By Phyllis Wakiaga – CEO of Kenya Association of Manufacturers and the Global Compact Network Kenya Board Chair.
In these economic times, it is becoming extremely difficult for many Kenyans to make ends meet.
Whilst an unfortunate consequence, the situation has been exacerbated by measures put in place to mitigate the spread of COVID-19, with the most recent restrictions necessitated by the surge in the number of cases in the country. We are at a worse off place compared to this time last year.
In Nairobi Metropolitan, for instance, the 8:00 pm to 4:00 am curfew has cut down the usual 24-hour services, reducing the income of many Kenyans – from Mama mbogas, matatu drivers and conductors, to kiosk owners and hoteliers. Add to this, the number of jobs lost due to cash constraints that hit many businesses, especially SMEs.
To make it worse, we are witnessing an increase in the cost of basic items, attributed to more taxes, high cost of raw materials and production costs, among others, which is further aggravating the already glim situation.
Recent media reports have highlighted that a 2kg pack of maize flour has risen above Ksh 100. Bread has gone up by between Ksh 5 – 8, not forgetting the increase in the cost of milk, fuel and electricity, among other necessities.
The most recent report on Consumer Price Indices and Inflation rates by Kenya National Bureau of Statistics (KNBS) has substantiated this situation. Housing, Water, Electricity, Gas and Other Fuels’ Index increased by 0.59% between February 2021 and March 2021, mainly attributed to the increase in prices of kerosene and electricity by 5.79% and 5.19%, respectively. The Transport Index, on the other hand, increased by 1.49%, mainly due to a rise in the price of diesel by 5.58% and petrol by 6.57%.
Understandably, the third wave of the pandemic is taking a toll on the country. However, the economy cannot stand to be closed for a long period. The only feasible way to guarantee the safe reopening of the whole economy is mass vaccination of all adults in the country. This calls for urgent mobilization of resources to realize this objective, including allowing the private sector to procure vaccines upon approval by the government, to complement public sector efforts.
At the same time, there is an urgent need for the government to, 1) increase Mwananchi’s cash flow, to support their capacity to make ends meet, 2) provide businesses – small and large – with incentives to continue operations, in turn, support the community with the much-needed jobs and 3.) provide a fiscal and regulatory environment that supports businesses to thrive, despite the pandemic, including a stimulus package to support investments at this time.
Manufacturers aspire to provide consumers with cost-efficient products, however, the current constraints in the business environment are a hindering factor. At present, the sector is at a 12.8% cost disadvantage compared to competitor countries because of the high cost of transport and logistics, county levies and charges, power and fuel energy, and delayed payments among others. Add to this, the high taxes at a time when the country is reeling from the effects of the pandemic.
As industry, we acknowledge that government revenue is essential in providing critical services to citizens, including health and education. However, sudden fiscal and taxation policy changes harm businesses and become a stumbling block to business continuity. If the government’s tax revenues are to grow in a sustainable manner, the private sector must be allowed to flourish.
Even as we navigate the pandemic, our aspirations for a Nation that can sustain itself – from producing goods for our local and export markets, creating jobs and subsequent wealth to health and education systems that offer high-quality and affordable services to all – remain at the core of our development goals. This is however possible when the government institutes policies that provide businesses and social service providers with the platform to support this.
We call upon the government to adopt a “do-no-harm” principle whilst intervening in the market, more so now, as we navigate the pandemic. This entails increasing citizens’ cash flow to ease their efforts in making meets end and providing a platform for business – small or large – to support the country’s imitative to create jobs and wealth for all. This shall enable businesses, and the economy at large, to remain sustainable amid the crisis and recover from the effects of the pandemic.