Kenya: Fair Trade With China Requires Laws On Partnership


opinion

Economists define Laissez-faire, a French phrase meaning “let them do” or “let go”, as an economic system in which transactions between private parties are free from government intervention such as regulation, privileges, tariffs and subsidies.

Popularised by RenĂ©-Louis d’Argenson, the French minister of finance and champion of free trade, in Journal Oeconomique 1751, its origins can be traced back to 1681, at a meeting between powerful French Controller-General of Finances Jean-Baptiste Colbert and a group of French businessmen headed by M. Le Gendre.

When the eager mercantilist minister asked how the French state could be of service to the merchants and help promote their commerce, Le Gendre simply replied “laissez-nous faire” (“leave it to us” or “let us do [it]”.

In other words, if I, or anyone for that matter, wanted to sell bananas, it is never the government’s business to tell anybody how and when to sell them. That is the decision of the seller and the buyer.

COUNTERPRODUCTIVE MOVE

In the past week, however, an MP asked the government to intervene on behalf of citizens to deny Chinese business people from hawking their wares to Kenyans in the streets.

Good as this request may sound, it negates the basic tenets of Kenya’s economic foundation. If such a move is ever enforced, it may turn out to be counterproductive in this era of retaliatory trade relations.

Anybody who has been to Guangzhou, China, will tell you about the influx of African traders, some running manufacturing operations. In Europe today, it is no longer a surprise to find an African hawking roast maize on the streets.

The world, in my view, is integrating faster than the politicians can think. Any move to isolate people based on their race, will justify President Trump’s view of the world and those who will suffer most would be Africans.

An MP has a lot of powers to do good for Kenyans irrespective of where they live in the globe. That power can be exercised without trampling over complex economic fundamentals.

MAKE LAWS

A parliamentarian could, for example, help create laws requiring every foreigner setting business in Kenya to partner with local people as a strategy to building capacity. After all, most of the large American companies do their implementation with local medium enterprises.

It is not anti-Laissez-faire to legally require some percentage of local content in all contracts in the country. It simply makes business sense and many countries are doing that. Dubai, for example, has more foreign nationals than the population of that small Emirate.

It is therefore, preposterous for an MP to complain that Chinese contractors bring in their own equipment and material like cement, when there isn’t a law to compel them to use local resources or assemble equipment locally. Who else can create such a law other than the MP.

When Chinese business magnate Jack Ma visited Kenya early this year, he challenged international companies to play by the local rules if they wanted to build better relationship with host countries. He even went further to urge multinational companies, especially the Chinese ones, to employ local workers, pay competitive wages and comply with tax requirements as a strategy to building sustainable relationship in the countries where they operate in.

While many people thought that Jack Ma’s message was directed at multinational companies, it was directed at Parliament. What he meant was that if you need to build a relationship with these companies, you need to provide clear guidelines.

The tragedy, however, is the fact that the people MPs are purporting to fight for do not want some of the jobs being done by foreigners.

TECHNICAL SKILLS

One of my students and a senior county executive recently told the class how they advertised for Grade II plumbers and carpenters, and could not receive any qualified person from the entire county.

When they expanded to national level, they could hardly get 10 people to interview, in spite of the fact that Kenya has several Technical Vocational Education and Training Institutions (TIVETs).

A Rift Valley Governor too complained that there are no applicants to TIVETs in his county.

All these are complex issues, and to resolve them demand thinking out of the box.

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

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Publish date : 2018-10-29 12:47:51

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