As I scanned through social media on New Year’s Eve, Kenyans expressed their expectations of 2022. Businesses across the board, from MSMEs to big corporates, also have expectations of the new year.
Being in the middle of a pandemic and with the general election seven months away, the expectations of the business community are not like last year’s.
Business activity tends to decline during electioneering years—2012 and 2017 are the only years in the past decade where Kenya’s GDP grew by less than five per cent.
Both local and foreign investments plummet for the fear of instability. Kenyans tend to spend less than they would in other years as they fear they might need the money when political violence breaks out. Resultantly, businesses downsize expecting low demand and the monster of unemployment burgeons.
Kenya’s economy cannot battle two beasts at a go: Political violence and Covid-19. The business community expects the political class to inspire confidence in the economy by shaming and castigating all forms of political violence, be it rhetoric or physical.
More importantly, they should walk the talk. The year 2021 closed on a sad note as we saw members of the National Assembly resort to violence as a means of expressing and solving their differences. As the political drumbeats rise to a crescendo, how is such a show by the political class going to inspire confidence of a peaceful electioneering year?
A constant and prominent call of the business community in 2021 was the cost of doing business, particularly in the manufacturing sector. Having faced the introduction of regressive taxes like the minimum tax (which thanks to the Judiciary was thrown out), adjustment of specific excise duty rates for inflation and an all-time high fuel price, businesses look forward to some breathing time in 2022.
We expect duplicate levies and cess by county governments that have been a thorn in the flesh of businesses doing cross county trade to be scrapped. Invisible costs can at times exceed the visible ones—the cost of being harassed by county askaris, extortion by organised gangs and even the police make doing business in Kenya a costly venture.
At a macro level, we end up with a ballooning trade deficit as locally produced goods cannot keep up with cheap imports, and the cycle of exporting jobs continues.
In August 2021, the Ministry of Trade secured an order for 11 tonnes of Kenyan coffee from Korea and kicked off engagements to reduce or scrap the eight per cent tax charged on the beverage. This will be critical to the price competitiveness of our coffee, and industry whose footprint has been reducing.
The business community looks forward to more similar initiatives in 2022 to promote trade. Since 2000, Kenyans have utilised the Africa Growth Opportunities Act in exporting textile and nuts among other products to the US duty free.
The AGOA facility, which was renewed by President Barack Obama in 2015, is set to expire in 2025, just two years away. We expect that the first agenda for Meg Whitman, the nominated US ambassador to Kenya, together with Katherine Tai, US Trade Representative, will be resuming negotiations for the US-Kenya free trade agreement.
This will serve as an alternative for the soon to expire AGOA, which accounts for more than 70 per cent of Kenya’s exports to the US and employs more than 52,000 Kenyans.
Various laws and regulations have in the recent past been put to a stop by the Judiciary on the basis of public participation. As the National Assembly and county assemblies exercise their mandate of making and amending laws, the business community seeks to be effectively included in the process as it will have a direct impact on our affairs and that of the public in general. We look forward to meaningful and impactful public participation and not tick box exercises.
As we seek to stabilise the shilling, the various agencies tasked with marketing Kenyan exports globally should take it a notch higher in 2022. Aside from tea, coffee and tourism, there exists other products and services that could be exported to the rest of the world.
Kenya takes pride in the quality of its human resource thus it should be advertised as a destination for business process outsourcing. The Philippines and India have utilised BPO to tackle unemployment.
We expect that as aspirants go out to seek political offices, their manifestos, right from the members of county assemblies to the president, should tell us how they seek to better the business environment and economy at large.
They should tell us how they intend to lower the cost of production, increase exports and ease the process of starting a business, just to mention but a few. I also call upon members of the business community all across the country to seek elective seats to champion business-friendly policies.
I hope and pray that all our different expectations at personal, family, organisation and national levels are met for the better. Happy New Year!
1st vice president, Kenya National Chamber of Commerce & Industry, and chairman, Reale Group of Hospitals and Clinics. [email protected]
