Tag Archives: jobs

Can Kenya’s Government Replicate Ports Success to Create Jobs?

Mombasa Port. (Photo: Business Daily)

Mombasa Port. (Photo: Business Daily)

By Ben Kiragu

One of the things Kenya’s new government succeeded in doing within its first year was to reduce the number of days it takes to move cargo from the Mombasa port to Malaba from 18 to 8 days — a 56 percent improvement in just 6 months. This is a major achievement which has boosted commercial relations with Uganda and other neighboring landlocked countries, forestalled competition from alternative transit routes, and ultimately reduced the cost of doing business, therefore improving economic growth in the region. How did the government accomplish this?

First of all, the president set up a cabinet subcommittee of Cabinet Secretaries dealing with the Northern Corridor — the transit links connecting Kenya’s landlocked neighbors to the sea — which reported to him during weekly cabinet meetings.  Second, administrative changes were instituted; all agencies involved in the process including KRA, KEPHIS, KEBS and KMA were instructed to work under the authority of the Kenya Ports Authority and relocated to Mombasa port. Also all government agencies were to take orders from KPA and finalize operations in Mombasa without reference to any other authority. Finally, the process of clearing was digitized and weighing bridges were modernized.

What are the lessons learnt from this? There was very clear knowledge, analysis, and understanding of the problems and where the bottle necks lay, therefore solving the problem was undertaken with almost surgical precision. There was very little need for new financial resources or the construction of major physical infrastructure. This is one of the key reasons why most projects in Kenya are delayed, as they wait for budgetary allocations or get into procurement bureaucracy and controversy as we have come to see especially as a result expanded democratic space. Lastly  and probably most important there was clear and dynamic leadership, the president led from the front on this one and delegated to decisive and action-oriented managers. The impact is there for all to see.

Creation of jobs was one of the rallying calls of the Jubilee campaign with 1 million jobs promised per year, but so far no major job creating initiative has borne fruit. The government seems to be waiting for big projects such as the Standard Gauge Railway and the Galana-Kulalu irrigation project to create jobs; one wonders if this will work, as time is clearly not on their side especially given the issues associated with some of these projects. My recommendation: why not replicate the cargo movement magic to prune low-hanging fruits and achieve quick wins in job creation by creating an enabling environment for micro and small enterprises (MSEs)?

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Fear of Failure and the Arab Dream

Wamda's Mix n' Mentor event in Riyadh brought together CEOs and entrepreneurs.

Wamda’s Mix n’ Mentor event in Riyadh brought together CEOs and entrepreneurs.

At a recent conference in Saudi Arabia, I overheard a conversation between two business leaders about their daughters’ marriage prospects. As the father of three daughters, I was curious to hear what they had to say. “Definitely not,” one of the businessmen said, “I am not going to let my daughter marry an entrepreneur. If he doesn’t have a stable job or predictable income, I ask you, how will he be able to support my daughter?” The other, in his traditional white thobe, nodded in agreement.

In 2011, a group of researchers conducted a survey on entrepreneurship in the MENA region and cited “non-acceptance from family members, lack of prestige, high level of competition, and fear of failure” as the top four barriers to starting a business (see Figure 1). In a region where schools and parents prioritize rote memorization over creativity, job security over entrepreneurship, and stability over risk-taking, young people naturally refrain from treading off the beaten path and launching new companies. Furthermore, other social factors, such as the lack of marriage prospects, explain why young Arabs aspire to be government employees and dream of job security.

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There is Global Agreement on the Top Economic Priority – But What to Do About It?

CIPE Executive Director John D. Sullivan speaks on a panel of private sector experts discussing the Pew findings at the U.S. Chamber of Commerce.

CIPE Executive Director John D. Sullivan speaks on a panel of private sector experts discussing the Pew findings at the U.S. Chamber of Commerce.

Researchers for Pew’s Global Attitudes survey have spoken to 37,000 people in more than 40 countries about their opinions on current economic challenges and the best policies to tackle them. One thing almost everyone agreed on: the most important economic priority around the world, in developing, emerging, and advanced economies, is jobs.

This is not an easy problem to solve. In developing countries, the traditional solution to unemployment is to create more government jobs, while almost everyone else gets by on subsistence agriculture, day labor, or informal economic activity of one kind or another. But between meager tax revenues and the growing unwillingness of international donors to finance bloated government payrolls and inefficient state-owned enterprises, this government-led strategy is becoming increasingly difficult for poor countries to pursue.

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Jobs for Libya’s Ex-combatants…and Everyone Else

Libyan fighters celebrate the capture of Sirte in September 2011. (Photo: Reuters/Esam Al Fetori)

In December 2011, Libya’s National Transition Council announced it would spend $8 billion on a disarmament, demobilization, and reintegration (DDR) program to help militia members disarm and transition to civilian life.

I’ve been following this all with great interest, largely since, before I came to CIPE, I was working exclusively on supporting implementation of DDR programs, albeit in Africa’s greater Great Lakes region. What has been increasingly striking to me is how my DDR past and my CIPE present are meeting.

The Libyan government says it expects that at least a third of their demobilized combatants will be hired by the public sector, primarily by the army and police. A few months later, the interim Prime Minister also announced that the government would pay unemployed former rebels for the year they fought, and that rebels who are now students would receive financial grants.

But there are two issues here that I see. One is that DDR programs themselves rarely go quite as planned. Ideally, they serve to create time for peace, taking enough young men out of armed life so that instability decreases and space for development increases. If they work really well, they may provide some ex-combatants with new skills and alternative sources of livelihood, pride, and status that encourage them to stay in civilian life.

However, in reality it is difficult to fully realize either of these goals. The logistics are hard enough – imagine figuring out how to pay thousands of people throughout a country with little infrastructure. Or developing a registration and verification system that will ensure ex-combatants – and only ex-combatants – receive benefits.

Then there are the political dimensions. Militia leaders often want to transform their military clout into political influence once the fighting is over. The period before DDR is full of jockeying and number games over personnel and what will happen to them. Some commanders may keep their fighters from disarming while they negotiate for a place in the future government. Once disarmament begins, they may encourage as many of their men as possible to enter the army or police to become a power base for the future. Commanders will even sometimes “recruit” additional people to register as combatants and increase their “footprint” and leverage even further.

Sure enough, thus far Libya’s DDR experience mirrors several of these dynamics. The first thing many militia commanders did after Qaddafi was overthrown was to delay demobilizing their groups while they negotiated for cabinet positions. Payments were suspended in April after officials discovered that, by some reports, over 450,000 people were paid, even though there are at most 250,000 militia members. If this is true, that means there were at least 200,000 cases of fraud.

Disarmament and demobilization are also not making great headway. Weapons have flowed back to home district caches and some armed groups are getting involved in tribal and regional politics; recent clashes in the southwest left 70 people dead, and there was an attack in Tripoli on the Prime Minister’s offices to protest suspended payments. And then only days ago militias took over the national airport, insisting that the state was holding a militia commander and demanding his release.

Which brings us to the second issue I see as I watch Libya, which is that DDR cannot happen in a vacuum. Even if it is going perfectly it is not enough. In several countries in Africa’s Greater Great Lakes Region where I or my colleagues worked, many ex-combatants came out of DDR programs with allowances, new vocational training and start-up kits. But they could not find jobs. This was not necessarily due to the training – although certainly its quality could vary – but because there were few jobs to find. Economic absorption, as they call it, was extremely low. Starting businesses was almost as difficult. Markets and supply chains were inadequate, and sustainable development was taking much longer than anybody expected.

As I now watch Libya, it seems to me that there is a danger of something similar happening. DDR in Libya is not working well enough to absorb frustrated young fighting men as it should be and some militia leaders apparently still have full or partial command and control of their forces. Indeed, DDR itself may well fail if the broader economic environment is not addressed. The public sector cannot hire every single ex-combatant, and many of those initially absorbed into national security forces ultimately will not be qualified to be soldiers or policemen. Sooner or later they will need something else to do.

And beyond combatants, there are thousands of young civilian men and women who are not eligible for DDR and also need jobs and dignity.

Long-term stability and prosperity in Libya will require a much broader-based, sustainable, and inclusive approach that complements DDR – one that addresses the economic needs of all citizens, ex-combatants included, and creates opportunities that Libyans can access based on merit, rather than identity.

Critical to this approach will be support for small and medium-sized enterprises (SMEs), which must be major engines for job creation and economic growth in Libya. The International Finance Corporation reports that, on average, 29 percent of formal GDP in low-income countries is generated by SMEs. This is particularly true in countries with political and civil instability, where Shari Berenback of USAID recently remarked that, “private enterprise is an important stabilizing force.” And note that this statistic only speaks of formal income. In the Middle East, unregistered businesses contribute even more, well above that 29 percent.

Unfortunately, all too often in post-conflict situations, SMEs lose out on both ends: donors tend to focus on micro-enterprises, while local banks are unwilling to risk giving the small-scale loans SMEs often need, or they are not structured to do so. (For more about this, see Gayle Tzemach Lemmon’s recent working paper on entrepreneurship in post-conflict situations.) For aspiring women entrepreneurs, the challenges to access can be even greater. Cultural factors come into play, as do administrative ones – women often do not hold the deeds to land, for example, and so banks are even less willing to lend them money.

Faced with these and other barriers, many SMEs end up going into the informal sector, meaning they do not register their businesses. Without legal identity, their owners and employees are often invisible and voiceless. If they are abused they cannot go to court, they cannot easily participate in policymaking or join associations, and their taxes do not support national services, along with a host of other costs.

The key, then, will be for Libyan reformers and their international partners to not just focus on helping small business owners, but also on building an environment for small business. Bank financing thresholds, property rights, tax laws and incentives, bankruptcy regulations – these may not be sexy, but they are vital to fostering tolerance for risk and innovation, both among banks and investors, and among aspiring entrepreneurs. Who will start a business if failure and debt mean ending up in jail? How can a bank lend money to a person without legal property, presuming that bank is willing to lend money to a small business or aspiring entrepreneur at all?

With elections coming up in Libya in late June, it’s the right time to ask these and a host of other questions. Systems and institutions that are inclusive, transparent and fair will go a long way to fostering the kind of job growth that all Libya’s young people need to have a bright future, ex-combatants included.

Ask not what the private sector can do for youth…


http://news.bbc.co.uk/2/hi/7936004.stm

With a majority of its population under the age of 30, the Middle East is the youngest region in the world. Understanding the pressures that this “youth bulge” exerts on the labor market can help us gain a better understanding of a viable economic approach that responds to the needs of a growing young population in search for work.

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