Today, the Nairobi ex-pats are riled up about a new policy restricting immigration for young and low-skilled workers in Kenya. Here is the story:
Kenya has shut the door on foreigners seeking permits for jobs that pay less than Sh168,000 per month or Sh2 million per year (USD $24,000). The move, which marks a major labour market policy change, also bars foreigners aged 35 years or less from being issued with work permits. The changes are contained in fresh regulations that Immigration minister Otieno Kajwang’ has published in a special Kenya Gazette notice.
Senior Ministry of Immigration officials, who did not want to be named because they are not authorised to speak to the press, said the new regulations are particularly targeted at foreigners holding jobs that can be handled by Kenyans.
The new rules have also locked out expatriates from employment in the medical, real estate, engineering, accountancy and legal professions.
This crackdown on immigration is not happening in isolation. Recently, Uganda passed legislation with the same provisions aimed at curbing immigration that potentially takes away jobs from locals. This strikes me as not only bad policy that will significant repercussions for development, but also counterproductive in achieving its intended aim (to increase the number of jobs for Kenyans and Ugandans). On a macro-level, relatively open borders generally have a positive impact on economic development in two ways. First, the exchange of knowledge, ideas, and skills improves human capital within the country and makes businesses serving the domestic and export markets more competitive. Immigration from advanced economies – regardless of skill level and age – typically comes with investment and infrastructure. Chinese companies employing cheaper Chinese labor will still bring machinery, technology, and business practices that can be emulated by local companies. So, not only is the Kenyan government stifling the influx of ideas to its country, it is also preventing investment, which has the potential to enlarge the pie, rather than simply expanding the pieces that go to foreigners.
My social enterprise and non-profit friends are upset because they see the law not only as an affront to what they are trying to achieve – improve the economic condition of poor – but also regressive in terms of job creation. This is a valid point – for every job taken by an expat in the social sector, multiple jobs open up for local staff. One friend who started a company in Nairobi had this to say on Facebook:
Dear Kenya –
I am 28. I am the oldest person in our young company. Over the next 7 years, we plan to hire more than 100 university graduates into entry-level positions with top-tier international training & mentorship.
My vision is to have the most-sought-after middle-managers in the entire region working for me. I don’t think I am being naive. We have already hired four. We’re doing this.
If this is implemented, consider them fired.
Let me know if you can help us and our Kenyan staff. They just graduated 3 weeks ago.
The person has a good point, which is that employment, coupled with mentorship and development, can have a significant ripple effect as qualified young professionals go out into the workplace. Realistically, this bill is not aimed at my friends, however. More than half of the work permits in the country are held by Indians, typically from a lower caste, who emigrated to the country to set up businesses and take advantage of the relatively untapped market. Another 25% belong to Chinese immigrants, who are working on infrastructure projects for state-run contractors. Only 10-20% are held by Americans and Europeans.
Most Kenyans I spoke with did not have kind things to say about many of the Indians – known in Swahili as “mwindi” – in the country. That is because, as a general rule, many of the Indians treat the local population as second-class citizens. One of the reasons for this is that many of the Indian immigrants are from a lower caste, and have been discriminated against for their entire lives. Those in the lower castes typically have darker skin, so some of the root of their discrimination has been based on skin color. When they move to Africa, they are employing people who have an even darker skin color, so they are even more likely to discriminate. This, coupled with the fact that Indians control a significant percentage of the import-export sector and, to a lesser extent, retail, has created resentment among Kenyans and Ugandans. I am not certain, but I would guess this bill is aimed squarely at the Indian immigrants living and working in the country.
However, the Ugandan legislation explicitly targets NGOs:
The government has banned international and local NGOs operating in the country from employing foreigners unless they show proof that no Ugandan matches the skills of the expatriate staff.
“The NGOs come to help the community and complement government effort and should not solicit money in our names to create jobs for themselves,” he said. “Otherwise, they should set up commercial enterprises, not the not-for-profit, non-political and community-empowerment organisations.”
Amb. Gabriel Kangwagye, the NGO registration board chairperson, told this newspaper yesterday that the not-for-profit groups solicit money from donors under the guise of helping the under-privileged, and they should not saturate local job market by employing their own.
Whether this legislation is based at Western or Asian expats doesn’t really matter. Either way, there are better ways of dealing with the problem of unemployment. Greater investment in education, skills training, and infrastructure, or less plundering of state coffers would serve to make the local economy more competitive. Unfortunately, the Kenyan and Ugandan governments have chosen to shoot themselves in the foot and enact laws that will reduce the amount of both foreign direct investment and aid money to the countries. The result will be a reduction in GDP growth, higher unemployment, and a generally regressive system that will undoubtedly hurt the people the laws are intended to help.
Develop Economies’ Music Recommendation