Opinion / Commentaries
Wednesday, 10 May 2017 09:41 EATceo@kam.co.ke
What does it mean to have a country whose citizens are happy? According to the World Happiness Report released in March this year, "happiness is considered to be the proper measure of social progress and the goal of public policy." The kind of happiness referred to here is the idea of existing in a comfortable and progressive environment that allows individuals to prosper becoming productive citizens, who positively contribute to the economy of their nations.
There are different factors that were used to measure levels of happiness these being Income, Freedom, Generosity, Good Governance, Health and Caring. What stood out in the findings is that work greatly affects happiness both in terms of unemployment and even more so, the quality of work available. Hence jobs, and not just jobs, but productive and sustainable jobs, are fundamental in order to establish a stable and prosperous society.
Our goal to reduce poverty as a nation, and achieve economic sustainability must be driven by finding the best way to institute equitable distribution of resources. The most natural way to do this is by increasing the purchasing power for a majority of the population who are gradually finding it difficult to afford basic necessities in this country. Jokes about the most essential commodities for day-to-day survival becoming precious resources overnight, punctuate our daily conversations and memes on microblogs. However beyond the jest, there is indeed a very real and present issue that if not addressed threatens the future of our country.
Certainly, targeting the breadbasket in this year’s budget proposal was akin to the proverbial light at the end of the tunnel. However, in order for there to be a long-lasting impact we need to concentrate on lowering the overall cost of living, which in turn enhances our social structures’ ability to cater for our growing population.
According to the World Bank, at present, Kenya is creating only 75,000 formal jobs in a year and 80 per cent of currently existing jobs are in the less productive informal sector. Just last week, the UN’s Human Development Index was released showing that Kenya was the worst hit by unemployment in East Africa. With 39.1 percent of the working age unemployed, we trailed behind other countries in the region including Ethiopia which was at 21.6 per cent!
Why is this the case? Because we have not been as keen as we ought to be in promoting labour-intensive industries which are a guaranteed solution for job creation. Some of these industries especially in the manufacturing sector have closed shop and moved to other countries due to various reasons including an unpredictable regulatory environment, multiple taxation, cost of production, the lack of required skills, cost of labour, cost of energy and cost of credit. In some cases these industries have exported jobs, preferring to run their major operations in neighbouring countries such as Ethiopia and Egypt, importing their final products for sale here.
When this happens, other local industries shy from expanding within our borders, which is a warning sign discouraging investors interested in opening up businesses here. Gradually, we erode our own chances of realizing vision 2030 because without these expansions and investments, it is not possible to provide and grow jobs. Productive jobs ensure inclusivity they provide security by guaranteeing that a lot more people, especially in the youth bracket, are able obtain essential services such as good health care, good education and basic commodities.
Lesotho and Ethiopia are great examples of how investing in these industries has led to immense job creation and increased GDP for their countries. Lesotho invested in its apparel industry through creation of industrial zones which offered incentives along with simplified regulations to increase foreign investment, thereby building its local capacity for apparel production. To this day, according to the Mckinsey Global Institute, this sector remains the largest job creator, employing up to 40,000 people boosting the country’s overall GDP.
Ethiopia, recognizing the potential of labour-intensive sectors for its economy has built large industrial eco-parks that are built ready for ‘plug and play’. They are less costly for investors and offer other incentives among them, zero taxation on exports. The impact of this investment is that the manufacturing sector in Ethiopia continues to grow at 11 per cent annually whilst in Kenya we recorded a growth of only 3.5 per cent last year.
What growing jobs does for an economy, is that it increases the number of people earning decent wages. Meaning more people are able, by and large to afford to cater for their basic amenities and their purchasing power is enhanced. This then increases the demand for goods that can be produced locally, consequently spurring the growth of local industries.
When industries grow and expand, they are able to hire and train more people, equipping them to perform efficiently benefiting both themselves and the companies. This growth will eventually attract investors who will continue the cycle of providing productive and sustainable jobs.
In the end, these increased revenue streams for our country will give us the opportunity to invest more in the social amenities that guarantee happiness and socio-economic stability.
The writer is the CEO of Kenya Association of Manufacturers and the UN Global Compact Network Representative for Kenya.