Decent work for all: why multinationals need a helping hand

Fabio Pulizzi: 00:09

Hello, this is How to Save Humanity in 17 Goals, a podcast brought to you by Nature Careers in partnership with Nature Water. I’m Fabio Pulizzi, chief editor at Nature Water.

Welcome again to the series where we meet the scientists working towards the global development targets brokered by the United Nations.

In 2015, world leaders pledged to solve a range of economic, environmental and social issues. A package of 17 sustainable development goals were agreed upon.

Since then, in a huge effort, thousands of researchers all over the world have been tackling the biggest problems that the planet faces today.

In episode eight, we look at sustainable development goal number eight: to promote economic growth and decent work for all. And meet an enterprise expert from Kenya, who thinks that nurturing micro and small businesses is one solution.

Moses Ngoze: 01:16

I'm Moses Ngoze. I’ m a senior lecturer at Masinde Muliro University, found in Kakamega, western part of Kenya.

There I teach enterpreneurship and management science courses. Apart from that, I research in enterpreneurship, and management science.

And mostly my research looks at enterpreneurship basically in Sub Saharan Africa, how it can improve the economies of the people within the country.

Yes, sustainable goal number eight is to promote sustained and inclusive economic growth, full and productive employment and decent work for all.

We find out that micro small enterprises create employment, they produce products, they are centres of innovation, and thereby through this, they lead to the growth of the economy by giving the income and generating employment. And these businesses are the best way to achieve sustainable business growth in Africa.

Through employment, we have big population so they'd be able to create employment. And also they create what we call industrialization. These enterprises are the best way of achieving sustainable goal number eight.

Moses Ngoze: 02:49

So what are these micro small and medium enterprises? Now, these are enterprises that basically employ between one up to 100 employees. And most of these enterprises are in the developing world.

Basically, worldwide, these particular firms account for the 90% of the firms within the world. So it means that 10% are large enterprise or multinationals.

And within Kenya, the micro, small, and medium enterprises, they account for around 75% of the total employment and more than 80% of the gross domestic product of our country.

I was born in Kenya, a place called Kisumu. Kisumu is, from the capital city of Kenya is a one hour flight. And it’ s found on the western part of Kenya.

When I was studying in my primary and high school, my passion has been always trying to impact knowledge on other people.

And this really motivated me to pursue an undergraduate degree that is in economics and mathematics. And then later, I taught in various higher institutions of learning.

And then by that teaching the institution of higher learning, I discovered my other passion that was doing research and consultancy. And also publication, basically in my area of concentration, which is economics, and then entrapreneurship.

And I still do a lot of research in micro, small and medium enterprises and others sectors in the Sub Saharan Africa

Moses Ngoze 05:08

So what is jua kali? Jua kali basically is a Kiswahili word that literally translated to English to mean hot sun.

So many people could see those particular people working under hot sun. So that's why loosely they gave it the name jua kali.

And in Kenya context, it has come to be referred to as these industries, micro small and medium enterprises. The jua kali sector has got those we call the artisans. Most micro small enterprise are involved in the primary production, like farmers who are producing commodities from home.

Like say, for example, eggs. We have a farmer who is keeping chicken. The medium enterprises are those particular ones that are manufacturing products. Bakeries, we have bakeries, confectionaries, we also have those who sell clothes. We also have those who have got hotels.

Most of the countries in Africa, positoin of women is quite large. And therefore, these women can be able to get jobs in these particular enterprises.

And therefore, we discovered that in the rural setup, where most of the big companies cannot be able to be started there, this becomes their source of employment. So that is how we conceptualize the macro small and medium enterprises in Kenya, and by extension in Africa.

Moses Ngoze 06:53

Why is Africa not having large enterprises? We are depending on the foreign companies called multinationals coming to Africa. It’s because we have got this missing middle that can be able to grow into large enterprise.

It was discovered that we have very few medium enterprises. And they account for only 14%. But we know that these particular firms need to grow from micro to small, to medium and into large enterprises. The missing middle are emanating because 1), the business ecosystem of Africa are what we are calling the business environment. But we don’ t have large market.

And also they don’t have those equipment. Like if it’ s manufacturing firms, where do they get very big producing plants, like the machines? The machines we don’ t have. So they are still working? Like what in Asia we call cottage industries, the cottage industries. They’ re still working from home.

And also the regulatory environment. Regulatory I mean, the government. Yeah, the government when they come in, they want to charge a lot of taxes.

And basically, again, capital. And I’ll be able to talk a little bit about the microcredit. That's where now the intervention of the microcredit comes in.

Moses Ngoze: 08:34

Now, how can we be able to support them? What are the ways of supporting these particular firms is through financial accessibility.

Nowadays, we have seen the government is coming in with very, very many schemes. Like in Kenya, we have got the Micro Small and Enterprise Fund. We also have the Youth Enterprise Fund. We also have the Women Enterprise Fund.

So what are we saying? We are saying that we need access to finance. However, the governments are really trying. And you also have doughnuts like the World Bank and the International Finance Corporation. We also have the British Council is also assisting so much. We also have the IMF, International Finance Corporation. And we also have the commercial banks. Although the commercial banks, the interest rate is quite variable.

And at the moment, you understand that they are having a problem of the interest rate. And it's not, Kenya is not exempted. The interest rate even goes as much as 35%. And yet you want to start per annum. So that’s quite, quite high.

And we also have the venture capitalist. Although it’s still a new phenomenon in Kenya, we are happy to have a few venture capitalists who are giving out money.

For these particular firms to thrive under Sustainable Development Goal number eight, the first thing is that these small enterprises, micro small and enterprises, should be looked at as an economic hub. That is economic-generating entities. That is, the government should be able to support them, and also their donors should be able to support them.

Because if the whole world, we are talking of them being 90%. And they are providing 70% of the total employment, then it means that this particular sector ought to be supported, to generate employment, to generate income, to be centres of innovation, and hence, bring in what we call economic growth in Kenya.

Well, how can the government come in? First of all the government should be able to provide a conducive environment for the growth of these particular firms? So how do they do that conducive environment?

First of all, improve the infrastructure (like building of the roads). Improving the connectivity like internet, coming up with electricity, the electricity. They should also be able to reduce the taxes for these particular firms.

And also try to support the initiative that is being brought in by institutions such as universities. And how do they do it in the universities? They should continue funding the university initiatives of trying to come up with the centres of enterprise development.

Moses Ngoze: 11:58

Nowadays, we have got the young generation who are now coming up in solutions in information, communication technology, the IT. Now the Silicon Savannah is now where we are saying is the Silicon Valley in America.

We have the the venture capitalist, or people who can be able to provide finances, and those who have good ideas, they meet there.

And then maybe I’ ve got money, you have an idea, we can be able to write a contract. And that particular contract binds us that we’ re going to start a firm. I’ m going to give you money, and the idea, we're going to promote it like that.

So in the country, in Nairobi, Nairobi is becoming so big, because we also in this particular idea, the young people are coming up with the mobile application, the internet applications.

We are a powerhouse in East Africa. In fact, when you get, you get our Kenyan shilling is like a Sterling Pound, is like $1 Oh, yes, in all of Eastern Africa.

And in terms of the countries that is growing very fast we are ranked, I think 4th Africa, after South Africa, Nigeria, Egypt.

So, what we are seeing is that however much you cannot be able to achieve this eighth sustainable development goal, but then, when it comes to growth, we can say that Kenya is ranked highly. Of course, we look at our economy this particular year to grow by 6%. At the moment, we are still on 4.5%.

But we are looking at this particular year to be very prospective 6%. And then also, what can the whole wild learn from Kenya? That's a big question.

Moses Ngoze: 14:04

Although there are so many interventions that have been put in place, but still 2030 is just six years away, six years away.

So we don’t take within six, six years apart, we can be able to fully, you know, achieve sustainable development goal number eight. And you don’ t know whether any catastrophe is going to come in, like the Corona COVID-19 came in and we did not know. The one that brought back the economy of the whole world.

So I would say no, and by no, means that we don't know about that particular future. And also given how the world economy is moving,

Fabio Pullizi: 15:07

Thanks for listening to this series How to Save Humanity in 17 Goals.

Join us again next time when we look at Sustainable Development Goal number nine on infrastructure, industrialization and innovation. See you then.