Ideas & discussion
Kenya must reward men who produce something
Monday, May 24, 2021
With CAROL MUSYOKA
- As Kenyans, we have succumbed to the fact that almost nothing happens to perpetrators of economic crimes related to corruption.
- In Ayn Rand’s words, “When you see men get richer from transplantation and pulling than from work, and your laws do not protect you from them, but protect them from you,” it pauses and wonders if there is an invisible one Correlation.
“When you see this in order to produce, you have to get permission from men who are not producing. When you see money flowing to those who trade favors and not goods. When you see men get richer from transplant and from pulling than working, and your laws do not protect you from them, they protect you from them. When you see corruption rewarded and honesty becoming a self-sacrifice, you may know that your society is doomed to fail. “
Ayn Rand – Russian philosopher and writer.
I was recently referred to the above quote by a friend who was concerned that only about 52 companies had listed their equity on the Nairobi Securities Exchange (NSE) since the turn of the century, which had risen to 61 by the time the NSE went public in 2014 and listed on the stock exchange, to the current 66 in 2021.
In short, in 21 years, the NSE has only brought about 14 companies public.
The question is why? However, during that time there has been a marked surge in Kenya Shilling billionaires, some of whom have done nothing but be in the right place at the right time, including – if the Kenya Medical Supplies Authority (Kemsa) parliamentary investigation covid- 19-related purchases are all you have to afford – just walk past the Kemsa doors and “angukia-ing” a tender (by chance).
As Kenyans, we have succumbed to the fact that almost nothing happens to the perpetrators of the corruption-related economic crimes.
In Ayn Rand’s words, “When you see men get richer from transplantation and pulling than from work, and your laws do not protect you from them, but protect them from you,” it pauses and wonders if there is an invisible one Correlation between the lack of growth in capital markets and the growth of transplant billionaires who associate the judicial system with adjournments and all kinds of tech doses that put the case on an endless path.
The truth is that there is a high cost in this country to do business in a legitimate way. Paying your various taxes on time, complying with myriad local and national trade licensing requirements, and navigating a multitude of labor regulations and jurisdictions that have favored the worker over the employer over the years are equally stressful for many SMEs.
Two interesting developments have occurred this year. The first was the attempt by the Kenya Revenue Authority (KRA) to introduce a sales tax of at least one percent on sales for all businesses. This was temporarily halted by the courts in April of this year as we await the outcome of all appeals filed by KRA.
The second is the current National Hospital Insurance Fund (NHIF) bill (amendment) requiring employers to cover the NHIF contribution paid by employees.
With the cost of doing business soaring, it’s no wonder that companies that are excellent candidates for listing on the stock exchange because of their growth potential and economic contribution are unwilling to raise their profile any further than necessary legal and financial disclosure From a business perspective, they are the targets of those “men who produce nothing,” as Ayn Rand lyricizes.
By flying under the radar of secrecy required of publicly traded companies, companies can get their jobs done without having to worry about who from the KRA is monitoring their half-yearly results releases in the print media while comparing and comparing tax returns opposing these are made.
The winners here are the banks as the leverage is far more attractive to the borrower due to the fewer eyes that can see their financial statements.
The losers are the business owners who are not given the opportunity to find the pricing that listing provides so shareholders can determine the market-driven value of their equity, as well as an easier way to make a profit on their sweat by selling to outside companies Raising additional alternative capital, which is in some ways cheaper and longer-term than debt financing.
“When you see corruption rewarded and honesty becoming self-sacrifice, you may know that your society is doomed,” jokes Ayn Rand.
We are not yet a doomed society, and I refuse to leave our fate to this negative conclusion. However, there is some food for thought on how our regulatory and tax framework can reward those who produce.
[email protected] Twitter: @carolmusyoka