I am at crossroads today. The reason for this is that I sat down and read in detail a pamphlet on the new government initiative; the Economic Stimulus Programme (ESP).
On the one hand, I want to offer a congratulatory message to the Ministry of Finance for this initiative. On the other hand, I feel that they have left out an important issue which if addressed would go a long way in revitalising our economy.
If you stop any Kenyan on the street today and seek their opinion on issues that negatively impact their economic power, they will no doubt mention the ongoing power rationing. So the fact that there is no initiative to address this problem in the short term, leaves me wondering what criteria was used to determine priority areas.
Incidentally – and on a lighter note – the letters ESP also stand for Extra-Sensory Perception. I hope the latter is not the method that was used to determine priority areas.
But more importantly, The lack of adequate power is a real problem which negatively impacts the ability of the Private Sector to drive the economy.
For manufacturers like me, power rationing has translated into a 30 percent increment in our operational costs. We have been forced to come up with ingenuous ways to deal with the inadequate power supply. Some have been forced to install generators, which are accompanied by their own set of costs i.e. fuel, labour, and the inherent risks. Others have been forced to operate their plants at night, resulting in increased manpower costs.
For the small and medium enterprises which operate from residential areas, power rationing has meant that they have lost a steady stream of customers. People enjoy shopping in their neighbourhoods because it is convenient.
What if the services you require are no longer available to you because of power rationing? You will inevitably move to the CBD where
perhaps you are assured of getting your goods and products. Woe unto the small business owner who will have to input double the resources to compete with entrepreneurs in the CBD.
In both scenarios, I am reading a loss of income for employers, employment for Kenyans and taxes to the government.
I don’t mind that the ministry wants to expand economic opportunities in rural areas, but what about those that already exist? Shouldn’t they be cushioning the opportunities in urban areas as well? Why should we be losing much needed revenue to unnecessary costs?
The economic stimulus programme feels like an attractive meal ostensibly served on a dirty plate. No matter how appealing it is to our sight, the attraction does not transfer to our palate.
Let the government spend a small portion of that Sh22 billion to protect jobs here – today. Before they can ask for our goodwill, let us see theirs translating into actual incentives that protect employment and income for Kenyans.
How much more appealing would this meal be if it subsidised the cost of generators for the SME sector? Or even ensured a steady power supply for industrial manufacturers? Perhaps some of that money can be utilised to give rebates to entrepreneurs who start producing alternative energy for consumption in their localities.
The competitiveness of Kenya is being heavily compromised by the malady of escalating costs. As a result, foreign imports which may be heavily subsidised in their home territories are bound to flood and replace our own products. Already, this phenomenon is manifesting in our own supermarkets which have rows and rows of imported products.
Secondly, it is a pity that as we move towards full EAC integration, our manufacturing ability is being undermined by lack of water and adequate power. Are we going to be relegated to become an import-based economy? We need to safeguard our achievements to take advantage of opportunities available in the EAC and COMESA markets.
We have also witnessed our backyard (read juakali) innovators collapse under the weight of these costs. My feeling is that the government needs to step up and research the impact of such costs on innovation. That is the only way they will be able to understand the problem, mitigate the effects and even encourage market entry.
Irrefutably, the real challenges that affect Kenyans are food, water, power and security.
Can the Economic Stimulus Programme be revised to cater to those challenges? It is only then that this initiative will produce the desired effects in the short, and long run.