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Why we must upgrade our Jua Kali sector

Sunday March 30 2014

Bitange Ndemo

Bitange Ndemo 

BITANGE NDEMO
By BITANGE NDEMO
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We gained independence from the British rule in 1963 and for almost four decades Kenya remained one of the most diversified economies in Sub-Saharan Africa.  No more. 

Our economy is largely based on Tourism and the export of a wide range of raw agricultural produce such as Tea, Coffee, and other horticultural products including cut flowers to the European Union market.  Our import bill is still higher than what we receive from our exports.  We shamelessly import such low technology items like bicycles which in my view our jua kali enterprises should copy and produce locally.

We simply watch subsistence enterprises (jua kali) struggle to survive yet 90 per cent of Kenya’s workforce earn a living from here.  In 1972, the International Labour Organization pushed governments to recognize these enterprises.  The Kenya government first recognized jua kali in 1986 through a sessional paper.  And in 1989 a strategy paper was developed when these enterprises were assisted with jua kali shades. 

In 1992 another sessional paper was developed, ostensibly to create an enabling environment.  It wasn’t until 2001 when the government through the Economic Survey 2001 noted that the micro and small enterprise sector employed more than four million people then.  As the informal sector employment grew steadily, formal employment figures were declining.

It is time now to assist these enterprises change gears from manufacture of poor products to manufacturing globally competitive products.  This is how we can do it.  Allow me to demonstrate using the furniture makers along Ngong Road between Dagoretti and Karen.  These enterprises are on a road reserve and for as long as I can remember they are mostly subsistence in other words eating from hand to mouth. 

CREATING NON-VIABLE ENTERPRISES

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If the government spends Sh500 million from the Uwezo Fund to buy a 10-acre piece of land within the vicinity and create an industrial cluster equipping it with modern tools and equipment, it will upgrade the entire cluster and develop more than 200 taxpayers.  The net effect is that the road reserve will be freed up and a stage for industrial uptake will be set up.

Ancillary enterprises will rise from the cluster as opportunity to satisfy the new needs.  From this then the fund can advance money to the new viable enterprises.  This will lead to the success of both women and youth funds that are currently disbursing money to areas where economists will tell you there is market failure (where there is not sufficient market to justify an investment).  Where there is market failure, it is the government that helps stimulate the market and there is no better way than stimulating already existing enterprises to give rise to new ones. 

We are under the wrong impression that our problem is money.  What is needed first is the opportunity and if one does not exist, we need to spend money to stimulate opportunity rather than throwing money to create non-viable enterprises as we are doing at the moment.  Since there are clusters in virtually every county, we can then replicate the model throughout the country.

Like in the Newly Industrialized Countries (NICs) these entrepreneurs will constantly be taught how to copy low technology non Intellectual Property (IP) products like furniture for the export market.  This is what is happening in many of the NICs.  There is evidence from research as Aaron de Oliveira tells us

“copying and imitation is good for society.  One of the best examples is the chemical industry in Switzerland in the late 19th century (which was not covered by patents), there were certainly many chemical companies who focused on copying -- but there were also many who were quite innovative, and the overall impact to the economy was very strong”.  

ZERO ADVERTISING

The fashion industry too thrives without copyright protection.  Here you find highly successful clothing chains like Zara founded in Spain in 1975 by Amancio Ortega and Rosalía Mera.

It is claimed that Zara, the global fashion imitator needs just two weeks to develop a new product and get it to stores, compared to the six-month industry average, and according to Wikimedia, launches around 10,000 new designs each year. Zara has resisted the industry-wide trend towards transferring fast fashion production to low-cost countries. Perhaps its most unusual strategy was the policy of zero advertising in contrast to direct competitors; the company preferred to invest a percentage of revenues in opening new stores instead. This has increased the idea of Zara as a "fashion imitator" company with low cost products.

Technological breakthroughs such as 3D printing come with new advanced production technologies that can revolutionize work in emerging economies. It is unimaginable that we have not moved with speed to boost production through use of 3D and robotics.  Given the fact that Kenya has built a sizeable capacity in coding, we shall be starting with a significant advantage over other countries.  With such technologies, I see no reason why we should import toys, rulers, and many other items imported from Asia and sold on our streets.

Kariobangi’s light industries need to be upgraded to a serious industrial cluster possibly leveraging on 3D printing to produce industrial grade quality goods.  This can be carefully managed with the aim of replicating such industrial development in other counties.  The Japanese International Corporation Agency (JICA) in a report titled One village One Product (OVOP) comprehensively shows which product can be manufactured in what village in Kenya.  JICA even conducted seminars or production of parts for Japanese products such as copiers and printers with the hope that one day we shall build our own copiers but we have not developed much interest in this as the report gathers dust in the shelves.

COPY TO GAIN TECHNIQUES

A study by Princeton University shows how Chinese artists have copied their way into success and become innovators.  It says, the tradition of copying in painting and calligraphy was a method aimed at the formulation of personal style. Except in the case of intended forgeries, exact replicas were not seen as the goal. Instead, artists copied in order to gain techniques and to probe the essential qualities of a past master's style.  Individual investigations through copying led to creative imitations, parody, and the use of allusion. Through this learning process the desired outcome was the synthesis of a new personal style expressive of the individual and the copied.

It is my considered opinion that if our artists copied Chinese art with the African blend, the outcome will be a fusion of cultures that brings new aesthetics to life.  This too will be innovation and creativity that may help us reduce our trade imbalance with China.  In the 1960’s Toyota Mark II was copied from the Volvo by the Japanese.  The Western world laughed at the joke of Japan becoming a car manufacturer.  They kept perfecting new manufacturing tricks along the learning curve. Today, the Lexus is as good as a Mercedes.  Japan’s motor industry outperforms all other vehicle manufacturers.  In Kenya we only produced five units of the Nyayo car and we laughed at ourselves.  We could not “fake it till we made it”—this is our undoing.

With excess labour force, let us copy what is copy-able, develop capacity and learn, then design and develop our own products.  If Nairobi is too expensive, let us move to Bungoma, Homa Bay, Nyandarua, Taita etc.  This is how other countries that have succeeded ahead of us have done it.  We can start with low-tech products like toys and other plastics. Leverage on new emerging technologies like 3D before everybody gets to it and begin to respect those willing to take baby steps in production for these are our future industrialists in Kenya.

Dr Ndemo is a Senior Lecturer at the University of Nairobi, Business School, Lower Kabete Campus. He is a former Permanent Secretary, Ministry of Information and Communication. Twitter: @bantigito

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