In my local estate, there are two mini-supermarkets. They used to be three but one has since transformed into a pub. The oldest and biggest has been here ever since this estate existed. Prior to 2013, it used to perform. Queues were long. Shelves were fully stocked. A few minutes ago I went to the supermarket to see if they have an umbrella. They don’t. They don’t have any textile/clothing/fashion items on sale, except for a few old dusty shoes they are selling at crazy discounts. I bet in the next few days they’ll donate the shoes to charity. If the trend continues, they’ll close the shop. The other supermarket is a new one, started by a young man who thought he should be self-employed. Two days ago I passed by the supermarket to buy light bulbs but the supermarket was already closed.
My favorite MPESA shop in the estate, another business started by a self-employed believer, closed shop more than two months ago. In the entire estate, there are more than 10 empty shops looking for tenants. A church started near a private clinic and closed shop, the private clinic took up the church. I personally opened a shop in 2012. It used to make a total of Shs. 180,000 a month in revenue Shs 22,000 of which is gross profit. Today, on a very good day, the shop can make only Shs 2,000 on revenue, which translates to a paltry Shs 7,200 per month in gross profits. Remove rent from the Shs 7,200 and you have nothing to smile about. The situation is not just in my estate. Get yourself to Nakuru town and you’ll meet so many vacant stalls, at reduced prices. There is a stall I wanted to take when it was being offered for Shs 35,000 a month. Today the same stall wants Shs. 20,000 a month but still, no one wants to pick it up. A photography client in town is selling her clothing businesses because, in her own words, business is down.
At the national level, several companies are retrenching employees. Telkom Kenya is firing 575 employees due to their loss-making spree that has forced it to merge with another loss-making entity, Airtel Kenya. EABL, despite reporting a 58% rise in net profits, is set to layoff 100 employees. This might be because they need to improve efficiency thanks largely to automation. Up to 200 employees of Stanbic Bank are facing layoffs under an early retirement scheme intended to cut payroll costs for the lender, Business Daily reported.
The above scenarios only speak of one thing – the business environment is shrinking. Consumers do not have the money to spend on products and services, and when no one is buying, no supplier can make money. The private sector cannot, therefore, provide jobs and disposable income, forcing everyone to live hand to mouth. Without growth in the business sector, and many losing their jobs, it becomes pointless to ask new graduates to become self-employed let alone create jobs for others.
How are they supposed to create jobs? What will they sell? Every time a young person sets up a business he or she sets up to sell something that’s already being sold in the neighborhood of the business. My shop has experienced a 66% drop in the last three years because of people who are advised to become self-employed. They set up shops in my neighborhood to sell the same fast-moving consumer goods (bread, milk, matchboxes, candles) that I sell yet the market size is the same 50 houses. If it is not setting up a barbershop somewhere it is selling women dresses online that these youths venture into. Or starting a photography business. Or starting a blog to tell other youths how not to fall in love, or be in the wrong relationship, or talk about some other form of nonsense they don’t have any expertise on.
Who will they sell to? The same people getting retrenched by the big corporations? Or the rest of them who do not have disposable income? Or the few who prefer to buy from foreign countries? You see the biggest problem with Kenyans is that once they touch some small money, the first thing they’d want to do is to go to Dubai, or China or Uganda to do some shopping. When they do so, they make those countries slightly richer, and by the same token deprive Kenyan businesses of the income needed to keep them afloat, then expand. This works to ensure that Kenyans are forever living hand to mouth, unable to grow, unable to buy. So, if these youth become self-employed, who will they sell to? The same people who prefer buying Chinese made toothpicks?
The best way to have the youth become self-employed is to ensure the business environment is forever vibrant, and this is the core function of any government. But the government cannot ensure a vibrant business environment when their policies encourage the importation of goods and services at the expense of local products. The sugar sector, for example, has died because cartels that control politicians prefer importing Mexican and Brazilian sugar, if not Ugandan sugar. Today Ugandan eggs and poultry have flooded the Kenyan market. The Chinese are not only selling Kenyans everything from electronics to plastic rice but have taken over the construction industry too, thanks to the fact that they give us the loans that we ourselves will have to pay back, with interest. Go to the industrial area and you will find Indians importing virtually everything – from key machinery to fertilizers – from India.
Where is the place for a Kenyan in the Kenyan economy? Kenyans have been left to only look for deals in government tenders, deals that they end up subcontracting to foreigners to execute. In such a corrupt environment, how do you expect a self-employed youth selling the same old stuff in a saturated market to prosper to a point of creating jobs for others? It is not like Kenyans are good at inventing and innovating new products that are of global reach; and even if they are, they global market does not appreciate their inventive and innovativeness; and that’s because their local market is yet to appreciate them first.
Author: Odipo Riaga