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November 20, 2018

Counties’ Obsession With Foreign Investors Wrong

Soon as Machakos governor Alfred Mutua successfully carried out an investor conference showcasing business opportunities in his county an all-too familiar incident took place in Nairobi, serving to remind us why, the national government needs to define some terms and issue easy-to-read booklets to all County government officials. Along Tom Mboya Street, just this week, news came in that at about 9PM, a hawker was shot dead by a Nairobi County askari as they attempted to evict hawkers off the streets.

Now this has become a running theme in the City as soon as dusk sets in. City askaris are known more for clubbing and chasing down hawkers than for nabbing vandals who steal side-mirrors and wheel caps. Occasionally, they engage in “sting” operations to clean the streets of twilight girls. I’m not sure between they, and the girls, who Nairobians would vote to see taken off the streets.

The trend has continued even as the defunct City Council has transitioned into the Nairobi County government. In true reminiscence of Henry Barlow’s “Building the Nation”, as his askaris wage these running battles against hawkers, Nairobi governor Evans Kidero has been doing his part; he has been meeting potential investors. In the confines of the Churchill Ballroom at the Sarova Stanley Hotel, Kidero was last month wooing investors to Nairobi with the promise of free land for setting up of factories and other businesses that create employment. No such luck for a hawker attempting to lay his meager wares on a sack on one of Nairobi’s streets.

A student of Financial Management could be excused for being confused. For, who is an investor? Wikipedia tells us an investor is a person who allocates capital with the expectation of a financial return. On the other hand, a hawker is a vendor of merchandise that can be easily transported.

The last I checked, to acquire this merchandise, the hawker has to dig into his pockets to purchase the merchandise which he then expects to sell. That sounds to me like investment. The government of Kenya spends a lot of money on international trade fairs, road shows and conferences, all ostensibly geared to attract “investors” to the country. It is high time we asked, who is an investor?

The other day, in Kikuyu Town, several businesses were hurriedly shut down, as council askaris descended arresting anyone manning them allegedly for failing to renew their licenses. Never mind that when last year ended, and with elections looming, things were so uncertain that these same councils chose not to renew licenses until they grasped the full meaning of the new county dispensation. So for a day, or more, many businesses remained closed while others had to spend a lot of money to bail out arrested attendants and pay fines on top of the standard license renewal fees.

As they did this, Governor William Kabogo of Kiambu, was talking of building a city not a town, combining the diverse resources of Juja, Thika, Kikuyu, Kiambu, Ruiru and Limuru towns. "I will be inviting investors to come and partner with us in real estate so that we can expand our towns into cities. This will create jobs that we promised the youth so that they have beginning," said Kabogo.

Again, governor we must, ask, what is the form and description of these investors? Do they come in better clothes or newer currency notes than the ones being harassed on their businesses and who have already created jobs? The Kenya Investment Authority (KenInvest) mandated through an Act of Parliament (Investment Promotion Act No. 6 of 2004) with the main objective of promoting investments in Kenya .

No talk of how far its domestic efforts have gone, but KenInvest has in the past conducted investment conferences in Boston, USA and London, UK.

But by all accounts, those have done little to attract investments. In fact, a diaspora bond that was to be floated at one time did not meet the success that was envisaged. Rather, it is Kenyans here at home, who have continued to finance this government by buying infrastructure and treasury bonds. Kenyans abroad however, continue to send dollars home to their relatives for investment in things like real estate, transport, export/import and so on. Ventures that their relatives and friends advise them are safe.

This tells you, that locals are the best gauge for the investment climate in the country or in a specific sector. If they believe real estate is the way to go, they will influence billions from the diaspora to flow into this sector. So when council officials, repeatedly harass, beat and injure innocent investors, small as they may be, using their shields as a license to extort and intimidate businessmen, exactly how do they expect efforts to woo those investors abroad to succeed?

The World Bank which releases a sub-national Doing Business Index for Kenya covering the main towns, may now issue a 47-County report showing the ease of doing business in each of these counties. Perhaps it is time for government to educate County officials on the meaning of the word investor as this report when it comes out is likely to discourage people from investing in certain counties based on their history of harassing businessmen. Before they complain about their ranking, Counties must be able to answer the question, Who is an investor? Anyone, who sacrifices their shilling, to try and get a fledgling venture going in your county is an investor – Treat him as such.

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