"Why would a company hire someone that sleeps on the job, doesn’t complete assigned tasks and demands a hefty untaxed salary?" - Ken M. a Kenyan Entrepreneur, 16th March 2009The global financial crisis has led to the closing down of many enterprises. Even the Business Daily today in its headline article “Global crisis wipes out call centre jobs” tells of the local BPO industry as being in jeopardy.
Recession-proofing
Indeed “recession-proofing” business has become a buzz word, even amongst local entrepreneurs. Key in the phrase on Google and you get a result of 4,790,000 website listings.
Ensuring that one’s business can swim the tide of global financial currents, means tightening belts, something that many companies are doing as seen in the number of industries laying off non-essential staff.
In line with this economic outlook, wouldn’t it also be prudent for the government that lives off earnings in the form of tax revenue from Kenyans also tighten its belt?
News stories such as lavish spending on tea and flowers are definitely not in tune with the times.
Mars Group Kenya, a local governance and accountability watchdog in a blog posted today “The Government of Kenya is Broke” has raised critical financial management inefficiencies being perpetrated with outright disregard to the Kenyan people. This coming at a time when the same government (which previously prided itself on being self-sufficient) has whipped out the begging bowl for donors to fill.
Scandals ranging from maize to oil continue unabated, whilst we business people are warned of imminent tax hikes. The grand coalition government seems to have a more voracious appetite in ensuring its parliamentarians are kept in the lap of luxury, whilst continuing to exert pressure on small businesses to pay taxes.
The Mars Group blog outlines several spending issues that if the Kenya government was a business, it would surely collapse.
For instance, the bloated cabinet of 93 Ministers and Assistant Ministers costs Kenyans billions of shillings annually. Out of the government’s budget, 24% goes to servicing external debt leaving 76% for services rendered to Kenya. Out of this balance, 85% is spent on recurrent expenditure (i.e. paying hefty salaries and buying the latest SUV’s) whilst only 15% is left for development.
It is this 15% of expenditure that is supposed to ensure that all Kenyans reach a point of financial stability, in order to pay (“as responsible citizens”) taxes.
One does not have to be an economist, accountant or even a high school student for that matter, to see that the flow of funds here is top heavy; whilst unfortunately it is small business entrepreneurs and lower income Kenyans consumers who bear the brunt of this parasitic government. Taxes such as VAT know no class barrier, thus we “watu wadogo” pay the same taxes as MPs who earn tax free allowances topping up high salaries.
No-brainer questions
The Mars Group blog proposes several reforms, which if given in advice to small business owners would seem a no-brainer: For instance,
• Why would a company have a bloated Board of Directors (i.e. cabinet) whilst revenues remain small?
• Why would a company hire someone that sleeps on the job, doesn’t complete assigned tasks and demands a hefty salary (untaxed!)? (our MPs).
• Why would a business owner retain the services of a financial officer when it turns out that money allocated for specific tasks (such as paying for free education) is diverted for other costs (such as buying maize)?
• How on learning that money has been siphoned out of the enterprise (Anglo-leasing style) by the same finance officer, would the business owner just let the matter drop; notwithstanding the fact that annually 24% of the business budget is religiously paid to external lenders?
• After finding out about the siphoning of funds, wouldn’t a prudent business owner ensure that such corrupt loans cease to be paid immediately?
• Wouldn’t an entrepreneur use legal redress so that the business doesn’t have to pay the corrupt loans?
Either way, remaining in the status quo would without a doubt crush the business before too long. The government is only lucky in that it gets free money from taxes without even having to pretend to offer adequate services.
That is until we finally demand that the government also tightens its belt.
Read THE GOVERNMENT OF KENYA IS BROKE: What Mwai Kibaki, Raila Odinga, and Parliament must do to deal with our current financial crisis
The Kenyan government and indeed most the governments in Africa are nothing but a waste of tax payers' money. I agree entirely with the submission that if Kenya government was a business it would have collapsed. What is shocking is the lack of business attitude in which the governments in Africa do their work. I can only equate them to a chef who has all the ingredients needed to prepared a delicious soup yet fail to do so because of incompetence.
ReplyDeleteYes. And what a horrid stew we are being served!
ReplyDeleteFYI, the Partnership for Change in Kenya has launched a campaign to ensure that Members of Parliament ensure that the National Budget is reflective of the will and needs of the people of Kenya i.e. the majority of the budget focussed on development rather than on recurrent expenditure such as fuel for gas guzzling official limousines.
For more information on this initiative check out the following link: http://yipeorg.blogspot.com/2009/04/business-activism-positively-transform.html