Manufacturing is next easy thing but more complex. It requires raw materials, high capital and technology / knowhow. Economies of scale play up here. You need smart planning. Our biggest import bill comes from everyday items like clothes, agricultural inputs, industrial equipment, household electronics, cars, etc. We can't compete on cars and machineries but we can make low-level items - wheelbarrows, toothpaste, cement, fertilizer, cookers, fridges. Don't bother with cars and earth movers. It comes down again to knowhow and efficiency. It's a free market so you can't ban the "cheap Chinese junk" otherwise Beijing will ban your leather and cut lending. Specialize and compete.
The idea is not to ban them but to start replacing them with cheap Kenyan junk; in our times that (in most cases) is the path that has been taken to building a solid manufacturing base, with different countries taking their "turn". On that basis, I would say the next countries to industrialize will be Vietnam, Indonesia, and the like (and not Kenya, Tanzania, Burundi and the like). Why do I say that?
As labour costs have increased in China, people who used to "outsource" to Kung Fu (and Kung Fu itself!) are "outsourcing" and those other Asian countries are jumping on it. And I don't mean shoes (as in Ethiopia), I mean everything from little bits of plastic to automotive parts and consumer electronics. Where are Kenya and the like? Rather than jump at Kung Fu's problems, they instead take great delight on how Kung Fu is "helping" them. (That largely means lending them money without too many questions---as long as they also pay for insurance on the loans---or buying their raw materials, "value-adding" to produce crap, and then making a huge profit in selling the crap right back to the Africans!)
It's all very well to say that manufacturing is the next easy thing. But it means making stuff. How is Kenya doing in that? Where are the cookers and fridges and even less demanding items? When do we start on them.*** It's not as though we will suddenly wake up one day and start mass-producing these things. Compared to the Asian countries (such as those I have mentioned), what particular steps are Kenya (and most of Africa) taking to ensure that will be in the next manufacturing boom?
***A memory: When I was a kid, someone was making (or perhaps just selling) fridges in Kenya. They looked like a "regular" fridge but used kerosene instead of electricity. Neat devices that one could have even in the "reserves". Then we "advanced".The
red is especially significant; I'll get back to it.
Manufacturing needs to supply domestic market and cut import bill. This needs cheaper power, labor, capital, roads, housing and efficient retail/wholesale sector with few middlemen and redtape. Services come in here to ensure efficiency - ICT, iTax, e-commerce, etc.
Indeed. But that is only part of it. Here is a key point (red below connecting red above):
Efficiency - this is driven by services and innovation. Note the MoonKi story's emphasis on the cost of doing business. To cheapen labor you need more skilled manpower in high supply. Technical colleges and e-learning can enable this by expanding education. Mobile banking expands access to cash for consumers and micro businesses. Internet connectivity (telecoms) makes market reach & advertising easy and cheap.
Workforce development: We used to have polytechnics and the like that supplemented the universities in STEM (and related areas) and also covered the lower levels that do not demand much use of the head. We got rid of them, in favour of "universities", of which we now have a large number. Almost every large building in every town/city in Kenya, has a "university" on its upper floors, sandwiched between bars and shopping areas, churning out graduates in humanities and the like.
That is not the labour force that will industrialize Kenya, and
that (proper workforce development) is what
GoK needs to work on before propagating foolish dreams of industrialization by 2030. How do we talk about knowhow when there are not enough people who know how?
(It's all very well to talk about e-learning, "M-PESA education", and the like. None of it ---"e-books", digital curriculum", ... whatever--- will be a substitute for a proper educational system that takes care of the technical areas.)
The iHubs, BPOs, economic zones, power plants, rail, roads, etc that government is doing are good. They need to encourage more big business tourism workshops like Obama visit last year; focus on smart manufacturing (value adds); reduce business redtape; partner with business to solve problems (look for market, formulate policies, source capital/reduce borrowing, etc); STOP corruption. Target a constant 10+% growth instead of the World Bank big brother oversight. Strategic planning and self determination is what works not paternalism.
Of course, all that is great and helpful. But at the end of the day, manufacturing is about making things, and, at a minimum it requires (a) that things actually be made and, by implication, (b) people skilled enough to do the making. Just having "economic zones, power plants, rail, roads" can, with judicious choices, help with (a), but none of it does anything for (b). And without (b), ...
On the
red: Africa is still largely a place where people dig stuff out of the ground, send it overseas for "value adding", and then pay through the nose for the final product. (It is no surprise that many tears are being shed as Kung Fu moves away from mass manufacturing of junk.) In Kenya, we don't have much in-the-ground stuff, so we just buy Kung Fu's junk outright and run a huge deficit in his favour. What do we do with what we have----sisal, cotton, ...?
I'm sure we are OK. Or perhaps OKish. (In Africa, Kenya has always been near the top of the class, even if it has generally been a D-/F class.) But Vision 2030? In light of the reality, I couldn't think of wilder dreams. Industrialization is not like sending money from A to B. Kenya is not suddenly going to do it on a path that has never been taken before or which has never occurred to anyone else.
We are OK - you MoonKi pessimist. When I see Uhuru promoting FDI in Germany and meeting SMEs in Nairobi I smile.
And the fruits of all the promoting and meeting? What would make me smile about Uhuru's trip to Germany if he said that he had learned something about their educational system (especially the two-track aspect in technical education) and that he would be doing his best to push Kenya in a similarly helpful graduation. (
RedBlue: I have read books, listened to "motivational speakers", ... on "the power of positive thinking"---that if one thinks positively, then one can achieve anything. True enough as far as it goes, which is not very far. From what I have observed on Planet Earth so far, one can be "positive" 24/7, 365 per, but that is not enough. Sensible thinking, good planning, sheer hard work, ... are necessary; in fact, a pessimist can achieve a lot with these even as his head is covered in the darkest cloud of gloom.
Still individual Kenyans have a big role to play not just government. Ask what you can do for your country...
Yes. Indeed. Precisely so. Ask not what your country can do for you. I have asked what I can do for my country. As far as industrialization goes, whatever I do can is of very limited value, given a bone-headed government. Kenya's dreams require more that just individuals asking ... and even doing ....
On a purely personal level, my attempts to "do for my country" has led to losses of money (the usual eating), lawsuits (one still ongoing, with lawyers and the judiciary eating), and all sorts of unpleasantness from the aforementioned. And I doubt that my experience is unique; The Beloved Country just seems to be one heck of a place. So now I'd rather first ask what my country plans to do for itself; we can return to MOON Ki later.
