Missing files and Tender Entrepreneur Brokers

“The abuse of entrusted power for private gain is always fine for the one person doing it, but it becomes catastrophic if everybody starts doing it.” - David Pitt-Watson

Last night on the news, Kenyans got to witness Dorothy Angote, the Permanent Secretary in the Ministry of Lands leading what was a day-long graft busting raid on junior officials in her Ministry. The Ministry which handles nearly five million title deeds, has been continuously been named as being one of the top most corrupt public institutions in the country. For her efforts, the PS unearthed thousands of files that had been stashed, some of which had been “missing” since the 1990s.

Kenyans have long become used to the phantom menace called “missing” files. The ghost appears out of nowhere just when one needs to undertake a transaction with the government.

Anyway, Dorothy Angote’s impromptu raid at least saved some Kenyans from the cartel of rogue officers at the Lands ministry as well as what we shall politely call brokers, agents or tender entrepreneurs.

However, Ms. Angote’s prescription to the problem falls short of expectation when she announced that there would be a reshuffle and disciplinary actions for the errant officers. If the Lands Ministry was a private business, for sure at least there would have been mass summary dismissals, if not court prosecutions. To send a clear message, the punishment must be clear.

Kenya has not been alone in handling rogue brokers that encourage public sector corruption. South Africa has also been dealing with such brokers who because of their close connections to the political elite, seem to be amassing great wealth to the detriment of hard working entrepreneurs.

Bobby Godsell the chairman of Business Leadership South Africa was recently mentioned in the media calling for South Africans to stand up to tender entrepreneurs who benefited from state contracts.

He likened this business practice to "a form of economic terrorism" that imposes “a cost on state services and conferring no benefit”.

This came in the wake of allegations that the country’s ruling party ANC’s youth leader Julius Malema's who the BBC recently described “28, a little overweight, impeccably dressed, and rather fond of referring to himself with the royal ‘we’” had irregularly personally benefited from lucrative government contracts. However, Mr. Malema has denied accusations of unearned wealth by saying that he is merely the victim of a political conspiracy and a racist plot. 

Indeed Malema is just another example of South Africa’s “bling culture” which has for some compromised ethical business behaviour. Entrepreneurs have had to be linked to a politically connected personalities in order to effectively compete on the public sector market.

Back in Kenya, business cronyism in the tender sector has led to great resistance each time the government tries to institute measures that will even out the information asymmetry when it comes to public procurement. 

As we mentioned almost two years ago, the broker sector in Kenya has also become a culture where:

“You need a middle man to manoeuvre public processes. For instance, if one goes to the companies, lands or court registries, you have to more or less fight your way to the front of the queue. Brokers have taken precedence and because they have managed to become acquainted with the public officers, they tend to get their work done first … “

And it is this lack of transparent systems and promulgation of red-tape that have been a boon for the broker community. The cost imposed on not just entrepreneurs but every taxpayer in muddling through bureaucratic systems is what ensures that brokers shall always be in demand. After all, the opportunity cost of giving a broker a facilitation fee and lunch money to ensure that your application is submitted or your file is found, is much less than the cost of having to leave your business in order to chase up the matter yourself.

Then there is the issue of business competitiveness which has also had an impact on the need to fast-track (at whatever cost) government procedures. Bending the rules and paying the occasional bribe just to get a process fast tracked or even to be awarded a contract are common dilemmas faced by today’s entrepreneur. Moreover if one is doing it, then you can bet that others just to stay ahead of the competition will also do so.

It has now become recognised that an important catalyst to business growth is enabling entrepreneurs to compete on the public procurement market. And it is encouraging that young entrepreneurs are taking on the bottlenecks in the public sector, and developing new applications that equalize information asymmetries and promote transparency whilst combating public sector corruption. One such business is Tenders Unlimited, a new Kenyan business startup that provides databased access to tenders to business people.

Reducing the opportunity costs of red-tape frees up resources for more productive activities as well as spurring wider economic growth. Thus computerization of government documents should be implemented.

And finally to put rogue brokers out of business, procedures that require in-person attendance should be minimised. As seen by the influx of mobile phone money transfer systems onto the market, banks are now joining the fray and offering mobile payment systems that will eliminate the need for people to stand in long queues just to get their bank statements. Without ZAP and MPesa, chances are that the traditional banks would not have brought banking services closer to the people.

Now we are asking the government to bring it’s services closer to us taxpayers too.

Slum Safari’s: Tourists pay for the squalor and stench of poverty, not development

There was uproar on twitter this morning regarding Kibera Tours, a website advertising slum tours in Africa’s largest slum. Indeed Kibera Tours is not the first nor will it be the last outfit trying to make money out of poverty. Tourists seeking such experiences can go to Dharavi in Mumbai - the biggest slum in Asia, the favelas of Rio de Janeiro, South Africa’s townships or even Mexico City’s garbage dumps.

Such escapades have been made even more popular by celebrities who sometime go by the title “Ambassadors” such as Angelina Jolie and Chris Rock, who after a tour of the ramshackle huts, having had to hold their breath while passing the open sewers, ducking the flying toilets while walking the narrow footpaths and in front of a trash heap, maybe surrounded by big bellied snot nosed children, express outrage at the poverty and make impassioned pleas for more money to assist the people. Even the Oscar award winning movie Slumdog Millionaire put comedy into the scenario.

The ironic thing is that Kibera has the most number of NGOs, INGOs, CSOs, FBOs, CBOs, students on their gap year or whatever name they go by per square foot compared to the rest of Kenya. Yet, poverty persists, maybe a prime example of the economic law of diminishing returns.

Recently at Yipe.org we met a youth group from Kibera who told us they were into “eco tourism”. When we delved into their enterprise further, there was nothing eco friendly about their business. It was slum tourism pure and simple. However the lead entrepreneur was un-phased and said why care what it’s called or what it’s about when you make US$ 20 on a bad day! – this in a place where the majority live on less than US$ 2 per day.

Reading the customer testimonials on the Kibera Tour website makes one wonder whether the inhabitants have been dehumanised. Among the customer reviews posted on the site a few stood out:

“This is what our guests said after joining about our tour, our organisation and about Kibera: ‘It feels safe’ … ‘Very interesting to see. Unique experience! Friendly people! Solidarity and happiness. Impressive!’ … ‘Impressive to see how strong the people are’ … ‘I thought first it was very dangerous, but now I think every one was friendly and helping each other'….” And the list goes on …

So what is on display: the people or the slum environment?

The reviews above teeter dangerously close to the environmental determinism movement of the late 19th and early 20th centuries that got away with saying things such as people that live in the tropics are lazy, slothful and riddled with venereal diseases amongst other slurs. To objectify the “people” of Kibera in such a way is even worse because they don’t receive the cash for the tours; the tour companies do.

Further, objectification of the people comes on the advice posted on the Kibera Tours site to the tourists:

“Please don't hand out anything during the tour. So don't hand out money, sweets, pens, balloons and so on. This can create chaos and quickly may establish the assumption that tourists equal gifts”.

So, how come slum tourism seems to be the hottest business idea around, judging by the number of people involved? Well, it’s really simple. For an entrepreneur seeking to venture into such an industry the entry barriers are low; so low they are almost negligible. Kibera is an informal settlement which means it officially doesn’t exist. The sprawling slum has a reputation of being dangerous, so even police or local authority presence is low – so you can pretty much do anything without too much interference.

The startup costs are also minimal – the slum is already there and with rural-urban migration it continues to grow. No need to invest in infrastructure on that score. The “people” are also there for the tourist’s viewing, and with high fertility rates coupled with high unemployment levels (which would otherwise take them out of the slum) the total package is there.

What about attracting customers? With internet access getting cheaper one can within no time set up a slum-safari site and get interest from eager do-gooders from afar. Without much government regulation the dollars, yen, euros or whatever other currency goes direct into your pockets. In fact you don’t even need to share it with the “people”.

Demand is also inelastic, it would take a great calamity for a do-gooder’s heart to change (demand) and poverty (supply) will remain and even grow – making a perfect equilibrium point. Finally there are no sunk costs; indeed it is in the interests of such entrepreneurs that the slum stays just the way it is. Slum upgrading initiatives are thus the only threat for the business. Tourists won’t pay to tour high rise concrete apartments equipped with basic living facilities even if the people living there are the “people”. Tourists pay for the squalor and the stench of impoverishment, not development – that they do by donating money to aid agencies.

But what to do when even the larger travel companies are joining the fray? Victoria Safari’s which operates throughout East Africa has a package called “Africa Slums Tours” calling it “pro poor tourism”. From it's website pro poor tourism is described:

“the concept of pro poor tourism in Africa is not new as it has been and is being practiced in South Africa. Soweto and Shanty tours in Johannesburg and Cape Town respectively are not new tours but have been ongoing slum safaris that are changing the face of South Africa's Slum areas. Kibera Slum dwellers in Nairobi - Kenya are gradually beginning to reap the benefits of Kibera Slum Tours just as other Kenya Slums dwellers, courtesy of Victoria Safaris.”

If slum dwellers have been benefiting then wouldn’t that mean there would be no more slums to visit? Besides that, there is also the worrying aspect of the logo of Eco Tourism Kenya at the bottom of the Africa Slums Tours web page. Ecotourism Kenya is a civil society organization that was founded in 1996 to promote ecotourism and sustainable tourism practices in Kenya. Is slum tourism then sustainable tourism?

So will slum tourism continue to thrive? Of course as long as the barriers to entry remain low, and the government does its best to do nothing to uplift the lives of the millions of Kenyans living in informal settlements. And it is doing that job very well!

Kenya's Youth Council Bill is merely a means to keep the old guard on top

Kenya's National Youth Council Bill 2009 came up for reading this week in parliament, though lack of quorum once again caused some delay. Though this should be cause for celebration for the country's youth movement, several clauses illustrate the government's inability to respect the needs and demands of Kenya's youth.

Indeed the Bill is ambiguous even when it comes to the definition of who actually constitute the youth. In the Bill's preliminary, the youth are termed as persons between fifteen and thirty years. However,the United Nations categorises youth as those between the ages of 15 to 24 years old. And for one to benefit from a loan from the country's Youth Enterprise Development Fund, one has to be between the ages of 18 to 35 years.

Then there is the issue of actual youth participation in the proposed Council. Section 5 of the Bill states that the Chairperson shall be appointed solely by the Minister of Youth Affairs & Sports. However, she need not even consult with youth groups when making her decision, so she could appoint a geriatric if she chose.

On further perusal of the clauses regarding the composition of the Council, it turns out that it is not only the Chair that could turn out to be old. Apart from the traditional practice of having permanent secretaries from the parent ministry and the Treasury in addition to the Attorney General (or an appointed proxy), the Minister also holds sole powers to appoint six other members to the Council. The clause once again does not insist on any consultation with youth groups, and also has no mention whatsoever of the age of these members.

Further, the Chief Executive of the Council can be as old as Methuselah as far as the Bill is concerned. This is the same officer who should serve as the face of the Council and be the voice of the youth to the Council members, yet the Bill omits to mention that they even need to form any liaisons with the country's youth groups or have any prior experience in youth policy making.

The staff of the Council too do not have to be youth. And remember that it was only a few months ago when the retirement age of civil servants in Kenya was hiked up by five years to 65! Seeing that the government claims to be striving to implement austerity measures, most likely the staff will be deployed from other government ministries; so who is to say that the Council offices will not be manned by 59 year olds? This in the same country where nearly 10% of the total population are unemployed youth, stinks of the same insensitivity government policies have had towards the Kenyan people.

The bid to control the youth through this reactionary document, also rises higher up in government echelons, not merely resting on the shoulders of the Minister of Youth Affairs. The President who himself is inching closer to 80 years holds the sole power to appoint the Chairperson of the proposed Advisory Board to the Council. This is the same person that oversaw the re-appointment of the oldest civil servant in Kenyan history back to the Kenya Airport Authority! Even scanning appointments to commissions and government agencies, it would be more in keeping to norm for the President to appoint someone over retirement age, this time not even having to consult with younger MPs let alone youth organisations themselves.

But there is a glimmer of light where the advisory board is concerned where the Minister of Youth (again!) has the power to appoint eight representatives of youth organisations. However, yet again the youth are locked out in getting extra seats on this board by the following factors:

• Though one member must be nominated by the Kenya Private Sector Alliance, to be a member one has be an association or a corporate entity and fork out at least Kshs. 5,000 (US$ 65). Youth entrepreneurs generally tend to be cash strapped, and thus more likely to be unable to even afford this sum, precluding them from such a nomination.
• Including only the Commission of Higher Education to represent the education sector ignores the millions of youth who never had or will have the opportunity to benefit from tertiary education.
• The National Economic and Social Council has a small minority of youth members, who once again only represent the creme de la creme of industry and financial services in the country. What about the informal sector entrepreneurs who form the majority of business activity in Kenya and employ 75% of Kenyans of working age?
• Finally where are the nomination categories that will nominate members to press for the rights of rural and urban poor youth?

Even the experts that are supposed to advise the advisory board do not have to be youthful. To us, the best expert is the one that is living the life - the youth themselves!

Another toothless dog?

It seems that indeed this proposed Council is once again a PR gimmick of the government, a mere toothless poodle to appease and control the youth. Under the Bill, the activities and mandates of the Council are only a duplication of what national youth movements have already being doing for eons. The proposed Council pales in comparison to the youth council in Rwanda, which even has enough power to elect members to the country's Chamber of Deputies, the second chamber of parliament.

As Hon. Denis H. Obua MP of Uganda writing earlier on the yipe.org blog comparing the mainstreaming of youth policy in his country to that of Rwanda commented:

"My observation was that issues of the youth are given top priority by the Rwandan government.

Their youth councils are one of the best supported in Africa and the Ministry of Youth Affairs is considered one of the core ministries ... But does the Rwandan government have more resources than Uganda’s? The answer is no, but issues of the youth attract top attention in Kigali".- Govt crippling youth efforts to live better, November 21 2008

Though the Kenya Bill tries to promote fresh talent by limiting the number of years one can sit on the Council or the Advisory Board to three years, a better measure would be to ensure that the main decision making powers rest with the youth membership, while the permanent secretaries and Attorney General's representative act as advisers to ensure they act within mandate and the law. The maximum limit for the youth Council members can be either 30 or 35 years, after the Ministry of Youth finally settles on one age. After that the Council members should retire.

Also the powers of the Minister of Youth to hire and fire should be curtailed, by insisting that there should be some consultative process with the youth of Kenya, before embarking on such actions.

Business activism: Positively transform Kenya with the 2009 Budget Campaign

As any entrepreneur knows, business in the current economic climate is becoming well-nigh impossible.

With inflation adversely impacting raw material and final product prices, instability as a result of political bickering, a tax regime that places punitive impositions on micro-enterprises as well as dwindling consumer purchasing power, Kenyan small business enterprises are now under threat.

A few weeks ago on this blog, we decried the fact that the way the government to which we pay taxes was spendthrift, positing that if it were a business, it would have collapsed ages ago.

Well the season of the National Budget has come upon us again. And this time we can make our representatives to parliament more accountable by ensuring that government expenditure provisions reflect the will of the people of Kenya.

As the accountability portal Mars Group and the Partnership for change point out:

“The National Budget as presently constituted is enmeshed in corrupt and wasteful expenditure and there is need for Kenyans to educate each other on this so that we can pressure our representatives to scrutinize the budget to identify such expenditure. Savings can be used to boost development expenditure.”

As entrepreneurs are the main drivers of the economy, we should be in the fore-front of such an initiative. For instance we can demand accountability from our parliamentary representatives on the following:

• A reduction in the size of the Government of Kenya via the enactment of a statute pursuant to section 16 of the Constitution to cap the number of Executive Cabinet Ministries; and the need for integrity criteria for public service.

• A reduction of the recurrent expenditure of Government and the setting of ceilings on recurrent expenditure.

• Demand for full accountability and transparency in the External Public Debt Register which records all debts incurred by the Government of Kenya with international multi-lateral, bi-lateral and commercial creditors.

Apart from contacting your MP, you can also write a letter to the Commissioner General of the Kenya Revenue Authority (either when making payments or not) to register your displeasure that you are fulfilling your business obligations, albeit to a government that does not manage its resources responsibly.

Or, you can join the Partnership for Change 2009 Budget campaign to mobilize public support so that the Government of Kenya becomes accountable and transparent in the borrowing and implementation of the funds it collects from the public in taxes.

This time the onus is on us entrepreneurs to make the change we wish to see in Kenya today.

Fiona Mati
Founder
Youth Interactive Portal for Enterprise (Yipe.org)