Karibu!

Nandan Nilekani: Imagining India

I want to talk about Nandan Nilekani again because he has a new book out called “Imagining India” where he talks about how he built the company, Infosys.  I’ve ordered the book and I am looking forward to reading it.

There is however, another reason why I wanted to bring up Nilekani and it is because, he represents a company that can provide a roadmap for people looking at building outsourcing centers in Kenya.  I’ve said before that reading many of the Kenyan business blogs is a very frustrating endeavor for me, mainly because they all seem to be obsessed with banking and do not seem to understand the importance of “production” as the most important tool for a country’s economic growth.

Banks, do not really produce anything.  They are an important medium for the transfer of money within borders and internationally, but they do not form the core of a country’s wealth creation.  Why don’t the Kenyan business bloggers get this? They’ll spend hours writing about a banks assets, it’s PE dividends, it’s this or that, ….and almost no time focusing on the fact that Kenya, produces little of anything.  And who knows whether those numbers are accurate or not? Maybe someone can explain to me what this obsession with banking in Kenya is all about?

Anyway, I was talking to a Kenyan who is headed for Mumbai to talk to their satellite office employee’s there and I asked them if they’d ever considered outsourcing to Kenya and the answer I got was this:  The intellectual capital is just not there.  She said the Indian employee’s who come and pitch their business to them are very, very, good, but because they are becoming so busy, they are begining to outsource some of their work to other companies in India that are not as good and whose employee’s are not as qualified.  However, even with this “annoyance”, they are still going to stick with India and actually that’s why this person is headed for Mumbai: To tell the 1st tier Indian company to do all the work they are giving them or else, they’ll lose the contract.

So,  let’s listen to Nandan because what he is talking about is what Kenya will eventually have to do, if it hopes to break it’s cycle of poverty.

When you make your money honestly, you acquire an enormous amount of knowledge, which you can then share by writing books and giving speeches, but when you steal, no knowledge is acquired and this is a problem I see in Kenya:  The “wealth” is not being acquired through the acquisition of knowledge and without this knowledge, you will never produce anything because producing “stuff” requires a certain amount of thinking.

I’d much rather be posting video’s of Kenyan business “icon’s”,  but they’re all in hiding and none of them want to talk.

22 comments for “Nandan Nilekani: Imagining India

  1. blogger
    June 17, 2009 at 9:54 am

    Kenya desperately needs to up its productivity obviously. However the biggest challenge has been “close-minded” thinking and an aversion to taking the risk of starting a business.
    Soon we will have the fiber optic cable in Kenya – how many people will take advantage of it? How many new businesses will be created?
    In fact, Kenya is quite a young country, progress and prosperity will come in time. The foundations for that are being built with the high numbers of Kenyans educated in top schools around the world. Look at Africa Online founders who went to MIT, Harvard and Yale (all Kenyans). Nature abhors a vacuum.

  2. coldtusker
    April 11, 2009 at 5:47 pm

    @Van Hausen: For all of NN’s shortcomings… he has nothing on nigerians. 50 years of independence & what is there to show for it? They even IMPORT petrol/gasoline.

    Nigeria has among the world’s best crude yet the idiots can’t refine it for themselves.

  3. Sijui
    April 6, 2009 at 3:19 pm

    KE, I believe the history of Equity Bank is an open book. It started as a micro-finance outfit in the mid to late 80s in Muranga, went through many iterations servicing loans to small scale farmers, and remained below the radar screen. Common knowledge that when first Kibaki regime came in they drastically altered monetary and fiscal policy by encouraging many MFIs to apply for banking licenses. Equity did based on an already tried and tested business model. People have argued back and forth about political connections, shady dealings, fraud etc, etc all I know is the information gleaned from very public knowledge and my own personal interactions with the Bank that have further cemented my high regard. They are responsive, efficient, accessible and very reasonable in terms of cost of accessing their services. I particularly appreciate Equity because their financial mediation in the banking, then mortgage, then insurance and who knows what next…..likely investment market have had a significant impact on the Kenyan economy. People may say it is hyperbole but they revolutionised the banking sector in Kenya in terms of FINANCIAL ACCESS and that is a fact.

    Transcentury is a different animal…the origins are not linked. Transcentury was started by a group of businessmen pooling their resources together, part of which led to the creation of then Wananchi Online.

    Bottom line, robust business models in both instances that have stood the test of time. No accident that in both instances, both attracted considerable foreign equity investment when the going was good. Models that African entrepreneurs should continue to emulate.

  4. Van Hausen
    April 6, 2009 at 12:16 pm

    Lord,

    All I’m saying is that many Inequalities and security related problems in India are because of too much freedom.

    They’re few have’s and many have not’s. I know the story you are about to raise.

    When you have over 400 million people living on less than a dollar. I can take back the 70% but this does not change anything about what I have raised.

    The truth remains that India needs a different approach in tackling its challenges. You can’t go around praising democracy when you know the system is broken.

    Nandan is a western lapdog and he’ll do anything to keep the status quo. You must also remember China has scarcity of Natural resources but it has been able to change its demographics in the fastest way ever done.

    You see the Restriction to Migration in China worked In helping easing congestion and Insecurity in many cities and foreign direct investment. Can you Imagine if people just Immigrated from rural to urban areas. These kind of freedoms are what I keep on saying developing countries cannot afford to continue. Official Corruption in China is dealth with Capital punishment. This is not the same in Western countries but it works. You see people need to look at these things and stop complaining over problems which they condone.

  5. kenyanentrepreneur
    April 6, 2009 at 11:28 am

    Anoutsider:

    Very interesting points. Maybe India’s socialist past has something to do with the way they view money? Are outlandish forms of materialism looked down upon?

    On Public Protests:

    Maybe it’s difficult to protest when you know that the police could and do use live bullets occasionally?

  6. AnOutsider
    April 6, 2009 at 10:45 am

    Hello there : I came across this blog posting — I thought I could share my point of view. I am a European who has lived in India for a few years (and now living in Kenya). Its nice to talk about production / manufacturing etc. But in my experience somethings are just too difficult in Kenya.

    for example : if i have to register an automobile, it takes a couple of weeks (or more) in Kenya. public transport is expensive and slow. the railways are not usable. basic goods are very expensive yet i see little public protest or strikes against the government.

    the same in india is quite different — automobile / motorbike registration takes a single day. public transport is fast and efficient (in some cities). the railways are cheap and very efficient for both human and goods transport. there is plenty of social activisim / strikes if the price goes up — people are willing to get together and fight to demand basic improvements.

    the other thing i notice is that kenyans seem to like driving big cars perhaps an indicator of a society where like to spend a lot of money on things which don’t really benefit the economy — on the other hand i often noticed even well to do people driving small 800cc cars are motorbikes in india — there is materialism even in india, but its much lesser than kenya.

  7. Lord
    April 6, 2009 at 8:46 am

    Van Hausen

    You claim India ,Poverty is over 70%…..Democrasy is NOT working

    Where do you live?….In short your FACTS are wrong…..fiction at best

    and some people belive you :roll:

  8. coldtusker
    April 6, 2009 at 6:18 am

    Kei O: True… Kibaki was a hero when he started off in 2002… there was real optimism. He screwed up by not clamping down on anglo-fleecing (was he a beneficiary?) and the rest is history…

    We need a leader who prioritises DEVELOPMENT not the political crap day in day out. A strong economy is far better than any political bickering. Though in India… it did backfire… BJP lost even though they put up some solid numbers…

    Oh, well… voters are not rational…

  9. Kei O
    April 6, 2009 at 4:48 am

    CT

    You have to hang your coat where you can reach it.

    The problem with Kenya is very simple. We can blog all day but so long as we do that, I mean just blog, we ain’t getting anywhere.

    Kenyans need to get serious.

    The following things need to be fixed:

    - Energy
    - Infrastructure
    - Telecomms including IT
    - Education
    - Security

    The rest will follow.

    ACTION is what is needed right now. Not mere words.

    This is what I meant by saying that Kenyans already know all the things we keep repeating here. There is nothing new.

  10. Pysd off
    April 5, 2009 at 3:15 pm

    @ Van Hausen. Thank you very much for elaborating on your statements.

  11. kenyanentrepreneur
    April 5, 2009 at 9:39 am

    Sijui:

    It’s interesting you mentioned james mwangi, Equity and transcentury because I’ve always wondered how you wake up one day and decide to start a bank. Where did these guys get the initial capital to start this bank? Nobody seems to know (or do they?).

    **Was the initial capital used to start Equity derived from stolen client money from transcentury bank? because if they did this, it would be baaad — can you imagine losing all the deposits in your bank account and then seeing someone like mwangi go on to start another bank while you were left broke?

    I’ll give him credit for recognizing this niche in the market, but you know what? maybe others had recognized it as well, but without the “capital”, were unable, to start a bank.

    And who knows what these banks are doing with people’s deposits? A lot of people think that the money in their accounts actually sits in a vault some where, but no, those bankers have to move it around — into other investments, into other places and who knows where it’s going?

    They are supposed to be rules that govern how much money you should always have in reserves, but even in America, those rules where flouted and that’s how many of these banks got into trouble. So, in Kenya, a place of very relaxed rules, who knows?

    That’s why whenever I see people quoting these bank CEO”s, I’m sort of stunned by how much they trust those numbers. Do people know where their money is going? I mean, many of these bankers have shady pasts.

    And again, besides the farmers, I don’t see what people are producing. I keep trying to figure this out, but can never seem to get an answer. Maybe you can provide one. Bankers are not manufacturer’s. They get their money from people who produce and then promise to re-invest it (“smartly” & “safely”). The real genius of all economies is with the people who actually make things, without them, you have nothing.

  12. Dee
    April 4, 2009 at 8:41 pm

    There is one major point you missed regarding a nation’s rapid development. You have to minimize political clout and interfearance.Thats Africa’s major weakness. In the West they call it lobbying but its done in most cases in a sustainable method whereas in Kenya its called patronage and sychofancy. Even in success cases like the Trans century Group that SIJUI talks about above cannot escape it. They have a political wing called CPDG (Central Province Development Group) whose purpose is to rub political hands to gain favors…..sad indeed..

  13. Sijui
    April 4, 2009 at 3:05 pm

    Keep the drumbeat going KE, you’re right. However I think there are other outlets where you can learn about real Kenyan entrepreneurs who are producing real things e.g. Business Daily Kenya. Once in a while they have great interviews with aspiring SMEs and you can follow the paper trail from there.

    One of my entrepreneurial role models is James Gachui, Chairman of Trans Century Group granted he is not one to give interviews because he’s old school and a very private person, but he’s someone who created something of value from nothing against the odds with Wananchi Telecom and now Seven Seas Technologies. Another despite all the controversy surrounding him is James Mwangi of Equity Bank.

    There are other examples out there but I agree completely, we remain obsessed with very superficial indicators of business acumen and success and miss the boat on real benchmarks i.e. creativity, innovation and calculated risk taking.

  14. kenyanentrepreneur
    April 3, 2009 at 4:34 pm

    ANK: am working for a multinational in india and am from Kenya

    Ank:

    I’d really like to get your perspective on the differences between India and Kenya in terms of their business development.

    What is it you are seeing in India that you are not seeing in Kenya?

  15. kenyanentrepreneur
    April 3, 2009 at 1:01 pm

    Kei O:

    I don’t know why you find it patronizing. I think it’s just the reality, but let me respond to your overall statement.

    The goal of a blog (& of a blogger) is to provide information to his or her readers and then in turn, my readers will provide information to me and to others. i.e. we are using this forum to share and disseminate our ideas on different topics.

    In my quest to provide this information, I have often, run into brick walls whenever I’ve tried to figure out how these so-called Kenyan businessmen are making their money and I find this to be very telling.

    I’ve said before that I am a voracious reader of business biographies and I’ve come to see that when people make their money honestly, they become so proud of their success, that they almost always want to share that knowledge with others. I am not surprised that the growing line of wealthy Indian entrepreneurs are now beginning to do this.

    However, if your wealth has come primarily through theft, you never acquire this necessary knowledge and without this knowledge, you can’t write books (like Nilekani) or give speeches or talk about how you did it.

    At some point, wealth has to be created from knowledge, otherwise, the money will remain in the hands of a corrupt elite. i.e. it will remain in the hands of those who are able to use their connections to steal. It will never trickle down and no jobs will be created and this is the lesson of India and of people like Nandan Nilekani.

    India’s economic turnaround came about when people started using their knowledge to create new wealth.

    If we refuse to accept this fact, then kenya will continue to be ruled by people like George Muhoho and Uhuru Kenyatta. Rich men yes, but one’s who have never had to acquire any sort of knowledge.

    I’m sure you’ve acquired an enormous amount of knowledge running your law firm and especially if you started from the bottom. I’ve observed the same thing with my on-line ventures: When I first started I knew virtually nothing, but if you stick with it, the learning curve is enormous.

    I can see why people who inherit businesses have a hard time running them: It takes years to acquire this knowledge and if they are forced to compete with people who started at the bottom, they’ll get blown out of the water.

  16. Van Hausen
    April 3, 2009 at 11:42 am

    Pysd off,

    I can back up my statement. The reason I say he’s a political hack is because he praises democracy as the source of India’s progress at the expense of the very things that threaten to spiral out of control and make India vulnerable to internal social upheaval, unrest and insecurity.

    You see Whenever you praise democracy in a country where corruption, over-population, child labor, sex slave trafficking and more than seventy percent of the population live in poverty- Something has to be wrong in your head.

    India is facing some of the biggest challenges this world has to offer and democracy is clearly not working to their best interest as a nation. The reason why I say he’s a political hack- Is because he knows all this information deep down. He knows the Chinese model is the better approach moving forward but Instead of criticizing democracy where its due. He goes on to praise it.

    Nandan needs to understand that India’s problems cannot be solved by just throwing some soft statements about democracy to please the West. Say the truth and the truth will set you free.

    My question to you is this – Do you believe democracy is sustainable for India in the long run ?

    I’ll finish by saying- Too much freedom is dangerous in a developing country- Too much government is dangerous in a developed country.

    I hope I have substantiated my first post above.

  17. coldtusker
    April 3, 2009 at 10:54 am

    Kei O: And what would your excuse would be… if I said Singapore is ahead of Kenya on multiple facets e.g. Shipping, Finance, etc

  18. Kei O
    April 3, 2009 at 10:26 am

    KE

    Seriousy though, Kenyans already know these things. I don’t know when you were last in Kenya – but I do find some of your interventions a little patronising. Well intentioned as they may be.

    I also find some of your arguments abit fallacious. I do not for instance understand why you would compare Kenya with India. The Indian market is huge and by definition it should produce huge players. The Kenyan population is probably just 3 Indian cities.

    And that is not to say that Kenyans should not aspire to greatness……

  19. Kei O
    April 3, 2009 at 5:21 am

    Make your money anyhow.

  20. ANK
    April 3, 2009 at 1:45 am

    am working for a multinational in india and am from Kenya..it pains me that kenyans dont want to think about what is important in terms of a sustainable economy.and you are right, who are our millionaires? where did they get their wealth? i can bet you that the legitimate wealth acquired in Kenya is by individuals whose count is below that of my left hand :sad:

  21. Pysd off
    April 3, 2009 at 1:44 am

    Van Hausen, I don’t know. Doesn’t one usually follow-up such accusations with some form of explanation? What, you don’t like his suit so he’s a hack. And even if he were one, does that diminish his arguments/knowledge in his book. Rigor, Kenyans, rigor. Let’s get into substantiating our statements with evidence/well-explained arguments.

  22. Van Hausen
    April 3, 2009 at 12:47 am

    ke,

    This guy is over rated man.

    He’s a hack. A political one.

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