Africans Are Tired of Remaining Small

While comparing what foreign investors and their locals their local counterparts can achieve, Tanzania President Jakaya Kikwete argued; “Mkia wa mbuzi hufagia anapokaa, na mkia wa ng’ombe hufukuza nzi” (A goat’s tail sweeps only where it is seated while a cow’s tail chases flies). The budget speeches by East Africa’s finance ministers failed to focus on growing the tail of local enterprises.

The news that Kenya government will scrap 205 licences and simplify another set of 371 is good for business opportunity creation but stopped short of growing the goat’s tail. Take for instance the braking effect the government put on local enterprises by introducing a 20 per cent excise duty on imported motor vehicle spare parts. Poor road network costs Kenyan businesses people not only in terms of spare parts but also in terms of health and time. One would have expected the minister to argue that since it takes the government a long time to fix roads (a 6 kilometre stretch Mbagathi highway almost taking three years!) spare parts will be tax exempt to cushion Kenyans against costs that accrues to them.

A farmer, who transports cabbages from Eldoret to Nairobi, will spend close to 3 hours at the crater dominated Timboroa section of the Eldoret-Nairobi road, and by the time he reaches Nakuru, he will need to replace shock-absorbers and springs. From Nakuru, he should be ready for a diversion that will take him through gullies to Gilgil for another two hours. Such a farmer will never dream of supplying the same to Dar es Salaam, Kampala leave alone Mombasa. His cabbage business will remain small, and may never reach a “multinational cabbage supply” status. Thanks to his government short term focus by his government!

Consumers, on the other hand, will be forced to pay for shock absorbers and other repair incidentals due to bad roads driving up prices. In a matter of time, consumers will shun Eldoret cabbages due to prices all because of government’s inability to fix roads. Recall, the government’s roads department was reported to have been unable to absorb 6.3 billion shillings earmarked for road upgrades in the financial year 2006 to 2007.

Introducing excise tax to mineral water business will also make it difficult for local businesses to effectively compete with established giants. This is a sector that one would have expected the government to encourage for purposes of engaging in value addition with a specific focus on addressing clean water needs for rural communities. In the long haul, the mineral water sector would have had a huge multiplier effect given the fact that it has been a source of weaning local entrepreneurs to beverage business.

Despite the budgetary odds, it is still important for East African states to stop limiting local enterprises to “mbuzi” status and provide a road map to “ng’ombe” status. This can be addressed through reforming licensing, regulatory and tax for revenue framework. For East Africans to be competitive at a global level, they cannot afford to remain informal and micro-enterprisers because of fear of government regulators and their policies. Such enterprises ought to be encouraged to link up with established businesses for purposes of strengthening their business muscle, and get exposed to international standards of operation.

To grow business opportunities, the government policy makers ought to also focus on what leads to inefficient expenditure of public funds. A review of procurement procedure ought to be put in place to make it easier for those charged with the responsibility of delivering public goods to do so in a timely fashion. East African business people, on the other hand, should not limit their vision to village markets. We have 100 million strong-market waiting out there. Let us grow the tail!

This article first appeared in Business Daily, a publication of Nation Media House


By James Shikwati
Director, Inter Region Economic Network


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