How proposed law will cure youth unemployment

No nation has ever prospered economically without the strong involvement of the government, be it in a capitalist, socialist or communist system.

Whether in the US in the 1930s where the New Deal saw government do what the private sector thought should not be done by the government or in USSR with the Joseph Stalin leadership steering the ambitious Five-Year Plans that saw the nation rise to be one of the largest economies in the world.

Today, government owned Chinese firms have dominated economies of many countries, Kenya included, and that’s how China became the world’s second largest economy.

The Strategic Youth Industries Bill 2014 that I have moved in Parliament seeks to put Kenya on the path many developed countries travelled. The Bill seeks to establish the Strategic Youth Industries Board and have the government commit at least 0.1 per cent of its annual revenue to the board to establish industries that should be profitable, sustainable and provide employment to Kenyans in the ratio of Sh100,000:1 employee.

This means if the board was to spend Sh100 million in setting up a given industry, the industry should employ a minimum of 1,000 employees and of these, 80 per cent should be young people to solve unemployment.

This may seem like another plan to create public corporations that act like employment bureaus and achieve nothing else except pay salaries to employees who do little work if any. Nothing is farther from the truth! A whole section of the Bill is dedicated to outlining objectives of the proposed law, which include setting up profitable and sustainable industries.

Before establishment of any industry, the board will submit to Parliament a comprehensive proposal, giving a thorough study of the target markets; capital, profitability and employment projections. It is only after debate and approval of the proposal by Parliament that the board can establish the proposed industry. This oversight mechanism over the board by Parliament will ensure none of the proposed industry will be run down as has been the case for some public entities in the past.

The Bill demands that every industry to be set up be privatised within five years. This will see the exit of the industry from the Strategic Youth Industries framework into a listed company, therefore posing a performance target for the board since for any successful privatisation, the industry should have posted good profits over the five years.

All this is nothing but experience put together in an organised way. This has been the Kenyan experience: First there was the Youth Fund, then there was Women Fund and now there is Uwezo Fund. These are excellent initiatives and they have done their part: nurturing entrepreneurs who have the courage and the character to pursue entrepreneurial goals. However, the larger part of the problem remains unsolved and that is why unemployment rate remains high while millions of the Funds’ cash lie idle. This means there are millions of unemployed Kenyans who don’t access Youth Fund or Women Fund. This is the root problem.

Entrepreneurship is a skill not owned by everyone. Some people are comfortable being employees rather than beginning their own ventures. Secondly, we must appreciate that we operate in a global economy, fiercely competitive and some local simple entrepreneurs may not survive this competition. Today, basic commodities like sugar and eggs can be imported at a lower price than that of local producers. We therefore need mega industries that can invest in research and other modern aspects to match the global competition.

A common misconception has been that public entities don’t perform well in Kenya. To some extent this may be true but it’s also worth noting that some of the most successful firms in Kenya were, and some still are, government corporations. These include one of the most profitable companies in Africa: Safaricom.

The underlying principle of the Bill is the same that saw the rolling out of Economic Stimulus Programme when President Uhuru Kenyatta was the Minister of Finance: Seeking the government to spend heavily on projects that stimulate economic growth and employment. It was the Economic Stimulus Programme that saw the GDP growth rate rise from 2.7% in 2009 to 5.8% in 2010.

In his foreword of the Economic Stimulus Programme, President Uhuru noted: “Kenya’s economy has demonstrated fraying points that require urgent, targeted attention if the current trend is to be reversed and conditions for takeoff re-established... The youth are the single most valued resource we have in this country.”

True to the words, the Strategic Youth Industries Bill seeks to bring the government into investing in high return commercial ventures that will also provide employment to Kenyans, mainly youths.