Something gigantic landed on humanity and the world shifted substantially. It introduced a global climate of fear and uncertainty. No more hugs. No more hand shaking, No more public gatherings. No more business as usual. Covid-19 has shaken the business world to the core. The cessation of air travel, the halting of the regular taxi, the matatu and standard gauge railway, the closure of the barber shop, the salon and the kiosk around the corner and the disappearance of the mama mboga have exposed our vulnerabilities as individuals, industries or as nation states. The disruption of goods and services, supply chains at local, regional and global levels has elicited different reactions.
For the first time, the category of essential and non-essential services was used to define what and who could operate during the lockdown. The critical role of health workers has been noticed and celebrated. They are putting themselves in danger to save lives. But generally, faced by an enemy that is hard to define, the initial reaction by governments globally has been to panic and resort to ad hoc and unco-ordinated actions.
To ensure sustainable development in the post-Covid-19 era, governments and different sectors of society will need to realign their models of operation to respond to the ‘new normal’. Where a government uses knowledge networks and puts its “think tanks” into action, it can easily develop a well researched and sequenced model of support, focussed on fundamental facts and trends that will not only save the current situation, but pivot the SMEs/MSMEs to become the engines of recovery and change.
However, many of the existing stimulus packages lack economic prudence and are blind to the failures of the current growth model which lays emphasis on consumption of technology and importation of goods and services. This approach does not address the foundation and building blocks of sustainable economic growth.
The foundation of an economy is as good as the skills and competencies of its people. Kenya for example has a very strong and vibrant artisanal sector. However, one cannot fail to see the uncritical attachment to transient money that goes to the EPZs (targeting FDI). The investment model for the EPZs is very simple. Even with the best crafted incentives, the investors are always ready to shift to the next cheapest destination in terms of doing business.
However, the worrying part to this narrative is that Kenya does not, for example, extend any such incentives to the local artisanal business entities. They deny them even the simplest of tax breaks from startups to the bedrock of Kenya economy, the MSMEs/SMEs. This archaic model should be overhauled post Covid-19 if Kenya has the determination and is willing to lay the foundation and principles for a sustainable recovery and pathway beyond the crisis.
Without doubt, most of the industries will access the government bailout from the Covid-19 rescue package. However after receiving the money, many will go back into hibernation waiting for the next bailout. The prudent ones will use the money to automatically downsize for efficiency and longevity as they seek to serve a precocious population brutalised by the crisis.
They will find it hard to deliver towards the new normal that is built on different business models that are lean and thrive on frugality. If these old business models are our hope, we should be ready for an economic spin and a deeper crisis than what we are experiencing now.
The industries that are poised to drive the new business along with the future business thinking are not in the government radar. As a matter of fact, the majority of these ideas are being nurtured in different spaces in the country. In the absence of a clear and coherent policy on financing and investing in startups we are risking losing a generation of ideas and opportunities for job creation.
The disruption of the global supply chains occasioned by Covid-19 calls for a higher level of analysis and guided engagement to deconstruct the old economic models in order to reposition industries towards a path of recovery.
Many economists are pointing to a pivotal moment in economic history. The pandemic is redefining and repositioning roles in the globalisation arena. It is laying bare and challenging the mechanisms and agencies of globalisation. It is unearthing the social formations, institutions and practices. The entrepreneurial spirit witnessed in the informal sector over the last decades ought to be nurtured and energized. A framework for the growth of startups is also key to inclusive and sustainable development in Kenya.
Peter Kuria Githinji is a business development strategist and founder of StartUP Industrial Park Prof Kimani Njogu is a linguist and cultural scholar based in Nairobi.