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Lessons from Saudi Arabia and our rural renaissance

Monday April 28 2014

By BITANGE NDEMO
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Hovering over the outskirts of Riyadh, my attention is disturbed by the scintillating beauty of the Arabian Desert below. As the large Airbus 340 begins to descend, I see dotted villages in the sea of sand.

It is early morning and the sun is rising with the soft rays piecing through the windows.

In the horizon is the Riyadh skyline, a pale shadow of Dubai, Abu Dhabi, Qatar and Bahrain. Riyadh is a replica of Dubai in the 1980s. It got stuck in time but there are signs of change.

In its time, the airport was a masterpiece. From the outside, it needs a coat of paint. As you walk into the main building, a large fountain of water greets you. It is deceptive for as you get closer to the immigration area, cigarette butts strewn all over the place tell you that much needs to be done. The parking area lacks the sheen of Dubai. Litter makes it look more dangerous than it is. As you move towards the city, the architectural designs are wanting in this leading oil-producing country with a per capita income approaching $32,000.

Saudi Arabia, a country with a population of 29 million, is an absolute monarchy ruled by King Abdullah bin Abdulaziz Al Saud. By and large it has been peaceful until 2011, when the so-called “Arab Spring” drew a few crowds outside in eastern Saudi Arabia, where the Shia minority population is concentrated. The Sunni majority is satisfied with increased economic hand-outs and the King’s promise of greater political participation.

Its $907 billion economy largely depends on oil, and more than 90 per cent of its export revenue comes from it. By virtue of being the leading oil producer and exporter, Saudi Arabia dominates the Organization of Petroleum Exporting Countries.

Since 2005, the country has focused more on economic diversification and as a result has joined the World Trade Organization to promote foreign investment into the Kingdom. They want to use ICT as a tool to revamp other sectors. With experts from several countries, the Kingdom is serious, perhaps a better strategy of not going head to head with its smaller neighbours.

"RULES FOR EVERYTHING"

Further, the country has embarked on an ambitious dream of building several economic cities (Konzas) to help diversify the economy. The Riyadh Economic City (Technology Park) is taking shape and a new airport expansion has started. In the conference the Ministers are gentle and old but graceful in their long robes. They articulate their ICT vision with ease and exhibit greater hope that this gentle giant of the Gulf is ready for business. They have a huge diaspora they can tap into and the resources to back their dreams. They want to revamp their universities and link them with industry.

A walk into the mall shows they may need more work; the work culture too is stuck. The eyes of workers tell a different story. The desire and drive to make a sale is not there. Perhaps there are too many rules. Omar from neighbouring Jordan tells me, “Here there are rules for everything. You cannot sit in some places in a restaurant if you are single”. Saudi Arabia is the citadel of Islamic conservatism. Change here will require significant social innovation. They are aware of it. Prof. Saad Ali Haj Bakry of King Saud University tells me that there will never be significant innovations without social change.

My mind is plotting something – how to leverage ICT to precipitate an industrial revolution at home. Well! In rural Kenya, we are equally stuck in the 1970s. Our rural market centres are dotted with abandoned structures often referred to as shops or dukas with not just similar architectural design but with no logical purpose. It is estimated that we may have spent more than $10 billion to construct these purposeless buildings.

In spite of the abundant supply of these shops, we continue to put up more, yet the payback period stands at infinity. Most of them remain idle, or at best cows use them to rub their backs on. These were status investments (with no real income but for people at home to see and revere the “investor”). With a tinge of dream, we can change this dead capital into Kenya’s industrial renaissance.

First let me propose that we turn most of these structures into rural warehouses and cottage industries. Kenya Bureau of Standards (KBS) will be required to post at least one standards officer at each village centre. The role of these village inspectors would be to inspect and grade produce at village level and electronically put it on a mobile notice-board. If for example, Hotel Intercontinental wanted 100 trays of eggs, it would specify the standards and the standards officer would match them with the producer. Postal Corporation as well as other courier companies would be mandated to transport those eggs overnight to Intercontinental.

OUR FALSE ASSUMPTION

This simple narration will translate to several jobs. Whilst some people will thrive in supply-chain management, others will find their way in the essential applications and platforms to help farmers reach the markets.

A drive towards Nyeri, Meru, Kericho, Kisii and many other places in rural Kenya will tell you that our farmers are in dire need of markets, not finance (our false assumption). Many of them risk their lives on highways to make a sale. These sales are made in haste and sometimes the sellers lose money, or worse, their lives as they crisscross highways to peddle their produce. We can discard these 19th century methods of sale for 21st century technology driven and civilized techniques of trade.

Further, when the farmer realizes that their perishables will have no value at the end of the day, they discard them at throw-away prices not even covering their cost.

Technology should help us to properly manage produce from production to market and estimate surplus.

Each village can be supported to develop cottage industries to absorb surplus. For example, excess tomato production will be converted into tomato paste and delay consumption. Bananas into banana puree, banana juice, banana flour (which is being marketed as gluten-free flour). Likewise in fish, we can improve farmer’s value retention by creating durable products out of fish. We cannot be importing Omega-3 or Cod Liver Oil when we have plenty of fish. We can put our people on the learning trajectory to build capacity and improve on product quality.

Yes, we can become an industrial powerhouse in leveraging what we have and starting small. This is how every Newly Industrialized Country (NIC) has done it. We can never be a true middle income country if we are dependent on other countries to sell to us tomatoes when all of our harvest goes to rot due to poor distribution systems. When North Rift has excess supply of maize, North Eastern has a supply deficit but somehow the two regions never get to talk.

MEAT ROASTING DENS

The problem always has been the intermediaries like the National Cereals and Produce Board (NCPB). Once we perfect private sector distribution mechanisms, bodies such as NCPB, Coffee Board of Kenya and the like should be closed down and the market left to play its role.

This is how the Chicago Mercantile Exchange (CME) was created in 1898. Wikipedia describes it as an American financial and commodity derivative exchange based in Chicago. The CME was founded as the Chicago Butter and Egg Board, an agricultural commodities exchange. Originally, the exchange was a non-profit organization. The CME demutualized in November 2000, went public in December 2002, and merged with the Chicago Board of Trade in July 2007 to become a designated contract market of the CME Group Inc., which operates both markets. Without taking such steps, we may never be a true middle income country while begging for food. Yet most of our food is lost through inefficient distribution mechanisms.

As we re-organize our economy for the better, it does not hurt if we start to behave like a middle income country. It does not require any money to free ourselves from the choking filth that is left behind by the haphazard way in which micro and small enterprises operate. From Burma Market in Nairobi to similar meat-roasting dens countrywide that have poor sanitation facilities, we are encouraging mediocrity. With standards, we can make a charcoal seller, a maize roaster or even a sugar cane dealer clean up their mess. It is possible for counties to peg the licenses on cleanliness, for this is how we can free up much resources to create a better environment for all.

Yes, create a better environment because we are spending in excess of Sh10 billion every year to test for typhoid and other water-borne diseases. If we encouraged prevention of diseases through cleanliness, we would take the savings out of curative measures and more importantly, we would reduce infant mortality most of which happens as a result of water-borne diseases. An improved child mortality rate improves the country’s image, hence more foreign direct investments. We could use the savings to build better housing for citizens instead of pouring it into the current waste.

As Mahatma Gandhi said, “Constant development is the law of life, and a man who always tries to maintain his dogmas in order to appear consistent drives himself into a false position.”

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