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September 24, 2018

Business Development Services Critical For County Progress

launch: Murang’a Governor Mwangi Wairia during the groundbreaking of the Golden Pearl Estate project on May 29.
launch: Murang’a Governor Mwangi Wairia during the groundbreaking of the Golden Pearl Estate project on May 29.

One of the main and perhaps the most important deliverable of the devolved system of government is spurring development in rural areas. 

It is recognised that counties are best served by policies and development solutions that take into account their unique environments, circumstances and even cultures.  A national policy, for instance, that addresses tea or coffee farming is only relevant to areas that grow that crop.  Devolved governance provides the framework to ensure that relevant government policies and interventions can be done simultaneously in every part of the country and is hence inclusive. 

That is why the annual Business Development Services conference held in Mombasa last week was timely and on point.  Going by the theme 'The Role of Business Development Services in Spurring Rural Development in the counties', the conference focused on how to develop market systems and value chains that work. 

It was a rare opportunity to bring together critical players in development including the private sector, funders, and policy makers in county and national government to discuss how they can work together to achieve more sustainable economic development, food security, economic empowerment and poverty reduction. 

The conference is an annual event of the BDS Donor Coordination Group with a wider membership among development partners and is steered by Micro Enterprise Support Programme Trust, a collaboration between the governments of Denmark and Kenya.

Spurring county development will require addressing the various constraints to business operations, productivity and growth. These constraints include limited information and understanding of markets, use of outdated technologies, lack of relevant business support services, poor infrastructure and unsupportive regulatory and policy frameworks.  It was for instance highlighted that while garbage collection remains a key challenge in many cities and towns, and indeed it is a service that ought to be provided by the government within their budget, there are no tax incentives to private sector players to provide this service.  The few private entities that provide this service are not only on the same national tax rates as any other private businesses, but also face additional levies and charges by county governments.  Indeed, this is an area you would expect the government to encourage the private sector with lower tax rates at the very least or better still, pay a private player to provide the service.   This is one example, but many other areas need similar attention. 

Counties that provide business development services will be at a competitive advantage that is critical to the survival and growth of local business and will attract external investments.  This may require some counties to redefine their primary role from that of tax collectors to that of service providers and development agents.  As a matter of fact, history teaches us that no economy ever taxed itself into prosperity.

To provide effective business development services will require first and foremost the careful identification of the economic activities that are critical to the development of a county.  Listing of these activities in order of their importance will also help in prioritising interventions that achieve the largest impact and will also ensure resources are utilised for the largest economic benefit. 

The second step is to identify the challenges that prevent the survival and growth of the enterprises engaged in the economic activities.  Spurring economic development means that enterprises need to thrive not just survive. Challenges may stem from lack of information, such as farmers growing crops that are not suited for the soils, or using fertilisers that do not address the nutritional deficiencies of the soils.  It may be use of low yielding seeds or lack of market access because roads are not accessible to ensure produce is taken to market on time.  It may also be lack of expertise and technology that would enable value addition and hence higher return.  The identification of challenges is most effective when both public and private sector participants join forces in multi-stakeholder initiatives that ensure joint effort. 

Finally, business development services entail providing facilitative services that address the challenges and barriers to unlock potential and ensure superior returns that spur economic development. 

For instance the growing of mangoes has been identified as a key economic activity in Malindi County. However, the level of post-harvest losses estimated at 40 per cent was identified as a challenge to this economic activity and the prosperity of the farmers.  One of the interventions made by MESPT was partnership with the local farmer’s cooperative to set up a mango processing plant to produce mango pulp used in making mango juices.  This has not only significantly reduced post- harvest losses, but also ensured mango juice is available on and off-season at affordable prices.  With a processing plant in place, further interventions could be made that can increase the productivity of the farmers such as provision of high yielding seedlings and technical support on how to take care of the mango trees. 

Needless to say, county governments that embrace business development as a priority role will build competitiveness that supports local businesses and attracts external investors. The benefits to the county in form of higher economic development, job creation and an expanded tax base will be worth the effort. 

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