Ethiopia industrialization

[MOON Ki]

You don't need ADB for commonsense definition.1) Public sector -gov controlled 2) Private sector -formal tax paying and regulated 3) Informal sector  -informal; these are commonly accepted definitions when talking about the economy.

Clearly, there is not much common sense at places like the ADB.   A failure to grasp that basic concept first.

Ethiopia has very small private sector -

 

Which reminds us of  this question:

How can a communist/marxist state have private sector?

[RV Pundit]

Sounds like we are into bla de bla phase. Ethiopia, TZ and China at one point had no private sector. They were communist or marxist states. They've been working on opening up their economy for private sector. As we speak there are still sectors in Ethiopia where private company cannot be allowed to operate. Now go google around and come up with more back up links. Such obtuseness.

You don't need ADB for commonsense definition.1) Public sector -gov controlled 2) Private sector -formal tax paying and regulated 3) Informal sector  -informal; these are commonly accepted definitions when talking about the economy.

Clearly, there is not much common sense at places like the ADB.   A failure to grasp that basic concept first.

Ethiopia has very small private sector -

 

Which reminds us of  this question:

How can a communist/marxist state have private sector?

[MOON Ki]

Now you're deliberately mixing stuff. Kenya can never be US or China with its 45M people. So let not debate about being no 1 or 2 or 3 in the world.

Your argument is that Kenya should follow the "USA model" because Kenya is somehow like the USA in the late 19th Century to early 20 Century.     What I have done is point out to you a few significant differences.
 
If you wish to sustain your argument, then the definition of "industrialized" and population sizes are  not helpful.   Instead of such, you should do at least two things: (1) state how Kenya is like the USA of the period; (2) give some indicators of how, on that basis,  Kenya will then be able to follow a similar path as the USA.  Feel free to proceed whenever you are ready. But "proof by assertion" simply won't do.   

We are talking about becoming INDUSTRALIZED. That is achieved I think when industry (manufacturing) account for 30-50% of GDP. Swiszterland is industrialized but isn't anywhere near no 10 or 20.

My point was to indicate the growth in US manufacturing of the period.   See the "follow-up" question on the growth of Kenyan manufacturing.   

You have also deliberately ignored my India analogy - which is more advanced kenya - whose economy mirrors kenya - ignoring the scale!

I did not ignore it.   You wrote that:

I meant the USA of 1900 had nearly the same conditions that we have here and that exist in India for example.

I noted that:

* Kenya imports a lot of pharmaceuticals, machinery, steel products, power transmission equipment, yarn, and automobiles from India.

* The latter imports tea, vegetables, leather, soda ash and scrap metal from Kenya.

Just to be sure, I asked you to tell us what those "same conditions" are.   I did not see an answer.

You subsequently wrote that:

In summary for kenya-we have to follow the US model--and first  get to where India is ...

So, now, India and Kenya are not comparable, and what Kenya should do is get to "where India is".   I have already stated my views on the the "USA model".   As to working to get "where India is", I'm all for it. What is it  that you wanted me to comment on in regard to India?

[MOON Ki]

Sounds like we are into bla de bla phase. Ethiopia, TZ and China at one point had no private sector. They were communist or marxist states. They've been working on opening up their economy for private sector. As we speak there are still sectors in Ethiopia where private company cannot be allowed to operate. Now go google around and come up with more back up links. Such obtuseness.

No need for links or additional obtuseness from me;  (in the implied context of Ethiopia, Tanzania, and China) it appears  that  I've resolved your difficulties on:

How can a communist/marxist state have private sector?

[MOON Ki]

Private businesses always need incentives from government to flourish.

If you have a government that is not interested in providing said incentives but is instead more interested in accumulating wealth and protecting the elite from any repercussions, then things fall apart.

I am unable to think of a country that has lifted masses out of poverty, industrialized, properly tackled unemployment, etc. without serious government intervention.     But in Kenya those who lead the government take the view that their chief task is to rob the public---from grabbing public land (some of which is later sold back to the government at exorbitant prices) to simply running away with large amounts of cash.

Not too long ago, a friend asked me what major policies and plans the Kenyan government had to lift masses out of poverty.    I was unable to answer, and I did search for them.

[RV Pundit]

Dude this is way beyond your paygrade; you don't just pick any topic; quickly google and then engage in a meaningful debate where you twist facts. All you do here is bombard us with links of copied data but generally you cannot weave your own yarn here.

Talk about something your truly understands. Not something you google around and pretend to know.

Sounds like we are into bla de bla phase. Ethiopia, TZ and China at one point had no private sector. They were communist or marxist states. They've been working on opening up their economy for private sector. As we speak there are still sectors in Ethiopia where private company cannot be allowed to operate. Now go google around and come up with more back up links. Such obtuseness.

No need for links or additional obtuseness from me;  (in the implied context of Ethiopia, Tanzania, and China) it appears  that  I've resolved your difficulties on:

How can a communist/marxist state have private sector?

[MOON Ki]

Dude this is way beyond your paygrade; you don't just pick any topic; quickly google and then engage in a meaningful debate where you twist facts. All you do here is bombard us with links of copied data but generally you cannot weave your own yarn here.

Talk about something your truly understands. Not something you google around and pretend to know.

Quite so.  I really ought to do something about my pay-grade, shouldn't I?    I also appreciate your excellent suggestion that I talk about only things I truly understand.     But  I find some of the comments in these discussions  very amusing, and it's hard to resist the temptation to jump in.  My bad.  Anyways ... may I take it that no more details will be forthcoming on the "USA model"?

[RV Pundit]

Why not google around, find some publication, summarize and paste it here. That is all you do anyway. When you're ready to engage at a my level - I'll be ready - right now we can't even agree on basics!private sector is something you have to go find out? How are we suppose to talk about US economic structure of the yore and how it mirrors kenya? Once you have ready, have truly understood this stuff and synethezies them...enough to make your own conclusions...then come here...otherwise I am not interested in reading canned reports.

Quite so.  I really ought to do something about my pay-grade, shouldn't I?    I also appreciate your excellent suggestion that I talk about only things I truly understand.     But  I find some of the comments in these discussions very amusing, and it's hard to resist the temptation to jump in.   Anyways ... may I take it that no more details will be forthcoming on the "USA model"?

[MOON Ki]

Why not google around, find some publication, summarize and paste it here. That is all you do anyway. When you're ready to engage at a my level - I'll be ready - right now we can't even agree on basics!

I doubt that I'll ever be ready to engage at your level; it's actually not something I particularly aspire to.   

otherwise I am not interested in reading canned reports.

I can't fault you on that one; some of these reports can be rather "awkward" and "unhelpful" to some arguments.   And, again, you make excellent suggestions for me that I will keep in mind.

[RV Pundit]

Right. You jumped in to discuss something that you don't even know. What for example is industralization in the context of the debate and economy of a country? Google that and come with std 6 response..Industralization is the process of converting raw material to finished goods - When do you think  kenya will become industralized? You won't even know if it hit you. Kenya just has to grow it industry 3 times..and it will become an Industrial Nation. That is not rocket science.

I doubt that I'll ever be ready to engage at your level; it's not something I particularly aspire to.   

[MOON Ki]

Right. You jumped in to discuss something that you don't even know. What for example is industralization in the context of the debate and economy of a country? Google that and come with std 6 response..Industralization is the process of converting raw material to finished goods - When do you think  kenya will become industralized? You won't even know if it hit you. Kenya just has to grow it industry 3 times..and it will become an Industrial Nation. That is not rocket science.

Again, you are absolutely right in all that.    Much appreciated.  By the way, may I suggest that you not consider that you write just for me---low pay-grade, Std. 6, etc.---as I'm sure  that many other readers will benefit from your deep understanding of the "USA model" and expert ideas on how Kenya can follow it.

I will now bow out of this one; but, again, I thank you for the many excellent suggestions that you have made for me.    That's what I call "ndugu helping ndugu"!

[RV Pundit]

US model is all over. Google it. US industralized through highly skilled labour - they didn't go for bottom of the pile manufacturing - but focused mainly on domestic market/import-substitution. Not through low cost manufacturing meant for export like Britain,China and rest of Asia countries like Japan/South Korea. Russia industralized through communist state command economy that "forcefully" made soviet union a big factory. China industralized by deploying cheap and near slavish labour. Throw in the other "common" stuff like infra structure. There are different model for each country due to the nature of that country. There is not one size fit all model. IMF/WB tried that and failed. Kenya cannot deploy labour at Ethiopia cost (20 dollars per month) neither does she have land to dish out! Therefore it cannot go China way. It has to find another way. There are many ways out there. Google them.

understanding of the "USA model" and how Kenya can follow it.

[Empedocles]

Ethiopia is welcoming the investors Kenya has frustratedhttp://www.nation.co.ke/oped/blogs/dot9/ndemo/-/2274486/2995990/-/cbjjj/-/index.html

[RV Pundit]

Reading the comment on Ndemo - It interesting that power in Ethiopia is 3 usd cent per KWH while ours is 24 cent(usd) per kwh. That is nearly 8 times more expensive. We have to stop this nonsense of green energy and really get coal powered power plants.Looking at this site - it seem we "subdized" power for large consumer to 14shs (14 cents) USd- which is still 5 times more expensive than Ethiopia. Jubilee and opposition need to debate on such kind of issue. Retirement of diesel station seem to have reduce cost from 24 to 18(domestic)-14(commercial) -while Ethiopia have 3 (for commerical) and 6 for domestics. Meaning on average our electricity is 3-5 times more expensive. Ethiopia though seem to be sudsizing power (not a good idea) coz the break-even cost is 9shs or cent (usd) per KWH.

https://stima.regulusweb.com/

[Empedocles]

Reading the comment on Ndemo - It interesting that power in Ethiopia is 3 usd cent per KWH while ours is 24 cent(usd) per kwh. That is nearly 8 times more expensive. We have to stop this nonsense of green energy and really get coal powered power plants.Looking at this site - it seem we "subdized" power for large consumer to 14shs (14 cents) USd- which is still 5 times more expensive than Ethiopia. Jubilee and opposition need to debate on such kind of issue. Retirement of diesel station seem to have reduce cost from 24 to 18(domestic)-14(commercial) -while Ethiopia have 3 (for commerical) and 6 for domestics. Meaning on average our electricity is 3-5 times more expensive. Ethiopia though seem to be sudsizing power (not a good idea) coz the break-even cost is 9shs or cent (usd) per KWH.

https://stima.regulusweb.com/

Why you can't see the connection with the shenanigans of Guchuru and Okemo, among very many others in the power sector, as being responsible for the high electricity tariffs is beyond me. Good luck with industrialization and making competitive products.

Another interesting article from this week's Business Daily:

IMF warns Kenya of Sh313bn undisclosed debt riskhttp://www.businessdailyafrica.com/IMF-warns-of-Treasury-s-Sh313bn-debt-risk/-/539552/3294160/-/item/1/-/7im7c5z/-/index.html

[RV Pundit]

The connection is there but I don't think it the main reason why we have expensive power. I think our pursuit of wrong & expensive source of power is the real cause. Right now you're free to generate power as independent producer and sell it to KPLC..but which kind of power is coming online...expensive renewable engery (wind/solar/geothermal power)..instead of conventional dirty cheap coa or huge hyrdos (like ethiopia) for example with or without corruption -cost of solar power is very high- i have seen figure of 20-25 cents per kwh -and coal -is 2-4shs per kwh.

If we want to compete with Ethiopia or Chinese we have to bring lots of coal powered plants online -and we can start selling power for 7shs per kwh.

Why you can't see the connection with the shenanigans of Guchuru and Okemo, among very many others in the power sector, as being responsible for the high electricity tariffs is beyond me. Good luck with industrialization and making competitive products.

Another interesting article from this week's Business Daily:

[Georgesoros]

There should be 50 distributors of power in Kenya, other than KPLC.
Why could a distributor buy power at 25 shillings/kw?
Thats a lot of cash.
power is expensive because the powers to be have added a Corrupt deals that has to be paid.
Ethiopia has the same kid of power, how come its much cheaper?

The connection is there but I don't think it the main reason why we have expensive power. I think our pursuit of wrong & expensive source of power is the real cause. Right now you're free to generate power as independent producer and sell it to KPLC..but which kind of power is coming online...expensive renewable engery (wind/solar/geothermal power)..instead of conventional dirty cheap coa or huge hyrdos (like ethiopia) for example with or without corruption -cost of solar power is very high- i have seen figure of 20-25 cents per kwh -and coal -is 2-4shs per kwh.

If we want to compete with Ethiopia or Chinese we have to bring lots of coal powered plants online -and we can start selling power for 7shs per kwh.

Why you can't see the connection with the shenanigans of Guchuru and Okemo, among very many others in the power sector, as being responsible for the high electricity tariffs is beyond me. Good luck with industrialization and making competitive products.

Another interesting article from this week's Business Daily:

[RV Pundit]

KPLC is part of the the mess and I am for spliting KPLC into 3 or 4 entities that can compete against each other if we cannot get new entities to compete with it. We are probably among few countries with sole distributor. But first let us study why our power is expensive. Hopefully after Ketraco is done de-bundling the network - we will get there.

I know gov (through KPLC/REA/) & donors are busy with supply/distribution problem and has done an amazing the last 10yrs where electricity connection was mere 12% to now where it nearly 60% of all household..with nearly all primary and public institution connected to power (few offgrid)...and where we are talking universal coverage in 2010.


Now it time we focussed on the next problem "Cost of that electricity".

We now have indepedent power producer....who sell power to KPLC...but at what price?  From the little I seen it around 8-9shs (or usd cent) per kwh. Then KPLC & GoK doubles that up with fuel surcharge (now dropping), foreign exchange losses, so many levies and KPLC margins - so you pay now 14-18sh - which some improvement from 24shs we paid recently - before Olkaria geothermal -retired most of the diesel power stations.

If our goal is to compete with Egypt/South Africa/ Ethiopia then we need to reduce power by at least 100% from 14shs (for industrial consumers) to 7shs. That mean producing power at 4shs and selling it at 7shs. That mean establish say huge coal plant like AMU one in LAMU and selling power to KPLC at 2-4shs -and then KPLC an double that up with supply expense to 4-8shs.

Ethiopia from the little I have read produce & supply power at 9shs but subsidize it to 3 shs (for industries) and 6 shs (for domestics). Ethiopia basically began from very little power and recently added 1,800MW from Gibe III - which was some 5 or so times more power than previously. I think if you have huge hyrdo -then economies of scale kicks in- and you can produce power very cheaply. We cannot go big on hydro because we don't have the Nile like river --so our only hope is Kitui or imported coal.

We need to go big on coal and enviromental concern be damned. The rich countries can retire coal and use expensive renewable power. This is our turn to pollute the enviroment.

There should be 50 distributors of power in Kenya, other than KPLC.
Why could a distributor buy power at 25 shillings/kw?
Thats a lot of cash.
power is expensive because the powers to be have added a Corrupt deals that has to be paid.
Ethiopia has the same kid of power, how come its much cheaper?

[RV Pundit]

Here is quick breadown -look like hyrdo is really cheap at 3 cent usd per kwh.
http://www.businessdailyafrica.com/Corporate-News/Relief-for-power-users-as-expensive-Aggreko-diesel/-/539550/3298794/-/loglyiz/-/index.html

[RV Pundit]

LAMU's coal plant (1,050MW) will charge 7shs .
http://www.businessdailyafrica.com/Sh200bn-Lamu-coal-plant-eyes-Nema-hurdle-/-/539546/3300324/-/x25dtrz/-/index.html