Dubai: Lessons For Kenya
I’ve been reading about Dubai’s debt woe’s lately and thinking to myself….well…isn’t that interesting. I had always assumed that Dubai was using it’s oil wealth to build up that emirate, but now, it looks like they were just borrowing the money from European banks.
Then, my reading revealed that the U.A.E. actually operates as a region of seven semi-autonomous zones or emirates and that the oil and gas wealth is not in Dubai, it’s actually in the neighboring emirate of Abu Dhabi, which (not surprisingly) has no debt. According to this article, Abu Dhabi has $650 billion dollars in cash reserves from it’s oil wealth and it doesn’t look like they are going to be bailing out their broke brothers.
Anyway, as I was reading about Dubai’s woe’s I thought about Kenya and once again, it’s becoming clear what’s happening. As I’ve said numerous times before, you cannot build an economy out of nothing, which is what appears to have happened in Dubai. Dubai did not have a natural commodity which they could export. That commodity belonged to Abu Dhabi. So, without a natural commodity to export, the only way to become a more developed country is for you to start producing things. i.e. start making things that people use, e.g. cars, tv’s, cell phones, drugs, etc, etc…. and this is where the parallel to Kenya is drawn.
Kenya, like Dubai, has no commodities. No oil, no diamonds, no gold. So, in order for a country like Kenya to reduce it’s poverty numbers, they have no choice, but to focus on making things that people use (& exporting them) or copy India and provide services that people need and export that (e.g. outsourcing services, etc, etc). There is no other solution.
The people in Saudi Arabia can afford not to make anything because they have oil. All they have to do is extract the oil from the ground and sell it and the money will roll in, but when you have no natural commodity, you have no choice, but to use your brains to create wealth and the only way to do this, if you are a policy maker in the government, is for you to invest massively in free, public education so that your population will have the intellectual capacity to go out and produce.
I was reading this article in the Nation and Raila is once begging his mzungu lovers for money because he wants them to fund this constitutional illusion nonsense, but a constitution is not what will fundamentally transform Kenya’s economy. Instead of wasting money on constitutional “experts” and replacing new Mercedez Benz’s with Passats, they should instead, be moving much of that money into education because without it, the economy will eventually stall.
Almost 70% of the population in Kenya is under the age of 30. There is not enough land for these young people. They can’t all become farmers. The land isn’t there anymore and the population keeps growing.
I was looking at this video of politicians stampeding to get public attention on the Mau issue and I thought to myself: Why are politicians like Ruto and Uhuru so excited about the possibility of leading a bunch of landless peasants? because unless they invest in free public education, that is who they are going to be ruling: A bunch of landless rural peasants and frustrated slum dwellers (all young people under the age of 30).
You should see the above video. They’re all cracking jokes and laughing (arrogantly). They look like utter fools. Totally blind to the time bomb they are sitting on.
Your thoughts……
Throwing stones seems to be your specialty. Being in NY and talking about Kenya (by acting as an expert on the ground) is nothing less than arrogant, ignorant and foolish. You need so many of your facts straight before speaking. Tell me what is the poverty level in Kenya? Because one is in poverty does it mean one has no money? What is the minimum wage payable to an individual? How many people are glad to act like they want to work, but once given a job act in ways that completely destabilize a business?
Ahh and the ever so apt question, Kenya has a rather large percent of educated but unemployed individuals. Why do they remain unemployed, while those with little or no education work tirelessly to create wealth? BTW most educated persons always think they should start in management even though they have no experience. Book smart does not equal street smart.
Annon:
You said:
“Because one is in poverty does it mean one has no money”?
Um..
Are you seriously asking me this question?
Then you go on to say the following:
“Ahh and the ever so apt question, Kenya has a rather large percent of educated but unemployed individuals. Why do they remain unemployed, while those with little or no education work tirelessly to create wealth”?
Um…hello again? read through this blog for my definitions on crony capitalism and you will see why this “large” mass of “educated” people you mention remains largely unemployed. Under crony capitalism, you do not get rewarded for doing the right thing.
The rest of your statement makes no sense to me: “Those with little education are working tirelessy to create wealth”? I have no idea what you mean here. Really, I don’t.
Sounds like you have never studied the great depression, or the economic and social history of the US between 1850 and 1945. I suggest you do so, as many a thing will open your mind.
Again, because one lives in poverty does it mean one has no money? Let’s say many people live under the falsehoods of material wealth to suggest they have money. Most don’t have anything, and if they lost their source of income tomorrow, many would be pushed into living standards closer to what they despise. Many people who live under standards described as poverty, do have some level of money. Maybe you need to work more in programs which focus on people in poverty. This will enable you to understand how they live and how well they think. Look you can bitch and moan about crony capitalism, yet it feeds you. And you benefit tremendously out of it. I would hold my hand up if I knew you did some level of social work with the homeless and poor up in the Bronx and Harlem neighbourhoods. I worked quite a bit with the people there as I did with the people of New Orleans whilst in Florida after Katrina.
It is an experience I will never be able to duplicate.
When I talk about the educated, books can only educate you so much. Theory is great in debates, but on the streets many theories are killed and others born. The reason many people in Kenya (esp the educated) remain unemployed is simple. They want to be fed. The jua kali artisans (as uneducated as they are) innovate in their fields with their limited resources. Most educated people in Kenya want to start at a level of employment they have been led to believe befits their education level. How is this possible? Why will someone hire you to a management position when the only thing you know is books, and nothing about business. Fair if your father or uncles own businesses, you could probably start at management. People need to know how to conduct a business without wanting to walk right into management. And then we talk about mismanagement and the whole other book of shenanigans.
I dare you to compare my education level to yours, and my work experience to yours. I never knew anything about business, but I had no problem washing dishes and scrubbing floors to earn and learn. Heck I lived in a two bedroom house sharing with 12 people. Boy talk about unhygienic conditions. When I went to the US, I had enough for one semester’s fees and lodging. Thereafter I was on my own. It sucked eating Ramon noodles everyday, sometimes twice a day. But I worked hard, earned me a scholarship and the rest is history. Today I sit with a BSc, dual MBA, CFA and am working towards my Phd. We are asian and rather well off, but when I left home at 18, I did so with few resources. I have never asked my parents for cash since the day I left Kenya. I worked hard, slaved, was broken-mentally many a times but kept at it. Hard work pays off, but in Kenya, very few thrive on working hard. Everything can wait is the attitude. And since you talk about crony capitalism, what exactly are you as an entrepreneur doing to exit the system and create a better system.
And to end, what makes you say we are in a capitalist society and not something more along the lines of facist-communist-lawless-corrupt-dictatorship. BTW you are always free to propose an alternative socio-economic system that will withstand the test of a 6-7 billion population.
BTW, in Kenya, I know of a beggar whose networth is over 5million, and has a savings account standing at over 350,000.00. Well all he does is beg, and live in dire poverty. He goes without meals if he cannot scavange something. Funnily enough whilst doing my taxes in Florida once I met a man of simliar standing. How did that guy amass his wealth, by begging, and finding treasures in garbage bins. Go figure that one out?
KE
Once again, you have jumped in with your two feet without doing your research.
The Dubai government is not broke. It is a private company called Dubai World which has defaulted on its debt.
The Dubai government has said it is not going to bail out Dubai World as it is a private company. The western banks and hedge funds that were lending Dubai World money apparently did not do their due diligence properly. They always assumed that Dubai World was guaranteed by the Dubai government. The Dubai government has said that this has never been the case and the creditors should have known better!
What has all this got to with Kenya anyway???
Kenya is doing alright as far as am concerned. As they say, Rome was not built in a day.
Annon:
Please read the links to the articles I posted above, especially the one that discusses the semi-autonomous nature of the emirate economies.
You sound very angry about the articles I’m writing, but if you are going to offer counter points, then at the very least, do a bit of reading so you can understand the subject matter.
I don’t mind counter-points, but I do get irritated when people start going off on tangents, which either don’t make sense or which are made without any sort of reading because it just takes away from the discussion.
At this point (because I want to move this discussion along) – I’d really prefer to start hearing from people who can offer their viewpoints on the issues I’ve raised above.
**BTW
Who talks about how many college degree’s they have? that’s very tacky and honestly, nobody cares.
Well i think the larger point you are trying to bring home. Is that Kenya must start producing commodities. Which is true. But sadly Western markets blockade African commodities for some reason.
So the only trade that is possible is between African states which is what we should be encouraging.
Don’t fall for Western propaganda Dubai is stronger then ever.Fact is in 10 years time the center of Business transactions will have moved from London (where i live) to Hong Kong, Dubai Singapore, London, Shangai, Rio de Janeiro and Abu Dhabi in that order excluding the US.
Don’t worry about my college degrees, and the point was not for anyone to care. But again, you continue to exhibit a level of reasoning and thought that shows your hypocritical nature. Why challenge my degree’s statement, and not the rest of the thoughts I wrote. You obviously talk talk and talk, but once in a while I’d expect something sane and reasonable to come out. However, to say in the least, I still await that sane and well thought out statement. Most importantly you obviously come out as someone with very little experience in life outside of a cubicle. Why not get out and about with the very people who you love to write about, yet know very little about. Ohh and the experience you gained from yesteryears doesn’t count.
ke,
I think African countries need to increase their trade between each other first. They need to make a strong base within their regions to act as a cushion in the event of lost market share abroad or to competing economies.
Basically what am saying is this. African countries need to come together in their regional blocks and match the goods that they import from foreign countries. They need to identify all these goods and find an african country that can produce the good at the least comparative advantage and buy it from such country.
As long as the country chosen agrees to buy other goods from other African countries with least comparative advantage in other specified sectors. My argument is really simple. There is no way a lone country in africa can compete and win against toughened veterans in the goods and products export markets. Trying to do this is the same as trying to feed solid yams to a toothless old woman.
Lets start with agreements within our regional blocks and then move slowly to compete with the rest of the veterans by producing quality products. Some of these things i’ve mentioned are already happening in the cereal and produce sectors but the trade is only restricted to certain goods and products. They just need to be more vigorous and expand their coverage to other goods and products and the African Development Bank needs to fund steel and metal industries in countries with the least comparative advantage. Instead of paying attention to just helping specific countries develop the ADB should also identify African regions where these goods products are produced at least cost.
If this happens then we can compete if not then too bad poverty will continue to pinch.
KE
I am very surprised and even disappointed that you did not know that Dubai has no oil. I am equally surprised that you did not know about the United Arab Emirates. I will therefore agree that with annon above that you exhibit a dangerous ignorance about real wananchi Kenyans on the ground. You should actually try and interact more with real “peasants” as you call. Only then will you understand that money is not the be all that you assume it to be.
I will nevertheless agree with you that the government needs to invest more in education. But that is an obvious point. So nothing new there.
John Karanja has rightly told you that there is a blockade against African products in the West. Please address this point before you start comparing Kenya with Dubai and Singapore. But then again, I doubt whether you have the intellectual honesty to address the real issues. You are more of a propagandist or an arm chair theorist.
Annon:
I was not familiar with the semi-autonomous governance structure of the seven emirates and frankly, I doubt many people were. In fact, I would argue that the bankers who lent Dubai that $60 billion dollars also assumed (incorrectly) that Abu Dhabi’s oil and gas reserves would cover their loans (assuming again that the 7 emirates shared their natural resources (which we are now discovering they did not).
So, I, like many others, assumed that the oil wealth was shared between the emirates and if you read the links to the articles I posted above, you will see that people are now only beginning to talk about the strange governance structures that define these states. Many people had no real idea how these Sheikhs were running their fiefdoms. These are not open societies, you know.
Onto John’s point about Africans not being allowed to sell their goods:
In many ways, I’m tired of hearing African countries whining about being shut-out. The answer to this problem has already been given: African countries need to move towards selling finished products and not just the raw materials. It goes back to my issue of production. Look at what the South Africans are doing with their fruit juices. They’re not just selling whole fruits, they’re making finished products by packaging and branding fruit juices and selling them around the world.
I remember giving another example about coffee. Don’t just sell the beans to Starbucks. Roast the beans yourself, package them, brand them & sell them as gourmet Kenyan coffee in grocery stores. Starbucks doesn’t have coffee farms. All they are doing is processing, branding & reselling and a lot of their coffee is quality African coffee.
The Colombians are doing this with their coffee: see this link: http://www.allbusiness.com/man.....847-1.html
Basically, my point here is that you have to make more than just agricultural produce and when you make it, you need to export it. However, in order to export it, there has to be demand for what you are making. So, the Asians for example, make goods that are in demand (cars, tv’s, mobile phones, etc, etc) which allows them to export massively;
Kenya can also make a good that’s in demand and it would be supplying cheap, English speaking back office workers in outsourcing centers. I can’t think of anything else that Kenya can export outside of it’s young, English speaking population. What else is there?
The one thing I’m beginning to see more and more of is Tusker beers because there’s a craze in the west for foreign beers and EABL must be selling it to wholesale distributors who then sell it to retail liquor stores so, that’s a good example, but I can’t think of anything else.
Gosh KE, you are supremely stupid. Do you never see Del Monte products in the stores in the US? Do you ever read the country of origin? Dude don’t even talk about coffee.
You have no idea about the way coffee is marketed. Hmmm, well I guess you haven’t had Kenyan tea anywhere else but in Kenya. Did you know the biggest tea trading center is in Dubai? And then maybe you need to visit Lake Magadi to know what is being exported from there? So the fish you eat called Tilapia and Nile Pearch, ever read the words Lake Victoria anywhere?
Lets see, when you next visit Kenya, maybe you need to drive down towards Malindi. See those plenty of sisal farms? Kenyan cheese is exported did you know that? BTW, so you as an expert (when you next VISIT Kenya) should go down to the JKIA export center. Maybe you’ll realise we export flowers en-masse. Let’s see, we produce and process zinc too. Suddenly it dawns on me that you are not a Kenyan, though you may have been born here. Visiting here for a few weeks every year doesn’t make you anything but an artificial expert. Keep to your entrepreneuring, coz maybe your level of stupidity is more apt there. So what have you done lately for the Kenyan economy?
Ad:
I find it amusing that you would come here and tout Kenya’s agricultural prowess when 10 million people or almost 30% of the population is now at risk of starvation.
Tea, flowers, coffee, cookies, cakes, tilapia…yes, yes,…we grow it all. In fact, we are so good at growing food that we export it all and leave nothing for ourselves.
Don’t ask what the government does with the earnings they get from these tremendous exports. We all know they aren’t using it to buy food. The donors help us with that.
I hope you are now beginning to see the ridiculousness of your argument.
Is Del Monte a Kenyan owned company or do they just have pinneaple farms in Kenya, which supply them with the fruit they need? And all Del Monte has to do is pay it’s Kenya farm workers very low wages, just like many of the flower farms are doing.
There is not enough land in Kenya to support this growing population of young people and that is why continuing to depend on agriculture is going to become dangerous, which brings me to my point about the lessons of Dubai. i.e. in order for an economy to advance and grow, it has to start using it’s intellectual capital to either make goods or to provide services to other countries at a lower cost.
Dubai did not have oil or gas and it’s population did not invest in any sort of intellectual capital. In fact, Dubai’s workforce was made up of expatriate workers, both at the high end (with many Europeans who have now fled) and at the low end (with many Indians and Pakistani’s who are now stuck with no jobs).
This is why I am drawing parallels to Kenya. Like Dubai, Kenya has no oil or gas. Unlike Dubai however, Kenya has a large and growing population of very young people. If, like Dubai, it fails to invest intellectual capital into the minds of these young people, it will (like Dubai) face problems in the future, but Kenya’s problems will be more violent because of our larger population and because of our tribalism.
So, again, at some point, agricultural commodities are not enough. You either have to start making industrial products or you have to get into this whole business of outsourcing and wage arbitrage. i.e. offering Kenya as a place where companies around the world can hire cheap, English speaking back office workers who’ll do their work for them.
So, for example, Brazil exports lots of agricultural products, but they also make planes (The Embraer).
India exports lots of agricultural products, but it also makes trucks, it has outsourcing centers, etc, etc.
Another thing you need to remember is that Kenya’s largest foreign exchange earner today comes from remittances. That should tell you a lot about the country’s productivity levels when it’s largest foreign exchange earner is now being “produced” by Kenyans who live outside of Kenya. Why is this happening? I’ll wait for your answer and move from there.
ke,
I think your parallels are distorted. What is happening in Dubai is that the biggest development company in Dubai is about to default on a 60 billion dollar loan. The reason behind this is the falling real estate prices caused by the global slow down and over ambitious developing plans by these developers. I hear that many of the sky scrappers are half empty with no tenants.. If am not wrong one major development company took out loans from European and other western banks for real estate development and they are due for payment but they’re asking for a delay. Of course this is not just a Dubai issue, any person who heavily borrowed and is up for payment during this recession is struggling to pay.
Just by the way you are drawing parallels between these two countries, i can already tell you have a weak understanding of finance and economics. Personally I see two different economies here with totally different approaches to development. Just because Dubai is defaulting in their loans does not mean that they become comparable to Kenya.
http://news.bbc.co.uk/2/hi/business/8380105.stm
Anonymous December 1, 2009 at 9:05 am said:
Are you living in Kenya? I don’t think so. Kenya is a house of cards built on lies and the sooner we accept the inevitable, the better.
KE,
I support your view about agriculture in Kenya and actually came across this article in businessweek which made me concerned. And like you mentioned, where does the government take all this money? http://www.businessweek.com/ma.....757158.htm
Is this the new colonialism in Africa?
I first started seeing Dubai in a different light when I read this article which was published last year (http://www.moneymorning.com/2008/07/23/dubai/).
Like Kenya, Dubai produces nothing of value.
At the end of it all, I just think most people here are protective of Kenya and refuse to see the rot we live in.
About the Great Depression of the US, Ad, why don’t YOU read “Bread – and Roses: The Struggle of American Labor 1865-1915″ and “Brother, can you spare a dime: The Great Depression” both written by Milton Meltzer. Then look at your comments again.
Didier:
It’s not just about that one development company (Dubai world)– again, read the links I provided or just google the story yourself. And now I’m reading that the $60billion may actually turn out to be more like $120 billion. Nobody really knows because the banks involved aren’t talking, the Sheikh (for obvious reasons) isn’t saying very much…this is more than just a crisis formed by a real estate development company. It’s looking like a financial crisis created by the warped policies of one Sheikh (Markhtoum).
Anyway, I don’t think my parallels to Kenya are distorted because the basic elements of the problem are the same. i.e. trying to build an economy without producing much of anything. What was Dubai making?
So, Kenya has a small agricultural base (yes) but with that rising population, it’s not going to be enough. They have to start making things or providing services.
But tell me why you think my comparisons are distorted?
P:
That is a very interesting and sad article. Why would you sell land to foreigners who are just going to end up exploiting your citizens? Aren’t you better off helping your own subsistence farmers? That’s how you achieve food security.
Article that P posted is here and it’s a must read:
http://www.businessweek.com/ma.....page_4.htm
KE
Your comparison is far fetched. The two economic models are totally different.
Furthermore, I really dont believe that production is the solution to everything. For instance, can you tell me what The UK produces? Infact, many EU countries do not produce anything. The only country in the EU that is near a production powerhouse is Germany. However, the EU countries have integrated their economies and created a fund that transfers wealth from the wealthier economies to the poorer economies.
I therefore agree with those on this blog who are saying that African integration is the key. Infact, I would go further and say that the African countries should come together and close their economies for the next 15 years. Total blockade. This would force them to innovate. On the other hand the outside world would start paying value for Africa’s natural resources.
We need a dictator to unite Africa as quickly as possible.
ke,
Your emphasis in producing is distorted. Dubai and Kenya can only produce so much profitably depending on how cheaply such good can be produced in another country. What’s the use of producing something which you cannot sell ? You’ll just see your market share taken.
The country’s that produce the quality goods the cheapest and are specializing in producing such goods are the ones who sweep the biggest market share. So like I said Kenya and Dubai can only profitably produce so much of anything anyway.
If you look at what Kenya exports right now you’ll understand what am saying. Kenya only competes in goods which it produces at best quality at cheapest cost of production compared to other veteran producers in such markets. Trade agreements can have positive impacts in gaining market share but such agreements are only limited to areas where the specified countries can produce the goods for cheap. What i mean is that there has to be a win win situation for two or more countries to take part in a trade agreement.
So does this mean Kenya should stop competing ? Nope. This means Kenya needs to 1. Increase their production of goods it has competitive advantage 2. Invest more in producing better quality products for cheap.
Of the two points number one is more viable but Kenya has very few of such goods which are profitably competitive in world markets. If number 2 is used there has to be a chance of breaking even on the investment in such production. In case 2 it can prove to be a risky venture although its worth trying if there is any chance of boxing out the veteran competitors.
So my point is this- There is no economy that exists on earth can produce everything at the cheapest cost. There has to be somethings that it can’t produce for cheap simply because it has to specialize what is produces the cheapest for profitability. Producing is not the cure for all like you are saying but specialized production of quality and cheap sellable goods is good start. Production is only good for an economy if its competitive enough to capture a big share of the world market. If not then it becomes a risky venture to too much uncertainty of market share. This is why i suggested African countries need to start doing more business together- You can read such in my previous reply on this page.
KE
Western markets blockade African commodities in these ways.
1.They subside their own industries making it impossible for us to compete.
2.They do not allow a transfer of technology to Africa as they do to Asia. Here i mean PATENTS. The west has patented almost every technology that exists regardless where it has originated from. Kenya for example cannot just producing FELT pens or Computers for export because we would be violating patents of some sort.
Western countries are ready to use military force to enforce patents so no dares try abuse except China sometimes.
P.S. Kenya’s Kikoy has been patented by a UK company and the Kiondo by a Japanese company.
3. The European Union has introduced a No Carbon policy for goods exported to Europe. For example fish from lake victoria which are dried with charcoal fuel are banned. THIS IS THE LATEST TECHNIQUE THEY ARE USING TO KEEP AFRICA COMMODITIES OUT.
So KE the only way out of this is for us to trade internally in Africa. That is why Kibakis was very clever to open up the region by bringing in the Chinese to build roads connecting our region and hopefully a port in Lamu and Railway track to South Sudan. This is the most single important event in Kenya’s history.
If i was Africa i would not sign the Copehagen treaty as you cannot trust the west to fulfil its side of the bargain.
Also global warming has been proven to be total fraud.
Annon:
Production is the solution to everything. You know why? because where else will you get money from? In order to get money, you have to make something and sell it, wherever in the world you live.
Africa has become dependent on foreign aid precisely because it does not produce much of anything. This is a real problem with Africa – we don’t have a culture of production.
John:
If you are an African country that is lucky enough to have a commodity that the world needs, they will buy it from you. For example, oil is in great demand so African countries that have it will have no problems selling it.
This is why I keep saying that you can’t keep focusing on the trade blockades’ because politicians in Europe and America who want to get re-elected will never remove those subsidies. Never. So, the answer is to find something that richer countries will be willing to pay for and figure out how to produce it for a much cheaper price.
Inter-Africa trade: It may be good, but is it enough? Most African countries are still too poor. Their populations are still too poor so who is going to buy their goods? How can two beggars do business with other? In order to make money initially, you have to find enough rich people who will pay for your products.
If you’re a Kenyan entrepreneur, what can you sell to someone in Burkina Faso? The only mass thing I’ve seen people in Burkina Faso use are piki piki’s which are probably imported from Asia. The Indian company Bajaj auto’s exports lots of piki piki’s to Africa.
You see? Asia again. So what’s the answer? On an individual level (because this discussion is getting too theoretical) what is the answer?
How are we going to make money in this global economy?
ke,
This time am going to agree with JK … JK understands this issue. He understands it more than you do.. as far as am concerned.
How can you ask a question like…. “how can two beggars do business with each other ?” This is a really awkward question which shows you still don’t understand the dynamics of trade. I suggest you take some basic economics classes. This is the other problem we have in Africa people like you who cannot understand basic things.
I’ll leave JK to letter you on the facts. He seems to be of better academic calibre than you are !! You always assume that Kenya is a handicapped beggar country. This is very unfortunate for a person born and raised in such country. You need to think about that first before dishing out some shoddy questions like the one you posed.
Didier:
You come here with all this bravado then I read your comments and I’m like…sigh
Your not that good, but prove me wrong.
How can two beggars do business with each other is a very self-explanatory statement. Two poor countries, that produce not much of anything, won’t have much to sell to each other. This is Africa’s dilemma. Their populations are still too poor and the only way to change that is to export your way out and to do it in countries that have consumers who can afford your goods.
Back up your shit Didier and stop getting hung up on academic nuances and credentials. I think you might be a college student.
KE,
And how can a beggar do business with a rich man?
Senge:
Let’s say you are a hot dog vendor and I gave you two choices of places you could sell your hot dogs.
The first choice would be a corner in korogocho.
The second choice would be a corner near wall street.
Which corner would you pick? assuming of course, that you want to become a successful hot dog vendor?
If your going to sell something, you have to find people who can afford to buy it (unless of course, you are happy remaining in korogocho).
Hey KE!
Long time no write, been very busy lately and just decided to take a peep at what’s going on on this blog, always a very interesting blog for me!
Anyway, I’m equally surprised that you did not know about Dubai and the Emirate structure. Dubai does have oil albeit insignificant quantities, at that, I honestly thought you’d be aware of that fact.And Yes, Dubai World is not the sovereign gvt of Dubai, It’s an investment company/Corporation that has defaulted on it’s debt.
Dubai was on 24 hr building mode, my only concern wa sthat the real estate seemed to be built for speculative purposes as opposed to housing real families with housing needs.
for anyone who’s familiar with Dubai, are there enough proffessioinal jobs out there to warrant all the residential real estate that was being built? or is it just to accomodate tourist residents?
Firstly thank you all for your comments surely this is the best way to get an education. Thanks to KE for the site.
KE asks how are we going to make money globally and Didier rightly answers we have to start locally.
In the 18th to 19th century the Kamba tribe were the most sophisticated traders in our region. They used to trade with the Arabs and Sultans at the port of Mombasa and bring goods and even people(the Ameru – story for another day)into what is todays Kenyan heartland (Parts of Central).
Infact Mombasa road all the way to Museum hill just before Westlands was the Kamba trading root. Museum HILL marks the beginning what was known as the Kikuyu highlands.
There would be no Uhuru Highway today if the British didn’t simply follow the Kamba trading root that existed during that century.
So trading has not been peculiar to Africans we have been doing it for a long time. We do it now considering unlike in the 19th century we share 2 common languages in East Africa Swahili and English to some extent.
We can start by trading things like Excess energy, human capital(Removing VISAs)and even knowledge.
Waiting for the west to open its doors is foolhardy they aren’t just going to Trade with us at the levels that could bring us out of poverty.
What Africa needs to do is is to start Patenting its cultural and intellectual assets and for this reason we must develop in the LONG RUN an integrated economy and some might argue military deterrent.
Another thing is we must realise the value of the Informal system of education we had. African like the Spoken word as opposed to the written word.
Access to digital equipment and software and youtube can play a significant role in exchange of ideas rapidly across the continent.
A good example is Nollywood and Riverwood. In Britain which is about 40 times richer you don’t find people producing Video content as much as we do with our meager resources.
However we also need to take Research seriously if you see how Jungus do research here you can just wonder.
Dubai is a knowledge economy you can never beat that.
JOhn Karanja
Now you are talking.
I have been preaching here before that African integration is the way forward. By the way, it is already happening. The ECOWAS, SADC, COMESA and EAC are the building blocks that will eventually see the full integration of the African economy. Remember the EU has taken more than 50 years to reach where it is today. The USA is also an integrated economy. The Asian countries also have their own preferential trading economic pacts. This is the way ahead for Africa.
I think KE is still stuck on the 20th century mode of Africa bashing. This is so outdated now. People are now much cleverer and they are realising they have more to gain by sticking together rather than when they are disunited.
My prediction is that Africa will be a very a different place in 50 years time.
KE
I challenge you to study the HIDDEN HISTORY of the west. You will then see that all the things that Africa is going through have also happened in the west, including mass starvation, civil war, tribalism, corruption, poverty, disease and ignorance.
Annon:
I’m not stuck in the 20th century. I just think that with the advent of technology, Africa doesn’t have to go through all those stages of development. If they just copied other countries and used more technology, they could leap forward.
John:
My question was more about what you’ll do on an individual level in order to make money for yourself. These broad policy discussions are not practical sometimes.
So, what are you going to sell within Africa and in what countries? At the end of the day, it is about you and your money.
Again, I want to get away from this broad discussion and start focusing on the individual entrepreneurial idea’s.
Mzeiya:
Long time no hear! Busy doing what? Are you making coin?
** here is a great entrepreneurial story on the founder of Mint.com – an online personal financial site that allows you to organize your finances in an easier way than the old sites like Quicken and Intuit.
Like I said, if you don’t have oil or gas or gold…you have to use your brain to make things that people can use.
http://www.nytimes.com/2009/12.....=2&em
great post as usual .. thanks .. you just gave me a few more ideas to play with
Its funny ppl are not talking about the video that ke posted here.Its mind boggling that ruto, balala and most kenyan politicians have started to talk about the elections of 2012. I cant believe they can get away we with this.
its still 2009 how can they talk about 2012 elections? Are kenyans that stupid? Its time kenyans woke up and realised that its these politicians who incite ppl to the election violence.
Anyway, kenyan politicians have never known why we elect them. A person said once “a country gets the leaders it deserves”. If i think this leaders are stupid what does that say about us kenyans?
Faisal:
The only reason those politicians would become excited about ruling a country like Kenya would be for ego purposes. i.e. having all that power (even it’s ruling over a bunch of poor people) would be good for their ego’s and secondly, they’d be able to become very rich through theft.
If they were really interested in change, they’d be crying if they got that job. Can you imagine how hard it would be to try and fix things? I would be nervous and stressed out by the enormous challenges. I wouldn’t be happy.
How about a 2nd opinion from a Kenyan Entrepreneur in NYC?
As someone exposed to the business world on a daily basis, my value input is that simply, nothing is being done. We have smart individuals here in the commentary section, and so are probably the people in government..(ducking rocks) but nothing is getting done. Temptation to be complacent and lazy plagues them. SIMPLY PUT.
I feel correct when I say, if the government doesn’t create avenues to channel all these unemployed able bodied individuals, someone in the private sector will.. see your local industrialists, Merali, Kirubi.
Didier, your analysis was great, but I felt that, you wanted Kenya to be everything to whatever industry they play in or just don’t play at all and it really cannot work that way. Everything takes time to grow, so maybe not now, but in 10-15years, Kenyans could be singing a different song. Which brings me to the point that, we need to be patient, but act fast on something!! The masses are still unable and that my friends, is where the truth wealth is..
So, I think I’ll take the masses and create my little industry, enable them, because in my eyes, I don’t have to be everything to everyone.. but I’ll certainly be someone to those who receive a paycheck at the end of the month and can enable their children. That my friends is how we make the world go round. ENABLING.
Boss Mayor:
Even referring to people Merali and Kirubi as “industrialists” is an insult to all industrialists. Both these men are crooks!
This is why I keep saying that there is no real capitalism. It’s just crony capitalism and without real capitalism (which rewards hard work, innovation and allows for competition) — you simply cannot create jobs. You cannot create jobs if you create nothing.
What you have in Kenya should be called “tendering” because your ability to make money is all about how connected you are since connections determine how many government tenders you can get. You don’t need innovation or hardwork to engage in tendering. All you need are the right connections. Mambo Kwisha.
This tendering is eventually going to catch up to the country because the population is rising rapidly and it’s full of young people. 70% under the age of 30.
You can’t have 20 million people tendering. It’s not feasible.
Anyway, This is your blog, show some leadership skills on how you conduct yourself and what should be expected of your readers.. it’s one thing to allow free speech and ideas to flow and another for mudslinging to begin and baseless comments spewed. Control it. Epic failure occurs when you participate in it all. You actually have something going on, moderately good articles.. but your destroying it with a garbage commentary section.
Seems like JUST ANOTHER KENYAN BLOG, for Kenyans to come and cry about home, dish out the magical recipe for success and move on. Then again, if that was your model. Kudos to you.
Quality and substance my friend at all times. All the best chief.
Boss Major:
Why are you getting annoyed with the commentary? We just don’t agree.
Anyway, what kind of business are you running in NYC?
@KE
I don’t think Kenya’s problems have been caused by crony capitalism. Crony capitalism is everywhere, especially in booming Asia. In the west, it’s known as networking or the old boys club. It happens out of trust. For example, I have an oral contract worth KSh 8m with a relative who trusts me. I can very easily walk away from the deal but that would be so dishonourable it’s not worth it. I’m also married to the relative of a close friend.
If you lack connections in Kenya, you can still make a fortune from households, especially the middle class. The problem with Kenyans, especially Africans, is that we’re too textbook. This makes us look down upon humble but potentially lucrative trades. I live in a leafy part of Westlands and I have a Kenyan Indian neighbour who has a garage and another who has a furniture workshop. Imagine an African telling his middle / upper class parents that he wishes to be a carpenter or mechanic? The horror in their eyes! Nothing wrong really, you could end up with an Ikea or KwikFit.
We have so many PhDs that we’re too arrogant to make spoons or buttons. In fact, we’re producing graduates at a faster rate than spoons. Remember that high-tech powerhouses in Asia started off with low-tech stuff like spoons, zips, and buttons. Also remember that in any economy, the bulk of the jobs are actually blue collar. Just look at restaurants, supermarkets, or construction sites. The ratio of blue to white collar jobs is like 20:1. But we’re producing graduates at a faster rate than mandazis. Unable to find white collar work, they just languish at home bitching endlessly instead of thinking of how they can become sufuria-exporting multi-millionaires with a house in Karen that’s on a lush 1 acre compound and spoilt wife. We Africans need to stop looking down on the trades because the bulk of global household spending goes towards humble goods like spoons and chairs, not “glamourous” legal services.
Kenyan Asians apprentice a lot for their relatives, even during school holidays, so they end up with skills more lucrative than us textbook Africans who can only be hired by the useless public and NGO sectors.
You my friend are smart. You my friend understand the key to success given the current state of our economy. We should forget about turning kenya into an IT powerhouse for now and focus on using our best resource.. the masses. This IT boom will only further heighten the gap.
I loved your 2 cents on the mentality some of Kenyans suffer from. Too proud and too arrogant to engage in certain trades, but like I mentioned before.. this is where the gold is in Africa. Create your own little industry making utensils and what have you. Forget about being an IT powerhouse because other nations have the capacity and resources to keep on being better. Let us focus on what they do not focus on. This is not to say that we do not need IT infrastructure, just seems a little disorganized of an effort almost.
Boss Major:
Create your own little industries making what? you know many kenyans are going to China to get what they need and their just re-selling it for a profit once they get back.
So, again…how, if you are making sufuria’s do you compete with a Chinese manufacturer who can make the same thing, faster and cheaper? People won’t buy your sufuria if it costs more and they don’t care whether it was made locally or in Timbuktu. They look at price and that’s it.
@KE and @Boss Major
We shouldn’t worry too much about Chinese imports. It’s all about sales and marketing. For example, people in DRC or Rwanda will buy Kenyan sufurias instead of cheaper Chinese ones simply because the Chinese ones aren’t available in their town or village. Kenyan sufurias from Kaluworks and mabati from MRM are surprisingly popular in many African countries.
I’m a software developer and I know that there are software developers out there who are cheaper and better than me but so long as my sales and marketing is superior to theirs then I’ll get more work than them. Despite being a software developer, I still believe Kenya should make and export shoe laces, needles, spoons, buttons, and other low-tech stuff.
Annon:
I’m not saying Kenya shouldn’t make low cost products. They should, but they’d also need to figure out how to make them more cheaply, faster and more efficiently. You can’t discount cheap Chinese goods. Well, you can, but at your own peril.
You said you’re a software developer. I’ve used developers from India and let me tell you something from my own experience. Sales and marketing can only get you so far. If an Indian offers to do a job for me that’s going to be cheaper and better than you can do, I ain’t using you. Heck, why would I and pay more?!
I’ve been screaming here about Kenyan software developers who are totally refusing to acknowledge the competition from India and you seem to be one of them. Don’t fool yourself into thinking that someone will pay you more when a cheaper alternative exists.
KE
you ‘ve been singing production forever…a dude has an excellent idea..start with low cost products..then u start to say how nobody can buy them because chinese are better..U even attack his career..because u outsource your web designing to indians..U must just like arguing just to argue.
You are definately twisted..
It’s not being twisted or arguing for the sake of arguing. It’s just reality. Unless you can produce goods more efficiently and at a lower cost, don’t expect to beat your competition. People won’t buy from you just because you have a good story line.
So, I’ll stick to what I said earlier. If an Indian software developer is going to charge me $150 dollars for a job, while a Kenyan will charge $800 dollars for the exact same job, I’m not going to hire the Kenyan. People need to stop deluding themselves about this reality.
Economics and capitalism is about competition. It’s not about love and ethnicity.
@KE
Actually, I’m cheaper than programmers in India. You can’t get someone in India with my programming, English, sales and marketing, and accounting skills who will charge only $11 per hour and give you 30 days to pay up.
Buyers, being human, are far from perfect. The stuff you and I have bought this month alone isn’t the best deal out there. Now, I reiterate that if my sales and marketing is superior to the Indians and Chinese, I’ll make more money than them despite them having cheaper and better products. Unless you’re a statutory monopoly like KPLC, it’s impossible to have 100% market share in any industry. So long as a restaurant has it’s mafans, for example, it shouldn’t worry about Java. Same thing applies to IT services and low-tech manufacturing. I have over a decade of self-employment experience.
Annon:
Do you have non-Kenyan clients? and if so,how do you get them since you keep mentioning your sales and marketing skills.
Also, when I hire a programmer, I don’t really care about their sales and marketing skills or their accounting skills. I only care about their programming skills and their ability to deliver what I want. So, I’m not sure why you keep mentioning sales, marketing and accounting.
BTW – The indians charge between $10 – $11 an hour as well.
KE:
I see where you are headed with some of your examples, but they are just not on target. $150 vs $800 programmer.. come on!?! Basic shopping acumen easily dictates your answer on that example.. You cannot compare the readily available human resources in India vs Kenya. Their impact is in the numbers, period.. before even we go into educational training.
Second, you don’t acknowledge we live in perfectly competitive markets. Their is Pepsi and Coke, Fedex and UPS, Nike and Adidas. You’ve clearly defined it that in your reality, Kenya will never be successful unless we become the BEST at something. When you start out with a premise like that, you’ve already set up your own brick wall.
It’s probably 10 countries that make the world go around… really. It’s futile dethroning them, but there is space for more, or at least get a slice of the pie that can make a change for our country and it’s surrounding.
China like India and every other country where there restrictions on how many kids you can have, will probably always remain at the top. Their value is in their low cost labor, that’s what makes them ridiculously cheap. They’ll continue flood markets with cheap goods because they have the ability to keep manufacturers costs low.
Now, I recently made a purchase from Macy’s and guess what, no joke, it read Made in Kenya.
Calvin Klein.
That made my day.
KE & JOHN KARANJA
KE I left the employment world (not voluntarily…soft economy had a devastating effect at my work place ) so now I’ engaged in dabbling in business- real estate investing, thus I’ve not ahd as much time to update myself on the happenings on this wonderful yet provocative blog,I’m actually behind on events happening in kenya. When i was employed sitting infront of a computer and a desk, I had PLENTY of time to go online see what’s happening around africa, the world, the blogs etc.
Anyway, JO KARANJA, Very good insights into how the brits use the existing trading routes of the kamba to establish roads. That is exactly what happened in America, most of the current US Network of original roads was based on the trails used by the indians.
FAISAL..I think most kenyan biz pple and wananchi in general try not to listen to politicians too often coz we all know who they are. kitambo it was all ODM, Now they are seeing Raila is gaining power and are ganging up against him to curtail him, Kenyan politics is as interesting as it gets yet sad!
Mzeiya:
Why would you go into real estate investing at this time? It’s collapsing all over the west
KE,
Exactly the reason why to go into real estate…Real estate is a very local business, by that i mean, don’t beleieve all the hype you see and read in the media, Houses are not collapsing, they are just coming down to more realistic levels in terms of price. Even during the housing boom, not all markets expereinced it, actually some markets declined.
I have come to discover to take anything you read or see in the american mass media with a grain of salt.
Just the same way there are ppl in kenya making mad paper and most of us in the west are still scratching our heads trying to figure out how…
Dubai is Ubai because they had a vision, and Kenya is Kenya because we have none. Im speaking as a kenyan in Kenya and ive stayed in Dubai for a bit. what does it matter How they got the cash for it, the important thing is that they set out to achiev the improvement of their city and in turn the economy af that emirate and in consequence improved the living sandards of the residents. Before we think of how to get money to build this Shallow minded country of ours( And i say that painfully), we need a vision, we need to know what we want for ourselves and our childre years from now. All we do is concentrate on the 5 years in between elections then go back to the polls to make more mistakes by electing the wrong people. we cant expect change by doing the same things. Vision is what we need,then we can seek the resourse to achieve this vision. And dont for a second think vision 2030 is worth anything, ive read it and its nothing but grand plans to build one road on top of another. We should start this vision with our children and help them cultivate a culture of striving for developement
@KE
All my clients are in the States although I’m based in Nairobi. Clients want someone with good software development skills and low rates but if you also have good English, sales, marketing, and accounting skills, then that’s an added advantage.
I deal with clients’ clients, clients’ vendors, and clients’ employees. The bulk of global software spending actually goes into rather dull (but critical) accounting software development, installation, customization, training, and support. That’s why my non-programming skills have been so helpful.
Anyway, some successful Kenyan manufacturers started off by cheap imports both locally and in neighbouring countries. After doing the math and discovering that some of the imports they’re selling can actually be produced cheaper locally, then they started manufacturing locally. Remember that a local factory has a transport cost advantage in the local market compared to a factory in China. This is especially so in an era of ever-rising global oil prices.
Annon:
Let me ask you a couple of questions:
1) How do you get these U.S. clients? i.e. do you advertise at particular places, do you send out emails? what’s your strategy?
2)Do you do the actual coding or do you help them maintain or upgrade systems they already have?
Yes, English skills make a difference and I’ve always said that Kenyans speak and write better English than the Indians I’ve dealt with. Actually, preferentially, I prefer to deal with Eastern Europeans who speak better English but their not as ubiquitous as the Indians.
**PS – send me your email address to: kenyanentrepreneur@gmail.com