Government support for Chamber of Commerce good for economy

Kenya National Chamber of Commerce and Industry chairman Kiprono Kittony

NAIROBI: As a membership-based organisation, the Kenya National Chamber of Commerce and Industry primarily depends on annual dues from its members to finance its day-to-day operations and carry out its mandate. However, in light of the escalating and evolving needs of the private sector and SMEs in Kenya, the chamber’s scope of activities has in recent years rapidly expanded, introducing the need for additional sources of finance.

Today, the chamber no longer restricts itself to highlighting key issues facing businesses; nor is it solely focused on providing networking opportunities for businesses. We have broadened our vision and are engaged in economic diplomacy; trade relations in key global markets; policy research and advocacy; training of SMEs on business best practice; and enterprise development at the county level.

Although these expanded functions have a demonstrable positive impact on Kenya’s economic growth, they come at an added cost that cannot be exclusively covered by membership dues. To sustain these critical functions, the Government needs to step in and support the chamber through funding, legislation or a mix of both.

The Government should not view this call for stronger support for the chamber as an added strain on its coffers, but as an opportunity for the country to benefit. Kenya stands to gain immensely, as illustrated by the experience in other countries where governments directly support their chambers of commerce through legislation or funding.
In a number of EU member countries, governments have made membership to the Chamber of Commerce compulsory for businesses of certain sizes, types, or sectors. For instance, German SMEs, known as the mittelstand in Germany, comprise a key constituency in their Chamber of Commerce membership base.

This explains why Germany is ranked fourth in the global economy, despite hosting only 28 companies in the Fortune 500. SMEs are Germany’s engine of growth. This is thanks in no small part to the organisational support of its Chamber of Commerce, and the fact that its government has made membership compulsory.
Comparable government interventions to make chamber membership compulsory in Kenya will allow the Chamber to net more members, particularly among the SMEs in the counties. This will accelerate the pace of formalization of the economy by encouraging compliance among businesses at the grassroots. Kenya’s formal sector is still too small, representing around 20 per cent of the economy.

A larger formal sector means that the government will not only expand the tax base, but also lower individual taxes for businesses due to equitable sharing of the tax burden.

Jubilee administration

Five years ago when the Jubilee administration came into power, the President promised that his government would empower the private sector to create employment and foster economic growth. Though much of this has been attained, supporting the chamber would be a critical step in consolidating and extending these gains.

Singapore and Dubai both serve as shining examples of the strong correlation between Government support for the Chamber and sustained economic growth. Public authorities in both jurisdictions fund their Chambers.
The Dubai Chamber started in 1965 with just 450 members. Thanks to consistent government funding, the organisation now has more than 193,000 members, which represents a 200-fold increase. The Dubai Chamber has more than succeeded in promoting Dubai as a global financial powerhouse and an international business hub. Consequently, the Emirati City has a GDP of $82.87 as at 2014, almost 30 per cent more than Kenya’s total GDP.

As Dubai’s experience demonstrates, the Kenyan government’s support for the Chamber will not only have a catalytic impact on overall economic growth, but also amplify the Chamber’s global outreach efforts.
Although the first chamber of commerce in the world was founded in the year 1599 in Marseille, France, the chamber concept is now a global phenomenon. Kenya’s Chamber is part of this global movement that has fundamentally shaped commerce, trade and investment around the world over the past half millennium.

In March this year, we were in Latin America scouting for trade opportunities for Kenyan businesses in promising emerging markets like Brazil and Argentina. This builds on the work we have done in other regions, including here in Africa where we continue to aggressively champion increased intra-African trade.

It is not just the Chamber’s global outreach efforts that should appeal to the government, but its work in the counties as well. The Chamber has representation in all 47 counties and is in the process of replicating its HQ functions to all the counties. This presents a golden opportunity for the government to partner with the Chamber to fast-track devolution and unlock opportunity in the counties.

Mr. Kittony is the National Chairman of the Kenya National Chamber of Commerce and Industry. [email protected]