Great disconnect: Why our problems aren't resolved fast

I had a recent meeting with members of the Kenya Private Sector Alliance (Kepsa), and some MPs convinced me we have identified 95 per cent of our national problems.

I must add 95 per cent of the solutions. But there is a big disconnect between problems and solutions.

The beauty about Kepsa is that they identify business problems from experience, their work. This is contrasted with academic research, where we struggle to identify problems based on theories and abstracted reality.

The problems identified by the business sector are real, affect real companies and people; they are not mere case studies. We need a third way where businesses and governments give us their problems to seek objective solutions and insights.

Examples of real problems: delayed tax refunds affect the cash flow of firms. How about unpredictable levies like those of the Kenya Wildlife Service (KWS) or Kenya Bureau of Standards (Kebs) in the middle of the budget cycle?

Remember the Finance Bill 2024?

Why do we separate strategic and operational issues?

Are we shifting to levies to avoid parliamentary scrutiny? Think of freezing PIN (Personal Identification Number), yet you need more tax from the same PIN? What works better: carrot or stick?

If our national problems and solutions are so well known, why the disconnect?
First, there are more places to articulate the problems, conferences, lecture rooms, meetings, the floor of parliament, political rallies and press conferences.

Add informal settings; what do you discuss with your buddies when sober and drunk?

Stimulate our economy

There are few opportunities to test the solutions and their practicality. Remember, some solutions are far into the future. One easy way to test if a solution can work is to check if it has worked elsewhere and then contextualise.

A good example, we took some drastic measures to stimulate our economy in the dark days of Covid-19.

Why can’t we try these measures now that we want to jumpstart the economy?

Tax revenues did not fall drastically because the rates were cut. Yet we still don’t believe in Laffer’s curve.

Clearly, we could collect more tax if we cut the tax rate. After all, no one in Kenya knows the tax rate that would give us maximum tax revenues. Can KRA simulate that or give me the work for a fee?

We are also reluctant to learn from others; we believe that only our solution works or matters. Kenya has an uncanny disdain for experts.

We also reject solutions because of vested interests. We love solutions that cater for our interests, read money.

A good example is; why don’t we pay fines through M-Pesa? Why can’t we use AI to award tenders?

The disconnect also comes through ill-defined problems. One MP captured it, “Tell us what you want us to do.”  Sometimes we don’t articulate the problem well enough to outsiders. Try explaining to a mzungu how to cook ugali.

The disconnect also comes through the “hydra effect.” Remember Greek mythology? All problems are multifaceted. Yet we love specialisation; seeing problems and solutions in one dimension. Sounds familiar? Solutions are too multidimensional.

Think of tax. How do we raise more taxes?  Raise the tax rate, and sales go down. Bring more entrepreneurs into the tax bracket, and they go underground.

We need psychology to understand our behaviour. Why do we like free things; the best services from taxes, but not paying taxes?

We need innovators to spawn new firms and get more tax revenue. That comes with more investment in Research and Development (R&D) and ensuring more economic and political freedom.

The disconnect results from our obsession with imported solutions.

It’s easier and lazier. A good example is the 2010 constitution. It does not help that lots of policymakers were schooled abroad and brought home non-contextualised idealism.

Those who never left are suspicious of those who left. Sometimes, our solutions are not based on experience and reality; how many KRA employees have run a successful business and know the pains of making money before you tax it?

KRA should recruit from the business community.

Tax revenues

Disconnect results from a fact; new ideas and solutions are absorbed with a lag. Entrepreneurs absorb them faster and make their money - remember the quails?

Remember M-Pesa? Think of new ideas in governance, justice, tax, and other soft areas. They are harder to absorb than a new highway, a phone, or a house - something tangible.

Further, we generate a few new ideas. Check our patents data and R&D budget.

We absorb new ideas faster when we see money. As we share our ideas with the government, we should demonstrate how it will collect more tax revenues.

How do we convince banks to lend us money?

The disconnect results from the fact that most of us think short-term, about today, not 50 years into the future.

CEOs think about their contract, politicians about the next polls. Many of us think about the next meal, rent or school fees. Framing out dialogues in a familiar language, identifying costs and benefits and letting us “see money” will close the great divide, the disconnect between problems and solutions.

I hope I have not disconnected from you while talking about disconnection.