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Wine and chocolate from the Tax man

[vc_row][vc_column width=”2/3″][vc_column_text]The New York Times online edition ran this breaking news story on Tuesday September 15th this year: “De Blasio to require computer science in New York City schools.” The article explains further, “To ensure that every child can learn the skills required to work in New York City’s fast-growing technology sector, Mayor Bill de Blasio will announce on Wednesday that within 10 years all of the city’s public schools will be required to offer computer science to all students…the goal is for all students, even those in elementary schools and those in the poorest neighborhoods, to have some exposure to computer science, whether building robots or learning to use basic programming languages. Noting that tech jobs in New York City grew 57 per cent from 2007 to 2014, Gabrielle Fialkoff, the director of the city’s Office of Strategic Partnerships, said, “I think there is acknowledgment that we need our students better prepared for these jobs and to address equity and diversity within the sector, as well.”

Bill de Blasio was sworn in as Mayor of New York City on January 1st 2014. It’s still early to comment on the efficacy of his tenure, but it is noteworthy that his goal is to have an educational curriculum that makes his citizenry relevant in the not so distant future, when he will likely already have left office. At the risk of sounding condescending to you dear reader, this is what forward planning looks like. It requires complete selflessness in the sense that you are making policies that will benefit future generations and that have zero positive impact on today’s bottom line. If you ask any employer what a key resource for delivery of their organization’s strategic goals is, they will tell you that it is competent and skilled human capital. And that human capital doesn’t buy skill from aisle 7 at the local supermarket. The academic curriculum in our secondary and tertiary institutions is critical for businesses today and it is imperative that they are regularly reviewed for relevance in a rapidly changing technological backdrop. Let me park this aside briefly.

So I went to visit Moraa at her furniture factory last week. Yes, I did say pax romana on any more entrepreneur-in-Kenya horror stories in last Monday’s column, but I have uncrossed my fingers just this one time after the mind blowing visit. For those of you reading this for the first time, Moraa is one of several insanely committed entrepreneurs whose courage to do business in Kenya, employ citizens and develop a supply chain that generates value as well as impacts more lives is nothing short of admirable. She, and many others like her, try to do legitimate business in Kenya but have had great difficult getting government support in opening new markets or creating an enabling environment for goods to be distributed within the region despite all the chest thumping around “ease of doing business” reforms.
Anway, Moraa has imported state of the art furniture cutting and printing machines in order to make a high quality Kenyan product. I stood in awe as I watched one laser machine print out a beautiful cartoon motif on the back end of a wooden bed resulting in a high definition, permanent image that did not drip or bleed past the edges. She had several other cutting machines that remained unmanned, and when I asked I was told that there was a severe shortage of skilled wood artisans since many polytechnics had converted into universities. On her last jaunt to one of the former polytechnics [I will not say which one, as I’ve realized government agencies take umbrage whenever I talk about them here and are always quick to send me a point of correction. However it is extremely refreshing to see that a) they read the papers b) they are sensitive to public perception of their services and c) they actually do care!] She found that they had some of the latest and very expensive machines that were simply lying idle in the workshop. Having been purchased, there were no trained personnel one to teach the students on how to use the equipment! As entrepreneurs always turn a challenge into an opportunity, Moraa’s next goal is to see how she can create a technical institute to train wood artisans, as she needs some for her own factory and envisages that the growth opportunities in the industry will continue to drive demand for this skilled resource.

Back to the curriculum discussion: How often do our public universities meet with industry and determine whether the output in the name of graduating students meet the needs of employers today? I recently saw an advertisement in the newspaper calling for public participation in the much-needed review of the 8-4-4 curriculum which is a wonderful initiative. My two cents worth from my well worn armchair: Have a two year course run in form 3 and 4 that teaches students how to run a business and ensure that it is project based rather than theoretical. It will assist a) those students who don’t necessarily want to pursue university studies and b) will ensure that those students who eventually end up working in government get a good sense of what it takes to be an entrepreneur which should guide their future policy making of today’s current buzz word: “ease of doing business”. Of course all this is futuristic, like Bill de Blasio’s dreams of a tech driven culture in the New York City post 2030.

On a happier note, staff from Kenya Revenue Authority visited Moraa last week. They came bearing gifts; a bottle of wine and a beautifully wrapped box of chocolates as part of their customer care week thanking tax compliant businesses. When she managed to scrape her jaw off the floor in shock at the friendly and very engaging visit, she shared the incredulous story. My jaw, not surprisingly, is still on the floor. When government works, it works well! Nice touch KRA!

[email protected]
Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

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End of the Entrepreneurial Trilogy

[vc_row][vc_column width=”2/3″][vc_column_text]Many years ago when I was in primary school, we used to play a frenetic game called “Tip”. The Player who was “it” would touch someone else while yelling “tip!” and the person so touched became “it” and would have to touch someone else to make them “it”. The game could go on for days, and it would be much to one’s chagrin if they were collected by their parents after school and the person who was “it” would wait until the last minute to tip you and run off chortling with glee as you stewed in your parents’ car all the way home waiting for the next day when you could tip someone else. However, there was repose from this mind numbingly silly game in the form of the words “Pax” which had to be accompanied by one crossing their middle finger over their index finger. When one was on “pax” one could not be tagged. The challenge, of course, was to always remember to be “on pax”. The purpose of this reminiscing is that I am bringing the exhausting “being an entrepreneur in Kenya” trilogy to an end after today. Pax! Here’s why:

Didier (not his real name) is a foreign investor in Kenya. He runs a chain of fast food restaurants and opened his first branch in 2012. Like any good foreign investor, his first port of call was Kenya Investment Authority (KenInvest) to see what benefits he could receive as he set up his first unit, which would require bringing in a lot of restaurant equipment. As you can imagine, he didn’t get much joy as the folks over at KenInvest were only interested in certain sectors of the economy such as manufacturing, oil and gas but not the restaurant industry. Crestfallen, but not beaten, he set up anyway. 14 licences later, he opened his first branch and within the first six months of opening had visitors from the Kenya Revenue Authority over for an audit of the start up that had not even finished a year of business. Not to be left behind, the Ministry of Labour chaps also came to do an audit in month seven.

As his business grew, he began to open new branches. He quickly came to discover that the much-touted Single Business Permit from Nairobi County came at a very high cost. Having to pay Kshs 300,000 (three hundred thousand in case you cannot read figures) per branch, he was duly informed that the permit ran over a calendar year from January to December. So if he opened a branch on December 29th of any year, he would still have to pay the FULL amount of Kshs 300,000/-. “Carol, to do business in Kenya, you have to know someone, and even that someone is not guaranteed to help you,” he said. He continued, “Out of the 14 licences that I need for EACH branch at least half of them run on a calendar cycle. Can you imagine the loss I make from licensing whenever I am starting a new branch?” The feedback that he has received from Nairobi County officials belongs in the Frustrated Entrepreneurs Hall of Fame: “Why do you want to deny the county revenue?” How is paying for a license every 12 months from date of issue rather than every calendar year from January to December denying revenue to this most efficient of institutions? Meanwhile, he opened his sixth branch less than two months ago. Within a week of opening he had been visited three times by Nairobi County officials who were “checking” on the standards of the business.
Didier has to date employed 150 Kenyans in his business. Kenyans who are paying Pay As You Earn income taxes as well as being productive members of society who consume goods and services thus playing their part in keeping the economic wheels of the country turning. As it is a restaurant business he has to maintain the county health standards and therefore has to send all 150 of them to get health certification twice a year at the cost of Kshs 1,000 per employee. You can do the mind boggling total math for yourself. By the time Didier was done telling me about all the costs of running a restaurant business, I concluded that he could easily shave off a significant part of his food prices if the taxes and licence fees were streamlined. You, the Kenyan, are paying for a lot of government sponsored operational inefficiencies.

“I don’t get it, Didier,” I mused, “Why do you stay and do business in Kenya?” He didn’t miss a beat. “Because there’s a huge opportunity here, I can see it.”

There is a certain short termism in the way both the central and the local governments approach revenue collection. The approach is transactional rather than strategic. The view: Let us collect what we can now = short term, rather than: Let us look ahead and see how to grow a wider tax base by creating an enabling environment for new businesses to thrive = long term. Today entrepreneurs are beaten down with a highly toxic operating environment where the compliance officers from various government institutions are used to frustrate and harass rather than to drive compliance. To paraphrase someone who wrote to me last week, “We really have to wonder about government officials who are lifetime employees. What could they possibly understand about risking everything to build a business in a hostile environment when they have always had a salary?” So my two cents worth to the team responsible for looking after the growth of entrepreneurs in this country is this: Help Moraa (the Kenyan from 2 weeks ago) and Didier (the foreign investor who is not in a strategic industry) do business in Kenya. They, and many others like them, will build solid businesses that generate revenue – part of which attaches to the government’s fiscal bottom line. The End. Pax Romana!

[email protected]
Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

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Right of Reply from SMEs

[vc_row][vc_column width=”2/3″][vc_column_text]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.

[email protected]
Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

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SMEs need less talk and more walk

[vc_row][vc_column width=”2/3″][vc_column_text]Achieng’s Uncle was visiting when she asked, ”Uncle, I’ve been a good girl, will you give me a thousand bob?” He looked at her fondly and said “I think you would be more successful if you asked for a hundred bob.” Achieng answered, ”Look Uncle, give me a hundred bob or give me a thousand bob, but don’t tell me how to run my business.”

The Ministry of Industrialization and Enterprise Development (MOIED) recently launched its strategic plan for transformation. I sat down in anticipation, ready to find a document that would be the road map to guide Kenya’s achievement of middle-income country status. At fourteen pages long, the document is short and crisp and spends a considerable amount of space defining the ten industries that demonstrate great potential. These have been identified as agro-processing, fisheries, textiles and apparel, leather, construction materials and services, oil, gas and mining services, Information Technology, tourism, wholesale and retail and finally small and medium enterprises. Then the document skids into two pages that quite aptly describe the challenges facing those industries backed by quantitative economic data. By this time my excitement was building up to a frenetic crescendo, the solution had to be coming round the corner by the time I got to page 13 of the 14-page document. I turned the page and slid down my seat, slack jawed and drained. There was nothing. Unless you count a 5-point strategy that uses language such as develop, create, launch and drive but does not put a single timeline or work plan around those pledges. I kid you not, if someone opens up that document in the year 2050 they would quite easily place it in the public domain and pass it off as a fresh document, since there are absolutely no time commitments or demonstrable goal driven action plans attaching. Fine, there is ONE time bound goal: “To drive ease of doing business reforms and reach top 50 by 2020”. I’m still grappling with top 50 of which beauty parade we are trying to achieve and what the “ease of doing business reforms” actually consists of. Let me latch on to that one for now.

I’ll give you the true story of an amazing female entrepreneur who is blazing the trail in her chosen industry of furniture manufacturing. Let’s call her Moraa for today, as she has been trying to meet with the Cabinet Secretary at MOIED for the last five months with no success and I don’t want to ruin her chances for that hallowed meeting when it eventually happens. Moraa started off her business about five years ago manufacturing quality furniture. She survived the first year, and the second, and the third and is now a proud employer of 28 Kenyans. Feeling that she should expand her horizons and mitigate market concentration risk, she travelled to Uganda last year and found a retailer willing to purchase her quality products. That’s where the fun and games began. ‘Carol, there is not a single place where one can get information about how to export one’s goods in Kenya,’ she told me. ‘But how did you figure it out?’ was my surprised response.

Moraa’s treacherous self taught journey to becoming an exporter was one that demonstrated tenacity, grit and a typical entrepreneurial strength of character that defines anyone doing business in Kenya.
Her first port of call was the Export Promotion Council. “Are you exporting tea? No? What about coffee? No? What about curios? No? Aii, we can’t help you!” Moraa stood there, gob smacked at the sheer lack of interest in assisting her with a basic checklist of what a Kenyan businessperson who wants to export non-tea, non-coffee and non-curio related products needs. Using her networks she discovered that she needs an export duty exemption certificate so that her goods could freely pass through the Kenyan border point of Malaba for their initial entry into Uganda, a member of the East African Community. After a few false starts she ended up standing in line at the Kenya Revenue Authority’s (KRA) imposing banking hall and paid the paltry sum of Kes 300/-. ‘Carol, it’s 300 bob per container, can you believe it? And it doesn’t matter whether it’s a 20 foot or 40 foot container!’

Moraa’s disappointment with our government is that they are bending over backwards to make life easy for foreign investors to open up shop in Kenya, but not doing enough to ensure ease of doing business for the very SME’s that form the 10th engine of economic growth in the MOIED strategic plan. She showed me a screenshot from the Invest in Kenya web page and mused how a foreign investor who was willing to start up with Kshs 200 million could get a 10 year tax holiday in the Export Processing Zone scheme. ‘I’m based here in Kenya, and KRA tells me that if I want to get a 5 year tax holiday I must put in start up capital of Kshs 250 million. How? I’m an SME!’

If you want to know where to fish, listen to the sound of the river. That is an old Irish proverb that is often used to educate business leaders on how to understand the markets in which they operate and get an emotional connection to their customers. The hard working folks over at MOIED need to put on a pair of sneakers and walk the length and breadth of Nairobi’s Industrial Area, knocking on doors and looking into the battle weary eyes of business owners today. They might discover that far from the new fangled ideas that have been cleverly written into the strategic plan, part of the answer to Kenya’s economic growth is in facilitation, education and ease of doing business in its purest form: opening new market frontiers and having a single point of information on how to do business for Moraa and her entrepreneurial kith. The entrepreneurs will do the rest: run their businesses and grow our economy.

[email protected]
Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

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Angel Investors as Key Drivers of Entrepreneurship

An angel appears at a board meeting and tells the chairman that in return for his unselfish and exemplary behavior, the Lord will reward him with his choice of infinite wealth, wisdom, or beauty. Without hesitating, the chairman selects infinite wisdom.
“Done!” says the angel, and disappears in a cloud of smoke and a bolt of lightning.
Now, all heads turn toward the chairman, who sits surrounded by a faint halo of light.
One of the directors whispers, “Say something.” The chairman sighs and says, “I should have taken the money.”

Earlier this month I attended the G-20 Global Partnership for Financial Inclusion, which held a workshop on Financing Entrepreneurship Innovative Solutions in Izmir, Turkey. Turkey currently holds the G20 Presidency and therefore its government played a pivotal role in the organization of the successful of the workshop. One of the panelists was a well-known Turkish entrepreneur, angel investor and author, Baybars Altuntaş, who impressed the audience with his vocalization of tax incentives that the Turkish Government provides to angel investors. I pulled Baybars to the side during a coffee break and asked for more details. Once a person has registered as an angel investor, he is allowed to net off up to 75% of his investment in the start up company against his income tax payable in the year. In other words, a tax holiday of up to 75% of your investment! Baybars added that angel investors tend to get together and pool their funds to reduce the risks as the success rate for their investments was only typically 10%. “Why would one invest money in start ups if only 1 in 10 initiatives succeed?” I quizzed. Baybars smiled the smug smile of the wealthy and responded, “Because the returns from that 10% will make you more money than the losses on the 90%!” I walked away, scratching my head and realizing why my risk aversion would leave me a pauper for the rest of my life.

Angel investment is the provision of financial capital to newly established or growing companies which have novel business models or technologies with high potential for growth and profit but are unable to find eligible financing resources to realize their investments.

Recognizing the inherent benefits that angel investors would provide through entrepreneurial seed capital support as well as stimulating economic growth through job and value creation, the Turkish parliament passed the “Regulation on Angel Investment” law in June 2012 and the Treasury promulgated the enabling legislation in February 2013. The rationale behind the law is to promote the financing of small enterprises and entrepreneurs by providing tax incentives to angel investors. According to a PwC Turkey Asset Management Bulletin, in order to benefit from the tax reliefs provided in the law business angels first have to obtain a license from the Treasury. The business angel cannot directly or indirectly be a controlling shareholder of the qualifying company that it wishes to invest in, neither can the qualifying company belong to his relatives. A qualifying company should, amongst other criteria, be a registered company in accordance to Turkish company law with a maximum of 50 employees and net assets of not more than TRY 10 million (Kshs 354 million). If the business angels participate in qualifying companies whose projects are related to research, development and innovations then the applicable tax incentive is 100% instead of 75%. This is where it gets interesting. In order to get 100% tax relief those activities have to have been supported in the last five years by the Scientific and Technological Research Council of Turkey, Small and Medium Enterprises Development Organization and the Ministry of Science, Industry and Technology. The tax reliefs are applicable until the 31st of December 2017 making it a 5-year program, but the Cabinet can authorize the extension of the date by another five years. Shares acquired by the angel investor have to be held for at least two years and the minimum investment is TRY 20,000 (approximately Kes 700,000) and a maximum of TRY 1,000,000 (Kes 35 million) annually.

So let’s bring this concept home. Imagine if the Kenyan government picked four key economic areas that they wanted to drive with the help of the private sector. Let’s say agriculture, health, technology and education. Then the government wakes up to the fact that they can’t be all things to all people, and that they need to leave the business of business to the best people suited to do it: business people. They then assume that it’s far better to allow a business person to take a risk on an entrepreneur as the business person has a) a much better nose for sniffing out and recognizing good opportunities, b) years of experience in making and losing money therefore an appreciation for and recognition of risk, c) business experience the kind of which they don’t teach in business school leading to mentorship and d) his very own money which defines his skin in the game. The same Kenyan government would then ensure that the business angels’ interests are aligned to the strategic objectives of the relevant ministries for the four key areas. Rather than allocate funds in totality to the Women and Youth Funds, re-route a portion of those funds to backstop a tax incentive program for Kenyan business angels. The benefits hardly merit articulation due to their sheer obviousness. The Government will distribute the risk of repayment from their annual budget allocations to the Women and Youth funds by providing an alternative mechanism for reaching those same stakeholders in a credible, efficient manner that provides the extra flavor of mentorship as well as stronger linkages between the existing business community, women and the youth. Finally, it allows for a wider tax bracket to be formed since, by requiring investees to be formalized legal entities, the investee companies enter into the taxation realm. It shouldn’t take a little wisdom from heaven to permit business angel investing to become a government driven entrepreneurship initiative.

[email protected]

Twitter: @carolmusyoka

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The City of Nairobi as a Financial Hub

‘Our ultimate aim is to create a vibrant and globally competitive financial sector that will promote high level of savings to finance Kenya’s overall investment needs. That will not happen without extensive reforms. Let me highlight some of the most important. First, we will establish a Nairobi International Financial Centre. Our model is the City of London. Once complete, it will consolidate Kenya’s position as our region’s hub, while also supplying the world-class financial services that East Africa’s rapidly growing oil and minerals sector needs.’

The above mentioned quote is extracted from a presentation made by Manoah Esipisu, the Secretary of Communication and State House Spokesperson on February 3rd 2014 at the Bloomberg Africa Forum. So I decided to dig up a little information on why the City of London stands tall and worthy of emulation in Esipisu’s educated eyes. First of all, the Greater London administrative area is made up of 32 boroughs. There are two cities within the 32 boroughs, namely the City of London and the City of Westminster. The City of London is the trading and financial nucleus of Greater London. Colloquially known as the Square Mile due to its geographical acreage of 1.12 square miles, it houses the London Stock Exchange, the Bank of England and Lloyd’s of London. Over 500 banks have offices in the City while a number of the world’s largest law firms are headquartered there and, consequently, the Square Mile accounted for 2.4% of United Kingdom’s GDP in 2009.

As at the last census in 2011, the City has a population of about 7,000 residents, but over 300,000 commute there daily to work, mainly in the financial services sector. Administratively, the City of London Corporation headed by the Lord Mayor governs the City. According to Wikipedia, the 2001 census showed the City as a unique district amongst 376 districts surveyed in England and Wales. The City had the highest number of one-person households, people with qualifications at degree level or higher and the highest indications of overcrowding. It recorded the lowest proportion of households with cars or vans, people who travel to work by car, married couple households and the lowest average household size: just 1.58 people. It also ranked highest within the Greater London area for the percentage of people with no religion and people who are employed. The City has its own police force with slightly over 800 police officers separate from the Metropolitan Police Service covering the remainder of Greater London.
My conclusions: to live in the City of London you have to be paid a ton of money to do a lot of work and have a total lack of discretionary time for matrimonial, social or religious matters! Oh, and that thing called traffic? What traffic? The public transport works quite well thank you! Well enough to get 300,000 in and out of the City environs daily.

So I look at Esipisu’s speech again, especially with regard to the aim of becoming a key financial centre for East Africa’s oil and minerals sector. A friend of mine providing consulting services in the rapidly expanding local Oil and Gas sector told me that there are at least over thirty foreign oil exploration related companies in Kenya closely followed behind by their attendant service providers in aviation, drilling equipment, security and what have you. They are located all over Nairobi as there doesn’t seem to have been foresight at central government level to create a bespoke business district for this critical source of foreign direct investment. Neither have there been any efforts on the immigration side to fast track work permits for the hundreds of specialized professionals that are flying into Kenya to work in the exploration fields. They arrive at JKIA and it takes 3 hours to get from the airport to their hotel rooms because the green city in the sun is actually the gridlocked city in the smog. The average Joe doesn’t want to drive if he can take clean, reliable and decent public transport. But for as long as the city’s transport policy is written by an individual who has a driver waiting for him at his designated parking spot under a cool parking shed, we will struggle to achieve the dream of becoming a financial centre. If goods and services cannot move or be provided freely in Nairobi then providers and consumers of capital, which is a key tenet of a global financial centre, will not come to deliver Esipisu’s dream.

If the Governor’s solution to the endemic traffic jam is to tell Nairobi natives to wake up earlier to get to work, then we’re sunk. Nairobi is not made up office working minions imprisoned on swivel chairs. It’s made up of entrepreneurs who traverse the length and breadth of the metropolitan area buying and selling goods and services. It’s made up of professionals moving from place to place to deliver their professional services as well as their customers coming to them for the same. It’s made up of citizens seeking medical, banking, insurance, education and a whole host of government services between 8 am and 5 pm. Nairobi natives cannot be trusted with the heavy responsibility of choosing the lesser evil between an ex-CEO of a grossly mismanaged corporate versus a stone thrower or, God help us, a bejeweled, money splashing hustler if 2017 rumors are to be believed. In my own view, a college of voters who constitute business owners should elect Nairobi County’s administrative leader. A staggered system of votes, based on number of employees can be designed so that those with more skin in the game have more say. A business owner with 10 employees or less would have one vote, one with 20 employees two votes etcetera.
Only then can we start seeing business minded individuals drive the social and economic agenda of this critical county and lay the groundwork that would help make some of Esipisu’s dreams of a regional financial centre valid.

[email protected]
Twitter: @carolmusyoka

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Young Entrepreneurs That Walk The Talk

Entrepreneurship is the last refuge of the trouble making individual. ~ Natalie Clifford Barney

Ted* came to work in my team as an intern in early 2007. Back in those days, working in a financial institution such as Barclays was the alpha and omega of a professional career. He was a stroppy 22 year old, with hair that was at least 3 inches too long and shirts whose cuffs that were at least 3 inches too short of the wrist line. He was a breath of fresh air in an environment of monumental performance pressure underpinned by a staid, insipid office culture. About a month before the first anniversary of his employment, as he had successfully transitioned into a full time job, he came to talk to me about taking a few months off to tour the United States.

“What?” was my incredulous reply. “Yeah, I want to just go around the States, maybe I’ll go to Mexico as well. I just want to figure stuff out,” he said nonchalantly. “But what about your career, I mean, you’ll have this inexplicable black hole in your CV which can’t be addressed with the words ‘backpacked through the United States for the sake of it’ as a line item,” I whined. It didn’t matter. Ted left for the United States, and threw in a couple of months backpacking through Europe as well. When he got back, he decided to start up a business doing websites for companies, as he was now crystal clear that he never wanted to work for anyone again.

Last week, I spent a morning in the offices of Kevin*, a twenty six year old entrepreneur whose business it is to collect electronic data from the online community, make sense of it and then help businesses make strategic decisions by distilling the information into language that decision makers can understand. Kevin has travelled around the world in the last two years providing insights at global conferences as a leading voice on African social media tactics and tips.

For two straight hours I sat with Kevin and two of his team members, getting completely blown away by the quality of data that they are able to collate using people’s Instagram, Facebook and Twitter feeds as sources of what would look like rubbish data to the untrained eye, but is actually valuable information on the experience of products and services by Kenyan consumers. Kevin only has one permanent employee in his office. The rest of his team work on contract from wherever in Kenya that they can link up to a fast internet connection. His clients are multinationals and top tier local corporates who are now starting to understand the benefits of getting unsolicited real time customer experiences to improve on their product offerings.

In a classic serendipitous twist, Kevin’s landlord is Ted, who has now become the consummate entrepreneur. At twenty nine years old, Ted now has 26 employees providing web design, branding and social media marketing solutions to multinational and local organizations in the banking, FMCG and not for profit sectors. I walked through Ted’s offices, where young fellows with 5 inches of Afro, cuff less shirts, loud blaring music and a completely relaxed, colorful environment created extraordinary client solutions on large Mac computers. It turns out that Kevin needed space to set up his business, and Ted gave him a corner desk and unfettered access. “It’s all about how we work together, Kevin thinks differently and thinks big, as a result he has helped us on some of our work and we’ve done some projects together,” Ted told me later. In his playbook, having different people share his rented office space provides opportunity for getting different perspectives on how to do business. Paul is another twenty something entrepreneur sharing Ted’s space. “We liked his vibe and he liked ours so we gave him space as well,” Ted says of Paul. There is a refreshing openness in the way Ted operates with his sub-tenants and a strong culture of leverage from synergistic relationships within the workspace. His big break in providing customized Facebook pages for clients came through a famous Kenyan musician who had come to see his previous music industry production tenant. Ted and his team were trying out their new product and offered it to the musician who had nothing to lose. The marketing manager of a large FMCG multinational saw the page, loved it and commissioned Ted’s company to do one for them. The rest as they say is history as their highly visible work sold itself off its virtual platform.

There are many Ted’s and Kevin’s in Kenya. They have chosen to buck the trend that our education system has tried to force down our collective throats which trend says that cramming, passing exams, going to university and looking for a job is the ultimate route to Canaan. These young men, and the people that they work with are making a big difference in the way that their corporate clients are doing business and understanding a client demographic that is both fluid and fickle. They are providing a service on their own terms, not constrained by the astoundingly boring confines of office environments that stifle creativity.

For every Chicken-gate, Angloleasing-gate and Maize-gate tenderpreneur we have in Kenya, there are at least ten thousand young people who want to make an honest living doing what they are madly passionate about. They fight a system that has conditioned our society into thinking it’s all about passing a standard eight sieve into a smaller form four sieve into an even smaller university sieve that spits out graduates expecting to be absorbed into a small workforce. The chaff that remains at the top of the sieves is browbeaten into defeatism and a self-fulfilling prophecy of doom. I’m glad that Ted bucked the trend and walked out of employment despite my pathetic exhortations against his mad ideas. 26 employees are happier for it.

*Not their real names
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Twitter: @carolmusyoka