In 2007, Kenya was at the brink of a socio-political disaster. Today we find ourselves staring an economic down-turn of devastating proportions in the face.
It brings to mind the picture of a man who is pushed out of the window of a multi-storey building; his fall is near fatal but he does not die. The building from which he falls has floors which go by names such as unemployment, tribalism and corruption.
For the sake of this discussion, I’ll call him the Kenyanite. He’s taken to the Intensive Care Unit. The first lifeline handed to him goes by the name coalition. The Kenyanite comes around but the medics say he is suffering from shelter dispossession, hunger, poverty and a host of other complications.
Can the man who will be holding the briefcase with the Kenyan coat of arms offer the Kenyanite any hope? As the spotlight falls on Finance Minister Uhuru Kenyatta on Budget Day, I appreciate he has a tough balancing act to perform but I’m challenging him to rise to the occasion.
This time around – more than ever before – the government cannot afford to lose revenue through compromises and corruption abetted by loopholes created by civil servants that continue to allow unscrupulous tax evasion.
On the other hand, I firmly believe that the government should seriously look at reducing the tax rate particularly; corporate income tax. There is a body of empirical evidence from around the world which suggests that when tax rates are reduced, revenue collection actually goes up and it acts as an incentive for compliance.
Reduced taxation on items such as beer, soft drinks and other consumables including mobile phone talk-time would translate to more revenue for the government.
Once we have collected all we can into the national coffers, there is a need for the government to start looking at controlling recurrent expenditure but not at the expense of development expenditure. The government is not a producer but a facilitator and service provider so it cannot continue to spend on itself. Instead, it needs to create an enabling environment for the private sector to thrive ensuring a level playing field for those in business.
We all agree that industrialisation is a key aspect of development but how can we support local manufacturers while we continue to import substandard, counterfeit and second-hand goods?
If the government, for instance suspended the importation of second-hand cars for only two years it would provide local assemblers with reprieve that would have backward and forward linkages with great benefits for the economy.
The budget speech usually goes on and on, you cannot even blame the MPs for dosing off in Parliament. The proposals made usually take so long to be implemented and subsequently trickle down to the general populace.
So what does the Kenyanite do in the meantime?
Managing business in an economic downturn is never the easiest thing; unfortunately the tendency is normally to shoot from the hip and perhaps make people redundant, cut costs without too much thought as to why we are cutting them. I firmly believe that what people should be doing is using the ‘crunch’ as an opportunity to look to the future.
I strongly believe that we are going to have an economic upturn. We don’t know when but we need to be in a position to take advantage of it. If we cut our workforce significantly and cut costs which we would need for research and development we will then not be in strong position for growth.
I would suggest to businesses to look very carefully at how they are spending money today, they need to control their costs and overheads bearing in mind that the upturn is coming.
A few other pointers I have for Mr Kenyatta include offering incentives to Kenyans in the diaspora to ensure they invest here at home.
Money needs to go into the agricultural sector as a whole; 46 years after independence Kenyans should not be going hungry. It is expensive and wasteful to import staple grain. We need to empower farmers to grow food and add value to our tea, coffee, fruits vegetables and even our flowers.
And finally, let us not be dictated by our neighbours because they have no industries to protect.
If the Finance Minister takes this route, then the Kenyanite will have hope of survival.
Yes Minister Uhuru, I’m sure this is possible. Yes, you can; just do it. God bless the taxpayer.