Great reading on Kenya and Ethiopia differences and parrallels.

[RV Pundit]

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http://www.dailymaverick.co.za/article/2015-04-23-ethiopias-stellar-growth-lessons-for-kenya-and-perhaps-south-africa/#.VTkdjyGqqko

[RVtitem]

http://www.dailymaverick.co.za/article/2015-04-23-ethiopias-stellar-growth-lessons-for-kenya-and-perhaps-south-africa/#.VTkdjyGqqko

All this does not mean Ethiopia has no development potholes or security threats. .....For one, the in-built suspicion of foreigners (as seen, for example, in the prohibition on foreign banks) always makes long-term investment more risky. A second is an in-built suspicion of the profit-motive of business, relating to the Marxian background of the current generation of leadership, where the party is above the private sector. Ethiopia has not yet really liberalised either its economy or its politics. Rather it has created space for the private sector within a highly state-dominated and regulated economy. The paradox is that the government is looking for long-term committed investors, which at the same time pushes investors into taking short-term, often trading oriented positions with expectations of quick (high) returns.

Pundit,
What the writer brings out as the negative in Ethiopia is actually what makes Ethiopia different from the rest of negro countries. Ethiopians admire their independence....and I think it is very difficult for them to auction their souls in the name of pleasing mzungu's ideologies.

[MOON Ki]

Yes, definitely an interesting article.    Some of the points that stood out for me:

* The shoe factory (with its jobs etc.) is my idea of a good story---an excellent start in changing from simply going to China to borrow money.   Right now, countries like Vietnam, Thailand, Indonesia etc. are taking advantage of rising labour costs in China, and some of them could well be the next "Asian Boom".  In contrast, much of Africa, with its cheap, youthful labour does not seem to be vigorously following that path.

* The various comments on corruption in Kenya---from tenders to security---seem to be on the mark.   

* A real question remains as to whether large infrastructure projects, say, can really bring about lasting economic transformation without the "dynamism of capitalism".   (I don't see the author as being negative for asking this.)   To the extent that one thinks it is possible, one need only look at former East European countries or even North Korea today.

It is intriguing to imagine where a place like Kenya could go if its "dynamic capitalists" had a competent government, lead by sober people, and even just half the current levels of corruption.

[RV Pundit]

Well. But isn't that corruption feeding into the private sector dynamism we see in Kenya. Aren't our fatcats re -investing corruption proceeds as capital investments in banks,insurance companies, Telcom companies, hotels, industries,real estate and the NSE. Of course some of it probably end up being stashed in foreign swiss accounts...thankfully this is happening less and less. Eng Kamau has reinvested his proceeds from China roads,bridges and railways into upcoming Radisson Blue hotel..and so are the other fat cats like Chirchir chicken is currently building a tea factory...etc etc.

In Ethiopia you've to contend with inherent weakness of state ran companies...they cannot benefit from competition from liberalized and diversified economy.

The way I see..Ethiopia and TZ are replicating Chinese/Asian model...if only they can allow private sector to unleash the economic potential.

Kenya and Nigeria..are recreating either Brazil (corruption,crime and drugs) or USA model (if we can deal with corruption,crime and drugs)...

The US rose to superpower despite having historically higher wages even in 1900s...thanks to being ever more productive and efficient...it something kenya has to follow...considering it near impossible to drive wages back for Chinese like factory labour industry to thrive. Kenyan worker is still 3 or more times more productive than a TZ.

Yes, definitely an interesting article.    Some of the points that stood out for me:

* The shoe factory (with its jobs etc.) is my idea of a good story---an excellent start in changing from simply going to China to borrow money.   Right now, countries like Vietnam, Thailand, Indonesia etc. are taking advantage of rising labour costs in China, and some of them could well be the next "Asian Boom".  In contrast, much of Africa, with its cheap, youthful labour does not seem to be vigorously following that path.

* The various comments on corruption in Kenya---from tenders to security---seem to be on the mark.   

* A real question remains as to whether large infrastructure projects, say, can really bring about lasting economic transformation without the "dynamism of capitalism".   (I don't see the author as being negative for asking this.)   To the extent that one thinks it is possible, one need only look at former East European countries or even North Korea today.

It is intriguing to imagine where a place like Kenya could go if its "dynamic capitalists" had a competent government, lead by sober people, and even just half the current levels of corruption.

[MOON Ki]

Well. But isn't that corruption feeding into the private sector dynamism we see in Kenya. Aren't our fatcats re -investing corruption proceeds as capital investments in banks,insurance companies, Telcom companies, hotels, industries,real estate and the NSE. Of course some of it probably end up being stashed in foreign swiss accounts...thankfully this is happening less and less. Eng Kamau has reinvested his proceeds from China roads,bridges and railways into upcoming Radisson Blue hotel..and so are the other fat cats like Chirchir chicken is currently building a tea factory...etc etc.

I don't see it that way.  Other than the fact there is little to indicate that the thieves are the "capitalist dynamos",  the side-effects of corruption, even if positive, must be weighed against the ill effects.   Kamau has invested his "proceeds" in a hotel and Chirchir has done whatever with his share, but what is the final overall cost to the country?   If fancy hotels and tea factories are great and worthy contributions, then the proper, and less costly, way to go about building them is to borrow the money from a bank, not to steal and divert money from its intended purposes.

People wail about corruption, and others work to reduce it, because, instinctively or otherwise, they know that in the end it's more harmful; nobody promotes corruption on the grounds that the proceeds of theft might be put to some good.    More objectively, there are numerous rigorous studies that confirm the ill effects of corruption.

Yes, wages themselves are not the issue; what matters in the end is whether the production justifies the wages.     But poor, non-industrialized countries generally do not have the means for competitive, large-scale activity except on the basis of cheap labour. Do current wages in Kenya have to be "driven back"?   How much higher are they than in the countries that are picking up on the "outsourcing" that has been going to China?

That shoe factory keeps getting mentioned all over the place.   Here is an article,  from not too long ago, by a Chinese guy who knows about such things:

http://mobile.nation.co.ke/blogs/Africa-path-to-riches-lies-in-cheap-labour/-/1949942/2632102/-/format/xhtml/item/0/-/fvp4y2/-/index.html

The question such stories and articles bring up is why some people are content with just the loans whereas others seek a bit more.  Africa needs more stories like the "shoe factory" ones; just borrowing money and having our wildlife finished won't do.

[Georgesoros]

Pundit
Inequalities in Brazil are staggering. Fat cats are dorminant like in Kenya. They gobble every thing and leave crumbs for the rest.

[RV Pundit]

You deliberately misunderstand me. I am trying to explain not justify corruption. I am trying to explain why on the face of it despite corruption, Kenya is far ahead of TZ and Ethiopia. I know they've both been growing in higher rate recently (TZ thanks to minning) and are catching up PPP...but still kenya is far ahead of it's subsaharean peers inspite of graft and insecurity. And the answers lies in dynamic private and informal sector. The private sector are dominated by political and civil servant fatcats investing mostly graft money. The informal sector by mwananchi.  In TZ or Ethiopia...the goverment ran sector are the big deal.

I don't see it that way.  Other than the fact there is little to indicate that the thieves are the "capitalist dynamos",  the side-effects of corruption, even if positive, must be weighed against the ill effects.   Kamau has invested his "proceeds" in a hotel and Chirchir has done whatever with his share, but what is the final overall cost to the country?   If fancy hotels and tea factories are great and worthy contributions, then the proper, and less costly, way to go about building them is to borrow the money from a bank, not to steal and divert money from its intended purposes.

People wail about corruption, and others work to reduce it, because, instinctively or otherwise, they know that in the end it's more harmful; nobody promotes corruption on the grounds that the proceeds of theft might be put to some good.    More objectively, there are numerous rigorous studies that confirm the ill effects of corruption.

Yes, wages themselves are not the issue; what matters in the end is whether the production justifies the wages.     But poor, non-industrialized countries generally do not have the means for competitive, large-scale activity except on the basis of cheap labour. Do current wages in Kenya have to be "driven back"?   How much higher are they than in the countries that are picking up on the "outsourcing" that has been going to China?

That shoe factory keeps getting mentioned all over the place.   Here is an article,  from not too long ago, by a Chinese guy who knows about such things:

http://mobile.nation.co.ke/blogs/Africa-path-to-riches-lies-in-cheap-labour/-/1949942/2632102/-/format/xhtml/item/0/-/fvp4y2/-/index.html

The question such stories and articles bring up is why some people are content with just the loans whereas others seek a bit more.  Africa needs more stories like the "shoe factory" ones; just borrowing money and having our wildlife finished won't do.