We are at a point in history where entrepreneurship is receiving more attention than ever before, especially in Africa. Previous generations focused on other things; our grandparents’ generation was into government jobs – a government job was the best thing one could ever land. Our parents were the professionals – the teachers, doctors, engineers etc. We are the entrepreneurs, the trailblazers. A fancy solution for the fact that our economies can no longer supply us with formal jobs. Which I guess is ok, it is what it is.
I, however, worry when the government also starts to sing the entrepreneurship song a bit louder than everyone else in the choir, and in a manner that suggests we should entrepreneur ourselves out of the problems politicians have created.
Last year, Kenya hosted the Global Entrepreneurship Summit, the largest entrepreneurship event the region had ever seen, complete with President Obama in attendance. The summit showcased Kenyan businesses that were doing great things, and everyone speaking at the conference had something for small and medium entrepreneurs (SMEs). Banks announced increased funding for women and SMEs, the political types told us that the future belongs to entrepreneurs and so on and so forth.
Alongside my Obama-fever (I really was feverish for the 2 days), I wanted to be hopeful that something was going to change, especially in the way our government treats entrepreneurs. I have written here before about how licensing is hurting small businesses, and deeper than that, we have in the past seen the government focus so much on attracting foreign businesses at the expense of local entrepreneurs. The importation of materials for the Standard Gauge Railway comes to mind.
While the dust has since settled on the GES, the entrepreneurship song continues, but it is increasingly becoming toneless, as we the citizens realize we are “entrepreneuring” by ourselves without the government, and no matter how much we entrepreneur, it will not be enough.
Even as the government continues to call for entrepreneurs to come up with innovations to fix the problems we face, there are certain areas that are so stubborn, that even the most spirited entrepreneur will not fix.
We cannot entrepreneur ourselves out of corruption
This one seems obvious. In the 2014/2015 financial year, the central government spent Kshs 14.4 billion in projects that had no economic value, and we could not account for a further Kshs 7.4 billion according to the auditor general. In the same year, counties failed to account for billions of shillings.
Since then, we have had a scandal hit our papers almost every day. From the infamous NYS scandal to the Olympics to the Youth Fund, and so on. With the election year with us, it can only get worse, as politicians fundraise for their campaigns…is that a sugar scandal I see on the horizon?
It is said that we cannot account for up to 40% of our tax revenue. This money that infamously disappears is usually not spare change that is just lying around. It is money designated for service provision for Kenyans – education, health, water, electricity, roads etc.
Bridge Schools will not fix this. Neither will Nairobi Hospital nor M Kopa Solar.
There are no shortcuts to fixing corruption, no amount of entrepreneurship can plug 40% of the country’s revenues. The leadership will need to act decisively.
Neither can we entrepreneur ourselves out of poor political decisions
A lot of times I wish I lived in a country where political decisions did not have such a direct impact on the economy. This is because, often, political decisions have an inverse effect on the country’s economy – the electorate is easily impressed, and too easily satisfied.
I wish politicians started with the simple things. Water. Food. Education. Garbage (for cities) before building us subways and what not.— Gatwiri (@RookieKE) September 25, 2016
I also wish the electorate wasn't so easily impressed by fluff.— Gatwiri (@RookieKE) September 25, 2016
Your leaders take loans (which you will repay), half of which they steal, then use the rest to build you a road. And you cheer for them.— Gatwiri (@RookieKE) September 25, 2016
The other day, the president assented the interest rates bill, a move that excited a lot of people, especially those of us who have been paying 20+% in interest to banks over the last few years. It is an election year, people have to be made happy.
The bigger question here is, what does this mean for our entrepreneurs?
Getting capital was already hard enough. Many Kenyan businesses are/were funded by unsecured personal loans, where one employed partner borrows and funds the business. Some banks were SME-friendly, but because of the risk profile, their rates were high – which entrepreneurs did not really mind, expensive credit is better than no credit.
This morning, someone asked me how he will fund his business, now that his bank has cancelled a friendly invoice discounting facility they have had in place for years. Lending to risky businesses is no longer worth it. Mr President, what happens now? Is your GES Summit speech still valid?
We will not entrepreneur ourselves out of poor social services
On this one, education comes to mind. Over the last decade or so, we have seen our education system deteriorate. First, it was primary schools, with the introduction of Free Primary Education (FPE) without requisite infrastructure investment, then as these FPE babies made it to high school, the deterioration extended there, and now we see it in our public universities.
My generation, which largely attended public primary and high schools, works overtime to ensure that our children do not have to attend public schools which are funded by our taxes.
While we have seen entrepreneurs move quickly to fill in the gaps created by this mess, it is not an efficient solution. Private school is super expensive, is not value for money, and really is a waste of funds considering that we are already funding public schools.
The same has happened in the health sector and security too.
What entrepreneurial solutions to social problems lead to is increased social inequality and an overall drop in the level of service provision both in the public facilities and private ones.
In conclusion, I think the government needs to pause the entrepreneurial song and return to the basics of its role as the government – service provision and creating an enabling environment for businesses to thrive. Really, that is all we ask for.
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