Counties are in a unique position to boost the industrialization of our country if they leverage their diversity in natural resource and skills and if they use the novelty of devolution to set the pace for healthy competitive practices that will attract investments.
The original excitement on devolution of power and economic resources that was brought on by the promulgation of a transformational constitution has now given way to anxieties on the sustainability of county governments. With many, questioning their ability to stand on their own, shunning their dependence on the national governments and establishing themselves as economic power houses based on the provisions within their boundaries. How innovatively can they raise their local revenues to complement the Commission on Revenue Allocation’s contribution?
One of the main visions of devolution was to ensure that all regions in the country benefit equally from improved economic conditions. The structures to achieve this were to be mapped upon the unique features of the counties. This means that county governments can be the architects of demand and supply for their regions in a bid to be competitive on their backs of their strong attributes and resources.
We have stellar examples such as Meru county setting the pace with the establishment of a cancer center and Machakos county with its dedication to renovate public amenities and invest it youth programs to attract investors. Constitutionally the government is only required to provide not less than 15% of the last audited and approved national accounts. So counties have to find sustainable ways to engage national governments and industry to realize their potential.
One of the ways to increase revenue streams is through rolling out Public- Private Partnerships in counties. Counties consultative forums where they involve industry in their decision making in order to maximize the available opportunities. Whilst creating an enabling business environment it will be important for them to include Regulatory Impact Assessments (RIA) into their legislative process. This would ensure regulatory rigour and consistency across national and county government, as well as policy-making based on due assessment of costs and benefits both intended and unintended. They will take into account the fact that some measures though may seem superficially beneficial to their communities will end up driving up the cost of doing business thereby making their counties uncompetitive. Also in some cases if the regulatory framework is constantly changing it may perpetuate investment uncertainty, increasing the complexity in conducting business across counties.
The result could be the “Balkanisation” of business regulation across 47 counties, including increased procedures to start a business. It will also lower Foreign Direct Investment and spur manipulations of the market by those with better knowledge of local processes/structures providing a loophole for unfair competitive practices.
Counties, in their procurement of locally produced goods, are also favourably positioned to lead the ‘Buy Kenya, Build Kenya’ initiative to amplify the skills and resources within their boundaries. Instilling a national pride in the quality of our local production and capacity to meet the demands of our country’s population will have a lasting effect on the growth of industry. Young people will be motivated to dedicate their innovation toward the development of diverse sectors, and will be sure that they will be valued and recognized for their contribution. Part of this contribution will be the setting up of well-equipped TVET institutions that will attract candidates from other counties as well. These institutions could also have research labs that encourage the creation of solutions for day-to-day challenges of each county depending on their unique needs.
From a national perspective, as industry we have seen great strides by the Government and respective agencies in the effort to make Kenya’s business environment more competitive. The exemplary instances for this would be the launch of the Kenya Industrial Transformation Program (KITP),the Special Economic Zones Act 2015, the enactment of the Companies Act 2015, the Insolvency Act 2015 and the Business Registration Act 2015. These actions indicate that there is political will to establish Kenya as a stable and investor-worthy business environment. Some of these were the indicators that were credited for Kenya’s improvement in the Ease of Doing Business Report by the World Bank in 2015.
There is a need to have strong structures on the county level to replicate these efforts, opening up regions to business activities that will uplift the overall living standards for our citizens. Increase in trade and investment consequently provides access to markets across the country and eventually to the EAC region. If counties establish fair rules of trading with each other, strong value chains will also be created along the way benefitting all from producers to the end-users. Also the upsurge in investment within counties means that the quality of goods or commodities being produced rises to a globally competitive standard.
The diversity of the 47 counties is where the future of our country’s economic stability lies, if we put in the time and effort to harness it.
Article by Flora Mutahi.
The writer is the Vice -Chairperson of the Kenya Association of Manufacturers.