Cheap energy the answer to empowering our idle youth through small businesses

Kenyans were recently promised cheaper power. This is certainly good news for business.

Power costs make up to 40 per cent of manufacturing expenses in Kenya, therefore the proposed 50 per cent reduction in the price of electricity come January will be a shot in the arm, especially for startups, if the benefits are cascaded to consumers as promised. 

Cheaper power should spawn more innovation and, therefore, more startups in rural areas.

Rural small-scale industry is the hope of Kenya’s large idle youth energy.

While big businesses have mitigation strategies for the high power costs — passing the costs to consumers, moving to countries with cheaper power, installing backup generators, or diversifying — small businesses just close down.

Inexpensive electricity could catalyse the development of off-farm activities by low-income households in rural areas.

It is essential to the growth of rural cottage industries and family-owned small-scale factories.

Much of the low-priced Chinese merchandise we love and hate is manufactured in such factories.

RURAL INDUSTRIES

Development of rural cottage industries is significant to the youth because ageing parents cling to land, forcing their children to migrate to urban areas in search of work, stay idle, abuse drugs and other substances, or engage in crime.

A viable alternative is to help the young people to direct their energies to off-farm activities rather than direct agricultural production.

Cheaper power could help address these problems if the proper environment is in place to support rural industries. 

Young people all over the world shun agriculture because they find working on farms difficult, uncreative, and boring. 

Being an impatient lot, they find waiting for payment for up to six months unacceptable. Youth energy requires rapid results.

Young people are most comfortable with experimentation and application of technology, which fit best in the value-addition of agricultural products.

There is great potential in value-addition. The rapid expansion of the middle class in Kenya opens up opportunities for diverse agricultural products.

TRADITIONAL VEGETABLES

Kenya’s middle class has unique lifestyle needs not common in other countries.

The middle class here is increasingly health-conscious, the reason behind the rising popularity of traditional cuisine.

South African agricultural researchers are struggling to introduce traditional vegetables in the markets for their middle class, who consider them to be food for the poor.

In Kenya, more people are abandoning exotic vegetables such as cabbage and sukuma wiki (collard green) in favour of traditional ones.

Notice the increasing number of mama mbogas selling amaranth (terere),  managu, mrenda, and pumpkin leaves in roadside markets.

Big supermarkets are stocking them as well. 

The vegetable sub-sector in Kenya has an annual turnover of about Sh3 billion.

This could double if it is valued-added, offering variable opportunities for young people to make money. Current supply does not meet demand.  

Off-farm opportunities include packaging and partial processing. 

Young entrepreneurs could cash in on the fast-spreading middle class craving for eternal youthfulness, health, and virility.

There is money to be made from carrot, cabbage, and tomato juices and creams from pawpaw sap.

All this needs inexpensive electricity to power the small-scale machines required.

Yet electricity is only a catalyst for business. There are other variables that young people need, such as entrepreneurial skills in market research, budgeting, business planning, and marketing.

Luckily, such social equity funds like Uwezo and the Youth Development Fund are already in place for business startups.      

One can only hope that Kenya Power’s legendary inefficiency will not spoil the party.

I am a pessimist: there is a difference between generation of more power and its efficient distribution. 

Hopefully, Kenya Power will not be tempted to make more money to cover its inefficiency, as is happening in the oil and communication sectors.

We were promised cheaper and more efficient internet connectivity with fibre-optic installation almost five years ago; this has not happened. 

Dr Mbataru teaches agribusiness at Kenyatta University. ([email protected])