Tigers and Dragons in Kenya

Interesting article about Chinese and Indian accquisitions in Kenya:

It is has become ironic that while many American and European firms consider their Kenyan subsidiaries to be lemons, Asian firms are making lemonades out of these situations and in some cases turning them into star performers.

These firms are also gaining entry into African markets without stirring as much animosity as the South African continental invasion has attracted.

The key to this success stems from the investment that India and China are making to understand the contours of both political and business power on the continent, taking advantage of the hunger for investment in most African countries.

Is this bad / good ? :

The US and the UK have in particular voiced concerns that the Africa-Asia link could precipitate a new form of neo-colonialism. Critics have also pointed out that most policies for Africa by the fast rising Asian economies are highly flawed; largely driven by lopsided economic gains and tend to ignore the social and humanitarian side of life.

Ironic isn’t it? The US is one country where both industrial and service business activity has been outsourced to China and India. The other thing I believe is that these rising eastern countries have a better understanding of African countries and economies – given that the economic situation in some parts of China and India is not so different from many African countries. There is also the absence of historical baggage like colonialism, slavery and racism, which gives these countries a different perspective to Africa than the West.

Note #1: How come the Chinese or Indian ambassadors don’t make the news as often as the American and the English ones ?

Note #2: A search on google yeilded this interesting article on Kenya by a former Indian High Commissioner to Kenya published in a Indian newspaper. Interesting perspective.

Magic and Racism

While I was at the Asian Party, I learnt a new racial epithet, commonly used by Asians in Kenya.

The term is “Jadugaar” – which in Urdu (or so my worn out english-urdu dictionary from Pakistan tells me) means “Magician”.

Strictly speaking its not a racialist word in the Western context of racism, which is oriented towards skin color and pigmentation and hence words like “nigger”, “negro”, “redskin”… etc.

“Jadugaar” appears to be aimed more at the traditional beliefs and practices of witchcraft. The “nigger” equivlent candidate would have been words derived from “Kaalaa” which means “black”. However “Kaaliaa”, “Kaaley” the singular, plural forms indicating black-person/persons are more commonly used as nicknames for people with darker complexion i.e. a pakistani or an indian with darker complexion can be nicknamed “Kaaliaa”.

Incidentally, in my home-town, “Negro” is still an acceptable word, anyone of African origin (most commonly Ghanaian boat people wearing sandals and selling hand-bags) is called a “Negro”. In my American mid-west town on the other hand, calling someone a “Negro” can put you behind bars.

Technology Adoption

The problem with a lot of the technology adoption success stories coming out of Africa and in other developing markets is that they are anecdotal at best. In some cases one reads about a “success” in a single news story and the example is never ever heard of again. Did it really succeed? Who did it really benefit? How do we measure failure or success?

An attempt to answer these questions and analyze the speed of technological diffusion is the Cross-Country Historical Adoption of Technology (CHAT) database developed as part of a Cross-country technology adoption study : Making the theories face the facts.

Some of the conclusions of this study :

Our panel data analysis indicates that the most important determinants of the speed at which a country adopts technologies are the country’s human capital endowment,type of government, degree of openness to trade, and adoption of predecessor technologies.

What it tries to do is find reasons for :

• Why does some technology get adopted quickly in a developing country, while another technology doesn’t ?
• Why is running a call-center in a country like India cheaper than say, running it in Kenya?

The Economist has an excellent article about the study.

Old technologies – electricity generation, land-lines, railways are still relevant:

Broadly, two sets of obstacles stand in the way of technological progress in emerging economies. The first is their technological inheritance. Most advances are based on the labours of previous generations: you need electricity to run computers and reliable communications for modern health care, for instance. So countries that failed to adopt old technologies are at a disadvantage when it comes to new ones. Mobile phones, which require no wires, are a prominent exception.

Mentioned in the context of technology adoption is the case of Kenyan call centres v/s the competition.

This partly explains the patchiness in countries’ technological achievements overall. Call centres in Kenya, for example, pay more than ten times as much per unit of bandwidth as do rivals in India, because India’s fibre-optic cable system is far better and cheaper. So sometimes you cannot leapfrog. It depends in part on how governments organise basic infrastructure like transport and communications. The other set of problems has to do with the intangible things that affect a country’s capacity to absorb technology: education; R&D; financial systems; the quality of government.

(Which means its probably more sensible to compete in a market where you are cheaper, better equipped, and have better positional advantage than the competition)

The Economist also makes an example of usage of conventional technologies by the Kenyan horticulture sector (and how these were affected during the recent violence).

Revealed: Google Suggests solutions to problems !!!

So I found this new thing called “Google Suggest“. This is what the god-like people at Google say about it:

“Our algorithms use a wide range of information to predict the queries users are most likely to want to see. For example, Google Suggest uses data about the overall popularity of various searches to help rank the refinements it offers.”

Fine.
So I ran a few tests :

Understandable. Though I didn’t get the part about the muslim country. Must be something to do with a bunch of Americans thinking Obama is muslim and connecting the dots to Kenya.

Alright. Time to end those panga jokes I guess.

So much disrespect for a president. Its high time the government blocked Google, and locked all these malicious searchers behind bars.

Whats a “Raila Odinga removal tool” ? Sounds obscene, like something my proctologist would make good use of.

My name is bond, zero coupon bond

The Central Bank of Kenya (the equivalent of the Federal Reserve) issued “zero coupon” and fixed-rate treasury bonds with one-year and ten-year validities. This is the second time since the new year that the government has aggressively tried to market treasury bonds. What does this mean ?

The government wants to raise money by borrowing internally (the other ways of course, are to simply print more money, but we know what happens when you do that – and also borrow externally – few are willing to do that at the moment).
So the government issues IOUs (treasury bills) which citizens and financial institutions can purchase – thus lending the government money. Zero coupon bonds are interesting because they are sold at a discounted price, and yield the actual price on maturity – and are usually long term bonds. A 1 year zero coupon bond – means the Central Bank has no idea about inflation and economic projections beyond the next 12 months (Zero coupon bonds tend to factor in the inflation index).

Understandable as revenue collection is down, inflation is up, foreign investment is down, and government spending is up. In a nutshell the government is running out of money. Its a great time to own a bank – you lend money to the government on your terms, their balls are in your hands.

Funny, this didn’t make much news.