Month: June 2019

Government policy is important- whether it’s good or bad

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This article first appeared in my weekly column with the Business Daily on June 16, 2019

When I interact with many engaging in the economic and social development of Kenya, a sense of cynicism is often communicated when addressing the role of and interaction with government. Whether it’s securing payment for services/goods rendered, trying to shift government policy or ensure it’s implemented, or trying to improve the quality of government interventions, there seems to be a growing view that nothing can be meaningfully achieved through government action. Indeed, government is seen as more of an obstacle to navigate than any hope of it being an enabler. This has led to a rubbishing of the importance of government policy as almost irrelevant to the country’s development. It has reached a stage where even the national budget and fiscal policy are seen as irredeemably meaningless by some serious thinkers in Kenya.

The source of such deep cynicism is due to several reasons, the first being a disconnect between government policy and the implementation thereof. Even in cases where a policy is well thought through, Kenya is infamous in its inability to effectively implement said policy. As a result, some feel one shouldn’t care about policies as they just end up being pieces of paper that are never properly implemented.

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(source: http://reports.weforum.org/new-models-for-entrepreneurship/section-7-the-role-of-government-and-regulatory-policies-in-entrepreneurial-ecosystems-growth-accelerators-or-growth-inhibitors/)

Secondly, is the concern that some policy is not well thought through and that government is often slow to listen to stakeholder feedback on certain policies, leaving Kenyans to live with the realities of bad policies. And linked to this is the sense that even when a problematic policy is then seen to be addressed by government, the modifications are driven more by political expediency and driving the priorities of the elite, than improving the lives of all Kenyans, especially low-income and marginalised populations.

Finally, is the issue of a lack of accountability in the use of public finances. Good policy requires human and financial resources for them to have a positive lived effect on the populace. Here, the government’s open problem with the mismanagement of public funds has left many with the feeling that they’ll never see the positive effects of policy driven by public finances as most is siphoned away through corruption.

However, despite the factors mentioned above, the rubbishing of the importance of government policy is dangerous because it reduces public scrutiny of government activity and can deepen a culture of a lack of accountability. If a population signals to their government, that they don’t believe in their policies and don’t care, then who will hold government accountable?

While it is not every Kenyan’s passion or interest to track and follow policy development and implementation (or lack thereof), it is important that a critical mass stay engaged. After all, we are all affected by government policy, either positively or negatively.

Anzetse Were is a development economist

 

Africa must be proactive and leverage the USA-China trade fall out

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This article first appeared in my weekly column with the Business Daily on June 9, 2019

Global headlines over the past few weeks have been awash with news on the escalating trade tensions between China and the United States of America (USA). As usual the commentary has been dominated by what this means for the USA and China. Refreshingly however, there has also been commentary on how the trade fall out will affect Africa. In my view, there are two core issues to consider as one analyses the effects of the USA-China trade war effects on Africa.

Firstly, the immediate effects will depend on the structure of the African economy. For commodity reliant economies, who over-rely on massive commodity exports (fuels, metals and minerals) to China, the trade fall out will be a problem. Countries such as South Sudan, Angola and Zimbabwe which currently export raw commodities to China and basically rely on that export route for forex earnings, should be worried. On the other hand, African countries with strong agricultural commodity export capacity on agricultural commodities subject to tariffs, may stand to benefit.  For example, some reports indicate that soybeans from Africa have been in high demand and are far more lucrative since China slapped tariffs on soybeans from the USA. Thus interestingly, the USA-China trade fallout is worsening what has been the long-standing problem of reliance on raw commodity (fuel, metals and minerals) exports by some African countries. In others, it is creating an opportunity to deepen exports with China in agricultural commodities.

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(source: https://www.newtimes.co.rw/opinions/us-china-trade-war-will-hurt-africa)

Secondly, the USA- China trade fall out is prompting a renewed focus on Africa for both countries, in dockets out of their traditional areas of strength and interest. China’s interest in Africa has been primarily focused on commodities (metals, fuels and minerals) and infrastructure development. The USA’s strength has primarily been FDI and private sector development in Africa. Both countries seem to be actively moving outside these areas of strengths to buffer themselves from each other.

Last week Reuters reported that the U.S. Department of Defense is in talks with rare earth miners across the globe in order to find diversified reserves outside of China; Africa is a key party in such talks. Because, ‘although China contains only a third of the world’s rare earth reserves, it accounts for 80% of U.S. imports of minerals because it controls nearly all of the facilities to process the material’. The US is actively diversifying away from that vulnerability and pivoting towards Africa. With regards to China, the Chinese government has become alive to the power of private sector China in Africa and is encouraging Chinese investors to invest and direct FDI into Africa. While this was occurring already, the trade war with the USA provides added impetus for Chinese investors to direct money away from the USA to other continents such as Africa, and diversify away from US markets by taking African markets seriously.

The main role for Africa governments and private sector is to assess the impact of the trade war given their economic structures and business models, and deliberately leverage this reality towards African development and growth. Gone are the days of being idle when elephants are fighting. Africa must be proactive.

Anzetse Were is a development economist

 

 

Companies need to deliver on their marketing promises

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This article first appeared in my weekly column with the Business Daily on June 2, 2019

Last week I had an unpleasant experience when a loved one had to have their international flight rescheduled because of weather issues. The ticket was then rescheduled but the airline issuing the ticket could not determine if the new flight details were in their system. While the situation was eventually resolved, the reality is that the airline, like many airlines, aggressively markets seamless connections and access to multiple destinations through their airline network. The reality however, is that the system doesn’t work like that, especially in an emergency. The product experience did not match promises made in marketing slogans.

Clearly this phenomenon is not unique to airlines. Most customers, when dealing with businesses, often find that there is a fundamental disconnect between what the business says it will do, and what it actually delivers. Clearly in the drive to get new customers and drive profits up, promises are made that the corporate system simply does not meet. And this is not only frustrating, it’s dishonest and wastes the customer’s time and money. These issues are of particular concern in a country like Kenya when many with significant financial constraints, spend money on a product and then find it impossible to use the unique selling points they were sold when making the purchase. Not only does that fail to translate to an efficient use of the funds spent by the customer, it puts the burden on the customer to spend an inordinate amount of time and money trying to figure out what is actually feasible.

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(source: http://anthillonline.com/these-are-the-5-marketing-tactics-every-small-business-should-be-focusing-on-in-2019/)

This situation is exacerbated in business to business connections, particularly when an SME is dealing with a large company.  To the SME, the large company is often an anchor player in the delivery of their business model. But often, to the large company, the SME is a fairly minor player as an individual business, to its bottom line. This power imbalance often means that the SME is sold a package the large company has, sometimes specifically targeting SMEs, promising that the large company is the best partner for the SME. However, when an emergency or crisis occurs, the reality is that the disconnect between the marketing that was sold to the SME by the large company becomes a costly inconvenience to the SME. The SME often has to spend an inordinate amount of time and money, trying to figure out how to tap into the features of the product that were marketed to them by the large company and discover what is feasible. And if the large company can afford to lose the business of the SME, they may not address the needs and requirements of the SME in a timely and efficient manner. Thus again, the SME is the one left bearing the burden of the large company not delivering on marketed promises.

In short, it is time companies become honest about what they can actually deliver. Either they need to fundamentally rethink their advertising and stop misleading customers on what they can actually do, or they need to restructure their businesses to deliver on marketing promises.

Anzetse Were is a development economist