The economic cost of marginalisation

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This article first appeared in my weekly column with the Business Daily on January 29, 2017


Over the past week I have been travelling around the country and have visited what can only be described as grossly neglected areas of the country. The difference between the state of infrastructure, water and sanitation systems, schools and even internet access in areas which have enjoyed government and private sector investment, and those which have not, is truly stark. And although devolution has brought some attention to counties and communities locked in neglect, a pattern of leaving ‘those areas’ to the NGO world and food relief organisations still lingers. This chronic marginalisation is costing the country millions.

Firstly, the lack of investment in human capital mainly in the form of education, healthcare as well as physical and food security has implications on productivity. In failing to ensure that every Kenyan is well fed and has access to basic healthcare and schooling, the country has written off millions of Kenyans, their ingenuity, their potential and their ability to develop the country. Individuals who are sick, poorly educated and malnourished are far less productive than those who are healthy, well-educated and food secure. The neglect has meant that employment-creating businesses were not opened, important innovations not discovered and ingenuity not tapped into, all of which could have had a positive impact on the country’s economic development.

Image result for human capital

(source: http://tweakyourbiz.com/management/files/shutterstock_128167007.jpg)

Secondly, there is a notable lack of support to businesses in vast swathes of the country. In those areas, businesses often fail to become successful due to external factors, not due to a lack of intelligence, determination or business acumen. Many good business ideas die due the lack of transport infrastructure and electricity rather than because the business idea was a poor one. If Kenyans marvel at how Thika Highway unlocked entrepreneurship along that road alone, imagine what a truly robust transport network could deliver. Business in many parts of the country do not take off due to external factors and as a result entire regions of the country fail grow and contribute to the GDP and wealth of the nation.

Finally, even if small pockets of private sector activity thrive in neglected areas, they probably function at subpar levels, unable to expand and grow optimally. Not only do they have to live with the reality of poor transport and energy networks, finding skilled labour for business operations is close to impossible due to low levels of education and a high disease burden. And if individuals manage to earn an education in such areas, they often leave the region as soon as feasibly possible. As a result, businesses in such regions operate below potential leading to subpar contributions to the economy.

Image result for poverty kenya

(source: http://www.standardmedia.co.ke/images/wednesday/Poverty_Standard_040913.jpg)

However, as with all clouds, there is a silver lining. There is a grit, resolve and spirit of determination in areas that have been forgotten. While some have resigned to their lot, others have a tenacious spirit determined to succeed. But what is clear is that there is a need for creative investment strategies to develop remote regions executed through blended financing and alliances of public, private and civil society actors. It is clear that just one type of financing or support is inadequate. There is a need for professionals and business people to step out of their bubbles and leverage their combined financial and skills assets towards shared interests. Without the pooling of resources and talent, the potential of millions of Kenyans will continue to go waste and fail to build the personal and communal wealth the country so desperately needs.

Anzetse Were is a development economist; anzetsew@gmail.com

 

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