Tuesday, December 12, 2017

NSENENE AND THE PUSH FOR A MIDDLE INCOME

The Nsenene (grasshopper) season is in full flight (forgive the pun).

I read fantastic stories last week of how sacks of the insect are criss crossing the nation. The major supply areas seem to be the central region, where in a given night you may see contraptions made of iron sheets, drums and high intensity light being used to trap grasshoppers.

Friends of mine who have been following the market say that a few weeks as the season was just getting started a tumpeco (half-liter mug) of nsenene was going for sh20,000! And a sack of nsenene was selling for up to sh500,000. She thinks the season has peaked as the same quantities are now going for sh3,000 and sh20,000.

The snacky treat is prepared by stripping it of wings and legs and frying it in its own oils.  I am told one can add tomatoes and even garlic to taste.

There are two nsenene seasons around April and November, the latter being the major season.

So if one got to thinking, what would it take to rare nsenene and therefore ensure a year around supply? Would the market demand fall off because as they say familiarity breeds contempt? Maybe we can export the treat, what would it cost to break into those foreign markets?

That last lesson is key to our quest for transformation of the economy.

It is not a secret but to take our economy to the next level – surpass the $1000 per capita magic number, we need to export stuff, the higher up the value chain they are the better.

"As it is now total world trade is estimated at $24trillion shared between goods and services $18.5trillion to $5trillion. Drilling down further of the goods traded $13trillion was manufactured goods, $3trillion natural resources and $2trillion agricultural products....

The low proportion of the global figure assigned to agriculture explains why the continent accounts for less than $5 in $100 dollar of world trade and therefore why poverty stalks us.

Beyond doubling or tripling the number of bags of coffee we export a year, in an increasingly competitive market – Vietnam now offloads four times the amount of robusta coffee we do onto the world markets, the attendant increase in land under the crop may be hard to sustain.

Maybe when we attain those volumes we may be able to seriously consider adding value to our coffee and grit our teeth to try and break into the processed coffee market, already in the stranglehold of non-coffee producers from Europe and the US. WE will grind our teeth to the gum before we can even cause a dent in that market.

Same maybe said for our tea, cotton and even sugar.

The sensible thing to do would be to squeeze ourselves into the trade in manufactured goods. This may not be as daunting a prospect as it may have been in the last century.

No one makes all the components of all they produce any more. For instance Apple has more at least a hundred suppliers mostly in South East Asia but also in Israel, Ireland, Mexico, Austria and the US of course.

The same can be said for Mercedes Benz or Sony or Boeing.

The trick to inserting ourselves in these value chains would be a productive workforce, and most especially cost effective, reliable and efficient infrastructure.

"You can imagine the coordination of a global supply chain needs a high level of efficiency, especially since manufacturers don’t want to spend more than what is absolutely necessary for storage. They have taken Just in Time (JIT) delivery – where suppliers are integrated in the manufacturing process to the point that they only deliver when a component is needed, to another level....

It therefore makes sense for us to be seeking to push our power and transport costs down, necessary if we are to have half a chance of inserting ourselves in these multi-billion dollar networks.

Companies in South East Asia are doing a rip roaring business delivering switches to Apple or seat belts to Nissan or door handles to IKEA or valves to GE.

To illustrate when Apple launched its iPhone 8 it sold about 10 million units in the first week, imagine if each screen costs $10 and one supplier had the whole deal it would have pulled down $80m (sh300b)! in that first week.

It has been true for a long time. To continue to sell raw commodities to the world market is a losing strategy.

"We have no choice but to go up the value chain. However the markets are not open for us to just walk in. We need to prepare for a fight like we have not seen not only for trying to add value to our traditional commodity exports but also to break into the value chains of the world where the real money is being made.

For starters we need to stop working as if we exist in silos. Power generation is not only the business of the energy ministry but of the manufacturers, tourism industry, education and health sectors. As is the Standard Gauge Railway or the oil roads or the valley dams or fishing issues on our lakes.

Back to our nsenene.

While it may serve to provide seasonal income for some nifty grasshopper trappers it is unlikely to help vault the country into middle income status. If the foreign markets are our target a taste for Nsenene is not universal – some even gag at the idea of eating it.

Monday, December 11, 2017

A SHILLING SAVED IS A SHILLING MADE

Several events in recent days have served to remind us of government’s wastefulness and how through rationalisation of its operations we can stretch our tax shilling much further than we currently do or think possible.

The incidents in no particular order, started with the strike of the medical workers that was suspended a week or so ago. The doctors argued that they were working under terrible conditions and being paid less than they deserve, given the important role the play in the country against the millions being thrown at non-core staff in other government agencies.

The doctors laid down their stethoscopes for about three weeks saying they would not go back to work if their pay was not increased, in some cases by a factor of ten. The public gritted their teeth through the strike. We all think they should get a better deal.

Related to that, state health minster Sarah Opendi told parliament this week that the doctors will be catered for in an impending comprehensive review of public service workers terms of service in which one trillion shillings has been earmarked for pay enhancement.

She didn’t go into the details but if split equally among all 300,000-odd public servants this comes to about sh3.2m improvement in annual pay.

And then on Wednesday, the same day that the minister was at parliament, the Internal Security Organisation (ISO) released their report in which they had done a survey of government expenditures. A report commissioned by the president to look into the waste and duplicity of activities by government and its agencies.

"The ISO report highlighted several things key among which was the way public servants have enhanced their pay through allowances, consultancies to government and allowances of every nature...

Reading between the lines the report highlighted the need for a restructuring of government. The last such restructuring happened in 1992.

The restructuring is bound to find that public servants are all not lifting their weight, some should have long retired or many are misplaced and hence are inefficient and ineffective in their current position.

US billionaire investor Warren Buffet says if you find yourself in a sinking boat energy would be better spent changing boats than trying to bail out water from the doomed craft.

There really is no reason given the exponential growth in our revenues over the last three decades that public servants are not paid better so that we can bury for good the  idea that as long as government pretends to pay they too shall pretend to work.

We are not even talking about matching public sector salary scales.

Of course government will argue about that they are investing on major infrastructure projects, which no one doubts are critical to our development ambitions, but one can also argue that public servants cannot be held hostage to government’s planning inadequacies. Somebody should have foreseen that down the road there was going to be a fallout and worked towards mitigating it.

Of course we are always wiser in hindsight but that public service pay was a ticking time bomb has been common knowledge for years.

"I think what galls the most for the public servants is how they do the brunt of the heavy lifting only to see less deserving people – rent seekers, praise singers and the corrupt, skimming off the cream...

From the events above it is clear – if we needed reminding, that public servants need to be paid better, two, that a rationalisation of the public service would go some way to finding the extra money needed to cause improvement and three, that we have waited too long to get on with it.

There will be pain no doubt up and down the line but if done properly it will be for the greater good of society.

As if we needed to emphasise it more all the strategies, the Vision 2020, 2040, 3000 …. and operational manuals will count for nothing if the right people are not in place to implement them. This is important because the public service is a key driver of any plans or development we may be dreaming of.


If they don’t work or can’t work or won’t work our best laid plans will be pipe dreams at best and delusional gymnastics at worst.