Monday, 12 November 2012

10 things to be Watchful of as you start your Business.


In the comment section of an international publication, I came across a list of five things that young companies and entrepreneurs must be
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prepared to face when launching their ventures. In the same breath, I decided to do a list of ten things that a typical young Kenyan company or entrepreneur might have to be watchful of. If you want to a launch a business or company in Kenya, here are the ten things you must be cautious of.

1. Banks are not your friends.
Banks are hard-core investors and should be treated as such. They want big returns for minimal capital invested. Unfortunately, you will be more worried about repaying the loans than concentrating on building your venture. Get your starting/seed capital from savings, friends, family or angels. What’s more, even though capital is highly desirable for starting a business, it is by no means the only ingredient to a successful venture. Cash flow is much more important than capital, and sometimes, too much capital at the start could lead to

Low Pay for Workers is the cause for brain drain in Kenya.


For close to ten years now, Equity Bank has had a pre-university mentorship program
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for the brightest and most talented KCSE stars across the country. According to the bank’s April 2012 newsletter, sixty five of their scholars have gained admission to top notch universities across the world ever since the bank introduced the pre-university mentorship program.  This year, some of the bank’s scholars that have been admitted to various universities in the US include Lydia Katini Mwangasha, the best female student in the 2010 KCSE exams who has been admitted to Harvard University and Allan Machuka Marube, the second best male student in the 2010 KCSE exams, who has been admitted to Princeton University.

However, apart from the bank just sponsoring these brains to go abroad, has the bank also ensured that some of the brains come back to the country, to utilize their skills? It is obvious that any student that receives admission to these universities would turn down an admission slot at one of the Kenyan public universities. With the lecturers’ strikes, and sometimes even strikes by students, bright students are an easy prey for overseas universities that are hungry for top talent. When it comes to talent alone, there is absolutely no way Kenyan universities can compete with these overseas universities. The amount of resources these universities command is mind boggling. Yale University for instance, pays for full tuition, full accommodation, a monthly living stipend, plus a ticket to and from home every year. Their stated mission is to get the best talent in the world, regardless of its location. Other top Ivy League and private universities like Harvard, MIT and Stanford would also likely offer a similar package.  Few Kenyans admitted to such universities ever return. I would hope that Equity Bank, apart from just encouraging such brains to study abroad, has mechanisms to ensure that they also put some of the skills to good use back home.

Proponents of brain drain argue that it is a good thing if our best can compete with the rest of the world. That only shows that we are capable of matching up with the best. They also point out the increased remittances from the African diaspora, and how it has helped boost economies back home. In deed, remittances for some countries such as Ethiopia, Eritrea and Somalia constitutes a huge chunk of their foreign exchange.

A radical idea proposed to combat brain drain is a FIFA-risation of the talent exchange. In such an arrangement, rich and developed countries would compensate poor countries for the talent they got from such countries. It is the same way in FIFA, when a club buys a player; the originating club is given some transfer money every time the player is bought by another club, so as to compensate the club for all the time, effort and money it took to develop the talent. Likewise, rich countries would compensate poor countries for the money the poor countries end up spending on future doctors, lecturers, engineers, only for them to end up serving in rich Western countries. Ethiopia has increased the number of doctors and nurses it trains by four times in recent years, perhaps out of a realization that it simply can’t hold all its doctors and nurses within its borders. It may very well reap big if a FIFA-risation arrangement is to be adopted.

Philip Emeagwali, the famed Nigerian-American computer scientist who has been credited as among the pioneers of the internet era, and is often regarded as the ‘Bill Gates’ of Africa, sums up.

He reiterates that in any country, human capital is much more valuable than financial capital because it is only a nation’s human capital that can be converted into real wealth.  He says that money alone cannot eliminate poverty in Africa, because even a trillion dollars is a number with no intrinsic value.  Real wealth cannot be measured by money, yet people often confuse money with wealth.  When you give your money to your doctor, that physician helps you to convert your money into health – or rather wealth.  Money cannot teach your children, teachers can.  Money cannot bring electricity to your home, engineers can.  Money cannot cure sick people, doctors can. When the medical doctors immigrate to the United States, the poor are forced to seek medical treatment from traditional healers while the elite fly to London for their routine medical checkups.
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