Act swiftly to reverse economic slowdown

Friday, October 18th, 2019 08:00 |
Money. Photo/File

On Wednesday, the Institute of Human Resource Management warned that Kenya could be staring at an economic crisis fuelled by the ongoing and looming lay-offs in many companies. The institute also intimated that the job losses, along with reduced jobs creation and spiralling youth unemployment would lead to increased crime and suicide cases.

The declaration of redundancies in Small and Medium Enterprises(SMEs) as well as multi-nationals, some of which have relocated to other countries, spells doom on the socio-economic fronts. The loss of income by individuals has a ripple effect on families, communities and may contribute directly to cases of depression and hopelessness.

Coming against the backdrop of a slowdown in agriculture, manufacturing and transport sectors, this is hardly good news. It is ominous.

Indeed, the International Monetary Fund(IMF) slashed Kenya’s projected economic growth to 5.6 per cent from the 5.8 per cent it predicted in April. It is, therefore, prudent to look at factors that have brought us to where we are. 

The ease of doing business is a case in point, and remains a sore point in discussing the way forward.

Efforts to ensure potential investors get most of their approvals and licences in a one-stop-shop have not borne much fruit and remains lip service at best.

But perhaps, the elephant in the room is the sad fact that we peg all our hopes on debt, rainfall and corruption. The graft bit is especially insidious and eats at our resources like a sort of cancer, given that about a third of the country’s budget is lost to corruption.

The debt aspect is a debilitating narrative, made worse by Parliament when it recently enacted laws to raise our debt ceiling. The result is that the country is borrowing to help pay debts. It’s a vicious cycle. 

To add to this morass, our dependence on rain-fed agriculture has not helped matters, with mega projects such as Galana Kulalu gobbling  billion of shillings with nothing to show, years after they were touted as the answer to food security.

County authorities, on their part, must create an enabling atmosphere for setting up small businesses. The requirement that one has to have numerous licences to set up shop is  anti-business and discourages investment.

We must start to loosen the straightjacket that our county governments have become in terms of assisting potential investors to do businesses.

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