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!

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

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.

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