Politics heavily influence economic decisions. When this happens, as it often does, the private sector suffers, yet it is the biggest driver of economic growth. Manufacturers are always victims of policy changes.
They endure more taxes, have to shoulder increase in wages and in case of a rise in fuel and other inputs such as electricity, are expected to absorb the costs on behalf of consumers, or risk looking greedy if they raise prices.
Conventional manufacturers, the firms that produce the goods we use daily, seem to have been forgotten. Either there are no incentives for them or they are being raided to cough more in taxation or wages.
Some multinationals like Colgate Palmolive and Cadbury’s ran away. Firms operating in the Economic Processing Zones (EPZs) have grown over the past decade because of incentives, with some expanding while others increasing output and profit margins. This programme continues to attract investors, mostly foreign companies seeking tax holidays.
So where does this leave the conventional manufacturers that have endured the rough terrain of Kenya’s economy over the years. When things are tough, these firms device ways of cutting costs which, unfortunately, involves sacking employees, scaling down production or shifting to other countries. Either way, the economy loses.
It is time we refocused our priorities as an economy. A lot has been done to promote small and medium enterprises in Kenya, with the private sector and non-governmental organisations (NGOs) coming in big time.
Now we have a vibrant small and medium-sized enterprises (SMEs) boosted mostly by emerging technologies. We need to go back to our roots and juice up the traditional manufacturers – those producing sugar, tea, coffee, cooking oil, unga, rice and soap. You realise they make most of the essential commodities that run our daily lives and determine the cost of living.
Much as they appear to have stabilised, these companies still need support in terms of taxation and easing the business environment.
We can help them by making electricity cheaper, labour rules predictable and enhance the fight against corruption. The plight of manufacturers has been left to sector organisations like Kenya Association of Manufacturers, Kenya Private Sector Alliance and Federation of Kenya Employers.
But their voices are drowned by political noises and government bureaucracy. These are the firms which provide most of the private sector jobs and are among the biggest tax payers, the reason why they should be supported to thrive and multiply their businesses, in Kenya and the region. One big firm closing down would create a crisis. Now think of a number of them going away, or down! The writer is Managing Editor of Business Today (www.businesstoday.co.ke). Email: [email protected]