Ruto's conflicting approaches on jobs and foreign exchange

President William Ruto has come out as conflicting on some of his administration's policies and pronouncements which are aimed at streamlining the country's economy.

Such has been seen on matters to do with foreign currency and unemployment where he has made several pronouncements that have had him speak from both sides of his mouth.

President Ruto has been keen to reiterate his administration's commitment to creating jobs hence the controversial 1.5 per cent basic pay housing tax now contained in the Finance Bill 2023 awaiting his signature.

His eyes are set on the tax to spur up manufacturing in the construction sector hence getting Kenyan youth jobs.

However, in the same breath, the President seeks to export the Kenyan labour force to Europe and America.

This, he said, is also to help the country with its dwindling foreign exchange reserves amid the strengthening US dollar.

Yet, President Ruto has also been on record pushing for African countries not to rely so much on the US dollar but use their own currencies through a continental intermediary bank.

"Why are we bringing dollars in the middle of our trade? This is the question we should be asking ourselves. And in the process, all our business people are stranded. Egypt cannot buy our tea, because they are looking for dollars; we cannot pay for their sugar because we are also looking for dollars," said President Ruto during the recent Africa ministerial meeting on the Africa Continental Free Trade Area (AfCFTA) Free held in Nairobi.

At the meeting, he said he is aware the Africa Exim Bank has a platform that would allow all African to countries to trade in their local currencies and leave it to the financier to settle the currency issue.

Depleting foreign currency reserves are the reason why the Ruto-led administration entered into a government-to-government deal with Saudi Arabia and the United Arab Emirates (UAE) which aimed to strengthen the shilling.

While this deal saw a reprieve on the shilling in the first few weeks, the dollar has since strengthened against the Kenyan shilling to trade at Sh150.

His administration is also pushing for win-win trade deals with overseas countries having recently concluded an Economic Partnership Agreement with the European Union (EU) with discussions ongoing to have a similar one with the United States.

These trade pacts are meant to balance the export-import transactions between Kenya and her trade partners and in the end, ensure the country makes as many foreign exchanges.

Even as the president is pushing for African nations to embrace their local currencies to save themselves the hassle of the dollar, he is on the other hand negotiating agreements with overseas countries to export skilled and unskilled workers to boost the country's remittance.

During his visit to Kakamega County, the President detailed how his administration is reforming the Ministry of Labour and Social Protection and that of Foreign and Diaspora Affairs so that the government can have bilateral agreements with many countries who have asked for workers.

He mentioned Canada, the US, and Germany as some of these markets in need of workers.

"We have one million opportunities for Kenyan youth in those countries where they can work and get US dollars," he said.

He said at the moment, the country gets Sh560 billion ($4 billion) every day from Kenyan workers abroad.

"We need another one million Kenyans to work outside this country so that we can use our labour to grow our economy and the fortunes of our young people," he said.

It is at the same venue that he mentioned how the housing levy will transform the country's economy by offering jobs to thousands of Kenyan youth.

He gave an example of Kakamega County where 10,000 units will be put up and that will need upward of 50,000 youth.

"That work starts in the factory," he said citing cement, steel, carpentry and electric firms which will employ Kenyans due to a growth in the manufacturing sector as a result of affordable housing projects.

During the May 1 Labour Day celebrations, he noted that the Kenyan worker is the most prized asset this country has.

"We have the most important resource in the Republic of Kenya that defines our country and that is the Kenyan labour force. Kenyan workers are the country's most important asset," he said.

When President Ruto met with German Chancellor Olaf Sholz in May, the issue of exporting Kenya's most important asset was on the table.

"The Chancellor and I have discussed in detail employment opportunities for professional skilled and semi-skilled Kenyans in Germany. A matter of equally great interest in meeting Germany's huge labour requirements," he said.

He added: "I have urged my good brother Chancellor Sholz to review and ease immigration laws and I am very confident they are well underway to enable Kenyans to find employment in Germany."

To this end, he said there was already an agreement to establish a technical team that will rope in his office, the Ministry of Foreign and Diaspora Affairs, and the Ministry of Labour for both countries.

It is perhaps easier to create jobs by exporting skilled and semi-skilled workers going by how much it costs to create one job in the economy, particularly in the manufacturing sector, the country's largest employer.

The Kenya Kwanza manifesto documents this saying it costs Sh1 million to create one manufacturing job in the formal economy compared to Sh120,000 to Sh240,000.

"This is not accidental -it is a consequence of the political and policy choices we make," the manifesto reads. "We have recently inaugurated a firearms factory that cost Sh4 billion and celebrated the fact that it will create 100 or so jobs. This works out to an investment of Sh40 million per job."

His plan is to employ a bottom-up approach by investing Sh500 billion across five years in small-holder agriculture and the informal sector.

As such, more funding will go to micro small and medium enterprises at the grassroots levels where the impact on job creation would be bigger.

For example, while it cost Sh4 million to create 100 at the firearms manufacturing plant, it cost Sh280,000 per job to create 600 opportunities in Kitui County garment factory.

"The Sh4 billion-gun factory investment is the equivalent of 24 Kitui garment factories and 14,000 jobs," reads the manifesto.

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