Let money circulate to stimulate economy facing many pressures

2019 has been a tough year for Kenyans. More than 20 companies listed on the Nairobi Securities Exchange (NSE) have warned that their financials will fall by at least a quarter in the current financial year. The companies attribute this to low spending power among consumers and delayed payment of bills by government agencies.

In the process, thousands of employees have lost their jobs. The NSE is among the companies that are in the red, warning that profit for the year to December 2019 will decline by more than 25 per cent. It noted that a tough year that resulted in reduced activity at the bourse had dented its earnings.

Small businesses have not been spared either after years of a credit drought. This is after the government in 2016 amended the Banking Act to cap interest rates at four percentage points above the Central Bank Rate.

The failure by the national government and counties to clear pending bills has hurt businesses, exposing some of them to auctions due to non-servicing of loans. Some companies have been forced out of business.

The government should keep its promise to clear Sh225 billion in pending bills by March 2020 as directed by President Uhuru Kenyatta.

However, a number of counties have defied the order, forcing the Treasury to withhold some of the transfers for the 2019-20 financial year and conditional grants. The Treasury should not tire in ensuring that counties pay contractors and suppliers on time to stimulate the economy.

As we move into a new year, Uhuru’s administration should strive to stimulate the economy by putting more money into the hands of consumers. It was commendable of the president to direct the Kenya Revenue Authority and the Treasury to overhaul the country’s tax regime to reduce the burden on small and medium-sized enterprises (SMEs).

There is also consensus that the cost of doing business in Kenya is extremely prohibitive. The government should make it easy for SMEs to access credit. Previous attempts to create programmes that could help grow small businesses have not worked due to poor planning. For instance, the move to ring-fence 30 per cent of all State tenders for the youth, women and those living with disabilities has not worked. It has been hijacked by cartels and proxies of established companies, politicians and government employees.

There is also the unfulfilled promise of lowering the cost of electricity. Cutting the cost of production, where power bills constitute a large portion of the costs for manufacturers will help grow industries.

Also important, let us weed out corruption and cartels within the system and remove the red tape that makes it difficult to do business in the country.