The Flying Geese Economics starting to be felt in kenya

After the expiry of President Moi’s tenure in 2002 and in came the Makerere and London Trained School of Economics President Kibaki, Kenya has seen the influx of foreign  firms across the globe ranging from manufacturing firms, ICT firms and financial services discipline either relocate or  shift their global offices or set up what I may term as technologically  dead end  activities  that are  labour intensive thence achieving their economies of scale.

 Having those functions administered in their home countries is more expensive but cheaper in developing countries due to , high investments in energy production ,  cheap labour coupled with the tax incentives offered to these foreign firms in the name of “free trade” and subsequently the comparative advantage of countries like Kenya, Ethiopia, Ghana and Nigeria in using  labour intensive technologies that  are industrious  in the global chain of production  one may postulate why speak about this model, my home country Kenya has  seen the entry of Chinese motor vehicle maker, Foton, which is investing Sh1.6 billion in an assembling plant in Nairobi. The budge is set to intensify competition in the new vehicle market among local dealers and has further signed an agreement with Thika-based Kenya Vehicle Manufacturers to assemble for them, according Foton East Africa general manager Calvin Guo said the company sold 1.2 million units worldwide last year. Former Prime minister gives a speech during the launch of Foton assembly plant in Nairobi,kenya.

This means the Monopolies and Price Commission will have to cave in to Michael E. Porter‘s five market forces to adapt to these emerging demands, their Asian counterparts Japan through its Brand Toyota Kenya has invested KShs 500 million in a truck and bus assembly plant in Mombasa Kenya’s coastal tourist  city  complete with a new showroom to improve marketing according to their Hino Motors general manager Kazuhiko Wanabe said it expects to produce 40 trucks and buses each month but will increase production to 200 units within a few months of operation. Toyota hopes to sell 1,200 Hino units by 2015 all these Asian Companies are taking advantage of the tax incentives on import of completely knocked down units (CKD) — the parts needed to assemble a vehicle — which are zero-rated in Kenya as opposed to a 25 per cent import duty on vehicle imports - all done and dusted as envisaged in the governments' master economic blueprint dubbed  Vision 2030.Commissioning of the Hinos Toyota Plant in Mombasa.

Further in the electronic Industry Korean electronics supremo Samsung is set to unwrap a television, laptop and printers’ assembly plant in Kenya by end of year  - as its gateway to the horn of Africa and the great lakes region according to the firm’s top management the venture is likely to absorb more than 900 locals in terms of employment - the firms overall target is to realize more than $2 billion revenues by 2015 in the great lakes region and  by large the horn of Africa considering the gradual return to normalcy by our neighbors’  Somalia , the firm is also setting an assembly plant in Abyssinia present day Ethiopia to tap into the growing  bourgeoisie  class , bearing in mind its other assembly plants in South Africa , Sudan and Senegal. The recent Jubilee Coalition manifesto on providing free laptops to those pupils joining class one in primary school from January 2014 though ambitious could end unlocking the dormant potential in our youths who get exposed to the digital age in their late twenties - despite its inherent challenges.The textile industry is not worth writing about given the predicaments it has faced from importation of second hand clothes, to the Export Processing Zones  facing industrial strikes, high energy costs inter- alia despite having a 25% tax holiday for 10 years in short you do not expect to compete with countries that are technologically advanced in the textile industries vis a vis the labour intensive ones even in the face of the famous AGOA agreement unless you emulate them. A brief documentary on Samsung's partnership with JKUAT on  construction of a laptop assembly line by September 2015.

In a nutshell as we become captives of the flying geese model as a nation we can only diversify our labour markets by offering incentives to those university graduates on internship or in college by subsidizing their study costs especially the ones pursuing the STEM degrees  and urge the government to pursue  Equity banks’  model  of the “Wings to fly “, offer more incentives for those coming up with new inventions and innovations  through their firms or on individual basis  and or further  pursue bilateral engagement for instance the  Kenyan Korean approach on nuclear studies where the country  now has 11 students undertaking master’s courses in nuclear engineering in preparation for 2022 generation of electricity , when Kenya will start using nuclear energy anchored with the likely revenues from the oil in Turkana and  titanium in kwale can be channeled  towards this end  -  in the end transfer  new forms flying geese models to the rest of the Africa. A beneficiary of the Equity banks’  model  of the “Wings to fly speaks out.

Emerging faces and players in Kenya’s technology scene.

Morris Mbetsa, Founder Mbetsa Innovations.

The 25 year old Mombasa born tech wizard started off  with developing a mobile based Application for Tracking Vehicles a move geared towards reducing theft related cases and mitigate some of the insurance car theft related claims rampant in the industry . Currently he is working on a device called the SWAG tablet Educator, an invention meant to reduce the cost of education in Kenya; he has so far piloted the program in Laikipia County. To date the young man has already employed over 10 people in his organization. The following excerpt from Ntv Kenya details the young mans journey into the techworld.

Jomo Kenyatta’s University of Agriculture and Technology Taifa Laptop.

Though other locally assembled laptop players exist. JKUAT has taken this venture on a full-scale mission with a scheduled assembly line set to open in Juja, Thika in September 2015. Their future plans is to venture into tablets and other related electronics under the Taifa brand. To date the institution has assembled over 4,000 laptops; the university designs the laptops in partnership with a Chinese firm to leverage on production costs. Operational the assembly line is expected to produce over 1,500 laptops per day.

BRCK TECHNOLOGY.

An internet based device that helps bridge the inter connectivity gap that exists mainly areas where electricity disruptions and internet connectivity are common. It is an offline solution internet and power solution designed by a group of software engineers based in Nairobi’s Tech incubator known by the name    IHUB. A brief presentation by one of the pioneers of the technology Juliana Rotich .

Nakuru Tiger Machinery Services.

An Agro based firm located in Nakuru that specialises in production of chaff cutters, posho mills and other farm machineries, the firm is already selling their products and services in neighbouring countries such as Uganda and Rwanda, A demo by the firm owners.

Kenya's growing Mall culture amid changing consumer tastes and preference’s.

Kenya’s retail sector has witnessed a tremendous growth over the last  20 years from the Mama Mboga's kiosks, Dukas and supermarkets to more sophisticated, complex and posh shopping malls that are now becoming a permanent feature in Nairobi , the country’s capital and even spreading farther to other cities like Mombasa, Kisumu, Eldoret, Nakuru , Naivasha etc.  Not long ago,   one couldn’t imagine buying local fresh vegetables like Sukuma wiki (kales), Kunde (Cowpeas) from the groceries in the shopping malls. Today there is growing preference for organized shopping by the middle class Kenyans who are more conscious on Quality, health and would want to purchase various items under one roof, something that the unorganized retail market of Mama Mboga, Mitumba traders and dukas do not offer.

Though still in its nascent stage, organized  retail market  is beginning to dot each urban centre in a largely rural country that is starting to urbanize thanks to devolution.The future looks bright for investors in the retail sector. The African development estimates that there are roughly 327 million middle class income earners in Africa or 34 % of the African Population while putting the Kenyan middle class at roughly 17% , which translates to 7.65 million people. It must however be noted that currently the mall culture is highly fuelled by a returning diaspora, wealthy refugees, foreign nationals working for UN agencies  and other multi nationals setting up their shops in Kenya to tap in the oil and gas sector, tourists and the wealthy local individuals.

Kenya offers immense investment opportunities in the retail sector that is largely  being driven by an emerging middle class out to experience new forms of shopping; they are young, educated and tech savvy youths, discovery of oil, coal and gas and a stable political climate. The first shopping mall to open its doors to the public was Nairobi’s Sarit centre in 1983; it sits on 250,000 sq. ft. with 4,000 parking lots and  has 300 seater cinema hall .A flashmob dancing inside the Sarit centre mall in Nairobi's sub district of westlands.

The village market shopping Mall.

Construction of the mall began in 1992 before it was finally opened in 1995, the mall covers over 225,713 sq of leasing space. The mall offers an outdoor food court and other restaurants, Health and fitness spas, Recreational and entertainment facilities, african artifacts shops,Bowling alleys inter alia. A documentary of the mall detailing what products and services it does offer to the public.

Yaya Centre Shopping Mall

Located in the upmarket kilimani estate in Nairobi , Yaya centre shopping mall is product of the late eighties with over 100 shops to be found within the complex . It's home to fashion chains like Truworths, Woolworths and with close to over 100 furnished apartments for both short and long term accomodation besides there is  chinese restaurant and an Italian restaurant on its 1st Floor and  a supermarket on the ground floor . A short   video clip  on a  group of tourists shopping at Yaya centre .

Garden City Mall Nairobi. 

A 250 million dollar investment that  recently opened it doors it clients on 28th May 2015, just shows us how ready kenya  is  for a  formal retail market. A clip on the mall during its inaugural debut to the clients.

Naivasha's Buffalo Mall.

Located off the Nairobi Nakuru Highway , in the Rift valley was launched in February 2015 , its opening is clear indicator of just how the other urban areas are ready for the shopping mall culture.

Other upcoming malls are  Two Rivers Mall being undertaken by the centum investment group

The Hub Karen Mall which is  set to open in september this year has already seen French supermarket Carrefour sign up for space as a tenant .

 I have not fully exhausted the Nakumatt chains of Mall that are spread in other parts of the city and the country  but just focused on  the main ones and the upcoming malls. In a nutshell the mall culture in kenya has just taken off from just under 3 reknown malls in the 90s to over 20 malls in 2015 and the numbers will continue to grow as the government invests heavily in education, health, infrastructure and the Energy sector.

Why Northern Kenya counties should consider Olive oil cultivation

Wajir, Mandera , Marsabit and Turkana counties  in my opinion do present a better opportunity for olive oil tree farming that actually do perform well in arid conditions  though a study on stress biology needs to be conducted to ascertain whether they can thrive well in those mentioned areas. According to studies carried out by the Hebrew University of Jerusalem and the Agricultural Research Organization reveals that olive trees have numerous environmental benefits ranging from cleaning up the air of pollutants such as CO2 gas in the air, providing shelter for migratory birds in addition to producing the olive oil. Studies do indicate that olive oil plants are capable of growing in arid and semi-arid condition without spending too much funds on maintenance. The good cultivars take up to four years when they start bearing the fruits and have life expectancy of over 400 years.

Economic Benefits of Olive Oil Products.

To understand the economics of Oil Olive agribusiness we need to look at countries like Italy where exports from olive oil contributes 1% to her GDP which stands at $2.149 trillion dollars, which translates to  $21.49 billion dollars , from our Kenyan perspective that’s nearly half of our GDP that stands at $55 billion dollars following the recent rebasing. According to FAO Italian olive production covers approximately 1,700,000 ha, 80 percent of which are located in southern Italy, where Puglia represents the most important region, with about 370 000 ha, followed by the Calabria (about 186 000 ha) and Sicily (about 160 000 ha). The four earlier mentioned Kenyan counties have the ability to hold more than 10,000,000 ha in my opinion and contribute an equal amount to the current GDP in 6-7 years to come if properly managed. A clip on how the olive oil industry cushions the greece economy as it battles economic  recession. 

Stakeholders Collaboration

However, there is need for collaboration between stakeholders i.e. the national government, the county government on priority projects, state departments such as K.A.R.I and I.C.I.P.E on the viability and feasibility of such ventures and the nomadic communities in the respective regions in order to realize such projects. Kenya consumes nearly 400 million tons of edible oil annually. We produce only 20% locally; the remaining 80% is imported, costing the country over $500,000,000 this can only change if more efforts are put into agro diversification i.e.  Palm oil, coconut oil and Olive Oil farming. The below video shows how  farming works in Israel in collaboration with various stakeholders.

Current situation

According to the economic survey carried out by the central bureau of statistics in 2004 under the then planning and development ministry exports of animal and vegetable oils from Kenya experienced a drop in year 2000 when they fell to KShs 1.2 billion from KShs 2.1 billion in 1999. However, the exports picked up again from 2001 onwards increasing to KShs 2.3 billion in 2002 and KShs 2.4 billion in 2003. This increase was mainly due to expansion of markets in Uganda and Tanzania, among other countries, by Bidco Oil Refineries. Animal and vegetable oils contribute over 96% of the total exports while oil seeds, nuts and kernel contribute the remaining 4%. The COMESA region is the principal market of Kenya’s vegetable oil products; these include Uganda, Tanzania, Zimbabwe, Zambia, Zaire, Rwanda and Burundi. One of the leading companies in Kenya, Bidco recently opened processing plants in Uganda to further increase and develop their market in the region. Kenya’s key export destinations for oil seeds include Netherlands, the UK, and Germany where export values stood at KShs 10 million, KShs 6 million and KShs 1.4 million respectively. Bidco Ceo Vimal Shah take on market prospects for agribusiness in East  africa.

A new look at the Kenyan Tourism Industry.

Over the last four years Kenya’s tourism industry, which accounts for about 11% of her GDP and stands at position 87 globally according to mecometer.com, has been facing turbulent times occasioned by insecurity threats from the Al shabaab Terrorist outfit. This in turn has forced many western countries to issue travel alerts hence a record low numbers in tourist arrivals. As the government tackles the insecurity headache through various state organs, infrastructure development and creating tax incentives to lure travellers and visitors to our country there is an urgent need for tourism players and the relevant ministry to invest heavily in the following areas.

Geothermal spas: To date Kenya has only one geothermal spa located in Naivasha despite the fact that places like Bogoria, Kapedo, Homabay and Nakuru are ripe for such geothermal health related tourism .Iceland, a country well known for its geothermal spas  receives close to  over 400,000  tourist per year .Opening of the first geothermal spa in East and central Africa in Naivasha Kenya more others to follow.

Music Tourism Festivals: More focus need to be shifted towards daylight music festival concerts crooned by international artists and beamed live  across continental channels like Dstv for more publicity , In morocco they got the Mawazine Festival, a festival less dependant on public funding but thrives on variables i.e Ticketing,advertising space that accounts for 68% of their budget while the private sector contributes 32% which begs the question  why can’t we have a Malindi Kitenge Festival , Mombasa cultural Festival or Lamu international Festival groomed by well reknown artists. In the UK according to the guardian newspaper, around 7.7 million people spent £1.4bn in Britain last year on everything from fairy wings and face paints to pints of beer and bacon butties, according to the first report into "music tourism" by UK Music, the body that represents the music industry. Music puts unknown places to the map so let us also have local musical groups given incentives to shoot on some of our hotspot tourist attractions because they too have huge followers on YouTube and other social media platforms. Jeniffer Lopez perfomance  during her last  Mawazine Music Festival concert early this year in Morocco .

Through Social media platforms such as   twitter or Facebook you’ll find so many potential tourists wishing to travel to the country yet there is virtually no one to guide them or rather advise them though we have our relevant ministry twitter handle on!  It is incumbent upon the relevant tourism ministry to have staff dedicated on going through social media posts on daily basis and offering customer service and advice to such potential clientele.Former spice girl Victoria Beckam expressing her wish to travel to kenya at 2.19 on the link below.

Arsenal trio of  chamberlain , Wilshere and coquelin  thoughts on visiting kenya.

Though government has introduced tax incentives for employers providing vacation allowances for its employees, focusing on MICE tourism and other initiatives the three above leads should be heavily considered.