Spur job creation locally as you export services
Last week, I encountered a group of hopeful individuals outside an employment bureau in Nairobi, animatedly discussing prospects in Qatar and Saudi Arabia.
These are part of millions of anxious youths and women considering to seek greener pastures abroad, hoping to amass wealth, as the government banks on them to repatriate foreign exchange, and safeguard the country against a weakened shilling.
With full support from concerned ministries, and while this initiative appears well-intentioned, it, however, raises concerns about the sustainability of relying on job exports while sidestepping the underlying issues that have given rise to this situation.
The government champions the job export initiative as a remedy for the escalating unemployment rates in the country. However, the lack of clarity regarding the nature of jobs and long-term viability of such a strategy raises concern.
Kenya must assess not only the immediate economic benefits but also the potential drawbacks and more importantly the root causes that have propelled the nation to contemplate such measures.
Global economic challenges, magnified by the Covid-19 pandemic, undeniably contributed to an economic downturn. While worldwide events, market turbulence, and economic volatility impact job availability directly, there is a tendency to overlook the need for Kenya to address domestic issues influencing what has become an unfavourable business climate, compelling companies to exit and explore opportunities elsewhere.
The ease of doing business in Kenya remains a persistent concern, with several companies closing shop as others relocate. That is why the Ministry of Trade, responsible for both local and diaspora affairs, must take measures to enhance Kenya’s appeal to investors. It will involve creating an environment conducive to business growth, attracting foreign direct investment, and promoting the expansion of existing companies to generate more employment opportunities for Kenyans. Reflecting on the success during President Kibaki’s tenure, whereby instead of exiting, it is the educated diaspora that came back to help achieve development goals and global competitiveness.
It points to the need to redirect attention to local opportunities, Kibaki intentionally helped restore confidence in the Kenyan economy but also fostered a sense of freedom crucial for the creativity and economic growth. With his group of technocrats, who played a pivotal role in formulating the innovative low-interest rates regime that transformed Kenya, banks begged individuals to take loans, ushering in an era where small businesses became the drivers of the economy, providing gainful employment to millions.
Why is relying on Kenyans working abroad while hindering industry and trade growth in the country an unsustainable strategy? The prevailing business climate in Kenya is marked by increasing taxes, high interest rates, bureaucratic hurdles, and the devaluation of the shilling. These factors contribute to a rising cost of doing business, compelling many companies to cut costs and unfortunately, lay off.
Despite the Medium Term Revenue Strategy signalling a bullish push for taxes, the justification for this during a period of high living costs and subdued economic activity is to say the least questionable.
The ongoing tax reforms have failed to generate sufficient revenues to deter borrowing, leading to increased reliance on external financing. This trend poses challenges for employers, particularly manufacturers who significantly contribute to employing Kenyans directly and indirectly through their value chains.
To address this and stimulate local job creation, the government must consider designing a tax system aligned with economic growth, promoting investment, productivity, and labour utilisation.
A discourse on a well-defined National Tax Policy ensuring predictability and coherence in the tax regime is required.
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