The Competitive Advantage Approach

In this approach, the focus should move away from taking advantage of our comparative advantages towards developing competitive advantage. In Marathon terms, it should be that when the counties run 40 kilometer economic races, Baringo emerges among the top five. We define regional competitiveness as ‘the capability of a region to attract and keep firms with stable or increasing market share in an activity, while maintaining stable, increasing standards of living for those who participate in it’.

Regional clusters of related industries, contribute greatly to growth of employment opportunities, export and income. We need a mix of strong economic institutions rooted in Baringo. By cluster development, we mean businesses cooperating together and working together even while they compete amongst one another. More emphasis is placed on innovation, differentiation and specialization within cluster development, rather than previous concentration on imitation and cost cutting in order to gain a competitive advantage.

Achieving a competitive advantage involves creating and maintaining a favorable position of competitiveness relative to those of existing and potential competitors. It requires that we avoid the temptation to compete on price. The low cost economic strategy emphasizes abundant and flexible workforce, strategic location, and responsive government in order to attract manufacturing operations. A company that sells cheaper than others very often is poor
Accordingly, we hold it that Baringo should prioritize regional competitiveness ahead of the exploitation of her comparative advantages. This is accomplished by developing local firms in various strategic sectors and ensuring there is close cooperation between the businesses of Baringo because this is a vital factor influencing effective cluster performance. Baringo must run a fair wealth marathon and emerge among the top.

Improving the quality of life in Baringo depends on thriving, wealthy businesses owned and based in Baringo. She needs to nurture great firms that secure jobs and wealth for its population and to place higher productivity, innovation, and cluster development at the top of its development agenda. At the core of our development should be the Baringo Business Council, which shall oversee the strategy. Wealth does not flow from the office of the governor to the population – it is the other way round – wealth should legally, freely and fairly flow to the government from its population.

The Low Hanging Fruit

This is another very sensible approach to Baringo's development. Basically, it says we concentrate our investments on sectors or areas that will yield quick results. When Kenya attained independence, this is the method that informed our development process. Much focus was put on the highlands, the cities and the regions already served by the existing infrastructure especially roads and the railway. This would result in rapid growth in the targeted sectors, accompanied by a population explosion in the areas that benefited from this.

On the downside, it resulted in marginalization of the lowlands and the northern frontier district areas, leading to inequalities that continue to destabilize the social fabric of the nation. It encourages people to migrate to the "high potential" areas, thereby preventing the pursuit of good opportunities in the “low potential” areas through the deprivation of human capital. It is sustainable only in the short term.

Baringo happens to straddle the frontier between the high potential and the low potential areas. Much of the current debate on where to locate the county headquarters has to do with this mentality – that some areas will be neglected if the headquarters are in the current “high” potential area, rather than the more central “marginal” areas. It would only be proper for the leadership to insist on equitable development for all regions and all sectors of the economy.

The same scenario is repeated when you consider resource distribution among sectors. It is very reasonable that the county government shall consider heavy investments in water and agriculture. Unfortunately, today’s young generation will want to engage in media and entertainment rather than livestock and agriculture. As much as we put resources for irrigation development, we must also support the upcoming sectors e.g. ICT, energy, healthcare, education and financial services – because this can yield high returns eventually.

Development is sustainable only when it is fairly distributed among the regions, between the generations, among the classes and among the various sectors of interest to the people of Baringo.

The Comparative Advantages Approach to Development

The Taita have an apt saying, ‘kila mtoto huzaliwa na riziki yake’ which when they translate means that when a baby is born, their fists are clenched, and what they are clutching in their fingers is their fortune. Similarly, every county has its fortune – be it the sea, arable land, mineral resources, cultural heritage and human capital among others, and Baringo has its share.

Traditional development theory sees the economy as “factor-driven.” A county’s comparative advantage in regional trade is expected to be determined by such factor endowments as land, natural resources, labor, and the size of the local population. Under comparative advantage theory, the basis for export development is factor intensity: the county should export products that use its abundant factors intensively.

This is a very sensible approach – it starts with identifying what resources are available and seeks how to develop on top of that. Baringo, for example, would be expected to take an inventory of its ‘riziki’ and figure out how to make the most from it. Some of the areas where Baringo holds comparative advantages include:

1. Human Resource – a better educated population that the surrounding communities
2. Livestock – 700,000 cattle, 1.4 million goats
3. Infrastructure – good roads, various airstrips in comparison to Turkana or Samburu.
4. Natural Resources - lakes, rivers, large forests, quarry stone, sand
5. Strategic position as a gateway to Turkana, Samburu and South Sudan. There also is a possibility for alternative linkage with Central Kenya through Laikipia. In addition, Baringo abuts very populous counties such as Keiyo, Uasin Gishu and Nakuru.
6. Fruit production and Horticulture – under irrigation, Marigat, Barwesa
7. Sisal Production
8. Land

However, the comparative advantage has a few weaknesses:

1. It invites exploitation – if oil was found in Baringo today, many strong countries and politicians would rush there and the local population would not benefit. All one needs to do is to identify the money and the vultures rush in.
2. It discourages divesture into more profitable areas for which the endowments may not be apparent. It is common in areas where gold has been discovered for people to stop investing in education – “why go to school if we can become rich digging dirt” seems to be prevailing mentality in such places.
3. It can entrench poverty: Suppose we were designated as the food basket of the nation. The country would put in place policies to ensure that we sell cheap food in the economy – at a great opportunity cost – because we could have used the same land to produce fruits that bring in a higher income.
4. It may not develop strategic capacity – Japan is one of the world’s largest steel producers, yet it has no iron mines. They import everything and do the value addition in Japan. One of the most potentially lucrative sectors in the regional economy is oil refining and petrochemicals. Baringo has no oil or ports – it would not make sense for them to be investing in such a sector – hence no investments are made in that sector; not really. In fact we should.

The “Our Person” Approach to Development

Immediately after independence, many Kenyans were not educated and most of them spoke only their mother tongue. If one became sick, at the hospital, the only way they could be helped was if there was someone who could understand their language. Similarly, if one was arraigned in court, ‘knowing’ someone from home could make a difference in one's plea before the magistrate. Worst of all, most surveyors often did not understand the local language and ended up allocating land as the local chief directed rather than as the true beneficiary had stated.

This is the genesis of tribalism in Kenya. The circumstances were such that there was a very significant correlation between the mediation by ‘someone’ from home and one getting desirable outcomes, or avoiding difficult situations. It has become a definitive element of Kenyan culture. Communities invest heavily in getting ‘their man’ in power so that he can tilt the playing field in their favor. This formula for development is the direct result of tribalism and the politics of patronage. It is fundamentally corrupt, unfair and may harm the intended beneficiary more than they expect. It is not sustainable in the long run, and in the short term it creates resentment from others towards the current beneficiaries, and laxity for the beneficiary.

A phrase I learnt while I grew up loosely translates as: “even the rat that stinks is still a member of the household” – meant to justify protection of corrupt people from home. That is a negative lesson I have had to expunge from my value system – but it still obtains among many of our people.

The best source of progress is one’s effort. Work hard and make smart choices; that is the only fair way to move forward. Not getting a well placed person up in there.

Baringo Development Paradigms: The Autopilot Approach

When working with this paradigm, whether or not we do anything, something will continue to happen. We do our best and deal with issues as they unfold – one day at a time.

This approach prevails in much of Baringo today – the responsibility for development is left to its own. Somehow, our people do not view their destiny as being dependent on their effort. That does not mean that nothing will happen, but that things will happen randomly and at the same average rate as the rest of the country. If Kenyans are buying plots, people in Baringo will do that; if everyone is investing in matatu business, the same will happen here – if pyramid schemes are hot, we will sink in it as much as the rest of the nation.

This is a dangerous formula for development – maybe it arises out of decades of centralized government, where all major decisions were made at the capital city and the up-country citizen was a mere victim of existence at any given time and place.

The situation is much different now; our people now have the ability, and opportunity and responsibility to transform Baringo into a prosperous region. I encourage that we abandon any dependence on this backward and outdated approach for our progress.

Baringo: What does it mean to be developed?

The classic definition of development or ‘maendeleo’ in local parlance is infrastructure – roads, water, schools, hospitals and electricity. Of course, we need all these and more. We have to broaden our definition of development to encompass other matters – such as:

1. Social issues: security, employment, better standards of life, freedom, gender and participation in governance

2. Economic development: equitable distribution of wealth, equal access to business opportunity and finance as well as efficiency in markets and value chains.

In a sense, development should result in a happy, just, productive and prosperous society – let us call it an ‘hakuna matata’ society. But please, let this not be in addition, a lazy society. We need not replicate the infrastructure in ‘developed’ countries for us to be considered developed.

Development can also be viewed in terms of where we put our greatest efforts. Do we spend most of the day fetching firewood or water from the river? Do we spend most of our life working to raise the rent? It is a good sign of development when we can spend our time on what we choose to do rather than fighting and responding to circumstances. We should aspire to shift our effort from working for the money to spending time with family, interacting and interrogating our heritage, pursuing our dreams and making the contribution that we want to make – not doing whatever it takes to raise school fees.

The good book says that a wise man leaves an inheritance for his children and his children’s children. We have not inherited much; development is when the bulk of our effort goes towards creating this inheritance for our children because our lot is secure.

Over the next one week, we will consider some of the paradigms that can govern our development:

1. Auto pilot development

2. Development by getting “One of our people” in the right place

3. Development by exploiting our comparative advantages

4. Development by targeting the low hanging fruit

5. Development through competitive advantage

Tomorrow we will be looking at auto pilot development.

The Population of Baringo County

In this article, I intend to analyze the structure of the population in Baringo county. The main source of the data is the 2009 population census. Some of the issues I intend to address include:

1. How is the population distributed across the region?
2. How is the population distributed across the generations?
3. How is the population distributed among the sexes?
4. What will be the age structure of voters in 2012?

Unfortunately, the Census data was not aggregated according to the new districts, but rather the districts as at 2009. We start our analysis with the regional distribution:

As can be seen, the population is nearly equally distributed among the four major Baringo districts. Interesting, Baringo North has a higher share of old people while Pokot shows significant old population shrinkage. This may point at emigration, or low life expectancy among others.

As far as gender is concerned, the distribution is as follows:

From this we note that Koibatek has a very uniform distribution among the genders at all ages. The other districts show suspect variations, but at this point it is difficult to attribute it to any single factor.

The next factor to consider is the distribution among the generations.

All the districts have very young populations. Using the 2009 Census results, Baringo county has a population of 555,621 people. Working with this figure, the percentage of the different age groups in this population is shown below.

Age Group	%	Cumulative Percentage
0 to 4	16.5	16.5
5 to 9	16.5	33.0
10 to 14	15.4	48.4
15 to 19	11.7	60.2
20 to 24	8.6	68.8
25 to 29	6.9	75.8
30 to 34	5.1	81.0
35 to 39	4.3	85.3
40 to 44	3.1	88.5
45 to 49	2.8	91.3
50 to 54	2.2	93.5
55 to 59	1.6	95.2
60 to 64	1.5	96.7
65 to 69	0.9	97.6
70 to 74	0.8	98.5
75 to 79	0.5	99.0
80 +	1.0	100.0

As can be seen from the above data, nearly 60% of the population was under 18 in 2009! This means that a lot of work needs to be done to ensure that this young generation gets good education. With only 349 primary schools, this is a big problem. These children will also require jobs starting 10 year from now. Cutting off the current population at 14, we obtain that in 2012, we will have 286,533 voters. Their population will be distributed as follows:

Age Group									%															Cumulative Percentage
17 to 22									22.7															22.72
23 to 27									16.7															39.45
28 to 32									13.6															53.01
33 to 37									10.0															63.08
38 to 42									8.4															71.49
43 to 47									6.1															77.62
48 to 52									5.6															83.19
53 to 57									4.2															87.47
58 to 62									3.2															90.73
63 to 67									2.9															93.61
68 to 72									1.8															95.41
73 to 77									1.6															97.03
78 to 82									1.1															98.08
83 +									1.9															100.0

This of course does not take into consideration migration patterns and mortality. As you can see, over 50% of the voters in 2012 will be the youth (under 30). I strongly believe social media will play a significant role at that time.

In a future article, I hope to address the following issues concerning the Baringo population:

1. Migration patterns
2. Income distribution, purchasing power and employment among the Baringo county population.
3. Education levels

Dear Bob, Please raise the mobile calling rates - we need more taxes. Rgds, PS-Info

A few weeks ago, the PS in the ministry of Information warned that the current tariff wars are capable of derailing vision 2030. At the heart of this remark is the realization that the government depends heavily on the taxation of communications to support development. One would expect that as calling rates become cheaper, mobile users would save more money and this would translate into higher discretionary spending. Ideally, we should be expecting increased consumption in other sectors - such as clothing, food, building materials e.t.c resulting in improved economic growth. The tax revenue would come in through these other sectors. But we all know that the PS is right, the taxes revenue will reduce: I wonder why?
Like the Yin and Yang symbol above, the Kenyan economy consists of the formal economy and the informal economy - and they are closely intertwined. It is relatively easy to tax tobacco and alcohol in the formal sector, while it is very difficult to tax the Chang'aa and weed in the informal economy. While the mobile operators are formal businesses, their largest business derives from the informal population. Like VAT, the telecommunications sector presented the government with a very efficient means of taxing the informal sector. A reduction in revenue for the mobile operators results in an overall reduction in tax revenue because the taxation efficiency for the informal sector is very low.

The lesson here is the need for the government to urgently relook into the graduation of the informal sector into the formal sector. While it is very easy to register a CBO, the same cannot be said of a company. It is expensive, you need to work with a lawyer - and the value they add can be attained through other professionals e.g. accountants, banking clerks, government officials and magistrates. To start a company, one needs to have a registered business address; that is yet another barrier for the informal sector - especially dot com operations that need no physical premises. The government should really consider setting up a small business administration and tie the various funds e.g. youth fund, womens fund, ministry of trade funds, jua kali development funding e.t.c. to this.

The recent move by the minister for transport to require all matatus to form cooperatives is a good example of formalization. The charcoal business, the real estate sector, pubs, hotels, restaurants and agriculture are other candidates that should be considered.

I hope you find it ridiculous, as I do, for anyone to encourage the mobile operators to increase tarriffs so that the government gets more money for development.