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The budget statement was great on promise…

FINANCIAL STANDARD
By | June 14th 2011

By John Kiarie

The Government has embraced the ethos that powers the private sector. Despite the tough times and the necessity to do something for the marginalised, the nation must continue building the foundations of a broader economic base.

One of the tenets embraced by successful private sector organisations is to pick a clear set of objectives and relentlessly pursue their delivery.

Finance Minister Uhuru Kenyatta deserves accolades for constantly improving and simplifying the business landscape for doing business and continuously investing in the right areas.

The new VAT Bill is long overdue and the hope is that it will receive wide approval and simplify the administration of this tax.

Manufacturers should benefit from the significant investment in infrastructure.

Distribution costs have been tremendously affected by increased vehicle running and maintenance costs occasioned by the high fuel and parts costs, without factoring the increasing labour costs.

ROAD NETWORK

Much needs to be done on our road network, especially the urban and rural roads. The Sh221 billion budget allocated to this sector is a bold statement and will be appreciated by all businesses.

The improvement of legal, regulatory and administrative processes for collateral recognition and registration is extremely important for improving access to finance for many manufacturers.

Although Uhuru did not spell out these measures, we hope that Treasury will be imaginative and consider our young entrepreneurs and rural economies to make this a reality.

Creating an OTC market for bonds is a step in the right direction but we need to see much more. The futures market for commodities will also provide a new opportunity for businesses to improve the feasibility of their investments.

Uhuru postured how we are blessed with the vibrancy of our youth to grasp the many opportunities available in the economy. The boosting of the youth funds is great but they need to be more efficiently channelled to the deserving groups.

However, one great requirement is for the development of this youth to match the available potential. Internships and mentorships are not enough. There is need for more targeted interventions and services.

Where are our polytechnics, incubation facilities, technology transfer partnerships with relevant private sector businesses and development of standards? County Governors have a great opportunity to assist Central Government in this regard.

WATER HARVESTING

Some of the big opportunities that have increasingly emerged and need to be grasped and welcomed by manufacturing businesses are the investments in rural development, water harvesting and storage, irrigation and farming technologies.

The budget allocated to these areas is commensurate with the requirements of the future counties. With constituencies now controlling an average of Sh103 million, we should see great ideas sprouting. Water harvesting and storage has a whopping Sh2.2 billion, we need some entrepreneurs to inject the much-needed life to jumpstart private sector investments in this area.

This is one great initiative that could go a long way in securing our nutrition and ability to develop.

VALUE CHAIN

Arid and Semi-Arid Regions have also benefited with additional investments of nearly Sh900 million for slaughterhouses. This is one value chain that needs attention and has the potential of not only delivering huge economic growth, but also mitigating against conflict and insecurity.

The fact that almost half of the country could be mobilised to produce, process and export meat and leather products; should be used to mobilise private sector interest and participation.

Investments in irrigation will offer one of the best opportunities to our manufacturing and consumer business sector. With investments of over Sh11 billion and the widespread nature of interventions, the Government is underwriting a creative opportunity and also ensuring the sustenance of the population. Implementation is certainly key, and the youth should be engaged and empowered to venture into competitive value chains.

There is increasing participation across the country in fruit processing, dairy and poultry rearing businesses. The elimination and reduction of input import duties will further improve the margins and sustainability of these businesses. They should also take advantage of the potential reduction of their energy costs through the use of battery operated vehicles and solar panels. Although this sounds futuristic, our software engineers are participating in the development of innovative mobile applications, why can’t our other engineering entrepreneurs drive innovation here as well? Increased demand should stimulate local production of these battery-operated vehicles and solar panels, which will assist build more vibrant county economies. Who would not want to invest in the county industrial centres with all these opportunities?

—John Kiarie is Partner, Deloitte Kenya.

The views expressed in this article are the author’s and not necessarily those of Deloitte Kenya. Please visit http://www.deloitte.com/ke for more on our Budget analysis.

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