Tag: Economy

Report: Kenyans Optimistic That 2018 Will Be A Better Year, Majority Looking To Venture Into Businesses Than Being Employed

Majority of Kenyans (64%) are optimistic that 2018 will be a better year than 2017. However, there is a significant number of Kenyans (17%) who are not sure about what the year holds in store and are adopting ‘a wait and see’ attitude.

Another notable number (14%) feel that this year will be worse than the just ended 2017. These revelations are according to the New Year Survey conducted by TIFA Research between the 12^th and 16^th December 2017.

Kenyans are hopeful that the start of 2018 will be a game-changer, especially on the divisive nature of Kenyan politics and hopefully the year will signal a return to normalcy for the country. Kenyans are also hoping that politicians will give them a break for the next 5 years so as to allow the country to focus on economic development that will spur job creation and the lowering of the standards of living as the country takes a path to recovery.

Nyanza, Western and North Eastern Most Pessimistic about 2018

The survey also reveals that the optimism levels of Kenyans vary by geographical regions. In terms of those who feel that 2018 will be better than 2017, residents of the Central region (81%) are the most optimistic followed by Eastern (73%) and Rift Valley regions (69%). The least optimistic regions include Nyanza (49%), Western (49%) and North Eastern (42%).

Jubilee Supporters are more optimistic than NASA Supporters

More than 75% of Jubilee supporters feel that 2018 will be better than 2017. On the contrary not more that 50% of NASA Supports feel that 2018 will be better than 2017.

Better employment prospects and political environment expected

Although the economy had slowed down during the election period at the tail end of last year, majority of Kenyans expect a turnaround in the economy in 2018. In addition, majority of Kenyans expect to see better employment prospects, better political environment, a reduction in the cost of living and better security. This signifies that Kenyans see the link between better economic performance and improved employment prospects and reduced cost of living.

High Optimism Towards Education and Public Health Sectors

According to the TIFA New Year Survey, 70% and 69% of Kenyans expects primary/secondary and higher education respectively to improve in 2018. These high expectations are recorded against the backdrop of a number of reforms in the education sector. The changes in this sector include the expected introduction of a new curriculum, new text book policy and stringent measures that have secured the integrity of national examinations. In the higher education sector, public university lecturers resumed work in December 2017 after they signed a Collective Bargaining Agreement (CBA) with the government. This signals the end of a protracted battle which had interrupted learning in higher institutions.

In March 2017, the doctors in Kenya ended their 100-day strike after signing a collective bargaining agreement with the government. However, to the detriment of Kenyans, the nurses’ strike began less than three months after the doctors’ strike came to an end and lasted for 151 days. These strikes exerted a lot of pressure on the public health system, making many Kenyans to suffer. With both doctors and nurses now back to work, it is not surprising that 67% of Kenyans feel that the public health sector will improve in 2018.

Main Focus of 2018: Entrepreneurism, Job Hunting and Advancement of Education

Looking at the goals for 2018, a third of the total sample said that they intend to set up a business with 32% mentions. The second highest goal is to get a new job by 24% of the sample. Advancing education is a goal among 22% of the total sample while additional academic qualifications is considered a strategy of enhancing prospects for promotion and subsequently increase in one’s remuneration. Also mentioned were goals such as getting work-life balance, constructing of a house, getting married, upgrading/investing in farming. Purchase of a car and land generated only 3% mentions.

Find the report below. Tap and scroll to read.

[pdf-embedder url=”https://cms.kenyainsights.com/wp-content/uploads/2018/01/New-Year-Poll_Kenyans-Optimistic-About-2018_TIFA-Research_Final.pdf”]

January 3, 2018
World Bank Says Kenya’s Economic Growth For The Year, Slowest In Five Years, And What This Mean For The 2018 Entrepreneurs

By Felix Onyango

Kenya has made a couple of noticeable strides on the path of ease of doing business. We have to appreciate the steps made so far but still advocate for continuous spontaneous changes that will ensure our full entrepreneurship productivity and potentials.

According to World Bank latest annual ratings, Kenya moved 12 places from position 92 in 2016 among 190 economies as far as ease of doing business pertains. All these are based on regulatory environment, protection of property rights. Efforts to make starting a business easier is notable by the merger of procedures necessary for startups and formal business operation.

Huduma Centre services have made this even convenient as well as online platforms set aside by various county governments and other authorities. In the previous financial year, Nairobi County, for example, did consolidate a total of 5 licenses to one permit such as single business permit, health certificate, advertising signage, food hygiene to fire clearance certificate, all these are applied by entrepreneurs online with digital payment as an option as well. With these, it’s true that investors have been relieved from previous burden and bureaucracies one had to undergo in order to kick-start a business.

With devolution taking deeper root in the country, every County governments are in the race of attracting it set of investors both foreign and local to boost its own economic agenda. More regulations have been given emphasis to attract the marginalized groups; youths, women, disabled through tendering and contracts i.e Access to Government Procurement Opportunities (AGPO) among other loans and grants provided to boost these group.This has as well come up with its own set of challenges from delayed or close to zero payment even after delivery of tenders,non-compliance to contracts, corruption et al which are all manageable with proper control structure in place.

Where are we? Are we heading somewhere? What can we learn?… Insights on Kenya’s external business environment

There have been cycles of economic growth as well as contraction due to several inevitable factors ranging from events, news, consumer preference, the general state of health of the market, these must always be taken into consideration by the investor who needs to start or spike growth of the business. In Kenya, let’s take quick look at several external environmental factors that must be contemplated by an entrepreneur ;

Political environment

Kenya economy is intertwined with the political aspect, impact on one will definitely have a consequence on another.It has been a long political season accompanied by political instability in several regions and towns thus derailing investment rates throwing most of the entrepreneurs into a ‘wait and see’ situation in order to explore their next step.With political rhetorics ‘slowly cooling down’ and political class showing capabilities of settling down issues at hand, entrepreneurs can only be optimistic about a better time ahead.

Business only thrives where there is sizeable peace and tranquility, security and a condusive environment full of a corporation with the political players, policies, and regulations that seeks to promote SMEs, manufacturing sector, processing, service, agricultural sectors for the good of the economy.

Interest rate

High-interest rates discourage customers /entrepreneurs from borrowing to expedite their entrepreneurial interests, on the other hand, the lower the interest rate the more the stimulation of industries growth, innovation, and more jobs.

The bill capping interest rate has been effected to law,this ensures maximum interest rate charged by commercial banks is only 4% above the CBK rate, the impact of this law is slowly being felt among the banking sector with several experiencing drops in ‘supernormal’ profits but critics including economists, banking sector have always stood their ground against the bill with IMF also chipping in to offer advice on the adverse effect in the long-run in the economic growth.

But the intention of those who pushed the bill was to support the growth of SMEs and entrepreneurs to access affordable loans and attract even those who were afraid of defaulting due to the high-interest rate. The challenge for many towards this remains to be collateral required for the loan acquisition. The banking sector have their own school of thought and continues to have own mitigation measures to curb the impact of the new law.

Prevailing currency strength

The value of Kenyan currency compared to foreign currency is an important business aspect for any entrepreneur, the strength of the Kenyan currency to US dollar is at least currently fairly stable despite the long political season but with time indication are pointing towards its growth.Whenever it strengthen, business in the sphere of international trade are able to be even more competitive in pricing, loss mitigation, and spike growth.

Economic status Kenya is indisputably the leading economy in East and Central Africa with the unique distinction of diversification and continuous advancement. According to the World Bank’s Kenya Economic update 2017, the country’s GDP projection is to decelerate to 5.5% which is 0.5 drift from 2016 forecast due to prolonged drought, food insecurity, crop failures and livestock death alluding to the fact that agriculture is the country’s economic backbone. Amidst all these, prudent macroeconomic policies are continuously considered to unlock the country’s full productive capacity; better credit access, agricultural productivity as well as optimization of sprouting new economic growth energies especially real estate which is increasingly taking center stage even in remote and previously sleeping regions, towns and cities.

Social Environment

Going by the latest country’s census, Kenya boasts of a population of about 44 million with 2.7% estimated annual growth rate.Away from the brief stats, it’s important to note that there exists continuous blossoming consumer demand particularly for high-end products and services attributed to uprising middle-class population. The country is strategically located making it a market hub in East and Central Africa.

It’s wise also to note here current existence of trade beneficial agreement and arrangement that the country has definitely optimized such as The African Growth and Opportunities Act(AGOA) as well as Economic Partnership Agreement (EPA), all these have offered a boost towards access to the European Union and other international markets as well on a duty free access. This has contributed to the growth and offer more opportunities in textile, processing, manufacturing and service industry.

Understanding your business environment into perspective is very paramount for proper planning, analysis plus informed decision making to ensure business productivity. Through SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis you are customed to be on the track of all aspects in the business environment and to keep you ahead of competitors & offer competitive edge as well as necessary adjustments of strategies to have a reflection of the environment under which you operate your business.

Ease of doing business report ought to be reprieve and challenge to the future of entrepreneurship in the country.This has had its own share of positive changes which are to the advantage of entrepreneurs to optimize with time. More adjustments must still be made to ease further business operations and support growth in terms of policies, empowerments to at least help bridge existing gaps.

Read the full World Bank’s report on Kenya’s economic outlook below

[pdf-embedder url=”https://cms.kenyainsights.com/wp-content/uploads/2017/12/121895-WP-P162368-PUBLIC-KenyaEconomicUpdateFINAL-1.pdf” title=”121895-WP-P162368-PUBLIC-KenyaEconomicUpdateFINAL (1)”]

The writer is an entrepreneur by profession and practice also a business mentor

December 7, 2017
ASAMOH: Ideal Food Security Solutions In Sub-Sahara Africa

By Reinhard Asamoh

What solutions have the greatest potential for increasing food security? Asamoh believes critical responses to food security challenges around the world include honouring comparative advantage by growing crops well suited to local conditions, enabling open markets, supporting smallholder farmers, fostering cooperation between the public and private sectors, encouraging investment, harmonising food safety standards and reforming biofuels mandates. While focusing on long-term solutions is crucial for achieving food security, providing aid during emergency food shortages is critical as well.

Increasing production and access to food

The world will always raise the most food the most economically and in the most environmentally responsible way when farmers plant the right crops for their local climate and soils using the right technology, then trade with others for the benefit of all. If every country set a goal of food self-sufficiency, the world would have much less food. Open markets increase food security by ensuring food surpluses can reach areas of deficit. Governments need to support open markets through a fair, transparent and rules-based trading system. Trade helps create jobs, supports local economies, helps raise living standards and contributes to a more food secure global population.

To increase food security, the world needs farmers at every level of production to be successful. Providing support to smallholder farmers is essential to helping them fulfil their expanding role in feeding the hungry and fighting malnutrition. First, smallholder farmers need training in agricultural best practices and access to inputs, credit, storage and technology to increase their productivity in a sustainable way, which raises their own living standards and produces surpluses to help nourish others. Second, farmers need some form of revenue certainty. Smallholder farmers often are forced to sell at harvest when they are cash flow destitute and have limited access to real credit. Selling at depressed prices creates a cycle of discouraging further production in future years.

Farmers in developing countries need reliable markets into which to sell their crops each season and an adequate price to compensate them for their efforts and provide incentive to continue production the following year. Third, farmers need access to crop insurance and other risk management tools so they can rebound from crop failures or other growing season fluctuations. And fourth, farmers must be able to own their land and pledge it as collateral if they are expected to reinvest and raise their productivity over time.

Improvements in African agriculture will be necessary to feed the world’s growing population. Roughly 60 percent of the world’s potential cropland is in Africa, and much of that land has adequate sun, water and soil for rain-fed crop production. Despite its vast potential, Africa has the lowest agricultural productivity in the world and must import much of the food and agricultural products its people need. Increasing Africa’s agricultural production – including closing the productivity gap by supporting smallholder farmers and bringing suitable lands into production – will be essential for achieving food security across Africa and around the world.

Business-ladies selling farm products in the local market

Technology advances have increased the efficiency of the global food system, giving more people access to a wider range of safe, nutritious foods at a relatively low cost. Genetic improvements, such as drought resistance, and optimisation of inputs, such as fertiliser, help farmers improve yields while reducing waste and environmental impact. Science and technology are vital to producing more safe, affordable and nutritious food in an environmentally conscious way. High-yield agriculture allows farmers to grow more food so less land needs to be converted for production. Small- and large-scale farmers using a variety of production practices will be needed to feed a growing world.

Food Security Solutions

Farmers benefit from cooperation between the public and private sectors, enabling them to grow more food sustainably and making that food accessible to others. Civil society, governments, academia and the private sector must work together toward solutions, such as training farmers in sustainable practices, helping them invest cooperatively in storage and other infrastructure, and facilitating harvest loans.

Greater investment in agriculture by the public and private sectors also is necessary to increase global food production. A boost in funding and attention in the following key areas is needed: transportation, distribution, storage and energy infrastructure; agricultural research and development; agricultural science, extension, education and the promotion of best practices; and governance around legal and business structures to encourage private sector investment.

Focusing on the role of women farmers also is critical to achieving food security. According to the Food and Agriculture Organization of the United Nations (FAO), women account for nearly half – 43 percent – of the world’s farmers, although their contribution to the agricultural labour force can be much higher – more than 60 percent in some countries. Yet women farmers face more severe constraints than men in accessing productive resources, markets and services. Closing the gender gap in agriculture would produce significant gains for society by increasing agricultural productivity, reducing poverty and hunger and promoting economic growth. Aid for agricultural development programs needs to more closely match the significant role women play in agricultural production.

Locals in Turkana taking away relief food from an NGO

Removing barriers

Ensuring the safety of food as it is produced and transported also is critical to achieving greater food security. To move food efficiently from where it is produced to where it is needed, predictable, science-based global food safety standards are necessary to manage risk, provide transparency and ensure accountability. Harmonising standards can help address the problem of food waste and correct the lapses, failures and gaps in food safety systems that prevent food from being safely consumed.

Reform of biofuels mandates also is necessary to help improve food security. Demand for biofuels has spurred investment in agriculture, but mandated use of biofuels creates inelastic demand and increased volatility in the food system. To help balance food, animal feed and biofuel uses of agricultural feedstocks, government policy needs to include waivers or other trigger mechanisms to lift biofuels mandates in times of stress, so that the market can direct short crops to those sectors where they are most needed.

Improving nutrition

Malnutrition imposes health, social and economic burdens on individuals, communities, businesses and governments. Increasing collaboration by the public, private and nonprofit sectors is needed to ensure people receive adequate nutrition. The Scaling Up Nutrition (SUN) Business Network and Global Nutrition for Growth Compact are helping focus attention and action to improve nutrition. Undernutrition increasingly co-exists with obesity, which is rising in every part of the world. Nutrition solutions are needed that improve diet and health for people across the food security spectrum, including hunger and overconsumption.

Providing emergency food aid

In cases of emergency food shortages – due to weather-related production shortfalls, natural disasters, political instability or conflict – or where markets work counter to food security for a period of time, mechanisms and programs for consumers and farmers are needed to support food security. Consumers can often be helped through income safety nets that tackle basic poverty, or more focused initiatives such as food banks and other emergency feeding programs, school feeding programs, or food voucher systems that can ensure that people have enough to eat. Farmers can be helped through crop insurance and programs that guarantee inputs for the following year. In times of dire emergency, support is needed for the World Food Programme to have flexibility in acquiring emergency food supplies.

By Reinhard Asamoh, a University of Nairobi trained Economist with interest in governance.

Twitter: @Asamoh_

This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email: [email protected]

July 8, 2016
Why the voice of Africa’s informal economy should be heard
The informal economy in Africa is big business. The International Labour Organisation (ILO) estimates that its average size as a percentage of gross domestic product in sub-Saharan Africa is 41%. This ranges from under 30% in South Africa to 60% in Nigeria, Tanzania and Zimbabwe.

It is also a huge employer. It represents about three-quarters of non-agricultural employment, and about 72% of total employment in sub-Saharan Africa. About 93% of new jobs created in Africa during that 1990s were in the informal economy.

The International Labour Office defines the informal economy as:

All economic activities by workers or economic units that are – in law or practice – not covered or sufficiently covered by formal arrangements.

Today the informal economy appears to be as important as ever to Africa and its future development. But governments, and international organisations like the World Bank and ILO, do not like the informal economy. As a result international policy has veered from supportive to antagonistic.

At times opposition to the informal economy has been violent. One example is the notorious Operation Murambatsvina (“get rid of trash”) in Zimbabwe in 2005. At best it is directed at pulling the informal economy into the formal economy.

Antagonism is driven by a range of reasons. Informal firms do not pay tax. In addition, reports abound of child labour, low wages (especially for women) and low job security as well as high incidence of HIV.

Yet, as the Swedish International Development Co-operation points out, many governments are unaware of the contribution of the informal economy, particularly the high involvement of women.

The report also suggests that it is expanding and is here to stay. And a World Bank report points to a trend of people with higher levels of education entering the informal sector as a career of choice.

A glimpse of the future

Political economist Fantu Cheru asserts that:

… a closer look at the informal sector in Africa provides a glimpse of what could be achieved if Africa’s economies and financial policies were more attuned to the continent’s everyday realities.

He sees the informal economy as being community-based, representing:

… socio-political entities, with their own rules, forms of organisation and internal hierarchies, constituting a node of resistance and defiance against state domination.

The point is that practices more closely allied with collectivist communities may be far more appropriate than “modern” management methods. These methods are based on Western principles and neoliberal economic policies. They have largely been discredited as inappropriate to African communities.

But the informal economy is largely marginalised. It has a weak voice and is rarely listened to by policymakers in government or in international organisations. When policies are made they affect a large percentage of firms, entrepreneurs, employees and communities. But it is unlikely any have been consulted.

Issues that could be given more prominence in policymaking are access to capital and the provision of relevant training. More important is what the formal economy can learn from the informal economy as a model for economic development.

Indigenous practices in a globalised world

If communities that rely on economic activity in the informal sector are indeed the repositories for indigenous management, entrepreneurial and employment practices it is little wonder they are not listened to.

Indigenous refers to practices, knowledge and values that are related to, and grow out of, local and community circumstances. These often stand in contrast to international or global practices, knowledge and values produced by universities and international corporations.

The dominant discourse is that indigenous practices are outmoded, archaic and out of tune with modernity. Yet seeing indigenous practices and those in the informal economy as frozen in time is a mistake. Even the glib packaging in management consultancy circles of concepts like “ubuntu” presents a glorified perception of indigenous knowledge being static and timeless.

As Cheru has pointed out, the informal sector may represent a resistance, an alternative to the prevailing globalised view.

Even so, it exists in the globalised world. While constantly adapting, sometimes resisting, it is never apart from globalisation. Rather than eschewing modern technology, communications, the internet and social media, Africa has been embracing it. This is happening through:
- better cellular telecommunications;
- access to cheap smartphones; and
- initiatives, not without controversy, such as Facebook’s internet.org, providing free and wider internet access.
Hence, Facebook told us in June 2014 that:

… there are 100 million people coming to Facebook every month across the African continent, with over 80% on mobile.

This includes a majority of people living in the informal economy.

These developments are providing new tools to trade, to market products and to work. They may even be changing the nature of employment. With practices and organisations still rooted in local contexts and communities, identities are changing.

In addition, social media has the potential to change things by providing greater voice and potentially better representation.

Political leaders may have to start listening to entrepreneurs, managers and staff working in the informal economy to formulate more inclusive policies that may prove more relevant to Africa’s development.

By Terence Jackson, Professor of Cross-cultural Management, Middlesex University

This article was originally published on The Conversation.

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February 18, 2016