The government can do lots to foster sustainable entrepreneurship

What you need to know:

  • There are many sources of opportunities, but let me focus on one that is more practical; trade shows or industry exhibitions. 
  • At a recent food trade and hospitality show in Dubai, I saw technologies there meant for Africa.  But there weren’t many Africans. 
  • In Nyandarua and Molo, 30 to 40 per cent of potatoes go to waste, yet Djibouti, which is two hours away from Nairobi, imports potatoes from France.
  • The fat profits banks are making now are an indicator that there is more room for new players.

Following my blog post last week, I received a barrage of tweets from people who wanted to know how we can best utilise resources like Uwezo Fund. 

This followed my statement that we shall never see an entrepreneur evolve from such funds, basically emphasising the point that the government should not be managing such funds, simply because it has never worked before.

If you recall the Guaranteed Minimum Returns loan scheme in the agricultural sector a few years back and the recent Kazi Kwa Vijana programme, you can see my point.

If the government wanted to create a sustainable entrepreneurial culture, then the approach they are using is not the right one.

Academics have argued for many years about whether entrepreneurs are created or born.  No one argument is conclusive, since some created entrepreneurs have gone on to succeed. 

Similarly, there are those who have the Midas touch in entrepreneurship and we refer to them as born entrepreneurs. 

To cut these arguments short, there is evidence that if you work hard enough, you can be equally successful if you follow some steps carefully.

The first step is recognising an opportunity, or how you move from an idea to the market.  If there is any aspect of entrepreneurship that is key, it is that process of going through the ideas in your head and deciding where there is an opportunity. 

READ: Uwezo Fund seeks to support more groups

READ: Tattoo artists make their mark in Nakuru

READ: Roasting smokies pays my bills

This process can be outsourced to expert volunteers or paid consultants.  There are many sources of opportunities, but let me focus on one that is more practical; trade shows or industry exhibitions. 

These shows help demystify some of the more complex opportunities such as manufacturing or new products.  They bring your idea into the market place.

For example, at a recent food trade and hospitality show in Dubai, I saw technologies there meant for Africa.  But there weren’t many Africans. 

A number of technologies caught my attention.  First was a commercial solar-powered fridge, then a fruit smoothie-making machine. 

I thought combining the two would create a great opportunity and one that can sustainably create jobs.  Here is how.

Most countries in the tropics like ours are blessed with abundant fruits.  They are seasonal, and we have never thought about how to use technology to ensure a sustained supply and delay consumption in order to retain value. 

MONEY CHASING GOOD IDEAS

If we developed a business plan to refrigerate mangoes from Kitui using their intense sunshine, we shall have achieved a sustainable supply of mangoes throughout the year. 

Further, if we positioned smoothie machines in strategic places, we could get a sustained supply of a value-added product that is hygienically produced and that can attract a wider market. From here we can package and supply it to other parts of the country, and in the process, create jobs in the value chain.

Any venture capitalist will fund such a business plan since there is a clear product and a market development strategy.  The plan does not need the government to provide funding, not when we still think of “mali ya uma” (free government money) as a free resource. 

There is lots of money chasing good ideas.  In the same expo I saw a food drier.  My mind took me to Kisii and Meru where up to 40 per cent of bananas go to waste because they lack market opportunities. 

At least in Meru the problem is lessened by Eric Muthomi, a 27-year-old entrepreneur, who started Stawi Foods and Fruits, an award winning enterprise involved in the production of banana flour.

Muthomi employs 15 workers.  With a little help, Stawi Foods can begin to innovatively manufacture banana noodles for the export market. 

This is how we can sustainably create jobs using the resources we have, as well as creating not just wealth, but enough foreign exchange, if we convince the Italians to consider banana noodles in their menu.  

'PREDICTABLY DEFAULT'

In Nigeria, more tomatoes from their harvest go to waste than those they import.  In Nyandarua and Molo, 30 to 40 per cent of potatoes go to waste, yet Djibouti, which is two hours away from Nairobi, imports potatoes from France.

France, if you did not know, subsidizes their farmers to remain competitive.  South Africa does the same, making their eggs cheaper in Nairobi than those supplied from Kiambu.

Instead of government pumping money into non-sustainable enterprises, the same should be used for market development, providing intelligence on our competitiveness and fighting market distortions by other countries. 

So when you give money to a youth group in Kiambu to invest in poultry, they are at the mercy of South Africans.  Does this make sense? 

Chances are that the youth group would predictably default on repayment, and academics would produce papers that conclude our youths cannot be trusted with money. 

The politician would then promise another fund, continuing the cycle .  Did we not learn from Kazi Kwa Vijana

The Economist of February 14, 2015 reports that Britain is quietly doing well in entrepreneurship.  In 2013, it says, “more businesses were created in Britain than in any year for at least a decade.  Emma Jones of Enterprise Nation, a lobby group for start-ups, says that the 2014 tally was even higher.  Many of them are laid-off builders and architects setting up on their own.  But among these “necessity entrepreneurs” are a valuable clump of more ambitious folk, who are taking on established businesses with more innovative technology and better customer service.”

ROOM FOR MORE BANKS

Regulators are responding to the rising number of entrepreneurs and making it easy for start-ups to get into some sectors. 

The banking sector regulator for example, has lowered the barriers to entry to that market by requiring new entrants to hold less cash at the outset.  This is good news for consumers, who have ever more options to choose from. 

The article says Metro Bank, an early challenger, has concentrated on opening branches, whereas Atom Bank, which will start later this year, is digital only. 

All this is not happening by accident. Lord Young, a former Entrepreneurship Advisor to Margaret Thatcher, is now advising British Prime Minister, David Cameron, on the same and implementing it across all sectors. 

These are great lessons from Britain.  I see many opportunities from this article.  First, we could leverage on ICT to create a more competitive banking sector in Kenya.

The fat profits banks are making now are an indicator that there is more room for new players.  The government should take a bold decision to unlock the resources that lie idle, such as unclaimed assets, and lend them to the youth to create digital banks across the country. 

Youth would then be assisted to identify viable projects to be funded by the digital banks.  Such projects include: drilling boreholes and selling water to communities as utility providers, building solar systems and supplying green energy to communities and building cottage industries in the rural areas.

DECLINING DISEASE

They may also fund the service sector, such as a network of courier services to distribute rural produce countrywide.

Virtually every county has natural resources to be exploited through flexible lending over the digital platform, creating an industrial revolution of our own. 

The impact of such an investment has greater implications, especially among the women who spend a great deal of time fetching water and firewood.  The investment will also have a huge impact on the environment. 

The disease burden will decline to the extent that our ranking, especially on the child mortality rate, would significantly improve.

If we put our selfish interests aside, our country will not just achieve vision 2030, but will be a developed country by then. 

Our future is in our hands and there are resources to make radical changes to our economic development.  Someone must stand out to take the necessary risk.

Mark Zuckerberg once said, “The biggest risk is not taking any risk... In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.

The writer is an Associate Professor at the University of Nairobi’s Business School. Twitter:@bantigito