Joys and perils of technology

Since independence, the Kenyan economy has gone through periods of transformation and shocks. During the Cold War, Kenya’s alignment to the capitalist west shielded our economy artificially from market shocks because of the foreign aid and balance of payment support it got.

We were then the darling of the West even though the country was under the much-maligned one-party government of Kanu.

Most sectors of the Government were receiving support from friendly nations. Of course this was meant to buy our loyalty. When the Berlin Wall collapsed in 1989, the reality dawned on the Kenyan leadership that the days of the freebies were over.

The normally friendly countries like the United States and Great Britain started supporting voices of democracy and pluralism.

Under Daniel arap Moi, the Kenyan government later yielded to the voices of change and Kenya eventually reverted to the multi-party democracy and embraced the Structural Adjustment Programmes in the 1990s albeit with hesitation.

Today, by any standards, Kenya can be considered a free market economy. Since the introduction of multi-party democracy in the early 1990s, the role of the State in regulating the market forces has been on the decline.

With support from the Bretton Woods institutions such as the World Bank and the International Monetary Fund, Kenya embarked on the structural adjustment programmes, which saw less regulation and more free market.

The role of the Government was reduced to making policies and creating an enabling environment for business to thrive. Many Government-owned companies were privatised, including the giant Kenya Posts and Telecommunications Corporation, which was split into three entities. The comparative advantage of the centralised economy versus the free market can be seen from the revenue the Exchequer received in form of taxes. Big private corporations such as Safaricom partly owned by Vodaphone, is the leading taxpayer to the Exchequer.

Hitherto State-owned firms were making losses and mismanagement had run down most of those companies. Even today, the management of most State parastatals is wanting with most of them fully dependent on funding from the Government instead of developing their own revenue base.

In the 21st century, like the rest of the world, Kenya is again at a point in time to learn how to adapt to the new disruptive shocks to the economy.

Technological changes have been so abrupt and the country is in a new transformative phase. That calls for a new narrative, since modern technology is likely to make many institutions and ways of life redundant.

For example, media is no longer the way we knew it. News no longer breaks. Social media has revolutionised how we receive and transmit the news. Consequently, more people are likely to lose their jobs because of the web-based economy.

Even how we transact commerce has changed significantly. Thanks to technology. Today, people buy their merchandise through virtual companies. Firms like Jumia, OLX and even what M-Pesa is doing to the banks is a clear indication that business is shifting from physical location to the cyber market.

More and more companies are using the Internet to provide services that make it easier for people to get services from the comfort of their homes. Online consultation means doctors in India can do prescription for patients in Kenya. And so forth.

With these emerging challenges and opportunities, the Government needs to initiate a new economic pathway. It needs to take the initiative as an enabler of trade. Unless the Government innovates, in the near future, the State will have no influence or control over how business is conducted when everything turns to the cyber market.

I am seeing a scenario where many people are likely to lose their jobs. Of course the new technology also offers great opportunity especially to the tech-savvy.

With the huge army of youths, most of them well educated, the State can start a process of aiding the youth to develop a system where they can tap into this market and appropriate value from technology which is cheap, faster and efficient.

For those companies and institutions that are vulnerable to disruption, Government needs to get ahead of the pack. The realities of today make it difficult for the Government, on its own, to determine the pathway we should envisage.

Yet you feel at times that even those in positions of leadership don’t seem to understand the challenges at hand. It is unfortunate that nearly five years after President Mwai Kibaki commissioned the Konza Technocity, there is little to talk about it.
Yet the future is in technology. And that is here to stay.

The economic model to be adapted should be horizontal and consultative, where all players sit around the table to analyse the emerging challenges. The Constitution of Kenya 2010 has created an environment of consultation and public participation.

Whereas the State could control the outcome of the transition prior to the collapse of the Old Order, technology offers a totally new challenge. And no matter what anyone does, it is bound to happen. We just have to be ready for the seismic shift in technology.