[kictanet] [strategic inefficiency is what creates a large number jobs] Jobs fall to 6 year low despite GDP "boom".

Fri Apr 26 16:47:00 EAT 2019

Dear listers,
In order to create jobs, the government should move away from policies that focus on increasing efficiency to those that are strategically inefficient.
Examples: 
1. SMEs, e. g. cottage industries, are inefficient - compared to larger factories, but they can create exponentially more jobs with less tax breaks. Most SMEs also spend all their revenues in Kenya, while promoting other dependent MSMEs.. unlike large corporations which tend to move funds abroad for different reasons (tax, asset protection, hedging, dividends etc).
2. We always see donors (especially, I believe, WB & IMF if I recall correctly) always pushing govt to redirect expenditure from recurrent/wages to "development"/infrastructure (clearly in their own interest as assets can be securitized for their own peace of mind, and more debt can be incurred in dev projects). So they push developing countries to reduce manpower in critical strategic sectors of the economy (less teachers, doctors etc) or to pay below-market wages. 
What is the impact of such financial efficiency measures? Do they not care that the employees they keep asking to be retrenched are real people with families? Do they not care that manpower reduction means our children get the worst teacher:pupil or doctor:patient or police:civillian ratios?
Such recommendations lead to massive hidden costs downstream that cannot be attributed (e.g. low quality education, poor healthcare, increased insecurity due to overloaded+underpaid workers). It just looks like we have endless problems of incompetence but it is not by accident... we follow "weaponised advice", designed to keeps us poor.
Efficiency efforts should be limited to enabling high impact service delivery (optimized processes) not financial efficiency.
Government should find ways/tactical excuses to ignore callous and unethical requests/pressures for cold blooded fiscal efficiency.
Public sector Performance Contract targets need to be linked to a basket of grassroots metrics that reflect the general quality of life for the ordinary population (besides GDP, Inflation, NSE Index & exchange rate). This can be presented in dashboard format on eCitizen so that wanjiku can see what is happening, hold officials to account for not delivering and be motivated to support such initiatives (but the data must be *real* to avoid risk of future backlash).
Our "missing middle" problem (i.e. a tiny middleclass) needs to be addressdd. It exists because government incentives for business have focused mainly on Micro enterprises which are too inefficient to be sustainable, and large corporations that are too efficient to fill the jobs gap (and too demanding - always asking for endless concessions just to maintain status quo).
If you track current incentives given to large corporations and account for all outflows and hidden costs (many of these corporations are the architects of grand corruption in the country) - you will see a MASSIVE NET LOSS / WEALTH EXTRACTION directly attributable to corporate activities (e.g. encouraging harphazard spending, lobbying for bad laws or poor incentives).. despite the appearance of "gains" on simplistic paper reports that ignore the full impact.
A thriving middle class (people who are not rich and not poor - with ability to buy a car, spend regularly on mid-level leisure and even save for luxury spending) is what ends poverty and drives a strong economy. 
Small and Medium-sized Enterprises SME are the key to a thriving middle class and rapid, large scale jobs creation. They tend to lean towards formality, will often have more educated founders, are inefficient because of scale - but not overly so as to be unsustainable like Micro enterprises, and a few will have potential to grow into mega corporations. 
De-risked MSEs are what attracts high quality FDI in the form of venture capital. So rather than pitch tax breaks to global investors, the government should pitch de-risked high potential small enterprises (the way Israel and some EU countries are doing) whose business model has been proven in order to attract capital to scale up the businesses.
The reality of Tax incentives to big corporations is that they only cannibalize the treasury - and these same corporations will do everything they can to minimize local expenditure (even furniture is imported yet we have skilled carpenters), and extract wealth in all manner of ways (e.g. transfer pricing). 
Most jobs offered by large factories are low level, while skilled jobs (r&d, conceptualization, design, development) will be outsourced with the (false) excuse that Kenyans are not competent. In reality they just want to prevent HIGH VALUE KNOWLEDGE TRANSFER so that locals don't build indigenous alternatives.
I know some of the things I write are not supposed to be said because it will spoil some lucrative plunder parties.. but I alsonknow many of you know what I am saying is TRUE because you have seen it being done, heard about it or (God forbid) participated in it .
This habit of taming monsters by feeding them with our kids is becoming too much and has to be called out for what it is. 
The youth are our children. It is our duty to create an enabling ecosystem framework that attracts opportunities and truly rewards them for innovation. 
We need a Kenyan Steve Jobs or Bill Gates who own their own companies - rather than have them and their ideas gobbled up by monopolistic dinosaur corporations that want to suppress their enterpreneurial dreams supressed in order to delay, the next wave of disruptive innovations. We need hundreds of winning case studies - not tens of mostly foreign owned startups (not that it's a bad thing to have foreign ownership, the key thing is that, given our history of suppressed esteem, our youth desperately need role models they can relate to so that they can start BELIEVING in themselves).
We can't just tell youth to be job creators.. that's like telling a starving person to go find food. If they knew how - or where, they would not be starving. 
The REAL reason we tell the youth to employ themselves - yet we have not created an enabling framework - is because they have caught us napping and we want to deflect responsibility.
"We" means anyone over 35 years old whether in privage sector or Government. Our parents didn't give us a gift to keep (the opportunities we enjoyed), they gave us a BATON to pass on in a long term RELAY RACE. 
Did you drop your baton (I did too)? Pick it up. Ignore the naysayers. Start running.
Link:
https://www.businessdailyafrica.com/news/Formal-jobs-fall-to-6-year-low-despite-GDP-boom/539546-5088750-nra671z/index.html

Warmest regards,Patrick.
Patrick A. M. Maina[Cross-domain Innovator | Public Policy Analyst - Indigenous Innovations]
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