Right of Reply from SMEs

Last week I wrote the true story of Moraa, an enterprising furniture manufacturer that just wanted her government to help her grow her business locally as well as find new export markets. What I didn’t expect was that I would be opening the floodgates to responses from other readers who suffer from a similar angst as Moraa. For instance JGM penned:

“I have made a lot of noise from way back about these investor conferences which we spend a lot of money to hold yet we do not do the same for our own local investors. We do not invite them to county meetings to discuss how to grow together. Instead you have all manner of government agencies harassing them. You wonder what the definition of an investor is. Like hawkers, they don’t have to be arrested and their merchandise confiscated. Just charge them the levy they were supposed to pay and tell them to leave unauthorized space. But recognize they put up their own little money hoping to get a return. That is an investor. In fact the average hawker is one of the most intelligent forms of an investor, as he has to factor in a risk most other businesses don’t: deliberate government crackdown! If these county guys would call us we have roundtables and meetings and agree on a common agenda, we would gladly pay them more levies for them to deliver service.”

JGM does have a point. Hawkers are investors. They may be at the bottom of the food chain, but they are business people trying to make an honest living. It would be far more innovative to treat them as potential growth enterprises than to beat them down daily and view them as the nuisance they are perceived to be. KM is a young man who I once employed and he left as he was bitten by the entrepreneurial bug. At less than 30 years old, he and a friend set up a microcredit agency about five years ago. He exemplifies the face of the Kenyan hustler as he writes: “Carol, I’m so happy you wrote this morning’s article. The SME is struggling to get access; we are harassed by KRA at each and every turn. Literally Nairobi County camps at either of my two branches and there is always a new licence or ‘fee’ I have not paid! Maybe we should create a lobby for SME’s? I have several horror stories.” But clearly not enough horror stories to make him want to close shop because he is passionate about his business. For now he’s all about maintaining his entrepreneurial sanity.

Meanwhile, back at the Murang’a County ranch, KG sent me this missive: “Dear Carol, I am involved in the small-scale production of juice in Murang’a County with all intentions of scaling up. My frustrations can be summed up as follows:
I have been having the runaround with KEBS for the last four months and not because my product failed but just trying to get the certificate after paying Kshs 5800/=. KRA would want me to pay excise duty on the juice but they have 17 requirements for me to fulfill before they grant me a licence. Some are reasonable and straightforward but let me highlight a few of what I consider ridiculous (maybe they need to put on sneakers and see the work we are doing)
• Valid security bond for the protection of excise duty
NEMA certification
• Letter from the county government showing the factory is in a designated industrial zone.
• Licence fee of Kshs 50,000 for me to pay taxes!
My business is an SME for heavens sake! In view of the above what am I to do? Operate under the radar thus stifling my growth? Or do I remain small?
Kindly share some of this issues with the wider public and perhaps some sense may start prevailing.”

As Jeff Koinange aptly puts it, “You can’t make this stuff up!” Good people: these are real Kenyans who have ideas and capital and are willing to pay taxes if that will enable them to grow their businesses, employ more people as well as create a supply chain that grows with them and strengthens the economy. Please note that not a single one of them has requested for money in the now ubiquitous ‘naomba serikali’ fashion. MW writing from the heart of Nairobi’s hustler district sent in his two cents: “Hi Carol! Thanks for hitting the nail on the head on how to grow this economy in today’s Business Daily! I am a small offset printer on Kirinyaga road and I often wonder what those who run this country think about us small business people. It is obvious that these businesses employ the majority of Kenyans. If you cross beyond Moi Avenue the population increases in quanta and so do the daily transactions, albeit in small denominations! The government needs to do little things like making life bearable for the Jua Kali Mechanics by building them sheds, provide water, toilets, and perhaps organize them into co-operatives that could buy modern tools so that their work can graduate to industrial standards. My point is these top shots have no idea what Kenya is all about. They just think about foreign investors! If we are having problems investing in our own country how will foreigners fare?” I wanted to give MW a hi-five as he summarized every SME owner’s frustrations: if the locals cannot succeed in doing business at home, what makes the government think that a foreigner will fare better?
To their credit, two different chaps from the Export Processing Zone sent me lengthy emails to disabuse me of the notion that they are unhelpful. Both were eager to meet with Moraa and provide some assistance. I linked up Moraa with them promptly. Kenyans just want a hassle free local business environment through which they will build their enterprise on the back of their own capital and sweat. Government can do it.

Twitter: @carolmusyoka

  • MD

    Hi Carol, this is such a relevant subject and it evokes all kinds of emotions. Although international investors are seemingly put on a pedestal, they face the same harassment, frustration as any of the local entrepreneurs. For me to open an outlet the license fees total KHS 300k, this is more than three times the cost of opening a similar business in SA for example. I have tried to lobby for reduced fees, the response, – why am I trying to reduce the NCC’s revenue. As a country we are not serious about attracting investment, local or international, and making life easier for entrepreneurs. An investors permit currently costs 200k every two years, why would you charge anyone a fee to invest in a country that desperately needs it? We are seen as “cows to milk”.

    • http://carolmusyoka.com Carol Musyoka

      Morne, those are unbelievable amounts of license fees! Thanks very much for your feedback as both an investor, tax payer and as an employer of many Kenyans.

  • http://mauduville.blogspot.com Samson Maundu

    Perhaps another reason why the engine light keeps flickering while you are doing 87kph is that the fuse that controls it is the wrong one, or one line of code in your engine management system has been compromised or corrupted. The system under which a board of directors operates my have a flaw, and each director may be like the Five Blind Indians and the Elephant who they only “see” what they touch: trunk (pipe), trunk (wall), leg (tree), ear (fan), tail (rope).

    Taking the Imperial Bank analogy, the system in place may have been designed to defraud both the shareholders and depositors of the bank. The bank’s directors may have been like the Five Blind Indians, seeing only that which they were trained to see. If we speculate and assume that the bank’s external auditors were part of the flawed system, then the bank’s directors could not have been able to ask the right tough questions nor know that the right tough questions needed to be asked.

    Before a board of directors is appointed, someone must have designed the system. There is always that one person with a vision. If her vision is venality, then there is little to be done, even with a top-notch board. But if her vision is true, one of the ways that she can ensure that the system runs smooth, that there is a true correlation between inputs and outputs, and that threats against he system are countered or corrected, she will enquire widely, learn the proper lessons from industry players, and choose her board with the integrity of the system in mind.