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New law alone not sufficient for business growth

FINANCIAL STANDARD
By | August 24th 2010

By Tabitha Areba

The dust is settling down on the referendum, but Kenyans are yet to feel the impact of the new constitution.

With days to it’s promulgation, businesses are upbeat the new law will restore confidence and boost consumer consumption.

"Once these laws are put in place, the environment will be good for businesses," says Jonathan Ciano, group chief executive, Uchumi Supermarket.

However, those who were waiting for the new Constitution to set up businesses and rake in huge profits should think again.

The document does not have clauses that contribute directly to the success of businesses.

Neither does it give a step-by-step guide on how to avoid business blunders. "With companies that failed in the past, I will not necessarily say the constitution was a major cause," said Ciano.

Though some ‘bad laws’ might have contributed to the collapse of some businesses, Ciano says he cannot attach the failure directly to the Constitution.

Among the issues that brought Uchumi to its knees, Ciano says there was no mention of a constitution or the lack of it thereof.

"Uchumi simply had misguided strategy, frustrated suppliers, financiers," he says. "But when you put all things together, everybody wins. That is where the constitution comes in."

Experts say the new constitution will not in itself get rid of bureaucracy and bad laws. However, it will set the tempo for regional competition.

"Counties that will be inward looking will stifle business," says James Shikwati, Director of the Inter Region Economic Network (IREN) based in Nairobi.

He says a number of medium-sized businesses will be on demand to offer services to counties, building up pressure for a fair business environment that originally was a preserve of big business players.

To survive this competition, managers have to work extra hard to ensure their businesses are on the right track.

Counties will shift attention to the grassroots.

In their bid to lift businesses to higher levels, leaders must recognise that laws evolve as society evolves.

"The business of the 1970s and 1980s relied mostly on printed word, the law also had to operate within that framework," says Shikwati.

"The business of the 1990s, and 2000s is faced with a surge in cell phone and Internet usage — so laws have come up to accommodate such changes," says Shikwati.

He, however, cautions that laws can suffocate business leaders from achieving greater goals.

"Laws determine the playing field and they can either suffocate or liberate the business environment," he says

As Ciano puts it, the Constitution shapes the environment in which a company operates.

"A Constitution reflects the aspirations, missions and the desires of the people. From the perspective of good governance, the new constitution instils confidence to citizens," he said.

"The new Constitution is likely to restore confidence in the country’s governance structure, especially the judiciary to enable people seek due process for disagreements as opposed to taking the law into their hands," he says.

He, however, dispels the notion that a constitution will necessarily spiral businesses to recording billions of shillings in profits.

Ciano says the things that have happened that otherwise should not have happened are the ones that stifle business.

As the President and the Prime Minister said, it is a rebirth of our nation. Business leaders should thus reassess themselves and forge the way forward rather than looking back.

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