[kictanet] Day 4 of 10- BPO Discussions, Govt Subsidies

Fri Jun 5 16:00:37 EAT 2009

When talking about incentives, I feel a little jittery. Why? Incentive
is synonymous with boosting an existing idea, business to realize
goals and objectives set within a certain time frame.  ￻An idea that
has no feasibility studies, cannot receive an incentive.  Perhaps for
us to determine whether BPO is worth an incentive, would be stats on
BPOs in Kenya and their direct benefits to Kenyans in addressing
social issues such as health etc. Then, if the stats give a gloomy
picture, especially on the end result, it becomes easier to give
incentives to those with a direct benefit to mwananchi.

On 05/06/2009, muriuki mureithi <mureithi at summitstrategies.co.ke> wrote:
> Thanks Prof
> This is the country I have in mind based on its sterling performance in bpo
>
> Our market entry strategy is so internationally focused that we forget the
> local market which should provide the foundation. International off-shoring
> is the high end in the bpo evolution model. Most of the incentives being
> discussed focus on international market while we have yet to cut our teeth
> with the local market. We will need to develop an evolution model   then
> target whatever incentive necessary to our level of development in that
> model, for example, in-shoring need no incentives. It is part of us
> therefore national image etc doesn't count. Question - what incentive did
> bpo need to take the safaricom business?
>
> Cheers
> MM
>
> -----Original Message-----
> From: Prof. Waema [mailto:waema at uonbi.ac.ke]
> Sent: 05 June 2009 12:20
> To: mureithi at summitstrategies.co.ke
> Cc: 'KICTAnet ICT Policy Discussions'
> Subject: Re: [kictanet] Day 4 of 10- BPO Discussions, Govt Subsidies
>
> MM,
>
> I like your point. We should have a very strong basis for the incentive
> scheme that we create for BPOs. Mauritius abolished their incentives on
> the basis that the country did not benefit significantly from them. This
> did not stop the inflow of investment. The question is, how critical are
> incentives to attractiveness as a BPO destination? My humble submission
> is that attractiveness is a balanced of many factors and it should not
> be surprising that one can be attractive even without "incentives" as
> most people understand them. tm
>
> On Fri, 2009-06-05 at 09:34 +0300, muriuki mureithi wrote:
>> Hi Walu
>>
>> I agree that incentives for a young industry is necessary we need to think
>> through the basis that guides the incentives
>>
>> Today's discussion begs the questions - why do the bpos need an incentive
> in
>> the first place? Does the industry have barriers that ordinary business
>> strategies cannot overcome and therefore need a push? What is the boundary
>> between baby-sitting the industry and therefore weakening it and incentive
>> framework for growth and for how long? And if we cross-subsidise with
>> resources from other sectors, when will this sector pay back to that
> sector
>> or support other sectors to also grow? Should we incentivise the sector
>> because other countries are doing it?
>>
>> Unfortunately I do not have the answer for these questions but my view is
>> that we should be very clear on the issue of incentives.  Our framework
> for
>> incentives should not be driven by what other countries are doing and then
>> copy them but rather quantify the non-business barriers to bpo business
> and
>> then provide resources to   overcome the challenge. These resources of
>> course go beyond fiscal measures and the effort should translate the
> benefit
>> to   whatever sector funded the incentives.
>>
>> Thus at the national level the cost/benefit of any such incentives should
>> compete favourably with other national options. The treasury will be
> looking
>> at the commitment set out in v2030 of 10000 jobs and ks10b and accept to
>> forego tax revenue in the same measure.  We start with low target and that
>> limits the   incentives the sector can get - a higher target should
>> galvanise more incentives and higher prioritisation
>> Cheers
>> MM
>>
>>
>> -----Original Message-----
>> From:
> kictanet-bounces+mureithi=summitstrategies.co.ke at lists.kictanet.or.ke
>>
> [mailto:kictanet-bounces+mureithi=summitstrategies.co.ke at lists.kictanet.or.k
>> e] On Behalf Of Walubengo J
>> Sent: 05 June 2009 07:48
>> To: mureithi at summitstrategies.co.ke
>> Cc: KICTAnet ICT Policy Discussions
>> Subject: [kictanet] Day 4 of 10- BPO Discussions, Govt Subsidies
>>
>> -Dear Listers,
>>
>> I must thank all for your insights over the last few days.  I like the
>> challenge that asked whether we are "over-regulating" an emerging market
> as
>> the "answer" to the question on if we have legal and regulatory gaps.
>> Listers are encouraged to challenge and not just answer the questions.
> Other
>> arising issues included where we want to play within the BPO Value Chain,
>> the Impact of the Political (in-)stability, the need to map our Data
>> Protection laws to those in the target markets are just but some of the
>> highlights I picked - and by all means this is NOT exhaustive as am still
>> reading through the contributions.
>>
>> But today we need to open the theme on Government subsidies. The
> Researchers
>> found the S.Africa and India had elaborate subsidy provisions for the
> sector
>> that included Tax Holidays and Exemptions, Investment Grants to BPO
>> operators, Training Subsidies, One-stop shop for Corporate Company
>> Registrations that could be 100% foreign owned, etc. The Researchers noted
>> the unique Mauritius case which had similar incentives but eventually
>> abolished most of them arguing that they were more beneficial to the
>> Operators than to the Nation.
>>
>> On the Kenyan front - other than the not so succesfull Govt Bandwidth
>> subsidies for Operators, very little in terms of incentives was available
> to
>> BPO Operators. It was noted that the BPO operators had to be within the
> EPZ
>> in order to enjoy the subsidies other EPZ corporates operates - the
> problem
>> being that most BPO operaters exist outside the EPZ area. Whats more, BPO
>> operators had to pay additional charges to be registered by the CCK
>> (Regulator) and should be at least 20% locally owned.
>>
>> Qtn6:  What incentives / subsidies should the government provide to BPO
>> operators?  What of the clause requiring 20% Local shareholding in foreign
>> companies - is it prohibitive or helpful?
>>
>> Floor is open comments.
>>
>> walu.
>> Encl: Synthesis 2:- Subsidies and Incentives
>>
>>
>>
>>
>>
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