Investors who do more harm than good

In developing countries, investment is a word often bandied about, and investors are the geese that lay the golden eggs, or so the masses have been led to believe.

As such, there’s always a red carpet laid out for investors, and a host of incentives on offer including tax breaks, free titled land, and financial support on concessionary terms.

On the basis of the starring role these investors, mostly foreign, purportedly played in the rapid growth witnessed in former third world economies such as Malaysia and Singapore, they have become the hottest fad in contemporary development discourse and planning.

It is no coincidence therefore that in Kenya, there is an entire bureaucracy in place in the form of an investment authority that has been set up to pursue, promote and guide investments.

Vision 2030 also gives considerable attention to the articulation of investment plans in sectors considered to be drivers of the economy.

Manufacturing, tourism, and agriculture in particular stand out.

However, this obsession with foreign investment can be misplaced and harmful.

Such is the obsession with investments that all other equally compelling arguments, including potential negative environmental and social impact, sustainability and the need for people-centered development have been relegated to the back burner or totally swept under the carpet.

This obsessive behaviour approximates that observed during the implementation of previous development fads such as import substitution, industrialisation and export-led industrialisation, with little or no systematic effort put into scrutinising potential flaws in these ‘infallible’ development doctrines.

In the fullness of time, the outcomes of these doctrines were inappropriate technologies, empty public coffers, unaffordable basic commodities and disillusioned and poorer masses, some of whom had lost control of productive assets such as land permanently and irreversibly.

The key lesson missed from the experience of Malaysia, South Korea and Singapore is the three pillars that produced sustainable industrialisation in these countries, namely development of indigenous human capital, appropriate and transferrable technology and a majority or at least significant local shareholding.

Consider the sugar sector, for example.

The sugar sub-sector for some strange reason appears to be the arena most susceptible to the vagaries of dubious investments, the large majority of which have no sweetness to them, particularly for displaced people, farmers and workers.

Two recent and highly controversial investments in the sugar sector, one actual, the other potential, bring to fore the dilemma that both government and citizens alike need to confront in the hallowed halls of investment.

As the parliamentary committee on agriculture, livestock and cooperatives chaired by Naivasha MP John Mututho discovered to its consternation, Kwale International Sugar Company (Kisco) had acquired 15,000 acres from locals without paying compensation.