The medicine of Kenya s economy, Harvard style

July 22, 2008

, NAIROBI, July 22 – Senior executives, CEOs and business owners were holed up in a city hotel for three days, trying to crack the mantle on competitiveness of industries and nations – the Harvard way. The executives explored the dogma of why some companies flourish and why some nations achieve great strengths.

All this discussion was enabled by a workshop organised by Strathmore Business School (SBS), Nairobi, Kenya and Harvard Business School (Massachusetts).

Last week, this workshop targeted the crème de la crème of various industries, with every intention of sensitising them on a new world order of Private-Public Sector Partnerships (PPSP). 

The seminar was facilitated by experts in the field of microeconomics, including renowned strategist Professor Michael Porter – the Bishop William Lawrence University Professor based at Harvard Business School, Dr. Wahome Gakuru, the Acting Director of Kenya\’s Vision 2030, Dr. James Mcfie, a financial accounting and taxation authority, and Dr. Michael Unger, an economist based at the Loyola College in Maryland, USA. 

The audience: a small cross-section of Kenya\’s business leaders from various industries such as media, banking, agri-business and trade.

The main theme of the seminar was the "Microeconomics of Competitiveness", a very relevant topic for Kenyans who are making strides to participate competitively in the global economy. The seminar took the case-study approach and participants reviewed companies such as Nokia, Volvo and Intel. They also studied industries like the California Wine Cluster, and countries such as Singapore, Chile and Rwanda.

They examined the success of Nokia, a company from a country that had a socialist background (Finland) that rose to become one of the leading brands of the world.

Today, almost 3 out of 5 mobile phone handsets in the world are Nokia. The success of this brand was a culmination of lots of research and development in mobile telephony and continuous technological improvement without waving in their quest to succeed.

So where do private partnerships come in? Finland, like most Nordic countries is extremely cold during winter, and thus the need to communicate via telephones was high. However, in the cold wintry months, the Finish often experienced problems using their fixed land lines as the cables snapped and would not work! As a result, the origin of wireless communication was born! As they say necessity is the mother of all invention.

The Finish Government indeed put in a lot of resources on research and development to grow and sustain the industry and for Nokia to become part and parcel of Finland\’s economy.

Professor Porter describes the competitiveness of nations and industries using the Diamond Model to analyse a few key fundamentals in business to determine the comparative advantage that a business possesses in terms of strategy, demand conditions and relating support conditions.

Singapore is a nation that downplayed its weakness of being a small island with limited resources in the 1960s, and built on its strengths to become one of the world\’s strongest growing economies.

Singapore had no raw materials, but it had one great asset that is always assumed in the world order-leadership by the youngster called Prime Minister Lee. Only at 31 years, he had a dream, drive and he managed well.
Interestingly, the country, just like Kenya, once had a "Dream Team" to inject change in the economy, but in the Kenyan case, it failed. Singapore, on the other hand, had an elite group of rigorous meritocracy that helped the government plan a long term achievement process.

Though there were excesses like banning of chewing gum, the government had a sense of humor; it sourced husbands for the educated women in the country.

Corruption, was also zero-tolerated in Singapore (not as we have come to know it in Kenya), to the extent that officials found guilty of corruption preferred to commit suicide than face prosecution and subject themselves or their families to shame!

Another case study was Chile, dubbed, "The Latin American Tiger". The country was run by economic experts called "Chicago Boys" who oversaw implementation of key economic targets.

Closer to home, Rwanda\’s process of economic development is one to learn from.

In a review of Kenya, there were some success stories with regards to global competitiveness, with the local horticultural industry being of keen interest to Professor Porter.

However, Porter argues that the Kenyan flower industry has not taken advantage of clustering like that which has happened in the California wine industry.

In California, industries like Banking, Heavy Machinery, Airlines, Institutions of Higher learning came about as a result of one successful industrial sector; the same was replicated in other industries, creating economic boom.

What about Vision 2030? All countries, like organisations, need to have a vision.
The success of a vision is in its long term appropriateness and in its ability to be implemented by its citizens.

One idea that has been floated is to introduce a Vision 2030 economic prison. This is purely for individuals who fault, fail to implement, or sabotage the very engine of economic recovery strategies so that citizens (who are indeed owners of the country) are not  taken for granted by individuals whom we have bestowed trust to manage this asset on our behalf. Based on Kenya\’s history, imagine how many prisoners we would have had such an idea been implemented in the 70s!

Kenya, unlike Singapore, or even its neighbour Rwanda, is endowed with natural and man-made resources that give it a competitive advantage over many of its neighbours.Unlike Rwanda, Kenya has the man-power and intellectual resources needed to transform its economy. This is evident in the number of Kenyan professionals that have fled to Rwanda, Botswana, and South Africa, where they are compensated better for their contribution to the economy. Enough said!

Kenyans can learn from the mistakes of others and tailor-make its way of growing the economy. To start off, Kenya needs to brush of its image as being a poor country. It certainly is not!

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