Why Manufacturing will never take hold in Kenya

[sema]

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Scroll to minute 38:05 - When it comes to understanding economics, I like simplicity not big English words like Ndii and I cannot see how, without manufacturing, Africa will ever get out of it's current poverty status. How do you become a richer country when you make nothing? They have to start making things. Every country in the world manufactures except Africans.

[RV Pundit]

Kenya definitely manufactures things.
It just about 7% of GDP now
That is a trillion Kshs worth of manufactured goods...in 13 trillion kshs economy
Most goods I see in Kenya supermarkets are made in Kenya.

Yes, traditional model was start from agriculture - low class/3rd world
Move people to Manufacturing - middle class/2nd world
Then move them to services - developed/1st world

I believe Information Technology has allowed us to leapfrog manufacturing and head to services.
Good example is M-pesa and whole fintech that now employs 250,000 m-pesa agents.
Do you know how many factories you need to employ such people.
Andrew Kibe is earning money online exporting his content worldwide. Pun fully intended

Remittance has gone to 500B - just 300B short of 800B from exports.

Can kenya become developed without manufacturing.

I say yes.

Kenya can double its GDP per capita to hit 4,000USD or become upper middle class in a decade by doing what it's doing.
Yes, it can - without doing any serious manufacturing.
Previously it was impossible to become middle class if you are large country without manufacturing.
Now it possible thanks to leapfrogging opportunities presented by Digital Economy.
Kenya should focus on digital economy - more than manufacturing

The whole fiber - to every home - will unleash many Kibe Andrews.
You dont need to manufacture a car - you can manufacture content online and earn money.

You dont need to export cars - you can export services (online work, content like Andrew Kibe) and earn dollars.

Kibe can relocate to Langata and continue making Youtube videos - and make money.

Definitely in short term.
kenya need to double its manufacturing to 15 % - long term to 20-25%
Kenya needs to move real estate and construction to 15-20%
Move ICT to 15%.
Focus on so called Industries IWOSS - industries without smokestacks (tourism, dairy, horticulture)
Avacados earn mexico 12 billion dollars in export revenue.
Do you know how many factories you need to earn 12 billion dollars in export.
Yet simple avacado can earn 12 billion - create industries around packhouse, cold stores and transportation.

[RV Pundit]

Nancy Laibuni who works with Ndii in statehouse has done good research here

This study assesses the scope for industries without smokestacks (IWOSS) to generate large-scale wage employment opportunities in Kenya especially for the youth. IWOSS are non-manufacturing industries that demonstrate high productivity and employment potential similar to manufacturing.
https://www.brookings.edu/research/industries-without-smokestacks-in-africa-a-kenya-case-study/

[RV Pundit]

https://www.csis.org/analysis/need-leapfrog-strategy

[RV Pundit]

[Kadudu]

Most people use mobile banking services in Kenya because it is the most convenient for their circumstances. In Germany am sure mobile money services are less than 5% and does that say anything about service delivery? If Kenyans were to have efficient and reliable bank services, many people would still be using conventianal banks.

80 percent of Kenyans use mobile money services compared to just 20 percent in the United States.

[RV Pundit]

That is point.
It took German many years to get to where it is with conventional banking services.
Kenya Mpesa took little time and little money and is more superior.

LEAPFROGGING.

Kenya can use the same tactics - and skip some stages of development.
For example - schools - we can use online schooling to skip building schools - like we skipped building banking infrastructure.

Most people use mobile banking services in Kenya because it is the most convenient for their circumstances. In Germany am sure mobile money services are less than 5% and does that say anything about service delivery? If Kenyans were to have efficient and reliable bank services, many people would still be using conventianal banks.

[sema]

You do not become rich by postulating negativity and stupidity on youtube (a free platform that no one controls - youtube can decide to ban your channel, which happened to kibe once already because of his offensive content and they can do it again) your channel can be hacked and brought down (so many things can happen when you are not in control of the platform and that's why anyone with a brain knows not to depend on it entirely as their only source of income)

The other thing you don't understand Pundit, is how expensive life in the US is (you cannot live off meager youtube earnings and especially not in an increasingly expensive city like Austin) and that is why even at age 47, Kibe is still freeloading in another man's house and not paying any bills (his earnings are too low) and it's why I'm saying that long-term, it's not a sustainable strategy if you want to remain in the US -- You either have to get a job so you can pay your bills or if you completely don't want to work, you get on welfare, but if you are in the country illegally, you can't get welfare and at 47, time is not on his side. You can't waste time arguing with 21 year old's in Kenya. It's utterly nonsensical. His host also said that when it was time for him to return, he hid because he didn't want to return to kenya (he had fallen on hard times there and knows he can't do it there; it's easier to abuse people in Kenya when he is hiding in George's house (in Kenya, they could find him 

On manufacturing - Name one country that has done it without manufacturing and with the population that kenya or other subsaharan african countries have?

[RV Pundit]

I suggest you get a private room with Kibe and sort these issues.
I am not aware of a country who has leapfrogged..that is our size.
Kenya could become the first.
Is there a possibility that we could somehow find gainful employment to say 10m people outside manufacturing for export???
I dont know - but if we invest in digital economy - give everyone fiber - the NEW BRAVE WORLD is unprecedented in the disruption it will cause
Many small countries have done it - Mauritus is latest and first in Africa.

You do not become rich by postulating negativity and stupidity on youtube (a free platform that no one controls - youtube can decide to ban your channel, which happened to kibe once already because of his offensive content and they can do it again) your channel can be hacked and brought down (so many things can happen when you are not in control of the platform and that's why anyone with a brain knows not to depend on it entirely as their only source of income)

The other thing you don't understand Pundit, is how expensive life in the US is (you cannot live off meager youtube earnings and especially not in an increasingly expensive city like Austin) and that is why even at age 47, Kibe is still freeloading in another man's house and not paying any bills (his earnings are too low) and it's why I'm saying that long-term, it's not a sustainable strategy if you want to remain in the US -- You either have to get a job so you can pay your bills or if you completely don't want to work, you get on welfare, but if you are in the country illegally, you can't get welfare and at 47, time is not on his side. You can't waste time arguing with 21 year old's in Kenya. It's utterly nonsensical. His host also said that when it was time for him to return, he hid because he didn't want to return to kenya (he had fallen on hard times there and knows he can't do it there; it's easier to abuse people in Kenya when he is hiding in George's house (in Kenya, they could find him 

On manufacturing - Name one country that has done it without manufacturing and with the population that kenya or other subsaharan african countries have?

[Georgesoros]

Policy Policy policy.
this should be in every govt doc. Jua kali has done a great job, but there is no policy to promote it to the point that it is viable employment for many. Most dismiss it as "for uneducated" while in Asia it is highly encouraged. Machining tools should be acquired at no tax so as to promote manufacturing. Industrial site should be secured and by counties and rented out to individuals who set up shop to do manufacturing. Land has become extremely expensive, so govt needs to tax specultion so as to maintain prices. I think these are easy but difficult policies that can promote manufacturing. Solar panel manufacturing is an industry of the future that needs to be included into policy.

[RV Pundit]

For manufacturing..EPZ and SEZ should be a priority..at least within those zones gov can mimic mini China
..they should be setup in lamu and Mombasa port..I think moses kuria is on top of things. It going to harder to spur manufacturing in whole of country...Gov has to build ndustrial parks next to slums in major towns...where cheap labor is available.Gov should build basic infrastructure..give them land for lease...as long as they doing exports...and doing mass employment.Informal manufacturing will thrive as long the large economy thrive

[sema]

I am not aware of a country who has leapfrogged..that is our size.
Kenya could become the first.

I honestly do not see how. The average kenyan is semi-literate, unschooled, stuck in rural poverty. How? You cannot compare these sub-saharan AFrican countries with huge populations to island nations like Mauritius (full of Hindu's that have a different culture)

Is there a possibility that we could somehow find gainful employment to say 10m people outside manufacturing for export???

[/quote]

There is no such possibility.  I can see expanded fiber and connectivity working in a country that has highly skilled labor (I think it's worked somewhat in India, but they have all those engineers that can provide cheap labor) does kenya have that?

[Nowayhaha]

Manufacturing offsets imports and a country can get revenue from exports. When the bulk of exports is still unprocessed agricultural products 70 years after Independence . Just know there is a big problem. No wonder we are where we are .

[sema]

Manufacturing offsets imports and a country can get revenue from exports

What you've described is competitive advantage, which I believe, each country needs to find.  What is it you do well enough that you can export and that other countries recognize and are willing to pay for it? What is it that you do so well that it gives you this competitive advantage?

Japan is good at making cars. That's it's competitive advantage. America is good at many things and thus has a good competitive advantage against the rest of the world (honestly) but lets say technology in this case (google, microsoft, adobe, etc); Germany is known for it's machines, etc etc.

Without competitive advantage you will remain a 3rd world economy relying on things like tourism, retail and one or two agricultural products (like coffee and tea); Florida has been described as a state that has a 3rd world economy because they make nothing. What does Florida have? tourism and what else do they export? Oranges?

I know pundit thinks kenyans can export "talking"  and "gossip" on a free platform like youtube, but youtube was created to make it's founders rich who I believe are billionaires today.  It wasn't created to make mere gossipers rich.

[Kim Jong-Un's Pajama Pants]

Manufacturing offsets imports and a country can get revenue from exports

What you've described is competitive advantage, which I believe, each country needs to find.  What is it you do well enough that you can export and that other countries recognize and are willing to pay for it? What is it that you do so well that it gives you this competitive advantage?

Japan is good at making cars. That's it's competitive advantage. America is good at many things and thus has a good competitive advantage against the rest of the world (honestly) but lets say technology in this case (google, microsoft, adobe, etc); Germany is known for it's machines, etc etc.

Without competitive advantage you will remain a 3rd world economy relying on things like tourism, retail and one or two agricultural products (like coffee and tea); Florida has been described as a state that has a 3rd world economy because they make nothing. What does Florida have? tourism and what else do they export? Oranges?

I know pundit thinks kenyans can export "talking"  and "gossip" on a free platform like youtube, but youtube was created to make it's founders rich who I believe are billionaires today.  It wasn't created to make mere gossipers rich.

Quite a few developed countries are not the best at anything though.  As in they are just a good as the next guy.  I think aside from the petro states, you have to have and meet a local demand for goods and services.

[RV Pundit]

Exports is not just of goods but also services.Kenya should focus on exporting services too. Also countries should aim to build good domestic economy..manufacturing many finished goods.

[RV Pundit]

Safaricom, kenya banks,insurance etc are now exporting billions of dollars' worth of service..Kenya trucks and buses export transport services..Kenya online workers do the same. Kenya might not be able to compete in manufacturing of goods in short run but is far ahead in services sectors because of its' very good education quality. In the long run we need to restructure the economy to have say at least 25% manufacturing (triple the current manufacturing base); 5-10% agriculture (shift people to manufacturing); 15% construction (we have lots of things to build); rest services (centered on digital economy).

We need to stop being anal about manufacturing - a million people employed as boda boda riders providing transport services - is as good as million people employed to manufacture stuff - only problem is one can earn forex - while the other one is fueling the domestic economy. 250K people working as banking agents/mpesa - providing financial services - is awesome. If we get a million people working online in BPOs - we can earn more forex - than if they were manufacturing low quality slave labour shirts and trousers.

[sema]

Quite a few developed countries are not the best at anything though

Which countries?

[RV Pundit]

Quite a few developed countries are not the best at anything though

Which countries?

I think Spain is a country that developed through stealing South America gold and industralize very late.I doubt Portugal manufacturing sector is big.

[Kim Jong-Un's Pajama Pants]

Quite a few developed countries are not the best at anything though

Which countries?

I think Spain is a country that developed through stealing South America gold and industralize very late.I doubt Portugal manufacturing sector is big.

I'd include Poland, Slovenia, Austria, Canada etc.  I have no idea what Poland produces(apart from Polish foods and drinks ) that the next country doesn't.  Yet it is developed.  Granted, being part of the EU has helped a ton.  The point I am making though, is that the export model is not that crucial.