Bottom Up Economics 101

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Bottom-up is what Equity Bank did – that has enabled it grow from bank no 62 in Kenya – to the biggest bank in East and Central Africa – with assets more than 10B dollars. It did this by providing banking to the “un-bankable”.

Bottom-up is what Safaricom did – with Mpesa and the many products focused on the bottom of the pyramid – and Safaricom is now 17B dollars behemoth.

Bottom up by EABL – has enabled the KEG bear to overtake Tusker and any of their beer – by huge volumes it ships. This poor man beer has enabled EABL to invest in 150M dollars factory in Kisumu and support value chain of millet and sorghum farmers – and many such poor man bars.

Read: Understanding Hustler Nation Bottom up approach

Bottom of the pyramid model is very clear on the private sector – it targeting the poor at the base of the socio-economic pyramid – and going for SCALE – that way you can make huge profit from very tiny margins.

Now when it comes to public/government sector – that is where it get a bit fuzzy – but model is the same.

Target the poor – not as  ‘social safety’ net or CSO like we are doing in Top Down Trickle Economy – but as the CORE business – the same way Equity bank – main customers are not the corporates – but the Mama Mboga.

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So at the very start – it’s a philosophy  – and Ruto has already scored big one – by shinning the light on the majority of Kenyans – who are poor and in informal sector. You need philosophy like vision 2030 or Moi’s Nyayo philosophy of peace, love and unit – to rally the society to make fundamental change or equity Member or Safaricom many iconic campaigns.

The next thing is to transform this philosophy to become government policy. That foremost whenever we do anything – we will think about the majority poor. When we are budgeting the – poor hustlers – at bottom of pyramid will be considered fast. When were are passing the law the majority poor will be considered -for any adverse effect.

The 3rd stage is now strategies and policies to REACH the BOTTOM.

There is no magic bullet here but suffice to say – before we give KQ – 20B cash injection – we should think about giving that money to bottom pyramid of the airline industry.

Before we think about injecting 3-5B to Mumias Sugar Company – we can probably give the sugar farmers subsidized fertilizers – or even organize them into co-operatives – and inject capital – that they can borrow cheaply and buy inputs, pay school fees and such.

The strategies must avoid those that have failed and those that DO NOT SCALE.

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For example Uwezo/Youth/Women fund is a BIG failure. The group based collatorized loan from government is a failure. People don’t repay and the fund remain stymied.

I would go for organizing poor hustlers into cooperatives and government funding those cooperatives. The cooperative that meets governance criteria and can repay the loans.

So for examples – all hawkers – should become part of cooperatives – and gov can inject money, training, capacity building and name it. Mechanics can do the same. The same way tea and coffee farming is cooperative led – should be replicated in entire agriculture.

The Matatu sectors are already in Saccos – it therefore easy for government to go in and fund them – so they can buy bigger, better cars – and they can avoid very expensive bank loans.

The other strategy is to decriminalize informal sector – once hustlers are organized – it would be easy for them to agree with government on how to do business – without police or county chasing them all over town. Remove the Kanjos and Traffic police who are keeping the poor down by collecting bribes – and let the Sacco manage traffic routes and such- let them self-regulate – with police providing supervision. The police can flag private car people – but commercial vehicles – belonging to saccos – should be left alone. Any violation – the sacco should be punished – fined – so they can do better job with their membership discipline and compliance.

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The other strategy – remove all taxes, license fees, barriers to entry for small businesses and hustlers – the sacco can probably pay one license for everyone – as long as you had badge saying you belong to XYX hawker sacco – you should be good to go.

If you cross turnover is less than xyz – you should not pay these taxes – which for big business has little impact – but for people down at bottom is a real barrier to entry. Almost like Equity customer being told to pay 5000 to open an account – or opening an account is free – it make huge difference. Or Safaricom selling simcard – versus giving out for free.

Those will work for those in business or entrepreneurship path.

Those who want employment – government should spend public money on projects with ability to employ the most people – for example mass social housing, mass road construction that is labour based, mass water connections, mass sewage connections, such kind of infrastructure work that can employ millions.

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