I think it’s dead.
So many alternatives are currently in place.
From: kictanet <firstname.lastname@example.org> On Behalf Of Odhiambo Washington via kictanet
Sent: Friday, January 4, 2019 4:36 PM
Cc: Odhiambo Washington <email@example.com>
Subject: Re: [kictanet] – proper representation during vision formulation is what is missing – Konza City is now 10 years old
So, in conclusion, Konza is dead??
I can only see suggestions, but nobody is answering the question.
Thanks Barrack, well noted. Personally I would wish for Konza to succeed… maybe the vision should be broadened initially e.g. pitching it as a general SEZ where people can buy low priced duty free goods (like a “little dubai”) provided they are locally manufactured.
Gov could recover the taxes indirectly e.g. through PAYE for the new jobs created. Hence a win/win. Price of rent and core services would have to be controlled (kept below market) for an initial period – say 10 years b4 gradually transitioning to “free markets”.
Incentives that boost regional demand for outputs could be what is missing. If business people know they will make money in Konza, they will set up.
The grandiosity would need to be scaled down initially with focus being in foot traffic. Why not do the roads then install tents and run a section of it as a trading SEZ for existing local manufacturers (anywhere in Kenya) – say for an initial 1 year trial and those that want to continue past that period would be asked to locate the manufacturing of those products on site…
Real incentives minimise risk perceptions making it a no brainier….
Many thanks for the great points. I totally agree with you. That said all is not lost. I attended the launch of Konza by his Excellency President Kibaki. The former President in his off the cuff remarks alluded to the fact that the project had faced a lot of opposition from the onset by those who felt it was a misplaced priority. He actually compared it to those that never believed that the country would have free primary education. In his opinion Konza was an idea whose time had come. Its unfortunate that the change in government came with new priorities. That said, there is still hope for Konza, the dual carriageway to Mombasa and the SGR will literally bring the City closer to Nairobi thus solving mobility issues. One just needs to drive to Machakos to see where Nairobi is expanding to. The Government also needs to prioritize the project and fund it just as it has done with the SGR. I agree with you that there is need for broader stakeholder engagement. The Ministry of Trade and Industry and the relevant government arm that deals with Technical and Vocational Education. I would have hoped to see visionaries like Dr. Bitange Ndemo, Nyaki Adeya and even the former President Mwai Kibaki play an active advisory role on the Konza project.
The root cause is a lack of proper indigenous MSME representation in the boards and committees that come up with these kinds of visions. Currently where representation exists, it is skewed either in favor of multinationals / bigCorp or to lobbyists beholden to multinationals /bigCorp simply because they have networks for (or can buy) access.
The (flawed) argument in favor of BigCorp is that they represent the big employers or large taxpayers – and I’ll explain why its flawed. Big companies operate at higher levels of efficiency compared to smaller companies (because they can leverage automation for example). This is good in the developed world with single-digit unemployment and where where a middle-class already exists – but *terrible* in developing countries with high levels of poverty and >25% unemployment.
In developing countries the focus should be on *effectiveness* (not efficiency). For example if you want to create jobs, you know the biggest employer from a macro perspective is the MSMEs because their low levels of operational efficiency forces them to hire more workers for a given economic endeavor.
The gap is exponential such that an economic activity that big corp achieves with 10 employees may require 50 startups – each with 2-5 employees. If you look at it from an activity perspective, the MSME sector suddenly becomes a mega employer creating jobs at exponential rates (greater than 1000% per economic activity!!!). These are the hidden insights that don’t get considered at the right platforms when incentives are being developed.
Further, the MSMEs can’t afford armies of specialized tax accountants and offshore tax havens. This means that Government can tailor incentives with tax on-boarding (e.g. via a “Taxation Sandbox” for indigenous startups) so that as these MSMEs grow, the Government would be able to collect more taxes from them (and on a broader – more macro-economically stable scale). So MSMEs as a collective also have potential to be come mega taxpayers. The goal should not be to milk taxes today – but to create a robust group of future (3-7 years) taxpayers.
Macroeconomic stability is another benefit inherent in MSMEs. Rather than relying on all-or nothing all-eggs-in-one-basket approach that is inevitable with big-corp FDI, the government can build entire ecosystems across a diverse range of sectors. The benefits of this are innumerable. One example is that MSMEs don’t bully/bribe the government bureaucracy for unproductive or harmful concessions.
As elucidated in Kachwanya’s insightful article, the quality of FDI matters. We shouldn’t market our people as slave labor. This could have worked in China and India but that era of cheap is now over (AI / Robotics / IoT is quickly making that obsolete). There are technologies that can fully automate basic BPO services (e.g. end user support via NL AI). A proper strategic policy would take modern trends into consideration and identify high-value niches where Kenya can offer a strong global value proposition.
Another thing Government planners appear to have overlooked is the idea of FDI via acquisition of indigenous startups. This strategy has been executed very well in China and India – which have contextualized their IP and industry laws to give an edge to indigenous clones of trending technologies (e.g. Flipkart in India). Governments all over the world subsidize their startups in order to generate new streams of foreign exchange.
The other mistake that I see is reliance on academia / professors for policy guidance… As much as the academia is trying, the reality is that these are the same book-smart academia that churns out half-baked graduates who are out of touch with industry. The local music industry in Kenya is now worth several hundred million shillings as an industry (with potential for billions) and they don’t have any professors running their show. Its the street-smart practitioners on the ground who have transformed the industry…
“It is the shoe wearer who know where the shoe hurts.”
So to avoid well meaning initiatives like Konza mutating into unintended flops, the government should co-opt practitioner stakeholders who understand the real issues in an industry and who have a desire and vision of a thriving ecosystem. People who can see far ahead – like Kachwana… I am totally blown away by how his 2013 article is so *spot on* – it’s like he had a crystal ball!
In business they say the most valuable customer is the one who complains, because that’s how you genuinely know where to improve. I believe the same applies at policy and strategic projects level. We want our country to get it right so that everyone can succeed. It’s not negativity – its a desire to improve things at ecosystem level for the benefit of all.
Thankfully our President is on board with the need for MSME incentives and that makes me optimistic that the Country’s vision is evolving in a good direction.
Happy new year everyone and may you have a prosperous and successful 2019!
Patrick A. M. Maina.
Interesting conversation. Odhiambo Washington, you mentioning that there is a white paper about Konza prompted me to search for it online. I came across this instead. Written 6 years ago but very pertinent today, I think.
Check out the Rock ‘n’ roll film festival, Kenya TV Channel!
Errr, Sam Oduor – I have a feeling that there’s a strategy/white paper somewhere on this Konza thing that might not be in agreement with your long input.
Usually techies are not historians like you seem inclined. Konza was, IMHO, supposed to be an ICT hub, not a museum project.
ICT stuff are supposed to be fully functional within months (not years) after the groundwork has been laid down, lest they become obsoleted by time.
So far, what’s going on in Konza??
Personally I do not think it was a white elephant; great ideas mature over the long term -> cant take 10-50 years.
Rome was not built on a single day – the project needs support from techies like us and investors.
Konza being of National interest should be a phased 10 – 20 – 30 – 40 – 50 – 60 …. year planned development approach.
Partly I would blame the land/property rush experienced in Kenya btw 2009 – 2012 ; guys inflated prices and no one was there to regulate – this might have had negative effects some investors planning to go in considering investors look at ROI which is key to any investment. I cannot see the math of buying land for 50k and selling it at 800k -> this was obviously not sustainable; where does such capital come from ? Virtual loans ?
Konza and many other projects are still very viable in Kenya and I have high hopes my only plea is for the Govt to be at the core of things like Land, Property and Infrastructure from unjustifiable exploits -> this way it will encourage investors to settle creating more Jobs which equates to good security, a healthy and sustainable economic growth.