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

Fri Apr 26 19:03:28 EAT 2019

Dear Patrick,

Thank you for this.

As someone in the "cottage industry" of film in Kenya, I agree with many of
the points you have put across here.

"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)."

All one has to do is look at the credits at the end of films, even low
budget ones. The potential of the film industry to create employment is big
and is yet to be fully explored in Kenya.

"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."

There are a number of relatively small film production companies in Kenya
which have been churning out good content despite lack of adequate
resources. If these production companies could be "de-risked', global
investors will be more likely to invest in them. Citing the amazing example
of South Korea, government has to take an active role in supporting the
creative economy. We are in the Knowledge Information age. I think it makes
sense to invest in the creative economy.

"Government should find ways/tactical excuses to ignore callous and
unethical requests/pressures for cold blooded fiscal efficiency."
I won't say much on this. I'll just say two words: Film licenses.

"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 ."
These are the challenges that many Kenyan filmmakers go through.

"The youth are our children. It is our duty to create an enabling ecosystem
framework that attracts opportunities and truly rewards them for
innovation."
Yes, that rewards them for innovation, not penalizing them. I am still not
over what someone said at a recent film market in Nairobi. That if one is
caught filming without a license, they shall be arrested.

Surely, there must be a better way to both encourage innovation while still
keeping order?

I remain disillusioned,
Mildred Achoch.

Check out the Rock 'n' roll film festival, Kenya TV Channel!
http://kenyarockfilmfestivaljournal.blogspot.com

On Fri, Apr 26, 2019 at 4:49 PM Patrick A. M. Maina via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> 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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