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!
Rgds,Patrick A. M. Maina.
On Thursday, January 3, 2019, 3:24:00 PM GMT+3, Mildred Achoch via kictanet <firstname.lastname@example.org> wrote:
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.
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On Thu, Jan 3, 2019 at 3:06 PM Odhiambo Washington via kictanet <email@example.com> wrote:
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??
On Thu, Jan 3, 2019, 14:41 Sam Oduor <firstname.lastname@example.org wrote:
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.
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On Thu, Jan 3, 2019 at 2:06 PM Odhiambo Washington via kictanet <email@example.com> wrote:
Does anyone know what activities are going on at the famed Konza City or it’s one of those big white elephants??
Brian Gitonga Marete shared a post.
12 hrs ·
It was obvious that Konza City was a con job from the get go. Concentrations of industrial excellence do not sprout up suddenly just because physical buildings and infrastructure are around. That is not the bottleneck, and anyone can provide that. The real battles of realizing something like the proposed Konza city are elsewhere.