Opinion and Analysis
Focus policies on creating jobs and growing exports
Posted Monday, July 9 2012 at 21:57
Over the last two weeks, there has been intensive debate on policy outlined in 2012/2013 Budget as the basis of creating jobs and reviving long-term economic growth. Some of these policies touched on expanding the tax base into new areas.
No doubt some of the policies are silent on employment and hence open to interpretation, while others negate employment creation aspirations.
The architects of economic recovery will recall that job creation was the foundation of the Kibaki regime in 2003.
Deliberate efforts were made to popularise increased investments in the productive sector, in particular the tourist industry, agriculture, agro-manufacturing, transport and communication, ICT among other sectors.
Evidence demonstrate that paying attention to these sectors led to high growth between 2004 and 2007.
Examples to illustrate this include the revival of New KCC and expansion in the dairy industry,, the revival of the Kenya Meat Commission, the coffee and pyrethrum sectors, the Rivatex in Eldoret, Uchumi Supermarkets, small scale farming, and transport among others. These show that sustaining high economic growth are the precursor of employment and wealth creation.
The above examples created the confidence that led to Vision 2030 that targets a middle-income economy .
Unfortunately, the hiccup of the post-election violence in 2007/2008 slowed down the pace of implementation of Vision 2030 in general and the attainment of the 10 per cent GDP growth in particular. The period between 2008/2010 largely focused on addressing the historical imbalances of post-election violence between 2007/2008.
Indeed a great deal of achievement has been made including passing the new Constitution and broadening democratic space as well as addressing investment in the infrastructure and expanding the service industry. These are no mean achievements but we still have a long way to go.
The unfortunate thing is that the country continues to have more than six million youths entering the job market. Youth unemployment remains a challenge given that our universities and colleges release a large number of graduates into the job market yearly.
The big question for Kenya is how to bring employment into the economy for the over six million youths.
In the US, the current debate between presidential candidates, Mitt Romney and President Obama, is how to create long-term growth in the economy through policies and investments in the private sector so that the private sector remains the engine of economic growth, a source of export of American products, reduce deficit, increase the capital count and balance of payments.
Proponents of this argument believe that this is how to restructure and reclaim the position of America The same for Kenya. They argue that too much government spending leads to consumer growth and this is not sustainable for the longrun especially if such are not supported by employment creation and largely dominated by imports.
In Europe, the EU look up to Germany for leadership in economic development.
Germany focuses to private sector for employment and wealth creation through her exports.
These are factors that keep the German economy strong in the Euro zone and enable it to provide leadership.Kenya, as the leading member of the EAC, with available market of over 130 million people, a region that imports over 70 percent of the products from outside East Africa, provide a unique lesson for Kenya with the highest industrial base and export potential in the region. We need to support private sector growth especially manufacturing to tap into the large market.