans, the main difference is that most Tanzanians think that education is over rated and is important but not necessary and they said that less than 30% of American are college educated, but in the other hand most Kenyans are attending school with no plan what so ever, no plan for papers and they are not street smart at all they end up driving taxis after graduating. We both need each other here Tanzania we need to teach Kenya how to survive in the street and put you staff right and Kenyans need to show some Tanzanians that education is not underated, but to be honest a Tanzanian who is college educated are doing better because they are street smart, but most of them end up in street ego and be uneducated. Less team up...and thats my word of wisdom thank you.
ReplyDelete