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Uhurunomics II: From dams, roads and rail to more patents

By XN Iraki | Published Sun, August 13th 2017 at 00:00, Updated August 12th 2017 at 21:23 GMT +3
 Standard Gauge Railway (SGR) 

Uhuru Kenyatta finally has political capital to spend after a stunning victory. His majority in Parliament and Senate makes it easy to push not just political but economic agenda too.

This is his last term and he may not worry too much about making unpopular and bold decisions. Leaving a legacy might preoccupy him more than anything else. He has to contend with other legacies, that of his father, Arap Moi and Mwai Kibaki.

We know the economic agenda of his first term, Uhurunomics I; infrastructure, a continuation of Kibaki projects, more debt, and more projects.

Interestingly, his projects went beyond concrete. He also had the softer parts. Lots of money was poured into education through improved teachers’ salaries, electrification, laptops and expansion of schools. Never mind the strike by lecturers and teachers.

In the health sector, there was revamping of NHIF, reclassification of hospitals and building of new ones, never mind the doctors’ and nurses strike. Less noticeable was fund transfer programme to the elderly and the vulnerable members of society. All these can be captured in the steady growth in GDP since Jubilee took over. Will this continue? What should Uhurunomics II be all about?

The first agenda is to move away from concrete to non-concrete developments. In his first term, he built the concrete base, the highways, the dams, SGR and other mega projects, which are not so mega by world standards.

What next? Can we now focus on non concrete structures? Can we start designing and building cars that can ride on the roads? Can we start synthesizing drugs for our hospitals? Can we make health an export industry and welcome people from other parts of the world as our patients? Can we start writing software for laptops we are providing to kids in schools? Can we start building wagons and software for the trains?

How else can we move from concrete to non concrete developments? We must do more thinking through research and development (R&D). As we have reported in the past, too few patents are granted in Kenya. If we funded research more we can generate more patents. Such patents eventually are commercialised, spawning new firms. One channel to increase the number of patents is through our universities that were put under one law and equalised in 2012.

To accelerate research, development and patenting, we need to un-bundle universities into teaching and research universities. We need even a national university like Singapore National University or Australian National University. These can be funded to focus on national research priorities. The research universities can compete for both private and public funds and given targets on patents and firms they need to spawn from their labs.

Today, lots of research money is spread out so thin that it is hard to feel the impact. Silicon Valley is about universities like Caltech, UC Berkeley and Stanford.

The dream of making R&D a catalyst of economic growth has been laid in Kenya through national research institutes and more recently Konza. But there is something missing at Konza more critical than money and land-diversity.

The secret behind Silicon Valley is diversity. The long piece of land in California is driven by brains imported from all over the world with different dreams, ambitions and perspectives. How can Konza and our universities attract diversity?

The second focus of Uhurunomics II should be the private sector which creates about 85 per cent of jobs in Kenya according to Kenya National Bureau of Statistics (KNBS). The private sector keeps 70 per cent of the profits, the rest go to tax. The more money kept by private sector is the raison d’être for more attention. Private sector is also more efficient in allocation of resources.

Looking at Kenya’s ranking on ease of doing business, the full potential of the private sector has not been exploited. A rank of 92 out of 190 in 2016 is not very admirable. The attitude towards the private sector from individuals and governments is not very positive too. We all want to be rich, but we do not want to do what it takes to be rich, which involves taking risks and being flexible. Incidentally, the most flexible and deposable factor is human labour; why layoffs are so common when the firms are doing badly.

Third focus is greater focus on softer issues particularly healthcare and education. These are seen as problem areas, not opportunity areas. Hospitals are not places to go when sick but seek better healthcare. Schools are not for keeping young men and women busy, but for building the economic potential of the next generation.

Why are our schools not swarming with students from neighbouring countries? Don’t we claim we are more advanced than them? Why are there no Kenyan hospitals with global footprints? We must add politics is a soft issue, nowadays seen as a path to employment and wealth not service provision.

Can Uhuru II make politics no longer a matter of life and death? How can he make losers in 2017 polls feel part of the Kenyan dream?

The focus on soft issues demands “soft industrialisation,” beyond the smoke stacks. Hospitals, schools and software produce little pollution. A related industry is sports, whose raw material is human beings, plenty in country worrying over unemployment.

We could be pioneers in making batteries for electric cars which have sounded a death knell for internal combustion engine and reduce demand for newly discovered oil. It seems because of the advances in electric cars, oil prices are unlikely to rise significantly, good news for the economy. I hope our policy makers have thought through the effect of the electric car on our oil industry. Our Oil might not be black gold forestalling the oil curse.

International trade should be his fourth agenda. We have not fully fully exploited trade links with neighbouring countries. May be “soft industrialisation” can drive international trade. Through R&D, we would acquire patents, produce new products or services and make the world our market, Google style. We have E-commerce to ensure we can reach any market in the world. Trade will shift this nation to the next level. We start with our neighbouring countries and trade blocs like EAC and Comesa then focus on planet Earth.

The fifth agenda is Blue Economy. Kenya’s exclusive economy zone off the Indian Ocean in addition to Lake Victoria and inland lakes are economic goldmines. Blue economy, including fisheries, sports and transport would turn the fortunes of the coast region. Think of Denmark and Maersk Line Shipping or South Korea and ship building. Why should I drive from Mombasa to Lamu when there is an Ocean next?

Internationalization of the Kenyan economy will continue in Uhuru II as 6th agenda. We celebrate when big firms set base in Nairobi, but we need home-grown firms domiciled in Kenya and reaching to other parts of the world. That apart, Kenya is likely to keep attracting foreign investors. The profit margins are high while labour costs are low but rising which will soon start disadvantaging us. How can we ensure we attract innovative men and women and retain them here as they do in the USA?

The 7th agenda, Uhurunomics II must manage corruption or perception of it. He has nothing to lose by focussing his guns on sacred cows. That will increase the ease of doing business, and focus national resources to the most productive sectors of the economy and motivate the next generation to take risks and create genuine wealth.

Finally, Uhurunomics II must develop a home grown economic model. Every nation is unique like a marriage. We saw what happened when we tried to copy the political model through the 2010 constitution. We also saw what happened when some parties tried to copy the American campaign model. Uhuru has political capital, hope he will spend it wisely even on the economic front.

The writer is a Senior Lecturer at the University of Nairobi.

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