Dr Ndii on Kenya bellycrats pervasive incompetence

[RVtitem]

• Tweet

http://www.nation.co.ke/oped/Opinion/Lessons-from-Asian-tigers-/440808-3342850-8gt4ou/index.html

[Nefertiti]

The paradox in Ndii's eloquent rants is the emphasis that they are purely economic analyses. Why does he doubt himself? Is he afraid they sound political? The object is lost in the argument. Was it the Windy City Assassin who said: how does one determine the last laugh? Does the opponent have to die?

[hk]

There are some aspect of Ndii article that I agree with. Especially about opportunity cost, basically what gives more bang for the shilling. There were some grandiose projects like greenfield terminal and I don't know 6 stadiums that were scrapped that didn't make any economic sense. The proposal that building a highway along the kenyan coastal line would lead to development of metropolis with industries I find it hard to believe that  it would pan out . In Mombasa there are EPZ zones that are hardly being fully utilised, why aren't the "sweatshops" putting factories there? Mind you anyone can apply for EPZ license you don't need to be in a special zone. Clearly Kenya isn't going to industrialise following the asia model of cheap labour (Ethiopia is doing that). Maybe we jump and instead of buying wheelbarrows we buy forklifts going by Ndii analogy . At the coast we should be looking at how to exploit the ridiculous potential in fish and marine industry. That sector can generate more than $1b annual like Namibia does.

[Real P]

Great article! Too much bureaucracy makes it harder to do business in Kenya. It is a significant obstacle to economic growth and job creation.

[RV Pundit]

Totally agreed. Besides I dont think we want to waste our small coastline (about 200km long) by polluting it with big industries.We can probably make more money out of it from tourism and marine fishing - and move heavy polluters inward --that LAMU power plant doesn't sit right with me for instance. This Asia model is not the only model to move from poor to a developed state. There are other models out there - like you quoted Nambia - which has decent living standard - that we can copy.  Many economic models out there that Prof Ndii? should be aware...of course his main beef is politically and he is always looking for something to deride..this week it is Naivasha Industrial park...I guess he has not heard of industrial park proposed in Mombasa - Ndogo Kundu or something like that.

There are some aspect of Ndii article that I agree with. Especially about opportunity cost, basically what gives more bang for the shilling. There were some grandiose projects like greenfield terminal and I don't know 6 stadiums that were scrapped that didn't make any economic sense. The proposal that building a highway along the kenyan coastal line would lead to development of metropolis with industries I find it hard to believe that  it would pan out . In Mombasa there are EPZ zones that are hardly being fully utilised, why aren't the "sweatshops" putting factories there? Mind you anyone can apply for EPZ license you don't need to be in a special zone. Clearly Kenya isn't going to industrialise following the asia model of cheap labour (Ethiopia is doing that). Maybe we jump and instead of buying wheelbarrows we buy forklifts going by Ndii analogy . At the coast we should be looking at how to exploit the ridiculous potential in fish and marine industry. That sector can generate more than $1b annual like Namibia does.

[MOON Ki]

Totally agreed. Besides I dont think we want to waste our small coastline (about 200km long) by polluting it with big industries.We can probably make more money out of it from tourism and marine fishing - and move heavy polluters inward --that LAMU power plant doesn't sit right with me for instance. This Asia model is not the only model to move from poor to a developed state. There are other models out there - like you quoted Nambia - which has decent living standard - that we can copy.  Many economic models out there that Prof Ndii? should be aware...of course his main beef is politically and he is always looking for something to deride..this week it is Naivasha Industrial park...I guess he has not heard of industrial park proposed in Mombasa - Ndogo Kundu or something like that.

Namibia has significant natural resources and is a major exporter of gold, uranium, zinc, diamonds, etc.    Which part of that "model" can Kenya copy and how?

[Georgesoros]

Kenya has its own model "the Kaplot" model. This is where one buys big chunks of land and subdivides.
I can say so far its doing great. I have friends who have undeveloped plots worth 100million an acre in Kitisuru - wherever that is!!
Lots of other  Africans come to do retail shopping in NRB. That is working well too.
Health industry is flourishing. NRB hospital built a large campus that will attract regional clients.

Totally agreed. Besides I dont think we want to waste our small coastline (about 200km long) by polluting it with big industries.We can probably make more money out of it from tourism and marine fishing - and move heavy polluters inward --that LAMU power plant doesn't sit right with me for instance. This Asia model is not the only model to move from poor to a developed state. There are other models out there - like you quoted Nambia - which has decent living standard - that we can copy.  Many economic models out there that Prof Ndii? should be aware...of course his main beef is politically and he is always looking for something to deride..this week it is Naivasha Industrial park...I guess he has not heard of industrial park proposed in Mombasa - Ndogo Kundu or something like that.

Namibia has significant natural resources and is a major exported of gold, uranium, zinc, diamonds, etc.    Which part of that "model" can Kenya copy and how?

[RV Pundit]

Yeah Dubai (Arab Emirates) or Sychelles are doing well - and didn't have to go through the slavish industrial manufacturing. There are lots of model out there. Kenya has shown it ready to leapfrog straight to services. Look at maturity of our financial sector for instances. Look at quality of our education. Look at our internet connectivity. We have the ingredient needed to try other models - esp in the era of information or knowledge economy.Dr Ndii  himself seem to realize that when I read him later saying it doesn't matter if someone is boda boda rider (about 0.5m of them in Kenya or more)  or a factory worker in China..boda boda may infact be earning more than Ethiopia dude getting 2,000 per month in Chinese ran slave factory. I recently read security companies are the fastest growing in kenya with more than 300,000 folks formally employed...earning at least minimum wage of 12,000K. When will you get factories in Ethiopia or any other country employing 0.3m people. I also read that informal wages overtook formal wages for same level of education since 2011 or about except for those in agricultural sectors. Maybe we need to just build universities that offer service oriented courses....and get our youngmen straight to services or white collar jobs. There are gazillion of new service jobs...main in IT, E-Commerce, biotech, pharmaceuticals, e-services

Kenya has its own model "the Kaplot" model. This is where one buys big chunks of land and subdivides.
I can say so far its doing great. I have friends who have undeveloped plots worth 100million an acre in Kitisuru - wherever that is!!
Lots of other  Africans come to do retail shopping in NRB. That is working well too.
Health industry is flourishing. NRB hospital built a large campus that will attract regional clients.

[MOON Ki]

Kenya has its own model "the Kaplot" model. This is where one buys big chunks of land and subdivides.
I can say so far its doing great. I have friends who have undeveloped plots worth 100million an acre in Kitisuru - wherever that is!!
Lots of other  Africans come to do retail shopping in NRB. That is working well too.
Health industry is flourishing. NRB hospital built a large campus that will attract regional clients.

I have to admit I never thought of any of that.   Not too long ago an Asian friend asked me this: "What plans does the Kenyan government have to rapidly increase employment and lift the masses of its people out of poverty".    I couldn't think of  good answer.  Nor could I get any out of the "experts" that I asked.  But Kenya appears to have a good answer: people could be engaged in measuring sub-divisions of plots, carrying shopping bags, etc.     And the NRB Hospital seems to be a really good approach: no longer will people have to go to India etc.; no longer will public hospitals in Kenya be death traps; we will be attracting regional clients; dot dot dot.  But that's probably not even the half of it: I take it  that  the "flourishing health industry" means that no longer are so many kids under 5 suffering from the ill effects of malnutrition; no longer are so many Kenyans be dying from shit-related and easily preventable diseases; dot dot dot.

Pundit also points to a really neat solution to the employment problem (especially for our youth):

There are gazillion of new service jobs...main in IT, E-Commerce, biotech, pharmaceuticals, e-services

Read that again: gazillion! 

Truly, its all onward-and-upward for our great country.    Shame on those saying that we don't even have a clear industrialization policy!

[Kim Jong-Un's Pajama Pants]

Pundit also points to a really neat solution to the employment problem (especially for our youth):

There are gazillion of new service jobs...main in IT, E-Commerce, biotech, pharmaceuticals, e-services

Read that again: gazillion! 

Truly, its all onward-and-upward for our great country.   

The knowledge economy is probably where it is at.  Not so much e-commerce and the likes but more like manufacturing. 

I am thinking focusing on something that is in constant demand, generates some grunt work, and can generate new industries like silicon chips.  Start from assembly.  Then manufacture.  Then the whole life cycle including design.  The raw materials for these kinds of things are literally oozing from the ground in the DRC.

[MOON Ki]

The knowledge economy is probably where it is at.  Not so much e-commerce and the likes but more like manufacturing.

Perhaps.   It depends on what the "knowledge economy" is.     According to the World Bank's analysis, IT and Finance and related things will not suffice to do what is required: they can make non-trivial contributions to the GDP, but they will not do much for employment and lifting the masses out of poverty.   By the way, a question: Given all the excitement about "Silicon Svannah" (aka Konza City) how is the IT sector growing in Kenya?

The World Bank etc. do not see any shortcuts for a place like Kenya.   It is all very well for some to talk about different models, but there are questions: which model, when, and how? (As far as I can tell, the view of the current Kenyan government and its supporters seems to be that if they just talk about it long enough and hard enough, then it will automatically happen.)

I am thinking focusing on something that is in constant demand, generates some grunt work, and can generate new industries like silicon chips.  Start from assembly.  Then manufacture.  Then the whole life cycle including design.  The raw materials for these kinds of things are literally oozing from the ground in the DRC.

Manufacturing, yes.   But note that manufacturing as a % of GDP in Kenya has pretty much been stagnant for quite some time.   What will change that?   When? How?   Perhaps in producing rungus, uniforms, etc. for watchmen and boda-boda types ... ?

 "What plans does the Kenyan government have to rapidly increase employment and lift the masses of its people out of poverty".

[RVtitem]

Land speculation industry ought to be stopped. Its causing too much imbalances. Canadians are a good example.

www.financialpost.com/m/wp/personal-finance/mortgages-real-estate/blog.html?b=business.financialpost.com/personal-finance/mortgages-real-estate/ontario-tried-a-speculation-tax-on-property-and-the-market-collapsed-overnight

[Kim Jong-Un's Pajama Pants]

The knowledge economy is probably where it is at.  Not so much e-commerce and the likes but more like manufacturing.

Perhaps.   It depends on what the "knowledge economy" is.     According to the World Bank's analysis, IT and Finance and related things will not suffice to do what is required: they can make non-trivial contributions to the GDP, but they will not do much for employment and lifting the masses out of poverty.   By the way, a question: Given all the excitement about "Silicon Svannah" (aka Konza City) how is the IT sector growing in Kenya?

The World Bank etc. do not see any shortcuts for a place like Kenya.   It is all very well for some to talk about different models, but there are questions: which model, when, and how? (As far as I can tell, the view of the current Kenyan government and its supporters seems to be that if they just talk about it long enough and hard enough, then it will automatically happen.)

I am thinking focusing on something that is in constant demand, generates some grunt work, and can generate new industries like silicon chips.  Start from assembly.  Then manufacture.  Then the whole life cycle including design.  The raw materials for these kinds of things are literally oozing from the ground in the DRC.

Manufacturing, yes.   But note that manufacturing as a % of GDP in Kenya has pretty much been stagnant for quite some time.   What will change that?   When? How?   Perhaps in producing rungus, uniforms, etc. for watchmen and boda-boda types ... ?

 "What plans does the Kenyan government have to rapidly increase employment and lift the masses of its people out of poverty".

Honestly I am not sure how to jump start such an industry from the ground.  I just know a lot of things now and in the future are incorporating chips.  If we can master creating that stuff, there is a market for it out there bigger than that for anything we can draw from the ground.  Policy wonks need to look at what is required and without much fanfare make it happen.

[MOON Ki]

Honestly I am not sure how to jump start such an industry from the ground.  I just know a lot of things now and in the future are incorporating chips.  If we can master creating that stuff, there is a market for it out there bigger than that for anything we can draw from the ground.  Policy wonks need to look at what is required and without much fanfare make it happen.

I wasn't thinking of chips in particular.   My views are on manufacturing in general, and I fully agree with you that manufacturing is the way to go.   But right now: (a)  manufacturing (of anything) in Kenya doesn't seem to be going anywhere and (b) it's hard to see how the government intends to change that.

Beyond that, the real goal should be getting people out of poverty and to a decent standard of living.    I see nothing there, other than some vague "visions" and an implicit, hoped-for, trickle-down effect.

Policy wonks?   The guy in charge of planning just announced that we have no plan!   

[RV Pundit]

You guys totally misunderstood the meaning of knowledge economy and what service economy can do. There problem we have in Kenya is simple. You have about 24m (50%) people aged 15-65yrs who should be in gainful employment. Our main problem is that bulk (60-70%) of these people are employed in agricultural activities that don't pay much nor can fully engage this people - agricluture itself generate 25-30% of GDP - so nearly 3/4 of those people are excess capacity.

The touted model is to move these guys to manufacturing jobs (so call Asian or China model) . But I think there is alternative that kenya is showing possible. Nothing novel here...other countries have done this..although they've financed it using oil(Arab Emirates) or tourism money (sychelles). It certainly possible to move from low income country to middle income country without industralizing. Kenya already is low middle income country yet it has not industralized. It's been growing at 6% the last few years.

Back to the 24m problem..we have about 2-3m in formal jobs -either in gov or private sector..nobody has big problem with that..some few(maybe 1/4) in agricluture sectors are doing well enough..we already are doing well in service sectors...lots of new jobs  employed as m-pesa/bank agents (maybe anything 200,000), tourism sectors employs hundrend thousands, about 300,000 are now employed as security guards, we have nearly 1m involved in boda boda riders and transport sectors as drivers/touts, about 1m maybe employed in Mjengo jobs, then new class of SMES doing trading, you have guys working in the ever expanding formal retails..supermarket attendants as far better jobs than shopkeer, folks working as cyber attendants...all these jobs have been shown to pay as equally well as formal jobs...such a teacher or doctor...for the same level of education.

Some of these are new jobs...others are jobs now possible thanks to knowledge economy...for instance they are thousands now working online or in call centers.In short knowledge economy doesn't mean computer economy...it mean economy driven by IT(Tech) (not ICT itself). You don't have to manufacture chips, all you have to do is to create m-pesa or banking agent type of jobs that employs 200,000 - and have 1.5 financial accounts for 1 person. These achievement may look easy but you'd have to find out how long Asian tigers go their guys to own a bank account! All these jobs are now possible thanks to knowledge economy.

Find out how large an industrial park you'll need to employ 200,000 people. We can go the knowledge/service economy and succeed. All we need is more laptops/quality educations in our schools...more universities...more graduates...every household connect to power/broabband..more apps/applications...and we can take advantage of knowledge economy straight to first world. Estonia has done it. It is not industrial power.

There are things Ethiopia can do...go the China way..and there are things Kenya can do..go the Estonia way. Ethiopia have the ingredients for this...slavish wages, really poorly educated folks, cheap land owned by gov, dictatorship, cheap power, lack of private sector, gov capacity...and we don't have those advantages. Even if we remove all corruption and redtape..nobody in kenya is ready to work for 20 dollars per month in some chinese factory. But we have education systems that is acknowledge to be as good as some middle income countries. We have smart people willing to innovate. We are a democracy. We already have a thriving private sector that is already chief source of FDI for many countries in Africa. That is why M-pesa or banking agent has suceeded here and that is why internet connection or smartphone usage has hit the roof. These are not true for every country. You just need to go to Ethiopia to find out why things we take for granted here...are not.

We don't have to abandon manufacturing or agri...but we just have to grow all the other sectors..without focusing too much on the tiger asian model.

[MOON Ki]

You guys totally misunderstood the meaning of knowledge economy ...

Of course.  And we are grateful to you for enlightening us.   

But I think there is alternative that kenya is showing possible. Nothing novel here...other countries have done this..although they've financed it using oil (Arab Emirates) or tourism money (sychelles).

We don't have any serious oil; so we can skip the Emirates.   Seychelles: A truly bizarre example.   The place has a total population of about 97,000---less than some small surburb in Nairobi!---that, moreover, growing very slowly. 

Other suggestions (or "models" as you call them)  for how Kenya will finance its great leap forward?

Back to the 24m problem..we have about 2-3m in formal jobs -either in gov or private sector..nobody has big problem with that..some few(maybe 1/4) in agricluture sectors are doing well enough..we already are doing well in service sectors...lots of new jobs  employed as m-pesa/bank agents (maybe anything 200,000), tourism sectors employs hundrend thousands, about 300,000 are now employed as security guards, we have nearly 1m involved in boda boda riders and transport sectors as drivers/touts, about 1m maybe employed in Mjengo jobs, then new class of SMES doing trading, you have guys working in the ever expanding formal retails..supermarket attendants as far better jobs than shopkeer, folks working as cyber attendants...all these jobs have been shown to pay as equally well as formal jobs...such a teacher or doctor...for the same level of education.

Interesting figures.   If I may query just one: how do you arrive at "maybe 200,000" for MPESA/bank agents?   

I'm sure there are many employed as watchmen, touts, boda-boda operators.   I don't know how much they make.    Do they make enough to get out of poverty?   

What does "for the same level of education" mean when comparing a doctor with supermarket attendants and cyber attendants?   

Lastly, out of the 24m you started with, how many do you have left?   

Find out how large an industrial park you'll need to employ 200,000 people.

That simple, huh?   

...and we can take advantage of knowledge economy straight to first world. Estonia has done it. It is not industrial power.

There are things Ethiopia can do...go the China way..and there are things Kenya can do..go the Estonia way

Estonia is another odd one.     Apart from the advantages it has from being a member of the EU and from its geographical position (esp. w.r.t to Russia), it has a tiny---and shrinking---population: 1.3 million is about the size of Mombasa.   Also, looking at its economy by sector, I don't see much of "knowledge economy".  The top 4 sectors in 2015: manufacturing (15%), real estate (10%), wholesale and retail trade (12%), transport and storage (8%). And so on.

[Kim Jong-Un's Pajama Pants]

Honestly I am not sure how to jump start such an industry from the ground.  I just know a lot of things now and in the future are incorporating chips.  If we can master creating that stuff, there is a market for it out there bigger than that for anything we can draw from the ground.  Policy wonks need to look at what is required and without much fanfare make it happen.

I wasn't thinking of chips in particular.   My views are on manufacturing in general, and I fully agree with you that manufacturing is the way to go.   But right now: (a)  manufacturing (of anything) in Kenya doesn't seem to be going anywhere and (b) it's hard to see how the government intends to change that.

Beyond that, the real goal should be getting people out of poverty and to a decent standard of living.    I see nothing there, other than some vague "visions" and an implicit, hoped-for, trickle-down effect.

Policy wonks?   The guy in charge of planning just announced that we have no plan!   

I should have said manufacturing.  Not knowledge economy. 

But whichever end goal, It's past that time to go beyond flashy documents and fanfare.

[Kim Jong-Un's Pajama Pants]

Some of these are new jobs...others are jobs now possible thanks to knowledge economy...for instance they are thousands now working online or in call centers.In short knowledge economy doesn't mean computer economy...it mean economy driven by IT(Tech) (not ICT itself). You don't have to manufacture chips, all you have to do is to create m-pesa or banking agent type of jobs that employs 200,000 - and have 1.5 financial accounts for 1 person. These achievement may look easy but you'd have to find out how long Asian tigers go their guys to own a bank account! All these jobs are now possible thanks to knowledge economy.

Find out how large an industrial park you'll need to employ 200,000 people. We can go the knowledge/service economy and succeed. All we need is more laptops/quality educations in our schools...more universities...more graduates...every household connect to power/broabband..more apps/applications...and we can take advantage of knowledge economy straight to first world. Estonia has done it. It is not industrial power.

How are these things related?  What leads to what and why?  What is the core product that is driving all these?  What is coming out of Kenya that the rest of world will have their knickers in a twist without?

[MOON Ki]

Some of these are new jobs...others are jobs now possible thanks to knowledge economy...for instance they are thousands now working online or in call centers.In short knowledge economy doesn't mean computer economy...it mean economy driven by IT(Tech) (not ICT itself). You don't have to manufacture chips, all you have to do is to create m-pesa or banking agent type of jobs that employs 200,000 - and have 1.5 financial accounts for 1 person. These achievement may look easy but you'd have to find out how long Asian tigers go their guys to own a bank account! All these jobs are now possible thanks to knowledge economy.

Find out how large an industrial park you'll need to employ 200,000 people. We can go the knowledge/service economy and succeed. All we need is more laptops/quality educations in our schools...more universities...more graduates...every household connect to power/broabband..more apps/applications...and we can take advantage of knowledge economy straight to first world. Estonia has done it. It is not industrial power.

How are these things related?  What leads to what and why?  What is the core product that is driving all these?  What is coming out of Kenya that the rest of world will have their knickers in a twist without?

I too have been wondering about that. E.g., these 200,000 guys in that industrial park.   What exactly are they producing?   And if it's just a matter of finding out how large a park is needed, why stop at just one park?

[RV Pundit]

Knowledge economy is not computer economy. M-pesa ecosystem is an example of knowledge economy. Current banking revolution is mostly thanks to computers making many things possible. You know how much a hassle banking was before computers were born.There are new jobs that you can see if you've never been to kenya in last 5-10yrs. One is ubiquitious boda boda - transport sector of the economy- that now employs millions of youths - who otherwise would be idling or under employed in farms. Their earning is certainly more than what guys make in industrial area...and way better than those in Ethiopia slave factories.As for m-pesa & banking agent jobs - all you need to find out is how many safaricom and airtel agents are out there - last I checked there were 150,000 in Safcom alone - and way bigger number than that - I have seen survey of their earning (from transactions fee) -coming down to 12-30k per agent on average. That 200K is understatement considering banks have way more agents than that.All those are example of new jobs. The traditional jobs of industrial area, farming and construction work is being suplimented by new jobs - more example Uber taxis jobs - that is knowledge economy job - thanks to a simple mapping application.

You don't have to manufacture chips to take advantage of knolwedge economy. All you need are the kind of educated, innovative, and receptive people like kenyans.

As for earning - in informal sector -catching up with formal sector - you need to look for labour survey that was done I think in 2010 or about. The constant is the level of education..so I mean std 8 drop out working formally as security guard in some company - is doing less than std 8 drop out working in transport sector as a boda boda.

With the knowledge economy - we need to rethink this manufacturing is the only way out for us.