The woes of the Young Kenyan Entrepreneur By Paul Mutuku

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1 The woes of the Young Kenyan Entrepreneur By Paul Mutuku According to the world population prospects 2006, Young people comprise 15.5% of the total world population. In Africa, youths constitute 14.1% of the total population. Narrowing down to Kenya, according to the 1999 national census, conducted by the Kenya National Bureau of statistics, youths form 75% of the country s total population. UN defines a youth as a person between the ages of 15 and 24 years. In Kenya a youth is defined as a person between the age of 18 and 35 years. Even though the disparity between the global percentages of youths (14.1%) and the Kenyan percentage (75%) is widened further by the difference of the age bracket in the definition, in Kenya youths are the majority population. There is thus a higher competition for resources, opportunities, facilities and youth related services. Apart from the disadvantage of numbers there are myriad factors that play a role in the woes of the young Kenyan Entrepreneur. Having been born and brought up in abject poverty, most youths have a low self esteem that eats their confidence. Success in Entrepreneurship has no two ways. It calls for one to have the confidence to believe that they are able to make a difference. Most youths born in dismal poverty do not believe that they can make a difference. This is a major blow to young entrepreneurs in Kenya because one needs to make them believe in themselves first before they can believe that their efforts and ideas in entrepreneurship can yield fruits. Poverty also makes it hard for the youths to access capital as well as to acquire skills and information on investment. As I comment the Kenyan government s recently launched Youth Entrepreneurship Fund, I would, with all due respect, point out that the fund is like a cup full of water meant to put out a fire in a burning house. It is quite ridiculous that the maximum amount given to a group at the constituency level is 50,000 Kshs (equivalent to 641$). With such an amount as the maximum, a group of 20 people can even end up receiving 20,000 Kshs (equivalent to 256$). This is an average of 1000 Kshs (equivalent to 12.8$) per person. According to the conditions set by the Ministry of Sports and Youth

2 affairs, any youths willing to get the government s loan as individuals can obtain the loans from the intermediary financial institutions giving the loans on behalf of the government. The straw that breaks the camels back is that the financial institutions give the finances in accordance with their internal conditions. Where in this world will the youths get all the required collaterals to obtain these loans? Young people would also like to know why the government has failed to insure the loans against such occurrences as death. Apart from lack of confidence and capital, there is the lack of support for innovativeness even at the smallest unit of the society, the family level. It is demoralizing that most parents would rather their children went looking for employment than start any form of business venture. Most youths who give a hand in business are viewed as failures who could either not cope or who would not fit in the employment arena. There is thus a negative influence that stems from the notion that one needs to be employed to become successful. Ironically, at the long run, the few entrepreneurs who succeed, against the odds, are seen as role models. Even as the government sets up a fund for youths in Entrepreneurship, it is a pity that the same government seems to be too busy fighting the same entrepreneurs. It s unfortunate that young business men and women have to pay taxes even when they are making losses. In this regard, the government seems to be giving with one hand and taking with two. On another account, any one who has come face to face with the cat and mouse running battles between City Council Police and hawkers will bear witness that no elderly person can manage the speed the young people run across the city with all their merchandise in their shoulders. Of course it is illegal for them to sell in the NCBDA (Nairobi Central Business District Area.) I stand to be hanged, but it s better than taking a gun and hijacking people in the highway. The Kenyan Education System is clearly not meant to promote a culture of entrepreneurship. The system is so theory based that, in my own opinion, those who pass the exams are not the brightest but those who posses a better cramming power. That s

3 why most university graduates have ended up pushing carts even after successfully finishing their degree courses, yet there are folks who didn t even go to school but are controlling millions. The education system not only fails to impart skills on entrepreneurship buts fails to interrogate the spirit of innovativeness and creativity that is core for entrepreneurship. All factors held constant, there subsists a negative attitude towards entrepreneurship among the youth in Kenya. One of the key causes of the negative attitude is the fear of risk and uncertainty. Most youths would rather be employed and safeguarded against the uncertainty of self employment. They are not willing to accommodate the income fluctuations and risks that come with self employment. Infact, if you were to interview most of the small scale young entrepreneurs, they would tell you that they would consider going for employment. To them entrepreneurship is a last resort. The global crisis has escalated the situation in the country. As foreign investors focus on consolidating their own financial position, there is a consequent reduction on their investment in Kenya. This reduces government revenue. A reduction in government revenue translates to a reduction in the youth entrepreneurship kitty. This directly affects the amount of money as well as the number of youths benefiting from the kitty. Industrial lay offs occasioned by the global crisis in the various sectors of the Kenyan economy fuel the unemployment and poverty levels in the country. As more people (with youths as the majority) become unemployed there is a direct impact on the competition in entrepreneurship as well as access to capital. The depreciating value of the Kenyan shilling makes it expensive to import finished commodities and raw materials. This increases the initial capital and the cost of operating a business as young people lack both the capital and the collateral required to acquire loans from financial institutions. It therefore becomes almost impossible to operate an import depended venture.

4 If the Kenyan youth is to achieve a milestone in entrepreneurship, there is need for a concerted effort by the government to review the education system in the country. There should be laid down structures that will ensure that even at a very tender age the seed of entrepreneurship and innovativeness is sown, otherwise there is little we can do once someone comes of age. The education system should be made not only more practical but equally applicable to the Kenyan society today. This way the education system can be able to play a pivotal role in promoting a positive entrepreneur attitude as much as mitigating the negative perception on entrepreneurship. Campaigns on self employment as a way to curb unemployment and poverty would contribute positively in promoting entrepreneurship in Kenya. In regard to the Entrepreneurship kitty, the government should not only increase the amount, but should also loosen the noose to make it easier for individual youths to access the fund. The committee at the Constituency level should be able to vet individual entrepreneurship plans and to support credible ideas. In cases where youths have limited capacity, the fund should be able to cater for capacity building in the different specific areas of entrepreneurship. Capacity building would alleviate the incidences where the government gives loans to naïve individuals who are left in debt after mismanaging the fund. The government should also ensure that the loans are insured against such occurrences as death, so that family members do not bear the burden of paying for loans of their deceased family members. There should be a considerate grace period for businesses before they can start paying taxes. This would give time for businesses to flex their muscles. The government could also consider waiving taxes on businesses owned by youths that do not reach a certain scale of profits. Otherwise without being political, there is no justification why striving youths in small scale entrepreneurship should pay tax for the little they don t have, while MP s do not pay taxes for the much they earn. In light of the global crisis, the government should develop alternative domestic revenue areas to cushion itself from the crisis.

5 All in all, before a Moses comes to the rescue of the young people of Kenya, it appears that they will still drown in the river of anguish with very little that they can do within their limited capacity.