Is Kenya’s Manufacturing Sector Driven By Innovation?

These stories crop up occasionally around the continent: Armed with a few pieces of metal and string, someone really ingenious built a helicopter in the back yard and then flapped off into the sunset. Well, almost: There are a few more materials involved, including some old engine, and then typically not much flapping occurs because the back-yard helicopter, as impressive as it is, doesn’t actually flap very far or, for that matter, very high.

I do appreciate geekiness: I like people who are really passionate about something, really dedicated to it, who get really good at it. But when I read about the back-yard helicopter stories, I have mixed feelings, and I wrote about this in a previous column: On the one hand, sure, it’s an amazing feat of jua kali engineering and daring to do this. But then I also wonder: In a different environment, wouldn’t someone clearly so talented and driven not have more opportunities to create, and not just copy? If the backyard helicopter creator was hired by, say, Boeing or Airbus when leaving university, wouldn’t this be an environment in which she or he could thrive and create things that work properly and go into industrial production?

I was reminded of this thought in a different context when I read Clyde Prestowitz’s article on ‘Production, not innovation, will win the future’ in Foreign Policy. ( http://prestowitz.foreignpolicy.com/posts/2011/03/07/production_not_innovation_will_win_the_future)

In it, he looks at the competition between the US and China. He cited the positive reception that US President Barack Obama received for announcing additional funding for development of high-speed trains, wind turbines, batteries, and solar panels. Obama has set a target of doubling imports in the next five years and innovation like this should help to revive the US’s fortune against an ever rising China and lead to a resurgence of the US middle class.

And at first glance, the US isn’t doing to badly, Prestowitz says: exports are up by 20% already, well on their way towards the target. Except that they are set against a ‘flood of imports’ and the US trade deficit is inching towards 4% of GDP, making the doubling-export targets meaningless. Innovation alone might then not be the solution: Prestowitz argues that China – a country we often think of as a large-scale producer of cheap, badly made copy-cat items – is in fact becoming a leader in innovation. And this is precisely because it manufactures so much. He cites Applied Materials Executive Vice President Mark Pinto: “Where you've got the manufacturing scale -- that's such a big factor in improving the technology ‑, scale plus technology is going to win. Where would you invest? The place where they're investing in the scale.” This turns the initial assumption on its head: It may not be innovation that drives production – the US have been one of the most innovative countries in the past decades ‑, but production that drives innovation.

Kenya has one of the most diversified economies in the region and manufactures goods for the neighbouring markets. Their industrialists look at Kenyan firms with a good degree of suspicion, worried that Kenyans will just too easily outcompete them. But in the larger scheme of things, is Kenya really producing anything particularly innovative, or on scale that could drive innovation? Much of what is being produced is fairly basic goods, and manufacturing anything is bedeviled with endless obstacles: power cuts, water cuts, lousy roads making transport expensive, crime, and so on. There is limited production capacity, and so no scale that would drive innovation. Of course there is plenty of talent around, but just not really an environment that really helps to nurture such talent and grow it into a commercial success. Are there large manufacturers that would have spotted raw talent like the jua kali helicopter engineers and offered them a job in their R&D department? How many companies here actually have R&D departments? Do universities and the industrial sector have a functioning co-operation that can take research and innovation into the commercial realm? Or are we still too stuck with the dysfunctional basics, roads and power and all that?

When I look at the ICT sector, there are some interesting developments of how smart individuals, universities and industry players like telecoms and handset manufacturers are beginning to connect their efforts. Of course the ICT sector is, in some ways, less physical, less hamstrung by infrastructure restrictions. But maybe it still holds some inspiration for Kenya’s industrial sector?

Andrea Bohnstedt is an independent risk analyst and publishes the online business magazine, www.ratio-magazine.com.