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How to translate mega investments into jobs

KEN OPALO
By Ken Opalo | May 11th 2019

 

President Uhuru Kenyatta’s last outing in China yielded Sh17.5b in concessional loans for construction of a data centre in Konza City (in addition to a “smart city” and surveillance systems). Much coverage of this project has been drowned out by the kerfuffle over why former Prime Minister Raila Odinga accompanied Kenyatta to China and the failure to secure funding for the Naivasha-Kisumu section of the Standard Gauge Railway (was it in his capacity as an African Union Infrastructure ambassador or as Kenyatta’s side kick?) Tabling the wisdom of incurring more debt from China for now, it is important to interrogate how as a country we might leverage the planned investments in Konza City to crowd in even more gains.

As I have repeatedly noted in this column, a lingering frustration with how the Jubilee Administration operates is the fact with every major project, it always seems as if the Chinese, Europeans, Indians, or Americans are more concerned about our development than our own elites. From the SGR to power generation, to Konza City, the Chinese appear to do all the thinking, planning and execution. Kenyan elites go along as cheerleaders, waiting in the wings for bribes and little more.

Two simple but important questions to ask are: how will the average Kenyan firm and worker benefit from the Konza City investment? Has the relevant Cabinet Secretary done any roadshows in the country or abroad to encourage investors to look into how they could benefit from Huawei’s data centre?

The reason for asking this question is simple. In all of 2018 the Kenyan economy generated a mere 78,400 jobs, according to the National Bureau of Statistics. We do not know how many jobs were lost. It is therefore not unlikely that, overall, we created even fewer jobs. This is unconscionable. For a country that aspires for mass job creation we should be doing orders of magnitude better than this. And it is for this reason that the government ought to be thinking of how to convert every shilling of public expenditure and foreign loans into dependable jobs.

In addition to the government, the Kenyan private sector bears some blame, too. Despite their relative economic strength, high net worth Kenyans remain captive to politicians. Even if one admits that they need non-market support from the government to succeed, the level of policy influence of the private sector is still wanting. In other countries, private sector players depend on policy and regulatory support, but still manage to influence and shape government planning in their favour. Has the Kenyan private sector done its homework about the SGR, Konza City, the oil in Turkana, the Lamu Port, among other major projects? What are they doing to ensure that they get maximum benefit from these state-led projects?

Our business leaders should not be content to bribe their way out of paying taxes and meeting regulatory standards (both of which are wrong). They should dream bigger and become globally competitive. I say this not out of nationalist feelings, but because Kenyan business success will ultimately benefit workers. This is for two main reasons. The social embeddedness of Kenyan firms will increase the rate of converting investments into jobs. The multiplier effects will therefore be larger than would be the case with foreign firms. Second, Kenyan firms will be easier to tax. In the end, only when our government and private sector take charge will infrastructure investments begin to translate into dependable jobs for our people.

- The writer is an Assistant Professor at Georgetown University

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